WEBVTT - Bloomberg Daybreak: June 16, 2022 - Hour 1 (Radio) 0:00:00.680 --> 0:00:04.240 Bloom Line from the Bloomberg Interactive Broker Studios. This is 0:00:04.280 --> 0:00:08.880 Bloomberg Daybreak for Thursday, June sixteen, two. Coming up this hour, 0:00:09.039 --> 0:00:12.840 the post fed rally fades as US future slump recession 0:00:12.920 --> 0:00:16.880 fears return following the biggest increase since nine does the 0:00:16.880 --> 0:00:20.360 Bank of England's turn to increase the interest race and 0:00:20.480 --> 0:00:23.200 Elon Musk is set to address Twitter employees for the 0:00:23.280 --> 0:00:25.680 first time. The gunman who killed black people in a 0:00:25.760 --> 0:00:29.640 racist attack of Buffalo faces federal hate crimes charges. Plus 0:00:29.640 --> 0:00:32.800 hearings resumed today on the January sixth Capitol Riot. I'm 0:00:32.800 --> 0:00:35.960 Michael larn Or Ahead, I'm John Stash Howard Swards. Another 0:00:36.000 --> 0:00:38.240 win for the Yankees, a loss for the meth Colorado 0:00:38.280 --> 0:00:40.760 won the Stanley Cup, Bottle Opener and the US Open 0:00:40.800 --> 0:00:46.440 Gulf agains today. That's all s traded ahead on Bloomberg 0:00:46.520 --> 0:00:50.040 Daybreak on Bloomberg e Live in freon New York, Bloomberg 0:00:50.159 --> 0:00:54.160 nine one, Washington, d C, Bloomberg one oh six one, Boston, 0:00:54.480 --> 0:00:58.880 Bloomberg nine sixties and Francisco Sirius x AM one nineteen 0:00:59.120 --> 0:01:01.960 and around the world Old on Bloomberg Radio dot Com 0:01:02.000 --> 0:01:08.720 and The Bloomberg Business app Good morning. I'm John Tucker, 0:01:08.840 --> 0:01:12.679 I'm Nathan Hagar. US futures are slumping this morning. We're 0:01:12.720 --> 0:01:14.800 coming up to five oh one on Wall Street, and 0:01:14.800 --> 0:01:17.000 we checked the markets every fifteen minutes during the trading 0:01:17.080 --> 0:01:20.320 down Bloomberg. Right now, SMP futures are down two point 0:01:20.360 --> 0:01:22.880 four percent for a drop of ninety points. Staff futures 0:01:22.880 --> 0:01:26.560 down five fifty four. Nasdaq futures leading the declines right 0:01:26.600 --> 0:01:29.760 now down three five points for a drop of two 0:01:29.800 --> 0:01:34.120 point nine percent. The tenure treasuries down twenty five thirty seconds, 0:01:34.120 --> 0:01:36.679 the yield three point three seven percent, yield on the 0:01:36.720 --> 0:01:39.520 two year three point three zero percent. NIMEX screwed right 0:01:39.560 --> 0:01:41.720 now trading at a hundred fifteen dollars ten cents of 0:01:41.760 --> 0:01:45.240 barrel John and Nathan. The reversal in futures comes after 0:01:45.319 --> 0:01:48.560 a rally yesterday following the latest decision from the Fed. 0:01:49.040 --> 0:01:52.600 J Palell engineered the biggest US interest rate increasing in 0:01:52.640 --> 0:01:56.160 twenty eight years to fight inflation. Markets are spotted with 0:01:56.200 --> 0:01:59.080 a rally that halted a five day ten percent route 0:01:59.280 --> 0:02:02.680 in S and P five. We at the Fed understand 0:02:02.680 --> 0:02:06.160 the hardship that high inflation is causing. We're strongly committed 0:02:06.160 --> 0:02:09.840 to bringing inflation back down, and we're moving expeditiously to 0:02:09.880 --> 0:02:11.919 do so. We have both the tools we need and 0:02:11.960 --> 0:02:14.440 the results that it will take to restore price stability 0:02:14.520 --> 0:02:18.520 on behalf of American families and businesses. J Company raising 0:02:18.639 --> 0:02:22.120 rates by seventy five basis points at lifting the target 0:02:22.240 --> 0:02:24.280 range for the federal funds rate to one and a 0:02:24.320 --> 0:02:27.720 half to one and three quarters per cent. Former Richmond 0:02:27.720 --> 0:02:31.240 Fed president Jeffrey Lacker says more is needed. I think 0:02:31.240 --> 0:02:33.200 it's going to have to go to about five and 0:02:33.200 --> 0:02:37.280 a half or six percent. That's my own sense, and 0:02:37.320 --> 0:02:42.079 that's based on just the historical record, uh that indicates 0:02:42.120 --> 0:02:46.040 that real interest rates, inflation adjusted short term policy rates 0:02:46.400 --> 0:02:49.400 have to get above zero in order to have any 0:02:49.840 --> 0:02:54.480 chance of