'Bloomberg Surveillance Simulcast' Full Show 7/22/2022
>> IT WOULD TAKE A LOT FOR THE ECB TO STOP NORMALIZING. >> THE ECB IS BACK INTO DANGEROUS TERRITORY HERE. >> THEY ARE HOPING THEY CAN HIKE WITHOUT TRIGGERING AN EVEN DEEPER DOWNTURN, BUT THAT IS AN OPEN QUESTION. >> THE RISK OF THE MARKETS AS WE TALK OURSELVES INTO A RECESSION. >> THE ECB IS IN AN INCREDIBLY TOUGH PLACE.
>> THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. JONATHAN: LIVE FROM NEW YORK CITY, FOR OUR AUDIENCE WORLDWIDE, GOOD MORNING. THIS IS "BLOOMBERG SURVEILLANCE" ON TV AND RADIO. ALONGSIDE TOM KEENE, I AM JONATHAN FERRO, HERE WITH KAILEY LEINZ. FUTURES DOWN. IT IS THE END OF FORWARD GUIDANCE. TOM: WE CAN TALK ABOUT THAT AND BONDS FORWARD NEXT WEEK TO A VERY IMPORTANT FED MEETING. BUT WE HAVE TO DO -- WHAT I SEE
ON THE DATA SCREEN RIGHT NOW IS THE SHOCKING SPEED THAT WE SEE IN CURVE INVERSION. ABSOLUTELY STUNNING HOW WE REVISIT NEW, GREATER INVERSION. JONATHAN: WHAT I SEE IN ECONOMIC DATA IN EUROPE, IT IS DREADFUL. PMI A DOWNSIDE SURPRISED HERE THAT IS NOT WHAT YOU WANT TO SEE THE DAY AFTER A FOR THE BASIS POINT HIKE. SOCGEN STILL CALLING THIS ONE UNBUYABLE POTENTIALLY THROUGH THE REST OF THE YEAR. TOM: THAT IS ON THE GDP AS WELL THEY HAVE BECOME DEPENDENT PERHAPS AFTER WHAT WE SAW YESTERDAY. OBVIOUSLY, THE MARKET NOT
IMPRESSED. THE SURGE IN EURO TERMS RIGHT AROUND. IT IS ABOUT ECONOMIC DATA, WRAPPED AGAINST, AS LAGARDE MENTIONED YESTERDAY, ORIGINAL POLITICS. TOM: -- JONATHAN: ISN'T IT GOOD NEWS WE STOP PRETENDING WHAT WILL HAPPEN IN EUROPE? TOM: YOU KNOW WHERE I AM ON THIS. JONATHAN: WHAT DO YOU MAKE OF SNAP CHAT COMING OUT AND SAYING NO FORECAST, NO GUIDANCE, WE DO NOT KNOW WHERE WE ARE GOING EITHER? TOM: I JUST SAID TO MATT MILLER THAT THE CONFLATION OF TECH IS TECH IS OHLONE. THERE IS PROFIT-MAKING TECH AND
STORY STOCKS. JONATHAN: CAN WE TAKE A MACRO SIGNAL FROM THE OUTCOME OF SNAP CHAT AND EARNINGS? KAILEY: YOU MIGHT BE ABLE TO IN WHAT THEY ARE TALKING ABOUT IS ADVERTISERS PULLING UP BECAUSE THE MACROECONOMIC ENVIRONMENT DETERIORATING. ARE THEY GOING TO BE A BELLWETHER FOR TWITTER, META, ALPHABET? ALSO WHAT I THOUGHT INTERESTING IS THEY ARE SLOWING HIRING.
HOW MANY TIMES HAVE WE HEARD THAT OVER THE LAST COUPLE WEEKS? JONATHAN: I HAVE TO SAY, SIN'T THAT THE GOAL, THE OBJECTIVE OF FED POLICY? JOB OPENINGS TO BE REDUCED, JUST TAKE THE MAN OUT OF THE LABOR MARKET? KAILEY: IN THEORY, ESP THE QUESTION IS ARE THEY ACTING SO AGGRESSIVELY THAT BY THE TIME DATA CATCHES UP SEE NOT JUST A COOLING BUT OUTRIGHT DESTRUCTION IN THE LABOR MARKET? AS WE TALK ABOUT WHERE FED FUNDS NEED TO GET TO, WHERE DOES UNEMPLOYMENT GET -- NEED TO GET TO? JONATHAN: THE ONE THING IN CORPORATE COMMS THAT WORRIED ME WAS AT&T, COMING OUT AND SAYING PEOPLE EFFECTIVELY ARE DELAYING PAYING THEIR BILLS. THAT IS SOME RING -- SOMETHING WORTH PAYING ATTENTION TO. TOM: I WOULD AGREE THAT IS 18 LEAVE. I WOULD ALSO SAY THEY HAVE A LITTLE BIT OF COMPETITION.
I JUST TAKE MASSIVE ISSUE OF MEDIA CONFLATING SNAP WITH NAME YOUR BIG TECH STOP MAKING GOOD BILLION -- GAJILLIONS OF MONEY. KAILEY: WE'VE SEEN IT IN META ALREADY. APPLE PRIVACY CHANGES HAVE BEEN WEIGHING ON THAT STOCK FOR A LONG TIME. JONATHAN: I WILL WHIP THROUGH THE PRICE ACTION. THE NASDAQ, LOWER BY HALF. THE YIELD AND SIX BASIS POINTS. EURO-DOLLAR 101.55. KAILEY: I WILL TRY TO GET MYSELF OUT OF
THE DOGHOUSE WITH TOM KEENE. WE HAVE A LOT GOING ON. JUST ABOUT 25 MINUTES FROM NOW, WE WILL GET A DECISION FROM THE BANK OF RUSSIA. WE HAVE ALREADY SEEN 10.5 PERCENTAGE POINTS OF RATE CUTS FROM APRIL TO JUNE. WE AFFECT ANOTHER 50 BASIS POINTS TODAY, ALTHOUGH OUR ECONOMISTS AT BLOOMBERG INTELLIGENCE THINK THE CENTRAL BANK WILL RAISE FORECASTS -- WHAT A TURNAROUND COMPARED TO WHEN THEY FIRST INVADED UKRAINE. WE WILL GET RESULTS FROM TWITTER -- JUST RESULTS, NOT A CALL, BECAUSE THAT IS ALL THE DRAMA WITH ELON MUSK IT WILL HE BE FORCED TO BUY THE COMPANY? LOOKING AT A SHARE PRICE OF $39. DOES NOT LOOK LIKE THE MARKET
BELIEVES IT. BUT WE WILL PAY ATTENTION TO THE ADVERTISING AND DAILY ACTIVE USERS. ARE THEY FALLING VICTIM TO THE SAME FORCES AS SNAP, ADVERTISING SLOWING DOWN? AT 9:45 EASTERN, WE GET THE PRE-LIM READ ON PMI'S FOR THE MONTH OF JULY. WE EXPECT MANUFACTURING TO FALL TO THE 52 LEVEL, BUT WE HAVE SEEN A STRING OF DOWNSIDE SURPRISES IN ECONOMIC GET OVER THE LAST 24 HOURS OR SO, IN PART WHY WE ARE SEEING A BIG RALLY IN THE BOND MARKET, SO WILL WE SEE FOLLOW-THROUGH ON THE IS IN EUROPE WHEN IT COMES TO THOSE NUMBERS LATER ON? JONATHAN: IN LOOKING AT TREASURIES, YIELDS LOWER BY 5 OR 6 BASIS POINTS. THIS RANGE WE HAVE TRADED IN IN THE LAST 24 HOURS, THE HIGH OFF YESTERDAY'S SESSION. JIM CARON JOINS US, CHIEF FIXED INCOME STRATEGIST AT MORGAN STANLEY. WITH THAT A MAJOR ECONOMIC DATA
RELEASED -- WHAT DO YOU MAKE OF THAT? JIM: WE ARE AT AN INFLECTION POINT. MARKETS ARE TRYING TO FIGURE OUT IF THEY NEED TO FOLLOW THE NOMINAL GROWTH OR THE REAL GROWTH AREA NOMINAL GROWTH, WHICH HAS BEEN REASONABLY POSITIVE, BUT WHEN YOU ADJUST FOR INFLATION, THE REAL DATA IS LOOKING VERY WEAK. WE ARE SEEING PMI'S START NEAR CRITICAL THRESHOLD LEVELS, AND ALL THE SURVEY DATA IS SUGGESTING THAT. A LOT OF CASH IN THE SYSTEM RIGHT NOW. PEOPLE ARE SKEPTICAL AS TO WHERE TO GO. I THINK THE BOND MARKETS HAVE BEEN PLACED WHERE THEY SOLD OFF, YIELDS HAVE GONE UP, AND IT IS JUST ATTRACTING SOME BUYERS AT THIS POINT, BECAUSE THERE IS A LOT OF UNCERTAINTY OUT THERE. TOM: YOU GO RIGHT WHERE I AM
THINKING ABOUT, WHICH IS THE SUGAR HIGH OF INFLATION. THAT WOULD BE TANG AND THE SUGAR HOW YOU GET FROM IT. THERE IS A POINT AFTER THE THIRD TANG WHERE IT DOES NOT WORK. DISCUSS THE NOMINAL JOY WE ARE SEEING NOW VERSUS THE REALREAL OF 2023. JIM: IT IS INTERESTING KATE IF WE PUT A COUPLE DATA POINTS TOGETHER -- WE ALL KNOW WAGES HAVE BEEN RISING, NOMINAL WAGES HAVE BEEN RISING. BUT IF YOU LOOK AT REAL WAGES, ADJUSTED FOR INFLATION, THEY ARE DOWN 3.4% YEAR-OVER-YEAR.
WE RECENTLY HAD A RETAIL SALES NUMBER THAT WAS A MONTH OVER MONTH NUMBER THAT WAS PRETTY BIG, POSITIVE 1%. WE ALSO HAD, IN THE SAME WEEK, A CPI NUMBER THAT WAS 1.3%. WHEN YOU SUBTRACT THE 1.3 FROM 1, RETAIL SALES ARE ACTUALLY AT -.3%. PEOPLE ARE STARTING TO BUY LESS GOODS BUT THEY ARE PAYING MORE MONEY THIS WILL START TO WEIGH ON INVENTORY ADJUSTMENTS WHICH WILL WEIGH ON GDP.
THE REAL DATA IS ACTUALLY TELLING US -- FORGIVE THE PUN -- THE REAL STORY, WHICH IS THAT THINGS ARE STARTING TO SLOW DOWN MORE MATERIALLY THAN WHAT MANY IN THE MARKETS ARE THINKING, AND CERTAINLY THE NOMINAL DATA DOES SUGGEST. KAILEY: WHAT DOES THAT MEAN FOR THE FED? WHAT THEY ARE TRYING TO ACHIEVE HIS DEMAND SLOW DOWN. IF THAT IS ALREADY STARTING, DOES THAT MEAN IT DOES NOT HAVE TO GO AS FAR? JIM: THAT IS THE CRUX OF THE MATTER GET I THINK THEY WILL GO AS FAR. THE FED IS HIKING INTEREST RATES INTO A KNOWN SLOW DOWN IN THE MARKETS.
