WEBVTT - Bloomberg Daybreak: June 22, 2022 - Hour 2 (Radio) 0:00:01.840 --> 0:00:05.160 Live from the Bloomberg Interactive Brokers Studios. This is Bloomberg 0:00:05.280 --> 0:00:09.480 Daybreak for Wednesday, June twenty two. Coming up this shour 0:00:09.760 --> 0:00:13.240 Stocks failed to build on yesterday's rally as recession fears 0:00:13.280 --> 0:00:17.639 resurface on Wall Street. Investors brace for congressional testimony from J. Powell. 0:00:17.800 --> 0:00:21.200 President Biden calls for a three month federal gas tax holiday, 0:00:21.280 --> 0:00:24.520 and Senators reach agreement on a bipartisan gun violence bill. 0:00:24.880 --> 0:00:27.560 Look for rent and greases in New York City. Plus 0:00:27.600 --> 0:00:30.720 Trump backed Katie Britt beats Maga mull Brooks in the 0:00:30.760 --> 0:00:35.240 Alabama Senate primary. Michael barn Ahead, I'm John Dashdown swards 0:00:35.280 --> 0:00:37.040 home runs did in the Yankees, and a laws at 0:00:37.080 --> 0:00:39.640 Tampa Bay Lots studded laws with the medicine euston. The 0:00:39.680 --> 0:00:45.760 Stanley Cup Final continues tonight. That's all Strendy ahead on 0:00:45.880 --> 0:00:51.520 Bloomberg Daybreak on Bloomberg eleven three, on New York, Bloomberg one, Washington, 0:00:51.640 --> 0:00:55.280 d C, Bloomberg one oh six one, Boston, Bloomberg nine 0:00:55.320 --> 0:00:59.120 sixties and Francisco, Syrias x AM one nine team, and 0:00:59.200 --> 0:01:02.279 around the world on Bloomberg Radio dot Com and via 0:01:02.360 --> 0:01:09.160 the Bloomberg Business app. Good morning. I'm Nathan Hagard and 0:01:09.160 --> 0:01:12.279 I'm Karen. Moscow and US Dock Index futures are lower 0:01:12.360 --> 0:01:14.559 this morning, coming up to six oh one on Wall Street, 0:01:14.560 --> 0:01:16.880 and we check the markets every fifteen minutes throughout the 0:01:16.880 --> 0:01:19.720 trading day. On bloomberg S and P Future is down 0:01:19.760 --> 0:01:22.360 about fifty eight points to DOWN futures down four hundred 0:01:22.600 --> 0:01:25.000 and NASDAG futures down to two hundred and one. The 0:01:25.080 --> 0:01:28.200 decks in Germany's down two point two percent. Ten year 0:01:28.240 --> 0:01:30.880 treasury of seventeen thirty seconds, you know, three point to 0:01:31.000 --> 0:01:33.560 one percent, and they yield on the two year is 0:01:33.560 --> 0:01:36.640 at three point one one percent. The euro one point 0:01:36.680 --> 0:01:39.560 oh five one nine against the dollar, Nathan Karen. The 0:01:39.560 --> 0:01:43.280 main event today congressional testimony on the economy from J Powell. 0:01:43.360 --> 0:01:45.880 Later this morning, the Fed Chairman appears before the Senate 0:01:45.920 --> 0:01:49.080 Banking Committee. We get a preview from Bloomberg's Michael McKee. 0:01:49.320 --> 0:01:52.200 Politics always plays a role in the Fed Chairman's appearances, 0:01:52.320 --> 0:01:54.400 and there will no doubt be efforts to pin the 0:01:54.440 --> 0:01:58.320 blame for inflation on someone. That's a topic Powell will duck. 0:01:58.720 --> 0:02:00.920 He'll also try to avoid it, spreassing an opinion on 0:02:01.040 --> 0:02:05.200 various fiscal responses to inflation now under consideration on Capitol Hill, 0:02:05.440 --> 0:02:08.640 such as a gas tax suspension. The real key question 0:02:08.680 --> 0:02:11.240 for the chairman is how high and how fast the 0:02:11.240 --> 0:02:14.680 Fed needs to raise interest rates. The latest FED forecast 0:02:14.840 --> 0:02:17.040 is to just under four percent by the end of 0:02:17.040 --> 0:02:19.880 the year, just over it in two thousand twenty three, 0:02:20.360 --> 0:02:22.680 but there has been pushback from investors and analysts who 0:02:22.720 --> 0:02:25.120 say the Central Bank may have to go much higher 0:02:25.160 --> 0:02:29.080 than that. Paul's answer may have a major impact on trading. 