Death of Queen Elizabeth: Bloomberg Surveillance 9/9/2022

Queen Elizabeth the second was the rock on which modern Britain was built by the opportunity to meet her before she passed and to she's incredibly gracious and decent woman. She served us all with strength and wisdom for 70 years. Her Majesty was a rare and reassuring constant amidst rapid change. She was the very spirit of Great Britain and that spirit will enjoy. All this is Bloomberg Surveillance with Tom Keene Jonathan Ferro and Lisa Abramowicz. The UK at the epicentre of the world live from London. For our audience worldwide this is Bloomberg Surveillance alongside Tom Keene and Lisa Abramowicz some Jonathan Ferro live from London for the next 10 days. Tom Keene a somber mood hanging over this country a somber mood very different from when Lisa and I were here in January. And you picked it up right from Heathrow coming in. Today it is. It is the beginning John. I would say 10 days of mourning for the queen and then the new getting used to as we all hear later today from King Charles the third and least a change of leadership in more ways than one in this country over the last week. It comes at a precipice of massive change on multiple fronts. You have the change with the new prime minister. You have the change with the new inflationary regime. You have the change with Brexit. And now you have a change in the person who is the glue for a lot of the cultural aspects of modern Britain that a lot of people really look to. So how will the new leader King Charles the third really take over the number one buzzword. I think in the last 24 hours or so Tom has been continuity. How many times have we all heard the word continuity 70 years on the throne. And I think the biggest statistic that I've heard time over the last 24 hours has been the very fact that she reigned for longer than longer than 85 percent of this country had left. I mean get your head around that. You know the length the length of it is extraordinary. And there's other parallels including Queen Victoria. But I take your point John that a huge part of England has lived with his queen. And now there's a new and I would suggest you know not that we're going to do the royal show for the next 10 days but I would say there's a huge mystery about the path forward for King Charles. We will be staying on top of a price action as well. I'll check in on that feeling right now looking at equities bouncing back just yesterday and continuing to do so today on the S&P 500 up around about eight tenths of one per cent on equity futures. We need to begin this morning though with our team coverage. Michael Bloomberg Guy Johnson in London Anna Edwards outside of Buckingham Palace a Maria Tadeo in Brussels. Anna first to you. Walk us all through what the next 10 days is going to look like for this country. Good morning to you John. Everybody. Yes. Here at Buckingham Palace the mood somber as you would expect. Many people gathering here to pay respects at the nation probably still in shock dealing with what has been a very fast moving situation over the last 24 hours. This time yesterday we were just dealing with the news that there were concerns around to death and now we find ourselves marking her passing. In terms of the next 10 days we start this period of mourning. The queen's body has returned to London. She lies in state. People are given the opportunity to walk past the body to sign books of condolence. In the more immediate future we'll hear from King Charles. He will return to London today and he will address the people the things he will say the words he will choose the way he will try and speak to the people and rally the nation. We'll be of course compared to the queen and watched very closely. And the fondest memories of my childhood is my grandfather and I doing the jigsaw puzzle at Buckingham Palace and the changing of the guard. How does Buckingham Palace fit in to the royal family. Is they more and we know of Scotland. We know of Windsor Palace. How does Buckingham Palace fit in to the schedule. They're going to see for the next 10 days. Right. Well I mean this is a place that of course is the center of their London life. They have many residences to the west of London at Windsor and up in Scotland as well. It's interesting that you cast your mind back to it to family memories at. I do too. I have messages from from family members just this morning talking older family members talking about how they remember seeing the queen at the time of her coronation on tour around the country. So although a lot of the focus will be on London this week as she was somebody who told the country she was someone who told the world she was someone who was head of state here but also in 15 other countries around the world. And it's in all of those places where feeling people are feeling this needs today. And she was actually the person who met with more world leaders than any other person out there at least according to one statistic that I read. She also is known for founding a very modern version of what the monarchy is within the British culture. What is the new modernity of the monarchy given where we are given King Charles the third. I was just discussing this with our editor in chief in our last program and asking you know with the coronation we haven't seen one of these for 70 years. Britain has changed so much in 70 years as a monarchy. Do you want to reject the face of tradition and history and all that that it taps into. Or do you want to give a sense of moving with the times and moving moving on a little. And he was reflecting on how culturally there might be some aspects of that. So we might find that the coronation. And that might not come for many months maybe a year or so that the coronation of King Charles the third might be more more multicultural than we would have seen of course in 1952 53. But then in many ways it will hark back to the Britain of old. And that is essentially what a lot of people sign up for the monarchy for. You know you do want to shine too much light on it. You don't want to normalize it too much. I want to bring you in on the future of the leadership under King Charles. This isn't exactly a person to tell his feelings on particular issues over the years. How do you think that's going to take shape in the years and decades to come. See how things develop. The Queen's authority wasn't inherited. I think it was earned it was earned over many years. It was earned by the way that she handled various situations. We will see whether or not King Charles can earn the same kind of authority and respect. It's too early to tell. We have an idea. He's served a very long apprenticeship but that apprenticeship was different. It is different when you are king to two to the learning process that you go through beforehand. So I think it will be very interesting. But we do find ourselves with a new prime minister and a new king a moment of instability for the country. And it's going to be interesting John over the next few days to see this process of transition working. Some things will be happening. We don't get our next data today. We do get it next week. Do we get a Bank of England meeting next week. All of these kind of things right. Need to need to ultimately kick back into gear for the next few days will be about transition. But ultimately this could this country's got a lot of questions to answer most notably on the fiscal front. How do we afford what we need. Guy Johnson you mentioned the Bank of England clearly the Bloomberg world. How much of the country will shut down over the next 10 days. Sporting events rugby events and the like. There'll be a series of events that will not take place. Tom kids will go to school. People will go to work. That process will continue. The O and S data will continue to be released if we bring it back to the boom Bloomberg world. But some big set piece events will not take place. And interesting enough train strikes. Strikes generally will not take place. So there will be certain things that will not be normal over the next few days. Much of the country will continue but obviously we are in a 10 day period of mourning. But but it will be it. It is a it is a hiatus. There are big questions that this needs that need answering around the future of this country. The next 10 days is a break from that. It will delay for instance an understanding a detailed understanding of how we're going to pay for this big fiscal package that the new government is going to be introducing. And this comes Maria Tadeo at a time of great uncertainty within the whole European continent about the energy project and this had been one of the leadership members at least when it comes to connecting the United Kingdom to the rest of the European Union. As you talk to members in Brussels how present are they. How much are they aware of what's going on in the United Kingdom not only on the fiscal standpoint but also some of the leadership changes. Look I think I would point to the words of the French president who said this morning on a decimal place to were so set by this. And that was echoed by Mario Draghi by the German government by the big monarchies two of Europe. Remember these are houses that are connected by blood going back centuries. And there has been as you say tension over the past year especially after the Brexit referendum. But all of this is forgotten this morning. And I can tell you behind the scenes here the European institutions you do see the European flag at half mast. There was a moment of silence today and the politics that have been at times very difficult. Today they're completely forgotten and they agree that this is someone that is a giant of history and will go down in history as such. The politics forgot to Maria but the problems don't go away. How are they going to address these problems going into the weekend. Well the problems do not go away and at times it is hard to to to deal with the emotion that you can feel here today. And then of course the reality of life which is this is going to be a very hard winter for a lot of Europeans. There is an energy ministers meeting that is going on behind the scenes essentially at this point is just throw out ideas brainstorm anything that can work and can bring down energy prices. They want to study. What I hear today though is that we're not going to get the breakthrough that the market once. There will be a political impetus that the market needs to be intervened in one way or another particularly the gas. But it's not going to come today. In fact what I hear is that you'll have to wait until next week. Ursula von der Leyen is expected to put out executive action and then it becomes a political story as it always is. In Brussels European leaders are only going to meet the 27 together at the start of October unless they decide to call an emergency meeting at the end of the month. Maria thank you. Good to catch up with you. And the Bloomberg team Anna Edwards from Buckingham Palace. A Guy Johnson here in London to tell him it's easy to forget because it's been totally buried in the news flow and rightly in the last 24 hours or so. But Tom we just had of the biggest pieces of fiscal intervention in the history of this country in the last 24 hours rather than as slow as extraordinary. And I think that's a good place to begin. As we go through this week of mourning for the queen within the tradition of it you look back at all the different monarchs over the years. They had huge fiscal crises. This is no different. This is no different than the fiscal crisis of Charles's first phase or frankly Charles's second phase with Medway. It's a different modern way. Same issue. I said it was a change of leadership. Lisa in more ways than one. It's not just a change of monarch. It's a change of prime minister. And it's a massive change to fiscal policy to address a huge issue which the UK is grappling with. And as Maria was discussing just moments ago the Europeans are dealing with as well. It's a massive moment. This is a sea change moment on many different levels from a leadership standpoint but also not only fiscal but also monetary stamp. When we talk about well we've looked at what we may expect in the Bank of England if they have their meaning to you. She was your queen to us. She was the queen. The words of Emmanuel Macron the French leader just moments ago. Coming up Brian Schweitzer seen the head of global fixed income at Morgan Stanley Investment Management will catch up with him in just a moment. Features our positive seven tenths of one percent. Live from London this is Bloomberg. Keeping you up to date with news from around the world with the first word. I'm Lisa Matteo. The face of the United Kingdom is changing. Within hours Charles will be formally procreate relieved as king in a ceremony dating back hundreds of years. He is succeeding his mother who is the country's longest reigning monarch when she died Thursday at the age of 96. Her death set off a 10 day mourning period that will end with the state funeral at Westminster Abbey. European Union energy ministers hold an emergency meeting in Brussels today. They'll discuss the first political steps on how to prevent Russia's cutoff of energy supplies from leading to rationing blackouts or even social unrest. The EU is considering a series of radical plans to tame runaway energy prices and keep the lights on. Kim Jong un is raising the stakes for an military confrontation with the U.S. and its allies. Kim expanded the circumstances under which North Korea would launch a nuclear strike. North Korea listed five conditions for using weapons of mass destruction. One of them is if Kim's leadership is threatened. The U.S. Justice Department will appeal a judge's order for a special master to review documents seized from Donald Trump's Florida home. Federal prosecutors say the ruling has thwarted a review of the potential national security impact. They also want to continue using the classified materials as part of an ongoing criminal investigation. And a federal appeals court has saved Citigroup from an epic blunder that became the talk of Wall Street. Judges rejected a lower court ruling that Revlon creditors could keep more than half a billion dollars the bank accidentally sent them. Citi CEO Jane Fraser said the mistake showed examples of manual processes that need to be automated. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Lisa Matteo. This is Bloomberg. We need to act forthrightly strongly as we have been doing and we need to keep at it until the job is done to avoid that. We think we can avoid the kind of very high social costs that Paul Volcker and the Fed had to bring into play in order to get inflation back down and set us up for it for a long period of price stability. Check out counterprogramming with President Carter in the last 24 hours. You think it worked. Did you think it worked. I thought it worked. I mean when the president of the Cato Institute says that bitcoin guy married his daughter. Okay. See you've got to explain this. You've got to explain this scene. So the Humphrey Hawkins testimony from Shery Ahn. And how many years ago was that. A number of years ago there's a man in the background holding a sign saying Bitcoin. Correct. Given a son in law of the president the see that was the most notable thing of the entire press conference. What do you think. It was boring and not boring. I thought that it was interesting. It was unusual press conference. But did he say anything new other than to reiterate their determination to raise rates and curtail inflation. Doubling down on what we heard from Christine Lagarde. The interns flew with us to London. That's right. Hi guys. You know what I think is important about what Jerome Powell said. I think what was so important about what he said yesterday is he continued the dialogue given others central bank meetings. And we don't know of the Bank of England but they're all reacting now to the fact the clock is ticking. We have to take away from yesterday saying it's a real anchor inflation expectations. I think he did in some ways double down on the effort from Jackson Hole. Thanks America. Mike Apron over there came out just a maybe an hour or so after the address Tom and said 75 in September no longer looking for 50. So I think 75 becomes the number that's now done for a lot of people Lisa. Basically because we didn't get the pushback in that address. Dani Burger. Do you think that it was that or do you think it was Lael Brainard coming out and really doubling down on it as well. Everyone is singing from the same hymn sheet all around the world basically saying raise rates raise them aggressively. We've got to front load this and actually save 4 percent. Looks more realistic than a three and a half percent for the terminal rate. The president legarde just moments ago. Rising inflation is a major concern. Tom I thought that had but excite Yousef Gamal El-Din she said. There are a couple of things that the ECB has determined United to bring inflation back to 2 percent. Can't do much to lower gas price and power bills. And that brings us back to the U.K. and I want to keep going back to this. We will quite rightly pay respect to someone who is absolutely dedicated their life to this country as we should and we'll cover the 10 days of mourning that will take place and all the developments that go along with it. I don't think we should lose sight of what was delivered yesterday. At the same time is still something that we need to discuss the news. Those extraordinary the biggest fiscal intervention one of the we've seen in the post-war period from this government from the UK to address a major major energy issue that does not go away does not go away. Just because the news flows changed is still something that needs to be worked in the backdrop of the war in Ukraine with Ukraine advancing over the last 24 hours makes it even more complex. That's what really tried to do her focus for the next number of days as the mourning for the queen of England and also tried to keep forward the Bloomberg Surveillance world with futures of 28. John do a quick dirty shirt for me. Help me out here. I noticed coming off the plane the real yacht I couldn't get Wi-Fi in the Gulfstream. And I look at the real yield point eight five basis points. That's important. It at around 350 seems to be the level at the front end of the yield curve on a two year. And Lisa that seems to be where we're hanging out right now. Yields to back end by about three basis points at 340 seven but some 350 that range of range that's where we're anchored at the moment. Off the back at asset. Speak to shorter conversations. Swing with Brian Winston. Joining us head of global fixed income at Morgan Stanley Investment. Brian how has your view changed in this tumultuous week. Where are we. Some weak. But but it hasn't changed that much. You guys are on it this morning. Welcome to the UK. It's not like new news. The central banks have doubled down on what they've said. There's not a time to information except as you said that fiscal stimulus. I think fiscal stimulus from the UK more fiscal stimulus coming across Europe is gonna make their job harder. Right. They need to continue to be diligent on rate staying high in order to stave off inflation. And it's got the psychology of inflation. Well let's talk about that the credit premium that's given to UK gilts the private credit premium that's given to other areas of the European region. And frankly even in the United States as a result of certain fiscal measures that are expanding the deficit and raising questions about who's going to finance that. Has that sufficiently been priced in to Britain to European bond yields. Well certainly it's been priced in more in Europe and the U.K. than in the U.S. but I think the short answer is no. I think this is a very tough situation. And I think it's very difficult to be the head of the central bank right now because you're fighting an inflation that is that is partly from energy and partly from psychology. And you're fighting growth. It's falling because of it. So to be raising rates aggressively into falling growth in energy you can't control means credit spreads should have a premium. And as you said more debt on the heels of it. So someone has to bail. Why is it that the ECB and the Federal Reserve both have really shrugged off suggestions of recession not use that as their base case and then double down on raising rates. Does that lead to a lack of credibility or simply just people saying this is what they have to do. I think they're trying to buy back credibility. Right. They stayed too easy too long with. They had a crystal ball. They would have raised rates. I think long before they did so in absence of that. And I think in light of where they started at zero or negative no choice. Right. So yes growth is slowing in a perfect world. They would have been higher to begin with. But now they have no choice to be credible. They have to fight the current inflation and worry about growth later. And they can't basically not to the market that we're going to ease again right away although it does seem more and more likely as growth falls. Brian a question that Lisa and I keep returning to is the long list we've got of people who say we've already seen the high of the year on the 10 year and more recently some people are starting to lean against that. Are you one of those that lean against that view that think maybe there's a little bit more upside here have the long end. You know I continue to be in a camp that the curve inverts more. So I don't think we've seen the high in the front end. Central banks I think have been pretty clear on that on the 10 year note. I think we'll test a slight new high. I don't think there's anything outrageous happening. But yes it does feel like rates have not found their high. It feels like credit spreads still have more work to do. So I would say not outrageously high. I don't know if we're going to see 4 percent would be a place I'd lean against but I do. As we've spoken on the show before I think you know the market's going test above 350. Brown Why say a Morgan Stanley investment management bride Thank you. Lisa if we test about 350 I do wonder how many people will come on this program and say 350. Great. By. You know I don't know because as the yields move up so too does the background as a narrative. I mean I'm thinking about Deutsche Bank and Maria today. I pointed this out that there are strategists came out this morning and said because of what. Is he dead. Because of what they said they see a 75 basis point rate hike in the November meeting in the October meeting. The idea is that they're going to be raising again at the same kind of record pace. Unsurprisingly Presidents Legarde was criticized yesterday Tom over the staff forecasts from the ECB. The baseline did not include a recession. Yeah no recession in the baseline for so many people. The base case is that this economy goes into recession. There's a war on. I think the uncertainty is off the chart. I was surprised it was not more of a tilt or language to recession as well. And again we hear from the Bank of England. On a visit to London. And I think that's really uncertain right now. But if we do they have the same risk. How do they gauge GDP. How do they gauge a lack of growth in the United States. Difficult cable right now by the way at 116. Lisa this apparently is not forward guidance but will probably hike at less than five more meetings. What's the language we got from ECB president. Right. What does that mean. Well two of more than two meetings that may mean 3 4. It's our forward guidance that will Jonathan Ferro. There's no staying in London. Okay. Is that appropriate. That's probably not. No. Futures up 8 cents from London. This is Bloomberg. Live from London this morning. And good morning with you for the next 10 days as a country goes into mourning after the passing of Queen Elizabeth. Let's check the markets for you. Futures look like this this morning. Equity features on the S&P 500 up eight tenths of a one percent. That's the story of the equity mark in the bond market. Yields looking like this coming in three basis points at a front end on a two year on a 10 year Tom Keene five basis points to about 326 327 euro dollar. Here's some euro strength for here. Euro dollar up about nine tenths of one per cent on that currency Pat some 1 0 0 9 0 right now. An important moment with Mohamed El-Erian has been such a friend of Bloomberg Surveillance over the years. He is president of Queens College Cambridge. And they are deeply affected by the death of their patron Dr. Shery Ahn. The history of Queens College is extraordinary. We don't need to go over it now but it is the back and forth of queen and king over centuries and centuries back to roughly 14 45. We now have a new transition as well. How do you perceive your patron and the chef to King Charles the third. Tom thanks for having me. We are extremely sad. The passing of Her Majesty the Queen. I don't think I can find words that express the size and scale of the loss that's being felt by the United Kingdom by people around the world and especially by our community because as you say she was our patron. As she visited the college she encouraged and inspired generations of students of faculty and staff. So there's a real sense of loss right now and mourning and wanting to honor her incredible reign. We're not looking forward to tell you the truth as to what next right now. This is a period of. Deep reflection and gratitude for what Her Majesty the Queen did for Queen's College Cambridge. One of the hallmarks of a reign was the diversity of the United Kingdom. Cambridge let on that as well and some would say Mohamed El-Erian let on it as