Has Inflation Peaked? | Bloomberg Surveillance 08/11/2022

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This is a necessary print for the Fed but it's not sufficient.
We need to see a lot more. We are entering I think a new phase in the inflation debate. We are still relatively cautious given
the ultimate outlook and trajectory for the economy. If the Fed is expecting to bring inflation back down to 2 percent growth is
secondary. Inflation is in focus. This idea of peak inflation that's just a math problem to us. This is Bloomberg Surveillance
with Tom Keene Jonathan Ferro and Lisa Abramowicz. Good morning everyone. Jonathan Ferro Lisa Abramowicz Tom Keene after a bang
up job report a bang up CPI a stunning market response yesterday. Lisa every strategist has to recalibrate. Every
strategist has to look forward and question are we seeing the deceleration now that we've been looking for for so long.
This was the first inflation read in some 18 that actually surprised to the downside with weakening trends in terms of
inflation.

And the markets rallied substantially despite Fed pushback saying guys it's way too soon. Get to the data here
this morning with green on the screen and the VIX again under a 20. We're beginning to see strategy. Michael Purvis OUTFRONT
from Tom Keene and Lisa he readjusted up to an abrupt move to 44 hundred. He says yes there are some challenges out there but
it's markets OUTFRONT of economics who seem to have forgotten that basic code.

And not only that but it's all aspects of the
market. You saw the dollar a week. For example if you take a look at the Bloomberg dollar index it weakened the most at one
point yesterday going back to 2020. It was a pretty substantial risk on move usually get dollar
weakness. You had it across the board whether it was the NASDAQ getting the most since July whether you saw credit severely
rallying all of these things kind of piecing together for a full risk on feel. That's hard to push against. Your point with
Michael Purvis right. Technicals Kailey Leinz in for John Farrell. He was at FCO in Rome. I'm not quite sure where he is
now. He may be in Heathrow on his way home. We've been trying to get him back here for three days. Kailey Leinz let me give you a
Brad Stone question if I can. And Ben Edmonds at Medway writes on this Matt Miller I should say writes on this Where is Lisa
says It's both equities and bonds dollar moving as well weaker where he says it's a double barreled short squeeze of Bond's
price up and equities price up.

Yeah and we definitely saw that in a huge way yesterday with the Nasdaq 100 back in a bull
market. I mean that didn't take very long. And the S&P now up 15 percent from its lows in mid June. I would argue though Tom that
the rally in the equity market was more substantial than what we saw in bonds because yes you saw yields coming dramatically
lower right off the back of the print yesterday. But by the end of the day it was unchanged in the two year was only down five
basis brambles. We got to trade Kaylee to just do this better.

I'm sorry Lisa. We came in negative 50 premium Ezra 2s 10 spread
and we disinvited yesterday a little bit. But come on get with the script. Kailey Leinz. One other thing before we sound so
positive. Everything is going great. We are going to go to the moon. The aspects of the CPI report that were most concerning
got kind of thrown out with a bet with the bathwater of this gold feeling that was out there. The idea that food inflation
came in at the fastest pace going back to 1979 the fact that rents are accelerating the fact that medical costs are
accelerating all of these basic aspects.

And I do wonder if we're seeing that bifurcation with used car prices coming down
that is a lower income rate squeezed group whereas new car prices continue to rise because that is the higher income group
they can still afford it. Sticky inflation of Michael McKee will help us through that with the Dallas trim the Brando trim the
lines trimmed and all the rest of the trimmed inflation reports. Let me get the data. Lisa staggers over for a brief futures up
12. Dow futures advance continued 122 points a Dow thirty three thousand thirty one. The Dow is ten point three percent from a
new record high. The first time said that in months and months and months and you see it with a VIX that stands under twenty
from thirty two down to twenty and now nineteen point ninety two on the VIX in the yield space a lesser inversion 2s three point
one seven percent. Oil has its own story going on worth watching. And of course the
really great challenge is year Brent crude making another dash for 198 on Brent crude and dollar weakness.
We'll get to that in a moment.

We need a Thursday bull market brief. Lisa what do you. Well just to comment though quickly on
crude you didn't get the IEA report talking about people switching from gas to oil in light of some of the shortages
adding to demand that they hadn't seen six months ago. So that part is part of the story today. Eight thirty a.m. we get us
initial jobless claims as well as PPE. These are the prices the price increases that factories manufacturers are seeing. How
much do we see this outpace what we see in CPI. And this goes to Mike Wilson's question which is do we see those profit margins
compress and continue to compress as people buy as those prices continue to outstrip CPI. The prices that consumers are willing
to pay at 1:00 p.m. USA selling 21 billion dollars of 30 year notes and doing this just for you bond auction day. Tom I find
this fasting because yesterday after that CPI print you had a 10 year auction that did amazingly well. And you've seen this
right. Basically people flooding back to bonds to Kelly's point. You are seeing that rally in bonds.

Yes. Maybe it's perhaps it's
more pronounced in stocks but still there too. So how low can it go. And what does that say. Does it send a contradictory message
to what we're seeing in stocks. In other words can this continue to happen with the fact that you normally have an inverse
relationship between these two asset classes and seven thirty pm. San Francisco Fed President Mary Daly is speaking in an
exclusive interview with Bloomberg Television in the Financial Times Tom. She pushed back. She said We still have a lot of work
to do. Inflation is still very sticky. It is still way too high.

Eight and a half percent. We are going to do more. She did seem
open to slowing the pace but this has been the interesting feature to me. One Fed official after another has come out and
said guys we are not going to pull back. What are you doing. Why are you pricing in a rate cut. That seems implausible. And the
market continues to say we don't buy it. And I really find this a really interesting conundrum where Fed officials are trying to
job on the market and a market is not listening.

What happened. Zero always is that economics is behind the markets and some
would say the equity market is always behind the bond market as well. Lisa thank you so much. Again futures up a lemon. A timely
way to look at the equity market up here that we're seeing is in fixed income. Brian Wise things done this before head of global
fixed income at Morgan Stanley Investment Management the right guy to talk at the right time. Brian I'm looking at the
Bloomberg Total Return Index one of the measurements. And as you know it's been ugly since the summer of last year
down 13 percent maybe down 17 percent on bonds. And we have had a bounce. We've had a very very nice bounce. Price up yield
down. And that is it. All clear for bonds is it is all clear for stocks. No Tom I think you and you analysts have been out of
this morning.

I mean I think the market's sniff this one out. We've had the move move from 350 and 10 year notes to 275 move
from over 600 and high yield to down to to 400. So I don't know if it's all clear. I think you might be actually at the lower
end of the yield range for now. But it's actually pretty amazing that the bond market I think it's sniffed out that CPI has
peaked and that there is some smoother sailing ahead.

We're not done. The Fed has more work to do. But. But they've done a lot.
And they have a law. They have the shelter components. And the most confusing component to mother the most concerning and
pointed to me. I think that's why they have more work to do. But the bond market I think is sniffed it out and we were near the
bottom end of the range. Brian how much is this actually evidence that Fed policy tightening is working. And how much is
this evidence that the Strategic Petroleum Reserve at a lack of demand for oil has made oil prices and gasoline prices fall to
the lowest since March. And that's really was underpinning this entire move.
It's a great question.

Is that big. Again the Fed did what they did is quick member how quickly they move. These bills began
about 50 versus 75 even back a year. They had moved over 25 basis points in one meeting in so long. So part of this is
credit to the Fed part is because commodities have come off and demand has has definitely shifted down. So I think the Fed looks
at this as the beginning of of their battle and having been more credible but having more work to do.

But do you think the Fed is
happy with what it's seen in the market reaction Brian when you have Charlie Evans talking about how inflation is still
unacceptably high. That's a quote. Neel Kashkari saying I want to be at 4.5 percent next year. And yet financial conditions are
getting easier. I think they're worried that there's that there's easing priced
in. Right. The idea that that easy money is back out there in the future that they could simply just ease again that they
needed to.

I don't think they see it that way. Again when I look at the shelter components and CPI CPI is too sticky. It's not
going back to 2 anytime soon. So they're not done. I think they need to push back hard on this market and they may need to show
the market that even though they're softening in CPI that they're serious about fighting inflation they can't afford to
lose this fight. The rally has been pretty broad based Brian and it's not just in equities but also in credit. You're seeing
people pile into the riskiest debt and you're seeing it in mass. How much do you lean into that. Do you see that continuing
versus perhaps a head fake ahead of what the Fed is trying to achieve which is a significant slowdown.
I think it's probably more of a head fake from these levels. Again I think we got to some levels that were there was just too
much priced in too much fear until we've gotten the balance as I said.

And you've got to downgrade warning that we're ahead of
it. And now you're probably at the point where you want to start to pare risk a little bit as opposed to chase it. Brian you saw
Mike Mike Wilson I guess you were reading from the same hymnal. Brian if you say the Fed the FOMC has to quote unquote fight
back don't they only have one tool the interest rate tool. Yes I used to think they had two tools I thought they would use
the balance sheet a little bit more. It seems like a tougher tool for them to use. So yes Tom I think the interest rate the
tool they have is the front end of the yield curve. I think they will continue to push on it again. Do they need to go to 75
every meeting. No I think they've done a lot of. Now those ethical in September. So I've got to pin you down on this.
What's the two's 10 spread you see.

Do you envision a negative 50 and negative 80 even a negative yet 100 basis point two's
turns negative 100. Seems like a reasonable target to me. Wow. Wow. Brian that gives pause. Ryan wants to starting a strong
year with Morgan Stanley Investment Management. He got the duplicative while waiting for Kelly looks down. Well I wish
someone caught my face on camera when he said that I got my ISE I'd be out of my shoe. Do not get in the lines Cam. We have the
grandma cam. No lines cam. Lisa it was a double well. Both of us said well that's the first time I've heard a full percentage
point yield differential. Two's higher than 10. I think that be a record. Right. And it highlights how effective overtime after
Volcker time. I want to check and see what that peak way. How far are we from having to do that kind of move. And if that
happens again what kind of pain is there felt out. I mean honestly what have we seen so far and markets have we seen the
Fed actually take effect in terms of taking the bloom off inflation or is this completely different.

Is this a confluence
of luck. And also you know some moves on the policy front tried to ISE that near-term price increases in gasoline in the first
season of Game of Thrones or one of the lead characters goes down in the cave and says give me wisdom. We did that this
morning with Peter. Dear terrorists who gives us market wisdom every day it Bloomberg. He said watch the XP X and deep
breakout. That's what the pros are watching. This is Bloomberg.
Keeping you up to date with news from around the world with the first word answers you can get us something. Inflation data in
the U.S. isn't changing the minds of the Federal Reserve officials. Two of them are signaling that the central bank will
stay on the path towards higher interest rates. Chicago Fed President Charles Evans says inflation is still unacceptably
high.

Minneapolis Fed President Neel Kashkari says he wants the Fed's benchmark rate at four point four percent by the end of
2023. Ukrainian special forces reportedly launched a powerful attack on a Russian airbase in occupied Crimea. That's according
to a Ukrainian government official who spoke to The Washington Post. Ukraine says nine Russian war planes were destroyed in the
attack. That would be the Russian Air Force's largest single day loss in the war. House Speaker Nancy Pelosi says the US
consulate in China to establish a new normal around Taiwan. Pelosi spoke hours after Beijing announced plans for regular
military patrols around the island. She said China had been trying to push its way towards its goals on Taiwan before she
led a congressional delegation there last week. North Korea's leader Kim Jong un was seriously ill during a recent Covid
outbreak. That's according to Sister Kim Jo Kim Yo Jong. She blamed South Korea for spreading the virus by sending what she
called dirty objects across the border in leaflets carried by balloons. And gasoline prices keep falling here in the US.
According to Tripoli the average price of a gallon of regular gas has dropped to three dollars 99 cents.

That's the lowest
since early March. Costs have fallen due to cheaper oil and relatively weak demand. By one measure fuel consumption is lower
than it was two years ago. In the midst of the pandemic. Global news 24 hours a day on air and on Bloomberg Quicktake powered by
more than twenty seven hundred journalists and analysts in more than 120 countries. I'm could get to. This is payback. Perceived a stronger labor market where jobs are booming and
Americans are working. We're seeing some signs that inflation may beginning to moderate. That's what happens when you're
building the economy from the bottom up in the bailout. Here's the United States. Trying to keep business as usual in
August and August is completely unusual for the politics and the polity of the American nation. It has been an extraordinary week
in politics centered around the former president Donald Trump.

In all of our news of the markets and such you're going to take
some time here. Reject Fitzpatrick to talk right now about what's going on Jack. My house stopped as a child for Perry
Mason. Raymond Burke came out and everything was solved within 30 minutes. It was incredible how Perry Mason always solved the
case. And he did it with the respect of Hamilton Berger who was a prosecutor and iconic within the show. And some would say
piece the show together. There are loads of prosecutors and whatever the number of cases there are against the former
president. How are they doing when a president of the United States pleads the fifth.
It's it's hard to say how they're doing necessarily because when he pleads the fifth that's in the context of this potential
civil suit with the threat from the New York attorney general that we still have to see if they're going to bring a case.