THIS IS SOMETHING THAT THEY DO NOT NORMALLY DO. I THINK THEY ONLY DID THIS ONCE IN THE LAST 50 YEARS, AND IT WAS IN THE 1970'S HERE THIS IS ALMOST UNPRECEDENTED. THE FED SEES THEY HAVE TO BRING DOWN INFLATION AT THIS STAGE. I LEAVE THEY ARE WILLING TO GO 75 BASIS POINTS IN JULY, POSSIBLY 50 TO 75 IN SEPTEMBER. THEY WILL KEEP GOING UP TO 3.75%, OR MAYBE EVEN A LITTLE
BIT HIGHER, BY EARLY NEXT YEAR. DESPITE THE FACT THAT WE ARE SLOWING, ARE WE SLOWING ENOUGH TO ACTUALLY GET INFLATION TO WHERE THEY WANT IT TO BE? I THINK THE ANSWER TO THAT AT THIS POINT IS NO, THEY ARE NOT. SO THEY ARE WILLING TO BE AGGRESSIVE EVEN IN THE FACE OF THIS WEAKNESS. JONATHAN:
WHAT DO YOU MAKE OF THE EASING FINANCIALS? JIM: I AM A LITTLE MIXED, BECAUSE I THINK PEOPLE ARE VERY HAPPY ABOUT THE FACT THAT MAYBE INTEREST RATES HAVE STOPPED GOING UP. LOOK AT WHAT IS GOING ON ALONG THE YIELD CURVE. AND I UNDERSTAND THAT, WHEN INTEREST RATES THOUGH LOW, PEOPLE THINK THEY WILL BE SOMEWHAT STABLE, PEOPLE START TO MOVE INTO GROWTH EQUITY, AND THAT STARTS TO BRING UP EQUITY PRICES, HIGH YIELD STARTS TO COME DOWN, PEOPLE START TO LOOK YIELD BECAUSE THEY BELIEVE THE THRUST HIGHER INTO INTEREST RATE IS OVER. WHAT THEY ARE NOT TAKING ABOUT ENOUGH IS WHY OUR RATES GOING DOWN? THEY ARE NOT GOING DOWN FOR GOOD REASONS. THEY ARE GOING DOWN BECAUSE THE ECONOMY IS SLOWING. I SEE THIS AS A BIT OF A SUGAR HIGH.
I SEE THIS AS OK, LET'S GO BUY SOMETHING, BUT WHY OUR RATES GOING DOWN, MAYBE I SHOULD RETHINK THIS. SO I AM SKEPTICAL ON THIS RALLY AT THIS POINT FOR THOSE REASONS. JONATHAN: AFTER THE NEWS CONFERENCE FINISHED YESTERDAY WITH PRESIDENT LAGARDE, WHAT DID YOU AND YOUR TEAM SAY TOGETHER? THE FIRST WORDS THAT LEFT YOUR MOUTHS, WHAT WERE YOU THINKING? JIM: I HAVE NO IDEA WHAT IS GOING ON. [LAUGHTER] IT WAS VERY LITTLE DETAIL PUT IN THIS TRANSMISSION PROTECTION INSTRUMENT THAT REALLY MADE IT SEEM THEY JUST OPEN THE DOOR TO SAY WE WILL HIKE INTEREST RATES, BUT WE HAVE THIS OTHER TOOL IN CASE THERE IS A PROBLEM, AND IT IS A BIG TOOL, DO NOT WORRY ABOUT IT, WE GOT IT. THE ECB CLEARLY WANTS TO LIVE IN THE MARKETS. TOM:
IN BLOOMBERG OPINION -- "TPI -- TO PROTECT ITALY." JONATHAN: GREAT TO CATCH UP WITH YOU. THAT SEEMS TO BE THE TAKE AWAY AFTER THAT ECB NEWS CONFERENCE -- PEOPLE'S HEADS SPINNING. MY HEAD WAS ABOUT TO EXPLODE. IF I HEAR CPI TOO MANY TIMES TODAY, I THINK IT WILL GO THAT WAY. TOM:
AN ACQUAINTANCE OF A FAMILY MEMBER HAD A MONOGRAPH FROM 1945 IN OXFORD OF JOHN MONET. NOTHING HAS CHANGED SINCE THEN. NOTHING MORE IN THE POLITICAL EFFUSION OFF THE MEMORY OF WORLD WAR II. I THOUGHT LAGARDE DID WELL GIVEN ALL THE CONFLICTING POLITICS SHE FACES. JONATHAN: THE EURO WEAKER. FUTURES DOWN A LITTLE BIT AFTER A DECENT RUN AT GAINS. FROM NEW YORK, THIS IS
BLOOMBERG . RITIKA: KEEPING UP-TO-DATE WITH NEWS FROM AROUND THE WORLD WITH THE FIRST WORD, I AM RITIKA GUPTA. U.S. SOCIAL MEDIA GIANTS ARE ON TRACK TO LOSE $49 BILLION SINCE
YESTERDAY'S CLOSE. CONCERNS ON THE OUTLOOK FOR ONLINE ADVERTISING FOR THE WHOLE SECTOR APPEAR THAT SEES A MAJOR SLOWDOWN. COMMERCE SECRETARY GINA RAIMONDO WARNS THE U.S. CANNOT RELYING ON TAIWAN FOR SEMI CONDUCTORS IN AN TO AN ANNUAL SECURITY FORUM. SHE CALLED THE $50 BILLION PACKAGE A SPUTNIK MOMENT FOR AMERICA. IN THE U.K., A NEW POLL SHOWS FOREIGN SECRETARY LIZ TRUSS EXTENDING HER LEAD OVER FORMER CHANCELLOR RISHI SUNAK TO BE THE NEXT PRIME MINISTER.
IN A POOL OF CONSERVATIVE PARTY MEMBERS, 62% SAID THEY WOULD VOTE FOR TRUSS, 38% WENT FOR SUNAK. TURKEY SAYS AN AGREEMENT TO ALLOW SHIPMENTS OF UKRAINE'S GRAIN WILL BE SIGNED IN ISTANBUL TODAY. UKRAINE, RUSSIA, AND THE U.N. WILL SIGN THE ACCORD.
UKRAINE'S GRAIN SHIPMENTS HAVE BEEN LARGELY STALLED AS PORTS HAVE BEEN BLOCKED SINCE THE RUSSIAN INVASION. ONE OF ELON MUSK'S TOP EXECUTIVES AT TESLA THE SUBJECT OF AN INTERNAL INVESTIGATION. BLOOMBERG LEARNED OMEAD AFSHAR IS BEING LOOKED AT AT HIS ROLE IN A PLAN TO PURCHASE HARD-TO-GET CONSTRUCTION MATERIALS. HE RUNS THE COMPANY'S TEXAS FACTORY.
DETAILS OF HIS DEPARTURE ARE BEING WORKED OUT. GLOBAL NEWS 24 HOURS A DAY ON AIR AND AT BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. I'M RITIKA GUPTA. THIS IS BLOOMBERG.
>> WE DECIDED TO RAISE THE THREE KEY ECB INTEREST RATES BY 50 BASIS POINTS AND APPROVED THE TRANSMISSION PROTECTION INSTRUMENT. WE EXPECT INFLATION TO REMAIN UNDESIRABLY HIGH FOR SOME TIME OWING TO CONTINUED PRESSURE FROM ENERGY AND FOOD PRICES AND PIPELINE PRESSURES. JONATHAN: GO BACK TO BED AND GET UNDER THE COVERS. THE ECB HIKING INTEREST RATES. OR MAYBE GO BACK TO SLEEP, BECAUSE THAT IS WHAT IT FELT LIKE AT THE NEWS CONFERENCE AT TIMES YESTERDAY. TOM: IT WAS NOT A SNOOZE FEST. I HUNG ON EVERY WORD. JONATHAN: I BET YOU WERE.
DID YOU EVEN CARRY THAT NEWS CONFERENCE ON RADIO? TOM: WE DID -- JONATHAN: HOW MUCH OF IT? TOM: MAYBE 90 SECONDS. THERE WAS A LOT OF GOOD COMMENT ACROSS ALL OF BUSINESS MEDIA. WHAT MARTIN ARNOLD DID WAS GREAT. AS WE HEARD FROM JIM CARON, IT IS A BIG "SO WHAT" -- IT NEEDS TO BE TESTED. JONATHAN:
I THINK BFA SAID FROM WHATEVER IT TAKES TO WHATEVER YESTERDAY. ON THE NASDAQ, LOWER 0.6%. DOWN SIX BASIS POINTS ON THE 10 YEAR STATESIDE. THE BUTTON MARKET -- LET ME TELL YOU WHAT 10-YEAR BOONE -- BUNDS ARE. THE TWO-YEAR DOWN 19 BASIS POINTS. THE PMI OUT OF EUROPE TODAY
WERE TERRIBLE. LET'S BE UP FRONT. THEY WERE JUST BAD. TOM: 23 BASIS POINTS ON THE GERMAN TWO-YEAR IS WHAT I SEE. IT SHOWS THE TRANSATLANTIC DIVIDE WE HAVE GOT PAID WE HAVE A DIVIDE IN WASHINGTON AS WELL.
BLOOMBERG'S JOE MATHIEU BRIEFS IS NOW KID I DO NOT WANT TO DO THE POSTMORTEM ON THIS CONFERENCE. EVERYONE IS DOING THIS. EVERYONE HAS GOT A POLITICAL VIEW. I WANT YOU TO ANSWER FOR OUR DOMESTIC AND INTERNATIONAL AUDIENCE, WHAT IS THE SO WHAT? WHERE WAS THIS IN SEPTEMBER OR DECEMBER OR IN THE HISTORY BOOKS? JOE: IF YOU'RE TALKING ABOUT THE JANUARY 6 COMMITTEE, COME SEPTEMBER, PARTLY WE COULD GET MORE HEARINGS. WE UNDERSTAND LAST NIGHT, FROM
MEMBERS OF THE COMMITTEE, MORE WITNESSES ARE COMING FORWARD, MORE EVIDENCE. LIZ CHENEY SAYS IT IS THE DAM BEGINNING TO BREAK. TIMING IS A REAL PROBLEM. WE WERE SUPPOSED TO GET A FINAL
REPORT FROM THIS COMMITTEE IMMINENTLY. LAST NIGHT WAS SUPPOSED TO BE THE GRAND FINALE. NOW WE KNOW IT IS NOT. THEY WILL DROP AN INTERIM
REPORT. WHAT HAPPENS IF REPUBLICANS TAKE CONTROL OF THE HOUSE IN NOVEMBER? THEY WILL DISSOLVE THIS COMMITTEE AND TURNAROUND AND INVESTIGATE THE INVESTIGATORS. TOM: JOE, YOU'RE REALLY GOOD AT THIS. YOU GET OUTSIDE THE BELTWAY -- IT IS HARD TO BELIEVE, BUT HE HAS NOT TAKEN IN ALL THE KOOL-AID YET OF D.C.
WHAT'S THE "SO WHAT" OF THIS IN THE HISTORY BOOKS, OTHER THAN DEMOCRATS FEEL THIS WAY, REPUBLICANS FEEL THAT WAY? JOE: IF YOU'RE TALKING ABOUT SEDITION AND WITNESS TAMPERING, IF THAT IS PROVABLE, THAT IS A BIG DEAL. THE COMMITTEE HAS TWO PURPOSES. ONE IS TO THAT THE RECORD STRAIGHT GAVE YOU ARE A HISTORY BUFF.
WE WANT TO KNOW WHAT ACTUALLY HAPPENED TO KEEP IT FROM HAPPENING AGAIN. SEPARATELY, THERE IS THE MATTER OF LEGAL JUSTICE. IT IS UNCLEAR HOW, IF, THIS COMMITTEE ACTUALLY DOVETAILS WITH THAT INVESTIGATION.
