WEBVTT - Bloomberg Daybreak: June 17, 2022 - Hour 2 (Radio) 0:00:02.279 --> 0:00:05.880 Live from the Bloomberg Interactive Broker Studios. This is Bloomberg 0:00:05.920 --> 0:00:09.880 day Break for Friday, June seventeen two. Coming up this hour, 0:00:10.119 --> 0:00:13.520 stocks rebound after yesterday's sell off on Wall Street. The 0:00:13.680 --> 0:00:17.240 SMP five enters today's triple Witching session at an eighteen 0:00:17.280 --> 0:00:20.840 month low. President Biden says a where session can be avoided, 0:00:21.000 --> 0:00:24.320 and Japan defies the global trend and retains super easy 0:00:24.360 --> 0:00:28.040 monetary policy. The final democratic debate in the primary campaign 0:00:28.040 --> 0:00:30.760 for New York governor is over. Plus another mass shooting 0:00:30.760 --> 0:00:33.240 in a church in Alabama leaves two dead. I'm Michael 0:00:33.280 --> 0:00:36.320 war More Ahead. I'm John Stanstown in sports night that 0:00:36.440 --> 0:00:38.559 he went for the Yankees comeback win for the mat 0:00:38.640 --> 0:00:42.320 than the Golden State Warriors have won the NBA Champion Champion. 0:00:44.520 --> 0:00:48.479 That's alls trended ahead on Bloomberg Daybreak on Bloomberg Elibern 0:00:48.520 --> 0:00:53.000 Free on New York, Bloomberg one, Washington, d C, Bloomberg 0:00:53.040 --> 0:00:56.720 one oh six one, Boston, Bloomberg nine sixties and Francisco 0:00:57.200 --> 0:01:00.240 Sirius XM one nineteen and around the world. Old on 0:01:00.400 --> 0:01:03.680 Bloomberg Radio dot Com and via the Bloomberg Business App. 0:01:07.520 --> 0:01:10.560 Good morning, I'm John Tucker. I'm Nathan Hagar. Futures are 0:01:10.600 --> 0:01:12.600 on the rise this morning. We're coming up to six 0:01:12.600 --> 0:01:14.480 oh one on Wall Street. We checked the markets every 0:01:14.520 --> 0:01:17.760 fifteen minutes throughout the trading day. On Bloomberg, SMP futures 0:01:17.760 --> 0:01:19.760 are up thirty three points, down features up two or 0:01:19.800 --> 0:01:23.039 twenty eight. NASTAC futures higher by one hundred twenty four points. 0:01:23.280 --> 0:01:25.760 The tenure Treasury is down three thirty seconds. The yield 0:01:25.760 --> 0:01:27.880 three point to zero percent yield on the two year 0:01:27.920 --> 0:01:30.319 three point one four percent name X screwed is up 0:01:30.400 --> 0:01:32.680 one percent or a dollar seventeen and a hundred eighteen 0:01:32.720 --> 0:01:35.720 dollars seventy six cents of barrel COMEX s called little 0:01:35.760 --> 0:01:38.640 changed of ninety cents at eighteen fifty eighty announce and 0:01:38.680 --> 0:01:40.959 the euro at one point zero five to one against 0:01:40.959 --> 0:01:43.400 the dollar, John and Nathan. The rise of ian futures 0:01:43.400 --> 0:01:46.240 follows yet another sell off on Wall Street, which all 0:01:46.240 --> 0:01:49.240 the SMP five had closed at an eighteen month low. 0:01:49.800 --> 0:01:52.280 It was a sea of red, with only fourteen stocks 0:01:52.280 --> 0:01:55.760 and the SMP five hundred closing higher yesterday. Lori bright Knack, 0:01:55.840 --> 0:01:59.400 the chief investment officer at Investco, says with inflation and 0:01:59.440 --> 0:02:02.520 recession fears front and center. The Fed has its work 0:02:02.600 --> 0:02:05.440 cut out for it. Monetary policy was too easy for 0:02:05.480 --> 0:02:08.040 too long, so they've got to make up some ground 0:02:08.040 --> 0:02:10.840 here to try to stay ahead of it. So unfortunately, 0:02:10.880 --> 0:02:12.919 I don't think that the news is going to get 0:02:12.919 --> 0:02:15.320 any better over the next month for the sad in 0:02:15.400 --> 0:02:19.560 terms of inflation. The INVESTI Chief Investment Officer Lori Brignack 0:02:19.639 --> 0:02:22.320 making the comments of Bloomberg Business Week and catch that 0:02:22.360 --> 0:02:25.359 program weekdays from two to five pm Wall Street Time 0:02:25.720 --> 0:02:28.200 all right, general, the sell off has been widespread. In fact, 0:02:28.200 --> 0:02:31.560 more companies in the Russell three thousand, excluding financial firms, 0:02:31.720 --> 0:02:35.120 are trading below their cash holdings. Bloomberg's Doug Krisner has 0:02:35.160 --> 0:02:38.400 more the total number has surpassed the month end record 0:02:38.440 --> 0:02:41.960 set during the