It
is not a great sign for Trump. Keep in mind in civil cases a jury can be instructed to or allowed to consider that as a
potential negative. They can infer negative things about the decision to plead the fifth as opposed to in a criminal criminal
case. I instructed not to. We don't know yet if they're going to file that suit but it does seem to show some the former
president feeling some pressure especially considering everything he said about people who plead the fifth and
implications of guilt. So we don't know what's going to happen on the other side. But it doesn't seem like a great sign for him
not to turn Bloomberg Surveillance into Perry Mason.

I mean you know I don't have the good looks of Raymond Burr. But
just to be blunt here and I think you beautifully explain the distinction of criminal versus civil politics in America doesn't
care how Republicans respond to the TV this of this of quote unquote pleading the fifth.
While we know how Republican allies of Trump will respond because aside from pleading the fifth in this potential civil
suit with the FBI raiding Mar a Lago there's been a ton of defense from Republican politicians from Congress on the
Republican side defending him demanding an explanation from DOJ. There is a lot of loyalty still to former President Trump among
Republican lawmakers. How does it play with voters. I mean the hypocrisy of campaigning in 2016 saying only the mob pleads the
fifth and then consistently pleading the fifth for roughly six hours.

Does it doesn't help him. But on Capitol Hill with his
allies we have not seen that many cracks in the foundation at least of The Washington Post points out this morning that the
president Trump pleaded the fifth in 1990 in a divorce proceeding.
Not that I don't want think all I could say. I'm not going to go there. But I was going to say did you just binge watch Perry
Mason last night. Yes I do. OK let's try to put your crush on Della. We can use this preparation for the show to really color
color the insight that we provide today. Let's switch gears a little bit Jack and talk a little bit about CPI and what we got
yesterday and what this administration can and cannot claim credit to.

So they've thrown basically as much oil as they
possibly can at the market with the releases unprecedented releases from the Strategic Petroleum Reserve. They've passed a
bill that may or may not have any impact on inflation. They are trying to do what they can. It's all going to take a long time.
Have they done everything they can. And they're not just now sitting here hoping and waiting. It doesn't get worse. And they
start talking be talking about brownouts and other types of constraints on energy usage in the pretty near term.

They don't
seem to have any massive other options that they haven't already tried. And you can tell that they they're they're tapping all
the resources they can when they're putting out that amount of oil from the Strategic Petroleum Reserve. And when the
conversation in D.C. has turned so significantly to much longer term legislation that may or may not really affect inflation.
You know the so-called Inflation Reduction Act is supposed to do that partly based on reducing the deficit. It's a pretty small
reduction over the course of a decade. When you talk about the chips Bill you know there are things that that could be
disinflationary in these pieces of legislation's impact. But this is not something where they can flip a switch.

The SPDR and
you know maybe there could be conversations about permitting reforms. They're having that. But again those are that's a bit
of a long term issue in the short term things they could do by election day or even a little ways off. The administration
doesn't have that many options that they haven't already gone to. Well of course Jack in theory the Democrats are going to be
like look gas prices are going down. Inflation is cooling off. All of that is a good thing. How will the Republican messaging
have to switch considering inflation is one of their primary campaign issues and how the Democrats caused it.
I'm not sure they're going to switch it. Yes. Gas prices are coming down. But when we talk about that in the context of gas
prices coming down below four dollars a gallon Republicans still feel good about their basic message that this administration has
not had a lot of success on the economy. You know. We saw essentially a month pause in the CPI but the year over year rate
was eight point five percent.

So Republicans are still talking about inflation about gas prices. And again especially if you're
thinking in terms of the midterms just a few months away. They are going to hammer the Biden administration and Democrats
on the economy. I'm not sure that's going to change to any really significant degree. Jack Patrick thank you so much from
Washington with a briefer on his watching Perry Mason last night.

Lisa let's do the dollar right now. It's a weaker dollar
from the 1 0 7 down to a 1 0 4 handle on D X Y. The euro 1 0 336 is a bit stronger but even sterling with a little bit of a bid
122 0 5. This feels broad based like a risk on rally that's giving a little bit of a reprieve to the dollar's strength at
our to all of the currencies that are paired with it. What I keep looking at is the W I R P function on the Bloomberg
basically where you're pricing in rate cuts and this market is pricing in rate cuts in May of next year. Fed official after Fed
official I understand how we can do that but that's my point. And the Fed officials are basically saying this can't happen
guys. We're not even close and people are still pricing this in. And how much is that underpinning the weakness that we've seen
in the dollar. Let me be careful here folks. I understand the use of this in the use of the Bloomberg terminal as a trading
game. I get that from an economic value. Lisa I just don't get how you can get the crystal ball out to raise rates as people
are talking about and then somehow miraculously come out with a rate reduction at some point probably talk myself out of a job.
Their futures up 10 maybe.

Stay with us. Bloomberg. Bloomberg Surveillance we say good morning to you on a Thursday
and it is an eventful Thursday as well. Off of a bang up job report a stunning inflation report. Markets on the move and I'm
going to call it a recalibration that we can Kailey Leinz in for John Farrell. Lisa Abramowicz I'm sorry.
Every strategist right wrong whatever has to recalibrate off these two reports. Have we reached peak inflation. Does it
matter how quickly is it coming down. Is this all because of oil. Does it matter that food rose at the fastest pace going
back to 1979. All of the recalibration that you're Perry Mason analysts have to face. Maria Paul Allen is tourists and Janelle
Marti write a brilliant essay for Bloomberg are reporting us I should say on rent.

Losing Pigs joins right now the chief
economist of Stifel. Thrilled she could join us this morning. Leslie I want to go narrow here and I want to go. What I see is
every single conversation in the Keene household and I want to get away from the idiocy of New York or L.A. the other big
cities Miami up 39 percent Orlando up 24 percent. Las Vegas up 16 percent. Bring it on down to even. Boston up 13 percent in
rent. Does anything else in the inflation report matter except housing. It does. So what we saw is the largest increase was
seen to the largest decrease was a result of energy prices. And that's not to say that it makes the report less meaningful but
it does give me pause or it makes it more questionable that we're on a sustainable downward trend in terms of cost.

When we
look at other components included in yesterday's consumer report as you mentioned oh we are the proxy that we use for shelter.
Costs rose over half a percentage point. Food prices up over 1 percent. These are large components of the monthly expenditure
that consumers spend on ADD as those continue to rise. Yes that reprieve at the pump was absolutely a welcome step in the right
direction. But it does it mitigate the relentless rise and costs that consumers are facing in nearly every other second. I want
to go losing your daughter because I know you've studied this. The franchise at the University of Michigan and at the Kansas
City Fed will join them at Jackson Hole here in a couple weeks where they set back 20 years ago and said how do we measure
inflation. My personal favorite is a Cleveland CPI folks which is like core
inflation. It can take out different things but I'm seeing an upward trajectory in what is now comically called.

They're now
casting CPI. I mean the fact is some of these indices have not turned around.
Oh that's absolutely correct. So while the market is very anxious to call a peak in inflation and the market is betting on
the fact that inflation will come down meaningfully into the end of the year alleviating a lot of pressure on the Fed to continue
to backup rates. When we look at other cost pressures when we look at other measures of inflation there's still a lot of work
for the Fed to do. And in fact we've heard those exact words from a number of committee members that they're nowhere near
done raising rates because they need to see not one month's number. They need to see several consecutive months of a
meaningful retreat in costs before they're convinced that we've not only reached peak inflation but we're on a sustainable
downward trajectory in costs.

Lindsay does this report that we got yesterday make you think that a soft landing is more
achievable. No it really doesn't. Again I'm not yet convinced that price
pressures have peaked and that we are on a pathway towards the Fed's target of 2 percent. So I do think that the Fed will
continue to raise rates beyond the three to half target that we saw as of the June SEP making it a deeper potentially more
prolonged downturn in the U.S. economy. So the soft landing I think was achievable or could have been achievable had the Fed
initiated rate increases earlier on. But now we're in a position where they're going to have to tighten at a faster pace higher
pace than they would've otherwise done if they had removed that transitory language earlier. Well that said Lindsey that's been
the case for a while. And we are seeing is a number of softening aspects softening think particularly on the good side. The areas
though that you pointed to whether it's food whether it's shelter that rent component that's a big one.

How much what
gives you conviction that that's stickier and could drive CPI even higher than the nine point one percent that we saw a couple
of months ago. Well particularly when we talk about food prices a lot of that
has to do with the supply chain the supply side aspect of inflation which the Fed has little control over. The Fed can
raise the cost of capital which can tap tap down demand tap down investment. And we've already started to see that impact. On the
supply side. Traditional monetary policy metrics can do nothing to alleviate the lack of supply in the market. The dislocations
that we're seeing in terms of trade and that's going to keep those components of inflation much more elevated than the Fed
would like to see.

Well Lindsay as Lisa said you're seeing moderation and good. So let's talk about services. How worried
are you about services inflation and the wage pressures there in.
Well as we saw at yesterday's productivity report unit labor costs are up over 10 percent. Now why is that. Well growth
slowed in the first quarter and the second quarter. But we also hired several million Americans. So as productivity remains very
very minimal. As we continue to hire more workers to produce less goods that's going to continue to put upward pressure on
wages without the improvement in productivity. Yeah and our genome or not IMS or equity strategist here at Bloomberg
Intelligence saying the equity rally with peak CPI only actually works if you see more productivity with it. To that point
Lindsey so when we talk about where inflation is going to get down to how high the Fed funds rate has to be to get it there
what rate on unemployment does that have to dictate.

Well I think we need to see a meaningful increase in the jobless
rate right now at three and a half percent while we are checking recessionary boxes for most other sectors of the economy with
weakness in manufacturing housing the consumer real income growth real spending the labor market remains solid. And so in
order to see that meaningful slowdown in the economy to bring down inflation I think the unemployment rate gets nearer that 5
percent level. So a significant increase from where we are right now. Lindsay I'm going to ask you a question with all of your
academic research and experience in the fields that's going to make Tom push back and start groaning which is about the
historical analog of the moment that we're in. And we talk a lot about the 1970s. And that's what's going to make Tom groan
because he doesn't see that. So people will say it's more akin to the 1940s. Other people point further back in history. Where
do you look for guidance as to how this is going to transpire and what tools will be necessary to get us back to where is more
comfortable.

Well I think there is some comparable aspects of the 1970s particularly when we talk about the supply side shocks
to inflation. That being said we are in an unprecedented market with the aftermath of a global pandemic with ongoing
geopolitical conflict. There really is no reasonable or realistic comparison to markets in the past. So right now I
think economists I think Fed officials I think market participants are struggling to understand all of these different
factors. This confluence of factors that are driving the market to really act irrational at this point as we've seen market
participants are ping pong back and forth based on one data point. We've seen the 10 year slip down to below two and a half
percent and then rally back above 3 percent based on one data point. And so this overreaction I think highlights the fact that
there really is no historical precedent or comparison that we can look to to really understand what's happening in the
marketplace. Lindsay List. Channel Group. Allan Meltzer of Carnegie Mellon. Can you do your economics on a homogenous basis
or are we so fractured that it's a heterogenous analysis where you're looking across quintiles and deciles of America.

Oh
absolutely. That there is a clear buy vacation and how Americans are responding to inflation as we were talking earlier. I think
those at the higher end of the income earning range are better able to absorb and are reflecting that better absorption rate of
inflation versus those in the middle or particularly at the bottom. Inflation does hit those with less ability to absorb
costs increases obviously more dramatically and that's having a larger impact on the average American. The average small
business struggling amid these rising cost pressures. Well to that point on cost pressures businesses are facing we're going
to get PPE later. Lindsey do you expect we'll see the same moderation. Well I do think we're going to see some reprieve in
the July number again as a reflection of the fact that commodity cause energy costs did cool in July.
But we are likely to see other categories just as we saw in the CPI continue to rise again giving the markets increased
confidence that inflation has peaked and the federal back off from this more aggressive pathway.
But I think economists and Fed officials are going to be less convinced even after a reprieve in the PVI this morning.

Dr.
Felix thank you so much. Greatly appreciate it with Steve Lindsey. Peter thank you. This morning Lisa. I'm just glad I'm
glad Caylee's here. Ferro Wood fell off this. But Caylee at least keep us on the straight narrow.
What's actually going on this morning Lisa as you remember. I forgot. It's Thursday. We have claims.

