>> i worry that core inflation is going to prove more sticky than the fed anticipates. >> i think the fed will push back on the chatter because they can't wait to let it work its way out. >> it is slowing the economy down faster than can be sustained long-term. >> we have to get interest rates higher to slow down demand and bring inflation back to the target. jonathan: how did we end up in a

field at 4 a.m. local time? tom: it is called jackson hole. jonathan: we are so thrilled. is it 40 degrees? tom: i was up at 4:00 a.m. looking at the stars. jonathan: equity features down 4%. we know the main event is several hours away. tom: is here an exciting and you can feel the anticipation. all of the president and all of the american economists are here. we mentioned ferment shawl -- chairman powell with the binoculars looking at a domino. but now he is looking at the numbers -- at andromeda. but now he is looking at the numbers.

jonathan: i wonder how much we hear about raise and hold the next 12 hours. lisa: and for how long. they can hold for two months and then they could hope for two years and we are getting into the territory. the market is priced for holding for two years at 3.5%. is that true? given the fact that any rally and equities would be met with high skepticism from fed officials. jonathan: is amount -- not just about rates but about qt. i think that's what we need to talk about with the fed officials. i want to hear what you think the balance sheet reduction and what it means from the rate hikes you think they have. tom: the media is so fixated on

the interesting game. what i found that surprised me is however pretty is going to her the three of us have been talking for months which is the duration of this. ford and guidance, dead -- forward guidance, dead. jonathan: let's get to the price action. equity features this morning down one third of a percent. yield higher by five basis points to 3.74% -- 3.074%. yields up by a basis point. lisa: with the expectation of hawkish tone. giving what we are expecting today, we are speaking with fed officials about their views. jim bullard, raphael bostic

joining bloomberg. jay powell is the first to ever bring people inside the room since he has been doing the meeting. it is interesting to figure out why now. [laughter] you guys are laughing at me. i am curious to see how much it comes down and how comfortably are with pce coming down. remember we would've been talking about the university of michigan sentiment. does anyone care about that anymore? jonathan: can we sleep now?

i think it is fascinating the listing. it it is so consequential for the country and i think it is about time. lisa: i think that is a question to ask fed officials heard is this new transparency necessary given the pushback from the public with the rage airfield with inflation. tom: this is a debate. one of the things we should talk later is how much communication is too much. stephen major joins us now. your expectations for chairman powell later this morning. stephen: good morning to all of you. i haven't got a great expectation. i am more interested in the

speeches and roundtable going on through the weekend. jackson hole is of out the more serious secular. if you look at the discussions that are coming they are much more interesting than any kind of hint on the next policy move. the fx market might hang on but the bond market has made up its mind. the curve is inverted. rates are pushing higher in the near term. the bond market considers policy rates will be back down to 2.5. jonathan: -- tom: to still stand by the idea that bonds will be supported, yields lower which you have said courageously for the last five years? stephen: yes, nothing has

changed. in the central banks can't change those secular forces. they can recognize them. but these are the constraints they have discussed on policy. it is the debt overhang can the aging population, education, supply-side shocks. they are customers of the equilibrium as much as we are. the average is three, so the bond market is not wrong today.

i would suggest in the next few years we would see lower yields not higher yields. lisa: i will ask the officials whether they can educate me make me younger and i will see what they say. it is said that this economy as debt sensitive as it is is not as sensitive as many people think because of the other side of the equation, the benefits because of the income receivers get and the ability to spend. how do you pushback against that thought where they say the inflation is here to stay? steve: it is a fair point that someone has to receive the interest in the coupons paid but if you overlay distribution of income and wealth to the savings rate and to the debt stock, you

will see a very -- dark picture -- stark picture. people saving money don't need it who pat can't afford it. governments are constrained because rates can't go up that much higher. so they have this closing between income they receive and the rate they pay out from them. and there are the poor households who are feeling the pinch from higher energy prices, higher mortgage rates. on aggregates there may be an argument that you could balance the expense but when you look at the distribution of wealth and

income, it is a stark picture. jonathan: have we seen the highs of the year on the 10 year? steve: we saw them in june. that was it. we saw that 10 year yield on the 75 basis point hike in june and another hike in july. we had hundred basis point range between two meetings. the market seems to be hanging onto the neutrality question. chairman powell mentioned that in two wasn't wrong. when it is around 3% and flat across the curve and they are looking at 2.5% and james bullard has it at 2.0%. they may be pushing for 4% but

it was closer to 2%. i don't think the fed chair was wrong when he said we are close to neutrality. jonathan: we will have that conversation potentially would jim bullard. good to catch up, stephen major of hbc. lisa: it is consistent where he has been sank will go back to a cyclical lower low comes to interest rates and benchmark yields because of the structural changes. this is the big debate, has it shifted in a time of deglobalization? jonathan: you mean a higher shift in rates and inflation? lisa: right, that is the core discussion. tom: this is all about the

elites. 7700 u.s. dollars -- 720 -- 770 u.s. dollars -- jonathan: from jackson hole this morning, good morning. ritika: ukrainian president the latimer zelenskyy reinforcing his call -- volodymyr zelenskyy reinforcing his call for russians to leave the nuclear plant. he is trying to prevent a nuclear accident that could impact all of europe. it was captured in march by russian troops.

industry regulators raise the energy price cap soaring gas prices and expected to increase more in january. it is a jarring increase for millions struggling to afford everyday essentials. the latest forfeiture investors who back away from an over did market. blackstone said it will stop buying homes in 38 u.s. cities saying home price growth and increasing regulations are factors. spacex offering wireless phone service in the u.s.. there is a partnership with t-mobile. they will work to ultimately --

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tom: 76 -- pres. biden: 76 days away from the midterm elections. it is a lot at stake who we are at a serious moment. moderna republicans are a threat to our democracy -- ma republicans arega a threat to democracy. futures down. -- jonathan: futures down ahead

of the big chairman of the fed meeting at 10:00 this morning. tom: feel the vix has been in movable. jonathan: we have talked about it all week. yields starting to climb higher. tom: in jackson hole. we are aware of the weather. the cold but overarching is everywhere you look there is drought. emily wilkins joins us. the inflation we have, could be food as prices hasn't moved much

. are they aware of the east coast of the drought we are seeing right now across all of the midwest and into the rocky mountains states? emily: that is a concern. democrats are taking a small sigh of relief that we saw inflation to level off last month but it is still high and they know it is going to be a major problem for them those who are campaigning say inflation consistently comes up as an issue. but they are feeling confidence in they have other things to point voters to as gas prices have come down. and abortion access is said to be a big issue. democrats have to intend with high inflation and have to keep and i on what is happening -- an eye on what is happening but

they do see some issues that if there is a red wave it wouldn't be as nearly as big as protected. tom: those narratives are many right now. which is the one besides the abortion debate that they can run with. is it affidavits with black marks across the pages? emily: it is such an adjusting story. the whole search warrant, unprecedented that was carried out on mar-a-lago. the department of justice could be releasing every jacket part of that search warrant. a lot of things has been redacted because certain parts of the investigation are protected. it has given a divide in the republican party right now, right at the point where they are supposed to be picking up momentum on the way to november.

they now have to deal with trump being back at the top of the headlines in the news and that is not necessarily going to be in officials for down ballot candidates. they are struggling with particularly week candidates showing week pulling in races here that is something republicans are struggling with. democrats point to a number of things they have cap done, the veteran bill, the infrastructure bill, the semiconductor bill, the build at addressed health care and taxes. to have a lot of things they could take back to voters and say we have done this. exactly what they will highlight will vary depending on where you are running and who your constituency is and how blue your district's page you will see a variety of messages but they have a lot to pull from and use. jonathan: thank you. where it will be be in 12 months

if we are sitting here again? we have unemployment going back to 3.5% but if we are here in 12 months the politics folded into this it would be a different picture. lisa: because then they can't raise rates and talk cavalierly as imposing pain but they can now because that will be the big push back. what i'm curious is, how much do we get a discussion about the fiscal spending fueled inflation and where it ties the hands of policymakers in the future to spend money to stave off a recession going forward. jonathan: will we see this federal reserve in conflict i the end of the year? tom: the growth equation comes into it as well a what you may hear today is a partition of the

services versus goods and where we are a year from now, so much of that, according to everything i read it, is based on goods inflation. there is a function that service sector inflation won't come down but goods could come back to some form of distillation and -- distillation -- disflation. jonathan: from walmart a number of weeks ago and saying that high income americans are not going to walmart. there is something happening in the american economy when you see high income americans going to walmart. we are really capturing that and the data when we are talking about a jobs report. lisa: much is it a lagging

indicator and divergence that is hot because of a real shift in the labor market versus actual strength in the economy. how do they understand it and cater to the weakness at the same time that they have two deal with inflation paid winter they start talking about the downgrading of purchases? tom: 280,000 jobs are 290,000 jobs in the last 30 days. lisa: it is a lagging indicator. tom: the fact is, not only america, we noticed in the irish times, ireland employment is booming. jonathan: in the u.k. they have a tripling of utility bills. if you focus on the labor markets, and look at cpi. that is the problem.

