Bloomberg Daybreak: June 16, 2022 - Hour 1 (Radio)

hearings resumed today on the January sixth Capitol Riot. I'm Michael larn Or Ahead, I'm John Stash Howard Swards. Another win for the Yankees, a loss for the meth Colorado won the Stanley Cup, Bottle Opener and the US Open

Gulf agains today. That's all s traded ahead on Bloomberg Daybreak on Bloomberg e Live in freon New York, Bloomberg nine one, Washington, d C, Bloomberg one oh six one, Boston, Bloomberg nine sixties and Francisco Sirius x AM one nineteen and around the world Old on Bloomberg Radio dot Com and The Bloomberg Business app Good morning. I'm John Tucker,

I'm Nathan Hagar. US futures are slumping this morning. We're coming up to five oh one on Wall Street, and we checked the markets every fifteen minutes during the trading down Bloomberg. Right now, SMP futures are down two point four percent for a drop of ninety points. Staff futures down five fifty four. Nasdaq futures leading the declines right now down three five points for a drop of two

point nine percent. The tenure treasuries down twenty five thirty seconds, the yield three point three seven percent, yield on the two year three point three zero percent. NIMEX screwed right now trading at a hundred fifteen dollars ten cents of barrel John and Nathan. The reversal in futures comes after a rally yesterday following the latest decision from the Fed. J Palell engineered the biggest US interest rate increasing in

twenty eight years to fight inflation. Markets are spotted with a rally that halted a five day ten percent route in S and P five. We at the Fed understand the hardship that high inflation is causing. We're strongly committed to bringing inflation back down, and we're moving expeditiously to do so. We have both the tools we need and the results that it will take to restore price stability

on behalf of American families and businesses. J Company raising rates by seventy five basis points at lifting the target range for the federal funds rate to one and a half to one and three quarters per cent. Former Richmond Fed president Jeffrey Lacker says more is needed. I think it's going to have to go to about five and

a half or six percent. That's my own sense, and that's based on just the historical record, uh that indicates that real interest rates, inflation adjusted short term policy rates have to get above zero in order to have any chance of frustraining inflation. Former Bank of Richmond president Jeffrey Lacker says the Fed should have raised rates last year. Well, the rate hike now has many on Wall Street forecasting

a recession for the US economy. We caught up with Guggenheim Chief investment officer Scott Minored, there's a chance that we are already in a recession. And so if if we are in a recession or we're close to a recession and the FED pushes on this more and then we find that that all of a sudden we have a decline in asset prices like stocks did in seven. Then uh, if the Fed reversus course, they're gonna look like they're week on inflation. So this this is a

very very tough situation that we're maneuvering. Googenheim Chief investment officer Scott Minerd says cracks are forming in the credit world and the worst is probably not over after the FED. Now it's the Bank of England's decision. Their decision comes as the Bank of England gets set to deliver a

fifth straight rate hike later this morning. Investors in accounts are betting the UK Central Bank we'll deliver a fifth straight hike later this morning, raising the base rate by twi bases points to a thirteen year high of one and quarter percent. But former Bank of England governor Mark Karney says he thinks policy makers are falling behind real world events. I think what's clear as central bankers need to catch up to their economies. They've you know, they've

been behind the curves. They've acknowledged this um and they need to start to get interest rates uh above inflation effectively, or at least perspective inflation inflation expectations. Mark Arney is stepping down from the Central Bank of twenty twenty. He's now a vice chair at Brookfield Asset Management. Oh, we have another interest rate decision in Europe to tell you about, John. The Swiss National Bank unexpectedly raised its rates for the

first time since two thousand seven. Policy makers opted to join the global bandwagon of monetary tightening, lifting their policy rate by fifty basis points to negative zero point to and saying at europe natural anser price is jumping after Russia has stepped up an energy war. It's cutting supplies to Europe's top buyers. Let's get more from Bloomberg and jury reporter Stephen Stephanevsky. This is a big deal, and this is like the worst case scenario that that traders

were expecting in Europe. Absolutely, it is um you know, for for weeks, for months, you know, when this war broke out, the fear was Russia was going to curb supply to customers, and they curbed to some customers. They curbed to Poland, to Bulgaria, they curbed to these countries, but they're not major buyers. Germany is a major buyer.