It's claims Thursday. I
just got a text that he may not come back now. So you know be careful what you ask. No no. So why why am I so why am I so. Yes
we do have claims Thursday. We also PPA Thursday I guess we have a competition for which is going to be more important. I think
Caylee brings up a good point though. People ISE going to be interesting in terms of margin pressures for companies
especially paired with that CPI print. And this alphabet soup that we're talking about basically is are businesses paying
higher and higher prices than they can pass along to the consumers. And that's what people are trying to pass out with
these two series and part of it. And again the difference. I mean like Gina Martin Adams on this or other great equity
strategies is given the turmoil that Dr. Pigs has just laid out. Do we begin to see transactions and combinations affected for
profit. And I would say I can't remember. Lisa was a merger Monday or merger Tuesday but we saw some of those little
transactions here.

Yes. Merger Monday. It was officially a merger on Monday. But we're starting to see more deals come
through. And how much is it out of necessity and how much is that at every convenience. And that I think is what we're going
to have to see in terms of whether this is trying to strip out costs trying to streamline so that they can better maintain
their margins. We have 40 seconds here. Did you say there's another auction today.

If so glad you were listening Tom. Yes.
Yes 30 year bonds. What's the difference between a 30 year auction and a seven year auction. One is for parents that mature
in seven years and the other Dani Burger. Don't be so rude. So far as I can tell you only hear seven year the seven year
auction there are less liquid. Right. So they haven't been around as long. And as a result are they. And they're not as
traded then on a benchmark Lou. So it tends to be messier and it also secures knowledge.
We want to see from. I think we'll be back in the future. Meanwhile Dow futures up 131. This is Bloomberg.
Keeping you up to 70 years from around the world with the password I'm sure you could get to.
Ukraine's president VALONE Amanda Lang he says that Russia lost nine fighter planes and explosions that rocked an air base in
occupied Crimea.

Russia denies that Ukrainian attacks caused the losses but the
Washington Post says that in fact Ukrainian special forces attacked the airfield.
Oil output in Russia is set to fall about 20 percent by the start of next year due to a European Union import ban.
According to the International Energy Agency gradual declines will start as soon as this month when Russia cuts back refining.
The EU ban is set to halt most crude purchases from Russia on December the 5th. And in China the central bank says it will
protect the economy against the threat of inflation. The People's Bank of China pledged to avoid massive stimulus and
money printing to spur growth. At the same time it promised to provide stronger and higher quality support to the economy. And
Disney is raising the price of its flagship Disney plus streaming service by 38 percent. It's part of a plan to generate
more revenue for its money losing online businesses.

The entertainment giant also wants to build on third quarter results
that beat estimate sales profit and subscriber growth. Deutsche Telekom has raised its earnings guidance for the full
year after forecasting that customer growth in the US will speed up. That also was better than expected revenue growth in
European markets. Deutsche Telekom wants to take full control of the T-Mobile US
business. It's become the company's primary growth driver.
And gasoline prices keep falling here in the U.S. according to chip away.
The average price of a gallon of regular gas has dropped at three dollars and 99 cents. That's the lowest since early March.
Costs are falling due to cheaper oil and relatively weak demand. By one measure fuel consumption is lower than it was two years
ago in the midst of the pandemic. Companies 24 hours a day on air and on Bloomberg Quicktake. And we're talking Gupta. This
has been back. Energy markets as you say has been a key focus for us and will
continue to be.

And we would expect where the market is today to continue to see
that moderation. Do we want to encourage this transition to where price pressure is moderate across the economy but also do
things that will make things more affordable for people right now. Because at the end of the day typical families look at
their monthly budget. Paul Allen Brandy's there on the lawn of the White House and a piercing interview yesterday with Lisa
Abramowicz. I thought she just crushed the NBC director. There a brand with for The Sopranos. What was that like. I mean you're
talking to D after a bang up inflation report and he's got to go political and say life is grim and energy. Right. But he
basically has to say there's more work to do. We're doing it. He can look at this bill we just passed. And my real issue is what
more can they do. Are they now just hoping it all works at a time when the inventories Strategic Petroleum Reserve are going
down and you still have people really cramped.

I mean to that point especially lower income households really
are struggling. Yeah. What was interesting there folks as we were watching D on the lawn in the Brad Stone can make clear
knowledge at Lisa Abramowicz. Yeah right. Okay. Greg Kailey Leinz in for John Farrell today. Right now. And I want you to
lean forward on gas under four dollars a gallon. There is no one in America who writes a more detailed report across hydrocarbons
than Stephen Schork. He's principal of the Shaw Group. We protect their copyright. His report is absolutely definitive.
Steven let me just go to one sentence of your your magisterial report. New York Harbour has the lowest inventories of
hydrocarbons in a decade. Why is that. Absolutely. Well it's the lack of refinery capacity.

Tom I'm here in Philadelphia and 30
miles down the road from my office. We used to have a refinery just three years ago that produced enough gasoline each day to
supply more than a quarter million cars. That gasoline production has gone missing. And that was a key supplier to New
York Harbor. Why is New York Harbor so important. Because this is the delivery complex where the future contracts
are settled. So if those low inventories and the lack of capacity we certainly have the ingredients of high prices. And
that's just a window folks in the shorts just genius here on all the details of supply and flow.
Stephen Schork what do you see in your madness about demand. A demand destruction right now is the key driver to lower oil
prices. When we seasonally adjust the numbers we're looking at demand destruction year over year more than 400000 barrels lower
a day. That's 5 percent. But more importantly when we look at demand relative to seasonal norms we're looking at demand
destruction. That's nearly 200000 barrels a day 2 percent below normal.
So clearly as the saying goes high prices are the cure for high prices.

So Americans are balking at these prices and they are
driving less. Steven this goes to the underpinning question of what we've seen in gasoline prices. Is this the reason why
you're seeing inflation come down and it can lead to a soft landing because of the SPRO release.
Or is this a sign of a deteriorating economy that's deteriorating at a much faster pace with demand destruction that
people have not really expected. Yeah it's an excellent question. Mason thank you.

Over the past week and I did do some
soul searching am I guilty of confirmation. I have been in the camp since March that we are in an economic downturn now. The
non recession crowd will tell you we cannot be in a downturn because of the labor market. Labor market is very strong. But
keep in mind because of inflation earnings are at a three year low.
So when we went back and looked at the last 14 recessions or what we've seen is the labor market has fallen in the first two
quarters on half of those gains. So of course that means at this point in the recession labor markets were still increasing.

And
this makes sense because labor is a lagging indicator. My concern going forward in what is keeping me in the recession
camp what is keeping me into hard labor is your landing excuse me is the fact that yes energy prices have decreased and they
will continue to decrease into the fall as we make the switch over to winter grade gasoline which is cheaper to manufacture.
But of course we're at a seasonal lull in demand. The other shoe that drops and we saw this in the CPI and this is the biggest
concern above energy and that is food costs. Food costs are rising at the ISE you pointed out earlier rising
at the fastest pace since the 1970s.

And we look at the potential harvest this fall. Not only is off road diesel price
for farmers rising farm equipment is rising. All of our costs propane prices are rising. These are all costs to the harvest.
So we're looking at. Renewed food costs because we cannot alter our behavior when it comes to food with gasoline not with food
to Tom's point earlier are we looking at a two or three track economy where you see real demand destruction at the lower tiers
of income because of food because of rent because of some of these other inputs whereas the wealthier individuals can keep
going.

Going to spend it. Her maize or wherever. Which is still seeing continue to perform. Yes absolutely. To your point about
a buy vacated market. I was shocked earlier this year. I tried hiring an analyst and the demand for four incomes and four perks
but blew my mind. I've been I'm 55 years old and I'm just a guest at what these college grads are expecting. So yes and
they're expecting it because they're getting it. So yes you're having that two way market where wealthy wealthier high income
earners are less impacted by inflation. And certainly we've seen none their demand numbers.

But clearly the lower income people
are absolutely squeezed and shelled remain squeezed for the foreseeable future.
Stephen Schork I guess. Thank you. That was brilliant. Thank you very much. I'll come back when the Phillies lose a game. It'll
be interesting to see Caylee. Did did Bramble Woods the brand take a shot at me with Emma's bow tie tilt. I mean I wore one of
my favorite airman's bow ties today. Am I in the time out chair because of that. Maybe Tom.
You've got to take it if you if you take shots at Lisa as well. But I think the bowtie looks great. We're very color. Yeah. Well
the radio listeners probably can't see that. But I'm from my wardrobe people call me up and said you go to matches with
Kaylie today but I'm not I'm not taking a shot at you. I'm just you know I know
that that's a popular name in your in your toolbox.

I do think though that there is a larger point here. Right. And it's
something that we have seen where it not for MJ point companies for the apparel companies the luxury retailers are actually
delivering better than expected margins were as you know the Wal-Mart's of the world the targets they're the ones who are
struggling. And I do not struggling that's a little bit strong but are performing worse than people had expected. How much are
we going to see this bifurcation and how much can you get conclusions from the overarching MA a market by averages that
don't really speak to some of these differentials. And I'd say it's a theme to Jackson Hole as well. Guys let's do claims here.
We're going to do claims in a 30 or a little bit off the radar on it and we need to get back on it. I just extrapolated out
Lisa. Where do we get the 300000 job claims which is a big round number. I was shocked. September 16th 22.

Yeah well some people
are looking at that accelerate. So there is a Wall Street Journal article this morning that I thought was fascinating
talking about one company that was both hiring and firing at the same time. And that's what we're seeing right. We're seeing a
bang up jobs report and we're still expecting to see the number of layoffs pick up. Well and how do you sort of understand such
a strange moment in an economy that is facing a very strange post pandemic reality that is technology and the overlay as we
heard from David Stubbs of JP Morgan yesterday what you need to know after the big day yesterday. Futures advanced up 12. Dow
futures up 130. The VIX stunning under twenty nineteen point nine to claims at eight thirty. Stay with us. This is a necessary print for the Fed but it's not sufficient.
We need to see a lot more.

We are entering I think a new phase in the inflation debate. We are still relatively cautious given
the ultimate outlook and trajectory for the economy. If the Fed is expecting to bring inflation back down to 2 percent growth is
secondary inflation is in focus. This idea of peak inflation that's just a math problem to us. This is Bloomberg Surveillance
with Tom Keene Jonathan Ferro and Lisa Abramowicz. Good morning everyone. Jonathan Ferro Lisa Abramowicz Tom Keene
on radio on television after a bang up job report after a bang up CPI report a VIX under 20. Every strategist adjusts Lisa.
This weekend the publishing is going to be fascinating especially pushing back against some of the expectations that
the Fed's going to back away from the rate hiking when the Fed officials are saying we're not going to back away from the rate
hiking.

So how do you get this sort of disbelief that you're seeing in markets that's helping to fuel this optimism. We have
an absolute perfect guest for you if you're in the equity market and gone.
Katie Kaminski coming up here. And Lisa I'm going to lead with Michael Purvis over at TALKBACK. And this morning he says look
an abrupt moved aspects 44 hundred's. So much of that yesterday were up.

Futures up 12 right now.
I mean it's happening in real time. I know. And he's not alone. There are a lot of people have been talking about how there is
more potential upside which raises an issue. Is this still the bear market rally that so many people have said. Do people like
this rally more now. Is there more conviction behind it. Because it hasn't felt like a lot of conviction.
Every single person has come on the show and said thin trading not that many volumes. It's August. What are we doing here in
Kailey Leinz. Got the short straw here. No surprise with that. Kelly said well I'll follow the Fed speak. I said good luck with
that. I mean the Fed dissonance with the market now. Caylee's extraordinary. It's like they're in two different worlds Tom
because you've seen the metamorphosis of Neel Kashkari once a dove now a hawk saying he thinks they're gonna get out to four
point four percent by the end of 2023. They are not done hiking. Charlie Evans agreeing with him saying inflation is still
unacceptably high indicating they're going to keep going.

And yet the equity market seems like there is staring them down and
saying yeah no we don't buy that. Mean I look at it Lisa. Look it was published over the after the CPI report I should say. And
the economy has been Emmons I thought was great on strategy where he said this is your wheelhouse Lisa.
It's a double barreled short squeeze. Both Bond's price up yield down and stocks price up are getting squeezed right now. I think
this is remarkable. Can we say it's the revenge of the 60 40 that didn't work at all during the first half of the year. I
didn't think of that. And now it's working in reverse gangbusters perhaps because people have gotten pretty pretty
confident on that side of this. Kaminsky So important to the data check. Lisa's gonna dash I say dashed the brief here in a
moment. Futures up twelve Dow futures up 134 NASDAQ green. I mean I'm sorry small caps as well. Russell leading the way up
four tenths of a percent.

The VIX nineteen point nine. One in the yield space a lesser curve inversion. Nevertheless a big
deal 41 premium Ezra basis points dollar weaker is of important note sterling a 122 06. We'll see on that. Lisa with an auction
read something like that. And just to sort of reiterate what Brian Weinstein said from Morgan Stanley earlier that you could
see a yield curve inversion in that particular spread that is 100 basis points of inversion and that would be basically
compared to start to Volcker era where you saw a negative 250 to 40. How much do we get back to that. Say here's who we're
watching eight thirty a.m. we get us initial jobless claims. Do we see some of those layoffs continue to pick up as well as PPA
for the month of July. This is the prices that manufacturers and factories pay.
How much do we see a lagging behind in terms of how much you get a softening effect in the PPA. In other words are consumers
paying less. But companies still paying more to manufacture the goods.