i don't many are looking at the labor markets and saying things are ok. when you're looking at the inflation picture you have a very different understanding. lisa: the implication was how the politics for into the moment at jackson hole and that will be a big question. we can talk about it, the question why they are holding it in such a public way trying to get their hands on the narrative. tom: an important interview, very visible in the economics, talking about student loans. jonathan: from jackson hole, this is bloomberg. ♪

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jonathan: live from jackson hole, wyoming, counting down to an address by chairman powell at 10:00 eastern time. in the walk toward the fence. -- and the walk toward the fence. tom: we are going to take the walk.

the walk of 2007 was emotional. we were flat on our back. there was an international response but it has turned in. i don't know if it is cambridge or sussex. jonathan: is the price action. the s&p 500 down on the session and week. check out the bond market, close to the high on a two year yield. the 10 year up five basis points. right now, short of 3.1%.

we have all heard from the ecb. positive by .4% for a stronger year going into this one. -- stronger euro going into this one. lisa: we are pricing in the most hawkish stance for the ecb. jonathan: we have to talk about the u.k.. the price of energy bills is rising in the u.k. we were anticipating this move but $4189 will begin in october. i want to give you an idea of how much that will change for the average family. when you put on the dishwasher in the u.k., that one cycle was $.40 last year and now the one pound. our u.k. team broke this down. think about the dryer.

it will go from 80 pounds a cycle to more than two pounds. this is a big change. this all adds up. we will have a situation where people are going to not be able to afford it and other going to stop heating homes, pay bills, stopping elsewhere? lisa: or will the government step in and say we have to spend more on what does that do to the deficit? tom: what government is the rope question. -- they lack -- what government is the real question. at the london school of economics and sir howard john davies joins us. thank you so much for joining us. the guardian essay of the other date you reaffirmed 4% inflation

of another time and place. adam posen said maybe three percent, why are we still talking to percent as we will hear from chairman powell today. is a 2% level of inflation data? sir howard: my concern is getting down from where we currently are to 4%, one can see increases in interest rates obviously but also if we assume that energy prices will not remain as they are now and we can start to see how we might get back. the pressure to get back down to 2% is going to involve unpleasant decisions by the fed and the bank of england. i am concerned that the federal rates are set up to fail on the

current regime and that would be a bad outcome and putting at risk independence. i'm wondering if we can't find a way of softening this in saying what we can get back eventually to 2% split in the meantime maybe we allow and provide a slightly higher target in the adjustment phase. that is my point. tom: you are good at giving the speech and finding the single sentence which resonates. what is the single sentence that chairman powell has to state this morning to resonates with economists and also listeners and viewers of the show? sir howard john davies i think --adam posen -- sir howard: i think he has to say he is willing to meet his full mandate, meaning medium-term for 2% inflation and

the impact of employment which currently is not too seriously but which overtime could cause him to moderate halfway towards his target. i think that some message along those lines to provide some conditioning or a pathway, if you are to aggressive, i think you are setting yourself up to fail. i think you have to find the framework which allows you to get back to your target but to do so taking into account the impact you will have on the unemployment market. lisa: i ask this because a lot of people are questioning what you are, whether political interference. the fed, ecb, bank of england from raising rates to what they

need to get it down to their target. does this mean a greater risk of inflation to get out of control and are they more willing to take that risk and causing a deep recession. sir howard: it is undoubtedly a risk. this is a great time to be central banker -- former central banker and not eight current central banker. somehow we have to find a manageable pathway down to a lower level of inflation which politicians will support. risk is if you go to too much to combat, you will lose the consensus basis or support that the independent banks have. there is no point into saying that is what we have been mandated to do because you lose support. i think that is what they have

to do to find a realistic pathway and one which politicians can say, we know there is going to be some pain but the central bank understands that and all not do it in such a way that we will bring it crashing to help. they have to build consensus around a sensible pathway. lisa: a sensible pathway, what does that look like if you are talking about the citigroup, 18% inflation rate they see as a potential peak for the united kingdom? sir howard: they have themselves in the headlines and maybe that is what the analysts at that bank wanted to do. that is a very unhelpful intervention so i dismissed it. i do think you can look at the pathway. jonathan: i have to jump in.

are we saying if the bank of england is not enforcing it, is that how we should describe it? sir howard: i think this was a marketing piece of research. jonathan: did you make of that? tom: i think there is a lot of criticism about the over analysis right now. it is front and center. one will question very quickly which i think is important. we had a fiscal impulse because of a global pandemic. known is talking about the number of years it will take to diffuse that fiscal impulse. are we delusional that we are thinking from fed meeting to fed meeting or quarters or one year or two years, this is going to take years to diffuse the fiscal boom we have experienced. sir howard: i think it will take some time. what will drive it is the

government have been able to engage in significant fiscal stimulus because the debt interest line has been very small. that is changing. we are already seeing it in the u.k. and the u.s. as well. it will take up an increasing share of expenditure over the next two to three years. that will put pressure on other forms of spending. i can't see any alternative. it will take quite some time to get bound -- back to a sensible balance in the u.k. and elsewhere. jonathan: thank you. great to catch up with you. he is in a far better place that i am to decide what forecast you want to pay attention to and

what he would choose to ignore. i was suggesting that the bank of england would be the last forecaster of inflation that people would want to follow. lisa: this is an interesting allegation, saying it is a marketing ploy of citigroup to come out and say 18% could be the peak inflation rate for the united kingdom. how much is that how central bankers can dismiss these projections and do they have to take them seriously. jonathan: we are already at double digits. where were we at 12 months ago. the team at citi is wondering if this is eight surveillance crossover. lisa: [laughter]

tom: he won't let me open this because we are four miles away. jonathan: are you going to eat that right now? from jackson hole, wyoming this morning, this is bloomberg. ♪ ritika: germany considering restricting the companies benefit from a gas levy. the government has scrutiny following an outcry over energy companies are germany initiated the plan over concerns that gas of these could trigger wider problems of the economy. some of exports could cause trouble in food markets.

local prices soar. they are concerned it would deal a further blow to other company -- countries. reinstating covid-19 regulations in hong kong forcing them to take action. from just a handful of infections, monkeypox has gone into a global health emergency. 49 thousand cases in 100 countries, mostly in europe and north america. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm ritika gupta. this is bloomberg. ♪

>> right now, the fed is so late that it is looking at two challenges, putting the inflation genie back into the bottle in looking at not creating too much damage and economic growth and inequality. jonathan: i wish mohammed was here. he was absolutely skating of the federal reserve yesterday. this fed has failed and analysis in the forecast. tom: this is a crowded field of

people looking at the next 18 months. jonathan: -- lisa: we will see how he was received here. he had his hike -- jonathan: i saw him and he had his hiking outfit on. tom: if you can bring up the photo of the selected people that are not hiking or canoeing so they can be out on the waters. it is extraordinary what happens on the canoe on the waters. it is a beautiful picture. there it goes.