And this pipeline they've the North Stream one, they've cut supply my Dutch front month gas futures the European benchmark rising as much as twelve percent a day after rising by forty four percent in the previous two sessions. Back here in the US, John the White House says President Biden is willing to use emergency measures to ramp up gasoline output. Bloomberg's Ed Baxter has the story. This is the same Cold War era law he invoked to increase

production of baby formula and bolster solar manufacturing. Biden saying his administration is prepared to use all reasonable government tools to increase refinery capacity. Meanwhile, the White House spokesman Karen Jean Pierre says the oil companies need to step up. We are calling on them to do the right thing, to be patriots here, uh and not to use the war as an excuse for higher costs leading to higher profits.

In San Francisco, I'm at bachetor Bloomberg day Break and thanks Ed incorporating it was a big day for Twitter and Elon Musk. Let's get the latest line from Bloomberg's we need a young Good Morning reneaving Good Morningtown. Elon Musk is addressing Twitter employees for the first time today since agreeing to buy the company for forty four billion dollars. At the virtual meeting, Musk will take questions directly from employees,

many of who have not been happy with him lately. Meantime, Twitter CEO recently announced a series of cost cutting measures, including canceling the company wide retreat that was scheduled to happen in January and a hiring freeze live in New York, I'm gonna need a young Bloomberg day break. We need to thank you in A big name in the cosmetic style is filing for bankruptcy. Revlon is applying for Chapter eleven. The company owned by billionaire Ron Perlman, has been unable

to manage its heavy deathload. Revlon got it start selling nail polish and the throws of the Great Depression. Proman's holding company could took control in a bitter takeover funded with junk debt raised by Michael Milken. This is Bloomberg, Thanks Nathan five of seven on Wall Street. Fantime to bring in Michael Barr with more on what else is going on in New York had around the world. John,

Thank you, Sarah. The gunman who killed ten black people in a racist attack at a Buffalo supermarket has been charged with federal hate crimes that could potentially carry a death penalty the Department of Justice. As eighteen year old Peyton Gendren told investigators as gold was to kill as many black people as possible. Attorney General Merrick Girland visited at the Top supermarket where the shooting happened. Hate fueled acts of violence terrorized not only the individuals who are

all attacked, but entire communities. Hate brings immediate devastation and it inflicts lasting fear. Attorney General Garland places flowers at a memorial and met with families. Lawyers for British socialite Galaine Maxwell, saying she should face no more than four to five years in prison at sentencing later this month for her role in financier Jeffrey Epstein's sex abuse of

teenage girls. Epstein took his own life in August of twenty nineteen while awaiting a sex trafficking trial in Manhattan. The role of former Vice President Mike Pence will be a major focus of today's congressional hearing on last year's Capitol riot. The January six committee will focus on the pressure put on Pence that day and includes efforts to

keep PINNs some certifying President Biden's election victory. The House January six Select Committee released videos showing Republican Georgia Representative Barry Loudermilk leading constituents on a tour around the Capitol complex on January five. The committee claim one of the participants in the tour marched the Capitol the next day and made detailed threats against members of Congress. New York

Democratic Congress Member Alexandria Ocassio Cortez. The fact that he was inviting and letting people in, that he did not know when the capital was quotes to the public. The fact that he was giving a tour at all is extremely concerning, Representative Ocassio Cortez spoke to ABC. Congressman louder Milk has denied any wrongdoing. COVID vaccines for infants and toddlers from Moderna and Fiser one support from a panel

of US regulatory advisors. The Committee advising the FDA voted unanimously in favor of visors three dose vaccine for youngsters ages six months through four years, and gave a strong endorsement to Moderna's two dose for children six months through five years. Global News twenty four hours a day on air and on Bloomberg Quicktake, powered by more than journalists, analysts and more in a hundred twenty countries. Michael Bard, this is Bloomberg, John Michael, thank you, Roll Street time

for the Bloomberg Sports Update. And here's John Stes. Thanks Jad. It's not offen. You see a TV thirty games over five hundred in mid June. But the Yankees are forty six and sixteen at the stadium and Aaron Judge home run first any this twenty five. That's seven more than anyone else in the majors. Fifth, that ain't three run shot for Kyle Agashioka, who had not homer all year until he hit two just this past Sunday, and now

he's got a third. Yanks pe Tampa Bay four to three, Nestor Cortez the win of the Safe for Clay Homes at City Field. A night to forget for the Mets, who lost in Milwaukee ten to two. In Atlanta one again, the Braves are fourteen and oh in June, and they're now just four games behind the Mets. Second night in the row and near no hit her the Dodgers, Tyler Anderson lost it when Shoheyo Tani hit a triple with one out in the ninth inning overtime to start the