frustraining inflation. Former Bank of Richmond president Jeffrey 0:02:54.520 --> 0:02:57.960 Lacker says the Fed should have raised rates last year. Well, 0:02:57.960 --> 0:03:00.600 the rate hike now has many on Wall Street forecasting 0:03:00.600 --> 0:03:03.240 a recession for the US economy. We caught up with 0:03:03.320 --> 0:03:07.959 Guggenheim Chief investment officer Scott Minored, there's a chance that 0:03:08.040 --> 0:03:12.200 we are already in a recession. And so if if 0:03:12.240 --> 0:03:14.320 we are in a recession or we're close to a 0:03:14.360 --> 0:03:17.880 recession and the FED pushes on this more and then 0:03:17.960 --> 0:03:19.880 we find that that all of a sudden we have 0:03:19.919 --> 0:03:23.760 a decline in asset prices like stocks did in seven. 0:03:23.919 --> 0:03:27.120 Then uh, if the Fed reversus course, they're gonna look 0:03:27.160 --> 0:03:30.639 like they're week on inflation. So this this is a 0:03:30.760 --> 0:03:35.200 very very tough situation that we're maneuvering. Googenheim Chief investment 0:03:35.200 --> 0:03:37.920 officer Scott Minerd says cracks are forming in the credit 0:03:37.960 --> 0:03:41.400 world and the worst is probably not over after the FED. 0:03:41.520 --> 0:03:45.080 Now it's the Bank of England's decision. Their decision comes 0:03:45.240 --> 0:03:47.680 as the Bank of England gets set to deliver a 0:03:47.760 --> 0:03:51.480 fifth straight rate hike later this morning. Investors in accounts 0:03:51.560 --> 0:03:54.360 are betting the UK Central Bank we'll deliver a fifth 0:03:54.360 --> 0:03:57.560 straight hike later this morning, raising the base rate by 0:03:57.600 --> 0:04:00.920 twi bases points to a thirteen year high of one 0:04:01.240 --> 0:04:05.080 and quarter percent. But former Bank of England governor Mark 0:04:05.120 --> 0:04:08.760 Karney says he thinks policy makers are falling behind real 0:04:08.800 --> 0:04:11.760 world events. I think what's clear as central bankers need 0:04:11.800 --> 0:04:14.640 to catch up to their economies. They've you know, they've 0:04:14.640 --> 0:04:17.800 been behind the curves. They've acknowledged this um and they 0:04:17.880 --> 0:04:24.040 need to start to get interest rates uh above inflation effectively, 0:04:24.200 --> 0:04:28.120 or at least perspective inflation inflation expectations. Mark Arney is 0:04:28.120 --> 0:04:30.440 stepping down from the Central Bank of twenty twenty. He's 0:04:30.480 --> 0:04:33.719 now a vice chair at Brookfield Asset Management. Oh, we 0:04:33.760 --> 0:04:36.200 have another interest rate decision in Europe to tell you about, John. 0:04:36.240 --> 0:04:39.479 The Swiss National Bank unexpectedly raised its rates for the 0:04:39.480 --> 0:04:43.000 first time since two thousand seven. Policy makers opted to 0:04:43.080 --> 0:04:46.560 join the global bandwagon of monetary tightening, lifting their policy 0:04:46.640 --> 0:04:49.360 rate by fifty basis points to negative zero point to 0:04:50.440 --> 0:04:53.200 and saying at europe natural anser price is jumping after 0:04:53.320 --> 0:04:56.960 Russia has stepped up an energy war. It's cutting supplies 0:04:56.960 --> 0:04:59.840 to Europe's top buyers. Let's get more from Bloomberg and 0:05:00.080 --> 0:05:03.640 jury reporter Stephen Stephanevsky. This is a big deal, and 0:05:03.680 --> 0:05:06.360 this is like the worst case scenario that that traders 0:05:06.360 --> 0:05:09.640 were expecting in Europe. Absolutely, it is um you know, 0:05:09.839 --> 0:05:12.240 for for weeks, for months, you know, when this war 0:05:12.279 --> 0:05:14.400 broke out, the fear was Russia was going to curb 0:05:14.440 --> 0:05:17.360 supply to customers, and they curbed to some customers. They 0:05:17.360 --> 0:05:21.520 curbed to Poland, to Bulgaria, they curbed to these countries, 0:05:21.800 --> 0:05:25.000 but they're not major buyers. Germany is a major buyer. 