LIZ CHENEY WANTS TO PROVIDE INFORMATION. THE CHAIRMAN SAYS THAT IS NOT THEIR JOB, THEY ARE JUST TO SET THE RECORD STRAIGHT, MERRICK GARLAND CAN DO WHAT HE WANTS. KAILEY: TO THAT POINT, AND YOU MENTIONED LIZ CHENEY, SHE IS FEELING THE HEAT FROM DEVIATING FROM HER PARTY. AT LEAST ADAM KINZINGER IS NOT SEEKING REELECTION. JOE: WITH REGARD TO HER OWN RACE, THAT IS ITS OWN THING IN WYOMING. PEOPLE ARE WONDERING HOW MAY
DEMOCRATS MAY VOTE FOR LIZ CHENEY. BUT SHE COULD BE IN TROUBLE. SHE COULD ALSO BE SETTING HERSELF UP FOR A PRESIDENTIAL RUN DOWN THE ROAD. WITH REGARD TO THE MIDTERMS THEMSELVES, WE STARTED THIS SEGMENT TALKING ABOUT INTEREST RATES AND INFLATION, AND THAT IS WHERE THE CONVERSATION WILL BEGIN THAT IS WHERE DECISIONS WILL BE MADE AT THE ABOUT BOX. IT WILL LIKELY NOT BE DRIVEN BY WHAT THIS COMMITTEE IS DOING. KAILEY:
OBVIOUSLY THE OTHER NEEDS THAT HIT THE WIRES YESTERDAY WAS PRESIDENT BIDEN TESTED POSITIVE FOR COVID-19. I REMEMBER WHEN PRESIDENT TRUMP TESTED POSITIVE IN OCTOBER OF 2020. THAT WAS A COMPLETELY DIFFERENT MOMENT IN THE PANDEMIC AND IN THE NEWS CYCLE. IT WAS ALL BECAUSE TALK ABOUT FOR DAYS BECAUSE WE DID NOT HAVE ADVANCED VACCINATION AND TREATMENTS. IT SEEMS NOT ANYONE IS PAYING ATTENTION. JOE:
YOU ARE DEALING WITH AN ALMOST 80-YEAR-OLD MAN, AND THERE ARE CONCERNS ABOUT HIS HEALTH, BUT THE WHITE HOUSE WAS QUICK TO KICK OUT IMAGES AND VIDEO OF THE PRESIDENT TO REASSURE THE WORLD THAT HE IS FINE. HE IS ISOLATED IN THE RESIDENCE, APPARENTLY WORKING HARD. EVERY IMAGE HE IS BEHIND THE DESK AND DOING SOMETHING. THAT IS THE WAY IT GOES. THE MESSAGING FROM THE WHITE
HOUSE IS REALLY STRIKING, AS WE LOOK AT WHERE WE WERE A YEAR AGO TODAY. JOE BIDEN WAS IN A CNN TOWN HALL, AND HE SAID THAT HE WILL NOT GET COVID IF YOU TAKE THE VACCINE. FACT CHECKERS PLAYED WITH THAT AT THAT TIME. YESTERDAY IN THE WHITE HOUSE REAPING ROOM, THEY SAID WE EXPECTED THIS WOULD ALWAYS HAPPEN WITH REGARD TO THE PRESIDENT BEING INFECTED. WE NEVER HEARD THAT BEFORE, NOT DIRECTLY. BUT ALSO, SOONER OR LATER EVERYONE WILL GET IT CARE THAT IS THE FIRST TIME I'VE HEARD THAT FROM A WHITE HOUSE OFFICIAL, CERTAINLY IN THIS ADMINISTRATION, THAT WAS PARTIALLY ELECTED TO BEAT COVID. JONATHAN:
JOE MATHIEU, WE WILL CHECK IN WITH YOU. IF THERE WAS A TIME IN THIS PANDEMIC -- TOM: I THINK IT IS REALLY BAD MEDICINE. IF YOU GET VACCINATED, THAT DOES NOT DIMINISH THE OPPORTUNITY TO ENJOY COVID. WHAT THAT MEANS IS, WHEN YOU GET SICK, YOU GET MUCH LESS SICK, PARTICULARLY WITH THE DOUBLE BOOSTERS. THE PRESIDENT GETS COVID AND EVERYONE GOES NUTS -- I GOT COVID, I DO NOT EVEN HEAR FROM YOU -- JONATHAN: YES, YOU DID. [LAUGHTER] TOM:
OK, YOU SENT ME A FRUIT BASKET. OTHER THAN THAT -- JONATHAN: I CHECKED IN MULTIPLE TIMES. DON'T EVEN START. NASDAQ WILL S&P, WE ARE DOWN. THE WEAKNESS IS SOMETHING WE HAVE TO SIT ON. DOWN THREE QUARTERS OF 1%. THE DATA AROUND EUROPE IS JUST BAD PURE FOR THOSE PEOPLE OUT THERE SAYING YOU WILL TALK US INTO A RECESSION -- I AM NOT TALKING ANYONE INTO ANYTHING. I'M JUST LOOKING AT ECONOMIC
DATA -- IT SPEAKS PRETTY LOUDLY. TOM: CAN WE GET READY FOR THE "REAL YIELD" THIS AFTERNOON? I JUST WANT A VICTORY LAP -- -0.25 -- 25 BASIS POINTS OF INVERSION SINCE ABOUT 4:00 A.M. THIS MORNING. THIS IS THE BANNER. THE BANNER SAYS "HALFWAY TO PRIYA MISRA." I DO NOT THINK I WOULD EVER SAY
THAT IS QUICKLY. JONATHAN: SHE WAS LOOKING FOR -40. I THINK MAYBE SHE STILL IS. ARGUABLY BECAUSE RATES HAVE TO GO UP MORE AND THE FRONT END WILL SUFFER. FUTURES DOWN ONE THIRD OF 1%. FROM NEW YORK THIS FRIDAY MORNING, GOOD MORNING. JONATHAN: RALLY ON THE S&P 500. A DECENT WINNING STREAK.
UP ABOUT 3.5%. FUTURES DOWN BY ABOUT O 20%. KAILEY WILL GO THROUGH SOCIAL MEDIA STOCKS A LITTLE LATER ON. SNAP IS A PAPER PLANE IN A WINDSTORM. YOU WANT TO LOOK TO THINGS LIKE
GOOGLE AND FACEBOOK. THE BOND MARKET RIGHT NOW. BIG RANGE ON A 10-YEAR TREASURY. PUSHING 3.1% AT THE HIGHS YESTERDAY. LOOK OUT FOR THE PMIS LATER THIS MORNING. LOOK AFTER PMIS EARLIER THIS MORNING IN EUROPE. CHECK OUT HOW EUROPE IS TRADING.
GERMANY. YIELDS IN. 22 BASIS POINTS ON A 10-YEAR AFTER THE ECB JUST HIKED 50 BASIS POINT. THE EURO -.3%. THE DATA OUT OF EUROPE UGLY. IF I HAD TO PICK A WORD, UGLY.
TOM: I WILL GET IT OUT ON TWITTER. JON, REAL GDP IS TOTALLY DIFFERENT, RADICALLY DIFFERENT THAN THE UNITED STATES. INHERENT DYNAMISM ISN'T THERE EVEN THOUGH EVERYONE WE KNOW IS GOING TO PARIS. JONATHAN: THE NUMBER ONE SHOCK, TOM. I KNOW YOU ARE COMPLAINING BECAUSE YOU WANT TO GO TO PARIS.
THE NUMBER ONE SHOCK COULD BE A NEGATIVE SUPPLY SHOCK. WHAT COULD HAPPEN, GIVEN THE COMMUNICATION FROM THE ECB, YOU GET A SHUT OFF OF GAS FROM RUSSIA AND THE ECB ENDS OF HIKING RATES BECAUSE OF THE INFLATION STORY? TOM: I'M DATA DEPENDENT. JONATHAN: THEY ARE WITH YOU, TOTALLY. YOU UNDERSTAND WHAT THEY DO WITH THE DATA. YOU HAVE A DECENT UNDERSTANDING OF THEIR REACTION FUNCTION. IT IS ALL MEANINGLESS. TOM:
I LOOK AT REACTION FUNCTION, JUST LIKE I LOOK AT THE SHARP RISK-FREE RATE. WHAT IS THAT RATE RIGHT NOW? JONATHAN: IN GERMANY, 1%, IF THAT IS WHAT YOU ARE TALKING ABOUT. TOM: YOUR SHORT-TERM PAPER IS AN ANCHOR. I'M ABOUT READY TO GO NEGATIVE
IN GERMANY. JONATHAN: WE ARE GETTING THERE. TOM: ARE YOU DONE OR WHAT? JONATHAN: YOU KEEP BRINGING STUFF UP SOME GIVING YOU NUMBERS. TOM: I WANT A TICKET SO I CAN WATCH THE "REAL YIELD" THIS AFTERNOON. THEY HAVE SHARES LINED UP LIKE THREE ROWS DEEP. IT'S LIKE A FOO FIGHTERS CONCERT. YOU HAVE THE GALLERY GOING AND
EVERYBODY WEARS THE REAL YIELD TICKET. THEY TAKE IT HOME. JONATHAN: IT IS GOING TO BE A HOT ONE. TOM: LET'S GO TO BRIAN LEVITT WHO HAS A REALLY SHARP SCENARIO-BASED MIDYEAR VIEW. INVESCO DOES THAT SO WELL. NOT ON TERM WITH EMILY WILKINS OF MICHIGAN STATE. THEY WALK BY EACH OTHER CAREFULLY.
I WANT TO GO TO YOUR WONDERFUL MIDYEAR REVIEW AND SCENARIO ANALYSIS. HOW DO OUR LISTENERS AND VIEWERS DO SCENARIO ANALYSIS GIVEN UNCERTAINTIES, INCLUDING MORE? -- WAR? BRIAN: LOOK AT IT FROM THE CYCLE IS CHALLENGED. WE KNOW HIGH INFLATION AND POLICY TIGHTENING RAISES THE PROSPECT OF A PRETTY SIGNIFICANT SLOWDOWN. EVEN INDICATORS OF THE BOND MARKET SUGGESTING A CONTRACTION. A MILD RECESSION IS CERTAINLY IN THE OFFING. AT THE SAME TIME THE MARKET HAS PRICED IN A DECENT AMOUNT OF IT.
YOU ARE STARTING TO SEE INFLATIONARY PRESSURES AND EXPECTATIONS COME DOWN, WHICH COULD START TO PROVIDE SOME CLARITY ON POLICY AND SET THE STAGE FOR A RECOVERY. TOM: LET'S GET TO JULY 27. YOU HAVE A FABULOUS CHART SHOWING THE DISTINCTIONS OF THE CENTRAL BANKS, WHO IS TIGHTENING, WHO IS NOT. HOW LONG IS JEROME POWELL AFTER WHAT WE SAW YESTERDAY WITH CHRISTINE LAGARDE? BRIAN: POLICY MAKERS IN THE WESTERN WORLD ARE GOING TO NEED TO DO MORE UNFORTUNATELY TO BRING INFLATION DOWN. I HEARD YOU TALK ABOUT THIS. THEY ARE RAISING RATES INTO A SLOWDOWN IN THE UNITED STATES. UNFORTUNATELY IN EUROPE EVEN WORSE THAN THAT.
ONE PLACE YOU ARE SEEING POLICY EASE IS CHINA. CHINA HAD BACK-TO-BACK ROUGH YEARS IN THE MARKET BECAUSE OF THE REGULATORY ENVIRONMENT AND ZERO COVID. EASING POLICY IN CHINA IS A TAILWIND. WE ARE STILL IN THE WESTERN WORLD GRAPPLING WITH THE HEADWIND OF EVER TIGHTER POLICY HERE. KAILEY: TALKING ABOUT THE HEADWINDS THEY ARE HIKING INTO A WEAKER ECONOMIC ENVIRONMENT. THE BOND MARKET IS HAVING A WAR
WITH ITSELF. YIELDS KEEP TRYING TO GO UP BECAUSE RATES ARE GOING TO GO UP. THAT CONCERN AROUND A POTENTIAL RECESSION OR SLOWDOWN IS KEEPING YIELDS CAPPED. WHAT IS YOUR ASSUMPTION ABOUT
SEEING THE PEAK IN YIELDS? DO PEOPLE WANT TO BE BUYING VOLUNTEER? BRIAN: I BELIEVE WE HAVE PROBABLY SEEN THE PEAK IN YIELDS. WHEN YOU'RE IN A RECOVERY, AND EXPANSION, INTEREST RATES MOVE HIGHER. EQUITY VALUES ADJUST. WHAT YOU SEE NOW IS SHORT RATES THAT HAVE MOVED UP A LOT SINCE LAST FALL. THEY MAY NEED TO GO A BIT HIGHER DEPENDING ON WHERE THE FED GOES. LONG RATES START TO STABILIZE AND COME IN AMID EXPECTATION OF LOWER INFLATION AND SLOWING ECONOMIC GROWTH.