This speaks to the margin compression that a lot of
people are expecting to happen later this year at 1 p.m.. Here it is Tom. The key point of the whole day the U.S. is selling 21
billion dollars of 30 year notes. The distinction of 30 year notes from seven year notes is that they last for 30 years. And
if they pay out rather than 70 year. But it also is a key metric of how much people have conviction that we're going to get back
down 20 percent level and that it is a note of safety. Lisa this is important.

Zero hedge left led with us last night a Goldman
Sachs note. I'm going to call it insatiable. I'm not knowledgeable enough. Lisa your world is insatiable. Demand for
paper. Well certainly yesterday the 10 year auction did suggest that. And there are so many people saying it is a buy. If you
see yields above 2 percent at a time when the Fed is really committed to getting inflation down there and the longer we
persist in this kind of environment the slower growth we have going forward over the longer term. These are some of the issues
that not only economists are looking at and traders but also the Fed officials who are coming out and trying to jawbone this
market in a direction that it does not want to go.

Seventh or 8 p.m. we hear from San Francisco Fed President Mary Daley. She's
speaking in an exclusive interview with Bloomberg Television. And Tom she has come out. She has said we have a lot more work
to do. When does the market pay attention or is the market right. And Fed officials are going to backtrack that backpedal
much quicker more quickly than they think. This is really important. Now we're going to jump to the equity
markets here with Katie Kaminski.

She's. Chief research strategist at Alpha Simplex and what's so important is you can't
pronounce her focus at the Massachusetts Institute of Technology stochastic processes stopping rules and investment heuristics
I've aged saying that Katie joins us now with an encyclopedic knowledge of math and trend. Katie you're your work with Andrew
Lo and all the others around trend based analysis leads us to one single question. Have we broken the bear market trend.
That's a really good question because what we have seen lately which I think is the most interesting from a technical
perspective is that we've seen signals really dissipate in the last two to three months. Right. And so it really feels like you
know an inflection point right now for us. We're still seeing sort of a net short but it's very weak. That kind of indicates
that we could go either direction depending on what occurs.

And I think yesterday just kind of showed that we might be going in
a better direction than people had thought. The only go inside baseball to Monroe Trout Nassim Taleb Paul Willman and the
others from years ago mostly out of Imperial College. The raging debate is there value to volume analysis. Do you study volume. I
don't. So volume is a good indicator to understand whether or not you
can trade a market and whether or not your sizing is appropriate.

But unfortunately a lot of indicators of volume
have been difficult to document empirically as predictive. There may be exceptions to this but I think volume is still a key
metric because it really tells you something about whether or not the trade ability of individual markets is there. And that's
how we tend to think about it. As you know futures quants Katie Liz McCormick of Bloomberg News wrote a story about a paper that
you wrote about how pigs flew at least in your world because you shorted bonds. You were able to deliver a 30 percent return or
more in the beginning of this year the first half of this year. Have you close that trade out or are you still trying to short
bonds here especially after the rally. So that's a good question because what we saw in June was a big spike in vol.

We saw cross
correlations spiking as well. So signals and bonds have actually dissipated. The recently wrote this paper is that we really
wanted to clarify that shorting bonds is not a fluke. If we continue to see rising rates that in fact when you think about a
rising rate environment you're going to have to consider the shape of the curve on whether or not there may be some tactical
short signals in bonds that could potentially work. And I think this is particularly pertinent right now as we're moving from an
inversion towards a slightly steeper curve right now. As we're seeing that could be an indication that things are getting
better. As long as we see that persist. Well Katie you stay in a rising rate environment. And what we're hearing from the Federal
Reserve is yes rates are going to keep rising. We are going to keep hiking into next year because inflation is nowhere near
where we'd like to see it.

So how wrong is the market now. So I think the market is a little optimistic because I think you
know it's always good to have a good number to have a good print to have something that brings your averages down. But most of us
in the futures markets we've already seen those moves and energies. We were kind of expecting this already. So I'd say
that it's a little bit as would expected slightly better. But what that means is that there may be a little bit of optimism
over the first data point that confirms what people really want which is things to go back to normal.

And the 60 40 as Lisa put
it to just be back into you know a good place which is basically what most people are used to. Okay. One final question. A lot of
people are looking at moving averages and their eyes are glazing over. I'm a huge disbeliever and baloney like the death cross in
that. Can you use moving averages right now to figure out if this is a breaking of the bear market trend. So if you do use
moving averages right now I'll tell you that your signals are going to be very mixed. You're going to have a lot of
indications that things look better on the shorter end and you're going to have a lot of indications that they don't look
good on the medium to long term.

So I'd say that it's really really unclear. And the only thing we can say is a quiet right
now is that there is very little signal and there is room to move in a new direction. That was a very safe answer. Katie
Kaminsky channeling George Kleinman there in what are known as climate exponential moving averages. You killed it Katie. Don't
be a stranger. Katie Kaminsky with Alpha Simplex today. Lisa what you just heard there is a font of what I'm going to call
derivative mathematics at Bloomberg. It was led by the late Dearly Miss Peter Carr and Bruno de Piero who is not dearly Mr.
Solomon the food court the other day and also people like Nassim Taleb and Paul Wilma. This was a fermenting thing 25 and 30
years ago. And where Katie was at M.I.T. it was led by Andrew Lo Joel Weber. What she's talking about is so important because it
really goes from the first half of the year where there seemed to be some sort of linearity or some sort of feeling of where we
were going to have we fully shifted now and what are we shifting to if it's not a revenge of 60 40.

Where are the Miss pricings
and how does she get pigs to fly again. Well I like the idea of 60 40 there Lisa because it's so out of favor. I mean it's
beaten to death here. And there's something about buy straw hats in winter. I think that was Mr. Baruch a few years ago. But to
Katie's point are we just seeing people go back to it.

Because it's what they know because it's what's familiar to them vs. a
real kind of surge ahead of a trend. Now I honestly wonder whether the conviction that people have that longer term yields
are going to remain super low and go even lower. Whether that ever gets challenged is the Fed's balance sheet starts to
exhale. I like what we hear from strategists like Liz Ann Sonders and others. That factor analysis which frankly also is
an M.I.T. derivative factor analysis really really matters. Here is well well that was very nerdy very geeky. We'll try to get to
the straight and narrow. Coming up claims in a 30.

Good morning. This is Bloomer.
Keeping you up to date with these from around the world with the first word risking. Get us something. Inflation data in the US
isn't changing the minds of Federal Reserve officials. Two of them are signaling that the central bank will stay on the path
towards higher interest rates. Chicago Fed President Charles Evans says inflation is still unacceptably high. Minneapolis Fed
President Neel Kashkari says he wants the Fed's benchmark rate at four point four percent by the end of 2023.

Ukrainian special
forces reportedly launched a powerful attack on a Russian ad base in occupied Crimea. That's according to a Ukrainian
government official who spoke to The Washington Post. Ukraine says nine Russian warplanes were destroyed in the attack. That
would be the Russian Air Force's largest single day loss in the war. North Korea's leader Kim Jong un was seriously ill during a
recent Covid outbreak. That's according to his sister Kim Yo Jong. She blames South Korea for spreading the virus by sending
what she called dirty objects across the border and leaflets carried by balloons. And gasoline prices keep falling here in
the US. According to chip away the average price of a gallon of regular gas has dropped to three dollars and 99 cents.

That is
the lowest since early March. Costs are falling due to cheaper oil and relatively weak demand. By one measure fuel consumption
is lower than it was two years ago in the midst of the pandemic. Drug maker Sanofi GSK and Harley I have now lost a combined 40
billion dollars in market value since Tuesday's close. This has to do with the mounting concerns about litigation around ISE
recalled heartburn drugs and tech. It was a once popular antacid that has drawn a flurry of US lawsuits alleging it causes
cancer. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists
and analysts in more than 120 countries.

I'm rich Kid Gupta. This is Glenn Beck. The idea that we are going to start cutting rates early next
year when inflation is very likely going to be well well well in excess of our target. I just think it's not realistic. I think
much more likely scenario is we will raise rates to some point and then we will sit there until we get convinced that inflation
is well on its way back down to 2 percent. The aerospace engineer Neel Kashkari there of the Minneapolis Fed with his
thoughts in the place that we're in right now as Lisa mentioned. Lisa do we agree that Kashkari sort of gone from W. liked to
hockey like NIKKEI put it. Well and she said it's a metamorphosis where you went from the Hoover dove to the Hoover
hawk. And you know he's been consistently that way an idea that just came out. And this is from the wonderful Ian Lincoln over
at BMO Group. Ian Lincoln just making it very clear as of yesterday Jackson Hole became important. I am thrilled to tell
you that Bloomberg TV and radio is giving a full commitment this year to Jackson Hole.

They're even letting me go. I'm dusting
off the two tone Tony Llamas. I'm not going to wear the chaps Lisa. It's too hot. But Lord you know we're all gonna go and
we're trying to get Kailey Leinz to go to. But we'll see. But Michael McKee will lead our coverage there with Kathleen Hays
and the British guys coming if he's back from Europe. Keep this up. Let's see what happens. I mean. Yeah. John Tucker with us.
It's going to be something. And all of a sudden someone is you know adult. As Ian Lincoln says this is Wyoming matters right
now. What we're going to do is digress. We're going to stop the show off of the wonderful wonderful reporting of Craig Tours and
Catarina Cirie who have a wonderful summary of something that has been a distraction for global Wall Street.
And that is trading so-called trading by Federal Reserve and central bank officials.

Jeff Fitzpatrick joins us now from
Bloomberg government. To summarize here Jack the chairman and the former vice chairman
Powell and Clarett have been cleared by various and sundry inspector generals and that but others have not. And the
question here is not so much. Rich guys being at the Fed but actually the buying and the
holding and the selling back and forth like during a month or even during two months. Is that right.
Yeah it does seem to be focused on the timing of when we saw that incredible amount of volatility in around March 20 20.
There's this letter from Senator Elizabeth Warren now that is expressing a lack of satisfaction with the investigation into
this and the amount of information that has come out of it. Noting that the inspector general report on this issue of
trading at the Fed did not address a guidance that came out March 2013 2020 that at least warned about not making
unnecessary trading. It seems to be more a matter of timing.

And if there was anything that could be considered suspicious around
then probably March 20 20 or so. You know I look it where we are here and a lot of people would say the senator
from Massachusetts is off base. She's mean spirited blah blah blah. But then you actually read the Bloomberg reporting and
you've got Fed presidents trading real estate trusts while they're talking and thinking about the financial structure of
commercial real estate.

That seems a little like midday trading J.P. Morgan right. That is the concern at this point. I think
some of the significant news here is just that even when there was an inspector general looking into this.
Congress appears to not be satisfied or at least some members of Congress are not satisfied with the amount of information and
the transparency around that. It is not just Senator Warren. Senator Pat Toomey has also said
he has asked for information is not quite satisfied with the amount that he's gotten.
So you know at a time when there's been this broader conversation even about lawmakers trading
if there is a sense of a lack of transparency that can create some pressure on its own.

ISE Senator Warren has not necessarily
made a very specific allegation of this is what she thinks happened and why it was either unethical or anything along those
lines. But they're not satisfied with the level level of transparency around those kinds of issues. But Jack picking up
on the lawmaker point this really raises a question why there hasn't been something passed even though it's proposed to create
more transparency or outright ban lawmakers and their significant others from trade. Stocks and companies especially
if their policies could potentially affect said companies. So where is that.
Not a lot of movement on that. That came up a couple of weeks ago. And as we get toward you know right now we're in August
recess the House is coming back just to try to pass that tax energy and prescription drug price bill.

But with August recess
and then the midterms when you hear proposals especially if it sounds like a good government proposal on transparency on
holding Congress itself accountable. That may be an important idea. And there could be bipartisan interest in that kind of
idea. But at this point of the year that may be a little bit more of a political talking point than a piece of legislation
that's about to be enacted. There's not really a clear path forward for it now. It's a serious issue that a lot of people
are talking about on Capitol Hill but I'm not sure we're going to see something signed into law anytime soon. Well Jackie you
mentioned tomorrow the House is expected to vote on that inflation reduction act. Is that going to be smooth sailing. Any
potential hiccups. It looks pretty good. The one potential hiccup that seems to have gone away is that the salt Democrats
the Democrats who had really pushed for lifting the cap on state and local tax deductions say they're OK with this. They dropped
all of the income tax measures from this bill.