0:02:29.240 --> 0:02:31.920 Michael McKee, Bloomberg Daybreak. Alright, Mike, thanks, and you can 0:02:31.960 --> 0:02:34.760 catch full coverage of FED share pals testimony starting around 0:02:35.600 --> 0:02:39.200 am Wall Street time on Bloomberg Radio and television. Well, Nathan, 0:02:39.240 --> 0:02:42.040 As investors awaited word from Powell, there are more calls 0:02:42.120 --> 0:02:45.160 this morning for the Fed to get more aggressive. Richmond 0:02:45.160 --> 0:02:47.960 Fan president Thomas Barkin wants to raise interest rates as 0:02:47.960 --> 0:02:51.000 fast as possible, as long as it doesn't cause undue 0:02:51.080 --> 0:02:54.120 harm to markets are the economy. We're in a situation 0:02:54.120 --> 0:02:58.520 where inflation is high, it's broad based, it's persistent, and 0:02:58.600 --> 0:03:01.200 rates are so well below normal, and so I think 0:03:01.280 --> 0:03:04.800 the spirit is you want to get back to where 0:03:04.840 --> 0:03:07.360 you want to go as fast as you can without 0:03:07.360 --> 0:03:11.040 breaking anything. And Richmond Fed President Thomas Barkin also says 0:03:11.040 --> 0:03:13.639 he does not expect the economy to swiftly return to 0:03:13.720 --> 0:03:17.240 pre pandemic patterns. A more aggressive FED, weaker demand for 0:03:17.280 --> 0:03:19.760 goods and supply shocks are leading the way for more 0:03:19.840 --> 0:03:22.639 recession fears. Let's get the latest on that, live from 0:03:22.680 --> 0:03:25.959 Bloomberg's Nita Young. Good morning, Rnita, Good morning. Nathan. City 0:03:25.960 --> 0:03:28.919 Group says there's a fifty percent chance of the world 0:03:28.960 --> 0:03:32.200 economy falling into a recession, and as a result, the 0:03:32.240 --> 0:03:35.520 Bank now sees the global economy growing three percent this 0:03:35.640 --> 0:03:39.600 year and two point eight percent in three. Economists at 0:03:39.640 --> 0:03:42.880 City Groups say if a recession did occur, it's likely 0:03:42.920 --> 0:03:46.920 to be quote garden variety, in which unemployment rises several 0:03:46.960 --> 0:03:51.000 percentage points and output experiences a couple of week quarters. 0:03:51.520 --> 0:03:54.320 Live in New York. I'm reneed a Young Bloomberg Day break. 0:03:54.360 --> 0:03:56.720 All right, need to thank you. Inflation also a major 0:03:56.760 --> 0:03:59.920 concern overseeage today's reading in the UK as prices jump 0:04:00.080 --> 0:04:01.960 to a new four decade high, and we get the 0:04:02.040 --> 0:04:04.600 latest with the Bloomberg's You Win pots in London, Good morning, 0:04:04.680 --> 0:04:08.280 you want, Good morning, cardaathan UK inflation in the etomy 0:04:08.320 --> 0:04:11.720 ticking up to nine point one. The reading reflects broad 0:04:11.720 --> 0:04:14.840 increases in the cost of everything from fuel and electricity 0:04:14.960 --> 0:04:17.719 to food and beverages. There are also more signs of 0:04:17.760 --> 0:04:21.080 growing price pressures at the wholesale level, with raw material 0:04:21.120 --> 0:04:23.880 costs increasing by the most on records. The Bank of 0:04:23.880 --> 0:04:27.200 England says CPI could hit eleven per cents later this year. 0:04:27.400 --> 0:04:29.520 In London, Immune parts Bloo boo day breaking, all right 0:04:29.560 --> 0:04:31.360 you and thanks for session fears and news of the 0:04:31.360 --> 0:04:34.799 Biden administrations prepared to step up its fight against gas prices. 0:04:34.800 --> 0:04:37.120 Have oil on the decline once again. Right now West 0:04:37.160 --> 0:04:40.239 Texas Intermediate cruise down five percent or five dollars forty 0:04:40.279 --> 0:04:42.640 five cents at a hundred four dollars seven cents of 0:04:42.680 --> 0:04:45.840 barrel Brent's trading at a hundred nine fifty six. Later today, 0:04:45.920 --> 0:04:48.680 President Biden will ask Congress to enact a three month 0:04:48.839 --> 0:04:52.719 gasoline tax holiday. Bloomberg said. Baxter has the story. The 0:04:52.800 --> 0:04:55.840 President is trying to cool the soaring pump prices as 0:04:55.839 --> 0:04:59.000 we head under the summer travel season. Mr Biden says 0:04:59.040 --> 0:05:02.400 it will not hurt infrastructure. Is it going to in 0:05:02.480 --> 0:05:05.520 fact make it difficult to maintain our roads. The answer 0:05:05.600 --> 0:05:08.560 is we have plenty of capacity to do that. Biden 0:05:08.640 --> 0:05:10.919 also says in the long run, there is plenty of 0:05:11.000 --> 0:05:15.520 oil to drill nine thousand oil fields in San Francisco. 