financial crisis. Smaller cap firms like those 0:02:41.960 --> 0:02:44.760 in the Russell are particularly sensitive to the health of 0:02:44.800 --> 0:02:48.720 the domestic economy, and now as financial conditions tighten, the 0:02:48.800 --> 0:02:51.720 concern of a recession is in sharp relief. In the 0:02:51.800 --> 0:02:54.600 last session alone, the Russell three thousand fell three and 0:02:54.639 --> 0:02:58.120 a half percent to its lowest level since Even so, 0:02:58.240 --> 0:03:00.440 writers on the Bloomberg m Live blog say when a 0:03:00.480 --> 0:03:03.920 company's total equity value is less than its cash and 0:03:04.000 --> 0:03:08.239 marketable securities. Bargains can possibly be found in New York 0:03:08.240 --> 0:03:10.560 on Dug Prisoner Bloomberg daybreak. All right, Doug, thank you, 0:03:10.560 --> 0:03:12.440 and it could be another volatile day on Wall Street. 0:03:12.480 --> 0:03:15.280 Today's the quarterly event known as triple witching. The three 0:03:15.320 --> 0:03:18.040 and a half trillion dollar options expiration may lead to 0:03:18.120 --> 0:03:20.880 shortcovering and that could bring temporary relief to the stock 0:03:20.919 --> 0:03:23.760 market and meantime. In the Asia, stocks tumbled to a 0:03:23.840 --> 0:03:26.760 two year low as traders feared the global rush to 0:03:26.840 --> 0:03:30.200 hike inter strates may result in an economic downturn. Let's 0:03:30.240 --> 0:03:34.120 get the recap from Bloomberg's Juliet Sally and Singapore. Good morning, Juliet, 0:03:34.200 --> 0:03:35.640 Good morning, John, and Nathan. The m s c I 0:03:35.720 --> 0:03:38.760 Asia Pacific Index fell to its lowest level in two years. 0:03:38.840 --> 0:03:41.280 The index has dropped every day this week and is 0:03:41.280 --> 0:03:44.600 down for a seventh session. That's the longest weekly dropped 0:03:44.600 --> 0:03:47.600 since the onset of the global pandemic. In March twenty 0:03:48.080 --> 0:03:51.840 Japanese shares dropped in tenure yields east from twenty sixteen 0:03:51.920 --> 0:03:54.440 highs as the Bank of Japan's decision to keep its 0:03:54.520 --> 0:03:59.320 ultra loose monetary settings unchanged provided limited stimulus as volatility 0:03:59.320 --> 0:04:02.160 in the end throws. China and Hong Kong Stokes gained 0:04:02.200 --> 0:04:05.000 the only markets in Asia in the green. This is 0:04:05.080 --> 0:04:08.200 Beijing's pro growth policy lended support to views that their 0:04:08.240 --> 0:04:12.600 equities will keep out performing. In Singapore, Juliette Sally bloom 0:04:12.600 --> 0:04:15.120 Boat daybreak All right, Juliette thanks. After that Bank of 0:04:15.200 --> 0:04:17.800 Japan decision, the yen weekend as much as one point 0:04:17.839 --> 0:04:21.359 eight percent. Bo J Governor Harhiko Coroda addressed the recent 0:04:21.440 --> 0:04:25.120 sell off in the currency. The recent rapid weakening of 0:04:25.160 --> 0:04:28.320 the yen is negative for the economy as it increases 0:04:28.400 --> 0:04:31.640 uncertainties and companies will have a harder time putting together 0:04:31.680 --> 0:04:35.920 their business plans. Governor Harhigo Krota, speaking through an interpreter, 0:04:35.960 --> 0:04:38.200 added a reference to fear in exchange rates to its 0:04:38.240 --> 0:04:40.680 list of risks following the end's rapid weakening to a 0:04:40.839 --> 0:04:43.679 twenty four year low this week. And in Europe, Christian 0:04:43.760 --> 0:04:46.599 the Garden has told euro Area finance ministers at the 0:04:46.600 --> 0:04:50.400 European Center Banks new anti crisis tool will kick in 0:04:50.560 --> 0:04:54.080 if the borrowing costs for weaker nations rises too far 0:04:54.320 --> 0:04:57.799 or too fast. Sources that a meaning in Luxembourg, Laguard 0:04:57.920 --> 0:05:00.520 told ministers that the new mechanism will be intended to 0:05:00.560 --> 0:05:06.000 prevent irrational market movements from putting pressure on individual euronations. 0:05:06.200 --> 0:05:08.640 Well back here in the US, President Biden's weighing in 0:05:08.640 --> 0:05:11.640 on the economy and saying a recession can be avoided. 0:05:11.760 --> 0:05:14.240 Let's get the details live from Bloomberg Reny to Young. 