It gets on corporate taxes but doesn't include any increases in income
taxes. And so that kind of gives an excuse to these members especially from New Jersey. Your Josh got High Flyers and those
types to say we can drop that demand because this isn't an income tax bill. So it's it's been pretty quiet and a lot of
praise for the bill and not much pushback. It's it's a narrow margin but it's looking pretty good in the House. Jack thank you
so much. Jack Fitzpatrick there co-owner. This is what Fitzpatrick is. So good folks. We can go to him on FOMC trading.
Boom.

He's got it written on it and the rest. Lisa this is not a small matter. I take great issue with the idea that if we go
after rich guys in equity ownership they're not going to serve. That's all there is to it. I mean we could end up with a
bureaucracy maybe like the Italians and Draghi. I don't know if that's true or not but that's the risk here. But at the same
time trading in and out of financial assets while you're in the game. I don't get it. I just don't get it. If nothing else it
creates the image of impropriety at a time when a lot of people have lost a certain sense of credibility. And I think that
that's the issue. How do you restore trust in institutions that are tasked with trying to make things better.

Our best our
Washington economic team led by Covid tours writings that look for that. I'll get it out on Twitter as well. Breaking news
Michael Purvis in the 8:00 hour on Stock Optimism. Stay with us. This is Bloomberg. In one our claims we haven't talked enough about it today. I did
an extrapolation out 300000 claims arrives in the middle of September. Based on the recent trend here there's some actually
pretty good data on. Michael McKee will wax philosophical. He's looking again at the larger claims statistic that bundles in the
last number of weeks efforts as well. Futures up 40. They advance
a little bit lesser earlier. Futures up 14 Dow futures up 151. After the shock of the equity move yesterday of CPI release will
give us the individuals here in a moment. In the bond space curve and version we went from forty nine basis points down to
42 basis points. A lesser inverted curb oil gets my attention 98 turn on Brent Crude will do currencies with Steven Englander
here in a moment.

Lisa on the individual securities what do you have. So Tom we've been talking all day about how the macro
economic outlook is strange and bifurcated and different pieces tell different stories. And it's the same with the individual
stocks. Disney shares surging after reporting earnings yesterday after the bell ahead of the open here up almost 9 percent after
reporting better than expected results actually increasing subscriber numbers to the Disney plus raising prices by thirty
eight percent and having a solid performance in their theme parks. Bumble declining 9 percent about the same amount ahead of
the open after a reporting disappointing earnings. This is the dating app that a lot of people have actually clamored to in the
market has done really well. So far this year cutting off some of those gains this morning so knows the speaker maker ratcheted
back their full year expectations.

Those shares plummeting at one point down 20 percent now down a little bit more than 17
percent. But Disney was a tale of across the board people coming back to the parks people actually signing up for Disney plus.
But Six Flags was the opposite story actually missing estimates and struggling in this environment. Six Flags down more than 12
percent just again. Is this execution. Is this different types of clientele. How do we deal with this and come up with a
cohesive narrative. After 90 percent of the S&P companies have reported earnings revision at one point six percent this is the
electric carmaker that has been decimated down.

More than 60 percent has not made money. And yet people going back to some of
the more speculative areas. Yes it's legislation. But you're also seeing this in areas like Bitcoin. Yeah. And that's what
you're seeing with Marathon Digital all of the crypto space doing really well because of this expectation that the Fed will
back away from the monetary tightening. Those shares up five point four percent Tom Keene and the VIX. Nineteen point 9 3
showing the equity enthusiasm as you spoke earlier with Katie Kaminsky a really sophisticated talk about trend following and
the dynamics of volume we do now with Steven Englander on Foreign Exchange. She's at Standard Chartered Bank and is
absolutely definitive on cross rate analysis of their effects. Lisa Stephen rather Lisa and Kaylee want to talk to you about
major pairs. Dollar yen euro and the rest of it. But I don't want to go to the angle under wheelhouse which is define unique
cross trades that would benefit. And you take a Europe flat on their back and you compare it with Mexican peso is an
opportunity. Discuss euro mix. Well as he as you said Europe is facing a lot of challenges the
winter can be very difficult.

The ECB hiking path is very uncertain if the Europe goes into recession. By contrast Mexico
has a lot of yield has real yield. If you think that the Fed is going to be slowing down anytime soon that yields going to look
attractive. And you kind of look at the chart Max has been very resilient even during periods of risk. Yes. And and if there's
good news Max has the beta. So it's going to match or beat euro. So we think you know it might not be a home run trade but it's
in this environment.

I'm happy for a double. So happy for a double. You saw the San Diego Padres doing it to the Giants last
night. But you know I look Stephen where we are right now in all the focus on Europe Europe Europe Europe when you see so much
focus on a major what do you do. Well you have to assess if the market is strong. I mean and you
know it's possible that the energy situation is somewhat better. Ah you know my colleagues on commodities research pointing out
that the gas storage is actually you know pretty reasonable about average for this time of year.

So they seem to be able to
substitute for Russia sources. So you want to be careful not to be too negative euro in a way that might blow up on you which
again points across trade. I mean it doesn't you know I don't think
you want something that will benefit if there's good news. And that's kind of the key to sort of take out some of the factors
that you really are uncertain about. Stephen let's zoom out a little bit and talk about the dollar and how that has been the
big sort of risk on risk off trade over the past few sessions.

Yesterday we saw a major decline in the dollar on the heels of
this better than expected CPI print. How sustainable is that given position and given how much the Fed still has to raise
rates. Well I'd say two for Oregon's second half of the year let me put
it that way that the you know I probably spent seventy five percent of my time talking about the Fed and the dollar and U.S.
rates. You know we've been talking about Europe. That's a big uncertainty. There's still Covid in China that's emerging.
That's a big uncertainty. And obviously you know geopolitical aspects of China Taiwan are there among other things where we
don't think we're kind of in the clear.

With respect to risk. So we're you know the dollar trade we think could come back. We
think it's close to the top but perhaps not at the very top right now whereas at the beginning of next year we think the
economic slowdown will be clear. The rates path will become more friendly to markets
and risk on is the biggest dollar negative out there. So if you can see 2023 as being a more friendly year that's going to be a
bolder negative year to forward. We're kind of on the fence here because there's a lot more than the Fed going on. So given that
how can much conviction can you have about being more positive about euro or even pricing in anything in some of the other
regions when it really is a dollar trade.

Well it really is. Risk on risk off. And you could see more of that risk off dollar
strength heading into the end of the year. What you have to be really careful. There's a time to you know
grabs you know major crosses with both hands. There's a time to be careful and wait until you think he knows something that's
not right then. And I think you know it's just a lot of uncertainty in that second half of this year and some of which I
think could be resolved. We'll kind of know how Europe is doing as the winter progresses. We'll know how the U.S. economy is
doing as well. But Steve is essentially what you're saying it is more about a
risk on risk off trade than actually rate differentials which was the story earlier this year.
I think so.

You know when we do our regression statistical analysis you find things like the yield curve slope and how the
S&P is doing in Italy Germany these spreads are actually more important than straight out. You know what's the U.S. five year
yield versus a European five year yield. So we think a lot of what we're seeing is a risk sentiment. And if it does improve
the dollar is kind of toast on a broad scale. But you know we you have to be patient until it's clear that things are
improving. And finally just to get your thoughts kind of outside of the ethics around but really the way we saw across asset
classes markets react to the CPI.

In your research you called it a 10 out of 10 in terms of risk buying when realistically the
downside surprise was only a seven out of 10. How comfortable are you with the pricing we're seeing and the expectation that
the Fed is going to be cutting next year. Well we actually have a very out consensus forecasts because we
think the Fed is going to stop in November around 3. But we also think they're not going to cut next year. That
basically means that they're going to wait and see that they you know if the economy is slowing and if inflation is coming off or
they want to be sure they're on the right track. So we can sense that we're likely to see a plateau in rates
rather than the spike. So yeah. And the Fed is clearly doing a full court press right
now saying no spike over the weekend. Stephen Engle ready to get out in front of standard charter news flow here.

Where are you
on Eurodollar. Are you a below parody guy. And I'd like a point nine five statistics idiom amend that. Where we're below parity
in terms of our baseline forecasts because we're concerned about how you know we set hardest sentiment is going to evolve and we
don't think we're out of the woods yet. You know certainly the deep fragmentation tool has a lot of uncertainty around it. So
we're kind of quite 918.

I mean signal that maybe the builders thought it the. But it's not a mile from the Paul Allen Stephen
Engle. Thank you so much for Standard Chartered being just definitive there. And of course talking up a cross rate which is
a claim for Euro Max as well. Lisa I've never done euro Max but doesn't the blooms like you can really piece all these pieces
together as is England and others do. Yeah. How much do you want to get away from using the dollar as a cross currency.
Because it is a risk on risk off trade now more than anything else. And how much does that become a theme as we head to the
end of the year and the beginning of 2023.

Let's do this right now is to find D X Y and Bloomberg D X Y for those you at home
taking notes D X Y is a traditional index. The merging trader partners. I can give you those percentages. It's easy to do on
the terminal d x y euro 58 percent. Yen 14 percent. British pound 12 percent is well. The Upper West Side has a 4 percent
holding as well onto x y Bloomberg Daybreak ISE. Way better math. The Bloomberg Dollar index is now what the pros follow for
trend and such and it brings in pulls in E and Kaylee. What's so important there is part of that mix is is it floating or banded
Chinese renminbi. Yeah I'm glad you bring up China time because I thought the report out of the PRC overnight was actually
really quite interesting essentially saying we aren't going to go with massive stimulus because of the threat of inflation. And
when so much around the thesis around China has been predicated on China would be being willing to step in and support growth
and no fear as it deals with Covid zero and turmoil in the property sector if they're worried about inflation their ability
to do that is going to be limited.

So where does that leave China as it looks like it's not going to reach five and a half
percent GDP growth. Equities still lift here this morning Lisa. Let's get out front. Some of the people we listen to have done
this here. We're into claims right now and then do we have to show up tomorrow Lisa. Are you miss tomorrow. Tom and I miss you
Miss Sharma. Oh my word. Oh wait. So if we didn't have you met she wouldn't show up. Yeah that's the takeaway. So like that
next year. Next week whether we have retail sales retail there's gonna be big deal. And how much do we see some sort of
bifurcation. I know this is my theme this morning but between what types of retail is selling. Right who it's selling to based
on the income and where things are getting crimped I believe Michael McKee is in the building. I haven't had a sighting yet.
We'll do claim. And I think Maria Tadeo Zaidi will join us from Deutsche Bank.

Stay with us. Good morning.
Keeping you up to date with news from around the world with the best right answers you can get to Ukraine's president. A lot of
Muslims. He says that Russia lost nine fighter planes and explosions that rocked an air base in occupied Crimea. Russia
denies that Ukrainian attacks caused the losses but the Washington Post says that in fact Ukrainian special forces
attacked the airfield.

And oil output in Russia is set to fall about 20 percent by the start of next year due to a European
Union import ban. According to the International Energy Agency gradual declines will start as soon as this month when Russia
cuts back refining. The EU ban is set to halt most crude purchases from Russia on December the 5th. And more trouble is
for glass. But one of Europe's most vital waterways the Rhine River is set to drop well below the critical 40 centimeter depth
over the weekend. Below that mark. Most barges hauling goods from diesel to coal are effectively unable to transit the river.
Disney is raising the price of its flagship Disney plus streaming service by 38 percent. It's part of a plan to generate
more revenue for its money losing online businesses. The entertainment giant also wants to build on third quarter results
that beat estimates the sales profit and subscriber growth. Deutsche Telekom has raised its earnings guidance for the full
year after forecasting that customer growth in the US will speed up.

That also was better than expected revenue growth in
European markets. Deutsche Telekom wants to take full control of the T-Mobile business in the U.S.. It's become the company's
primary growth driver. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred
journalists and analysts say more than one hundred and twenty countries. I'm Richard Gupta.

This is Bloomberg. Concern between the Italian election next month. The weather
stop. Unusual weather we should say in Europe. Drying up the river is also a new supply shock as well as the energy costs. So
I think that Europe is facing a couple of shocks in addition to that interest rate differential that could drive the euro back
towards its low. Mark Chandler there on the foreign exchange and of course a euro moving out here 2 0 1 0 3. We just spoke with
Steven Englander of Chen Standard Chartered Bank who reaffirmed through parity to zero point ninety eight. And that seems to be
the call here even with the dynamics of a bang up American jobs report in a really interesting inflation report it's moved
markets and we see that this morning. S&P futures advance out of the 20 level up half a percent and even the Dow putting it down
up 172 points as well. Critically the VIX below 20. We digress right now. And do what
is unusual because a stereotype and conceit is American investors American tourists bombarding Europe as we're seeing
this year.

Andrea Bonhomie is a founder of Investor Industrial and he is
someone who believes in investing in America. He's done this in any number of forms. And what I would say is he's done this
beautifully here. He's invested in DAX. Matthew Miller of course with a nodding acquaintance for that in what is so great about
DAX. Andrea is just right next to one of the best Italian restaurants in New York. Ultra parody. So I love how you put
that together. A great Italian restaurant next to DAX. Not by design but but but design. But trust me it works out. I've done
it too many times. I want you to tell us with the transactions you did today and
they're smaller and they have to do with this that and the other thing.

