彭博市场观察：美联储加息预期升温，英国政局再动荡

>> WE STILL.THINK TECH IS THE DOMINANT THEME EQUITY EARNINGS WILL ALWAYS TRY >> >> THE MARKET. >> THERE COULD BE A NEAR-TERM CORRECTION. >> IT WILL BE A BROADER RALLY GOING FORWARD. >> THIS IS "BLOOMBERG SURVEILLANCE" WITH JONATHAN FERRO, LISA ABRAMOWICZ, AND ANNMARIE HORDERN. JONATHAN: LIVE FROM NEW YORK CITY THIS MORNING, GOOD MORNING. GOOD MORNING FOR OUR AUDIENCE WORLDWIDE. "BLOOMBERG SURVEILLANCE" STARTS RIGHT NOW. CRUDE INCHING LOWER, IRAN CLAIMING MAJOR PROGRESS FOLLOWING PEACE TALKS WITH THE U.S.. JUST DAYS AWAY FROM GETTING THE LATEST READ ON INFLATION IN AMERICA, TREASURY YIELDS KICKING OFF THE WEEK WITH THE HIGHS OF THE YEAR. THE TWO-YEAR, 4.20. THANK OF AMERICA LOOKING FOR 75 BASIS POINTS OF HIKES THIS YEAR. LISA: THAT FOLLOWS WITH WHAT WE SAW FROM DEUTSCHE BANK WITH TWO 25 BASIS POINT RATES COMING THIS YEAR. DETACHING FROM OIL PRICES, THIS ISN'T JUST AN OIL STORY. IT IS A STORY OF HAWKISHNESS BY CENTRAL BANKERS. THE WORST FED IS BEING SEEN AS DECIDEDLY HAWKISH. THE QUESTION IS HOW HIGH WILL THEY GO?

JONATHAN: BE CAREFUL WHO YOU LISTEN TO. LATER THIS MORNING, WE WILL HEAR FROM GOVERNOR WALLER. LATER THIS WEEK, WE WILL HEAR FROM GOVERNOR WILLIAMS. I WONDER IF THEY WILL BE AS RELUCTANT TO OFFER FORWARD GUIDANCE. LISA: AND WHETHER PEOPLE TAKE THE FORWARD GUIDANCE. WE HAVE NO IDEA OF WHAT WARSH'S POWER OVER THE FEDERAL RESERVE IS. I REALLY DO WONDER HOW MUCH SOME OF THESE FED MEMBERS ARE GOING TO DEFER TO THE FIVE COMMITTEES THAT WILL STUDY THINGS LIKE HOW THEY ARE GOING TO SPEAK TO THE PUBLIC. IN THE MEANTIME, THERE ARE QUESTIONS AROUND WHETHER THIS IS THE RIGHT READ. NINE OUT OF 18 MEMBERS VOTING FOR THE NEXT MOVE TO BE A RATE HIKE. NONETHELESS, WHO HOLDS THE POWER, WHO HOLDS THE CARDS AT A TIME OF DRAMA?

JONATHAN: INTERESTING TIMING. WE HAVE DEUTSCHE BANK, BANK OF AMERICA LINING UP FOR A CALLS. BRENT 79, WTI AROUND 75. CLAIMING MAJOR PROGRESS AROUND TALKS THAT NO ONE ON WALL STREET WANTS TO HEAR ABOUT. ANNMARIE: THE FACT IS WHEN YOU LOOK AT THE NEGOTIATIONS IN SWITZERLAND, THEY REALLY AGREE TO KEEP TALKING. THERE WAS A LINE OF COMMUNICATION THEY ESTABLISH FROM TEHRAN TO MAKE SURE THERE WAS NO MISUNDERSTANDING. WHAT MATTERS FOR WALL STREET IS THE FACT THAT MORE VESSELS AND CARGO AND PRODUCT IS GOING THROUGH. CENTCOM TALKED ABOUT THAT OVER THE WEEKEND. THIS MORNING WHAT YOU SEE IS IRAN RAMPING UP WHAT THEY ARE OPENLY SENDING OUT TO THE MARKET ON U.S. SANCTIONED VESSELS. JONATHAN: THERE WAS STORIES ON WALL STREET PEOPLE DON'T WANT TO TALK ABOUT. IRAN WOULD BE UP THERE IN THE U.K. WOULD BE CLOSE BECAUSE PEOPLE ARE SICK TO DEATH OF U.K. POLITICS AS WELL. STERLING THIS MORNING, 132. THESE ARE THE TWO STORIES PEOPLE DON'T WANT TO ENGAGE WITH THIS MORNING, BUT LET'S ENGAGE WITH THIS ONE. A NEW PRIME MINISTER ON THE CARDS. PRIME MINISTER KEIR STARMER ANNOUNCING HIS PLANS TO STEP ASIDE. LISA: THE LIKELIHOOD IS ANDY BURNHAM WILL COME IN LATER THIS YEAR, EVEN THOUGH HIS CAMP IS SAYING WE NEED TIME TO GET PROPOSALS THAT WE CAN DELIVER ON. THE MARKETS ARE NOT NECESSARILY RESPONDING TO THIS, ALTHOUGH THERE ALREADY HAS BEEN A RESPONSE. TO PUT INTO PERSPECTIVE THE BROADER SPHERE. SINCE 2022, THERE HAVE BEEN FOUR PRIME MINISTERS. THIS WILL BE THE FIFTH. EACH HAS LASTED TWO YEARS, THREE YEARS MAX, ONE MONTH MINIMUM. HOW DO YOU COALESCE AROUND SOMETHING THAT WILL BE LASTING, THAT WILL COME UP WITH PROPOSALS TO FIX THE DOOM LOOP WITH WHAT YOU SEE WITH BORROWING COSTS?