0:05:14.279 --> 0:05:17.480 Good morning, Granita, Good morning Nathan. The President is reiterating 0:05:17.520 --> 0:05:20.240 his message that the US is in a stronger position 0:05:20.279 --> 0:05:23.320 than any nation in the world to overcome inflation. And 0:05:23.320 --> 0:05:26.920 while he says the recession is not inevitable, he acknowledges 0:05:26.960 --> 0:05:29.919 that Americans are really down on the state of the country. 0:05:30.279 --> 0:05:32.400 He made these comments in an interview with the AP, 0:05:32.760 --> 0:05:36.120 his first with a print outlet since taking office, and 0:05:36.200 --> 0:05:38.919 it took place a day after the FIT executed the 0:05:38.960 --> 0:05:42.240 biggest interest rate hike in almost three decades in order 0:05:42.240 --> 0:05:45.360 to cool inflation. Live in New York, I'm really need 0:05:45.360 --> 0:05:48.480 a Young Bloomberg day break. Need to thanks. Reactions still 0:05:48.560 --> 0:05:52.200 pouring into Elon Musk's first meeting with Twitter employees, he 0:05:52.320 --> 0:05:55.359 told staffords they shouldn't worry about changes to their jobs 0:05:55.400 --> 0:05:57.800 once he takes over. As long as their work is 0:05:57.880 --> 0:06:00.880 quote exceptional. Let's get more at his remarks and his 0:06:00.960 --> 0:06:05.039 concerns about fake Twitter accounts from Bloomberg's Ed Ludlow, he 0:06:05.120 --> 0:06:08.039 said that whether Twitter pursues a subscription or an ad model, 0:06:08.240 --> 0:06:12.640 he's still concerned about bots. Nonetheless, and essentially the goal 0:06:12.800 --> 0:06:16.120 is to make Twitter an expensive platform in otherways, requiring 0:06:16.200 --> 0:06:21.280 some form of payment that disincentivizes for activity. Bloomberg's Ed 0:06:21.320 --> 0:06:24.000 Ludlow says Musch did not address whether he was committed 0:06:24.080 --> 0:06:26.760 to the deal. Looking at the pre market now, John 0:06:26.760 --> 0:06:29.280 shares of Adobe or down more than three percent after 0:06:29.320 --> 0:06:32.320 the company reduced its annual revenue forecast. We get the 0:06:32.320 --> 0:06:36.120 story from Bloomberg's Charlie Pellis. Adobe says it's business will 0:06:36.160 --> 0:06:40.760 be affected by currency fluctuations, seasonal shifts in demand, and 0:06:40.839 --> 0:06:44.320 the decision to end sales in Russia and Belarus after 0:06:44.360 --> 0:06:48.000 the invasion of Ukraine. Had said fiscal year revenue will 0:06:48.040 --> 0:06:51.240 be about seventeen point seven billion dollars. That is a 0:06:51.279 --> 0:06:55.560 decrease from the company's previous forecast of seventeen point nine billion, 0:06:55.960 --> 0:07:00.000 and investors are increasingly skeptical about the dominance of Adobe 0:07:00.160 --> 0:07:04.239 line of software for design Professions, which makes up about 0:07:04.320 --> 0:07:08.840 six of its revenue in New York. Charlie Pellet, Bloomberg Daybreak. 0:07:08.920 --> 0:07:12.720 Thanks Charlie dow futures up two points right now, SMP 0:07:12.880 --> 0:07:17.000 Futures of thirty two, the Nanzac features of one nineteen points. 0:07:17.320 --> 0:07:23.800 You're listening to Bloomberg Daybreak and at six o seven 0:07:23.800 --> 0:07:26.000 on Wall Street, time to bring in Michael Barr to 0:07:26.040 --> 0:07:28.040 find out what else is going on in New York 0:07:28.040 --> 0:07:30.680 hand around the world, John, Thank you very much. The 0:07:30.720 --> 0:07:33.920 final Democratic debate in the primary campaign for New York 0:07:34.040 --> 0:07:38.200 governor is over. US Representative Tom Swansea and New York 0:07:38.200 --> 0:07:42.600 City Public Advocate Jamanni Williams criticize Governor Kathy Hokel's strategy 0:07:42.680 --> 0:07:46.320 toward gun violence. All of the candidates on w NBC 0:07:46.600 --> 0:07:50.160 were asked about their vision to improve the state, including 0:07:50.720 --> 0:07:54.160 don't bet against New York. We've been down before, we 0:07:54.240 --> 0:07:58.400 will come back even stronger. We've always demonstrated our resiliency, 0:07:58.520 --> 0:08:03.440 our tenacity. It's our Yorkers. Early voting start Saturday in 0:08:03.480 --> 0:08:07.520 New York. The European Commission recommended that Ukraine be granted 0:08:07.800 --> 0:08:11.000 candidate status and the symbolic step on the Long Path 0:08:11.120 --> 0:08:13.960 to become members of the European Union. That's according to 0:08:13.960 --> 0:08:17.240 two people familiar with the matter. The recommendation is significant 0:08:17.240 --> 0:08:21.600 for Ukraine as it seeks moral support encountering Russian aggression. 