INVESTORS SEE THEIR STATEMENT. THINK OF IT IN TERMS OF 60/40. THE 40 DID NOT WORK THIS TIME. WE HAD A RATE ADJUSTMENT. I WOULD NOT BE SELLING MY GOVERNMENT BONDS OR QUALITY MUNICIPAL BONDS. KAILEY: IS GROWTH AND EQUITIES ALSO YOUR FRIEND IN A SLOWDOWN? BRIAN: YEAH, DEFENSIVE HIGHER-QUALITY GROWTH BUSINESSES TEND TO DO WELL IN A SLOWDOWN. IT IS THE RECOVERY EXPANSION PHASE WHERE YOU WANT TO BE VERY CYCLICAL WHEN YOU SLOW DOWN MORE ECONOMICALLY SENSITIVE PARTS OF THE MARKET. IT TENDS TO DO LESS WELL. INVESTORS PILING INTO THINGS
LIKE ENERGY PROBABLY DOING IT SOMEWHAT NEAR THE HIGH. MORE GROWTH BUSINESSES TEND TO DO WELL WHEN THEY DON'T REQUIRE SUCH ECONOMIC ACTIVITY. TOM: STRATEGIES HAVE TO WRITE ABOUT A MINI BULL MARKET. 12 MONTHS TRAILING. S&P AND DOW ABOVE CORRECTION LEVEL. THEY ARE DOWN 8%, 7%, 12 MONTHS TRAILING. THERE'S A POINT YOU HAVE TO BLINKEN SAY SHOULD I BE MORE IN EQUITY -- BLINK AND SAY SHOULD I BE MORE IN EQUITY? WHERE SHOULD WE BE IN THE MIX? BRIAN: IT DEPENDS ON THE TIME HORIZON. IF YOU'RE BUYING, YOU'RE
PROBABLY NOT ALL THAT UNHAPPY A COUPLE OF YEARS FROM NOW. DO WE HAVE ROOM TO GROW? I SUSPECT WE DO. WE HAVE NOT TRADITIONAL BOTTOM INDICATORS FLASH, CALL RATIOS HIGHER. THERE'S PROBABLY A BIT MORE ROOM TO GO. WE HAVE VALUATION ADJUSTMENT.
NOW WE LIKELY NEED TO ADJUST FOR SOME EARNINGS PRESSURE. THE WAY I TELL PEOPLE, IF YOU THINK OF THE AVERAGE PEAK AND TROUGH DECLINE ASSOCIATE WITH RECESSION IN THE LAST 10 RECESSIONS, 31%. THE S&P TO 23.4%. WE HAVE DONE A GOOD AMOUNT OF WHAT THE AVERAGE IS. AVERAGES LIE. I DON'T THINK ANY OF US EXPECT SEVERE RECESSION LIKE THAT. IF IT IS A MORE MILD VARIETY, THERE MAY BE ROOM TO GO.
YOU DON'T HAVE TO GET TO THE BOTTOM IS AN INVESTOR. YOU CAN BUY HALFWAY OR MORE THAN HALFWAY THROUGH AND FOR LONG-TERM INVESTORS THAT PAYS OFF WELL. KAILEY: LET'S TALK ABOUT THE ROOM TO GO FOR THE DOLLAR. IT'S HEADING FOR THE WORST WEEK SINCE MAY. BRIAN: THE DOLLAR HAS RESPONDED TO A MOVE BY THE EUROPEAN CENTRAL BANK. THEY WILL BE TRADING. THE EURO WILL BE A BIG PART OF IT. ECB RAISING RATES MORE THAN EXPECTED LEADS TO AN ADJUSTMENT
IN THE DOLLAR. THE CURRENCY WILL FLOW TO WHERE IT IS TREATED BEST. THE UNITED STATES, YEAH, WE HAVE SOME CHALLENGES ON THE ECONOMIC FRONT BUT CERTAINLY NOT AS SEVERE AS WHAT YOU ARE SEEING IN EUROPE.
I THINK THE DOLLAR IS LIKELY TO BE STRONG RELATIVE TO LARGER TRADING PARTNERS. JONATHAN: WAKE UP EARLY, DO AN INTERVIEW WITH US, GO PLAY GOLF AT 11:00. BRIAN: I PLAY GOLF WITH CLIENTS. TOM: 200 BASIS POINTS PER YEAR, YOU KNOW. HE'S BUSY. JONATHAN:
YOU GO PLAY GOLF WITH CLIENTS. PERFECT TIME TO GO PLAY GOLF WITH CLIENTS. TOM: COULD YOU SEE ME ON A GOLF COURSE? JONATHAN: YOU CADDIED, DIDN'T YOU? TOM: BIG TIME. WHERE LEE TREVINO WON THE U.S.
OPEN A FEW YEARS AGO. THERE ARE SCENES IN "CASH CHECK" -- CADDYSHACK" THAT ARE HILARIOUS. THEY WOULD PAY ME TO LEAVE THE GOLF COURSE. JONATHAN: A LOT OF MONEY AND THAT? CADDYING? TOM: I COULD KEEP IT FROM NELSON ROCKEFELLER. I WAS RICH. IT WAS IN MY YOUTH. JONATHAN: MANY YEARS AGO.
TOM: SUPPLY AND DEMAND. IT'S ABSOLUTELY CRAZY. IT HAS BEEN REALLY INTERESTING. CUTTER AIRLINES -- QATAR AIRLINES IS CHEAPER THAN NEW YORK TO PARIS. I FIND THAT JUST SAYING EVERYTHING ABOUT THE BAND. JONATHAN: BUSINESS CLASS.
YOU DID NOT SPECIFY. THIS RAISES A QUESTION ABOUT THE BACK HALF OF THIS YEAR. THIS YEAR THEY CAN CHARGE WHAT THEY WANT AND PEOPLE ARE BUYING TICKETS.
I DON'T KNOW IF THEY CAN REPEAT THAT ACT LATER THIS YEAR. TOM: I HAD THE BUY TO BRITISH COLUMBIA YESTERDAY. IT WAS ON THE EDGE OF REASONABLE. JONATHAN: IT CAME DOWN A BIT? TOM: WHAT CAN I SAY? AIR KIRBY IS UNITED AIRLINES. THEY HAVE BEEN GOOD. JONATHAN: ARE WE NAMING THE AIRLINES AFTER THE CEO NOW? TOM: I GOT THEM IN TWO HOURS. I THOUGHT THAT WAS PRETTY GOOD.
JONATHAN: FUTURES DOWN POINT PERCENT -- .2%. TOM: MY LUGGAGE IS IN DES MOINES. JONATHAN: THIS IS BLOOMBERG. ♪ RITIKA: KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD, THE JANUARY 6 COMMITTEE SAYS THE FORMER PRESIDENT IGNORED CALLING OFF THE MOB STORMING THE CAPITOL. MEMBERS CAST THE INACTION AS A DESPERATE FINAL PLOY IN HIS STRUGGLE TO HOLD ONTO THE PRESIDENCY.
THE WHITE HOUSE IS CONFIDENT PRESIDENT BIDEN WILL AVOID THE WORST OF THE CORONAVIRUS THANKS TO VACCINES IN A THERAPEUTIC DRUG. THE PRESIDENT IS IT. SEE MILD SYMPTOMS BUT HAS BEGUN TAKING -- HAS BEGUN HAVING MILD SYMPTOMS. THE REPUBLICAN CANDIDATE FOR GOVERNOR IN NEW YORK STATE WAS ATTACKED AT A CAMPAIGN EVENT.
A MAN. DRAG HIM TO THE GROUND BEFORE BEING SUBDUED NO ONE WAS HURT. -- DISSOLVE PARLIAMENT AND OFFICIALLY CALLED FOLLOWING MARIO DRAGHI'S MOVE. TURKIYE SAYS UKRAINIAN GRAIN WILL BEG IN ISTANBUL. GRAIN SHIPMENT HAVE BEEN STORED AS THE PORTS HAVE BEEN BLOCKED SINCE THE RUSSIAN INVASION, LEADING TO AN INCREASE IN WORLD HUNGER. AMAZON STARTED DELIVERING PACKAGES TO U.S.
CUSTOMERS USING THE FIRST OF 100,000 ELECTRIC VANS FROM RIVIAN. AMAZON HOPES TO HAVE THE VANS DEPLOYED IN MORE THAN 100 CITIES BY THE END OF THE YEAR. GLOBAL NEWS, 24 HOURS A DAY, ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. >> I'M DOING WELL. GETTING A LOT OF WORK DONE AND CONTINUING TO GET IT DONE. THANKS FOR YOUR CONCERN.
KEEP THE FAITH. JONATHAN: THE PRESIDENT HAS COVID, AND IS NOT THE NEWS OF IT IT WOULD HAVE BEEN TWO YEARS AGO. FUTURES NEGATIVE ON THE S&P 500. ON THE NASDAQ WE ARE DOWN BY 131%. -- ONE THIRD OF 1%. THE FLOW IS GOING INTO TREASURIES.
BUNDS AGGRESSIVELY LOWER. HERO WEEK -- EURO WEAKER. DATA ED OF EUROPE NOT GREAT AT ALL. DOWNSIDE SURPRISE. DOWNSIDE SURPRISE. PMIS AT 9:45 EASTERN TIME. TOM: IT IS WAY BETTER THAN WHAT PRESIDENT TRUMP CONFRONTED.
MAYBE AGE, MAYBE HEALTH, BUT VERLIN SAYS WELL. LAUREN SAUER IS AN EXPERT IN THIS FIELD, NEBRASKA MEDICAL CENTER. I WANT TO GO TO OUR YOUTH. MY MOTHER DRAGGED ME FOR BOOSTERS. NO BIG DEAL. THERE WAS WHOOPING COUGH, TETANUS, DIPHTHERIA, TDAP, ALL THE REST OF IT. WHY IS OUR FEAR OVER A COVID
BOOSTER SHOT SO DIFFERENT THAN OUR FEAR OVER GETTING A DIPHTHERIA BOOSTER SHOT? LAUREN: TO BE HONEST I THINK A LOT OF IT IS POLITICS AND THE CONVERSATION ON HOW THE VACCINE WAS DEVELOPED. IT IS RARE WE SEE THE DEVELOPMENT OF A VACCINE PLAY OUT IN THE PUBLIC LIKE THIS ONE HAS. WE ARE SEEING EVERY MINUTIA OF THE PATH. PEOPLE ARE PAYING SUCH CLOSE ATTENTION TO THE DATA THAT ARE NOT SCIENTISTS, NOT CLINICIANS, AND THEY ARE CANDY GOT MISINTERPRETATIONS INTO SOCIAL MEDIA THAT ARE NOT QUITE ACCURATE. I THINK CHANGING THE
CONVERSATION ABOUT HOW VACCINES ARE MADE AND WHY WE USE THEM IS IMPORTANT. BRINGING THE TRUST BACK TO THE PROCESS. EXPLAINING WHAT HAPPENED AND HOW THINGS ARE DEVELOPED AND GETTING PEOPLE BACK ON TRACK WITH THE VACCINES YOU MENTIONED. A LOT OF KIDS HAVE BEEN DELAYED GETTING THEIR CHILDHOOD VACCINES BECAUSE OF THE COVID PANDEMIC. BRINGING EVERYONE BACK UP TO SPEED AND GETTING THE POPULATION HEALTHY AGAIN. TOM:
WHAT WOULD YOU LIKE TO SEE IN TERMS OF ACTION FROM POLITICIANS TO GET US BACK TO WHERE WE DON'T DIE FROM DIPHTHERIA IN ONE WEEK LIKE MEMBERS OF MY FAMILY DID IN ABOUT 1905? LAUREN: A HUGE PIECE IS MESSAGING THE PROCESS AND WHY IT IS IMPORTANT. WE NEED TO HAVE ALL OF OUR POLITICIANS COME OUT AND TALK ABOUT WHY VACCINES ARE IMPORTANT FOR THEIR CHILDREN. WE CAN'T HAVE THIS VITRIOL, THIS DIALOGUE PLAYING OUT IN THE PUBLIC SPHERE. RECOGNIZING SCIENTISTS HAVE A HIGHER LEVEL OF TRAINING, CLINICIANS HAVE A HIGHER LEVEL OF TRAINING THAN THE AVERAGE POLITICIAN ON HOW VACCINES WORK, WHY WE USE THEM. THE OPINION OF AN INDIVIDUAL, AND LET'S JUST SAY A MEMBER OF CONGRESS, IS DIFFERENT THAN A PHYSICIAN RESEARCHER TRAINED FOR 20 PLUS YEARS TO DEVELOP THESE VACCINES, ROLL OUT THE TRIALS, AND UNDERSTAND THE DATA ON HOW THEY WORK. KAILEY: AS WE TALK ABOUT THE MESSAGING,
WHAT A LOT OF PEOPLE SEE AS I'M VACCINATED BUT I STILL HAVE A POSITIVE CASE. THIS SPECIALLY WHEN YOU TALK ABOUT A NEW VARIANT THAT DEFEATS ALL IMMUNITY, DOES THAT RAISE THE QUESTION OF GETTING MORE BOOSTERS INTO ARMS OR JUST ESSENTIALLY SAYING WE HAVE TO RESIGN OURSELVES TO THE FACT EVERYONE WILL CONTRACT THE VIRUS, IT'S JUST A MATTER OF HOW BAD IT IS FOR THEM. LAUREN: IT'S HONESTLY SOMEWHERE IN BETWEEN. WE HAVE A FEW MISSTEPS ON THE
SCIENCE SIDE POTENTIALLY TALKING ABOUT STERILIZING COMMUNITY EARLY IN THE PANDEMIC BECAUSE HE DID NOT KNOW HOW THE DATA WOULD LOOK. EXPECTING PEOPLE TO CHANGE THEIR VIEWPOINT FROM I WILL GET THIS VACCINE AND WILL NEED A VACCINE AND GET SICK TO THE VACCINE IS PROTECTING YOU BUT IT'S PROTECT YOU FROM GETTING REALLY SICK AND POSSIBLY ENDING UP IN THE HOSPITAL OR DYING. THAT CONVERSATION IS CONTINUING TO PLAY OUT. EVENTUALLY WHEN WE GET THE VACCINE LEVEL REALLY HIGH IN THE POPULATION THE MILD COVID IS WHAT WE WILL START TO SEE.