0:05:25.160 --> 0:05:28.520 And this pipeline they've the North Stream one, they've cut 0:05:28.520 --> 0:05:33.960 supply my Dutch front month gas futures the European benchmark 0:05:34.360 --> 0:05:36.760 rising as much as twelve percent a day after rising 0:05:36.800 --> 0:05:40.479 by forty four percent in the previous two sessions. Back 0:05:40.480 --> 0:05:42.720 here in the US, John the White House says President 0:05:42.720 --> 0:05:45.600 Biden is willing to use emergency measures to ramp up 0:05:45.600 --> 0:05:49.320 gasoline output. Bloomberg's Ed Baxter has the story. This is 0:05:49.360 --> 0:05:51.839 the same Cold War era law he invoked to increase 0:05:51.920 --> 0:05:56.280 production of baby formula and bolster solar manufacturing. Biden saying 0:05:56.320 --> 0:05:59.960 his administration is prepared to use all reasonable government tools 0:06:00.240 --> 0:06:04.320 to increase refinery capacity. Meanwhile, the White House spokesman Karen 0:06:04.440 --> 0:06:07.400 Jean Pierre says the oil companies need to step up. 0:06:07.440 --> 0:06:09.720 We are calling on them to do the right thing, 0:06:09.839 --> 0:06:12.640 to be patriots here, uh and not to use the 0:06:12.680 --> 0:06:17.600 war as an excuse for higher costs leading to higher profits. 0:06:18.120 --> 0:06:20.880 In San Francisco, I'm at bachetor Bloomberg day Break and 0:06:20.880 --> 0:06:23.000 thanks Ed incorporating it was a big day for Twitter 0:06:23.040 --> 0:06:26.160 and Elon Musk. Let's get the latest line from Bloomberg's 0:06:26.160 --> 0:06:28.719 we need a young Good Morning reneaving Good Morningtown. Elon 0:06:28.800 --> 0:06:31.920 Musk is addressing Twitter employees for the first time today 0:06:31.960 --> 0:06:35.040 since agreeing to buy the company for forty four billion dollars. 0:06:35.400 --> 0:06:39.280 At the virtual meeting, Musk will take questions directly from employees, 0:06:39.600 --> 0:06:43.159 many of who have not been happy with him lately. Meantime, 0:06:43.200 --> 0:06:46.680 Twitter CEO recently announced a series of cost cutting measures, 0:06:46.920 --> 0:06:50.520 including canceling the company wide retreat that was scheduled to 0:06:50.560 --> 0:06:55.400 happen in January and a hiring freeze live in New York, 0:06:55.440 --> 0:06:57.600 I'm gonna need a young Bloomberg day break. We need 0:06:57.640 --> 0:06:59.440 to thank you in A big name in the cosmetic 0:06:59.520 --> 0:07:03.640 style is filing for bankruptcy. Revlon is applying for Chapter eleven. 0:07:03.839 --> 0:07:06.320 The company owned by billionaire Ron Perlman, has been unable 0:07:06.360 --> 0:07:09.480 to manage its heavy deathload. Revlon got it start selling 0:07:09.560 --> 0:07:12.120 nail polish and the throws of the Great Depression. Proman's 0:07:12.160 --> 0:07:16.280 holding company could took control in a bitter takeover funded 0:07:16.320 --> 0:07:19.440 with junk debt raised by Michael Milken. This is Bloomberg, 0:07:23.960 --> 0:07:26.480 Thanks Nathan five of seven on Wall Street. Fantime to 0:07:26.560 --> 0:07:28.880 bring in Michael Barr with more on what else is 0:07:28.880 --> 0:07:31.559 going on in New York had around the world. John, 0:07:31.600 --> 0:07:34.000 Thank you, Sarah. The gunman who killed ten black people 0:07:34.040 --> 0:07:36.920 in a racist attack at a Buffalo supermarket has been 0:07:37.000 --> 0:07:40.760 charged with federal hate crimes that could potentially carry a 0:07:40.880 --> 0:07:44.160 death penalty the Department of Justice. As eighteen year old 0:07:44.160 --> 0:07:47.760 Peyton Gendren told investigators as gold was to kill as 0:07:47.800 --> 0:07:51.720 many black people as possible. Attorney General Merrick Girland visited 0:07:51.760 --> 0:07:55.200 at the Top supermarket where the shooting happened. Hate fueled 0:07:55.280 --> 0:07:59.000 acts of violence terrorized not only the individuals who are 0:07:59.040 --> 0:08:06.360 all attacked, but entire communities. Hate brings immediate devastation and 0:08:06.640 --> 0:08:11.720 it inflicts lasting fear. Attorney General Garland places flowers at 0:08:11.720 --> 0:08:15.880 a memorial and met with families. Lawyers for British socialite 0:08:15.920 --> 0:08:18.720 Galaine Maxwell, saying she should face no more than four 0:08:18.760 --> 0:08:21.880 to five years in prison at sentencing later this month 0:08:21.960 --> 0:08:25.800 for her role in financier Jeffrey Epstein's sex abuse of 0:08:25.880 --> 0:08:28.880 teenage girls. Epstein took his own life in August of 0:08:28.920 --> 0:08:32.439 twenty nineteen while awaiting a sex trafficking trial in Manhattan. 