well. There's the shock of the trust's cabinet the senior officials showing the diversity of the United Kingdom from the University of Cambridge State the diversity that Queen Elizabeth brought. She would speak to everyone and he would and would encourage us to be more inclusive more diverse and to continue in the daily fight of reducing obstacle to access to a Cambridge education. It's all about access and participation. And Her Majesty was a leader in this regard. She believed in a very inclusive. In community I cannot tell you that when she would come and visit us she would spend as much time with the president as she would with the head gardener with the head of our student body. She would go around and talk to people in a very personal and engaging fashion. And she was an inspiration in terms of inclusion and diversity. Mohammed the last time she visited you was back in 2019 as recently as 2019. Can you share with us just a little something from that how special that visit was for you and the college. It was incredibly special drawn not only because we were hosting Her Majesty for lunch but we invited our community to come out and the joy with which they welcomed her to Queens and the interaction with her. There are pictures on our Web site of her meeting with the students meeting with the staff spending time and caring. And then it was a wonderful lunch in which we thanked her for her very strong support of our college. You know she she followed the Queen Mother who was our patron just before her. And it's been a constant for us just like it has been a constant for the whole nation. Mohamed this has been one of the key points that people keep coming back to that she was the embodiment of a spirit of the United Kingdom that will be hard to replace and that she really created the modern version of a monarchy. Can you give us a sense a more tangible sense of why it is especially for people outside of the United Kingdom that she acted in this role even though she is a figurehead. Right. That she is a political by definition and that she is looking to remain as sort of a public relations persona rather than a leader like the parliament. It was Lisa. Her inspiration. She has inspired so many in the United Kingdom and around the world. And I would argue she will continue to long inspire people around the world. So where did that inspiration come from. I think from three things. One empathy. She she was very empathetic. She listened to people. Second. Her dedication. She said it on day one that she would be dedicated to serve the nation. And she continued serving the nation for over seven decades as the monarch. And third was her responsiveness. So when you put these two things together it sums up inspirational leadership that overcomes all sorts of divisions within society. And that was flexible enough to take the United Kingdom through massive changes. If you look at how different the United Kingdom of today is compared to the one 70 years ago when she became queen and she she was able to navigate all that inspiring us inspired a whole nation throughout that whole period. Mohammed given how much things have changed as you talk about given Brexit given the fact that the United Kingdom has shrunk in its scope with relation to some of these trade partnerships or at least nomenclature what is the new vision going forward. Does it adhere back to that one or is this truly a marking of a new regime. You know there are many challenges facing the United Kingdom and that's true for the new prime minister who recognize that on day one. But I think Lisa right now it's about Her Majesty Queen Elizabeth. The second it's about mourning her death. It's about honoring her accomplishment and honoring her reign. That will come today when we will sit down and talk about all the challenges ahead. But I think this is a really important moment in history because she has played such an important role not just in this country but around the world. Mohammed thank you for marking this moment in history with us. We appreciate it. And I think we all agree it's certainly not the day to discuss markets and the economy with you. Mohammed thank you very much for giving us your time this morning. Mohamed El-Erian of Queens College Cambridge Mass. We reflect on what's been left behind and I think naturally we'll begin to look to the future. The two words we've talked about a lot over the last twelve hours. We talked about continuity. The other one was unity the ability to unite the country at a time when it's becoming increasingly divided. We'll discuss no doubt over the next 10 days about Britain's role in the world. We also need to have a conversation about what the United Kingdom is going to look like in the years to come as well because there's a world leaders gather for the service here in eight nine days. I think John what's so important and I can't recall where I saw this but someone had the empire of an early Queen Elizabeth and where it is now with Barbados becoming a republic just in the last number of years. And yet you see the diversity of the United Kingdom. And Lisa I believe I can say Americans are thunderstruck by the diversity that we've seen in the last 72 hours from Prime Minister Truss. It's amazing I think to Americans to see the different melting pot that she helped invent in the United Kingdom. But John to your point though that is the case. And that's why unity. All the more forefront especially with all of the challenges. And I think that that is really one of the main challenges going forward especially given that this news has overshadowed the biggest fiscal package offered up to the United Kingdom in modern history. The fact that we are on the precipice of some sort of coordinated action by energy ministers in the European Union as they meet in Brussels that we're on the brink of inflation that might reach as high as double digits and beyond the 20s handle. I mean how do you navigate this without that unity that she brought. And I think that that's a reason why it is pivotal that we're discussing this right now. You'll always see a difference in politics. By definition in a democracy you're bound to see division in politics. And we see that in the U.K. it's no different to any other country in the Western world. I think the fact that Scotland is still pushing for independence is much much bigger than just division in parliament. So that's about the threat to the overall union and a push to break it up. And that's something that still lingers over this. Oh absolutely and isn't going away anytime soon. I'd say 10 years ago I was open skull and a fair amount. And I was naive on this. I was the dumb American. And John you see it now is Prime Minister Truss. Do you know I'm speaking from a distance had a challenge in and filling the Northern Ireland position in her new cabinet. She she got her man but it was a challenge to get that filled. It's not just Scotland a little bit Wales but of course always the Irish story with Brexit and the economy. Right now the UK is in a hugely difficult place. And as we return to have a discussion about what happened in the last 24 hours from the UK to see less trust deliver that massive fiscal intervention. And Lisa almost immediately suggest Ahmed the leader of the opposition came out and push for a windfall tax. And that I think defines the political divide in this country at the moment. And it's not unique to Britain veto the same issues that the Europeans are going to face deep into winter. And one of the biggest cause you've got to make I think the economy in financial markets and allow me just to take this a little bit broader is the weather this winter the temperature and you speak to market participants at the moment. And the thing that they would love to forecast if the ECB staff are going to come out with forecasts. Never mind GDP and inflation in a forecast for how cold winter is going to be and what it means for gas prices because that's going to dominate the big big issue. It's going to be the issue through the rest of this year. And it's a worldwide issue. And there's so many different machinations here. But what do you what happens if you don't dampen demand. And this isn't just a UK issue. This is also a USC show. Just reading for example that there is the potential for another release of the Strategic Petroleum Reserve to get oil prices that much lower ahead of the midterm elections. All of these things. At what point did they increase consumption and then create this revolving cycle. Any 19 on West Texas Intermediate is a miracle. From where we were 90 days ago 100 days a bit of a bounce back this morning. Sun up 2 percent 85 19 on WTI. Crude futures up nine tenths of one per cent. Equities running a little bit over the last couple of days. Coming up we'll continue the conversation. Sir Robin Niblett the director of Chatham House just around the corner from London. This is Bloomberg. Keeping you up to date with news from around the world with the first word. I'm Lisa Mateo in the UK. It's the end of one era and the beginning of another. A day after Queen Elizabeth the second died following more than seven decades as monarch. Her son Charles will be formally proclaimed king. Now he was 73 years old and is the oldest person to accede to the throne in British history. The U.K. has begun a 10 day mourning period that ends with the queen's funeral. China is stepping up its defenses against Covid while chunks of the country remain under tight lockdowns. The government is placing more restrictions on Internet internal travel and the steps seem designed to reduce the risk of outbreaks before next month's Communist Party Congress in Beijing. That's when President Xi Jinping is expected to secure a president breaking third term in office. President Biden rallied Democrats last night with an attack on Donald Trump and his supporters. He blasted the former president for promising to pardon riders who attacked the capital. The president also warned voters against putting Trump followers in charge of the House or Senate in November's elections. The next series about Queen Elizabeth the seconds rain will likely stop production on Season 6 following the death of Britain's oldest reigning monarch. That's according to Variety. And the crowned Season 5 is set to premiere in November and feature a new cast. Netflix has not yet released a statement. Global News 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts in more than 120 countries. I'm Lisa Matteo. This is Bloomberg. It is a day of great loss that Queen Elizabeth the second leaves a great legacy. Today the crown passes as it has done for more than a thousand years to our new monarch our new head of state His Majesty King Charles the third the prime minister unless trusts as a nation mourns its longest reigning monarch. Live from London. Good morning. Better news for you Tom. Some cross it passing pales in comparison to the kind of conversations we have this morning but it gives you an idea of the kind of changes we're witnessing in this country to get through the next 10 days. The English Premier League matches this weekend will be postponed. Some unclear at this point whether next weekend's match in Spain just wow this is this. This was inevitable. Understand there's a meeting early this morning and this is the decision that's been made. The benchmark for me is 1963. And John F. Kennedy in the nation came to a complete stop. And I would suggest this even with the understanding this day would happen makes this week upon point where the nation is. As I mentioned there's no railroad strikes. The people will work to move people around as they mourn. And the other thing associated with football is we could remember Simon turning to labor this point. But to put these games on requires a lot of reason a lot of race. Yes. Politically from the place and those resources over the next 10 days will be needed elsewhere. It sounds like what we're going to see here for the next number of days. And of course we've got lots of good coverage for you. Guy Johnson Anna Edwards. Helping out with truly London perspective. We're thrilled that we'll go to them here in a bit. Right now as you spoke of Mohamed El-Erian of Queens College the University of Cambridge we touch on another of the queen's efforts which is Chatham House. You've heard that name in America less familiar but in London dominant is one of the great think tanks and places of perspective for the United Kingdom. Sir Robin Niblett joins us right now director of Chatham House. And I thought on your website the commitment of the queen and particularly Robin to the academics that you did in 2014 her leadership to jumpstart that project give us a window into 2014 and what the queen did for Chatham House. Tom happy to. I'm now a distinguished fellow Chatham House. We have a new director as of a month ago Bronwen Maddox. But I had the pleasure of meeting excuse