And food. Your belief from Italy in American investment
described that. Absolutely. Well if you look at the United States for successfully tying companies is the single biggest
market. It's the single biggest growth market. We have about 8000 employees across across the group. And the
United States will remain important for us. So I think there is no difference whether one looks at political or exchange rate
issues in the medium term. The U.S. will remain a very important market for successful. It's not uncommon to you do something
like confections where you're making little chocolates that I can't afford. But they're all over my house. I get you know I
get the I get the drill. But what it's about is a technology conceit of America. We think we do technology better than Italy
better than continental Europe. Do we. Useful technology. Better but we do industry better and we do
brands better. So I think Italy is the single largest industrial producer in Europe after Germany and our strength will come
through and and and the growth in other states will will will will support us on that.

Andre I'd like to get to the Italian
economy which has been really a pinpoint a pivot point for a lot of discussion. But before we do the conviction to by the
conviction to make a deal right now as people talk about record uncertainty and you see money cash piling up on venture capital
funds at a record pace. Where do you get that conviction. You get the conviction because private equity is supposed to
invest in moments like like this. Our usefulness to the world is to provide liquidity when other people are scared or or are
pulling back. And usually people pull back when they're when you're supposed to invest. So this this investment that we've
just done in other states which is about two and half billion of sales to our food build up
is important. And you can do it because there are moments like this where supply chain issues exchange rate issues USG issues
wars etc are impacting the market.

And this is the moment where you're supposed to continue investing not pulling back. J Is it
safer for you to invest in the United States right now than the euro region based on the tightening plan that holds more
uncertainty there. Based on the state of the economy based on gas prices based on what we hear about which is fragmentation of
the euro project.

In the short term yes in the medium term. No. As prices in
Europe are becoming very good right now. So we will continue both. Both tracks. OK. Andre. So that's where regionally you're
investing. Let's talk about companies specific kinds of companies you are putting money into. You're making food related
deals at a time of very high inflation pressure for some of these companies. How do you navigate that challenge. Absolutely.
So right now you've got the raw material price inflation. You've got problems with supply chain you've got an on shoring all four
or four off if you want sourcing.

So there are tons of issues right now in the food industry. But if you look in the medium
term food is the biggest challenge we have on the global economy today. Security food safety or food quality or food quality of
ingredients. So we're doing these two major buildups one in the ingredient side where we have reached about a billion in sales
and one which is three and a half billion which is are our private label. One or both deals today are on those two two ends
of the market.

And this will well are spot on where the world is going. So you'll see major changes in your food and food will
become a central issue also because of the droughts etc.. It will be. It will be. You mentioned technology before. It could
be as big as technology I think. Andre I'm going to talk to you about what matters is what matters is I looked for your letter
to me on the Taylor Swift graduation at your New York University is well this was a huge deal in Manhattan. And I think what was
really missed about Ms. Swift speaking at Yankee Stadium to your NYU was this is a kid who never went to college. She did high
school and literally because of her claim worked out of airport terminals as she studied. What was it like having a kid that
never did that show up at NYU.

Well I'm honourable member and we were both NYU. Yeah but you got a ticket as I did. And what you
is is is a university which was born out of this city. And this city is a city which gives opportunity to everybody. And it goes
to your questions about also the United States. The United States is a place where you can have unity. I mean that's and
that's what then. Well he was there for you. That's what what I think that's going to make some news here. I got the other chief
just e-mailed me and this is this is boring. Make some news. How do you top Taylor Swift at NYU. Are you going have Mario Draghi
speak at NYU next year. I don't think Mario Draghi will get we'll get the same reception instead of trying to keep it close
but not digging a hole for himself with it.

He's done. He's a exactly. He's a he's a good manager. But no I don't think the
double will be that will be that's going to be sort of the Italian newspapers tomorrow.
Thank you so much. Invested industrial digging himself a hole in the Italian press. Mario Draghi. I mean Lisa you say it but
Mario Draghi what do we think Elise. Is he looking for a job. Is he looking to saying look what you made me do or you know
perform otherwise.

Let's see if we can ask him. Will be interesting. Maybe we'll see. We may see him in Jackson Hole.
Seriously your wonderful show. Well yes especially because that is one of the main issues in Europe right now is what do you do.
Right. You have a government splintering at a time when the ECB is trying to protect some of the peripheral regions from having
their spreads blow out too much as they tighten policy. I mean not to bring it from Taylor Swift to nerd felt but you know
honestly this is a real issue right now especially given the willingness by some of the other nations to release.
I can't pronounce it. Kylie Kiely only emails in and says Peyton Manning spoke at the University of Virginia. Did he say
footballs into the crowd. Nothing wrong.
Maybe she threw baseballs into the crowd at Yankee Stadium. Oh Farah you can't return fast enough. Futures up 18.

Dow futures
up 165 in 30 minutes. Claims key economic data. This is Bloomberg. The markets not believing that the Fed is yet done enough to
bring inflation down anytime soon. I don't think markets are currently pricing in a severe recession outcome. This is not
every group every stock every index working. I think when we get past the summer that could start to see more volatility. Then as
these forces gather steam I think the market's concluding that the Federal Reserve is going to break something.

This is
Bloomberg Surveillance with Tom Keene Jonathan Ferro and Lisa Abramowicz. Countdown to jobless claims. Countdown to PPA from
New York City. This is Bloomberg Surveillance. Good morning. We have John Farah Tom Keene and Lisa Abramowicz. But John Farrow
is off and Kailey Leinz very much in which we are very happy about Tom. We have to look at some of the data that's coming out
in about 30 minutes time. We've got PPA coming out and jobless claims which is more important to you. Well I think the claims
is most important here because it will validate the worsening labor economy if we continue to see a rising claims number I'm
sorry high frequency data like weekly claims and continuing claims to me is always always more important. That's Carl
Weinberg 1 to 1 to speak of one person who likes a dramatic I know over at MetLife feels the same way.

Lisa I think the
economic data as a whole has to follow on from bang up jobs bang up CPI and that is change the tone of the market. Witness
futures up again today. Yeah you can see the Nasdaq surging up about a half a percent. It sounds like it's not that much more
coming more than 20 percent off the lows that we saw back in June time. You have to wonder how much further it has to go
whether the market's gotten ahead of itself. And a lot of notes have come out this morning say no it hasn't actually has more to
go. Michael Purvis with us here in 15 minutes or three must listen for the bears as here goes decidedly the other way.
Single most important note this morning at least from Bloomberg's IRA jersey on fixed income.

And Lisa this goes to
the heart of the matter. Nominal labor income growth. I didn't know this. It's 9 percent
plus what's in on radio. That's IRA Jersey's exclamation point nine percent plus nominal labor income growth. How can that be
negative for America. Well it's only negative if you see CPI reassert itself. To you go side. Well this is what we were
hearing from Lindsey Pizza. And honestly Kelly this is what a lot of people are looking for in PPR which is it is the margin.
It is not the absolute is not the nominal. It is how compressed are things getting. And with PPA it's going to be important for
that. Mike Wilson projection of shrinking margins going forward. Exactly right. Which is why he has been so bearish on this
equity market consistently. He thinks the bulk of that margin pressure in the earnings
downgrades are going to short show up at the latter half at the end of this year. Which raises a question of the fundamental
backbone of this rally. Is just this a melt up. People getting excited about the idea of a double pivot from the
Federal Reserve because inflation is cooler.

But that doesn't make inflation cool. And on the producer prices
if you're still dealing with those higher input costs and a lack of ability to pass that on. That doesn't leave corporate America
in a brilliant place. Yeah it certainly it's leaving the market in a better place. And right now Tom or look seeing the revenge
of the 60 40 with bonds and stocks rally you could argue which has been seeing a bigger rally but nonetheless it is broad and
it is sticky no question about that. I like how you bring up the 60 40 because it's been out of favor to say the least. Yeah.
What we're seeing today is yields coming down across the yield curve although you're seeing a lesser inversion 10 year yields
two point seventy four percent.

S&P and NASDAQ futures both about a half a percent 40 to 30 on the S&P. A bit of crude
strength which I find interesting Tom given what we had seen in terms of weakness steady weakness. And now all of a sudden that
IAEA report which we haven't talked enough about that came out this morning that said that they're actually increasing
potential demand because of the transition people substituting from gas with oil to get ahead of potentially a difficult winter
over in Europe. Tom watch watching a hundred dollars a barrel. Brent crude ninety eight point four 0 up a stick today. But it's
been ISE. I'm going to say that's been the upper end of the range to breakout to a higher statistic. Would be interesting.
And right now we're just trying to understand how much conviction this rally does have.
Jim Paulson said he thinks he has conviction which gives a lot of conviction to the conviction.
Chief investment strategist at the lethal group.

Jim you've been bullish. You've been then a little bit pulling back. And now all
of a sudden the melt up has begun something a little bit more concrete. Do you buy into this or do you see this as a head
fake. I want to buy into it side Lisa. I think that a couple things
for me I think is at the forefront. You know you talk about the Fed a minute. I think the case for additional Fed tightening is
rapidly dissipating. I mean we brought real GDP growth down to a crawl.
Overall I think there's still downside momentum on growth as we go through the balance of this year. The pass tightening
policies of money growth slowing fiscal growth slowing dollar rising yields rising is likely to keep real growth sluggish. On
top of that the inflation evidence just continues to get more and more pronounced. I don't know how long it will take to come
down but clearly the momentum is down.

Well all on inflation I think by September we're going to see the Fed case for why keep
hiking kind of dissipate a little bit. And this is you know I mean I don't mean to interrupt. I'm just thinking about what
you're saying and that we are seeing increasing evidence that inflation is coming down. The pushback I'm sure that you hear
and you're going to hear it a lot is not when it comes to rent. Not when it comes to food. Not when it comes to medical costs.
Not when it comes to how much you're paying for services. So yes you are seeing disinflation in some areas but it's not as broad
as many people would like to see. What gives you conviction that we're seeing the beginning of something that is going to broaden
out later this year into next.

Well I think that having real economic growth you know 0 to 2
percent is a big part of it having the past economic policies they have legs and they're going to continue to be a negative
downward force. The reason inflation peaked in the March April May period was because a year earlier fiscal growth peaked
monetary growth peaked dollar started to rise yields started to go up. That is about a one year lag policy has on the economy
and inflation. And that lag is going to continue to be negative going forward. Also you know you can always pick parts of the
inflation so that are still hot. But there's a lot of parts that are you know the inflationary thrust of commodities which was
driving this at the leading edge is now a deflationary thrust.

Overall you know the core rates of CPI PPA IPC have now all
decelerated year on year. In the last three to four months annual wage inflation was six and a half percent on a six month
basis. The end of the year it's now four point seven percent or four point three percent. What if those I can't remember but
it's a big deceleration year to date. So I think I think the debate on inflation has peaked.

I think that's over. And now
it's a debate on how fast it comes down. Right. And I'm just saying you know by September meeting we're going to get more
claimed numbers that probably will show a little more weakness. And I think the case could start to go away. But beyond that
this is really what I'm more bullish. I don't really care what the Fed's going to do because the Fed isn't driving this ship.
If I look at what's happening we're already into a brand new easing cycle right now. But on Jan yields from two years to 30
years have already started to ease. The dollar's rolled over. It's already started to ease. Junk spreads have gone from over
six to under five. They've started to ease. Real money grows at minus three point two percent. You can't go much lower. I think
it's going to start to improve because inflation comes down and fiscal growth has already started to go back to easing.

So do
you want to miss that easing cycle. Jim I totally hear you yet. At the same time I also hear Federal Reserve officials like Neel
Kashkari saying we are nowhere near done. We still have so much tightening left to do because inflation is still very far from
our target. Even if yes it is moderating and clearly you aren't in that camp. But as you talk about all of these things that are
changing financial conditions that are easing and the Fed not being in control does that not mean they are going to be even
more aggressive to get back control back. Well I think it's interesting how much attention we devote to
the Fed because the Fed's been behind the curve the whole time. Fortunately inflation is coming down today not because the Fed
lifted the funds rate for the first time in February this year because monetary growth fiscal growth dollar growth yield growth
were tightening all last year. And that's what's bringing the sour economy slower inflation. So now why the Fed still behind
the curve but all the markets are on the other way and starting to ease.

So why should we continue to give so much dominance to
the Federal Reserve. Jim we had Katie Kaminski on from M.I.T. earlier and it sprawls out to your Iowa state with the rigor of
mathematics and the rigor of trend the rigor of a time series being all. When we look at the equity markets how do we move
from what's an obvious short squeeze. Futures up 21 Dow futures up 183 two days in a row to a constructive bull market trend.
How do you transition from an obvious short squeeze out to a durable trend.
Yeah I think that's a good point Tom.