0:08:32.920 --> 0:08:35.840 The role of former Vice President Mike Pence will be 0:08:35.880 --> 0:08:39.200 a major focus of today's congressional hearing on last year's 0:08:39.200 --> 0:08:42.800 Capitol riot. The January six committee will focus on the 0:08:42.840 --> 0:08:45.959 pressure put on Pence that day and includes efforts to 0:08:46.040 --> 0:08:50.200 keep PINNs some certifying President Biden's election victory. The House 0:08:50.280 --> 0:08:54.920 January six Select Committee released videos showing Republican Georgia Representative 0:08:55.200 --> 0:08:59.240 Barry Loudermilk leading constituents on a tour around the Capitol 0:08:59.280 --> 0:09:02.840 complex on January five. The committee claim one of the 0:09:02.880 --> 0:09:05.720 participants in the tour marched the Capitol the next day 0:09:06.080 --> 0:09:09.680 and made detailed threats against members of Congress. New York 0:09:09.679 --> 0:09:13.840 Democratic Congress Member Alexandria Ocassio Cortez. The fact that he 0:09:13.920 --> 0:09:16.920 was inviting and letting people in, that he did not 0:09:17.080 --> 0:09:20.440 know when the capital was quotes to the public. The 0:09:20.480 --> 0:09:22.679 fact that he was giving a tour at all is 0:09:23.240 --> 0:09:30.080 extremely concerning, Representative Ocassio Cortez spoke to ABC. Congressman louder 0:09:30.120 --> 0:09:33.640 Milk has denied any wrongdoing. COVID vaccines for infants and 0:09:33.679 --> 0:09:36.640 toddlers from Moderna and Fiser one support from a panel 0:09:36.880 --> 0:09:40.800 of US regulatory advisors. The Committee advising the FDA voted 0:09:40.920 --> 0:09:45.520 unanimously in favor of visors three dose vaccine for youngsters 0:09:45.760 --> 0:09:48.360 ages six months through four years, and gave a strong 0:09:48.440 --> 0:09:52.680 endorsement to Moderna's two dose for children six months through 0:09:52.760 --> 0:09:55.440 five years. Global News twenty four hours a day on 0:09:55.520 --> 0:09:59.319 air and on Bloomberg Quicktake, powered by more than journalists, 0:09:59.320 --> 0:10:02.040 analysts and more in a hundred twenty countries. Michael Bard, 0:10:02.080 --> 0:10:09.760 this is Bloomberg, John Michael, thank you, Roll Street time 0:10:09.800 --> 0:10:13.240 for the Bloomberg Sports Update. And here's John Stes. Thanks Jad. 0:10:13.280 --> 0:10:15.600 It's not offen. You see a TV thirty games over 0:10:15.679 --> 0:10:18.600 five hundred in mid June. But the Yankees are forty 0:10:18.720 --> 0:10:21.240 six and sixteen at the stadium and Aaron Judge home 0:10:21.320 --> 0:10:23.840 run first any this twenty five. That's seven more than 0:10:23.880 --> 0:10:26.480 anyone else in the majors. Fifth, that ain't three run 0:10:26.559 --> 0:10:29.679 shot for Kyle Agashioka, who had not homer all year 0:10:30.160 --> 0:10:32.440 until he hit two just this past Sunday, and now 0:10:32.480 --> 0:10:34.720 he's got a third. Yanks pe Tampa Bay four to three, 0:10:35.040 --> 0:10:37.559 Nestor Cortez the win of the Safe for Clay Homes 0:10:37.559 --> 0:10:39.840 at City Field. A night to forget for the Mets, 0:10:39.880 --> 0:10:42.679 who lost in Milwaukee ten to two. In Atlanta one again, 0:10:42.720 --> 0:10:44.960 the Braves are fourteen and oh in June, and they're 0:10:45.000 --> 0:10:47.559 now just four games behind the Mets. Second night in 0:10:47.559 --> 0:10:50.120 the row and near no hit her the Dodgers, Tyler 0:10:50.200 --> 0:10:53.120 Anderson lost it when Shoheyo Tani hit a triple with 0:10:53.280 --> 0:10:55.160 one out in the ninth inning overtime to start the 0:10:55.160 --> 0:10:57.719 Stanley Cup Final in Denver, Colorado. Blew at three one, 0:10:57.720 --> 0:11:00.480 wim We got a goal from Andre burakoff game minute 0:11:00.480 --> 0:11:03.040 twenty three and ot for a four three game one 0:11:03.160 --> 0:11:06.320 victory over Tampa Bay. Tonight in Boston, it's Game six 0:11:06.360 --> 0:11:09.280 of the NBA Finals. Either Golden State wins the championship 0:11:09.400 --> 0:11:11.040 or they go back to the Bay area for a 0:11:11.080 --> 0:11:13.640 Game seven with Red Sunday and what a sports day 0:11:13.920 --> 0:11:16.480 in Boston because this morning they tee off to start 0:11:16.520 --> 0:11:19.199 the US Open golf at the country Club of Brookline, 0:11:19.520 --> 0:11:22.440 of course, that first hosted the Open in nineteen thirteen, 0:11:22.520 --> 0:11:25.439 with a victory by Brooklyn native Francis Weamanton in a 0:11:25.520 --> 0:11:28.640 movie about that, Rory Makaroy looking forward to playing in 0:11:28.840 --> 0:11:31.720 historic of course. That is what's so good about golf 0:11:32.040 --> 0:11:35.559 is the history in the tradition and these stories. Um, 0:11:35.600 --> 0:11:37.319 you know the fact that you know he grew up 0:11:37.320 --> 0:11:41.160 just off the seventeen pole here um and we're still 0:11:41.200 --> 0:11:43.439 talking about it to this day, over a hundred years old. 0:11:43.559 --> 0:11:45.800 Like that's so cool. That's the great thing about this sport. 0:11:45.840 --> 0:11:47.880 Hawkeroy won last week. He's the betting favorite to win 0:11:47.960 --> 0:11:49.959 the Open. Has an early tea time today, so does 0:11:49.960 --> 0:11:54.120 defending champ John Ron Johns Dashaward Bloomberg Sports. John, all right, 0:11:54.160 --> 0:11:56.120 thanks John, Ahead of the cans show up and down. 0:11:56.120 --> 0:12:00.199 Futures down five hundred seventy seven points as futures they're 0:12:00.240 --> 0:12:03.480 down blind the nasdack futures down three hundred seven. This 0:12:03.559 --> 0:12:08.439 is Bloomberg. Just to get a Bloomberg day break, We'll 0:12:08.440 --> 0:12:11.199 be joined by Dan Bors, chief market strategist at B 0:12:11.520 --> 0:12:14.880 and P. Whill got his stud the investing landscape in 0:12:14.920 --> 0:12:24.839 this new regime. Markets headlines and breaking news twenty four 0:12:24.880 --> 0:12:27.960 hours a day at Bloomberg dot Com, the Bloomberg Business 0:12:27.960 --> 0:12:37.480 apt and at Bloomberg Quick Take. He's a Bloomberg Business Flash. 0:12:38.000 --> 0:12:40.720 Nathan Hagar, Well, so much for the post Fed rally 0:12:40.800 --> 0:12:44.000 futures this morning. You're signaling a route in stocks today 0:12:44.040 --> 0:12:47.080 after the Fed signaled a willingness to accept the recession. 0:12:47.600 --> 0:12:52.400 And arise in unemployment. In its resolve to contain elevated inflation, 0:12:52.679 --> 0:12:55.320 we checked the markets every fifteen minutes during the trading day. 0:12:55.320 --> 0:12:58.240 On bloomberg SMP futures now or down eighty six points 0:12:58.320 --> 0:13:01.760 or two point three percent, futures down five forty six. 0:13:01.840 --> 0:13:04.320 Nastat future is lowered by three n eighteen points, that 0:13:04.400 --> 0:13:07.680 is a drop of two point seven percent. The tenure 0:13:07.720 --> 0:13:10.240 Treasury is down twenty eight thirty seconds, the yield three 0:13:10.240 --> 0:13:13.040 point nine percent yield on the two year three point 0:13:13.120 --> 0:13:16.040 three one percent Nimex screws down two tenths per cent, 0:13:16.120 --> 0:13:18.280 or twenty six cents at a hundred fifteen dollars eight 0:13:18.280 --> 0:13:21.040 cents of barrel comes. Gold is up nine tenths per 0:13:21.040 --> 0:13:23.440 cent or fifteen dollars forty cents. At eighteen thirty five, 0:13:23.480 --> 0:13:26.360 Even announced the euro one point zero four one one 0:13:26.400 --> 0:13:29.320 against the dollar British pound one point zero six ahead 0:13:29.320 --> 0:13:31.560 of a Bank of England decision later this morning. The 0:13:31.640 --> 0:13:34.400 yen is at one thirty two point eight seven. At 0:13:34.400 --> 0:13:36.680 eight thirty Wall Street time, we get weekly jobless claims, 0:13:36.679 --> 0:13:39.000 along with reports on housing starts and building permits, and 0:13:39.040 --> 0:13:42.840 the Philadelphia FEDS business outlook Kroger reports earnings before the 0:13:42.840 --> 0:13:45.720 opening bell and will get results from Adobe after the close. 0:13:46.080 --> 0:13:48.800 That's a Bloomberg Business Flash. Now here's Michael Barr with 0:13:48.880 --> 0:13:51.280 Forum What's going on around the world. Michael, good morning, 0:13:51.360 --> 0:13:54.640 Good morning, Nathan. The January six Committee is plunging into 0:13:54.679 --> 0:13:57.920 Donald Trump's efforts to pressure your Vice president Mike Benz 0:13:58.080 --> 0:14:02.360 to reject the electoral held. At today's hearing, testimony is 0:14:02.400 --> 0:14:06.040 expected from the Vice President's Council Greg Jacob and a 0:14:06.120 --> 0:14:10.600 retired federal judge, Michael Luddig, who called the plan incorrect 0:14:10.640 --> 0:14:14.640 at every turn, COVID vaccines for infants, hand toddlers from 0:14:14.640 --> 0:14:17.480 MODERNA and finds her one support from a panel of 0:14:17.600 --> 0:14:21.560 US regulatory advisors. In baseball, the red Hot Yankees one again. 