[laughter] oh my goodness. jonathan: what was the water like. lisa: if i had a bathing suit i would have jumped in it was amazing. [laughter] tom: fiscal policy. maya macguineas has looked at the study of the american budget. thank you for joining us here. our budget is on fire and has always been on fire but now there is something new paid we are coming out of a pandemic with massive fiscal challenges and now we have the student loan debate. do you agree the student loan debate is problematic? maya: whenever i come to jackson

hole i feel like i'm coming to fiscal bringing an apology. with had excess stimulus into bidding to inflation but now what is remarkable with the student loan forgiveness policy is that despite the fact that we are in an inflationary moment where what we need to be doing is taking stimulus out of the economy, the president has just single-handedly added have a $20 more into the economy, clearly pushing in the wrong direction. tom: so important here, jason furman said the same thing,, everybody is on the same page, how did this get passed? if people like mcguinness and furman say no. maya: we get a half ago, is

after a year of difficult negotiation they had just went to the ira which was going to be deficit reduction. it wasn't going to be a game changer what was going to move in the right direction, a huge pivot from the budget buster into something fiscally responsible and eating is not dry and the president is undoing it. it is not good at policy. this is a policy that will push up the cost of higher education. it is political. this is not good policy. lisa: to the potential downturn people are expecting, people will wonder where it is safe or additional stimulus given what we saw in the pandemic. how much do you look at the other side of the ballot sheet? the tax revenues the government received as a result of the accelerated economy on the appeals -- on the heels of that? maya: you want to do your fiscal

policy the right way. we need to borrow $5 trillion to get us out. as soon as the inflation hits, we needed to change the fiscal path we are on because we could be in a recession very soon and made it to borrow again. right now the best thing we can do is get hold on inflation. lisa: cuticle look at the reality of interest rates as the cost of borrowing for this country. how does a potential for percent overnight rate mean? what does that translate to -- 4% overnight rate mean? what does that translate to? maya: an 1% increase in interest rate will add to put $720 to the interest payments over a decade. that is bigger than almost any policy we have. now because the debt load is so high, we are hypersensitive to

increase in rates and that was what people work morning about. it is moments like this where you start to see those costs. interest rates expected to triple over the next decade. jonathan: i think i convinces question. how does the president do this without congressional approval? maya: it is a great question. i think we will continue to hear concerns of the legality of this. he certainly doesn't have the support of all members of his party. a lot of people, starting with joe manchin, worked really hard for something that would bring the deficit down and watch him undermine that, there is a lot of discontent but the moderates in the party and also people who care about the policy that said this is a one off and is not fixing it. this will make the affordability of higher education worse not

better. jonathan: great to catch up with you. from an outsider looking in trying to become familiar, how do you do something that they right before the midterm elections without congressional approval? tom: that has been the debate since the get go. but what is in the back of everyone's mind is lisa abramowicz's question, we had the gift of low interest rates and the committee for a responsible budget is that party will end someday. it has. now what? 2.7 troy dollars is real. -- $2.7 trillion is real. lisa: there has been talk of holding rates at 4% four two years. -- for two years.

it is going to become a lot more difficult because as we saw yesterday the data is conflicting and they have to choose a narrative and choose aside. yes choose a side at the same time we have the overhang of debt and government wants to keep spending. jonathan: it gets trickier as unemployment climbs. tom: it is waning. jonathan: i can hear that. tom: can we get the surveillance umbrella for maya macguineas. jonathan: from jackson hole, this is berg. -- bloomberg. ♪

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>> i worry that core inflation will prove more sticky than the fed anticipates. >> i do think the fed will push back on the chatter. the fed just can't wait to let inflation work its way out. >> the economy is slowing faster than can be sustained long-term. >> we have to get interest rates higher to slow down demand and bring inflation back to our target.

jonathan: live from jackson hole, ym in -- jackson hole, wyoming, good morning. coming up later this morning, chairman powell 10:00 a.m. eastern time. we have been waiting for this for a number of weeks. tom: it seems like a hollywood event except there is no substance to it. i would emphasize that at 8:00 a.m. wyoming time we will have our analysis after, the bottom line is there has to be some substance to it and i would look for one or two sentences that change the debate. jonathan: i am not sure hollywood talking about the academics. tom: showed the yield chart, but it is moving. jonathan: the two-year is close

to the highs of the year. the tenure is at 3% last week. lisa: how much will the fed have to come out and be that much more aggressive because of how much the market has rallied? that is the pivotal question. it matters that we are committed to a neutral rate to get the markets to cooperate. jonathan: do you think we will hear that? lisa: no. but i am wondering how they are going to do it. jonathan: the market is waiting for this from the abysmal search a year ago. that speech from 12 months ago. i wonder how much this chairman has been conditioned by that whole transitory, temporary thing. let's be honest -- it didn't work. tom: you are correct when you read the speech in hindsight.

it is painful. what i learned from the gorgeous lobby looking up at the grand teton's, and that lobby is an extension of the timeline. we have heard about monetary policy and fiscal policy the same message, it is going to take a longer time. jonathan: raise and a hold -- raise and hold. lisa: disclosed down to the question of where is inflation going to top out at will we see higher inflation and nominal rates for a much longer time. the pimco view, steve major says we are going right back to where we were. jonathan: when does the sun come up?

let's get to the markets. equity futures down .4%. tom: we have proven today that tang does not freeze in six degrees centigrade weather. jonathan: euro-dollar, north of parity. lisa: not on the heels of expectation for ecb policy. today we are watching the fed speak we hear out of jackson hole leading up to the 10:00 a.m. eastern speech. for that, we will speak to patrick harker, jim bullard and raphael bostic.

at 8:30 a.m., u.s. personal spending and income indicator for the month of july. the art look into the core pce and how much -- we are looking into the core pce and how much are people spending. we look at the university of michigan sentiment for august. remember when we used to care about this? jonathan: two weeks ago. lisa: two weeks ago it was a very important indicator. tom: can you bring back the picture of the three fed presidents we are going to speak to? this is the heart of 19 oh 7, 1912. they didn't trust washington, new york, these three voices are all uniquely different. other than the fact -- jonathan: something interesting

was said, 50 to 75 basis hikes and even if it is 50 in september, the last few decades. lisa: how are they going to try to position a 50 basis points which is hawkish for the rest of the world will see it as dovish. tom: the strength of the american system invented in 1912 and reaffirmed in 1951, was those three guys we are going to talk to pindar all radically different. is this -- talk to. all of these are radically different. tom: -- jonathan: looking for a bigger move. the less i know of the bank of england, but a range of views.

i wish we had less groupthink. can you believe how little dissent we have had even with this economy has looked like in the last 12 months? lisa: i wonder if some of the unanimous those are masking some of the dissent. jonathan: i have respect for the board. tom: this is real life. way too fed presidents having lunch yesterday. jonathan: i am trying to listen in. my cover was blown. lisa: you blend.

jonathan: leslie falconio joins us now. we talked about the trouble in high here -- yield credit in the next 12 once -- 12 months. do you share that? leslie: they have a lot of cash on the balance sheet. going forward given where spreads are and retraction, there could be trouble ahead. if there is this entry in terms of credit, supply down 70% year-over-year, mutual and high heels right now. you definitely have to watch it over the next year or so. tom: describe curb inversion we have the shock of 50 basis points of inversion. we have come back a little bit.

take the curve in version and bring it over to the plan for taxable fixed income in the next six months? leslie: it is interesting when you think about the curb inversion. we have steepened out. right now you have the potential in terms of raising rates and the fact that the long end of the curve is saying you might be able to bring inflation down. when you look at things like the term premium and the 10 year, of the less negative but still negative. you have this inversion of the yield curve which we don't think is going to go away anytime soon. tom: i looked at this bond

market and it is supposed to react off of the speech. what if it is nothing westmark what if nothing happens in the speech? then what? leslie: i think the markets have gone back in terms of the projections. we called for 80 basis points of easing in 2023 and now down to 35 basis points in 2023. we have moved so the fund rate is not far from the fed terminal. a lot of constituents enter hawkish reports and they said that in july we were currently in neutral. we have gone back to the june playbook. it was a nothing event. i think they will have that reaction with yields coming down and spreads tightening because

people are concerned may go on the more hawkish side. jonathan: we have to leave it there. what are we looking at? tom: six degrees centigrade. i think this came up and i don't who'd growth -- who to give credit to? what if it is a nothing burger? lisa: i hate that phrase. i strongly feel about that. i think they have to respond is one of the big debates. if they don't, that would be an issue.

tom: he has secret microphones. [laughter] tom: what is a portobello nothing burger? jonathan: we are talking about college football in the south. and i have to get to a bama game. tom: it will be warmer than this. jonathan: and i need to watch some actual football with a round ball. this is bloomberg. ♪ ritika: ukrainian president zelenskyy reinforcing his call for russian troops to withdraw from the biggest nuclear plant after damage to transmission lines in the occupied territory disrupted supply.

ukraine is trying to prevent a nuclear accident that could impact europe. it was captured in march by russian troops. average u.k. household will pay triple the price to heed their home this winter compared with a year ago. the energy cap has risen and expected to rise more in january as the u.k. competes with other nations for limited gas supplies. it could affect millions already having trouble affording essentials. banning gas power vehicles in california, the board voted unanimously to mandate 100% zero emissions and hybrid plug-in sales. it will likely be adopted by 16 other states. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries.