Stanley Cup Final in Denver, Colorado. Blew at three one, wim We got a goal from Andre burakoff game minute twenty three and ot for a four three game one victory over Tampa Bay. Tonight in Boston, it's Game six

of the NBA Finals. Either Golden State wins the championship or they go back to the Bay area for a Game seven with Red Sunday and what a sports day in Boston because this morning they tee off to start the US Open golf at the country Club of Brookline, of course, that first hosted the Open in nineteen thirteen, with a victory by Brooklyn native Francis Weamanton in a movie about that, Rory Makaroy looking forward to playing in historic of course. That is what's so good about golf

is the history in the tradition and these stories. Um, you know the fact that you know he grew up just off the seventeen pole here um and we're still talking about it to this day, over a hundred years old. Like that's so cool. That's the great thing about this sport. Hawkeroy won last week. He's the betting favorite to win the Open. Has an early tea time today, so does defending champ John Ron Johns Dashaward Bloomberg Sports. John, all right, thanks John, Ahead of the cans show up and down.

Futures down five hundred seventy seven points as futures they're down blind the nasdack futures down three hundred seven. This is Bloomberg. Just to get a Bloomberg day break, We'll be joined by Dan Bors, chief market strategist at B and P. Whill got his stud the investing landscape in this new regime. Markets headlines and breaking news twenty four hours a day at Bloomberg dot Com, the Bloomberg Business apt and at Bloomberg Quick Take. He's a Bloomberg Business Flash.

Nathan Hagar, Well, so much for the post Fed rally futures this morning. You're signaling a route in stocks today after the Fed signaled a willingness to accept the recession. And arise in unemployment. In its resolve to contain elevated inflation, we checked the markets every fifteen minutes during the trading day. On bloomberg SMP futures now or down eighty six points or two point three percent, futures down five forty six. Nastat future is lowered by three n eighteen points, that

is a drop of two point seven percent. The tenure Treasury is down twenty eight thirty seconds, the yield three point nine percent yield on the two year three point three one percent Nimex screws down two tenths per cent, or twenty six cents at a hundred fifteen dollars eight cents of barrel comes. Gold is up nine tenths per cent or fifteen dollars forty cents. At eighteen thirty five, Even announced the euro one point zero four one one against the dollar British pound one point zero six ahead

of a Bank of England decision later this morning. The yen is at one thirty two point eight seven. At eight thirty Wall Street time, we get weekly jobless claims, along with reports on housing starts and building permits, and the Philadelphia FEDS business outlook Kroger reports earnings before the opening bell and will get results from Adobe after the close. That's a Bloomberg Business Flash. Now here's Michael Barr with Forum What's going on around the world. Michael, good morning,

Good morning, Nathan. The January six Committee is plunging into Donald Trump's efforts to pressure your Vice president Mike Benz to reject the electoral held. At today's hearing, testimony is expected from the Vice President's Council Greg Jacob and a retired federal judge, Michael Luddig, who called the plan incorrect at every turn, COVID vaccines for infants, hand toddlers from MODERNA and finds her one support from a panel of

US regulatory advisors. In baseball, the red Hot Yankees one again. The Mets lost along with the Nationals, Orioles and Giants. The Red Sox beat the A's in Game one of the NHL Final. The Avalanche beat the Lightning and overtime. For three Global News twenty four hours a day on air and on Bloomberg Quicktake, powered by more than twenty seven hundred journalists and analysts in more than one d twenty countries. I'm Michael Barr, and this is Bloomberg, John Michael,

thank you. Find twenty on Wall Street. We are live from the Bloomberg in Trantbroker Studios. This is Bloomberg Daybreak. Traders seem to be giving at their initial optimism over FED share trum pal's comments that super sized rate hikes won't be the norm. Let's get you set up for the trading day ahead. Now we're joined by Dan Morris, chief market strategist at B and B. Parabout asset management. Dan, why do you change in sentiment from yesterday to the

futures this morning? Firmly in the rent? Yeah? Well, I guess you could always find a bit of news to focus on, be a positive or negative. And I think at this point at least people seem to be picking up on the on the recession. Even if you're not going to get a hundred basis point hikes, Um, we're

actually still modestly constructive. So I think the key question is you know now that the FED maybe has caught up to where it needs to be after having been behind the curve up to now, you know, is that enough? Are they at the right level? Is the trajectory the right one to get inflation? Down or contrarily, do you think it's not enough they're going to have to go higher? It is going to take a recession to get inflation down.