PEOPLE WILL BE VACCINATED. PROBABLY ON A REGULAR VACCINE SCHEDULE AND IT WILL FEEL LIKE THE WAY WE DEAL WITH THE FLU. TO BE HONEST PEOPLE GET REALLY SICK AND DIE EVERY YEAR OF THE FLU. RESEARCH CONTINUES ON HOW TO MAKE BETTER FLU VACCINES, HOW TO MAKE UNIVERSAL FLU VACCINES.
IT WILL PROBABLY FOLLOW THE SAME PATH. KAILEY: WHAT IS THE APPROPRIATE POLICY RESPONSE IN A WORLD WHERE PEOPLE ARE NOT GETTING AS SICK BUT STILL GETTING SICK AND CAN BE CONTAGIOUS? DOES THAT MEAN MASKS FOREVER? YOU'RE OUT OF THE OFFICE FOR AT LEAST FIVE DAYS IF YOU TEST POSITIVE? HOWDY THINGS HAVE TO EVOLVE IN THAT SCENARIO? LAUREN: THE FIRST STEP IS WE STILL HAVE TO DO A LOT OF WORK TO GET THE VACCINATION RATE UP. FOR MINING PEOPLE -- REMINDING PEOPLE IF THEY HAVE GOT VACCINATED, THEY HAVE TO GET BOOSTERS. PUSHING THE FEDERAL GOVERNMENT TO BRING THAT FORTH DOES TO PEOPLE -- FOURTH DOES TO PEOPLE. -- DOSE TO PEOPLE. AS WE GROW VACCINE IMMUNITY WE WILL SEE LESS MASKS. I THINK MASKING ESPECIALLY INDOORS IS QUITE APPROPRIATE.
TOM: ARE WE COMPLETELY TO WHERE THIS VIRUS IS ENDEMIC? IT IS HERE, GET OVER IT. IT IS NOT MOVING. LAUREN: I THINK IT IS HERE. I THINK IT IS ENDEMIC. WE ARE TALKING ABOUT ENDEMIC LIKE IT IS SOMETHING WE RESIGN OURSELVES TO ACCEPT. IN REALITY WE HAVE LOTS OF ENDEMIC DISEASES WE FIGHT TOOTH AND THEY'LL. TOM: -- TOOTH AND NAIL. TOM: GIVE US ANY SAMPLE. LAUREN: MAYBE NOT IN THE UNITED STATES
WE DON'T TALK THEM IN THE SAME WAY. ACROSS THE WORLD WE FIGHT ENDEMIC DISEASES BECAUSE THEY STILL CAUSE SIGNIFICANT MORBIDITY AND MORTALITY. DOING ALL WE CAN TO STOP COVID SPREAD AND FIGHT COVID TO PROTECT OUR PEOPLE IS REALLY IMPORTANT. EVEN IF THE DISEASE BECOMES ENDEMIC. JONATHAN: LAUREN SAUER, WONDERFUL TO HEAR FROM YOU AS ALWAYS. WE HAVE MISSED YOU.
UNIVERSITY OF NEBRASKA MEDICAL CENTER'S LAUREN SAUER. I WAS LOST IN A NEW ARTICLE OUT BY MOHAMED EL-ERIAN. IT IS PUNCHY. A LONG LIST OF WHAT THE FEDERAL
RESERVE NEEDS TO DO TO BE REMEMBERED BY ECONOMIC HISTORIANS AS HAVING UNNECESSARY BECAUSE THE U.S. RECESSION, HAVING DESTABILIZED THE GLOBAL ECONOMY RECOVERING FROM COVID, HAVING UNSETTLED FINANCIAL STABILITY AND CONTRIBUTED TO DEBT STRESS IN FRAGILE DEVELOPING COUNTRIES. THAT IS THE CONCLUSION OF HIS PEACE THIS MORNING.
-- PIECE THIS MORNING. TOM: THE THING HE BRINGS UP I THINK IN AUGUST IS EM. I'M WATCHING EVERY MORNING SOME OF THE EM UNRAVELINGS. YOU NEVER KNOW HOW THEY CORRELATE. THIS IS A WAY FOR THE INEPTITUDE OF SRI LANKA AND MAJOR CULTURAL ISSUES THERE.
ON THE BACK END OF THAT WHERE HE MENTIONS EM I THINK HE IS SPOT ON. JONATHAN: SPECIAL COVERAGE NEXT WEDNESDAY. I'M PLEASED THAT ANNOUNCED MOHAMMED WILL BE JOINING US. THAT HAS BEEN CONFIRMED TO LOOK OUT FOR HIM ON WEDNESDAY. TOM: CAN I ASK HIM A QUESTION? JONATHAN: YOU CAN TALK IF YOU ARE POLITE. FUTURES DOWN .2%.
THE EURO WEAKER. DOWN SIX BASIS POINTS. 281.42. FROM NEW YORK THIS IS BLOOMBERG. >> IT WOULD TAKE A LOT TO STOP MOBILIZING FOR OIL. >> PRETTY DANGEROUS TERRITORY. ARGUABLY SOME POLICY MISTAKES. >> THEY HOPE THEY CAN HIKE WITHOUT TRIGGERING A DEEPER DOWNTURN.
>> THE RISK OF THE MARKETS IS WE TALK OURSELVES INTO A RECESSION. >> THE ECB IS BEING TOUGH. ALL CENTRAL BANKS ARE AT THE MOMENT. >> THIS IS "BLOOMBERG SURVEILLANCE." JONATHAN:
HIKING IN THE WEAKNESS. THAT IS THE ECB RIGHT NOW. LIVE FROM NEW YORK CITY, GOOD MORNING. THIS IS "BLOOMBERG SURVEILLANCE" ON BLOOMBERG AND RADIO. FUTURES NEGATIVE. .25%. WHAT A MESSY TIME FOR GLOBAL
MARKETS. TOM: A LOT OF NEWS COMING OUT ON A FRIDAY. THERE'S A VOTE ON EUROPEAN CONFIDENCE.
I WONDER HOW THAT COMES OVER ON WHAT WE WILL SEE NEXT WEEK. JONATHAN: DOWN 30 BASIS POINTS THIS MORNING. ACROSS EUROPE IT IS NOT GREAT. NOT TERRIFIC. I DESCRIBE IT AS PRETTY POOR. U.S. BMI A LITTLE LATER -- PMI A LITTLE LATER. WE HEAR FROM ALL THE BIG TECH HEAVYWEIGHTS. TOM:
I KNOW KAILEY IS LOOKING AT THOSE. NEXT WEEK IS WIDELY ANTICIPATED. I TAKE ISSUE WITH THE IDEA OF COMPARING WHAT WE SEE NEXT WEEK WITH SNAP YESTERDAY. JONATHAN: YOU ARE NOT THE ONLY ONE. TOM: KAILEY LEINZ IS WITH YOU. TOM:
PLANNING CRYPTO TUESDAY? KAILEY: I'M ALWAYS PLANNING CRYPTO. I'M PAYING ATTENTION TO SNAP. IS THAT IMPORTANT MACROECONOMIC INDICATOR? COMPANIES NOT WANTED TO SPEND ON ONLINE ADVERTISING BECAUSE THE ENVIRONMENT IS DETERIORATING. SLOWING IN HIRING. SOMETHING WE'RE HEARING COMPANIES TALKING ABOUT. WHAT DOES THAT INDICATE? JONATHAN: THE PAPER PLANE IN A WINDSTORM. WE HAVE TO SEE HOW FACEBOOK AND
GOOGLE STANDUP. I SAID THAT. I SAID EARLIER AS WELL. YOU SEEM TO HAVE IGNORED IT. KAILEY: DOES NOT COUNT OF IT COMES FROM YOU. JONATHAN: OK. FANTASTIC. HOPEFULLY WE CAN CATCH UP NEXT WEEK. NASDAQ DOWN BY .5%. FIVE OR SIX BASIS POINTS ON A 10-YEAR. IN EUROPE, NOT GREAT.
EURO-DOLLAR -.6%. CRUDE DOWN 1.5%. KAILEY: THE UNWINDING OF PRICE PRESSURE IN COMMODITIES SOMETHING TO KEEP IN AN EYE ON. SPEAKING OF CENTRAL BANK RESPONSES, WE GOT A RATE CUT FROM THE BANK OF RUSSIA ABOUT AN HOUR AND A HALF AGO, 30 MEXICO. IT'S FRIDAY -- 30 MINUTES AGO. IT'S FRIDAY. CUTTING RATES DOWN 8%. ECONOMISTS WERE EXPECTING 9%. 150 BASIS POINTS WHEN WE WERE EXPECTING 50. THE CUMULATIVE TOTAL IS 12
BASIS POINTS SINCE APRIL. INFLATION IS NOT GOING TO BE UP AS MUCH. VERY DIFFERENT ECONOMIC OUTLOOK THAT WE SAW BACK IN FEBRUARY. ALSO AT 8:00 A.M. NEW YORK TIME, RESULTS FROM TWITTER. WE WERE TALKING ABOUT THE
ADVERTISING HEADWINDS. HOW MUCH IS THAT WEIGHING ON THE COMPANY? THERE WILL NOT BE A CONFERENCE CALL BECAUSE THEY ARE IN A BATTLE WITH A LEGAL -- A LEGAL BATTLE WITH ELON MUSK OVER THAT TAKEOVER. WE WILL NOT GET MUCH COMMENTARY AROUND IT. 9:45, PRELIMINARY JULY PMI IN THE U.S. AFTER WEAK PMIS OUT OF EUROPE AND A LITTLE WEAKER ECONOMIC DATA. WILL WE GET A DISAPPOINT ON THESE NUMBERS AS WELL? JONATHAN: GIVEN THE EXECUTION PROBLEMS AT TWITTER IN THE LAST COUPLE OF MONTHS, IS THAT A PAPER PLANE WITH HOLES IN IT? TOM: COMPLETE MYSTERY HERE.