i'm ritika gupta. this is bloomberg. ♪

jonathan: i thought we were hearing from the president of the united states but i guess nadir. futures right now down went 4% on the s&p 500. 10:00 a.m. eastern, 8:00 a.m. locally when we will hear from the fed chair later this morning. tom: to be clear, i'm not making

a joke, there is no press conference. jonathan: i understand the speech could last up to 30 minutes and that we go from there. lisa: this is the first time in the history of this event held at jackson hole that we are being allowed inside the room and a livestreaming of the speech. when they first started coming to jackson hole, this will be the first time they are trying to address the public and how does that change the nature of the speech and why it is being done right now? jonathan: it is important that we hear from the chairman. tom: before we get emily wilkins, let's review the data flow after labor day. i know you and i were focused on the friday of the second of september. labor day is after that. jonathan: will get payrolls on september 2 and cpi on believe

september 13. those are the two big ones going into the decision. tom: emily wilkins with bloomberg in washington joins us. how does the dialogue change of the midterms given the friday the second and the tuesday after labor day schumer emily: i think the big -- after labor day? emily: when i talked to lawmakers campaigning, they say they hear it a lot. even though the biden administration has tried to point to low on up limit numbers and look how great the economy is, americans aren't buying it and republicans know that and they have dug in on the issue of inflation as their main messaging point. democrats have the side of relief to see the inflation numbers be flat in july.

it will be interesting to see what the august numbers are. that could throw a grenade into the argument should inflation go back down. tom: what is the quality of the polling now? do we know whether races stand and we have a better look at that in september? emily: the polling for the last couple of elections has not really been terribly accurate. last year in 2020, it look like democrats were on track to have wins down ballot. but if you look at members of congress, republicans had a great election and the polls didn't reflect that. there been a mix and trying to figure out what polling needs to

do. there are lots of questions. take the new york special election. i think there are only so many ways you can measure an election and pulling is still a tool that we will use in washington. lisa: we were speaking with maya macguineas with the committee for a responsible budget and she was talking about whether the student loan belief will actually get through in terms of legal challenges. can the president do this is the question. how likely is it that this becomes law given some of the legal challenges? emily: i think we can definitely expect legal challenges. biden administration argues there is a precedent in allowing some the student loan forgiveness and relief in an emergency. the biden administration is

attempting low unemployment and on the other hand they are saying they need to forgive student loans because folks don't have the ability to pay them and delaying those. it is sent tinley -- it is certainly something to watch as it goes to the courts. it will be interesting to see the timing on that because certainly folks will be able to start applying for forgiveness before we see things going through the courts. lisa: i ask this because it is incredibly controversial and we will be speaking to a host of people pushing back. we say this is adding to inflationary pressures at exactly the wrong time. how much does that impede the political date is the economic when we are having here she mark emily: the fact of the matter is that you are hearing from

economists who say it will increase inflationary pressures but also from other economists who have argued against it. what the biden administration is looking at is a purely political calculation, play for young voters and progressive voters and a way for him to say i kept my campaign promise on that. it is already an issue for democrats. the worst it gets, the worse it looks. expect this decision to continue to be controversial and if it does wind up raising inflation, expect republican against pounced on that. jonathan: it is the number one question we have asked, is the calendar on the side of this white house? if the midterms were in

february, march, april, i think we would talking about a very different result than the one we are potentially talking about right now. tom: there has been a lot of times that question had to be study and asked and has been analyzed over a given outcome. it is not common to see that but i don't think inflation is the biggest topic. jonathan: what do you think is? tom: crime and i think the abortion decision. we have not talked enough about crime and i'm uncertain if crime is resonating. lisa: i agree with tom, because the parties are pitted in terms of where they place the blame for inflation. the marginal issues, including education will drive that. i do think that your question about his timing on their side of good one? i say this not necessarily in a pejorative way, but relief of 72

straight days of gas price decline and how much does that factor in? jonathan: how dues anchors spent -- how do news anchors spend time in the rain and cold? tom: the wind has come up but more accentuated because jackson lake. it is in high tide. jonathan: futures down .4%. this is bloomberg. ♪

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cracks we are alive. here is the price action. going into chairman powell, little later, equity futures are different. down on the session, down on the week by .4% on the s&p. a similar move on the nasdaq 100. you can see the bond market. you will notice the two-year is close to 340 for most the week.

330 seven, yields basically unchanged, and higher on the longer an. >> the 10 year is three .7%. >> it is to 99, and a cup of coffee. >> a bond market. is the bond market speaking? >> i'm sorry. >> i don't tickets funny. they came to the set, and now, look how weak it is now. >> they're showing toughness. >> is that the theme? >> joining us now, as you know, from doing going, when you are a child, the wind came off of kenmore square, it moves up to the corner, you can top of a cold. brookline massachusetts. years ago. what in god's name? >> what happened. >> my luggage is this big. there is no room for a code, but anyway, nice to see. >> we get a chill from sherman

powell. >> he's going to take you into the warming embrace. >> he's -- this is an important conversation, but this is the most important conversation today. don't tell jason. howard davies was just on, and confirmed that it is a 4% inflation. it is courageous. you have led a charge, globally in support of olivier. you go to a 3% number. when will we escape from the 2% fortress, the box we're in? >> in my view, we have an opportunity to do that on the cycle. the central bank, the fed, but they won't do it. they will knocked on inflation, it will be paid for, they will get it down. a year from now, inflation is going to be well under five then, it will be how much do you grind out the economy further to get to two.

if you're smart, and you do the right thing, at that point, you are 10 years back, and it will be very slow. not pushed to do. >> the denominator is time. goldman sachs says there is a solution to extend out to a longer duration. fiscally, it will be a longer duration. can we be comfortable with the inflation, knowing it will extend out and give us more stability? >> yes. nothing is guaranteed, but we can be comfortable about that. in the central bank, with the fed, on the short end, it will do whatever it takes to get inflation from eight to nine and starting with a foreign going down, and there will not be any credibility issues. it will be back to normal. it may not be back to the golden age, but back to normal. the big issue is what happens

next. if were in a world of negative supply shocks and rising energy prices, shortages, in part because of deglobalization, the question becomes if it is the right way to go. >> what is the right way to go? >> i've been trying to work on that. i know that others are starting to think about it, but i have no sense that they are grappling with it, partially because they have something else to worry about it partly because they all feel they did a strategic review and we got burned. you have to start thinking about these things. due to climate change, due to conflict, and everyone trying to look after themselves, with energy and food and vaccines, many you have a world with a lot more frequency, and you have stuff trending up. maybe it changes the definition of the target and the coronation, and maybe you change your forecast communications you been trying to section off it

one way to go, this is something that howard talked about is that you need to have a fiscal monetary accommodation to deal with, change, specifically. the issue of bonds, and green bonds. and you start to separate that out. separate out which should be a rising energy prices. >> and hearing the end of central-bank independence. set a fair assessment? >> i don't think so. i think it's a risk. you and i, while tom and i, you are too young, but back in the noble financial crisis in 2012, desperate >> i was wrong for that. really? >> well you may recall that i was saying to our friends not to be a teenager. the teenager thinks you say no to any you have to do something. independence is saying i will do something if i think it's in my interest. the central bank can coordinate. it just has to not be forced to do it. >> you started this conversation by saying we will hear the warming race of central-bank

credibility. i don't understand that. >> what does that mean. they are fighting against for the market is doing. >> i was being facetious, but the reality is that if you listen to what you just said about the yield curve, they probably have it right. they probably have it right that the curve is inverting, the short end is higher than the long end, and the shortened seems high, but it's not that high. were not talking em high. we think we are getting to roughly 4%. the market says a lot of stuff, and trace a lot of stuff. financial conditions go back and forth, and i know you talk about this. the fact is, that is not something for the central bank to micromanage. let the market figure out that the fed is on this path.

the last chair powell says with the vehicle both to the jackson hole speech, the better. >> one of the big questions is the balance sheet, but also the protracted inflation. what are we looking at russian mark we could hold at 3%. do we hear that out of the fed. is that something -- how do they address how much higher inflation could be over the long-term, due to deglobalization. >> i'm not on the program. i'm just a participant. but if i had to participate with the fed, i say that should be next year's topic. it is a world of, not just this discussion of constraints, but this year's topic, and talk about shock. talk about more frequent one-sided shocks. talk about a world word deglobalization shocks matter.

i will be speaking at this conference and a couple of months. anyways. we have to get ahead of that, but for political reasons, it's a good political sense, and we can't just go around talking that conceptually, in a few years, >> they didn't talk about present fed presence. >>. . does pal just say enough is enough? >> if he could have. >> who tells him that. who was a cork in the mouth? he said to me this morning. >> every day. >> look how well it works. >> i was considered a loudmouth in the bank of england, --. i thought that was danny. i do know that was you. if you look at the frequency of the conversations i had, this teaches -- the speeches i had.