So that that's really the judgment. And I guess on the minute, on the hour of the market seems to to change which view it has. Okay, with a recession, the first question we have to ask how deep and how long? Well, if you look at the components, you basically what's driving core inflation? Uh? And the assessment has got to be, you know, how much of those really

could should turn out to be temporary? I mean, the goods inflation should turn out to be temporary, but we know there's some of these more persistent factors in particularly and also it seemed to have spooked the Fed last week was the increase in shelter Uh So how much you know, how big of a recession do you need to do to get the shelter prices to fall and that component, the rent component of core PC to fall. And you know, I think that's going to be the

key assessment. But you know, just to be clear, we're not expecting a recession. Okay, Now, how does this change

the investment landscape? With a more aggressive typing policy from the Fed, you say, avoiding a recession at this point, if again, if you think that this is enough, and really what we've seen so far really over the course of the year with this reset, you know, in policy rates and particul the increasing real rates, you know, that's had primarily an impact on valuations and on on growth stock valuations which have fallen dramatically, But now they're at

at reasonable levels. So if you think real rates aren't going to go up any further, that the Fed is not going to hike anymore, you're actually pretty good valuations. The earnings outlook from that point of view is still fine. So I think you can have a modestly constructive view

on equities, which which we do. It's only in the contrary scenario that either you think you need more rate hikes, in which valuations would be at risk again, and then it would get arguably even worse, because at that point you're earnings estaments would start to follow worse. So far, they've actually continued to rise despite everything that's happened so far this year. So what sectors are you looking to

right now? We don't have any specific sector allocations and more geographics that we're overweight in Japan and China, and that's based on one UH and absolute terms attractive valuations. You know, if if the US and Europe about average, you can argue that Japan, e M China are below average. So that's a clear advantage. And also just the difference

in monetary policy outlook. You know, it said clearly hiking the e CBS, you know, ramping up, whereas in Japan and China they've they've got a bit more room, they can be more patient, and so that's going to be more supportive for equity markets. Do you have a view for the dollar? Is it higher dollar for the foreseeable future? Given those great differentials, it really shouldn't from here. I mean clearly, the dollar over the course of you know, the last year has continually had to price in these

writing expectations. But that's actually your historical pattern. As you go into your first hike, you know, the dollar tends to strengthen. Once the cycle actually starts, it tends to weaken. And I think there's two reasons that hasn't exactly happened this time. One, we kept or keep having to reset our expectations higher. But once we're at that final point that should be over. And then also we've had you know a bit of risk off just because of the geopolitics,

and you know dollar tends to strengthening those environments. So on the assumption the geopolitics at least doesn't get worse, uh, and also the assumption we don't have yet more increases and expectations for FED funds. You know, historically the dollar does weaken. Let's switch the volatility with the VIX, the Wall Street fear gage this morning. How much more elevated

do you think it it will be? Well, I think that really reflects kind of the surprise that we've had over the last week with with this last FED meeting. I mean historically that I think they tend from the central banks is to communicate well ahead of time so you don't surprise the markets with with a move that they hadn't anticipated, and that clearly wasn't the case this time, and so that surprise feeds through into your volatility and

create indicators pretty much across the board. If at this point hopefully no more surprises, volatility really should come back to Dan Morris, chief market strategist at Big MP parabout asset management. Thanks they had appreciate it ahead of the over Wall Street down futures five hundred sixties six points lower, s and B futures down that has their futures right now points lower. You're listening the Bloomberg Daybreak and the

Bloomberg Weather from Rob Caroline privately. Mostly cloudy today, chance of a shower or a thunderstorm. High temperature today seventy

five in eighty cloudy tonight blows around seventy. Broadcasting live from the Bloomberg Interactive Broker Studio in New York, Bloomberg E Living Freedom to Washington, d C, Bloomberg to Boston, Bloomberg one O six one to San Francisco, Bloomberg nine sixty to the Country Sirius XM Chad one nine and around the globe to Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg Daybreak. It's five thirty on Wall Street. Good morning. I'm John Tucker, I'm Nathan Hager.