ANNMARIE: IT HAS BEEN DIFFICULT WHEN IT COMES TO U.K. POLITICS AND THE LEVEL OF DYSFUNCTION WE HAVE NOT SEEN. WE COULD SEE SOMEONE SOONER. WE COULD HAVE A NEW PRIME MINISTER 17TH OR 18TH OF IT IS ONE CANDIDATE. IS THERE GOING TO BE A CONTESTED LEADERSHIP RACE WHEN IT COMES TO IS IT JUST GOING TO BE THE MAYOR WHO IS BEING SIGNED IN AS AN MP?

OR WILL OTHER INDIVIDUALS THROW THEIR NAMES IN THE HAT OR TAKE OTHER POSITIONS LIKE THE CHANCELLORSHIP? JONATHAN: YOU MENTIONED BREXIT. ALMOST 10 YEARS TO THE DAY. THAT WAS A GLOBAL STORY FOR A NUMBER OF WEEKS. THEN IT BECAME A EUROPEAN ONE FOR A NUMBER OF YEARS. THEN IT BECAME A U.K. ONE THE BRITS ARE THE ONLY ONES TALKING ABOUT THIS ANYMORE. THIS WAS HIGHLY CONSEQUENTIAL FOR THE FUTURE OF THE BRITISH ECONOMY. WITH THAT, THERE CAN BE NO DOUBT. BUT IT IS CONSEQUENTIAL FOR THE REST OF THE WORLD AND GLOBAL MARKETS WITH ONE EXCEPTION, THE BOND MARKET. IF SOMETHING CHANGES, THIS COULD RATTLE FIXED INCOME. I HAVE NO IDEA WHAT THE PLANS ARE THE GOVERNMENT, WHAT IT LOOKS LIKE, WHETHER THERE WILL BE A SHIFT TO THE LEFT OR IF THIS BOND MARKET WILL PUSH BACK AHEAD OF TIME. 30'S THROUGH THE LEVEL ALREADY THIS MORNING. I WILL REMIND YOU THE BIGGEST FAILURE OF THIS CURRENT GOVERNMENT IS A YEAR AGO WHEN THEY TRIED TO REFORM WELFARE AND THE WELFARE BILL BECAME WHAT IS LATER CALLED THE ZOMBIE BILL BECAUSE THEY COULDN'T GET IT THROUGH PARLIAMENT EVEN WITH AN OVERWHELMING MAJORITY. THAT IS GOING TO BE THE TASK THIS TIME AROUND FOR A NEW PRIME MINISTER IF THIS BOND MARKET PUSHES BACK. LISA: HOW MUCH OF THIS IS PURELY A U.K. STORY WHEN MARKETS AROUND THE WORLD ARE FACING SIMILAR DYNAMICS, ALTHOUGH NOT AS EXTREME AS WHAT WE ARE SEEING IN THE UNITED KINGDOM?