those fine to her pleasure of hosting Her Majesty twice in recent years once with the Chatham House Prize in 2019 when she gave it to David Attenborough. But 2014 was when we launched the Queen Elizabeth Academy for International Affairs. And I think one of the big challenges for institutions in London has been able to make sure that you're still well-connected to young people around the world engaging them in what London has to offer. What Britain has to offer as a place of independent thinking which is what Chatham House about is as well. And Her Majesty gave her name to the creation of a new academy came met with the first cohort of academy fellows from all over the world. And I think what we wanted to do by having this academy named in her honor was captured. The fact you're not gonna have a patron of institution for 70 years very often. It was actually remarkable. RUDIN Wonderful to be able have to connect to that way but also to to be able to track some of the brightest most driven change makers around the world to come and spend some time. She her example is a draw. It was the most important part of Britain's soft power. In her example was the Commonwealth. There was a commonwealth of the early 50s and the tumult of the 60s and 70s. What does Charles the third commonwealth look like. It's going to be very difficult for a number of reasons in a way. It was held together by respect for her majesty for the queen as well as by that common sense of heritage of having formed part of the British Empire but being forming part of the British Empire even as independent nations is now something that receives a lot more scrutiny than it did in the past. And so what we're going to find I think in the coming years is potentially Charles having to enable the Commonwealth to redefine its purpose amongst those nations without the glue of her majesty the queen there to hold it together. We've already had some moves away from having the sovereign her majesty as the head of state from one Commonwealth member by betas a year ago. And there's a worry that the whole review of the role of empire of slavery and so on will start to come back in and put the UK in a much more difficult position in the future. Robin we really do mark the end of an era exactly as you say not only a unifying force but a redefinition of globalisation a redefinition of the United Kingdom and the broader empire that it used to have. Right. All of these redefining aspects of the new moment. What will be the new definition of the next ten years. How will King Charles the third come out. And she'd be new vision in the world as you see it. Look the challenge that any monarch has here is that they can't establish a vision. They cannot declare a vision to the rest of the nation in our constitutional monarchy. They really are the holders of continuity but they're not the agents of political change in politics. So in a way it will be up to this trusts of future prime ministers to establish the vision of the country. What he has to communicate is again the linkage to the continuity part of I'd say Britain's soft power has been the fact that it has had such stable politics for so long and how quickly the governments change of the prime ministers change. The fact that the head of state has continuity in the family is part of its powers to what the monarchy does is give space to governments to go through profound change without a sense of the whole nation has been called into question. So I think in a way Prince Charles who's leant forward quite a bit as a prince of Wales on climate change on architecture biodiversity on architecture. Exactly. Is now going to step back and have to to become the safer that the queen was for what other people believe the nation is. Its can be really delicate change if there is some real estate investors that are happy with this. In London that he might he might back to say I think over time I think they'll be happy for that reason. He won't be able to sway in the way he did before. Absolutely. It go to New York. I read the New Yorker effort here of the last 24 hours. And Robin Meade Rebecca Mead was very good about this psychological shift that any monarch has to make John his Charles and then his King Charles. The third was at Chelsea Barracks. Was it Chelsea Barracks all those years ago. Yeah. So tell me to further Qatar is irrelevant. A royal to royal. They were able to have a different type of conversation having amazing but not get myself into trouble as a pet projects. I like to the back story when I used to live in Chelsea past there and was a big conversation at the time that shows do most well. I do my PSAT at Oxford. As I was writing it a building has been built in front in Madeleine College and done in all of the old style of modelling college. But being built in 1912 it was 1930 or something. And at one point as I watched the building go up I suddenly saw this person walking across the top with a gaggle of people and it was Prince Charles being shown around buildings. And I didn't have a mobile in those days but it was the old building in the keeping. And I may say it worked beautifully. So I have to say maybe I'm going to be the king doing that. Who knows. Robin Niblett thank you. Thank you so much. Distinguished fellow at Chatham House. Take an important bit of flavour. You know I think this is an assertive guy as a prince in terms of Robin's point it's going to be interesting to see how the show steps back and makes that shift us as king. He understands the weight of his throne. One of the articles I wrote on the plane coming over is is the queen was never formally interviewed ever. Yeah. There was conversation like you and I was never in. Are you sure the conversations were like the ones that like social life from London. With Tom Keene ad Lisa Abramowicz some Jonathan Ferro. This is Bloomberg Surveillance. Live from London. For our audience worldwide this is Bloomberg Surveillance on TV and radio alongside Tom Keene and Lisa Abramowicz some Jonathan Ferro. We pause now for a moment of silence in remembrance of Queen Elizabeth the second Westminster Abbey's turnabout. And the state ball at St. Paul's Cathedral will ring over the city for the next hour. A nation in mourning after losing the longest reigning monarch Queen Elizabeth the second King Charles the eldest of Elizabeth's four children will formally be proclaimed the king at a ceremony dating back hundreds of years at 73. As you've heard repeatedly over the last day or so he becomes the oldest person to a seat to the throne in a British history. Where's the Tom Keene and Lisa Abramowicz some Jonathan Ferro. Got a lot to do over the next 10 days some got to work through ten days of mourning in this country. Stay on top of the markets as well and think about the future of this country in a very divided world. As Lisa mentioned earlier the moment here the shock of seeing Liz Truss with that hugely diverse and original being greeted by the queen literally in her final hours of fragile 96 years old. In the backdrop of this is we witness in the cold world of Bloomberg by say sterling is a backdrop of crisis. There have been other crises in the country. The country will endure but it is if the script was made of crisis at this moment. Joining us now is Guy Johnson. Guy we've talked a couple of times already this morning about the next 10 days. Can you walk us through it again what the next 10 days will look like in this country. There'll be a lot of ceremony. I've just walked past seven. All right. Say seven royal horse artillery forming up just over the road from where I'm sitting now. Tom at the guards at the guards headquarters they're making their way up to Hyde Park Corner. They will mark the queen's death with a salutes a gun shot for every year that she reigned. It will continue from there. We will see a series of of very very ritualistic events taking place over the next few days that will mark the transition of power John from the Queen Elizabeth to King Charles the third. We will see a meeting of the prime minister and the new king. We will see a series of meetings of the various councils that are going to run the next 10 days. Ultimately this is run by the Norfolk's. They are and have historically always run the process of a funeral of a monarch. So it's a very ritualistic process that is going to take place. But behind the scenes John there are series of events that may be delayed deferred. There is a hiatus here in governments. And ultimately this is a question as you've just been discussing that it's got some big questions that need answering. What is going to happen with the fiscal package. What's going to happen with rates. Do we know whether the Bank of England is going to be having a meeting next week. There's still information coming out. We'll get a clearer picture. I suspect as this day progresses guy will be the tone of King Charles. A third speech this evening I believe it is 6:00 p.m. in London. Make it 1 p.m. in New York. What should we listen for in that speech. I think we should listen. I think we should expect continuity Tom. He is standing on the shoulder of a giants. Shoulders of a giants. His mother Queen Elizabeth. She. She earns the authority that she has. She earned the respect that she had. He will be aware of that. This is this is by birth. But you have to earn the respect that she built up. This doesn't happen if you are not able to deliver upon that. So he will be. He will be very aware of that. So I wouldn't expect any fireworks. I wouldn't expect any surprises. He will be trying to sound a note of calm a note of continuity. John talks about that in the last hour. This is the word we're gonna hear a lot of. And I think there's a reason for it. We are. We are coming out of a period of turbulence. We now have the death of a monarch. We need to stabilize the situation. That will be the tone of his speech. And it's a delicate moment because of exactly what you say. Some of the issues that are facing the nation that need to be addressed on a fiscal standpoint. This comes as less trust just announced. One of the biggest fiscal packages ever in the United Kingdom's history. When we talk about the process of what happens over the next 10 days is parliament in action. Is there governance in that kind of real way hashing out some of these pretty significant plans that were just laid out. In theory least the government stops. In theory the parliamentary process stops. There is a process that we need to go through a swearing of allegiance a recognition by parliament of the new king. All of that will take place. We're going to get an extraordinary Saturday sitting tomorrow that is going to be for senior MP. So so that process will continue as parliament has been recalled. Parliament is here and present in this process. But in answer to your question which I think is is are we going to learn the details of the best fiscal package. Are we going to learn how it is going to be paid for. Are we going to understand what is happening on the monetary front in terms of of how that is responding to that fiscal package. I suspect not. So this is a hiatus in that process. It is a delay in that process. And these are the details that the markets want. These are the details that the markets want to hear about. They want to know are rates going to go up next week. If so by how much are we going to have a meeting of the Bank of England. How are we going to pay for this piece of fiscal package. How is the gilt market going to respond to that. How will ultimately it be paid for in terms of the way that the PMO is going to manage that. These are huge numbers that we're talking about. I suspect that we are going to see a delay in answering those questions. Guy thank you. Guy Johnson outside of Buckingham Palace will catch up with Guy Johnson throughout the afternoon here in London on TV and radio. I'm happy to say that. Joining us now is Vince Cable a former MP and visiting professor at the London School of Economics and Political Science. Sir Vince fantastic to have you with us. Thanks for being with us. Inevitably we'll talk about change and what will change with a new monarch on the throne. What will change for you sir. Well I I was privileged as a privy council a cabinet minister who dealt with her majesty. And and I understand as I've seen up close the reasons why the country has such respect and affection for her. And so it is a I mean this moment is on the one hand very predicted. And we all knew this was going to happen. But at the same time momentous. And you have a whole generation of people you know 70 or under. You've lived your whole life in the Elizabethan age. I think for a politician I mean I was a retired politician. I think the significance was that although we had you know great change turbulence big second the changes over time you know the monarchy and the queen was a kind of bedrock of continuity and