We're about four hours away from the open of US trading. Let's get you up to date on the news you need to know. At this hour, the post fed rate hike rally appears. Over US features are sliding Following US Today's games, which halted a five day ten percent route in the smp J palen, the fedlifted rate seventy basis points of the biggest increase since Former Richmond FED president Jeffrey Lanker says policymakers now face the real reality of

a recession. They dropped a critical sentence indicating they're not certain they can do this soft landing that that's an indication that they think they they're running the risk of a recession. Former Richmond FED President Jeffrey Lanker says rates need to go up to six percent to have any chance of restraining inflation and Google him. Chief Investment Officers

Scott Miners says the market is obsessed with inflation. Every time we get another bad piece of news on inflation which is higher than expectation than we're we're forcing the Fed to ratchet up uh their pace or the degree of tightening the they're doing. Google him. Chief Investment Officers Scott Miners says there are cracks appearing in the credit world and the worst is probably not over. The Swiss National Bank unexpectedly raised interest rates john for the first

time since two thousand seven. Policymakers opted to join the global bandwagon of monetary tightening, lifting the rate by fifty basis points to the policy rate to zero negative zero points to five percent. And we'll hear from the Bank of England and about ninety minutes from now, accounamis for a canceling the b o E will deliver a fifth straight rate hike. In corporate news, and it's a big day for Twitter and Elon Musk. Let's get more line

from Bloomberg's Vernita Young. Good morning, Rinita, Good morning. Nathan. Elon Musk is addressing Twitter employees for the first time today since agreeing to buy the company for forty four billion dollars. At the virtual meeting, Musk will take questions directly from employees, many of who have not been happy

with him lately. Meantime, Twitter CEO recently announced a series of cost cutting measures, including canceling the company wide retreat that was scheduled to happen in January twenty three and a hiring freeze. Live in New York, I'm ready to Young Bloomberg day Break, Thanks for day to the cosmetics giant. Revlon has five Chapter eleven bankruptcy protection. The company owned by billionaire Ron Perlman, has been unable to manage its

heavy deadload. SMP futures down down eighty nine points, down futures down five D seventy five. Danstack futures are lower by three twenty six points. The tenure treasury is down one and six thirty seconds. The yield three point four three percent yield on the two year three point three five local headlines and a check of sports up next. This is Bloomberg. All right, thanks Nathan, and it's time to bring in Michael Barr with Moura. What else is going out of New York end around the world, John,

Thank you very much, sir. Federal hate crime charges were officially filed and last months shooting at the Buffalo supermarket yesterday, Attorney General Merrick Garland placed flowers at the scene at the Buffalo grocery store massacre. Garl and declared it an unmitigated intentional act of hate based murder. No one in this country should have to live in fear that they will go to work or shop at a grocery store and will be attacked by someone who hates them because

of the color of their skin. A g Mary Garland as prosecutors say, eighteen year old Peyton Gendren's goal was to kill as many blacks as possible. Ten black people were killed and three others were wounded. The House committee investigating the attack on the US Capitol will resume hearings today. They will hear from former Vice President Mike Pence's top lawyer as it focuses on Donald Trump's pressure on Pence to block certifying Joe Biden's presidential election. The panel will

also show testimony by Pence's chief of staff. Two US military veterans have been captured in Ukraine. The two men were serving as volunteers with the Ukrainian Army Unit. The man Alexander dru Ki and Andy Heynen were reportedly captured by Russian forces near Kharkiev. Druki's mother, Lois Druki, said her son felt compelled to go to Ukraine to assist in the war against Russia. He felt very strongly that he needed to help fight for democracy wherever it was

in the world. Other Westerners have been taken prisoner during the war, including two from the UK were sentenced to death by Russian back separatists. COVID vaccines for infants and toddlers from Moderna and Fiser one support from a panel of US regulatory advisors. Meanwhile, Anthony Fauci, the chief medical adviser to President Joe Biden, tested positive for COVID. Fauci, who was fully vaccinated and boosted twice, is said to

be experiencing my old symptoms. Global News twenty four hours a day on air and on Bloomberg Quicktake, powered by more than twenty seven hundred journalists and analysts more than a hundred twenty countries. Michael Barr and this is Bloomberg, John, Michael. Thanks, and it is now five thirty five on the walls for fits. Sorry for the Bloomberg Sports update, hears John Stash, all right, John, Yankees having this amazing season, even with some players struggling like Kyle Hegashi Yoka, who has of

justice past. Sunday was batting under one fifty without a home run, and then three home runs in the span of six at bats had the big glow fifth in into the stadium after Tampa Bay woffed Isaiah Kinner Felfa intentionally to face Iggy three run homer put the Yanks up for nothing. They held on beat the Rays four to three, Iron Judge with a homer, and the Yanks have won six in a row, thirteen of fourteen their