0:14:21.640 --> 0:14:24.760 The Mets lost along with the Nationals, Orioles and Giants. 0:14:24.960 --> 0:14:27.360 The Red Sox beat the A's in Game one of 0:14:27.400 --> 0:14:30.520 the NHL Final. The Avalanche beat the Lightning and overtime. 0:14:30.560 --> 0:14:33.560 For three Global News twenty four hours a day on 0:14:33.760 --> 0:14:37.320 air and on Bloomberg Quicktake, powered by more than twenty 0:14:37.400 --> 0:14:40.000 seven hundred journalists and analysts in more than one d 0:14:40.120 --> 0:14:43.680 twenty countries. I'm Michael Barr, and this is Bloomberg, John Michael, 0:14:43.720 --> 0:14:46.080 thank you. Find twenty on Wall Street. We are live 0:14:46.080 --> 0:14:50.080 from the Bloomberg in Trantbroker Studios. This is Bloomberg Daybreak. 0:14:50.560 --> 0:14:53.760 Traders seem to be giving at their initial optimism over 0:14:53.840 --> 0:14:57.360 FED share trum pal's comments that super sized rate hikes 0:14:57.360 --> 0:14:59.720 won't be the norm. Let's get you set up for 0:14:59.760 --> 0:15:02.400 the trading day ahead. Now we're joined by Dan Morris, 0:15:02.440 --> 0:15:06.920 chief market strategist at B and B. Parabout asset management. Dan, 0:15:07.040 --> 0:15:10.840 why do you change in sentiment from yesterday to the 0:15:10.880 --> 0:15:14.960 futures this morning? Firmly in the rent? Yeah? Well, I 0:15:14.960 --> 0:15:17.440 guess you could always find a bit of news to 0:15:17.640 --> 0:15:20.400 focus on, be a positive or negative. And I think 0:15:20.720 --> 0:15:22.840 at this point at least people seem to be picking 0:15:22.920 --> 0:15:24.480 up on the on the recession. Even if you're not 0:15:24.480 --> 0:15:27.280 going to get a hundred basis point hikes, Um, we're 0:15:27.280 --> 0:15:30.560 actually still modestly constructive. So I think the key question 0:15:30.680 --> 0:15:33.840 is you know now that the FED maybe has caught 0:15:33.880 --> 0:15:36.480 up to where it needs to be after having been 0:15:36.520 --> 0:15:38.920 behind the curve up to now, you know, is that enough? 0:15:38.960 --> 0:15:42.240 Are they at the right level? Is the trajectory the 0:15:42.360 --> 0:15:45.400 right one to get inflation? Down or contrarily, do you 0:15:45.400 --> 0:15:47.600 think it's not enough they're going to have to go higher? 0:15:47.680 --> 0:15:50.760 It is going to take a recession to get inflation down. 0:15:50.840 --> 0:15:53.880 So that that's really the judgment. And I guess on 0:15:53.920 --> 0:15:55.720 the minute, on the hour of the market seems to 0:15:55.720 --> 0:15:58.560 to change which view it has. Okay, with a recession, 0:15:58.840 --> 0:16:01.040 the first question we have to ask how deep and 0:16:01.080 --> 0:16:05.120 how long? Well, if you look at the components, you 0:16:05.240 --> 0:16:08.920 basically what's driving core inflation? Uh? And the assessment has 0:16:08.960 --> 0:16:10.920 got to be, you know, how much of those really 0:16:11.440 --> 0:16:13.560 could should turn out to be temporary? I mean, the 0:16:13.840 --> 0:16:15.920 goods inflation should turn out to be temporary, but we 0:16:15.960 --> 0:16:18.400 know there's some of these more persistent factors in particularly 0:16:18.640 --> 0:16:21.240 and also it seemed to have spooked the Fed last 0:16:21.240 --> 0:16:24.360 week was the increase in shelter Uh So how much 0:16:24.920 --> 0:16:26.600 you know, how big of a recession do you need 0:16:26.640 --> 0:16:29.720 to do to get the shelter prices to fall and 0:16:29.800 --> 0:16:33.800 that component, the rent component of core PC to fall. 0:16:33.960 --> 0:16:35.680 And you know, I think that's going to be the 0:16:36.120 --> 0:16:38.160 key assessment. But you know, just to be clear, we're 0:16:38.200 --> 0:16:42.480 not expecting a recession. Okay, Now, how does this change 0:16:42.520 --> 0:16:46.400 the investment landscape? With a more aggressive