stability surround and remains one of the sort of underlying strengths of the country. And it rests upon the fact that it is a constitutional monarchy. It doesn't have a political row. And it will be very important that the new king is seen by the world and the country is going to totally non-political figure servants. I think it's so important to speak to you here. I'd love to do a two hour conversation with you right now. If you look at your party history as a kid when you were at Cambridge and I'm from their Glasgow and such and then you find that you were the chief economist for Royal Dutch Shell for a while as well. You have a backdrop here of this emergency moment for your United Kingdom. How does Charles the third provides support to Prime Minister Trust. Well I think given the way in which the monarchy works and I think we all want it to continue to work. I think there are very few Republicans in Britain. It is by respecting this boundary between politics and the head of state role. And I mean King Charles. It's an enormously difficult job. I mean he's been auditioning for this for 50 years. He could have stepped into the monarch role at any time. And he it's required extraordinary self-discipline from him. It's been a very very difficult role. And he's now as you say 73 on his inheriting this responsibility. I think one of the things he will be very mindful of bearing in mind you know the enormous respect for his mother who was scrupulously non-political through the whole of her reign. I mean he has at times you know strayed into the political world most recently over Rwanda. And he will I think in order to maintain the solidity of the monarchy be very very careful not to go into turmoil. Liberal Democrat. I have no idea. I mean I met him a few times and I like what he did. And he was you know genuinely socially concerned individual. I had absolutely no idea about his. I think he's trying to cause some trouble in class and that's where that's going. I think this is such a delicate moment because I thought so. He didn't tell me because we've been talking on morning about dovetailing the death of a monarch who really represented the United Kingdom for so many years and grew up through steamboats until there's you know a smartphone. And we are here on the precipice of a massive fiscal package without the unity required to give confidence about how it will be executed about how effectively it will be managed with respect to the fiscal profile of this nation. How are you watching this as a former member of parliament the deliberations over the energy help that Liz Truss's has proposed to households. I'm surprised that the linkage that's been made with this big economic moment. I mean they I think they are wholly separate. And I mean certainly the new king will want to have absolutely nothing to do with the controversies around the fiscal package. And I shouldn't. I mean his role is to provide. I mean the phrase that you've been using common continuity and stability amongst political and economic upheaval. That's his job. It's not to take up a position on these economic decision making. I mean that will happen anyway. The big change in the treasury of course has been the loss of the sacking of the permanent secretary. And that is the big event from the economic policy point of view. But but the planning of the details of the fiscal package will proceed. And I although there may be a slight hiatus in the announcements nothing is going to happen to disturb the development of the policy. Well things will pause as events we're just seeing from the Bank of England the NPC announcements been rescheduled to 22nd of September to the 22nd of September. So I understand that's a one week delay for the Bank of England Lisa but that was the first thing you asked this morning off me when we landed. We still going to get a bank giving the decision next week. And I said I don't know. We'll see. And we ISE it is going to be delayed by one week. Joel Weber. Yeah. And whether this actually gives them a little bit more certainty might be interesting to see as well whether we get our fiscal proposals more concretely from both the European Union as well as from less Truss's team of parliament. It's almost events that things will continue but for now they pause and we're seeing that with the bank of this one and we'll see that with a whole host of events that were scheduled to take place over the next 10 days. As I mentioned in my template for this and a very different moment was 1963 the clearest memories of how America paused for the funeral of President Kennedy at ways as different as we saw with the Premier League 20 minutes ago. Now the Bank of England who's who's going to push against those institutions Jason Kelly Vince Cable will say thank you. Thank you very much for being with us. Thank you. We appreciate your time sir. Very much so. So a Bank of England decision rescheduled. It was scheduled for September 15th. You'll now get that on September 22nd a bank giving the decision that was widely anticipated and perhaps later it gives them an extra week to work out what this program is from less trust because it's a very very different outlook for this economy now based on the intervention that this government is staged to do something about energy. Jason Kelly. Yeah. Were Andrew Bailey is not in an admirable spot right now especially given the balance sheet and what you do with that given some of the credit risk introduced by the first 24 hours after the Fed raises 100 or 125. This is a good call it the day after the day you're on something. The time is right. That was better than it was all the sleep I got on the Gulfstream. How much sleep did you get. A Gulfstream 7 hours. I got a back to life from London. This is Bloomberg. Queen Elizabeth the second has been a wise and encouraging guide. Always wanting the best for our nation and greeting each change with understanding good grace and and abiding faith in the Australian people's judgment. From her first trip here it was clear Her Majesty had a special place in our hearts and we in hers. The tributes pour in from heads of state around the world. That was Anthony Albanese the Australian prime minister. Live from London this morning. Good morning. She was in New York. Good afternoon to everyone I swear alongside Tom Keene and Lisa Abramowicz some Jonathan Ferro. Let's check in on the markets for you. 718 over in New York 12 18 here in London. Picture things looks like this on equity futures up 33 points on S&P 500. T.K. we advance about eight cents a one per cent. Don't play in the markets today. And I would say John a 22 handle on the VIX or back to 32000 Dow 4000 S&P 500. And I believe it was you John that span Binky Charters views Deutsche Bank the other day of the spread the diversity here even from one strategist not becoming EPS. I mean we need to get we need to get Binky on the show because I get on with Ben Care. Don't have a go at Ben Keeper. The difference between recession and no recession can't beat the S&P at 3000 and the S&P at 47 50. I know this way more radio Jihye Lee. You and I do enhance some of forms here and we will do it. But you know seriously I think the uncertainty here is extraordinary. Which means to get to Sarah Hunt here in a moment is really quite important. But where's the intervention. You meant to stage the intervention which is about monetary intervention or Tom John intervention the Lisa intervention Lisa Abramowicz. To stand between you guys. We carry on. We finally have a dollar break. I think that is the news item as we travel across a real euro dollar pop. Yeah we got Europe. Gateway finally. And we'll have to see where that goes. We welcome all of you from London Lisa Abramowicz John Farrell and myself here for the next 10 days. And it will be an extraordinary ceremony at Westminster Abbey here in a number of days. Course many I have to be honest I'm presuming President and Dr. Biden will attend. I think we can proceed. We can at this point we can't officially get heads of state from all around the world fly in. We'll see how that evolves over the number of days with leadership from Anna Edwards and Guy Johnson. Right now Sarah Hunt joins us chief market strategist Alpine Sex Woods as we continue to consider the markets. Sarah I usually don't go market strategy with you. I'm much more interested in portfolio dynamics but I believe we had a June rally. Is this a redux of what we lived in June. First of all let me just say that from Americans who we mourn the passing of the queen it was amazing. She's been the queen for my entire lifetime and that is sort of a shock to everyone's system. So you know getting back to lives. You think getting back to monetary policy. I'm not sure it's a redux from zero. I think that June was very much about the fact that we were going to pause and we had heat inflation and we might be doing a mini version of that right here because you have seen oil prices come down. But I look at what's going on in Europe and look at what's going on with energy across the globe. And I have to say that it's hard to say that we're done with that with high prices and how that's going to affect people. So I think right now you've got a little bit of relief from the dollar because the ECB hiked rates. So that makes that swaps out that policy a little bit. So that is a little relief to the dollar that's helping equity markets. I'm not sure that that's a full redux in June. However. Sarah can you just build on something you said about energy. Are you saying that you don't think we fully realize the consequences of the crisis we're in right now in places like Europe or are you suggesting that that crisis is about to get worse. And really you know this is I'm a long term energy person so this goes back to whether. Right. You know years ago I used to look at the weather forecast to see what you thought energy prices were going to do. And if we don't get a very severe winter if we get a mild winter I think that that's going to help a lot. But I still think that there's a lot of pressure there. And it's unclear how some of those pressures are going to be alleviated. There's been a big program in the U.K. just announced yesterday about how to fix that for consumers but that doesn't really figure out how to fix that for the companies that have to deal with the input prices and how that's going to look overall. So I think that there's still a lot of uncertainty. And the idea that we're sitting here in September when the weather is fairly mild and feeling sanguine about it I think is a little bit it's a little bit premature. So we've been talking all morning about Liz Trusts and her recent plan to bring down energy costs for households and how she did not include a windfall tax. How much does the lack of inclusion of a windfall tax the opposition there the opposition in places in the United States as well sort of feed in to your bullish stance on energy companies. Well I think to the extent that there's never any relief when prices collapse I think that the windfall tax is a little bit of a difficult argument to make. On the other hand certainly given extraordinary circumstances that were under taking it off the table entirely doesn't help necessarily the situation because you're trying to look for some way to fund some of this relief that's going into what they're trying to do for households and for businesses. And Germany is going to have the same issue because you've already seen a lot of complaining from businesses and from consumers there. And they've got skyrocketing energy costs that makes production very difficult. So that's an industrial problem as well as a consumer problem. So how to pay for that becomes the question. And a lot of the policies that's taking years to get to where we are are difficult to reverse. So I think that it's difficult to see how you see a situation resolving itself in a very easy manner except for the fact that you've got some demand destruction going on partially on the oil front because of China. But in general talking about conservation doesn't have to be the malaise of the 70s but it certainly could be part of the conversation. And that seems to be a little bit off that that hasn't been part of that package as well. Sarah Hunt thank you. Of Alpine Saxon words on the energy situation what it means in the equity market as well. Lisa it's uncapped liability. You and I have talked about this so many times now you can't come up with a number for how much it's going to cost because it is uncapped liability. Nobody can forecast the price of gas. Let's be clear about that. And I don't think anyone right now can get in the mind of a dictator in Russia and what he's going to do to gas supplies or for that matter how Europeans are going to respond to if it gets a whole lot worse from here because it's not just the war. It's the response the policy response to that war