thirty games over five hundred. Mets lost in Milwaukee ten to two, while Atlanta won its fourteenth in a row, moved within four games to the Mets Tuesday the Cardinals Miles Nicholas was one out from a no hitter. Last night, the Dodgers Tylan Anderson two outs away, lost to milhad win Shiotani hit a triple. Stanley Cup Finals Tampa Bay going for the three peat, Colorado's first Cup final in

twenty one years. In Denver, Game one went to overtime. GT. Coffer down the middle, Copper Hole shoots, It's flock become party is okay, k SC and Denver as one four three, They're thirty and two in the playoffs. Golden State Warriors can win the NBA Championship tonight, games six to the finals in Boston, where this morning in the US Open begins. Country Club of Brookline Defenny Champ, John Rahm as an early tea time, So does Rory McElroy and Jordan's Speak.

John Stashward Bloomberg Sports, John John, thank you five thirty seven on Wall Street Campus time for the Bloomberg Try State Business Report. For that we're joined by Ed Quarry. New Jersey will expand its planned property tax relief program, providing more than two billion dollars to more than two million households. Residents with income of up to two hundred

fifty thousand dollars will be eligible. Homeowners will get as much as fifteen hundred bucks, Renters will get as much as four hundred fifteen Golden Tree as That management has been ordered to pay a one point two million dollar bonus to a former chief operating officer. He was fired for lying about an affair with a subordinate, making lewd comments, and exposing himself. A Manhattan Supreme Court judges sided with an arbitrator who said Christians work for the company entitled

him to the bonus. But the gauge of New York state manufacturing activity shrank for a second month in a row. In June, a measure of inflationary pressure at producers picked up. The Federal Reserve Bank of New York's General Business Conditions Index improved the minus one point two from minus eleven point six. That your Bloomberg Try State Business report. I'm Ed Corey, thanks A five thirty eight on Wall Street.

Bloomberg Radio is on the air from San Francisco to New York, London to Hong Kong, and let's check in out with our global insteam for some of the top stories heard on our three hundred affiliate radio stations around the world. I'm Steve Potus, Scott K and X in Los Angeles. We're talking about Twitter canceling a company wide trip to disney Land as it looks to save money. I'm Corney Danahoe on wh S and Louisville Forwards profit on its electric cars is being wiped out by rising

commodity costs. I'm Gina Servetti and for k CBS and San Francisco, I'm reporting that block the payments company formerly known as Square plans to give up it's San Francisco headquarters. I'm Lisa Mateo and on w b Z in Boston, I'll be reporting on why the next Tesla could cost you even more. Tim Ed Corey on w t A M in Cleveland, I'm reporting several midsized evans boosted Cleveland's sports tourism industry this spring, and those are some of

The stories are Twitter. Seven hundred Bloomberg journalists and analyst are working on this morning around the world. It is thirty nine on Wall Street. The following is an editorial from Bloomberg Opinion. The effort to revive the Iranian nuclear Deal of fifteen maybe on life support after tear Round recent removed nearly half of the cameras monitoring its nuclear facilities. The head of the International Atomic Energy Agency said that decision could prove a fatal blow to the pack. Well,

diplomacy shouldn't be abandoned. The U s should be using this time to show around what the alternative to a deal would look like without setting any redlines Publicly, President Biden should make it clear to the Iranians that any attempt to enrich uranium to weapons grade or to kick out inspectors could trigger military action. Showing that it's prepared to defend its interests in the absence of a deal maybe the best way for the US to convince Iran

to sign one. This editorial was written by the Bloomberg Opinion Editorial Board. For more Bloomberg Opinion, please go to Bloomberg dot com, Slash Opinion or opean go on the Bloomberg Terminal. This has been Bloomberg Opinion. Bloomberg Opinion editorial is could be heard every weekly, this time terminal customers. You can read more at O, P I N go

ahead of the open of Wall Street. After yesterday's rally, down futures right now five hundred eighty five points lower, the S and P futures down ninety points, and thans that futures they're down three hundred and twenty nine points. Tedier yielding in the US three point four three percent. You're listening to Bloomberg Daybreak just ahead. How far into restrictive territory does the Fed go? Will be joined by