typing policy from 0:16:46.400 --> 0:16:49.120 the Fed, you say, avoiding a recession at this point, 0:16:51.560 --> 0:16:54.400 if again, if you think that this is enough, and 0:16:54.480 --> 0:16:56.680 really what we've seen so far really over the course 0:16:56.680 --> 0:16:59.320 of the year with this reset, you know, in policy 0:16:59.400 --> 0:17:01.960 rates and particul the increasing real rates, you know, that's 0:17:02.000 --> 0:17:05.200 had primarily an impact on valuations and on on growth 0:17:05.240 --> 0:17:08.199 stock valuations which have fallen dramatically, But now they're at 0:17:08.400 --> 0:17:11.400 at reasonable levels. So if you think real rates aren't 0:17:11.400 --> 0:17:12.879 going to go up any further, that the Fed is 0:17:12.880 --> 0:17:16.280 not going to hike anymore, you're actually pretty good valuations. 0:17:16.320 --> 0:17:19.639 The earnings outlook from that point of view is still fine. 0:17:19.960 --> 0:17:22.080 So I think you can have a modestly constructive view 0:17:22.080 --> 0:17:24.320 on equities, which which we do. It's only in the 0:17:24.400 --> 0:17:27.760 contrary scenario that either you think you need more rate hikes, 0:17:27.760 --> 0:17:29.920 in which valuations would be at risk again, and then 0:17:30.040 --> 0:17:32.639 it would get arguably even worse, because at that point 0:17:32.920 --> 0:17:35.360 you're earnings estaments would start to follow worse. So far, 0:17:35.400 --> 0:17:38.199 they've actually continued to rise despite everything that's happened so 0:17:38.240 --> 0:17:40.560 far this year. So what sectors are you looking to 0:17:40.760 --> 0:17:45.440 right now? We don't have any specific sector allocations and 0:17:45.560 --> 0:17:49.879 more geographics that we're overweight in Japan and China, and 0:17:49.960 --> 0:17:54.040 that's based on one UH and absolute terms attractive valuations. 0:17:54.080 --> 0:17:56.040 You know, if if the US and Europe about average, 0:17:56.080 --> 0:17:59.560 you can argue that Japan, e M China are below average. 0:17:59.600 --> 0:18:02.359 So that's a clear advantage. And also just the difference 0:18:02.359 --> 0:18:04.960 in monetary policy outlook. You know, it said clearly hiking 0:18:04.960 --> 0:18:07.840 the e CBS, you know, ramping up, whereas in Japan 0:18:07.840 --> 0:18:10.679 and China they've they've got a bit more room, they 0:18:10.680 --> 0:18:12.800 can be more patient, and so that's going to be 0:18:12.800 --> 0:18:15.320 more supportive for equity markets. Do you have a view 0:18:15.359 --> 0:18:19.639 for the dollar? Is it higher dollar for the foreseeable future? 0:18:19.760 --> 0:18:24.159 Given those great differentials, it really shouldn't from here. I 0:18:24.160 --> 0:18:26.320 mean clearly, the dollar over the course of you know, 0:18:26.400 --> 0:18:29.680 the last year has continually had to price in these 0:18:29.680 --> 0:18:32.639 writing expectations. But that's actually your historical pattern. As you 0:18:32.720 --> 0:18:35.200 go into your first hike, you know, the dollar tends 0:18:35.240 --> 0:18:37.680 to strengthen. Once the cycle actually starts, it tends to weaken. 0:18:37.760 --> 0:18:40.639 And I think there's two reasons that hasn't exactly happened 0:18:40.720 --> 0:18:44.200 this time. One, we kept or keep having to reset 0:18:44.200 --> 0:18:47.240 our expectations higher. But once we're at that final point 0:18:47.960 --> 0:18:50.000 that should be over. And then also we've had you 0:18:50.040 --> 0:18:52.520 know a bit of risk off just because of the geopolitics, 0:18:52.520 --> 0:18:55.160 and you know dollar tends to strengthening those environments. So 0:18:55.280 --> 0:18:59.160 on the assumption the geopolitics at least doesn't get worse, uh, 0:18:59.200 --> 0:19:02.080 and also the assumption we don't have yet more increases 0:19:02.119 --> 0:19:04.880 and expectations for FED funds. You know, historically the dollar 0:19:04.960 --> 0:19:08.159 does weaken. Let's switch the volatility with the VIX, the 0:19:08.200 --> 0:19:12.800 Wall Street fear gage this morning. How much more elevated 0:19:12.840 --> 0:19:16.240 do you think it it will be? Well, I think 0:19:16.640 --> 0:19:19.800 that really reflects kind of the surprise that we've had 0:19:19.800 --> 0:19:22.040 over the last week with with this last FED meeting. 