THE IDEA THAT DEBTS HAVE INCREASED DRAMATICALLY ACROSS DEVELOPED MARKETS, FRANKLY NOBODY WANTS TO PAY TO REDUCE THAT DEFICIT AND THAT HAS BECOME INCREASINGLY IMPORTANT FOR THE MARKET. JONATHAN: COMING UP, WE WILL' CATCH UP WITH OUR GUESTS. COLONEL WAYNE SANDERS AS THE ROAD TO THE FINAL DEAL TAKES SHAPE. AND WE WILL CATCH UP WITH JORDAN ROCHESTER. WE BEGIN THIS HOUR WITH STOCKS. LITTLE CHANGE FOLLOWING TWO WEEKS OF GAINS HEADING TO THIS WEEK'S INFLATION DATA. THE SENTIMENT STORY IS ONE OF MIXED EMOTIONS, WITH TAKEAWAYS TO BURYING DEPENDING ON WHICH DATA SET ONE IS LOOKING AT. LORI JOINS US NOW. DOES THE BULL CASE STAND UP TO THE RATE HIKE DEBATE AT THE MOMENT?

LORI: I THINK SO, AS LONG AS YOU HAVE A MODERATE AMOUNT OF RATE HIKES. IF YOU ARE LOOKING AT IT FROM THE PERSPECTIVE OF THE FED TAKING THEIR INTEREST RATE UP OR 10 YEAR BOND YIELDS MOVING UP THAT WHEN WE LOOK FROM THE HISTORY OF ABOUT 2022, OR WE LOOK BACK TO 1990 AND FED MOVES OVER THE CONTEXT OF TWELVE-MONTH MOVES, EVERYTHING IN MODERATION SEEMS LIKE SOMETHING THE EQUITY MARKET CAN HANDLE. IF YOU GO BACK TO 2021, WE PRICED IN AN ENORMOUS AMOUNT OF RAKES. WE HAD A MASSIVE MOVES UP. IT WAS A REAL REGIME CHANGE. WE HAVE BEEN STUCK IN THIS BOND YIELD ENVIRONMENT. IF WE STAY CONTAINED IN THAT RANGE WE COULD HAVE SHORT-TERM INDIGESTION AND MARKETS BUT STILL HAVE COME A FAIRLY GOOD OUTLOOK OVER THE NEXT 12 MONTHS. IF YOU GO BACK AND LOOK AT HOW STOCKS PERFORM IN DIFFERENT HIKING AND CUTTING CYCLES, THE BEST ENVIRONMENT IS WHEN THE FED DOES NOTHING. BUT YOU TEND TO GET 13% TO 14% RETURNS ON THE HIKING AND CUTTING SIDE WHEN YOU ARE SEEING MOVES IN THE 100 BASIS POINT RANGE. AS LONG AS WE STAY WITHIN TWO HIKES WITHIN THE NEXT SIX MONTHS, STOCKS WILL ULTIMATELY BE OK. THEY WILL NOT LIKE IT IN THE SHORT TERM. JONATHAN: LISA MENTIONED DEUTSCHE BANK LOOKING FOR A RATES CALL. BANK OF AMERICA DOING THE SAME. THIS CONVERSATION ACCELERATED BY THIS MOVE AND ENERGY. WHEN YOU SPEAK TO THE TEAM AT RBC, HOW DEPENDENT IS THE OUTLOOK FOR INTEREST RATES IN WHAT IS HAPPENING IN THE COMMODITY MARKET?

LORI: OUR STRATEGY TEAM HOLDS THE CALLS FOR US. HE HAS WRITTEN HIS CONVICTION HAS COME DOWN AND THE NEXT MOVE MAY BE A HIKE RATHER THAN A CUT. THERE IS A LOT OF FLUIDITY IN THE SITUATION. ONE OF THE THINGS THAT CAME OUT IN MY MEETINGS WITH INVESTORS IS A LOT OF UNCERTAINTY IS IN THE AIR, WHETHER LOOKING AT THE PATH OF THE FED, HOW THE FED WILL OPERATE GOING FORWARD, AND FRANKLY THE SITUATION IN THE MIDDLE EAST IN TERMS OF WHAT THAT MEANS FOR OIL PRICES. WHAT WOULD YOUR ASSUMPTION BE OVER THE NEXT 12 MONTHS. I DON'T THINK A LOT OF PEOPLE KNOW THAT BUT IT DOES LEAD TO HEADLINE INFLATION. ONE THING BLAKE HAS EMPHASIZED IS HE HAS NOT REALLY VIEWED THE FED POLICY RATE AS THE APPROPRIATE TOOL TO COMBAT INFLATION EMANATING FROM OIL PRICES. WE KNOW WE HAVE INFLATION EMANATING FROM OTHER SOURCES AS WELL. LISA