0:08:21.960 --> 0:08:25.840 Lawmakers heard gripping testimony from top aides of then Vice 0:08:25.880 --> 0:08:29.440 President Pence and President Trump during the latest hearing from 0:08:29.440 --> 0:08:34.280 the January sixth Committee, rioters staying within forty feet up Pence. 0:08:34.720 --> 0:08:37.120 The committee now wants to interview the wife of Supreme 0:08:37.160 --> 0:08:41.160 Court Justice Clarence Thomas, Jenny, after new emails were revealed 0:08:41.200 --> 0:08:45.640 from the conservative activists. Former federal prosecutor Michael Zelden talked 0:08:45.640 --> 0:08:48.280 about the potential legal outcome. I think what they're going 0:08:48.320 --> 0:08:50.800 to be doing is trying to prove each of the 0:08:50.920 --> 0:08:55.280 seven prongs of their conspiracy. They're saying the president engaged 0:08:55.320 --> 0:08:58.760 in the seventh part conspiracy. The first was the big lie, 0:08:58.880 --> 0:09:01.440 The second was to replace the acting Attorney General. The 0:09:01.480 --> 0:09:04.000 third was to pressure Pence, The fourth was to pressure 0:09:04.040 --> 0:09:08.920 state officials. The fifth was to do the false electors scheme, 0:09:09.000 --> 0:09:11.120 the sixth was the violent mob, and the seventh was 0:09:11.480 --> 0:09:15.280 in action when this was going on. Former federal prosecutor 0:09:15.320 --> 0:09:18.720 Michael Zelden spoke with Joe Matthew on Bloomberg Sound on 0:09:19.160 --> 0:09:21.920 Wiki Leak's chief, Julian Assa, should be sent to the 0:09:22.040 --> 0:09:26.560 US to face criminal espionage charges. The UK government agreed 0:09:26.640 --> 0:09:29.600 with the courts and opposing his long running battle to 0:09:29.640 --> 0:09:32.839 avoid extradition. Two people are dead and another wounded when 0:09:32.840 --> 0:09:35.640 police in Alabama SAA gunman opened fire at a church 0:09:36.000 --> 0:09:39.080 investi Via Hills. Police say a suspect is in custody. 0:09:39.440 --> 0:09:42.280 Democratic and Republican senators are at odds over how to 0:09:42.360 --> 0:09:46.000 keep firearms from dangerous people. Lawmakers said they remained divided 0:09:46.040 --> 0:09:49.360 over how to define abuse of dating partners so they 0:09:49.400 --> 0:09:52.720 could be legally barred from purchasing firearms. Global News twenty 0:09:52.760 --> 0:09:55.600 four hours a day on air and on Bloomberg Quicktake, 0:09:55.800 --> 0:09:58.520 powered by more than twenty seven hundred journalists and analysts 0:09:58.600 --> 0:10:01.880 more than a hundred twenty countries. Michael Barr, this is Bloomberg. John, 0:10:01.880 --> 0:10:07.800 all right, Michael, thank you. Coming up on six ten 0:10:08.040 --> 0:10:10.959 on Wall Street time down for the Blueberg Sports Update, 0:10:11.240 --> 0:10:13.640 and here's John Stann Shower. All right, John. Golden State 0:10:13.640 --> 0:10:16.320 Warriors had that run of three NBA championships, five straight 0:10:16.360 --> 0:10:18.160 trip to the finals, and then it appeared that run 0:10:18.280 --> 0:10:21.640 was over. With injuries and Kevin Durant's defection to Brooklyn 0:10:21.679 --> 0:10:23.319 two years ago, they were the worst team in the NBA. 0:10:23.840 --> 0:10:26.400 And yet there were the Warriors last night, winning games 0:10:26.440 --> 0:10:28.600 six in Boston one oh three to ninety and winning 0:10:28.600 --> 0:10:31.320 the finals four games and to a final where every 0:10:31.360 --> 0:10:34.160 game was decided by ten or more points. That never 0:10:34.200 --> 0:10:37.080 happened before. Warriors led by twenty two South they start 0:10:37.120 --> 0:10:39.240 the defic at the eight. Steph Curry made sure that 0:10:39.360 --> 0:10:42.720 no closer. Curry was amazing thirty four points in the finals. 