0:19:22.080 --> 0:19:24.919 I mean historically that I think they tend from the 0:19:24.960 --> 0:19:27.600 central banks is to communicate well ahead of time so 0:19:27.640 --> 0:19:30.520 you don't surprise the markets with with a move that 0:19:30.560 --> 0:19:33.320 they hadn't anticipated, and that clearly wasn't the case this time, 0:19:33.359 --> 0:19:36.600 and so that surprise feeds through into your volatility and 0:19:36.720 --> 0:19:39.960 create indicators pretty much across the board. If at this 0:19:40.040 --> 0:19:44.200 point hopefully no more surprises, volatility really should come back 0:19:44.240 --> 0:19:47.960 to Dan Morris, chief market strategist at Big MP parabout 0:19:48.000 --> 0:19:50.639 asset management. Thanks they had appreciate it ahead of the 0:19:50.680 --> 0:19:54.720 over Wall Street down futures five hundred sixties six points lower, 0:19:54.920 --> 0:19:57.760 s and B futures down that has their futures right 0:19:57.800 --> 0:20:06.200 now points lower. You're listening the Bloomberg Daybreak and the 0:20:06.200 --> 0:20:09.840 Bloomberg Weather from Rob Caroline privately. Mostly cloudy today, chance 0:20:09.920 --> 0:20:13.840 of a shower or a thunderstorm. High temperature today seventy 0:20:13.920 --> 0:20:26.240 five in eighty cloudy tonight blows around seventy. Broadcasting live 0:20:26.440 --> 0:20:30.399 from the Bloomberg Interactive Broker Studio in New York, Bloomberg 0:20:30.400 --> 0:20:34.480 E Living Freedom to Washington, d C, Bloomberg to Boston, 0:20:34.600 --> 0:20:37.960 Bloomberg one O six one to San Francisco, Bloomberg nine 0:20:38.080 --> 0:20:41.320 sixty to the Country Sirius XM Chad one nine and 0:20:41.400 --> 0:20:44.720 around the globe to Bloomberg Business app and Bloomberg Radio 0:20:44.880 --> 0:20:54.040 dot Com. This is Bloomberg Daybreak. It's five thirty on 0:20:54.119 --> 0:20:57.000 Wall Street. Good morning. I'm John Tucker, I'm Nathan Hager. 0:20:57.040 --> 0:20:59.280 We're about four hours away from the open of US trading. 0:20:59.359 --> 0:21:00.879 Let's get you up to date on the news you 0:21:00.920 --> 0:21:03.160 need to know. At this hour, the post fed rate 0:21:03.240 --> 0:21:06.919 hike rally appears. Over US features are sliding Following US 0:21:06.920 --> 0:21:09.600 Today's games, which halted a five day ten percent route 0:21:09.600 --> 0:21:12.960 in the smp J palen, the fedlifted rate seventy basis 0:21:13.000 --> 0:21:17.360 points of the biggest increase since Former Richmond FED president 0:21:17.400 --> 0:21:20.800 Jeffrey Lanker says policymakers now face the real reality of 0:21:20.800 --> 0:21:25.359 a recession. They dropped a critical sentence indicating they're not 0:21:25.480 --> 0:21:28.640 certain they can do this soft landing that that's an 0:21:28.640 --> 0:21:31.439 indication that they think they they're running the risk of 0:21:31.520 --> 0:21:35.879 a recession. Former Richmond FED President Jeffrey Lanker says rates 0:21:35.920 --> 0:21:38.200 need to go up to six percent to have any 0:21:38.280 --> 0:21:41.960 chance of restraining inflation and Google him. Chief Investment Officers 0:21:41.960 --> 0:21:46.320 Scott Miners says the market is obsessed with inflation. Every 0:21:46.320 --> 0:21:50.080 time we get another bad piece of news on inflation 0:21:50.240 --> 0:21:54.840 which is higher than expectation than we're we're forcing the 0:21:54.880 --> 0:21:58.879 Fed to ratchet up uh their pace or the degree 0:21:58.920 --> 0:22:02.520 of tightening the they're doing. Google him. Chief Investment Officers 0:22:02.560 --> 0:22:05.560 Scott Miners says there are cracks appearing in the credit 0:22:05.600 --> 0:22:08.639 world and the worst is probably not over. The Swiss 0:22:08.720 --> 0:22:11.480 National Bank unexpectedly raised interest rates john for the first 0:22:11.480 --> 0:22:14.720 time since two thousand seven. Policymakers opted to join the 0:22:14.720 --> 0:22:18.040 global bandwagon of monetary tightening, lifting the rate by fifty 0:22:18.080 --> 0:22:21.480 basis points to the policy rate to zero negative zero 0:22:21.520 --> 0:22:23.800 points to five percent. And we'll hear from the Bank 0:22:23.840 --> 0:22:26.280