, it is more than what a fed president does now. >> if the fed chair does think there is too much communication, why rock cap that in history. >> i think there are two reasons. the first is there is a ratchet effect on communications with twitter, which has kicked me off for the reasons and has a backend. there are always people bubbling up and saying why are you be -- wire you not talking. why are you not behind closed doors? it's a ratchet effect. >> i will be the first to say. what are they doing? why are they talking to you? >> they are talking too much, and it is about distinguishing the chair talking. it is not too much. it is other people talking. >> to your point, much what they can do about that.

>> i don't talk to chair powell about this. i'm not channeling him. but if you go back, it's clear that bernanke and chair powell have all been frustrated by this. at the moment, it's less harmful, because the entire foc is singing the same song sheet. we have mary daly -- people are out there talking quite hawkish. no one is undercutting the message. it's less bad than it usually is. he would be better if they stop. this popped into my head. for those of you on radio, this is critical. dr. pozen looks like one of the show managers for the glastonbury. >> that's what you think? >> can i also clarify that you were thrown off twitter because you didn't do something wrong. you are hacked. >> i was hacked at >> just before people start making comments. >> i was hacked. twitter is not, despite my blue check, they're not getting back.

>> of twitter is listening, >> thank you for giving me this time. >> congratulations for extending this important debate of who we talk about from 2% to 3%. >> to the point, they have to acknowledge that idea. next it is counterproductive. >> it is something for the future. >> the last thing on that, thank you for the backing on the more wing to slow, the twitter point, the important thing is that i don't want chair powell to overcommit or feel he has to do too much because then we are blocking off the future. in other words, i don't want him going out there and saying 2% means 2% a. if he does that, it's a mistake. >> fee make sure he gets one of our releases. >> not to ruin it. >> thank you. >> fantastic to see you. >> as we look ahead towards

wyoming, we are going to see that take place at 10 a.m. eastern time. 8 a.m. local. >> it will be critical. futures are down. from jackson hole this morning, good morning. this is bloomberg. >> keeping you up-to-date with news from around the world. i am pretty forgive to. for the third time congress members are visiting taiwan. marsha blackburn is on a three-day trip to the island. that is likely to further test washington's tense ties with beijing. earlier this month, nancy pelosi visited taiwan, and she found this answer. two weeks later, u.s. senator edward markey led a delegation to taipei. next hong kong is reinstating some of its restrictions. there will be mandatory group test in antigen test. recent outbreak is putting the

health care system under pressure, forcing the government to take action. blackstone is the latest institutional investor to take away the overheated housing market. the landlord owned by exxon says it will stop buying homes and 38 cities, starting next month price growth and market demand are increasing factors in this decision. they operate in more than 80 markets. t-mobile is teaming up with elon musk for the remote parts of the u.s., and the coverage is spotty. they announce that partnerships with spacex in texas. the satellite service will work during hurricanes and natural disasters did they will knock out cell phone towers, and that will ultimately save lives. global news, 24 hours a day, on number quick take, powered by more than 2700 journalists and analysts in more than 120 countries. i am pretty could object, and

this is bloomberg.

>> we always talk about the least risk. it would be slightly higher inflation we had rather than deflation. that's where we are at. core inflation, we believe we have hit the peak of it. we will find it eventually. >> the reserve bank of new zealand, and the governor of jackson hole ryoma. doing the rounds as well. >> haven't seen him, but in weren't intendants, and we will do the photo thing. >> like the queen. >> lisa could go out there.

>> we need to give you a weather report. 45 degrees here from when we started. we are helping jon ferro. >> we need to give you a weather service. >> eight or nine degrees celsius. just to help us. >> that with the temperature is four degrees celsius. excess particular access wyoming. >> it is close there. >> i can't believe you're anywhere near. >> to ours in 10 minutes. >> we have three klutzy. >> let me introduce you to the set. >> to the cameraman. >> eastern time. his eastern time, 10 a.m. eastern. you will hear from the chairman. >> wheezed have will kennedy. it is not funny, in europe right now. on energy prices. it is a moonshot to the sky, and we all know, prices always

break. how or what or when to these parabolic moves in germany, france, england, how do they break? >> it's difficult to say. i would start by saying they continue to go skywards. about 1000 euros, for the first time, and that's well over 10 times what it was a complete change. several hundred dollars a barrel. more than $500 a barrel. in oil terms, and must break eventually, because people cannot of were to pay these prices we are seeing people shot factories and fertilizer plants. aluminum plants, and they're starting to shut because people won't pay these prices for electricity, so that's how rakes. it breaks to see that accelerate. >> >> difficulties in the u.k..

talk to me about this. the difficulty to face winter, or more so in the are to come. >> every six months, or three months, a maximum average price with gas. that's about 1200 pounds, today, three times that. where than 3.5 thousand pounds, more than $4000. for the average household, that is a huge amount of monthly disposable income in energy costs, and it is going to be very hard for. there will be a knock on effect for the economy because every pound spent on gas is one less pound spent on popes, supermarkets, so it's a huge problem for the next prime minister, and could accelerate inflation. we have an inflation forecast of 18% later this winter, for citibank. the political response has been

very underwhelming. we don't know who will be prime minister, and both counts have not put forth any proposals of what they will do to ameliorate the situation. >> right now, we empathize deeply with what it could feel like. it seems unsustainable whether there is a discussion about usage ahead of that time store up more supplies. we've heard about this in germany, for example. how much is that in discussion? >> it is happening in two ways. for market-based mechanisms, and the people with electricity, and policy proposals with thermostats, and streetlights, and less time. as we get people into what -- deeper into winter, we will see conscious policies and market-driven responses. we will see more of those things that it will be a darkened. that is for many european countries.

politicians will have to start more with sacrifices, but they will have to step up with that in the. >> i oil engineering textbooks say that oil is a global price. i gather there is a war, and it is serious. but if the global price is broken down, and the agony have a parabolic price. >> it is a huge arbitrage there, and the market cannot close it. in the market, you cannot close that. the have record exports of oil and diesel. gasoline, but you cannot do that for gas and power. as much as possible's being put on the water because it is not able to close the arbitrage, but we will see higher prices, but will they rise to meet, it is

impossible for that to happen. there will be linkages, but they don't exist for gas and power. not in the same way to do for oil. >> thank you the difficulties of european energy and what it means for the consumer. we need to talk about what it means for the central bank it we are looking ahead towards a decision on december 8, and the bank of england. what does it achieve? in this world? >> that the issue with they cannot do anything. that's the price of gas. with russia invading, i will point to they respond to this. can he take the long game? and they take the approach? >> they don't have that luxury. he is out of service, so we can talk and they have to act, and that is different break next we are looking over the right

shoulder, there was a beautiful view of the mountains, and we can see there are four guys in a room, and they are major in rewrites. >>, starting rumors, but every sense of the speech, they have to worry about the speech. >> will there be some kind of reaction to the reaction we have? >> yes, in some way. there has to be. >> they haven't touched on it. the potential disconnect and what the market is pricing. they might push back will be. >> there is not a disconnect it the market got it right. this is something we heard from other people. we see in the bond market in the yield curve did what pain is required, and they're pricing that in. >> one sweet, moments ago. >> one question. why is colombo joining you? >> i can't dashcam or three --

it is getting me through the morning. x camera three is over here. i'm frozen. i can't turn to. >> why is colombo joined us today was mark we don't know. >> we have no idea. >> did colombo do the weather often? not much. it was a comedy show that ran through 2003. look it up. doppelganger. >> i can't turn. >> he's coming up. will are looking forward to that. we have to host a fed speaker for you in the 9:00 a.m. hour. next this is cold. >> you know what? this is bloomberg.