0:10:43.160 --> 0:10:45.640 MVP Yankees and Mets both with one run wins at home, 0:10:45.679 --> 0:10:48.840 but the Yanks. The win came at the end swing 0:10:48.920 --> 0:10:51.800 on hit on the right center. It is high. It 0:10:52.080 --> 0:10:58.520 is fuck that us don't win the game. Anthony Rizzo 0:10:58.800 --> 0:11:04.199 hit a one hind innings wolf up home runder right 0:11:04.280 --> 0:11:08.200 Centerville and the Yankees beating the Rays two to one. 0:11:08.520 --> 0:11:10.160 W f a any game of a total of only 0:11:10.240 --> 0:11:12.880 seven hits. The Yanks side to scratch star of Luis Savarino, 0:11:12.960 --> 0:11:15.200 He's on the cover list. They used three young pitchers 0:11:15.200 --> 0:11:17.920 and together they allowed on the three hits. Yankees brew 0:11:18.040 --> 0:11:20.640 thirty one games over five hundred Mets trailed in Milwaukee 0:11:20.679 --> 0:11:22.720 for one. Mark Canna tied the game two on. Over 0:11:22.840 --> 0:11:25.600 fifth inning, Mets topped the Brewers of City Field five 0:11:25.679 --> 0:11:28.640 to four. A Canadian Adam Hadwin as the US Open 0:11:28.720 --> 0:11:32.319 leader at Brookline, Mass four under sixty six. Rory McIlroy's 0:11:32.320 --> 0:11:34.760 in the group that trails by one shot. Dustin Johnson 0:11:34.800 --> 0:11:36.640 part of a larger group that's two back. It was 0:11:36.679 --> 0:11:39.760 a rough fifty second birthday for Phil Micholson. He's never 0:11:39.800 --> 0:11:42.319 won the Open, He's finished second six times, and he's 0:11:42.360 --> 0:11:45.560 not gonna win this year. Shot seventy eighties, twelve shots 0:11:45.559 --> 0:11:49.400 behind dash where Bloomberg sports alright? Thanks John del futures 0:11:49.480 --> 0:11:53.120 up two hundred twenty three points, SMP futures of thirty 0:11:53.160 --> 0:11:56.000 three points, and the uns day key Mini futures one 0:11:56.080 --> 0:12:00.400 hundred and twenty one points. After yesterday's sell off, you're 0:12:00.440 --> 0:12:07.559 listening to Bloomberg day Break. Daybreak brought you by Pepack 0:12:07.600 --> 0:12:10.920 Private Wealth Management. At Pepack Private Wealth Management knows that 0:12:11.120 --> 0:12:14.080 a portfolio is more than a collection of assets. It's 0:12:14.080 --> 0:12:17.360 a path to your future. Visit peepack Private dot com 0:12:17.480 --> 0:12:23.920 and begin your financial legacy. Today, Markets Headlines and Breaking 0:12:23.920 --> 0:12:26.840 News twenty four hours a day at Bloomberg dot com, 0:12:27.000 --> 0:12:30.480 the Bloomberg Business apt and at Bloomberg Quick Tape is 0:12:30.520 --> 0:12:38.839 a Bloomberg Business lash and Nathan Hagar will after a 0:12:38.960 --> 0:12:42.760 racing about two trillion dollars in market capitalization this week 0:12:42.880 --> 0:12:46.840 so far, SMP futures are pointing to a relief rally 0:12:47.559 --> 0:12:50.440 after a week that saw the benchmark enter a bear 0:12:50.600 --> 0:12:54.200 market amid growing fears of a recession. We checked the 0:12:54.200 --> 0:12:56.360 markets for you every fifteen minutes during the trading day 0:12:56.400 --> 0:12:59.280 on Bloomberg. Right now, SMP futures are up thirty two 0:12:59.280 --> 0:13:01.960 points south few years have two hundred fifteen Nastact futures 0:13:01.960 --> 0:13:04.800 are hired by a hundred twenty points. The tenure treasury 0:13:04.840 --> 0:13:07.240 is down six thirty seconds. The yield three point two 0:13:07.559 --> 0:13:09.920 percent yield on the two year three point one five 0:13:10.000 --> 0:13:12.600 percent nime X screwed is up nine tenths per cent, 0:13:12.679 --> 0:13:14.840 up a dollar three at a hundred eighteen dollar sixty 0:13:14.840 --> 0:13:17.400 two cents arrol come x gold little change down at 0:13:17.400 --> 0:13:20.400 dollar ten at eighteen forty eighty announced. The euro is 0:13:20.440 --> 0:13:22.560 at one point zero five two three against the dollar, 0:13:22.600 --> 0:13:25.839 British pound one point four. The yen is at one 0:13:25.880 --> 0:13:28.920 thirty four point seven nine. That's a Bloomberg Business Flash. 0:13:28.920 --> 0:13:30.880 And now here's Michael Barr with more on what's going 0:13:30.920 --> 0:13:33.880 on on plugging the world. Michael, thank you very much, Nathan. 