Sarah House, senior economists at Wells Fargo. This is Daybreak, Markets, headlines and breaking news twenty four hours a day at Bloomberg dot com, the Bloomberg Business at and at Bloomberg Quick Tape is a Bloomberg Business lash and Nathan Hagar. Stocks rallied after the Fed's decision yesterday, but this morning futures are pointing to a route with the FED signaling willingness to accept the recession to rain in inflation. We check the markets every fifteen minutes during the trading day

on Bloomberg. Right now, SMP futures are down eighty nine points down, futures down five eighty DASTACK futures are lower by three twenty five points. The tenure treasury is down one in six thirty seconds. The yield three point four three percent. Yield on the two year is at three

point three six percent. Nime X screwed is down four tenths per center, forty five cents at a hundred fourteen dollars, eighty five cents a barrel comes Gold up seven tenths per center, thirteen dollars at eighteen thirty two eight ten and ounce. The euro is at one point zero four one six against the dollar, British pound one point two one three two and again is at one thirty two

point eight five. That's a Bloomberg business flash. Now here's Michael Barr with more on what's going on around the world. Michael Pathan, thank you very much. The House Committee investigating the January six month riot is holding its third public hearing today. The panel is expected to focus on former Vice President Pence, who faced threats by Trump's orders less than two weeks after restarting production abbots troubled infant Formula Plan and Sturgis, Michigan. It's now being forced to shut

it all back down again. The company says torrential storms cause power outages and flooded parts of their facility. In baseball, the Yankees one, the Mets lost along with the Nationals, Orioles and Giants. The Red Sox beat the A's Game one in the NHL Final. The Avalanche beat the Lightning and overtime. Four three Global News twenty four hours a day on air and on Bloomberg Quick Take, powered by more than hundred journalists and analysts more than a hundred

twenty countries. Michael bar this is Bloomberg, John, Michael, thank you. We are live for the Bloomberg Interact, a Broker's studios where it is nine on Wall Street. But the Fed shair Jerome Powell now has engineered the Central Bank's biggest interest rate to increase since And let's take a deeper dive into the Fed move now with Sarah House, senior economist at Wells Fargo. Sarah, thanks for being with us this morning. What are your major takeaways from the meeting

that we had yesterday? So I think what we saw of the meeting was a more realistic take on what it would take to bring down inflation, where we're going to have to bring policy well into restrictive territory and at least some recognition that's going to bring some pain along the way. So if you look at the summary of Economic projections, you had the unemployment rate beginning to to pick up, and in the statement that SID removed the line about they expect the labor markets to to

remain strong. So I think we saw the Fed overall get more serious about the inflation problem ahead and recognize that we're not going to have a painless escape, how restrictive. So the Fed move their media estimates where RACHEL will be at the end of this year up to a range of three and a quarter three and a half percent.

We think that they'll go even higher. So we're estimating that the upper bound of the said funds rate we'll reach four percent by the end of the year, and it will climb to four and a half per sent by the first quarter of next year. So the Feds looking for rates by the end of to be a little under four percent. So not quite as aggressive on this, but I think certainly signaling that it is going to

take that restrictive policy stamp to bring down inflation. Does the economy really have to go through the ring or to break the back of inflation? And is unemployment inevitable You're gonna have to go higher, I think, given how much of this inflation is driven by demand. So yes, you do have some supply chain issues, particularly things like the auto sectors, but overwhelmingly to stems from just the robust recovery that we've seen and the inability of supply

to keep up. I think you do have to to put policy in restrictive territory, try to slow it below trend trend growth. So I think it is a necessary step, and unfortunately you can't slow demand in a meaningful way, I think without seeing that translate into softer, softer demand for workers, which is likely to lead to higher unemployment. Yeah, there have been some inevitable comparisons to the era of FED share Paul Volker um are are they valid or we really going back to those types of rights? So

I think there's a lot different in today's environment. So one is that I think the FED has learned the lessons of the Volca era seem similar inflation I think that they are more eager to to quash it than what we were seeing in the late nineteen seventies, which

allowed inflation to get so entrenched. One of the big catalysts for the shift from what was a very well telegraph fifty basis point move coming into this meeting to a last minute signal for seventy five basis points was the fact that we saw long term inflation expectations shoot to a fourteen year high in Friday's University of Michigan consumer sentiment survey. So that along with inflation, caused the