0:05:15.560 --> 0:05:19.039 I'm at Baxter Bloomberg Daybreak and thank you. Also in Washington, 0:05:19.080 --> 0:05:22.160 the Senate has voted to advance a bypartisan gun safety bill, 0:05:22.200 --> 0:05:25.120 and a vote on final passage it's expected later this week. 0:05:25.200 --> 0:05:27.640 Backer is called the measure the biggest breakthrough on the 0:05:27.760 --> 0:05:31.760 issue in decades. It's designed to improve background checks, secure schools, 0:05:32.000 --> 0:05:35.560 and give states federal funds to combat gun violence. Isaac 0:05:35.640 --> 0:05:38.600 Baltzansky is director of policy Research at bt I G. 0:05:39.200 --> 0:05:41.600 But as we've learned time and time again, the motivator 0:05:41.720 --> 0:05:45.520 for lawmakers is so often the calendar and the jet 0:05:45.640 --> 0:05:48.520 fumes are also in play here because they're trying to 0:05:48.600 --> 0:05:51.559 leave town for two weeks at the end of this week, 0:05:51.720 --> 0:05:55.760 and that is an undeniable motivator, especially for these lawmakers 0:05:56.040 --> 0:05:58.640 who are running for re election. Bt I is Isaac 0:05:58.680 --> 0:06:01.679 balt Tanski spoke with Our Watch and corresponded Joe Matthew 0:06:01.680 --> 0:06:04.320 on Bloomberg Sound on Catch the Program weekdays at five 0:06:04.360 --> 0:06:07.360 PM Eastern on Bloomberg Radio here. In the latest round 0:06:07.400 --> 0:06:09.599 of hearings into the January six attack at the US 0:06:09.680 --> 0:06:12.440 Capital is in the Books. Testimony yesterday focused on state 0:06:12.480 --> 0:06:14.840 and local officials and the pressure they faced from former 0:06:14.880 --> 0:06:18.880 President Donald Trump to overturn the election. Committee Democrat Adam 0:06:18.920 --> 0:06:22.719 Schiff says the system held, but barely. Anyone who got 0:06:22.760 --> 0:06:25.719 in the way of Donald Trump's continued hold on power 0:06:26.120 --> 0:06:28.760 after he lost the election was the subject of a 0:06:28.920 --> 0:06:33.800 dangerous and escalating campaign of pressure. Congressman Schiff and other 0:06:33.839 --> 0:06:37.160 committee members heard from Georgia's Secretary of State Brad Raethensburger. 0:06:37.200 --> 0:06:40.240 He says he faced a campaign of intimidation, including threats 0:06:40.240 --> 0:06:43.000 to his wife, and then some people broke into my 0:06:43.080 --> 0:06:46.600 daughter in laws home and I sent has passed, and 0:06:46.760 --> 0:06:50.800 she's a widow and has two kids, and so we're 0:06:50.839 --> 0:06:54.240 very concerned about her safety. Also, Secretary of State Raffensburger 0:06:54.279 --> 0:06:56.800 says he followed every rabbit hole to make sure George's 0:06:56.839 --> 0:06:59.560 numbers were accurate, but he says the former president came 0:06:59.640 --> 0:07:02.560 up shot it. Right Now, SMP futures are down fifty 0:07:02.600 --> 0:07:05.360 three point staff futures down three seventy two Das deck 0:07:05.400 --> 0:07:07.919 futures are lower by a hundred eighty eight points. The 0:07:07.960 --> 0:07:10.720 tenure treasury is up sixteen thirty seconds. The yield three 0:07:10.760 --> 0:07:12.960 point to one percent on the tenure note yield on 0:07:12.960 --> 0:07:15.960 the two year three point one one. Straight ahead your 0:07:16.000 --> 0:07:19.680 latest local headlines into check of sports. This is Bloomberg 0:07:23.200 --> 0:07:25.280 six oh seven on Wall Street where at sixty six 0:07:25.360 --> 0:07:27.960 degrees in Central Park got an accident on the southbound 0:07:27.960 --> 0:07:31.520 Deagan passed the Cross Bronx Expressway. Details coming up in traffic. 0:07:31.800 --> 0:07:34.080 First Michael Barr with more on what's going on in 0:07:34.120 --> 0:07:37.000 New York and around the world. Good morning, Michael, Good morning, Nathan. 0:07:37.040 --> 0:07:39.880 Rent is going up in New York City. Last night, 0:07:39.920 --> 0:07:43.280 the Rent Guidelines Board voted to increase one year and 0:07:43.440 --> 0:07:46.400 two year leases. On a five four vote. The board 0:07:46.400 --> 0:07:49.280 decided to raise the rent for rent stabilized departments to 0:07:49.640 --> 0:07:53.040 three for one year leases. It will go up to 0:07:53.120 --> 0:07:56.320 five percent for two year leases. Katie Bread has won 0:07:56.360 --> 0:08:00.480 the Republican runoff against Representative Mobe Brooks for retiring Alabama 0:08:00.480 --> 0:08:04.800 Senator Richard Shelby's seat. Britt Shelby's