0:13:33.920 --> 0:13:37.480 The next January six committee hearing is on Tuesday. The 0:13:37.520 --> 0:13:40.760 wife of Supreme Court Justice Clarence Thomas, Jenny, is being 0:13:40.800 --> 0:13:44.080 called to answer questions before the panel about her role 0:13:44.120 --> 0:13:47.320 in the effort to overturn the twenty election. The British 0:13:47.400 --> 0:13:50.680 government has approved the expedition of Wiki Leak's founder, Julian 0:13:50.720 --> 0:13:54.240 Massage to the United States to face Spye charges. The 0:13:54.280 --> 0:13:58.400 European Commission recommended today that war torn Ukraine should be 0:13:58.480 --> 0:14:02.640 granted EU candidates as the Warriors are the twenty two 0:14:02.720 --> 0:14:06.679 NBA champions. They beat the Celtics in Game six. In baseball, 0:14:06.720 --> 0:14:09.320 the Yankees and Mets one, the A's beat the Red 0:14:09.360 --> 0:14:13.480 Sox for three, the Orioles one, the Nationals lost. Global 0:14:13.520 --> 0:14:16.080 News twenty four hours a day on air and on 0:14:16.120 --> 0:14:19.840 Bloomberg Quicktake, powered by more than twenty seven hundred journalists 0:14:19.840 --> 0:14:22.760 and analysts more than a hundred twenty countries. Michael Barr, 0:14:22.840 --> 0:14:25.080 this is Bloomberg, John alright, Michael, thank you. It is 0:14:25.120 --> 0:14:28.320 now six nineteen Wall Street, and we are lying to 0:14:28.360 --> 0:14:31.840 the Bloomberg interact of broker studios. This is Bloomberg daybreak. 0:14:32.560 --> 0:14:35.480 Maybe too soon to call an into America's worst bond 0:14:35.480 --> 0:14:38.840 market collapse in at least half a century. Let's focus 0:14:38.840 --> 0:14:42.720 on bonds this morning, as well as monetary policy from 0:14:42.720 --> 0:14:46.200 the Federal Reserve. Joining us now Jean Jadozo, the global 0:14:46.360 --> 0:14:51.760 head of fixed income at Columbia Thread Needle, Happy Friday. Um, 0:14:51.920 --> 0:14:56.720 what's the risk of an overshoot at this point from policymakers. 0:14:58.320 --> 0:15:01.000 I think, frankly, it's pretty high. Actually, I think that's 0:15:01.040 --> 0:15:04.680 the message we got from the Fed and even commentary 0:15:04.760 --> 0:15:07.680 overnight from the e c B. As it relates to 0:15:07.880 --> 0:15:12.920 the reaction function, which is going to favor attacking demand 0:15:13.080 --> 0:15:17.440 to bring down inflationary pressures at the expense of the economy. 0:15:17.560 --> 0:15:20.480 So I think this is a situation where front end 0:15:20.560 --> 0:15:23.600 rates are likely to continue to rise and bring forth 0:15:24.120 --> 0:15:26.640 really what we would consider to be a more meaningful 0:15:26.760 --> 0:15:29.760 inversion of the curve where long which already yields go 0:15:30.000 --> 0:15:35.400 far below those at the front end of the curve ahead, well, 0:15:35.440 --> 0:15:37.080 we could call it a recession. I think we have 0:15:37.160 --> 0:15:39.560 to look at what's you know already happened, and what's 0:15:39.560 --> 0:15:43.680 already in the price Many would define a recession as 0:15:43.720 --> 0:15:47.880 two consecutive quarters of negative GDP growth in the US, 0:15:47.920 --> 0:15:51.000 We've already had one of those, and signs in the 0:15:51.040 --> 0:15:54.920 current quarter point to perhaps consumer demand that while growing 0:15:54.920 --> 0:15:57.240 on a nominal basis, is still not keeping up with 0:15:57.320 --> 0:16:01.240 price increases, so I e. Perhaps in other quarter now. 0:16:01.760 --> 0:16:04.400 And if you look at credit spreads, well maybe they're 0:16:04.400 --> 0:16:07.280 not pricing in quite a full recession. But I think 0:16:07.320 --> 0:16:11.160 that's because credit fundamentals are actually starting from quite a 0:16:11.200 --> 0:16:14.720 positive starting point. So the question here for the FED 0:16:14.880 --> 0:16:18.000 is is the tradeoff of a shallow recession worth it 0:16:18.280 --> 0:16:21.600 to bring down inflation? We think in their calculus they 0:16:21.600 --> 0:16:24.720 probably think it is. Well, I gotta wonder if policy 0:16:24.880 --> 0:16:28.480 is even effective when you look at the energy prices 0:16:28.600 --> 0:16:31.760 and you know, grocery prices, is that something that can 0:16:31.840 --> 0:16:36.720 be attacked well, in a way, it's more effective, But 0:16:36.800 --> 0:16:39.040 it's not because it can bring down the prices of 0:16:39.080 --> 0:16:42.440 those goods. I say it's more effective because it will 0:16:42.520 --> 0:16:46.080 hasten the tightening of financial conditions. If you're a consumer 0:16:46.480 --> 0:16:51.640 or a business. The lack of disposable or discretionary income, 0:16:52.640 --> 0:16:56.680 that deterioration occurs faster. So you just look, for example, 0:16:56.920 --> 0:17:00.560 at the thirty year mortgage near six percent now, and 0:17:00.680 --> 0:17:04.439 if you are a borrower with a down payment of 0:17:04.480 --> 0:17:08.480 the median home in the United States, your monthly payment 0:17:08.840 --> 0:17:11.800 compared to the beginning of two thousand twenty one, just 0:17:11.840 --> 0:17:14.880 about a year and a half ago, is up eighty percent. 