You know eventually to keep this going we'll have to decide that we're not going to
recess. So that that to me is almost becoming the bigger issue than inflation right now is are we going to recess soon if we're
not going to recess that I think that gives you a fundamental undertow to yourself to your point of giving sustainability. In
the short term though we're dealing with a lot of bears on the sidelines a lot of sellers that have come out and there.

And
we're dealing with some technical levels that are right there in front of us right now. The forty two hundred level forty two
twenty two. And if you break through some of those then you're going to see a lot of the technicians that have been bearish
changed tune and that could bring some buying in that could sustain could sustain this for a while. So it's if we fail it
then we probably have some downside because it's probably ahead of itself.

But if we break through that then I think you could
convert some bears and bring some sustainability for a period. Jim Paulsen brilliant with Louisville. Thank you so much.
Greatly greatly appreciate this morning. And Lisa this goes to your auction ability where the demand out there seems to be so
great isn't it. Jim Paulson says those on the sidelines in bonds and equities. That's a substantial group right now. Yeah. And
that's the reason why you're going to have more people who are going to come in. I'm just still thinking about this. He's
saying you don't want to miss an easing cycle.

There are signs that it's already begun. It doesn't matter that says because
they're behind the curve on the way up with inflation and they're behind the curve in the way that. That's fascinating. I.
This is horse and cart. One of the hardest things to understand in any cycle is markets are always out front of the cart which
is monetary authorities. This is Bloomberg. Good morning. Giving you up today with news from around the world with the
first word armored you can get something. Inflation data in the US isn't changing the minds of Federal Reserve officials. Two of
them are signaling that the central bank will stay on the path towards higher interest rates. Chicago Fed President Charles
Evans says inflation is still unacceptably high. Minneapolis Fed President Neel Kashkari says he wants the Fed's benchmark rate
at four point four percent by the end of 2023.

Ukrainian special forces reportedly launched a powerful attack on a Russian
airbase in occupied Crimea. That's according to a Ukrainian government official who spoke to The Washington Post. Ukraine
says nine Russian war planes were destroyed in the attack. That would be the Russian Air Force's largest single day loss in the
war. And gasoline prices keep falling in the US according to Tripoli. The average price of a gallon of regular gas has
dropped to between dollars 99 cents.

That's the lowest since early March. Costs have fallen due to cheaper oil and relatively
weak demand. By one measure fuel consumption is lower than it was two years ago. In the midst of the pandemic drug maker
Sanofi GSK and Halligan have now lost a combined 40 billion dollars in market value since Tuesday's close. That has to do
with mounting concerns about litigation and around a record heartburn drugs and tech. It was once popular antacid that was
drawn a flurry of US lawsuits alleging it causes cancer. GSK has lost is its biggest since 1988. Another month another record for
apartment rents in Manhattan. The median rent on new leases last month was two thousand one hundred fifty dollars according to
appraiser Miller Samuel and brokerage Douglas Elliman real estate. That's up two point five percent from June and 29
percent from a year earlier. The median rent has a record in each of the past six months.

Gabonese 24 hours a day which could
get to. This is payback. He knew that the headline number was going to be coming
substantially down because we could see what had happened with gasoline prices the core number was better than most people
expected. That's certainly better than the alternative to that. Lawrence Summers speaking there on the Fed on the choices on the
optionality the degrees of freedom that any given central bank as he's been someone who says look at inflation here's what it
could be everything to see if he visits Wall Street week this week and where Professor Summers is on the inflation report that
we've seen we're 12 minutes away from an incredibly important claims report. Yes PPA is. Well I guess final demand PPA will be
of interest but claims to me is absolutely front and center. This is what we like to do. We are driven by the research of our
gas. And when someone writes a piercing note we say Michael Purvis of TALKBACK and we don't care that you're living large in
Spain.

We need to speak to you in the Spanish afternoon of a 4:00 p.m. with a saying Greer or a martini by his side. Michael
Purvis joins us on optimism on the market. Michael I would predict every strategist every market survive has to come out
this weekend and adjust. How did you adjust this morning. Well look I I've I've been arguing that the recession.
Economic contraction was really a pretty speculative argument.

That was the argument had been made pretty substantially. And
this in the last two weeks we've had the three most important economic data points you know the ISI services ISE the non-farm
payroll and then the inflation yesterday come in just the way you want them in terms of affirming their right not necessarily
in a high inflation negative growth are contractionary conditions there. So
what would you look at positioning Tom. And this is both Treasury positioning and equity positioning. It is extremely
bare. Some both on both sides. Right. So the market is there's a vacuum there. And when you have those three important data
points lined up you're looking at Q2 earnings that actually the beats on earnings and both revenues and earnings were better
than the Q1 beats. You're looking at a situation where where the market's going to move higher. So I have a tactical call up
another 200 points to forty four hundred and my year end call like just to the forty five hundred there. I'm not saying we're
completely out of the woods but I think the the the certainly for the near near-term water is going to move higher not lower.
Michael how much is your conviction rate now underpinned by this idea that we just heard from Jim Paulsen which is that we are at
the beginning of an easing cycle that inflation is rolling off much more quickly from the Fed is expecting and that they're
going to have to catch up with the market.

Look I think there's a you know sort of looking at the
Eurodollar futures curve and looking at that. I think it's 50 basis points right now. Cuts next year. I think that's an
aggressive assumption here. But I come from. How assets played point of view. We see some stability. We're sort of peak
hawkishness that's going from the Fed pivot of just a year ago being categorically doubles to. Now we sort of categorically
forecast. Right. That's one of the most aggressive fed. That's a bad policy. You're going to have that asset prices disrupted.
And we've had that right.

So I think right now that that is in. And so whether we get 50 basis points 75 basis points or zero
basis points and cuts in 23 I think as long as we can look at something that's resembling some sort of stability in the bond
market that's almost more important than then you know what the average
expectation that you're dollars. Michael how much do you take a look at this idea that you had the biggest increase in food
prices going back to 1979. Rents are surging. You see areas in nondiscretionary spending that are crimping the average American
household balance sheet and that has yet to fully play out. How do you factor that into your bullish thesis. Well that's a very
good and very fair point. And I do think there's very strong arguments for a lot of components of inflation to stay higher
longer. Right. But I think the question is is if the markets and the economy can sort of adjust to that right there then I think
the two pieces of that sort of inflationary surges are going to be very different than what we've seen over the last nine
months.

Right. It's really the surge and the velocity of these inflation friends that have really disrupted the markets. If we
get to a point where where you know we never get down to 2 percent and we're sort of adjusting to a new normal because of
you know global globalization we localisation higher food prices energy supply that never really fully expands so that the world
gets down to 50 bucks again. Then I think you can look at a condition where where that those types of dynamics will play out
in a much slower and basis and the economy can sort of adjust to the baby.

The tenure doesn't go back to 2 percent. It may be
that it's 3 to 4 percent but it stays there. And then you can add the conditions for risk assets to be supported. Is there
going to be fundamental support that when we're thinking about earnings. Because as we talk about these inflationary pressures
there has been a lot of warning on the more bearish end of the spectrum from Mike Wilson for example about margin pressure
coming on. And as I now look at an S&P 500 trading back at a multiple almost at 19 on forward earnings.

When are we going to
start to maybe have a problem with that denominator. Yeah well the earnings question like earnings bottoms up consensus
estimates compiled by Bloomberg are up about six and a half percent from the beginning of the year. That's unusual. Usually
they go down through the year there and the Q2 numbers have been generally pretty good. I think it's important to recognize that
you have a high inflationary environment with an economic a major economic contraction. Right. Meaning PMI ISE in the 40s or
30s. Right. You will have high earnings growth in the 1970s. You didn't have a great real GDP condition. You had this at a lot of
inflation. But earnings growth was literally twice as high in the 1970s than it was in the 1960s when real GDP averaged like
four point three percent for that decade there.

I think that's one of those things that high nominal GDP can wash away. It
actually helped margins for many companies. Right. And certainly the top line is inflated by revenues as well. So
you're not seeing a lot of margin compression. The other story the market and again I'm talking about the S&P 500 index level.
Obviously there's a lot of sectors where there's a lot of volatility. But if you can look at that I think 13 percent.
Right that income margin that's being being expected by forward estimates estimate that is that is that is that is buttressed by
IBEX and and CAC. It's been shown resilience right through Michael Barr. You know we got to leave it there. But on behalf
of Kailey Leinz I mean John I just got to say Tom you know the beta does Alix Steel nailed it. I have a beverage of your
choice.

We say to Michael Purvis in Spain as he slips into the Spanish late afternoon tripper to be with us today. Coming up
Michael McKee in claims this is Bloomberg. Economic data retail sales next week. But right now there is a
Seattle slew of economic data. And here to give perspective particularly on the high frequency claims data is our Michael
McKee Michael. Frequently we talk on Thursdays frequently we talk on Thursdays when we get the jobless claims numbers.
And right now we're looking at two hundred and sixty two thousand for the last week with jobless claims which is a little
bit higher than the previous number.

I'm still waiting for the release to load to see what the revision is and see if it's a
major change. We look at continuing claims there one million four hundred twenty eight thousand that's up by 14000 left.
Actually by 12000 from last month. So not a huge level of ongoing claims which tells you people are
still able to get jobs. They're on unemployment claims for a brief period of time PPA. That's so when everybody's watching
for and here is some interesting news. The final demand PPA which is what companies get for their products down half a
percent during the month of July. And that pushes the year over year rate down from eleven point
three to nine point eight percent is kind of kind of interesting. The ex food and energy sort of the traditional core
is up only two tenths. The forecast was for four tenths. That was what we saw last month.

And ex food energy and trade up two
tenths. That was forecast to be up 14. Right. So the annual rates for the core rate seven point six down from eight point
two. And well energy food and trade five point eight down from six point four. So a weakening of inflation. Well let's talk
about that in a moment here and then we'll go to Matt was early but the markets lift on this. Futures up 31. That's S&P futures
up 31. Dow futures pop up to 263. NASDAQ up seven tenths of a percent. The VIX hasn't moved yet but I wonder if we're going to
see 18 handle on the VIX. At least it would be something similar to your yields come in pretty significantly even after they've
declined supposedly confirms the view that we had seen yesterday from CPI.
Now you've got that two year yield down to three point one three percent in just under one point. Right. Yeah. It's just
fascinating to me.

Further confirmation and further dollar weakness as well. Is this a mirror image or what we saw
yesterday. Well not a mirror image which would imply reversed. But this is an image that matches kind of what we saw yesterday.
The initial jobless claims by the way last week revised down from 216 to 248. So this number is telling us that the labor
market is stronger than even we thought and is not necessarily getting worse which some people were worried about. And
inflation pressures have started to ease. Looking at the overall producer price numbers looks like a 9
percent drop in energy is what is responsible for that half a percent drop in final demand goods which is not going to
surprise anybody but the index for food and for final demand goods less strife
rose 1 percent.

So we're still seeing some food inflation out there. That's what I was going to say. Mike how much is this a
head fake. I keep using that word. How much is this giving perhaps the wrong impression because it's all tied to oil prices
that even if they stabilize here won't provide the same kind of tailwind to this deteriorating inflationary impulse that a lot
of people are counting on right now. Well a lot of energy products go into other products so they do have an effect. It
takes a while to get into the price indexes but that so you know as we go along that should be good news. But it does suggest
that we are seeing an energy driven inflation area except for the overall number is still not matching. What we saw in the
prior week services ended up only one tenth percent higher and services were a big mover in yesterday's CPI.

So this is good
news. We've got to leave that here. Mike on that is good news is good news to have you with us yesterday. And I can just say it
is a change Jackson Hole just in what we've seen in 48 hours Michael McKee with all of our economic coverage. Right now the
Rocco to speak to at this time. Matthew Rossetti is chief U.S. economist at Deutsche Bank. And you know as well for those that
keep track he was way out front in calling for some form of economic contraction in America. Matt Miller Zandi With the data
we've seen on jobs with the data we've seen on inflation CPI in PPR. Can you and Peter Hooper reaffirm U.S. recession.
Sure first thanks so much for having me.

I think it does reaffirm our view which is that we're not in a near-term
recession and the economy certainly that the labor market data we saw last week the jobless claims data art are kind of edging
higher but still at very low levels. A labor market that is very tight I think also suggests that we're not heading into a
recession imminently. However I think it does point to a labor market that is still tight. Wage pressures that are still well
above what would be consistent in the Fed's objective unit labor cost growth that is about 5 percent and inflation pressures
which yes they are coming down but I think are very far away from the Fed's objective.

We saw trimmed mean CPI yesterday at
forty five basis points month a month 7 percent year on year. And so we would stick with our view that we still have a
recession. The recession is likely next year around the middle of next year and it still remains one that is fed induced as as
the Fed continues to tighten monetary policy. But Matt do you actually expect this to be a less severe recession than you had
perhaps a couple of months ago based on this decline that we've seen both in CPI MPI.
Yeah we had as a baseline what I would call a moderate recession we had the unemployment rate rising.