I DON'T HAVE A READ ON THAT. I'M LOOKING AT AN ABSOLUTE CONFIRMATION OF A TRAVEL BOOM WITNESSED THROUGH AMERICAN EXPRESS. EXTRAORDINARY NUMBERS WITH NEW GUIDANCE. FORGET ABOUT THE NUMBERS. THE REAL MYSTERY IS WHAT DOES THIS TRAVEL BOOM DO INTO THE END OF THE YEAR? THAT IS ONE OF THE GREAT MYSTERIES IN THE Q3 AND Q4. JONATHAN: REVENUE UP 23% TO 25%. THEY RECENTLY SAW 18% TO 20%. HERE'S A QUOTE FOR YOU. WE ARE AT THE CROSSROADS BETWEEN THE END OF THE COMMODITY RUN AT THE BEGINNING OF THE BOND MARKET ROAD TO RECOVERY. THAT COMES FROM EMILY ROLAND.
WHAT DO YOU MEAN BY THE BOND MARKET ROAD TO RECOVERY? EMILY: WE ARE SEEING SIGNS GLOBAL ECONOMIC GROWTH IS THE CELEBRATING AT A RAPID CLIP HERE . EVIDENCE OVER THE PAST FEW DAYS WITH ECONOMIC DATA IN THE U.S. INITIAL CLAIMS RISING. THE PHILLY FED PLUNGING. LEADING ECONOMIC INDICATORS BARELY HANGING ON.
NOW THE PMI DATA IN EUROPE CONFIRMING EUROPE IS LIKELY IN A RECESSION OR VERY CLOSE TO ONE. WE SEE THIS BROAD ENVIRONMENT WHERE ECONOMIC GROWTH IS SLOWING. USUALLY IN THE LATE CYCLE PERIOD BOND YIELDS FALL. BOND YIELDS HAVE BEEN SEEING THIS MASSIVE BACKUP OVER THE COURSE OF 2022. WE THINK NOW IS THE TIME TO LEAN INTO HIGH QUALITY BONDS. #BUYBONDSANDCHILL. YOU NEED MORTGAGE-BACKED
SECURITIES, TREASURIES, INVESTMENT-GRADE CORPORATE. WE WOULD TAKE IT RIGHT NOW. TOM: WHAT IS THE CHARACTER OF THIS EQUITY BULL MARKET OF THE LAST SIX WEEKS? EMILY: WE HAVE SEEN A COUPLE OF NARRATIVES DRIVING THIS. THE BREATHER THE DOLLAR IS TAKING. THE DOLLAR COMING BACK A LITTLE BIT.
THERE'S A NARRATIVE BUILDING WE HAVE REACHED MAXIMUM CAPITULATION HERE, MEANING ANY SELLER THAT WANTS TO GET OUT HAS GOTTEN OUT. WE WOULD BE CAREFUL WITH THAT NARRATIVE. THERE'S A FEW THINGS THAT USUALLY HAPPEN WHEN YOU START TO CALL FOR MORE DURABLE BOTTOM. HIGH-YIELD BOND SPREADS. 489 BASIS POINTS RIGHT NOW.
THEY HAVE TO BLOW UP MORE. EARNINGS ESTIMATES ARE LEVELING OFF. WE WANT TO LOOK FOR THOSE TO ACTUALLY ROLLOVER. WE HAVE TO ACTUALLY HAVE THE RECESSION. THERE'S A LOT OF MARKETS THAT ARE PRICING IN A RECESSION. WE STILL HAVE AN EMPLOYMENT AT
3.6%. WE STILL HAVE CONSUMER SPENDING ELEVATED HERE. WE HAVE TO EXPERIENCE THE RECESSION BEFORE WE CAN CALL FOR MORE DURABLE BOTTOM. WE ARE CAREFUL ABOUT LEANING INTO THE RALLY. KAILEY: ON THE SUBJECT OF EARNINGS, A BIG WEEK FOR THOSE NEXT WEEK, ARE YOU SAYING THERE IS TOO MUCH OPTIMISM OUT THERE ON CORPORATE PROFITS? EMILY: YEAH. WHEN WE LOOK AT ESTIMATES FOR 2022, JUST OVER 10%.
WE THINK THAT IS LIKELY REALLY OPTIMISTIC. WE ARE LOOKING FOR A LOW SINGLE-DIGIT GROWTH. NOT TERRIBLE. THE BAR IS PRETTY LOW. THERE'S OPTIMISM RUN EARNINGS.
WHAT COMPANIES ARE DOING IS FINDING EVERY LEVER THEY CAN TO GENERATE CASH FLOW. WE SEE THIS DECELERATION STARTING TO HURT CORPORATE EARNINGS. THE TIGHTENING OF THE FED IS PUTTING INTO THE SYSTEM NEEDS TO BE FELT BY CORPORATIONS. THEY IS SOME ROOM TO GO THERE. WE THINK LEANING INTO HIGHER QUALITY COMPANIES, ONES WITH GREAT CASH FLOW, LOTS OF CASH ON THE BALANCE SHEETS, THAT IS WHAT YOU WANT TO DO IN A LATE CYCLE PERIOD. QUALITY HAS GOTTEN CRUSHED THIS YEAR. I DON'T UNDERSTAND WHY WE ARE SEEING A ROTATION INTO IT.
THAT IS WHERE WE WOULD LEAN INTO FOR THE BACK CAP OF THE YEAR. JONATHAN: HIS EUROPE INVESTABLE IN 2022? EMILY: YOU HAVE TO BE REAL CAREFUL THERE. GROWTH CLEARLY SLOWING. EARNING ESTIMATES ROLLING OVER. GETTING VERY DEFENSIVE AND EUROPE, OWNING QUALITY AND EMBRACING AREAS LIKE UTILITIES, INFRASTRUCTURE, HEALTH CARE.
FROM AN INDEX CONSTRUCTION STANDPOINT, IF YOU OWN EUROPE, YOU OWN ECONOMIC TENTATIVE AT THE. NOT WHAT YOU -- SENSITIVITY. NOT WHAT YOU WANT TO OWN IN A RECESSION. JONATHAN: A TOUGH MOMENT FOR EUROPE.
WE WILL SAY IT 1000 MORE TIMES THIS SUMMER. BEFORE THE ECB MEETS AGAIN IN SEPTEMBER. TOM: THE DOLLAR DOWN 14% FROM THE PEAK. AN IDEA.
IT IS NOT LIKE A TECH PLAY. I AGREE ON EUROPE. IT'S A MYSTERY. I DON'T PRETEND EXPERTISE. WE NEED TO CATCH A WITH DAVID. JONATHAN: ON THE BANKS?
WITHOUT A DOUBT. TOM: WE WERE SUPPOSED TO BE IN FRANKFURT YESTERDAY FOR THE NEXT MEETING. JONATHAN: DO YOU WANT TO GO IN SEPTEMBER? WE CAN SPEND THE WHOLE OF SEPTEMBER IN EUROPE WITH THE ITALIAN ELECTION.
44 ECONOMISTS ON WHETHER THE -- WHERE THE FED PEAK WILL BE. RE-75 EARLY NEXT YEAR, THEN A PAUSE BEFORE THE END OF THE YEAR. TOM: THE INTERNS COME IN ON FRIDAY. YEARS AGO THE INTERNS NEVER SHOWED UP ON FRIDAY. JONATHAN: WHY ARE YOU SAYING THAT? TOM: I THINK IT'S GREAT THE INTERNS COME IN ON FRIDAY. THEY ARE HERE THIS EARLY. THEY ARE HUNG OVER, BUT YOU KNOW. JONATHAN:
IS THERE A REASON YOU MENTIONED THAT IN RESPONSE TO WHAT IS SAID ABOUT THE FED PEEKING? TOM: SORRY, JON. ONCE AGAIN I WAS NOT PAYING ATTENTION. JONATHAN: THANK YOU. FUTURES DOWN BY .3% ON THE S&P. NASDAQ AROUND .5%. KAILEY, IF YOU WAKE UP AND WHAT PRICE ACTION, I WOULD SAY THAT THE GERMAN BUNDS. WHAT IS THAT TELLING YOU NOW?
KAILEY: THE ECB JUST HIKED 50 BASIS POINTS AT A TIME A VERY DIRE ECONOMIC OUTLOOK FOR EUROPE. THE PMIS CONTRACTION TERRITORY ON THE COMPOSITE IN GERMANY, COMPOSITE AND SERVICES. BTP YIELDS DOWN 19 BASIS POINTS. TOM: ITALY, GERMANY. I'M SORRY, IT HAS NOT COME IN.
IT IS STILL SEVERE. JONATHAN: WITHOUT A DOUBT. DETAILING YIELDS ARE COMING IN TODAY IS POSITIVE. THE PROBLEM IS, THE EPICENTER OF THE PRICE ACTION IS WEAK EUROPEAN ECONOMIC DATA. TOM: THE EPICENTER OF ITALIAN PRICE ACTION IS GUCCI AT THE BOTTOM OF THE SPANISH STAIRS. JONATHAN: ONLINE SHOPPING FOR GUCCI. TOM:
KAILEY IS NOT ONLINE SHOPPING. JONATHAN: WHAT IS THE WORST INDICATOR OF WHAT IS GOING ON RIGHT NOW? TOM: THE NUMBER OF SHARES EMPTY AT THE BAR. JONATHAN: FROM NEW YORK CITY, THIS IS BLOOMBERG. ♪ RITIKA: KEEPING YOU UP-TO-DATE WITH NEWS AROUND THE WORLD, I AM RITIKA GUPTA. SOCIAL MEDIA GIANTS ARE ON TRACK TO LOSE $69 BILLION SINCE YESTERDAY'S CLOSE. CONCERNS ABOUT THE OUTLOOK FOR
ONLINE ADVERTISING FOR THE SECTOR. THAT SAW A MAJOR SLOWDOWN IN THE AD INDUSTRY AND A REDUCED RATE OF HIRING. GINA RAIMONDO WARNS THE U.S. CANNOT KEEP RELYING ON TAIWAN FOR SEMICONDUCTORS.
IN A SPEECH, SHE SAID CONGRESS NEEDS TO PASS LEGISLATION TO COURT DOMESTIC PRODUCTION OF HIGH-END COMPUTER CHIPS. SHE CALLED THE $50 BILLION PACKETS A SPUTNIK MOMENT. . -- SINCE THE PANDEMIC LOCKDOWN OF EARLY 2021. A SURVEY OF MANAGERS SIZE 17-MONTH LOW. SERVICE SECTOR GROWTH, STALLED. AND THE U.K., -- AND THERE IS TO BECOME THE NEXT PRIME MINISTER. ACCORDING TO A SURVEY OF
CONSERVATIVE PARTY MEMBERS, 62% SAY THEY WOULD VOTE FOR TRUST. TURKEY SAYS AN AGREEMENT TO ALLOW SHIPMENT OF UKRAINIAN GRAIN WILL BE SIGNED TODAY. GRAIN SHIPMENTS HAVE BEEN STALLED AS THE PORTS HAVE BEEN BLOCKED SINCE THE RUSSIAN INVASION THAT LED TO REDUCTIONS OF AN INCREASE IN WORLD HUNGER. GLOBAL NEWS, 24 HOURS A DAY, ON AIR AND ON BLOOMBERG QUICKTAKE, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. >> I THINK IT'S IMPORTANT FOR US TO SHOW SUPPORT FOR TAIWAN. I ALSO THINK WE HAVE -- NONE OF US SAID WE ARE FOR INDEPENDENCE WHEN IT COMES TO TAIWAN. THAT IS UP TO TAIWAN TO DECIDE.
JONATHAN: THAT WAS NANCY PELOSI, U.S. SPEAKER OF THE HOUSE. GOOD MORNING. FUTURES ARE NEGATIVE ON THE S&P AND NASDAQ.