that's taken us to this place. With that in mind Lisa this stance on the windfall tax is based on where we are now. Now you take me down the road through next year. The energy prices gas prices are going to explode explode higher again. And the U.K. the British government has to cover the difference. The fatter margins for the energy companies and they're on the hook for that. And those profits get bigger and bigger and bigger. All of this depends on what happens with the gas price where we are right now. They're telling us no windfall tax. If you tell me we get another 10 20 30 40 percent rally in the price of gas. Do you think that position holds. And I don't think we know the answer to that. Well I think that it would become politically untenable. I think that we can see that with some certainty that if there if the big energy companies are making bank and they're not investing as was the plan as is the big opposition to the windfall tax that they're not investing in becoming energy independent by what 2030. I think sure they don't become financially untenable. But that's what I'm saying. In other words in the short term it might become financially and politically infeasible at which point they will revisit it. But it's interesting to see where the emphasis is on right now even as they try to raise money with some very skeptical foreign investors a weak currency or higher yields. We had a reversal of all of that but we've seen both over the last month and a half. Yeah and how much how much. What's the give there. At which point they have to intervene on some level. Martin what's it going to weigh in on some of this particularly around the bond market and these search hard we've seen in yields through much of 2022. They had a global fundamental fixed income strategy over at BlackRock. Joining us shortly. Let's check in on the equity market for us. We can't be down to the open about a few hours away. Equity futures up eight tenths of one percent one in three on the S&P. It's against the law in London. No I'm pretty sure that is against the law of the Footsie. And no City of London rules. Sir Faro. From London a nation in mourning. Good afternoon to you from London alongside Tom Keene and Lisa Abramowicz some Jonathan Ferro. Checking the markets for you with equity futures pushing higher built in on the gains of yesterday in the equity mark on the S&P 500 we climb higher by eight tenths of 1 per cent. It's lower by five or six basis points on a 10 year 326 20. Any other day would make it a much bigger deal of this. But the dollar weakness out there Jonathan Ferro just snapping back in some snap and back in after a really solid charge clobbered the dollar pair through the weekend and into next week towards the Queen's funeral will have us balanced between a Bloomberg Surveillance world and this worldwide mourning for the monarch. I think we're practicing doing it. It's so hard to go from dollar yen over to discussion of the future certainly. I think one thing we can discuss though is just the change to the sequencing the events the schedule that we expected to have next week. A prime example of that is the Bank of England sterling at the moment and 115 80 much anticipated rate decision was due to come on September 15th. We now understand according to the bank giving to the NPC will delay that decision. Time to September 22nd. So just a shift in the schedule. But ultimately some big decisions still need to be made. And policy makers in this country in honor of Dr. El-Erian on a game theory basis critically one day after the Fed meeting. I think that's a huge deal. They will have the gains to work with from the poll press. Can you imagine a month for them. We can imagine quite easily a month now where we've had 75 basis points from the ECB that we get 75 basis points from the Federal Reserve and perhaps even a day later. So we get 75 basis points for the Bank of England. One thing that I'll be very interested to see. And he's just done a pretty good job of pulling this up over the last couple of days. Massive intervention from the state to basically cap energy bills. I wonder what that means for their outlook for inflation over the next couple of years and in turn what it means for their outlook for interest rates as well. Well again it goes over the fiscal balance sheet away from price change. And that's that's the way the theory works. But this has been a year or theory as it were. She is steeped in theory. Marilyn Watson joins us now head of global fundamental fixed income strategy at BlackRock Maryland. Not to make the point of the moment but which rock do I hide under right now. I mean within a bond portfolio is a simple solution to shorten duration. So I think as you say there are a lot of moving parts at the moment. 60 Hang Seng we had the ECB but the sand coming up in a couple weeks time that I didn't have to just lay out the date as well. But we are seeing a lot of volatility in the markets at the moment. And I think you've hit the nail on the head in terms of where do you find some yield. Where do you find maybe a little bit of safety in the markets. I certainly think now the shifts that we see in terms of yield in terms of spread. We do see a lot more attractive area in the market whether it's in your estimation. We're seeing also the rates that suntanned you know shift significantly. And I do think if you're looking at the front end in terms of policy Perry then now I do think there are some very attractive areas to invest in fixed income. But we are expecting to see this continued volatility going forward over the next few months as we have inflation stealing credit in the US in the Eurozone and elsewhere and a lot of decisions to be made. On a non-linear basis the path from under 2 percent on a 10 year yield in March and up we go if we do break out where many expect to go three and a half three point six five three point nine percent 10 year yield. How does that change your world. So it doesn't change it up significantly in the fact that I think we along with many other investors are still ready to be cautious about the right path going forward in terms of where the peak might be in terms of rates expected to peak the turnover rate to be maybe around just under 4 percent. But I think looking at the past now if you if you do see a little bit of a spread there in terms of where the turnover it might be when the top of the yield might be I think we're expecting that. We're expecting well associate London investors respect in the same as well. We still see a lot of money invested in very safe assets. We have money on the sidelines in terms of cash. We do expect to see a lot more supply going forward. We expect to see a lot of opportunities actually. So I think you know looking at the market at the moment as we do have some tightening going on as the Fed is reducing its balance sheet as rates continue to rise in the US and elsewhere. We can actually use this volatility to take advantage of valuations where we see them. So let's talk about some of the guides that you used Marilyn when you're looking for opportunities at a time when we have inflation that may just may come down to eight point one percent in the euro region or that's the expectation on average and then go down to 2.8 percent several years from now. This is the baseline and some would say even optimistic projection from the ECB. We've got the same kind of talk from the Federal Reserve. How do you factor inflation into your forecast. Is that the reason why are underweight duration or is the fiscal response that really has your attention. So it's both and I think the the fiscal packages that you mentioned in the fiscal response are going to play into inflation going forward as well and potentially that might make the job of central banks harder if we do have this very sizable packages that we're seeing coming through from the U.K.. Do you ask the Eurozone as well. Inflation does play. I'll see a very key role in terms of a central bank monetary policy but also see the yields of bonds going forward. And it is something that we do pay very keen attention to here in the U.S. obviously. Next week we have some very significant data coming out in terms of inflation CPI CPI and the Fed will also be paying very close attention to those as it then goes into the following week. It's a much policy stance announcement sat and announced that they are going to continue to be very aggressive in terms of trying to get inflation back down towards the 2 percent target. And so inflation does play a very key role. I think at the moment in terms of central banks that are also very concerned about credit mercy and the fact that you know investors they don't want investors to be anchored in high inflation expectations it's very important for them for investors of the market to see inflation coming down and to view the credibility of central banks in bringing that inflation rate down. I think that is absolutely critical. Marilyn when you talk about the idea of credibility we talk about the idea that the ECB is not projecting a recession even as they get inflation down at a time when even the CEO of Deutsche Bank is saying that a recession is all but inevitable in Europe's biggest economy. How does that do for their credibility that we are not hearing the recession calls from the central bank to a Wall Street to city in London to the rest of Europe. That's a very different picture. Yeah. So think in terms of their credibility. They're very aggressive hawkish stance that they took yesterday in terms of raising rates by 75 basis points by announcing that they're going to continue to raise rates on a pretty aggressive path. They mentioned their reference maybe two to five meetings and they reference that they could go bumps him on rates. So they were some to the rhetoric and the decisions that they made yesterday relatively hawkish. However I think it took a lot of Michael Barr surprise that the growth forecasts for this year were much higher than people expected and next year still very positive. No I'll buy low in terms of GDP. I think there's just so much uncertainty out there. I do think there's a lag in terms of some of the data coming through for the eurozone GDP numbers. But the huge amount of uncertainty that we have yet to see as we go into winter in terms of the impact of energy prices that will have a potentially negative impact on GDP further and more that has been priced in at the moment. I think that's the difficulty. So if he was have a fun chart I think you'd see it would be very very wide in terms of what the ECB was projecting. But that middle number I think. Yes aiming potentially aiming maybe for a positive positive number. But I think the risk of uncertainty is very very high at the moment. Mauldin Watson of BlackRock Mountain thank you and thank you. Right now we're getting tributes to the late queen in parliament. Let's drop by and take a listen. If you're wrong. The nation had to lead a celebration I remember. Innocent joy. More than ten years ago after the opening ceremony of the London Olympics. When I told her that the leader of a friendly Middle Eastern country seemed actually to believe that she had jumped out of a helicopter. In a pink dress and parachuted into the stadium. And I remember her. Equal pleasure on being told just a few weeks ago that she had been a smash hit. In her performance with Paddington Bear. And perhaps more importantly she knew how to keep us going when times were toughest. In 1940 when this country and this democracy faced the real possibility of extinction she gave a broadcast aged only 14. That was intended to reassure the children of Britain. She said then. We know every one of us that in the end all will be well. She was right. And she was right again in the darkest days of the Kobe pandemic when she came on our screens and told us that we would meet again. And we did. And I know I speak for other prime ministers when I say ex prime minister when I say that she helped to comfort and guide us as well as the nation because she had the patience and the sense of history to see that troubles come and go and that disasters are seldom as bad as they seem. And it was that indomitable ability that humor that work ethic and that sense of history which together made her Elizabeth the great. And when I call her that I should. I won. Elizabeth great. I have one final quality of course which was her humility her single bar electric fire Tupperware using refusal to be grand. And unlike US politicians. With outriders and our armor plated convoys I can tell you as a direct eyewitness that she drove herself in her own car with no detectives and no bodyguard bouncing at alarming speed over the Scottish landscape to the total amazement of the ramblers and the tourists we encountered. And it is that. Indomitable spirit with which she created the modern constitutional monarchy. And institution so strong