former chief of staff, 0:08:04.880 --> 0:08:08.040 gained ground after Brooks lost. Donald Trump's endorsement in March, 0:08:08.360 --> 0:08:12.920 Britt got forty five percent, while Brooks received. Washington d C. 0:08:13.200 --> 0:08:16.200 Mayor Muriel Bowser appears to be on hairway to winning 0:08:16.200 --> 0:08:20.960 a third consecutive term. Bowser one yesterday's Democratic primary. Bowser 0:08:21.000 --> 0:08:25.240 got fifty percent, while second place Robert White received. They 0:08:25.280 --> 0:08:27.760 had of the Texas Department of Public Safety is now 0:08:27.840 --> 0:08:30.880 calling the law enforcement response to the massacre at the 0:08:31.000 --> 0:08:36.400 rob Elementary School and abject failure. Colonel Steve McCall says 0:08:36.480 --> 0:08:39.480 that there were enough police officers on hand that could 0:08:39.480 --> 0:08:42.240 have stopped the gunman quickly after he entered the building, 0:08:42.280 --> 0:08:45.240 but they waited in the school hallway for nearly an hour. 0:08:45.480 --> 0:08:49.240 Not enough training was done in the situation, playing simple 0:08:49.320 --> 0:08:52.000 because a bad decision and terrible decisions. Terrible decisions were 0:08:52.000 --> 0:08:55.320 made by the unseen commander and should have never happened Simple, 0:08:55.840 --> 0:08:59.800 Colonel McCall say police failed to engage sooner than three 0:09:00.120 --> 0:09:03.319 it's into the attack. A jury in California sign it 0:09:03.360 --> 0:09:05.680 with a woman who filed a sex abuse lawsuit against 0:09:05.720 --> 0:09:09.680 comedian Bill Cosby. Jurors found Cosby sexually abused the then 0:09:09.840 --> 0:09:12.840 sixteen year old girl at the Playboy Mansion in nineteen 0:09:12.920 --> 0:09:16.560 seventy five, the jury awarded Judy Huff, now sixty four, 0:09:16.640 --> 0:09:20.400 a half a million dollars. Attorney Gloria already today our 0:09:20.440 --> 0:09:26.959 client Judy Huff one real change because she fought Phil Cosby, 0:09:27.200 --> 0:09:30.360 one step at a time for over seven and a 0:09:30.440 --> 0:09:34.520 half years. Attorney Gloria Allread. Cosby has denied the allegations. 0:09:34.760 --> 0:09:37.079 Twenty five people in New York City I presumed to 0:09:37.200 --> 0:09:40.880 have tested positive for monkey pocks. New York City Mayor 0:09:41.000 --> 0:09:44.040 Eric Adams and health officials lowered the city's COVID nineteen 0:09:44.080 --> 0:09:47.800 alert level to medium from high, and New York City 0:09:47.840 --> 0:09:51.600 Broadway theaters have agreed to adopt an optional masking policy 0:09:51.600 --> 0:09:53.959 of the month of July. The new policy ends a 0:09:54.040 --> 0:09:57.920 near you long policy of requiring facial coverings inside theaters 0:09:57.920 --> 0:10:00.760 at all times. Global News twenty four hours a day 0:10:00.760 --> 0:10:03.160 on air and on Bloomberg Quick Take power by more 0:10:03.360 --> 0:10:06.960 than journalists analysts more than a twenty countries on Michael 0:10:06.960 --> 0:10:14.800 bar this is Bloomberg, alright, Michael, thank you? Six ten 0:10:14.840 --> 0:10:17.480 on Wall Street. John stash As the Bloomberg Sports Update, 0:10:17.559 --> 0:10:20.120 all right. Nathan esther Cortez has been a revelation for 0:10:20.120 --> 0:10:22.640 the Yankees. Eight of his first nine starts, he didn't 0:10:22.640 --> 0:10:25.280 allow more than two runs, but he has come back 0:10:25.280 --> 0:10:27.800 to earth a bit that Tampa Bay. Cortez served up 0:10:27.840 --> 0:10:29.880 two home runs in the first fit, and he sucked 0:10:29.920 --> 0:10:32.120 Parade has two winnings later built at his second of 0:10:32.160 --> 0:10:35.240 the game and not wanting Cortez to face Parades a 0:10:35.320 --> 0:10:37.559 third time, he came out in the fifth and this 0:10:37.640 --> 0:10:54.520 was Clark Smith's first pitch. Alright. Tampa Bay won the 0:10:54.520 --> 0:10:56.720 game five to four. Cortez is e r A has 0:10:56.760 --> 0:10:59.600 gone from one point three a month ago to two 0:10:59.600 --> 0:11:02.520 points met started Trevor Williams in Houston. He would not 0:11:02.520 --> 0:11:04.360 be in the rotation if not for the Max Scherzer 0:11:04.440 --> 0:11:06.960 injury and William Stella one and four. Astros hit three 0:11:07.000 --> 0:11:10.400 home runs they wanted eight to two. Toronto's Austin Matthews 0:11:10.400 --> 0:11:13.120 has scored sixty goals named NHL m v P Gorss. 