FED to react and shift very quickly. And so I think that even the they are behind the curve and they've allowed inflation to get to a forty year high, I think they are are rapidly making up for that, and so that should limit how far rates ultimately have to to go. So how do you suppose this is going to impact in the long term, at least the

the appetite for risk. Well, I think that overall we're going to see some some some risk shifting, and we're going to see it cool as as it does become more apparent that the FED is going to have to have to raise rates. So we've already seen that to some extent that they're they're very well could be more to come. Okay, I also wanted to answ you real quickly if you could are cracks appearing in the treasury market. There have been some liquidity concerns as well, so I'm

not sure about whether there are cracks being there. Of course, we had the start of QT this month, and so we are beginning to see to see that transition. I think overall, you know, we are seeing a rapid shift in policy. So the FEDS see not the most aggressive paths of policy titan that they have seen since the early nineteen eighties, and I think that's going to come with some pain and some bumpsa along along the way. Yes, Sarah,

thanks very much. Appreciated. Sara House, senior economists at Wells Fargo. Nathan all right, John, thank you. It's five fifty three on Wall Street. It's time for our Bloomberg Law Report. Let's get to the legal stories we're watching this morning. From Bloomberg's Jeff Bellinger, Amazon, Uber, and Meta Platforms are among several technology companies calling on Congress to pass permanent protections for so called dreamers, undocumented immigrants brought to the

US as children. The Occupational Safety and Health Administration is developing an enforcement program directed at preventing falls in all industries, and CROCS issuing a Japan based dollar store chain for trademark infringement. CROCS accuses the store of selling knockoffs of its popular rubber clocks. Bloomberg Law everything you need, all on one legal research platform, including guidance analysis and Bloomberg Market Intelligence. Find out more at Bloomberg Law dot com.

Now another legal story we're watching. The January sixth Committee holds its third public hearing this afternoon, laying out the case for holding former President Donald Trump and others responsible for instigating the violence at the Capitol. There's reportedly a rift among committee members about whether to make a criminal

referral of Trump to the Justice Department. But a referral is it actually needed for d o J to bring charges, and the members are clearly united in presenting their strongest case against the former president. For more, Bloomberg's June Grosso speaks to Jordan Strauss, a fellow at the Croll Institute. Regardless of whether the Committee makes a criminal referral to the Justice Department or not. Is it pretty obvious that what the committee is doing is trying to lay out

a roadmap for d o J to prosecute Trump. Treaty is absolutely trying to lay out the roadmap to prosecute the president and others in the pres its orbit. I think it's hard to stay until they've closed their case and until they've finished presenting information who could be charged with what? And I think it's also very important to remember that the standard of proof in a criminal case

is beyond a reasonable doubt. You know, when I was at the Justice Department, I can say that the level of certainty not just of guilt, but also that guilt could be proven to a jury beyond a reasonable doubt for a prosecutor before they move forward, needed to be in the minds of the prosecutor, even though that's not the legal standard, right, it needed to be that high before they move forward. So there's a lot of nuanced here.

And I think that the Department thus far has taken a very careful approach to charging and charging decisions, and I think that's going to continue. And I think that unless there is really really incredibly incredibly strong evidence, I think it's unlikely the Department would elect to move forward with charges that are that novel against someone that senior.

So then do you think that the Justice Department is looking for more then they would normally look for in a case, more than just you know, being convinced that someone is guilty and that you can prove it because they know what's at stake. So when they are high profile or high consequence criminal defendants, they always receive more attention. So be it a high profile of terrorism case or a high profile securities broad case, it's always going to

receive extra layers. One of the reasons that it receives extra layers is when you're doing something high consequence, you want to make sure that senior leadership knows. You know, you might want to stress test the theory of the case a little bit more than usuals. One of the reasons might be that you're making a novel application of the law, or you're using a law like the dedicious conspiracy that's just not used very often, so you know,

you combine that with the complexity of the fact finding. Yes, I do think that they're probably receiving additional attention. That said, Judge Garland has head that the approach of the Department is going to be to work its way up and to bring more complex and more meaningful cases as the more complex and more meaningful facts submerge. And they've they've done just that so far. Nice Jordan Krause of the

Cral Institute speaking with Bloomberg June Grosso. You can catch more of that interview, plus analysis of the latest legal news by listening to the Bloomberg Law Show. There's a ten pm Eastern time on Bloomberg Radio. You can listen anytime by subscribing to the Bloomberg Law podcast s. Andp Futures down down eighty three point, Stole futures down five seven, Dance Deck futures are lower by three nine points. The tenure Treasury is down down one and nine thirty seconds.

The yield three point four or four percent yield on the two year three point three six percent. Bloomberg Dave break continues. This is Bloomberg