It doesn't seem like
moderate but a two percentage points and something that would be kind of akin to what we saw in the early 1990s about a 1 percent
decline in GDP. I think the key reasons for that were one you have private sector balance sheets that are in good shape to
kind of the cyclical sectors in housing and autos have been supply constrained. And 3 you know that that you did have
monetary policy that you know what would ease next year and kind of help out. I think on the margin you know certainly the
inflation data this week was weaker than we anticipated. I think it does help our call for the Fed to move rates by 50 basis
points at the September meeting. And it's just really a question of do we see these downside misses persisting. I think given the
trimmed mean data we continue to see inflation over the coming months. That is well ahead of the Fed's objective which means
that the market's pricing of the terminal is probably too low at the point at this point.

So where are some of the inflationary
pressures coming from. We've been talking about food rising at the fastest pace since since 1979. We've been talking about rent
on a tear. We've been talking about medical costs. How sticky are these particular elements as we see energy prices really
cool off as well as some of the other issues with respect to goods.
Yeah I think the ones you mentioned are the ones that tend to be sticky especially rent to know are. And you know those the ones
when you look at the minutes over the past year or Fed officials comments. Those are the ones that they're concerned about
because they're six sticky. They're persistent. And also Fed research shows that as they tighten monetary policy it kind of
pushes down housing affordability pushes people away from home ownership
into renting and you push up rental prices for a period of time.

The other point that I would note particularly for the PPA this
morning is health care inflation is likely to be rising possibly substantially for the P.C. healthcare health care gauge over the
next year. And that's simply a function of underlying wage pressures that we're seeing in the hospital and health care
sector. We think that adds about 50 basis points to Corp B.C. over the next year or so. That is an important inflationary
impulse for the Fed that is upcoming and we haven't actually seen yet which is why we continue to hear Fed officials even
after the CPI saying look our job isn't done.

We still have a long way to go to get inflation down to target. But man it
raises the question of how high the bar is meaning how higher rate of inflation are they ultimately going to be willing to
tolerate. Is 3 or 4 percent going to be the new 2 percent. Do we have to make that adjustment.
You know I think we heard some strong comments from Governor Waller before the last FOMC meeting on that point. You know it
was noted that over prior months we had point three percent type core prints and he was asked if you know if that was sufficient.
And what he said is that annualized is to about 4 percent.

That is more than double our objective and it's nowhere near where we
need to be. You could say the same thing about yesterday's core CPI print. You know an annualized is almost 4 percent. So I
think until you really see strong evidence that inflation is coming down you're going to need to hear hawkish comments from
the Fed because they need to have credibility to keep inflation expectations in check. And in order to have I think hope of
getting inflation pressures back down to target over time. And as we say over time over what time period do you think is
realistic. Ultimately when we get into the start of 2023 when this market is betting that the Fed is going to be able to cut
rates a couple months later what rate of inflation do you think we will be seeing then.
I don't think anywhere near the rate of inflation that the Fed would need to see to cut rates at that point unless the labor
market has really deteriorated and the unemployment rate has risen substantially.

If you look at policy roles you know any of
the ones that the Fed would look at. None of them would call for rate cuts early next year unless inflation were really coming
down. We're expecting you still have core P.S. about 4 percent early next year. We think it is year around four and a half
percent. And so that's still double that.

The Fed's objective then year over year terms. And you're just very clearly that's
not anywhere near the level that the Fed would cut rates. Now you read my mind. It's right where I wanted to go and actually
just brought up the chart. The fact is 4 percent inflation. We could enjoy 1990. We can enjoy 1970. Of course the massive
volatility coming out of World War 2 and into Korea that was dirty effect is America's survived 4 percent inflation before.
Will we do it now. Absolutely. I think we will see the Fed achieve their objective
over time. We're confident that the Fed will do what is necessary in order to tame inflation pressures ensure that we
don't have a repeat of the 1970s.

President Kashkari comments yesterday. I think we're very clear
about that. The key question I think and it's the ongoing macro debate is
how much pain will that require in the labor market and from a growth perspective. Yeah we can. We continue to think that it
will mean that the unemployment rate needs to rise. And I think the recent wage data certainly the way it is this is the
interview outcome here. Matt Miller ISE. David Focus Lando believes in the Phillips curve. It means that what we're saying.
I think when you look at what is driving inflation pressures today there is no doubt an important supply side component. It's
in autos. It has been in energy. But there's also a very important demand side components and that is the component that
the Fed needs to act on.

It tends to be in services right shelter inflation and in particular. And the Phillips curve we
think will work. In terms of getting incursion down it was flat 3 Covid. There is some evidence that is steeping now. That was
early. Thank you for the brief as well. Lisa did you think you did well there dodging that question. I think he did a fabulous
job. We're trying to get it. Pro futures up twenty nine. It fixed nineteen point eighty three. It is an upmarket. This is
Bloomberg. Keeping you up to date with news from around the world with the
first word. I'm Richard You Gupta. OPEC expects global oil markets to tip into surplus this quarter. That cartel cut
forecasts for the amount of crude it will need to pump in the third quarter by one point two million barrels a day.

IBEX
outlook may give more insight into the minimum production increase and agreed on last week with its allies. Ukraine's
president boredom is Lansky says that Russia lost nine fighter planes in explosions that rocked an airbase in occupied Crimea.
Russia denies that Ukrainian attacks caused the losses but the Washington Post says that in fact Ukrainian special forces
attacked the airfield. The number of student visas given to Chinese nationals has fallen by more than a half compared with
pre pandemic levels. That's according to The Wall Street Journal state citing State Department data. The drop hurts but finances
Saints at State University. Since Chinese students pay out of state tuition the decline is blamed in part on students doubts
that they would be welcome in the U.S..

Disney is raising the price of its flagship but Disney plus streaming service by
thirty eight percent. It's a part Paul Allen plan to generate more revenue for its money losing online businesses. The
entertainment giant also wants to build on third quarter results that beat estimates for sales profit and subscriber growth.
The world's largest asset manager is making a significant move into crypto markets. BlackRock is offering its first ever
investment product directly in Bitcoin. The new private Bitcoin trust seeks to track the price of the biggest cryptocurrency.
The firm is responding to demand from a large institutional clients. Global news 24 hours a day on air and on Bloomberg
Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries and could get to. This
has been. Markets priced for almost three percent inflation not just next
year but two years from now. The one year rate implied by Brinkema says is almost at 3 percent. So the markets not
believing that the Fed is yet done enough to bring inflation down anytime soon. Michael Barr really good to speak to Michael
Pyne yesterday about full faith and credit.

He has carved out a franchise at Barclays Capital looking at global inflation linked
research and it was just timely to speak to him with that CPI report. Lisa before we go CEOs usually Kelly before we get to
ISE idea. Lisa. Kelly. Kelly we got to just stop and suggest what the last five days have been since Friday at eight thirty.
And the jobs report I think you know we in the media almost but numbed by it. It's been amazing. It has been amazing. A huge
tone shift for this market resilient labor market on the one hand and inflation cooling on the other both on CPI and PPA
objectively.

Are they any means cool. No but the moderation is much more than expected.
Producer price inflation month on month down half a percent. Tom I don't think anyone saw that coming. I'm do some math for you
here in a minute but let's bring in a shirt body with its deputy CEO of fixed income at Neuberger Berman with a really twisted
view coming out of the Midlands of Chicago the Midwest of Chicago as well as shock.
Wonderful to speak to you today of the shock of the jobs report CPI PPA. My feeling is everybody goes into the weekend and has
to recalibrate. How will you recalibrate in fixed income and Neuberger Berman.

Well you know I think the main message and you
know this this kind of move I think started with with Powells press conference and the really the message that Fed thinks
they're broadly at neutral. And if we get the data that supports it the Fed would like to slow down the pace of hikes. You know
inflation is as you know we all know it's still too high. Fed's going to be dealing with that. But there is a shift from the Fed
that if the data allows it the Fed wants to be a little bit more forward looking calibrate the pace and ultimate destination of
hikes to try and get to that that soft landing.

And I think the key message of this week and the payrolls data and then the
inflation princes that window's getting a little bit larger. So the Fed is got a little bit higher probability of being able to
nail that soft landing. There's the chance that the hikes are going to go down in pace and ultimately the destination we get
to. And so if the data continues to cooperate and we have a pretty long window again until September and the next Fed
meeting it's an environment where these trends that you know started over the last week you know they've got some some room
to run. The Dow points move folks is seven hundred forty three Dow points. With futures this morning off the CPI report. And
the further news today Dow futures up 250 aspects of thirty seven tenths of a percent.

And we're going to see the same move
in bonds. Can all of a sudden you invest for total return. Are you down in the mailroom. They're watching the Chicago Cubs and
clipping coupons. Which is it. Well I think break it into treasuries or government bonds and then some of the credit
assets for it for government bonds. I mean I think the main message of our view is we're going to go back to a period where
bond yields sort of disappear a little bit from the headlines.

The days of these 15 20 basis point moves they're going to go be
going down pretty rapidly. We're going to enter a period where rates are going to bounce around probably two and a half to
three percent 10 year notes smaller moves devolved ization for credit markets. And this is not investment grade investment
grade credit mortgages. There's still more room for. We think these spreads to tighten probably at this point you know best
opportunities are in the non investment grade market but also things like you know short maturity financials and bank
securities.

So here I think you know Tom on your question of total return there's more total return. Right now we think
coming from credit income and credit spread tightening then we'll see a big drop in interest rates from these levels. I want
to stick on treasuries for a moment because for a second day we're seeing the curve steep an hour two times now it just
negative. Thirty nine basis points. So we're back north of negative 40. Brian Weinstein of Morgan Stanley start it off our
show in the 6:00 a.m. hour saying we could go to negative 1 percent 100 basis points between 2s and tents.

How likely do you
think that is. I think that's pretty unlikely anytime soon. I mean I think you
know our our view is that inflation is coming down and you know for a year and this year it's something with a five handle. And
this is referencing core CPI. And for next year it's something with a three handle. So there is a substantial fall in inflation
likely coming over the next 18 months.

And that ultimately we think means the Fed doesn't have to you know push continue to
take the funds rate another 200 basis points higher or something like that. So if the funds rate kind of ends in the zip code we
think it's most likely to maybe something with a high 3 percent type of number that's remaining an inverted curve. But I would
say it's probably a level that's closer to these levels or a little higher than those larger numbers. One more question if we
could down. This comes from a research show. Michael McKee thank you for for doing this to me. Eliza Winger and Antoine in
Bloomberg Economics reaffirm a doubtful chance of being in recession now but there's still that angst out well into next
year. How does a fixed term fixed income A should react to that. If we say things are better now and we clearly see that in the
data how do you then place long term bond capital believing and stresses that could be out there a year from now. So I think
there's two main points and one is in this debate is is going to be coming in.

The bond market is real recession versus nominal
recession. There's a big gap is as we all know between nominal GDP and real GDP right now. So is the chance that we get to zero
to 1 percent real GDP you know possible. Likely. Yeah but that's still with where inflation is likely to be a higher nominal GDP
environment than we're used to. You know one point is that's a bit more supportive for a range of credit markets than than the
opposite. And the second is it's hard to get a recession when you know we're getting these types of job gains.

And the US is a
big economy. Could we see something that's you know a small slowdown small
negative GDP. Absolutely. But some of the larger issues we're not we're not getting a high probability on them right now. Oh
sure. Thank you so much. Might people talk to your people. And we do make note that you're missing John terribly and ask a
basis how we get back from Pharrell coming back Tuesday. No Tom I can't get out of an AP. And now he was at FTSE in Rome. I
don't know where he is now. Some place I hope he I hope he gets back.

We're hoping he gets back. And you know you know it's like
E.T. come home. Except this is John. It looks the same actually. How do you. Thank you so much. Neuberger Berman greatly
appreciate that. Kelly what I think is so important here and I want to go back to my headline of the day which I stole from IRA
Jersey because I've never come up with an original headline in my life.
Nominal labor income growth is up 9 percent. How do bad things happen when you have 9 percent nominal income growth. Well
that's the thing. Tom if we're watching wages at what point is people being paid higher wages in order to be able to pay the
higher prices they are failing in their daily life a good thing. At what point is it a bad thing a potentially leads to a wage
price spiral. It's something we're going to have to continue to watch.

But today Tom I'm watching this market across asset
classes that cool people. I mean it's a place for a dollar for a second day. Tom equities on the rise. Bull market NASDAQ. One
hundred. That continues. Let me give you the equity markets here. Very very important
aspects here. Up eight tenths of a percent. Dow as well 33 points on S&P.

Dow up 270 points. And Nasdaq 100 blisters up
eight tenths of a percent up 108 points thirteen thousand five hundred. That's a wow move..

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