and so happy and so well understood not just in this country but in the Commonwealth and around the world that this succession has already seamlessly taken place. And I believe she would regard it as her own highest achievement that her son Charles the third will clearly and amply follow her own extraordinary standards of duty and service. And the fact that today we can say with such confidence. God Save the King is a tribute to him. But above all to Elizabeth the great who worked so hard. The former prime minister Boris Johnson paying tribute to Queen Elizabeth the second time. I don't know if you saw this happy yesterday. There's a story passed around about Queen Elizabeth and her drive which is something that Boris Johnson speaking to right now. The story about her driving a member of the Saudi royal family in her Landrover around one of these estates. And of course at the time it was illegal for a female to drive in Saudi Arabia. And obviously she sits in the driving seat and a member of royal family is is concerned to say the least. And what does she do. Power as fast as she can. Well and the guy in the passenger seat got very scared. She had a reputation for driving those cars very quickly. I believe it started World War Two. And this is important. It's an iconic photo. And the young lady was a mechanic. Except it was serious. She was actually it wasn't like a photo op. It was a real skill. Yeah. Some pretty in-store only. So she wouldn't drop a screw on the Chrysler engine distributor. Sounds like something they did. I think that's Tom Project in Lisa Abramowicz. She was not the stereotype of simply a dainty queen who didn't want to get her hands dirty. And I love the images of her with our horses and her dogs with their paws up on her just absolutely in heaven because that's where she left off. There'll be more tributes to the queen. No doubt in the coming nine ten days we'll bring some of those tributes to you. Happy to say that. Joining us now from Brussels is our European correspondent Maria today. And as we've said repeatedly through today Europe's got work to do even if a lot of it has to stop for a while. Maria talked to me about the work being done in Brussels today. Well Jonathan there is a meeting which is still going on and I can tell you I've been here since 8:00 a.m. and this is still going now four hours. This is energy ministers. Remember this emergency meeting was called a week ago when it really did feel the energy market in Europe was about to break. Now the idea. The goal in this meeting of course was to stabilize the market to bring down prices. We know that European energy ministers have been talking about a cap on Russian gas. But what I hear is that inside the room at this stage there is no deal. There is no agreement. And in fact I had a contact with told me if I were you I'd really tone down the expectations because this is still a long road ahead. And what I understand is essentially the issue here is there is an active debate in terms of should you put a price cap on all gases or European countries that trade with each other or should you just do it on Russian gas. That would affect countries like Germany. But it's a very small percentage. But overall you strip away the jargon. And what it shows is that Europe has a big problem but they don't have a solution. Maria you're a font of wisdom and reading in Brussels about what the experts tell the politicians. Do the economists agree that a price cap is efficacious. Again it depends who you ask and I think also at this point you do see a clash between the economics and the politics here. The politicians have also to deal or they worry about potentially social unrest going in the winter. They have to sell this to their populations. They have to show that the effort the bills that they pay they go to something that is helping Ukraine that is freedom is European values. Also when you talk to the different countries they have a very different assessment. So I think at this stage the issue is these are 27 different countries. Tom we talk about the European energy market but the reality is when you know this market you know that is not true. There isn't a European energy market. There's 27 different countries that have 27 different energy mix. They have use different things and you're different resources. So bringing them all together with a solution that fits all is frankly very difficult. Maria to that point the fact that there is not a European energy crisis but a specific Germany and Italy and France crisis is this really an energy challenge for most nations and a German energy crisis. Is that really what we're talking about. Well it is a Germany because this is the biggest economy is it would be well incredibly naive to think that the euro area can go by with the biggest economy and export machine going into recession. Everyone here understands and I know sometimes we talked about the revenge of the southern European countries. Well I can tell you very well they do not want Germany to go into a recession because this would have ripple down effects on everyone else. It would also have it on the effects it would have on the euro too. They don't want to see that. But listen you made a very good point. When you look at Germany this is a gas crisis. When you look at the French. This is a nuclear electricity crisis. That is fundamentally the issue here. You're looking at a market that is being hit from all sides by different reasons. So finding a solution that works for all it is incredibly hard. And plus on top of that you need to be able to sell it politically at home. Maria thank you. Maria Tadeo out of Brussels I have to say where Maria is right now in Brussels time in Belgium. The Belgians have been most upfront about some of the rest on the table here that you ration. How long does it go on for. Not just one win set but potentially five perhaps even more. And also the prospect of a sudden stop to the economy if this whole energy crisis gets a whole lot worse. We're hearing that kind of language from the Dow Jones and I don't think we're hearing that elsewhere in quite the same way. The backdrop to me on this as well. And that speaks to King Charles of third's effort on climate change and what the British have done there. Frankly with Prime Minister Johnson's effort I should point out as well is the idea of what do we do forward on energy in Europe. It was something to be in the plane and see Rotterdam to the east. When you look at Rotterdam coal in the last year that's something no one including the government of the United Kingdom expected 12 month that your flight go over Rotterdam. No no. You go different. No no. We went in. I don't even know you're going to work all at once he said. Well I looked out the window and I saw it as I got work and they said got confused. They said it was Rotterdam. No no. I just was looking at Rotterdam because a Rotterdam call and. OK. Whether it's nat gas or it's Rotterdam coal or Newcastle Coal which is in Australia not near Perth. But if you look at all these different stories none of this a year ago is a discussion. You know Lisa you want to translate. I want to just pivot completely. I'm not going to change it. I'm only going to get it. Haven't you. I'm just going to take this in a little bit different direction which is talking about the different crises. What are the different solutions and are they market based. And I think about the fact I keep going back to this. The gasoline in the United States has fallen for 86 consecutive days. Is this because of demand destruction that will lead to lower energy prices naturally or is this due to an artificiality by the government in terms of opening up the Strategic Petroleum Reserve. One of our favorite guests is Darryl Cohen portfolio manager. How to Come is a DWI us with terrific experience in commodities and particularly away from the usual four stories we talk about. And the worst is truly global truly encyclopedic. What is the story doorway right now in commodities that you don't hear in the media. What is the back story for the fourth quarter of 2022. Well clearly the energy part is a very big part of commodity market and what's going on in Europe today really is a result of the fact that there is less gas available. Now Russian gas is not being delivered to Europe. But we should focus more not just in the immediate situation but also what happens after this winter. In some ways Europe has been very lucky. This year. The drought condition from 2021 did not repeat itself in Asia. So there is more available liquid natural gas for Europe because agent men wind down really a part of the summer that may not repeat next year given how drought is affecting China today as well as the Covid-19 situation. China actually reduced energy demand for China. And we may actually see oil demand for China actually have a right kind result. And that's actually very healthy for Europe this year. I'm not sure it will repeat again next year. Right. Right. That great observation and Jonathan Ferro mentioned this an hour and a half ago or so. We really don't know. The winter is that is coming in Europe. How naive are we about what cold actually does to your world. Clearly you would cause the energy price to spike if the demand suddenly increases because of the weather condition and this limited amount of switching that could be available to Europe at this point. We anticipate coal burning power plant to be maximally utilized this winter just like last winter. And when we see that situation the only way for Europe to get through that is to reduce demand. Somehow we just activities rationing energy which would mean directly impact their income. Doorway I remember when we talked with you earlier this year you said you could see oil prices climbing crude climbing beyond one hundred and fifty dollars a barrel or beyond in the wake of some of the concerns about supply. We now have had a supply cut by OPEC plus members on the prospect of weaker demand. Do you stand by some of those earlier forecasts or do you think that the likelihood of recession in a number of different regions has completely changed the landscape. Well there are a couple of things that is realized now compared to what I said earlier. I earlier from early March it was not very clear how much of the oil from Russia could actually get exported. And now we know much less would disrupt it. We were anticipating two and a half million barrels per day potentially could be disrupted through essentially. That did not occur. In fact Russia has been able to export most of the oil producers and we think less than 900000 barrels per day is disrupted. And secondly the coca situation in China has been very severe. That says the government lockdown has been very thoroughly and very enduring. And that has caused a demand from China to go down. And then higher prices outside of China has also curbed the demand. We've seen actual demand decline year over year from gasoline consumption perspective and that's very significant. So the demand change plus the ability for Russia to continue to export really resulted in the price movement that we've seen. Of course SPRO does help as well for now at some point. U.S. government has to buy back as PR which will reverse others act that way. You're one of our favorites. Thanks for being with us sir. Dalai come there. As D.W. as on the energy situation having a full ass row on Bloomberg opinion today. And I'm sure many if you follow the workers the plus Britain it was on this Truss's plan whether you agree with this or not he raises some important questions. Let's put it that way. I'll quote him trust his policy for short. Does it focus on poor and working class families maintain the semblance of a market to curb demand identify the cost and a way to pay for it. No no and no. Have a blast out on Bloomberg opinion this morning. So it is supply side economics. I'm not going to go under it now because honestly when brain can't do it it's you know I defer to Glenn Hubbard here who I think is absolutely brilliant on this and that you've got to provide market centers into Mr. Blossom Point. Where are the market's incentives of a fiscal or a hydrocarbon policy that directly helps the people that need it most. We haven't heard that yet. What's a half if you will to that first point Tom because it's not targeted. Let's take a very very wealthy family. Have just had their energy bills capped by the government and then can go on consuming as much energy as they like knowing that even if prices go higher. I thought that was a bit of government's going to pay for. I was hoping sort of that I missed something. There you have it. I have. And I felt the same way Tom and Lisa to really calibrate this. I think the the view that came up repeatedly ahead of time before is unveiled because so much of this was leaked was if you're going to do that surely you should make