0:17:15.320 --> 0:17:18.439 And that's a result of higher home prices but significantly 0:17:18.520 --> 0:17:22.080 higher interest rates. Those type of payment shots are material, 0:17:22.440 --> 0:17:24.760 and when you layer on the additional costs of food 0:17:24.800 --> 0:17:28.440 and energy, you know that again the tax on discretionary 0:17:28.480 --> 0:17:33.080 income is significant. That brings forward a recession, which ultimately 0:17:33.480 --> 0:17:36.800 will result in lower demand across the economy. Can I 0:17:36.840 --> 0:17:39.800 get into the plumbing just for a minute. Are there 0:17:40.000 --> 0:17:43.480 liquidity problems, especially in the treasury market, you see any 0:17:43.520 --> 0:17:48.560 cracks appearing, well, certainly liquidity has deteriorated. We we haven't 0:17:48.600 --> 0:17:53.520 seen cracks that would indicate crisis territory at this stage, 0:17:53.840 --> 0:17:55.919 and I think that's one of the reasons that the 0:17:56.000 --> 0:18:00.720 Fed frankly limited its hikes or at recent hike to 0:18:00.800 --> 0:18:03.560 seventy five basis points. And we've done the math that 0:18:03.600 --> 0:18:06.240 if they were to hike a bit more than that. 0:18:06.400 --> 0:18:09.480 At a time, you could be in a position where 0:18:09.480 --> 0:18:12.560 money we're talking about money market funds breaking them bucks. 0:18:12.600 --> 0:18:16.520 Something we haven't talked about, UM, you know, really financial crisis. 0:18:17.000 --> 0:18:21.359 Certainly liquidity is poor and on days like Monday, UM 0:18:21.440 --> 0:18:25.879 when there was significant moves on the yield curve, it 0:18:25.920 --> 0:18:28.399 was it was we saw difficulty across the market and 0:18:28.520 --> 0:18:32.800 moving large volumes of treasury securities. But it's still a deeper, 0:18:32.880 --> 0:18:35.720 more liquid market than anything in fixed income, and it's 0:18:35.760 --> 0:18:39.040 it's nothing compared to the liquidity challenges we saw a 0:18:39.040 --> 0:18:42.000 decade and a half of UH. And if I can 0:18:42.040 --> 0:18:44.439 move to corporates just for a second, especially with with 0:18:44.560 --> 0:18:48.399 high yields, UM, is there a threat of higher defaults ahead? 0:18:48.440 --> 0:18:51.800 Do you do you see that? I think there is. 0:18:52.000 --> 0:18:55.800 We're starting again from a very low default rate and 0:18:55.880 --> 0:18:59.640 a strong balance sheep position. Companies were not sitting idly 0:18:59.760 --> 0:19:02.080 vie for the last two years. They were planning ahead, 0:19:02.119 --> 0:19:05.360 and they were refinancing their capital structures, and they were 0:19:05.440 --> 0:19:08.720 generating flexibility on their balance sheets. And so if we 0:19:08.760 --> 0:19:11.840 look where we sit today, earnings and leverage are in 0:19:11.880 --> 0:19:15.560 a good spot, but borrowing costs have risen for companies 0:19:15.600 --> 0:19:18.520 as well. Just looking yesterday, we were at a point 0:19:18.520 --> 0:19:22.080 where this morning, about twenty four hours ago, the three 0:19:22.119 --> 0:19:24.680 year treasury was at three and a half percent yield, 0:19:24.880 --> 0:19:28.400 which ironically is identical to the yield on the high 0:19:28.520 --> 0:19:33.000 yield bond market one year ago. So we've moved significantly. 0:19:33.600 --> 0:19:35.480 So I think, you know, a little bit of further 0:19:35.560 --> 0:19:40.320 widening in credit spreads would actually make them, uh, pretty attractive, 0:19:40.359 --> 0:19:42.719 even though it would signal that, you know, there perhaps 0:19:42.760 --> 0:19:46.239 as a recession happening, I think you'd be compensated for 0:19:46.320 --> 0:19:49.000 what could be hired to faults at that at that level, Gene, 0:19:49.040 --> 0:19:51.280 Thanks all appreciated, Genes. It is a global hand of 0:19:51.359 --> 0:19:55.639 fixed income at Columbia thread Needle again, Jane is a 0:19:55.720 --> 0:19:59.600 high risk of an overshoot by federal reserve policy makers. 