0:11:13.120 --> 0:11:16.079 Sturchin finished third. He did as expected when the Vezina 0:11:16.160 --> 0:11:19.360 Trophy third ranger goally to win the award. Mike Richter 0:11:19.520 --> 0:11:21.720 and John Van beat book for the others. Stanley Cup 0:11:21.800 --> 0:11:26.040 Finals zooms tonight in Tampa, Colorado Leagus two games to one. 0:11:26.120 --> 0:11:29.160 Rob Grinkowski, having retired once before, is now doing it again. 0:11:29.240 --> 0:11:31.000 He played nine years in New England, came out of 0:11:31.000 --> 0:11:33.520 retirement to play two more with Tom Brady and Tampa Bay, 0:11:33.520 --> 0:11:35.559 and together they won a Super Bowl for the fourth time. 0:11:36.000 --> 0:11:37.959 While Brooks kept is not having a good year, he 0:11:38.000 --> 0:11:39.880 has won four majors. He's a big name and now 0:11:40.000 --> 0:11:42.559 he's the latest to vote the PGA Tour for the 0:11:42.640 --> 0:11:44.760 new Live Tour. Kept It said last week he hadn't 0:11:44.800 --> 0:11:48.360 given the Live Tour much fun. John Stash Edward Blumberg 0:11:48.440 --> 0:11:52.760 sports all right, John, thanks SMB futures down fifty two points, 0:11:52.800 --> 0:11:55.440 staff futures down to fifty six, dance that features are 0:11:55.480 --> 0:11:58.560 lower by a hundred eighty three points. The tenure treasury 0:11:58.640 --> 0:12:01.840 yield three point two two percent. Ahead of Chairman Powell's 0:12:01.880 --> 0:12:08.679 testimony in the Senate. This is Bloomberg Bloomberg Daybreak, brought 0:12:08.679 --> 0:12:11.800 to you by Hofstra University's Frank geez Are School of Business, 0:12:11.880 --> 0:12:15.280 Top rankings online NBA program with a real world foundation. 0:12:15.600 --> 0:12:22.400 Learn more at Hofstrad dot edu. Slash Go grad markets 0:12:22.520 --> 0:12:25.560 headlines and breaking news twenty four hours a day at 0:12:25.600 --> 0:12:29.000 Bloomberg dot com. The Bloomberg Business at and at Bloomberg 0:12:29.080 --> 0:12:38.000 quick tape this is a Bloomberg business blash and I'm 0:12:38.080 --> 0:12:41.000 Karen Moscow. Stocks in Europe are falling along with US 0:12:41.040 --> 0:12:43.839 stock index futures as well as commodities, and made ever 0:12:43.960 --> 0:12:46.880 louder warnings that federal reserve at rate hikes may lead 0:12:46.880 --> 0:12:49.880 to an economic downturn. We checked the markets every fifteen 0:12:49.920 --> 0:12:52.360 minutes throughout the trading day on bloomberg S and P 0:12:52.559 --> 0:12:56.280 futures down fifty two points, DAL futures down three fifty five, 0:12:56.360 --> 0:12:59.280 Annas day futures down a hundred eighties six. The decks 0:12:59.320 --> 0:13:01.600 in Germany's down about to per cent. The ten year 0:13:01.640 --> 0:13:04.360 treasury up thirteen thirty seconds, held three point to two 0:13:04.440 --> 0:13:07.080 per cent yield done a two year three point one 0:13:07.160 --> 0:13:10.040 two percent nine mix. Crude oil is down more than 0:13:10.120 --> 0:13:12.360 five percent, down five dollars fifty six cents and a 0:13:12.440 --> 0:13:15.360 hundred three dollars ninety six cents of barrel comex school 0:13:15.360 --> 0:13:17.520 there is down half percent or nine dollars thirty cents 0:13:17.559 --> 0:13:20.480 at eighteen twenty nine fifty an ounce. The euro one 0:13:20.520 --> 0:13:22.960 point oh five one eight against the dollar, British found 0:13:23.000 --> 0:13:25.280 one point two to five one and the end at 0:13:25.280 --> 0:13:28.160 one thirty six point one four. Looking at bitcoin, it's 0:13:28.200 --> 0:13:31.000 down more than two percent at twenty thousand, three hundred 0:13:31.120 --> 0:13:34.199 ninety dollars. That's a Bloomberg business flash. Now here's Michael 0:13:34.240 --> 0:13:36.360 Barr with more on what's going on around the world. 0:13:36.520 --> 0:13:39.000 Michael Karen, thank you very much. Katie Britt won the 0:13:39.040 --> 0:13:42.560 Republican nomination for a cent and in Alabama, defeating six 0:13:42.720 --> 0:13:46.360 term Congressman Mob Brooks in a primary runoff. Britt received 0:13:46.360 --> 0:13:50.720 forty five percent, while Brooks got twenty nine percent. Meanwhile, 0:13:50.760 --> 0:13:54.520 in Georgia, trucking company executive Mike Collins defeated Vernon Jones 0:13:54.800 --> 0:13:58.400 in the Republican primary runoff for Georgia's tenth congressional district. 