THIS IS FROM MOHAMED EL-ERIAN ON THE FED. IT SEEMS TO REMAIN THE CENTRAL BANK IN ADVANCED ECONOMIES IT IS MOST PRONE TO USING A PHRASE IN THE FORMER CHANCELLOR OF THE EXCHEQUER RISHI SUNAK, FAIRYTALE ECONOMICS. IT IS THE MOST SYSTEMICALLY IMPORTANT OF THE CENTRAL BANKS. MOHAMED FIRING THIS MORNING. TOM: AN IMPORTANT ESSAY AND
SOMETHING WE WILL PLAY OFF OF HERE, NOT ONLY TODAY BUT THROUGH THE WEEKEND AND INTO NEXT WEEK. JON, WE HAVE TO SET UP THE FED MEETING NEXT WEEK. I HAVE TO AFTER THE DESPERATION WE SAW FROM THE ECB YESTERDAY. JONATHAN: 75 BASIS POINT SEEMS TO BE THE STORY. WE COULD WAKE UP ON MONDAY TO
ANOTHER RALLY OF 50 TO 100. TOM: I'M LOOKING AT GERMAN YIELD RIGHT NOW. JONATHAN: FINALLY. THANK YOU. YOU ARE GETTING ON BOARD THIS MORNING. KAILEY: EXECUTED IS ONLINE SHOPPING. JONATHAN:
TOOK AN HOUR AND 20 MINUTES FOR TOM TO LOG INTO THE TERMINAL. TOM: I DID NOT DARKEN THE DOOR UNTIL 5:54. THAT WAS THE REAL PROBLEM. THIS IS A PERSONAL NOTE AND IT HAS TO DO WITH THE COURAGE OF LEE ZELMAN.
HE WAS ACCOSTED IN NEW YORK. I HAVE A MAJOR ACQUAINTANCE WITH HIM. WE USED TO MEASURE THE SIZE OF THE BEVERAGE AT WAIVER BAR WE WERE SHOWING OUR LEGAL DRIVERS LICENSE TO. IT WAS THE VFW. WE WOULD SAY LET'S GO HALFS. TO FANCY BRATS WOULD HANG OUT WITH THE MIDDLE CLASS OF FAIRPORT, NEW YORK.
THIS IS ALONG THE ERIE CANAL. JOE MATHIEU JOINS US ON THE SUMMER OF DISCONTENT FOR THE MIDDLE CLASS. I DON'T KNOW THE DETAILS OF THE ATTACK ON THE CANDIDATE FOR REPUBLICAN GOVERNOR IN NEW YORK.
HE IS SAFE. THAT IS FINE. WE HAVE A SUMMER OF MIDDLE-CLASS DISCONTENT. HOW DOES WASHINGTON PLAY THAT? JOE: ADAM KINZINGER WAS CORRECT WHEN HE SAID THERE IS MORE VIOLENCE COMING. THIS IS A TERRIFYING MOMENT AND I'M GLAD YOU BROUGHT IT UP. IT IS NOT GETTING ENOUGH ATTENTION. HE TRIED TO STAB HIM ON STAGE.
ZELN -- IS HE ALL RIGHT -- HE IS ALL RIGHT. AFTER ALL WE SAW WITH SHINZO ABE, FOLLOWING JANUARY 6. THIS IS NOT A BUSINESS FOR THE FAINT OF HEART. BASED ON WHAT WE ARE SEEING IN THE JANUARY 6 COMMITTEE, THERE ARE A LOT OF THINGS YOU MIGHT NOT WANT TO KNOW HAPPENED THAT DAY. TOM: PARTITION HOW THE DEMOCRATS AND REPUBLICANS EACH HAVE A DIFFERENT MIDDLE-CLASS. WHAT IS THAT DISTINCTION
BETWEEN SPEAKER PELOSI'S MIDDLE-CLASS AND FORMER PRESIDENT TRUMP'S? JOE: GREAT QUESTION. THE DEMOCRATIC MIDDLE-CLASS, THROUGH THE EYES OF SPEAKER PELOSI AND JOE WHO TALKS ABOUT WHEN HE WAS GROWING UP AND HIS DAD SAID THE MIDDLE-CLASS CLASS NEEDS A LITTLE BIT OF BREATHING ROOM. WE HEAR THAT A LOT. THEY THINK THE PROGRESSIVE BUILD BACK BETTER AGENDA IS IN FACT WHAT IS NEEDED HERE.
CHILD TAX CREDITS AND SO FORTH THAT THEY ARE NOT GETTING LOWER PRESCRIPTION DRUG PRICES. THE REPUBLICAN MIDDLE-CLASS SAYS NO. IN MANY CASES LET'S BRING BACK DONALD TRUMP AND GET BACK TO GROWTH HERE, BACK TO TAX CUTS. THAT WILL BE THE CONVERSATION PEOPLE WILL NEED TO USE TO DECIDE WHEN THEY GO TO THE POLLS IN NOVEMBER. KAILEY:
SPEAKING OF CONVERSATIONS THAT LAST A LONG TIME, BUILD BACK BETTER IS SOMETHING WE HAVE TALKED ABOUT FOR HOW LONG? DOES IT EVEN EXIST ANYMORE? IT SEEMS LIKE LITTLE FRAGMENTS OF AT THE INITIAL LEGISLATION WAS INTENDED TO BE. JOE: IT WILL BE A SHADOW -- I WILL NOT SAY ITS FORMER SELF BECAUSE IT NEVER REALLY EXISTED. THE MASSIVE TO TRULY DOLLAR PLAN THAT NEVER GOT THROUGH CONGRESS LATE LAST YEAR -- TO TRILLION DOLLAR PLAN. -- $2 TRILLION DOLLAR PLAN. I HAVE SAID THIS BEFORE. NO ONE IS TALKING ABOUT IT. FOR EXPANDED SUBSIDIES, ENHANCED SUBSIDIES FOR OBAMACARE PUT IN PLACE DURING COVID.
THEY EXPIRE AT THE END OF THE YEAR. UNTIL NOW THERE HAS BEEN NO PLAN FOR DEMOCRATS TO EXTEND THEM. THEY WANT TO USE THE RECONCILIATION BILL AS AN OPPORTUNITY. NOW WE HAVE A PRESIDENT WITH COVID THERE IS STILL THE MATTER OF COVID FUNDING. 10 TO $20 BILLION REQUESTED OVER SIX WANT TO GO HAS STILL NOT SEEN THE LIGHT OF DAY WE WERE TOLD THERAPEUTICS WILL START RUNNING OUT. KAILEY:
BIDEN CAMPAIGNED ON GETTING THE PANDEMIC UNDER CONTROL. IS THE WHITE HOUSE PUTTING THAT ON THE BACK BURNER? IT DOES NOT SEEM LIKE THERE IS EFFORT GETTING PEOPLE VACCINATED. IT SEEMS TO HAVE FADED INTO THE BACKGROUND. JOE: THEY DID TAKE THE OPPORTUNITY TO SAY THE PRESIDENT IS NOT IN THE HOSPITAL BECAUSE HE IS FULLY VACCINATED. THEY DID URGE PEOPLE TO GET THE VACCINE NOW. IT'S EXTREMELY IMPORTANT.
BUT WHY IS WHAT IS CHANGING. ONE YEAR AGO PRESIDENT BIDEN SAID THESE VACCINES WILL KEEP YOU FROM GETTING COVID. YESTERDAY IT WAS CLEAR THAT WAS NO LONGER THE CASE. PEOPLE WHO GET VACCINES COULD STILL BE INFECTED AND THEY SAID EVERYONE AT SOME POINT WILL. IT IS JUST YOUR SYMPTOMS WILL
BE LOWER. THAT WILL BE THE MESSAGE GOING FORWARD. A LOT DIFFERENT THAN A YEAR AGO. JONATHAN: GOOD TO CATCH UP WITH YOU, JOE MATHIEU. WE HAVE TO GET BACK TO THE BOND MARKET IN GERMANY. BECAUSE OF WHAT HAPPENED WITH
ECONOMIC DATA AND THE ENERGY ISSUE, WHEN THE PMIS COME OUT, THE DIFFERENCE BETWEEN EXPANSION AND CONTRACTION IS 50. THE COMPOSITE IS 48. A 48 HANDLE ON THE PMI. TOM: I AGREE THE MOVEMENT FROM A 0.77 TWO 0.43 IS PRECIPITOUS. I FELT YESTERDAY WITH THE LENGTHY ECB CONFERENCE WE TOOK. THAT IS THERE IS A WAR GOING ON. WE ARE ALL STRUGGLING WITH THE FACT WE ARE DISTANT FROM THE WAR. WE ARE ON WAR FOOTING IN
EUROPE. JONATHAN: A LOT OF THIS IS UN FORECASTABLE. THE EURO IS WEAKER AND THE TWO-YEAR IS MUCH LOWER. THE HEADLINE CROSSED EARLIER. SINCE 2008. BIG, BIG MOVES, TOM. TOM: WHAT IF WE BREAK THROUGH TO NEW LEVELS? YOU ARE PUTTING SOMETHING OUT ON TWITTER WHEN I WAS JUST GETTING INTO THE OFFICE. JONATHAN: JONATHAN: THREE-DAY WINNING STREAK ON THE S&P 500 ENDED FRIDAY. WE ARE NEGATIVE A QUARTER OF 1%.
WE CAME CLOSE TO 4K YESTERDAY. SNAP NUMBERS AWFUL. KAILEY WILL GO THROUGH THEM. IN 30 MINUTES WE GET TWITTER NUMBERS. I WILL GET TO THE BOND MARKET. TOM: MAYBE THEY SOLD SOME BITCOIN.
JONATHAN: TESLA. 10-YEAR DOWN SEVEN BASIS POINTS. OFF THE BACK OF THE ECONOMIC DATA IN EUROPE THIS MORNING. LOOK AT GERMANY. THE TWO-YEAR YIELD IS DOWN 25 BASIS POINTS. THINK ABOUT THAT. THE DATA IN EUROPE IS JUST BAD.
UP 50 ON THE PMI. THAT IS CONTRACTION TERRITORY. THAT IS WHY YOU SEE GERMAN YIELDS PLUMMET. TOM: THEY DON'T HAVE AN MBER. JONATHAN:
THE MARKET WILL DO THE MATH FOR THEM. THE NUMBERS DON'T LOOK GOOD. WE HAVE TO FIGURE OUT THE UPCOMING DATA. TOM: WE NEED TO TRAVEL THERE TO DO
SOME RESEARCH. JONATHAN: I KNOW YOU WANT TO GO TO THE MEETING IN GERMANY. TOM: THE BANK OF FRANCE MEETING. JONATHAN: THE NUMBER ONE ISSUE IS THE GAS FLOWING FROM RUSSIA INTO EUROPE. RIGHT NOW YOU CAN'T FORECAST THAT. BUT WE NEED TO UNDERSTAND IS
HOW THE ECB WILL REACT TO THAT IF WE GET A NEGATIVE SUPPLY SHOCK ON ENERGY IN EUROPE THIS YEAR. HOW DO THEY REACT TO HIGHER ENERGY PRICES IF THEY ARE WORRIED ABOUT SECOND ROUND EFFECTS? THEY JUST KEEP HIKING AND ECONOMIC WEAKNESS, OR IS THERE A TIPPING POINT LATER THIS YEAR? TOM: THEY ARE A CENTRAL BANK ADAPTING TO A WERE FITTING. THEY TALKED ABOUT HOW THE UNITED KINGDOM HAS TO FIGURE OUT A WAR FOOTING LIKE EUROPE. THEY ARE ALL TRYING TO DO IT.
THERE IS A WAR GOING ON, EPSILON IN THE EQUATION GOES TO THE MOON. JONATHAN: WE ARE ON THE SAME PAGE. TOM: WE ARE? JONATHAN: WHAT I KEEP STATING IS WHAT WE HAVE TO FIGURE OUT. WHAT HAPPENS IF -- IF THE GASKETS SHUT OFF? -- GAS GETS SHUT OFF? WORK OUT WHAT THE DATA MEANS. YOU CANNOT SAY YOU ARE DATA-DEPENDENT AND GO MEETING BY MEETING HAS THE MARKET TRIES TO FIGURE IT OUT BECAUSE THE ECB GETS TO PICK AND CHOOSE EVERY OTHER MEETING. THEY COMES OUT TWO DAYS BEFORE
THE SAYS WE WILL GO UP 50. THAT IS NOT HOW THIS IS MEANT TO WORK AT ALL. THE EURO NO WEAKER BY .7%. -- NOW WEAKER BY .7%. KAILEY: A LOT OF SNAP, A LOT OF DOWNSIDE FOR SNAP. THE STOCK WAS DOWN 70% AHEAD OF ITS EARNINGS RESULTS. IT IS DOWN ANOTHER 30% IN
PREMARKET TRADING. ABSOLUTELY BRUTAL AS THE REMEDY DISAPPOINTS BECAUSE OF A SLOWDOWN IN ONLINE ADVERTISING SPENDING. IN THEORY THAT HAS A READTHROUGH TO OTHER COMPANIES DEPENDED ON THE ONLINE AD REVENUE. PINTEREST, META LOWER.