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>> this is the time in the economy with both significant uncertainty about inflation, and recession. >> will they hold the fed funds rate constant question mark >> it could be well over 4%.

i don't think that's out of the question. >> they are trying to tighten the conditions to slow the economy down. not just a little bit. >> i know what they should do. they should not blink. >> this is bloomberg surveillance. >> i used to love colombo. it's a great show. >> are still on this. >> jackson hole wyoming. good morning. for our audience worldwide, on tv and radio, i'm tom keene, with lisa abramowicz. we are counting you down to an address from jay powell, taking basic couple of hours from now, right here. the fed has a lot of work to do. inflation is a .5%, and the speech from 12 months ago, from this chairman, it failed to capture a moment. >> i've seen on every news source, and the conversation is here. does he drop in a sentence or two, not of apology, but just to note that it got it wrong?

>> with bloomberg opinions, maybe we should have the grand mia coper, an event like this. >> lessee does that. what do the transition to? now we are not getting forward guidance, even though we get a lot of discussion, it may be too much, as we were talking earlier. what does it mean in terms of the new regime, if it's not a transitory mea culpa? >> even asking this question, and how long do we hold? hold is something we've heard repeatedly through the week, and a little later, we will have a range of fed interviews, we will catch up with the president. president bullard. frontloaded. are we paying attention to communications from certain fed presidents? do you think it moves. >> how much does the front loading bacon? the front end of the yield curve is moving, and on this point, is

this a market listening to what the fed is saying, and pricing it in accurately, rather than not listening. >> the president will join us. >> i'm sorry, but people like andrew hallman or grew up with other worthies, and we have done the work and the math, and this is a level i have to go to, but on bloomberg economics, even above all in order, up to dare i say fortified. >> fed funds our focus this year on the end of the year, and they have another basis point move. you've mentioned it a few times. a lot of people would agree that this address should not be about the september meeting. an address like this one, given we will see if the first time, is an event. it has to be about more than one meeting. has to be about a bigger picture. a framework. >> what are we looking at the end goal of inflation? adam said something. it is off-the-cuff, but it was

the most important thing that he said. if this fed chair comes out and keep saying, we will get 2%, we will get there as quickly as possible, that will be a big deal for the market. how much can they say they are aiming for 3%, but still get the message across that we are not gung ho. >> do you get the feeling that they get onto the bloomberg afterwards and check to see where their trading? do you feel that is a feature of this? >> that's a good russian. if they do that, what do they want to see? what they don't want to see, we thought, was the market rallying because that eases conditions. what are they trying for? >> to john's question, they are looking at the index, with the imf. michael rosenberg invented this, and it's fancy. it is not cooperating recently. >> you know what i love, and i last mike to do this, but if they will just tell where the trading is?

as a news conference, that would be great. for the last few conferences, what is it like? 3%? >> they should have a ticker that shows the response. >> you think so? >> a news conference. we still have what is happening. >> for those of you on bloomberg radio, with our wonderful gas, i think this is really important. we are moving around like a hockey bench at yale university four years ago. the coldest rink in new england --. >> were moving back and forth it next is a hockey bench. the wind is coming off, and it's like 10 above zero, and i'm worried the pup will break in half. >> were all just like this. >> is 39. >> danny joins us now. and let's start right here. the chairman will speak in two hours. what would you like to hear from the chairman?

>> i think he will repeat what he said at the press conference at the end of july. less than a month ago, i don't think there will be a radical change, because what have we really learned from this? we've learned that the labor market is strong, we've learned that may be, inflation is speaking, but it remains high. i think he will say the same thing. he gave us forward guidance at the press conference. the economic projections. that is what the committee thinks about the fed funds rate. he's talking about a three and half percent on the fed fund rate the end of the year, and 375 to 4% by the end of next year. >> for the youth financing, let's go back to the days of cj lauren. is disinflation from the 70's?

>> this is a tv show. we are on fast-forward. the 70's was a long decade that was basically called the great inflation. started in 1965 and it lasted until the 1980's did i think this will turn out to be like what happened after the soldiers came back from world war ii. we had a huge demand for durable goods. it took a couple years to retool. i think this inflation has been consumer durable it. it is not that different. we have an energy component to it, and that will moderate it this is not going to be a great inflation. i think we have seen the peak. this is moderating, and i think we can all look forward to that.

>> what do you think of the adam pose an idea? we have to tolerate a 3% inflation rate. the fed how does that shape the view among what is accepted versus what they are saying, which is 2%? >> i've been thinking that there is just no way they will get inflation down to 2% anytime soon. i don't think it will happen this year. i don't think it will happen next year, and maybe not the year after that it the problem is, rent inflation is sticky. we know that a lot of people are seeing rent go quite a bit. the only show the total pool of rent, and it doesn't show what is happening on the margin. right now, rent is, depending on what you are using, basically going up four or 5%, but on the

margin, they are going up 10 to 20%. that is going to be reflected over time. they are going to have to change their tune here. they will conclude that maybe 3% isn't a target they want to reach, or they will exclude rent. >> let's talk about the equity market and finish there. i quoted a piece of little bit earlier in the week about what you had to say about the dollar. something we talked to lots about this week. the dollar is stronger. what does that mean for corporate profits in america? what are we underestimating, and what does it mean the equity market, and what you want to avoid? next first and foremost, it is the equivalent of at least a 50 basis point rate hike, and it is equivalent to that i think that lowers the terminal rate.

corporate profits, we've seen like microsoft, and the dollar is going to take something away from profitability. that will happen to most of these multinational companies. a significant part of the revenues from overseas. thank you. that point on the dollar, is a two punch combo. a double hit. you get a hit from the translation effect, and you have a much weaker currency. then you have the economy on top of that. >> is pretty brutal. >> how much is this exacerbated by the flight to safety, and how do you deal with the fact that there is no other ways that they are going to? >> i love that. tom leans over to me in the interview, and he blows whatever's in there, he says hot tag. >> >> hot tag?

>> how do you focus. you are dialed in for three hours. next you have to be kidding me. it is quite good. >> an interesting headline. it calls for an urgent meeting. you will see way more this year. we have the same question there's a lot of doom and gloom, and it might seem like that, but with the price action, and things like european gas, if you see what's going on with the bills, and across europe, i think it is fair to call it exactly that you did european leaders are trying to treat it like that. >> the point we haven't discussed enough, and it's a dynamic we need to hear more about from august to september, that is the kind of thing that we need to implement with lessee makers to pull back on consumption. we will see a lot more of that. >> what can they do other than

psychology, and i daresay, they have the pandemic playbook. the pull back on consumption. >> although, you do wonder, why would they be more aggressive, given that they are saying they need to conserve more. >> i'm not going to sink, but their ice crystals around the moon it works futures are down. this is bloomberg. >> keeping you up-to-date, with the first word. they are suing for the vaccine market. they are peaking in losses, against pfizer and be. in the united states and germany, they are violating patents of protected rna technology. they are not asking for them for

the market, but the sales are that they are seeking damages. it will start on march 8 we had the ukrainian president is forcing a call for russian troops to withdraw from europe's biggest nuclear power plant damage to transmission lines on the occupied territory, and how supply. they say they are trying to prevent a nuclear accident that could impact all of your. it happened in march, and russian troops swept through. they are lining up interest for an initial public offering. there was a luxury automaker that could have a valuation of as much as 85 billion dollars. it would be one of the biggest listings. a big-name investor reportedly will include a price. the ipo could happen in early september. local news, 24 hours a day, on bloomberg quicktake, powered by more than 2700 journalists and analysts more than 120 countries. this is bloomberg.