0:13:58.840 --> 0:14:02.680 Donald Trump endorsed Jones, while Governor Brian Kemp back Collins, 0:14:02.840 --> 0:14:07.200 who got sixty four percent. DC Mayor Muriel Bowser has 0:14:07.240 --> 0:14:09.640 won the Democratic primary, putting her on track for a 0:14:09.760 --> 0:14:13.240 third term to lead the nation's capital. Bowser received fifty 0:14:13.280 --> 0:14:15.800 percent of the vote compared to second place Robert White. 0:14:15.840 --> 0:14:19.640 At In baseball, the Yankees and Mets lost, the Red 0:14:19.720 --> 0:14:23.240 Sox won, the Nationals beat the Orioles, the Giants won, 0:14:23.360 --> 0:14:26.080 the A's lost. Global News twenty four hours a day 0:14:26.200 --> 0:14:28.920 on air and on Bloomberg Quick Take, powered by more 0:14:29.000 --> 0:14:31.720 than undred journalists and analysts are more than a hundred 0:14:31.760 --> 0:14:35.960 twenty countries. I'm Michael Barr. This is Bloomberg. This is 0:14:36.040 --> 0:14:39.560 the Big Take, the best of Bloomberg's in depth original 0:14:39.680 --> 0:14:42.200 reporting from around the globe. This is a really fast 0:14:42.280 --> 0:14:46.119 moving story that's of course a lot of outrage among investors. 0:14:46.240 --> 0:14:48.960 This is so fascinating. A market shutdown in a way 0:14:49.000 --> 0:14:52.040 it's never done before. That's gonna have consequences for years 0:14:52.080 --> 0:14:57.080 to come. The Big Take on Bloomberg Radio coming up 0:14:57.120 --> 0:14:59.080 to six twenty on Wall Street Life from the Bloomberg 0:14:59.120 --> 0:15:01.880 interactor Broker's vidios. This is Bloomberg Daybreak, and our big 0:15:01.960 --> 0:15:04.960 take this morning is on the housing market and growing signs. 0:15:05.000 --> 0:15:07.600 The real estate boom over the last few years is 0:15:07.680 --> 0:15:09.960 on the brink of bust as central banks bent on 0:15:10.080 --> 0:15:14.120 fighting inflation move fast on interest rates. Bloomberg Chief Asia 0:15:14.160 --> 0:15:17.080 Economics correspondent and the Current wrote the Big Take this 0:15:17.280 --> 0:15:19.200 morning and end us here with us live from Hong 0:15:19.280 --> 0:15:21.840 Kong to talk more about it, and a great to 0:15:21.880 --> 0:15:24.480 have you with us this morning. Congratulations on the piece, 0:15:24.560 --> 0:15:26.360 and I mean we're already seeing the rains pull in 0:15:26.440 --> 0:15:29.680 on the US housing market with mortgage rates now close 0:15:29.760 --> 0:15:32.320 to six percent. Is is that what we're seeing globally 0:15:32.320 --> 0:15:35.360 as well. Yeah, so what we're seeing now is something 0:15:35.480 --> 0:15:37.640 of a reverse in nates. And do you know the 0:15:37.720 --> 0:15:41.360 back story was when the pandemic came, borrowing costs were 0:15:41.400 --> 0:15:44.440 brought down to historic loads, and of course central banks 0:15:44.520 --> 0:15:46.960 put a lot of money into their economies. The end 0:15:47.000 --> 0:15:50.360 results we saw a big house price boom right around 0:15:50.400 --> 0:15:52.840 the world, not just the rich world, but also in 0:15:52.960 --> 0:15:55.160 emerging economies. Well, of course, now all of that is 0:15:55.240 --> 0:15:57.400 being on round at the fretty rapid clip in terms 0:15:57.480 --> 0:16:01.400 of central banks are raising interest rates to bring down inflation, 0:16:01.480 --> 0:16:05.360 and that means mortgage costs and lonely payment costs are 0:16:05.480 --> 0:16:09.400 going up. And they they there are are already signs 0:16:09.440 --> 0:16:12.560 that house prices are cooling in some places maturity that's 0:16:12.600 --> 0:16:15.520 been and take New Zealand for example. In other places 0:16:15.600 --> 0:16:17.760 signs that it's they're just beginning to come up the 0:16:17.800 --> 0:16:20.400 ball and economists are saying it could be worse than 0:16:20.440 --> 0:16:23.360 a few months from now. So to be clear, you know, 0:16:23.440 --> 0:16:25.520 we're not yet at the two thousand and eight style 0:16:25.640 --> 0:16:28.080 crash territory. But