TWITTER ALSO DOWN 2.5%. HOW MUCH DO WE SEE SIMILAR ADVERTISING TRENDS AFFECTING THEM? THERE'S A LOT OF NOISE BECAUSE OF ELON MUSK'S TAKEOVER OR MAYBE NOT OF THAT COMPANY. THERE ARE OTHER EARNINGS MOVE ARE SEEING PRETTY BIG DECLINES.
THE BIGGEST REVENUE MISS GOING BACK TO 2013 IS DOWN 12%. SEAGATE DATA ABOUT 12% AFTER ITS FORECAST DISAPPOINTED. ONE POSITIVE STORY. WE ARE TALKING ABOUT WEEK
ECONOMICS. AMERICAN EXPRESS RAISING ITS REVENUE GROWTH OUTLOOK TO UP TO 25%. PREVIOUSLY IT WAS ONLY A 20%. LOOK AT THE NUMBERS AND THE QUARTER JUST REPORTED. RECORD SPENDING ON THE PART OF AMERICAN EXPRESS CUSTOMERS. VOLUMES OF 30%. PART OF THAT IS BECAUSE PRICES ARE HIGHER.
PEOPLE ARE STILL SPENDING AND USING LEVERAGE TO DO SO. A VERY INTERESTING CONVERSATION TO HAVE AS AMERICAN EXCESS RISES 4% IN PREMARKET TRADING. TOM: REALLY APPRECIATE THAT. THIS IS THE JOY --THIERRY WIZMAN JOINS US.
JON WANTS TO FOCUS ON EUROPE. IT IS FRONT AND CENTER NOW. I HAVE TO GO BACK TO WHAT YOU AND I DID YEARS AGO, THE UNRAVELING OF CURRENCIES WE SEE IN EMFX, THE PACIFIC RIM, AND THEN ASIA, MALAYSIA -- ARE WE HARKENING BACK TO AUGUST OF LONG AGO? THIERRY: THE EMERGING MARKETS ARE NOT REALLY A BLOG. -- BLOB. IT IS NOT AS IF BRAZIL HAS THE SAME DYNAMICS AS INDONESIA AND CHINA. THERE'S A LOT OF VARIATION TO WHAT THEY DEPEND ON FOR THEIR TERMS OF TRADE, WHERE THEY GET FUNDING FROM. I HATE TO OVERLY GENERALIZE ABOUT THEM. I CAN TELL YOU THAT WITH COMMODITY PRICES NOW SLIDING, WHICH IS A DIFFERENT SITUATION WE HAD IN THE FIRST QUARTER OF THIS YEAR WHEN THEY WERE GENERALLY RISING ON THE BACK OF THE WAR DRIVING COMMODITY PRICES UP, I'M CONCERNED ABOUT THOSE EMERGING MARKETS THAT ARE OVERLY DEPENDENT ON COMMODITY PRICES TO SUPPORT TERMS OF TRADE. BRAZIL FOR EXAMPLE. COLUMBIA, CHILE, SOUTHEAST
ASIAN MARKETS, SOUTH AFRICA AS WELL. IF WE TALK ABOUT EMERGING MARKETS NOT OVERLY DEPENDENT ON COMMODITIES, CHINA FOR EXAMPLE, I'M NOT TOO CONCERNED. WE HAVE TO MAKE A DISTINCTION. THOSE EMERGING MARKETS BASED ON COMMODITIES AND THOSE THAT ARE NOT. TOM: JON IS FOCUSED ON THE COLLAPSE OF YIELDS IN GERMANY. ECONOMIC CONTRACTION THE MIDDLE WAR. -- AMID A WAR. THIERRY:
I THINK THE GREATEST CONCERN NOW IS WHAT YOU WERE GUYS WERE TALKING ABOUT, THE PROSPECT OF PEOPLE SEEING RATIONING IN ELECTRICITY AND EUROPE IF WE DO NOT GET THE NATURAL GAS FLOWS RESTARTED. THERE'S ANOTHER PROBLEM WHICH IS CLIMATE RESILIENCY, ALSO EATING INTO THEIR RESERVES OF NATURAL GAS. WE MAY BE FACING A SITUATION WHERE IN THE WINTER WE DON'T HAVE ENOUGH NATURAL GAS. POLITICIANS AND POLICYMAKERS WILL ANTICIPATE THAT AN RATION OF WELL AHEAD. THAT COULD START ANYTIME. THE EXTENT OF THE WEAKNESS IN THE PMIS WERE SO SIGNIFICANT IN JULY BECAUSE THESE COMPANIES ARE CONCERNED THEY WILL NOT HAVE THE ELECTRICITY TO PRODUCE. IF THEY DON'T, WHAT IS THE POINT OF HOARDING MACHINERY IF YOU CANNOT RUN THEM IN THE NEXT FEW MONTHS? THAT IS THE GREATEST CONCERN.
WITH REGARDS TO THE ECB, IT IS ANYONE'S GUESS. I AGREE THEY WERE TOO AMBIGUOUS IN THE COMMUNICATION YESTERDAY WITH RESPECT TO WHAT KIND OF DATA THEY ARE WATCHING. THE WEAKNESS WE ARE SEEING IN THE EURO THIS MORNING HAS TO DO A LOT WITH THE FACT THERE IS AMBIGUITY WITH RESPECT TO WHAT THE ECB IS WATCHING. JONATHAN: WE ARE CLUELESS TO THEIR REACTION FUNCTION. THAT'S THE PROBLEM. IT GETS VERY DIFFICULT TO BUY THE EURO.
THAT MEANS WEAKER INFLATION. IT WAS STILL UNVIABLE -- UNBUYABLE THROUGH THE REST OF THE YEAR. DO YOU AGREE? THIERRY: I DO. WE DON'T SEE WHERE THEY ARE SHORT OF A DIPLOMATIC SOLUTION TO THE WAR. THE WAR HAS SO MUCH TO DO WITH EUROPEAN GROWTH RIGHT NOW. ESPECIALLY TO THE PROSPECT OF RATIONING AND THE APPLICATIONS IT WILL HAVE AN INDUSTRY. IF THEY RATION, THEY WILL RUSSIAN INDUSTRY, NOT HOUSEHOLDS.
THAT WOULD BE A POLITICAL DISASTER. THEY WILL SHUT DOWN FACTORIES, FOUR DAYS A WEEK INSTEAD OF FIVE. THAT'S A SCENARIO THAT WILL HANG OVER THIS MARKET UNTIL WE GET CLARITY AND RESOLUTION ON THE NATURAL GAS FLOWS. THAT IS DEPENDENT ON A
RESOLUTION TO THE WAR. KAILEY: I TRIED HARD TO LISTEN TO EVERY WORD THAT CHRISTINE LAGARDE SAID YESTERDAY. THEY WERE VERY FEW THINGS I FELT WERE WORTH TRANSCRIBING. ONE OF THEM BEING WE ARE MOVING FROM ONE GO TO ZERO. A COUPLE OF SECONDS LATER SHE GOES ON TO SAY WHAT IS THE NEUTRAL SETTING? AT THIS POINT IN TIME I DON'T KNOW. DO YOU KNOW?
WE HAVE AN UNDERSTANDING OF HOW HIGH THE ECB COULD HIKE RATES GIVEN EVERYTHING YOU JUST LAID OUT FOR US? THIERRY: ECONOMIST THINK WE COULD GET A RATE ABOVE ONE SOME TIME IN THE EARLY PART OF NEXT YEAR. WE ARE STARTING TO HAVE DOUBTS. THE REASON HAS TO DO AGAIN WITH THE PROSPECT THAT IF WE GET ELECTRICITY RATIONING IN EUROPE WE WILL SEE MUCH LOWER GROWTH IN THE SECOND HALF OF THIS YEAR. IT'S THE ROAD TO RUIN. YOU HAVE STRESS ON THE ITALIAN MARKET COMING FROM TOO MANY SPECULATORS SAYING THEY SHOULD MAKE A RUN, A SPECULATIVE ATTACK ON ITALIAN BONDS. THOSE TWO THINGS HAVE THE CAPACITY TO DETER THE ECB FROM GOING ALL THE WAY UP TO 1.25 BY THE BEGINNING OF NEXT YEAR. WHAT CHRISTINE LAGARDE WAS TRYING TO SAY WHEN SHE INVOKED THE IDEA THEY ARE DATA DEPENDENT IS EXACTLY THAT. THEY DO NOT KNOW HOW THEY ARE
GOING TO RESPOND TO A SITUATION WHERE INFLATION CONTINUES TO GO UP BUT YOU HAVE FINANCIAL STRESSES IN THE CREDIT MARKETS AT THE SAME TIME YOU HAVE A COLLAPSE IN SENTIMENT AND THE OUTLOOK FOR NEW ORDERS CONTINUES TO DETERIORATE. JONATHAN: YOU NAILED IT. I DON'T KNOW HOW THEY WILL SPONSOR THE DATA. THIERRY WIZMAN, THANK YOU. TOM, THAT IS THE DIFFICULTY WE ALL HAVE WITH THE ECB RIGHT NOW.
TOM: NO QUESTION ABOUT IT. THE AMBIGUITY IS THE WORD. NOT ONLY THE ENGLISH PART OF IT BUT THE ECONOMIC PART OF THE USE OF THE WORD AMBIGUITY PLAYS IT OUT. THE GERMAN YIELD IS A PRECURSOR FOR A SIMPLE OBSERVATION.
WHEN AND HOW DOES EURO VISIT BELOW PARITY? JONATHAN: JUST 24 HOURS OF THE HAWKS TOOK CONTROL OF THE ECB. DRIPPING IN MYSTERY AND EVERY BEAUTY AND BE WILL HAVE 50 BASIS POINTS AND LET'S TRY TO DO THAT AGAIN IN SEPTEMBER. TOM: THE MARKETS CORRECTED SEPTEMBER AND MODEL THAT OUT. I CAN'T EMPHASIZE ENOUGH THE LOOK BACK WE DO IS JUST WRONG. THEY ARE ALWAYS DRIVING FORWARD. JONATHAN: I CAN'T EMPHASIZE SOME OF THE WEAKNESS IN THE EURO IS NOT JUST ABOUT THE ECONOMIC DATA. IT IS BECAUSE IT IS SUCH A LACK
OF UNDERSTANDING ABOUT HOW THIS ECB WILL RESPOND TO THAT DATA. THE BIGGEST RISK FACTOR THIS YEAR FOR EUROPE, THAT GAS GETS TURNED OFF FROM EUROPE. WE DON'T HAVE TO RESPOND TO THAT. THAT IS TOUGH. FUTURES ARE DOWN BY JUST. .2% FROM NEW YORK, THIS IS BLOOMBERG.
♪ RITIKA: KEEPING YOU UP-TO-DATE WITH NEWS FROM AROUND THE WORLD, I AM RITIKA GUPTA. TRUMP INSIDERS TOLD THE JANUARY 6 COMMITTEE THE PRESIDENT IGNORED PLEAS TO CALL OUT THE MOB STORMING THE U.S. CAPITOL. THE PANEL HELD A PRIME TIME HEARING THURSDAY NIGHT. MEMBERS CAST THE FORMER PRESIDENT'S IN ACTION AS A DESPERATE PLOY TO HOLD ONTO THE PRESIDENCY. THE WHITE HOUSE IS CONFIDENT PRESI
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