0:20:00.280 --> 0:20:03.320 Ten year yield right now one of two basis points. 0:20:03.359 --> 0:20:08.280 This is Bloomberg. Bloomberg day Break brought you by Hofster 0:20:08.440 --> 0:20:12.840 University's Frank gez R School Business ZARB Executive NBA built 0:20:12.880 --> 0:20:15.680 for working professionals, can be completed in a few of 0:20:15.760 --> 0:20:23.280 eleven months. Visit Hofstra EU slash go grad broadcasting live 0:20:23.440 --> 0:20:27.439 from the Bloomberg Interactive broker studio in New York, Bloomberg 0:20:27.440 --> 0:20:31.520 E Living Freedom to Washington, d C. Bloomberg to Boston, 0:20:31.600 --> 0:20:35.000 Bloomberg one O six one to San Francisco, Bloomberg nine 0:20:35.119 --> 0:20:38.000 six to the country, Sirius XM to A one ninet 0:20:38.280 --> 0:20:41.440 and around the globe the Bloomberg Business app and Bloomberg 0:20:41.520 --> 0:20:51.080 Radio dot com. This is Bloomberg Daybreak. He has six 0:20:51.119 --> 0:20:54.520 thirty on Wall Street. Good morning, I'm John Tucker Hagar. 0:20:54.560 --> 0:20:56.960 We're about three hours away from the open of US trading. 0:20:57.080 --> 0:20:58.760 It's time for the five things you need to notice 0:20:58.760 --> 0:21:00.680 start your day. Brought to you by i b k 0:21:00.960 --> 0:21:04.280 R Investment Advisors switched to Interactive brokers for lowest costs, 0:21:04.280 --> 0:21:07.439 global trading and turnkey custody solutions, no ticket charges and 0:21:07.480 --> 0:21:09.760 no conflicts of your interests at ib k R dot 0:21:09.760 --> 0:21:12.840 com slash r i A first. US futures are higher 0:21:12.840 --> 0:21:15.440 as we close out the trading week. Yesterday, the SMP 0:21:15.560 --> 0:21:18.400 five hundred closed at an eighteen month low. Markets are 0:21:18.680 --> 0:21:21.760 rounding off a week highlighted by interest rate increases, including 0:21:21.800 --> 0:21:26.640 the Fed's biggest move since Greg Jensen, co chief investment 0:21:26.680 --> 0:21:29.680 officer at Bridgewater Associate, says the FED has a difficult 0:21:29.760 --> 0:21:33.640 job ahead. They're serious about two percent inflation. They're gonna 0:21:33.680 --> 0:21:36.560 have to crack the U S economy hard, and it's 0:21:36.600 --> 0:21:39.120 then gonna take the easing to offset that and then 0:21:39.160 --> 0:21:41.520 the recovery before you see a bottom. So that's a 0:21:41.720 --> 0:21:44.800 that's a long process. Um In the end, we think 0:21:44.840 --> 0:21:49.399 the federal blink and choose to sustain asset prices lower 0:21:49.440 --> 0:21:52.120 than they are today, Greg jen said at Bridgewater. Associate 0:21:52.200 --> 0:21:55.520 says stocks may still fall lower because unlike other bear markets, 0:21:55.560 --> 0:21:58.600 there is not support from an accommodative central bank and 0:21:58.680 --> 0:22:01.080 two other market those of this before the opening deal 0:22:01.119 --> 0:22:04.639 the fetchhair j Pal makes welcoming remarks at in the 0:22:04.680 --> 0:22:08.879 inaugural conference of the International Role of the Dollar. Today 0:22:08.960 --> 0:22:10.920 is also a triple witching Friday. The three and a 0:22:10.920 --> 0:22:14.800 half trillion dollar options expiration may lead to shortcovering that 0:22:14.880 --> 0:22:17.520 could bring some temporary really for the stock market for 0:22:17.640 --> 0:22:20.520 the ends weaker this morning. This after Japan retained super 0:22:20.520 --> 0:22:23.800 easy monetary policy and yield curve control, defying pressure to 0:22:23.880 --> 0:22:26.920 track a global trend toward tighter monetary policy. And back 0:22:26.920 --> 0:22:29.639 you're in the US. President Biden weighing in on the economy, 0:22:29.680 --> 0:22:32.959 he says a recession can be avoided. Let's get the 0:22:32.960 --> 0:22:36.240 tales live from Bloomberg's Rededa Young, Good morning Reed, Good 0:22:36.240 --> 0:22:39.239 morning John. The President is reiterating his message that the 0:22:39.320 --> 0:22:42.119 US is in a stronger position than any nation in 0:22:42.160 --> 0:22:45.040 the world to overcome inflation, and while he says a 0:22:45.080 --> 0:22:49.000