certainly the big boom of the last 0:16:28.120 --> 0:16:30.240 few years is definitely coming to an end. Now we 0:16:30.320 --> 0:16:32.480 could talk a little bit more about what makes this 0:16:32.880 --> 0:16:35.680 potential crash in the housing market different from what we 0:16:35.760 --> 0:16:37.560 saw in two thousand eight. I mean, there are a 0:16:37.640 --> 0:16:40.520 lot more guardrails in place for housing than there were 0:16:40.600 --> 0:16:45.000 back then. Right, absolutely right, So let's do the two 0:16:45.000 --> 0:16:48.760 thousand comparison. This time around. Banks are supposed to be 0:16:48.840 --> 0:16:51.000 in better order. Remember all of the years of ex 0:16:51.120 --> 0:16:54.560 regulations have got their balance sheets and better condition. Consumers 0:16:54.680 --> 0:16:57.040 are in good order. The are cashed up after the 0:16:57.160 --> 0:17:00.560 pandemic years when they when they increase their evening during 0:17:00.640 --> 0:17:03.840 that time. The labor markets around the world are still 0:17:03.960 --> 0:17:06.440 quite strong in fact, as you know, and many economies 0:17:06.480 --> 0:17:09.639 like us, the shortage of labor is the issue. And 0:17:09.760 --> 0:17:12.960 of course let's not forget that boring costs are coming 0:17:13.000 --> 0:17:15.760 from a pretty low base. So depending where you are 0:17:15.840 --> 0:17:19.240 on that mortgage spectrum, your interest rates still nothing like 0:17:19.359 --> 0:17:22.159 what they might have been, say, in previous generations. So 0:17:22.320 --> 0:17:27.160 the thinking is that the households should be in better order. Nonetheless, 0:17:27.400 --> 0:17:31.240 we are also looking at something of a synchronized monetary 0:17:31.280 --> 0:17:34.280 policy typing cycle the kind of which we haven't seen 0:17:34.560 --> 0:17:37.720 for some decades. And when you have mortgage rates going 0:17:37.840 --> 0:17:40.080 up the way that they are around the world, then 0:17:40.200 --> 0:17:43.119 inevitably there will be a hit to household wealth. And 0:17:43.200 --> 0:17:45.600 that's where you might start seeing the pain trickling through 0:17:45.640 --> 0:17:48.119 the through the real economy. Well, are we starting to 0:17:48.200 --> 0:17:51.080 see signs and that the rise in interest rates that 0:17:51.160 --> 0:17:54.840 we're seeing is starting to take a hit on overall 0:17:55.080 --> 0:17:58.880 housing prices and what does that mean for the overall economy? 0:18:00.280 --> 0:18:03.000 But yeah, so our colleagues that Bloomberg Economics have run 0:18:03.080 --> 0:18:05.240 some big numbers on this in terms some of the 0:18:05.359 --> 0:18:08.800 key rates that price to rent and home price income ratios. 0:18:08.960 --> 0:18:11.439 And they're having a look at countries such as, for example, 0:18:11.440 --> 0:18:15.360 of Canada, the US New Zealand. They're seeing those hot 0:18:15.400 --> 0:18:19.320 residential markets looking especially vulnerable to to a downturn out 0:18:19.400 --> 0:18:22.440 that wall to happen, it will be quite a flow 0:18:22.560 --> 0:18:26.560 through because construction and home buying is the ultimate and 0:18:26.640 --> 0:18:29.399 multi clar it's the big driver of economic activity in 0:18:29.440 --> 0:18:31.920 most economies around the world. Now you reverse that, you've 0:18:31.920 --> 0:18:35.240 a falling home prices, that's going to a road household wealth. 0:18:35.520 --> 0:18:38.920 It's obviously going to hammer consumer confidence. It puts the 0:18:39.000 --> 0:18:42.159 brakes on future development. It's hard to rev up people's 0:18:42.200 --> 0:18:46.080 confidence when they're paying paying back higher interest rates on 0:18:46.160 --> 0:18:49.160 an asset that's losing value. And then again it flows 0:18:49.240 --> 0:18:51.840 through the whole properic construction and the sales story. So 0:18:52.280 --> 0:18:54.600 that's the big concern that if we do start to 0:18:54.640 --> 0:18:57.240 see it starts to see a material correction in these 0:18:57.280 --> 0:18:59.959 house prices, it will reportrough the economy that's coming at 0:19:00.080 --> 0:19:03.520 ton of course, when already we're seeing activity indicators screwing 0:19:03.520 --> 0:19:06.359 around the world. City Group out