>> they are trying to tighten financial conditions to slow the economy down so much that inflationary pressures abate over time. that kind of slowing growth, slowing and spending, it cannot possibly good for earnings. the solution, and i agree with that, slow the economy down. it is going faster than it can possibly be sustained, long-term. that was our chief global economist. good morning. i'm jonathan ferro. price action is shaping up. equities are down on the s&p 500. let's get it pushed towards

that, and i said to abramowitz, why are you doing this? >> what are you worried about? you can't leave me alone with tom. i need you to be ok for the next couple of hours. >> whatever's in the cup, you can't. >> what is not cup? >> hot tag. >> there was a subscriber who just message me. before we get to our wonderful co-founder investor, a genius has been hidden by a frumpy and disarming demeanor, and with the economy, is turned into a false sense of security, like lumber. >> he was a genius. >> let us begin with something we've really been cognizant of. it is about economic growth. you are providing global leadership and you have screamed

don't forget en, don't forget third world and the link inextricably to who we are. how do we respond to the debates, including what is going on? >> i think the fundamental problem is that we are all obsessed about this, and rightly so. we should care about that, but with that, we forget about growth, and this is the fundamental problem that will be problematic in your. as you highlighted, in the emerging markets, with real consequences to the west, immigration, migration, but across europe as well. the effect of food and inflationary pressures, and the demand and supply leading to these bigger problems. >> do you see those issues, and

great to have you with us, is one of issues? something we can deal with and move on? will this be with us long time? >> a long time. even before the pandemic, there were a lot of structural problems that were deeply creating problems for the global economy of that time. like climate, things like technology and the risk of a jobless underclass. inequality. it was already pretty long and problematic, and then you have a pandemic. inflation is really exhilarating, i would argue, with a direction into a much more problematic low growth environment. that is well accepted around the world with no real solution to addressing it. >> and want to pick up on that. you were writing an article where you said you expect inflation to be higher, and more stubborn, in the single digits. or percent or 5% for a long. of time. how much is this lysed?

how much expect you get russian mark it is a consensus idea among your peers. >> if you look around today, you will see this with rich water. there was stubborn inflation, and it's because we have supply-side, as well as demand-side, factors driving inflation, and while it is true that the federal reserve can do a lot to attack supply-side aspect, the demand-side aspect of balance sheets, in terms of raising rates, we know a lot of the constraints are outside of the purview and mandate of the fed that is where the problem emerges. >> do you think jay powell agrees with schumer >> i think he is aware. he is aware of these issues. but i think, in the narrow sense of the mandate, and i have not into him, but i saw him at chris, i would say that in the narrow sense of the mandate, there is a broadening acceptance that the model is flawed, and

the 2% band is probably on pace. >> were you just have breakfast? >> yes, little ago. >> greater than 2%? what does that say. x exactly. >> i've a question. you have a conceit of modern em, but this time is different. emerging markets are stable, with a better debt structure. i don't buy it for one second. asked what is the vulnerability here, that they have, that's unspoken in 2020 two? >> a simple word. china. they are vulnerable. china is the largest trading partner, and lender to is already of emerging market countries in south america it that is the problem. a week china, which we know is weak, leads to anymore problems and effects, and we are not seeing these crises emanating, but beyond that, to a week if of

emerging markets. >> how better things in china? asked typically, we used to look at this like if it is good, it must be really bad. what is the story now? >> i think everyone is looking to november to hear what the recent looks like it i think the numbers coming out of there are very strong since they started with a political class and their announcing infrastructure investments it it is becoming aggressive. they are worried, and not just because of china, but the knock on effects of the global economy and i think, frankly, we all want to be worried for a longer-term tenure. in the in term, the covid approach, and the week this with the economy, we should be this -- concerned about. awesome as always. thank you for catching up with us. two pieces from that.

it could be in the single digits, and we have to factor in growth, with much more material. a big piece of that. what we've heard from doctors and others, is that we have a sentence today in the speech where we finally say, we need to extend the duration of our study. no is doing that. james bullard wants to frontload. frontload into what? frontload and wait. we repeated this all week, and we've had a lot of that. >> one thing people have been saying is that they don't give forward guidance. how do we have a framework for responses, if we have no sense of where they light in the debate of patient and how attractive it will be? that is something the market is grappling with a >> do think they have an office of or guidance? x i think the work of how they think about inflation, and whether they agree with what we are talking about, with a four 5% inflation rate, for years, i

think they are that into a model. next what happens if unemployment climbs? inflation is still sticky smart what do we do. >> it will be addressed today, but what he will say is that we will hear this type times date we are data-dependent. it's widely known. forward guidance. you know it is important? we have an email. >> is this important smirk >> it is not. >> the sun is rising. >> the sun is rising. they timed it perfectly. the sun is rising. excited to do some reporting. keiko at brett chairman al? no be valuable to everybody. >> breakfast. >> i'll be back. (♪ ♪) (racing sounds)

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>> live from jackson hole, good morning. in a couple of hours, we'll hear from the chairman of the federal reserve bid that will take place at 10 a.m.. 8 a.m. local. just about 90 mins way. futures are negative by about a third of 1%. bouncing back to little bit, and down by about two tents of 1% or so. a host of economic data need to bring to you.

data served, and i would like to deflate, year-over-year. without having it available, we do have personal income. this is breakfast. you can have that in a moment. comes in it 2.2% because an estimate of 2.6. spending against 2.5. i can get you a deflator now. 4.6%. down for point. bit softer. i guess an estimate of 0.2. i'm surprised, but the equity market is bouncing back. the yield of the front end on the session by about a couple of basis points. >> you had a good downside for inflation coming off faster than expected, it is interesting to me about the little expend figure aspect. personal spending came in at a

0.1% gain, and it really was underwhelming it how much does that speak to the week is? asked that is a cool deflator. year-over-year. it is down 6.8. month over month, negative. the previous month was 1.1%. that is how punchy june was, so this is july data 0% was the estimate. looking at the inflation numbers, we are softer off the order, there's some indication of why we are reversing losses this morning. next forward guidance has disappeared and data is what matters. >> i was state, one month. >> but a series of data in this historic fomc meeting. >> we are thrilled to welcome a contributor, which barely describes this opinion. a public service as the president of the new york fed. bill dudley invented economics,

we are thrilled he could join us today. x why do we still need to be so strident about raising interest rates? >> that is not getting the job done. with inflation, the expectations will become unanchored, and the federal reserve will have to do more. we ran this experiment in the 1970's for the policy was tightened, and they had a recession. inflation came down, but it was not enough to everyone thought inflation was higher, until paul volcker came in, and they had to do a lot? >> the john taylor of stanford, he did on the need to be responsible and get back to 2%. the work of 2008 and 2009, and in england, they agreed with

adam posing, sitting in the chair, saying that 3%, eating a public reason that we must get back to 2%. x if we get back to 3%, we are hanging out at 3%, and the next thing is that we take inflation back up again. you ratify a higher inflation floor, he gets expectations and it gets into wages and we are off the races. that is the problem. >> you knew you were going to 2%, there was no problem. if you are a 3%, the next move is up, then you are back in the 1970's. >> you think the bigger mistake is to do too little, not too much. next the mesh and we will hear from powell is why inflation needs to be brought back down, and what will be required to do that it i don't think it will focus on what will happen in september. we are talking about what we need to do, why we need to do it, and what the alternatives will be. >> is two ways of doing this. a simplistic way, and then

there's another way of saying that you get to that kind of trajectory where you start to see things moving back towards 2%, even was. can you help me understand things, and what we should be looking for in the next few months? >> once we get to the tight monetary policy setting, which were not at, there will be an ability to see the tightness of military policy, and it is accomplishing a mission in the labor market, which is what is needed to push inflation down. the problem is, this is bigger than the problem of your ago. it is too tight. unemployment rate is too low, it is hard to talk about that because if it is too low, it will put people out of work with it will have to get back down to 2%, but that's the fed's problem. we thought it was transitory inflation, but now are fighting a bigger problem amended late work it is too tight, so we have to slow the economy down to push it up. somewhere in the range of four

to 5%. >> you've written a lot of columns, even highly critical of this current fed, and what they've done, and how they have you negated the pain wired, but how has the reception been at this confab? >> i think people understand that i'm not making my criticism personal. when the fed does a good job like in the early days of pandemic, i have been so or of those actions. they start to call it as i see it. balls and strikes. if they do their job, i will tell people they are doing a good job, and if they make a mistake i will talk about that well. with respect to the bigger and work we are with you, we are talking about inflation rates we can expect in two years or three years. the idea that maybe it is not 2%, but it is 4% or 5% some of the structural strangers, how do they prepare for that area what is the likely policy response we can expect?

next if it has fundamentally change, if it needs to be on short, that will cause productivity growth, and higher inflation pressures, they have to respond to that it interest rates will just be higher than they were following the great financial crisis. they are looking at the last cycle is a template for what we are looking at, and it is quite a different place, given all of the things happening. quick so many people say we will survive. there is one group that says will come to an end with an ugly outcome, but you live with this. how does the dudley rate regime affect investment and trade it >> people are overwrought rid the economy has a lot of positive elements. they are in good shape. were not talking with the fed trying to generate a deep recession.