today warning a global 0:19:06.400 --> 0:19:09.040 recession that looks like it could be fifty fifties. So 0:19:09.280 --> 0:19:13.560 on top of everything that's happening inflation, supply chain problems, energy, 0:19:13.760 --> 0:19:18.240 food crisis, housing crisis would be the last thing the 0:19:18.359 --> 0:19:21.719 police makers need right now and certainly the important thing 0:19:21.760 --> 0:19:25.120 to look at as a household wealth is a significant 0:19:25.520 --> 0:19:29.480 portion of many households wealth in terms of real estate 0:19:29.600 --> 0:19:33.240 prices and the current chief. As your economics correspondent for 0:19:33.359 --> 0:19:35.480 Bloomberg News, thanks again for being with us for more 0:19:35.560 --> 0:19:38.680 on and as Big Take story you can find on 0:19:38.840 --> 0:19:42.000 Bloomberg dot com slash Big Take. It's also the top 0:19:42.080 --> 0:19:45.120 story on the home page at Bloomberg dot com this morning, 0:19:45.160 --> 0:19:46.639 and you can find all our big takes on the 0:19:46.640 --> 0:19:50.960 Bloomberg terminal at ANI Big Take Go SMP Future is 0:19:50.960 --> 0:19:53.800 now down fifty one points. Now futures down three forty 0:19:53.800 --> 0:19:57.119 eight NASDAK futures are lower by a hundred eighty two points. 0:19:57.560 --> 0:19:59.840 Just ahead the five things you need to notice start 0:20:00.080 --> 0:20:02.920 or day, including Sherman Palace testimony on Capitol Hill. This 0:20:03.440 --> 0:20:09.760 is Bloomberg Bloomberg eleven three oh weather mostly cloudy, scattered 0:20:09.800 --> 0:20:12.240 showers across Long Island in Connecticut. Highs in the low 0:20:12.320 --> 0:20:15.200 seventies today, will be in the upper seventies with clouds 0:20:15.280 --> 0:20:19.359 tomorrow low eighties by Friday. Currently sixty six in Central Park, 0:20:21.960 --> 0:20:26.480 broadcasting live from the Bloomberg Interactive Broker Studio in New York. 0:20:26.600 --> 0:20:31.240 Bloomberg E Living Freeland to Washington, d C, Bloomberg to Boston, 0:20:31.359 --> 0:20:34.760 Bloomberg one O six one to San Francisco, Bloomberg nine 0:20:34.880 --> 0:20:39.040 sixty to the Country, Sirius XM to and around the globe, 0:20:39.160 --> 0:20:42.600 the Bloomberg Business apt and Bloomberg Radio dot Com. This 0:20:43.080 --> 0:20:51.680 is Bloomberg Daybreak six thirty on Wall Street. Good morning, 0:20:51.720 --> 0:20:54.760 I'm Nathan Hager and I'm Karen Moscow. We're just about 0:20:54.800 --> 0:20:57.200 three hours away from the open of US trading. Time 0:20:57.240 --> 0:20:59.400 to the five things you need to notice start your day. 0:20:59.480 --> 0:21:02.520 Brought to you by I v k R Investment Advisers 0:21:02.520 --> 0:21:05.440 switched to Interactive Brokers for lowest cost global trading and 0:21:05.520 --> 0:21:09.159 turnkey custody solutions no ticket charges and no conflicts of 0:21:09.240 --> 0:21:12.080 your interests at ibkr dot com slash r I A 0:21:13.000 --> 0:21:16.680 first FED chairman and J Powell preparing to appear before 0:21:16.720 --> 0:21:19.760 the Senate Banking Committee this morning. Powell's expected to feel 0:21:19.880 --> 0:21:22.240 questions about how high and fast he needs to raise 0:21:22.320 --> 0:21:25.119 interest rates to slow inflation. At the same time, there 0:21:25.160 --> 0:21:27.679 are calls for the central Bank to be more aggressive. 0:21:28.040 --> 0:21:30.719 Richmond Fed President Thomas Barkin wants to raise rates as 0:21:30.800 --> 0:21:33.879 fast as possible, but avoid causing undue harm to market 0:21:33.960 --> 0:21:36.360 through the economy. I think you have to be flexible 0:21:36.440 --> 0:21:39.040 to what happens. The faster inflation comes down, the less 0:21:39.040 --> 0:21:42.320 you're gonna have to do in terms of restricted monetary policy. 0:21:42.760 --> 0:21:45.960 But the more difficult the external forces are, the more 0:21:46.040 --> 0:21:49.320 you'll have to do. And so I'm watching that carefully 0:21:50.400 --> 0:21:53.240 and Richmond Fed President Thomas Barkin said he supported the 0:21:53.280 --> 0:21:56.520 decision to raise raise seventy five basis points earlier this month. 0:21:56.560 --> 0:21:59.399 You can catch full coverage of FED Chairman Powell's Senate 0:21:59.440 --> 0:22:04.000