we are nudging up the unemployment rate to push inflation down of it. as we saw, it comes off quite a bit as you unwind, and in this debate, it is oversimplified. there are elements that are transitory, and there elements that are much more built into the system did in terms of labor market. >> to think, this is less than interest rate sensitivity than some people give it attitude it can it sustain the kind of rates at 45%? >> let's refract -- reflect on history. if you look at 2004, it is five and a quarter percent grade >> we didn't have as much. >> but then, it is mostly of the federal government level, not households and businesses when you think about the pandemic, the government hands out a lot of money, and the government debt went up, but household and business debt is not in a good

or reasonable shape. >> can i squeeze this in? we have fed officials around us. do they speak too much? i have a question from a subscriber do we hear too much from the regional fed presidents? >> i think it's fine to give their views. the audience should understand who is important, and who is important are jay powell. >> let's continue this? >> who is important? >> anyone else? >> i think john williams and lael brainard,. >> just so people who don't know who he is, it is a former fed president. >> i can't spell that. >> he's a key person. that's why it will get so much attention. >> the heart of this matter, with your academics virtually, you just mentioned a group of people skilled in phd's qanon mix monetary policy.

are you suggesting there is a two-tier central-bank structure of the phd's in monetary theory, and everyone else? >> i'm saying there are a few key seats, the german sea, the vice chairman, chairman of the board of governors, they are more equal than others. >> let's see >> we don't see much dissent because people buy into the transitory inflation story. a year ago the speech was correct. there was a shift in demand from services to goods. it did upwards pressure. we knew it was going to research -- revert, but what the fed missed was the labor market. it was tighter much sooner than expected. >> did all of us, including servants, were they slaves to create a measured approach. were we so indoctrinated that we couldn't get away from it >> i

would say is more funny. we went to be careful and cautious, and the focus was on getting inflation up because that is problem. but it turned out it wasn't that way. >> as you said, were not going back to that and i think were not going back to that. >> were not going back to but we will see. >> a former new york fed president. great point you raise. >> this is the fundamental question. if we don't go back to that, that's what was facing this whole premise on. if we don't go back to that, how much two markets have to readjust question mark how mispriced are the aspects of this market. >> every time you get a rally in the market, where does it come from? >> the nasdaq, this idea that we can get back to that. fascinating stuff. chairman powell with one hour 20 ms. way. it will be nice walk.

we'll have a nice little walk, it will take a shot at that did >> he's practicing that. >> let's walk with that. from jackson hole, good morning. >> columbus. >> exactly. he could play colombo. >> we are keeping up-to-date with news from around the world. i'm pretty takei good to. >> within vaccine market, we have patent infringement lawsuits against pfizer did in the u.s. and germany, there using the two of filing patents protecting key elements of the rna technology. they are asking the courts to pull this vaccine from the market. and not to block future sales. they are seeking damages, starting march 8 did beijing has reached an agreement to allow officials to review documents.

it is the first step towards avoiding the delisting. the deal marks a breakthrough of a decade-long standoff. it is threatened to delist alibaba and others. in india, they have curbed food markets. it is considering a move as local prices soared. global rights trade will restrict things with a further blow of the cost-of-living crisis. germany is considering restricting companies able to benefit from a new gas levy. just to those who need help. they face scrutiny, following an outcry of soaring profits at some energy companies. germany initiated a plan over concerns that gas companies could trigger wider disruptions to the biggest on the. global news, 20 for hours a day, and on quicktake, powered by

more than 2000 journalists and analysts and a hundred 20 companies. this is bloomberg.

>> the pressure to get back down to 2% is going to involve some very unpleasant decisions by the fed and the bank of england. what i'm concerned about is that on the current regime, the central banks are set up to fail. i think that would be a bad outcome. then, it would be putting at risk, the whole basis of independence. >> are chairman, with the deputy governor. thanking them. i'm not sure if the microphones pick it up, but the fed president for moments ago, saying that he did look like colombo, he should go to chairman palance will more question. >> it was great. >> on thinking it was a perfect

idea. >> are killing me. i've never seen colombo. >> you must have. >> we did have a tv. we did not have a tv. >> you had replaced. >> but all we do is watch red sox baseball. access miserable. >> it would be miserable. if you are to get personal, it was a miserable childhood. >> as we continue, we have a data check it >> the 10 year is up. we had some pce data, and the yield has pulled back, but not for long. >> we are seeing on the two-year, back to 337 on the equity market it to tenths of 1%. understandably, no big moves. in our 11 ms. way. one to the present, and one to the past. we will cap with david. he is one of our presidents of the world bank, but also on the

high ground it first, we need to go to the immediacy. you arrived on set because you cited a grizzly bear yesterday. did you have to run? there was a briefing right there. >> i was in yellowstone's, this is incredible. i have to say, this is incredible. i watch this on colombo. without question, this is the truth. >> what is the last question >> we you are not supposed to run from a bear. >> there you go. news you can use. >> i want to go to this history. >> what is going on? >> i sat on this long with a profession -- professor from carnegie mellon, and he defended the fed in 2007, 2 thousand eight and 2009. what is the chairman need to say to reaffirm the integrity of the fed?

>> confidence is important. stagflation is hard to get out of it the fed, as it raises interest rates, it is fighting an uphill battle with friction in the global system. it would be one thing if people looked at it and could see the other side and say, i'm coming up with new investments to produce a lot more. that is and what the world is doing. you get a reduction in demand as rate hikes go through, but not getting commensurate supply increases. i think that is where the focus needs to be for the central bank, and especially the united states. this is the biggest economy, so how can it produce more of everything at a time when the world prices are high. what are the blockages keeping production from going higher? >> used the s word. is this stagflation? >> stagflation means higher inflation, and clearly, we have that.

it history books, we will market it, but my worry is for developing countries, and lower income levels, the stagflation may last quite a while. they get hurt because it hurts in a slow growth. >> they downgraded expectations for global gdp to 2.9% the year it we seen some pretty terrible data. we've seen some developments percolating in your. are you the -- lowering that still? >> imf is doing a forecast, but my worry is that things have gone worse from that already low forecast. in the second quarter, there was a -3%, year-over-year. it is difficult because of the shutdown. as we look at europe, they are trying to buy natural gas from around the world, the producers are not stepping up.

one of the challenges is how do you refill the storage that was trained by russia, the previous year? >> we are in jackson hole. what is the response mechanism the ecb with china on its back and the world saying stagflation is here at best. you see a pulse coming in strong. >> is not all on the fed. it is a range of policies. there is a regulatory policy and policy as far as the choice of the composition of assets, and is one of the topics that will be discussed here. it has a big impact on the supply side of the economy, and the government around the world as they advanced economies. it is the managing and using a lot of the world's capital for their own need. for government workers. that makes it hard for the new supply that is needed. the u.s. is a giant swing

producer, and you would like to see those numbers for the u.s., expected output, going up. this year, next year. >>, cannot speak, so i will ask what he was asked. what is the data? >> there are a lot of important issues as we think about how to invest. one is profit, and you want a world better. how do you mix that? i think corporations have to follow and look for their shareholders. esg and environment social, and development, governance issues, they are hard to tackle. world bank is a leader in that, and for the people in poor countries, it is really important. we are going to continue doing esg, but from a regulatory standpoint, regulators have to look at how we get more production in the world. >> you must have some way

forward in terms of farm machinery, so you can plan next year's, crop. that's not happening. >> president malpass, great to catch up. >> you have a coach -- give a good shot. a better view. it is getting better. >> worry about tom, who cannot speak >> we have five-minute gaps, and he is upset sometimes. >> guys wheeze one thing in? >> this is an incredibly important chart. >> yen and gold. is there a new commodity cycle? >> my observation is that gold is not going up, so that is a contrary desk comfortable sign. there is some weakness in the euro. there is more talk about currency stability. i think the central bank will look for, and they will say this not hyperinflation.

this is not getting out of control. we need more production. >> i thought you squeeze more in there. next we can do all of that. we built it. ask we will go back decades. thank you so much. >> a big one is coming up. about an hour away. >> it's an important speech, and we have people in the next hour defining what they'll be listening for. fed president. >> i believe with hercules. that's an i've missed time. >> a frontloading issue for him, and keeping rates longer. >> for the next hour, a host of fed presidents. >> can i just say? next president bostick. >> can i to say this is about surveillance, and winters here.

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>> this is an extended edition of bloomberg surveillance, with tom keene, jonathan ferro, and lisa abramowicz.