it more targeted. And if you don't be do something about curtailing demand. Well this is the reason why it's so interesting that Doorway Hung who had a very bullish view on oil earlier this year is coming out and saying actually the demand destruction was more than perhaps he had previously expected. And we heard from at Morris. This is the market doing its job. People restraining some of their use their consumption of energy in these sort of in these forums. So at what point do you end up creating a spiral that is costly without any kind of ramification that will be a longer lasting and benefit not one to do it look back. But I think here the coal is so important that will Kennedy and his team need to do a look back of the strategist like Edward Morris at Citigroup that absolutely nailed this call of lower oil. Another new call from at Moss is not on oil prices. What he had to say to us on the last week on energy prices in Europe and how many years Lisa it would take to get them back to where they were in 2020 2021. It is going to be a difficult and very long project years long. A some rally here on S&P 500 futures up seven tenths of one percent. City London got it. Tough to square mile. No doubt checks got an IBEX confirmed rule. No doubt checks. No doubt checks. No mention. Queen Elizabeth the second was the rock on which modern Britain was built by the opportunity to meet her before she passed and she was incredibly gracious and decent woman. She served us all with the strength and wisdom for 70 years. Her Majesty was a rare and reassuring constant amidst rapid change. She was the very spirit of Great Britain and that spirit will enjoy. All this is Bloomberg Surveillance with Tom Keene Jonathan Ferro and Lisa Abramowicz. The tributes are pouring in as a nation mourns its longest reigning monarch Queen Elizabeth the second from London. For our audience worldwide. Good afternoon. This is Bloomberg Surveillance alongside Tom Keene and Lisa Abramowicz Jonathan Ferro being conducted right now. Tom Keene a 96 gun salute once shot for every year of the late queen's life. The tradition here is the dusk gun salute and it is all across this United Kingdom. I'm sure there'll be imagery in a couple days to show the span of the United Kingdom the geography and the honor of these military forces saluting their queen. And of course the attachment here of Prince Philip to the military through the Navy is noted. But also the children and grandchildren of Queen Elizabeth. So there's a huge linkage here. I would suggest John this is symbolism that goes beyond other moments. We've seen this in British history. Alisa the first day of 10 days of mourning for this country and the gun salutes happening not just in the city of London with Hyde Park and Woolwich Barracks and the Tower of London but also beyond in Wales and Scotland and Northern Ireland. And this really raises the theme that we have heard from everyone this morning was talking about the late Queen Elizabeth that she was a uniter and she united the United Kingdom in a way that few others have. Also in the last 10 minutes or so confirmation some that President Joe Biden will attend the queen's funeral. Getting that from NBC that report coming out about 10 minutes ago. This will be extraordinary. And again the imagery for Bloomberg Radio Worldwide. Wonderful camerawork by our different feeds here with London Bridge in the background on the Thames. And also Joe I believe I saw the Tower of London Hearst. There's a lot of love and a huge number of images here. Maybe Portsmouth we're seeing now tell us amazing to see a country that's prepared for this to happen and then just feel totally surprised and unprepared for it. One person one friend reached out to me yesterday and said this figurehead ensured national identity and dignity distinct from politics. And I think for me personally and for many others too that's something you only come to appreciate. Much later in life and particularly I think that's really punctuated with her passing in the last 24 hours. My shock when it happened to be the Telegraph Lisa was to see up a top where they announced King Charles the third. And to see that in a font in type of the Charles the 1st and 2nd of the 17th century it shocked me to see that. And yet of course it should be. And from a U.S. view I was speaking to my father who remembers the day that she was coronated or very and that they had to actually ship film over from the United Kingdom to the United States to place it on the rails for days. And that is what everybody watched. So John John's giving you a sense of just what the reach was and the importance even back then. Well we can get some team coverage for you right now. Bloomberg's Guy Johnson from outside Buckingham Palace Annmarie Horden down in Washington D.C.. Guy we've gone back and forth on this a lot together. I think we've both been anticipating a moment and the country hoping it would never come. It's here. Walk me through the next week now and what was on the schedule and now what's largely off the schedule. Well what is on the schedule is a series of ceremonial events. John I can hear the guns firing there. They're just up the road from me here in Hyde Park corner seven Royal Horse Artillery the ceremonial armour the Royal Regiment of Artillery firing those guns as you say. Ninety six shots will be fired marking the lifespan of Queen Elizabeth. The second we're gonna see a lot of ceremony like that building up ultimately. And we'll get more details over the next day or so probably tomorrow about the funeral that'll will take place in ten days time. That will be a national holiday. That will be a market holiday if it falls on a weekday. John. In the meantime there will be a series of ceremonial events that will take place as well. This session council will meet formally putting forward King Charles as as the monarch. He is obviously already the monarch but that will formalize that process. We will see parliament return. They will swear allegiance to the king. They will effectively have a vote pushing and making the king the king and parliament's recognition of that. So a series of ceremonial events will take place. The queen will go to Edinburgh. She will ultimately come down here to London and lie and rest. The public will be able to gather and pay their respects to her. So a whole series of events that are going to take place a transition of power ultimately this evening. We will hear from King Charles the third that will take place. That speech will be delivered at 6:00 p.m. London time. Do we know where the family is. Bernice King Charles the brothers the sisters the children the grandchildren. Do we know where they are on this first day of mourning that they're all migrating back down south from the highlands the highlands home of the royal family upper Balmoral. They gathered there for the passing of the Queen Tom. And they will then come down ultimately to the seat of power here in London Buckingham Palace behind me. Quite literally a changing of the guards taking place here. You talked about your jigsaw puzzle a little bit earlier on. That is what is taking place here. They they will come back down here. Charles will start the process of his role within this incredibly SIM City sort of simplistic and and orchestrated process. A lot of symbolism surrounding it all. A lot of history that is going to be involved in that process. He is the bigger here. He is ultimately in charge now of all of this. He will. He will meet with the north folks. They will between them decide how this is this process is going to work. The details of the funeral these are his decisions now and he will come back here and make those decisions. Ed Murray from the United States perspective. We did learn that President Biden is going to attend the queen's funeral. He talked finally about his experiences with her. We know that she had quite a relationship also with the Obama family and many other presidents I believe it was 14 that she was the queen through. I'm wondering what this means in terms of the U.S. U.K. relationship how this sort of crystallized that over the years considering that it is considered a nonpolitical job and yet in some ways is one of the key ambassadorial roles. And also the key to that role was Queen Elizabeth. The second she was the constant as you mentioned in these 14 presidential administrations that she had a relationship with. The only individual she didn't personally meet was Lyndon B Johnson. But it started out when she was a princess and she stayed at Blair House because the White House was undergoing renovations under Truman. That this relationship between Queen Elizabeth the second and these presidents started. There's tons of memories that you have heard an outpouring whether it was Senator Schumer talking about the fact that she was the first British monarch to give a joint address to Congress. And then obviously lastly President Biden saw her just last summer with First Lady Jill Biden at Windsor Castle. And there was just an outpouring of love. And I think this summed it up in the president's statement yesterday. She was a stateswoman of unmatched dignity and constancy who deepened the bedrock alliance between the United Kingdom and the United States. She helped make our relationship special. Getting to your point Lisa this quote unquote special relationship. This was something that all presidents really found fondness with the queen. And of course it comes at the backdrop of a difficult moment politically and economically for the United Kingdom with this new prime minister that's being ushered in and what she is facing which is double digit inflation a potential recession and sky high energy bills and new leadership in more ways than one over the last week in this country. Mary just to wrap things up if you've got a decent pitcher Yadav who from Washington will be attending this funeral in the coming week or so. Well the president said yesterday to a Daily Mail reporter as he was leaving the DNC where he started those political remarks about the midterms talking about Queen Elizabeth the second that yes probably he'll be going and NBC is reporting that. So it'll be him and the first lady. We do have Secretary of State Anthony Blinken who is just in Kiev yesterday in Brussels today meeting with Ian Stoltenberg of NATO. He's already in Brussels. I imagine potentially he would also be a teen attending maybe the vice president. We don't know. This is speculation but obviously the U.S. is going to want to send a very strong message at this moment. MH Thank you Amara. Down in Washington Guy Johnson outside of Buckingham Palace this guy pointed out moments ago an address from the King fighters dressed at 6:00 p.m. local time Tom. So that's 1:00 p.m. Eastern Time. Get that one in the diary. King Charles will be addressing the nation. I'm a little bit nicer world. I would suggest John much more than the Commonwealth show addressing the world as we heard from Robin Niblett. There's a terrific Mr. here. I mentioned The New Yorker magazine article of the last 48 hours. There's a terrific mystery here of who this new King Charles the third will be. What was interesting about what Sir Robin had to say is how assertive a Prince Charles was on certain issues. Architecture you mentioned specifically and other topics too. And Lisa perhaps how as king he will have to take a step back and become a different kind of person. Right. Much more of a diplomat someone toeing the line and not necessarily putting forward his own agenda but celebrating the agenda of others and pushing it forward. What I am curious to see is the role of Prince William who will be the inevitable follower to Prince Charles the third and who will come on because Prince Charles is the oldest person to ascend to the monarchy. So what will his role be. What will he push forward whereas his popularity on this trip. Do you think Chairman Power would like to schedule an address. That was a joke. I'm not going there. Maybe it's too early. Maybe. Maybe he'll just postpone the meeting program with someone else. We should explain to our audience on radio. Television. Oh come on. They already Lisa Abramowicz. John you know that in the good spirit and a huge part of our team joining us in London for these 10 days I must say there's a bit of sleep deprivation. Recently kids of the soccer we really go to see Manchester City tops that we knew we were having a big game. That would have been a big game. Don't give us away. No one could tell Don. Thank you John. Coming up Bill Dudley a former New York Fed president on chairman House questionable scheduling over the last 24 hours and a whole lot more from New York and London and worldwide. This is pulling back. Keeping you up to date with news from around the world with the first word. I'm Lisa Matteo. The face of the United Kingdom is changing. Within hours Charles will be formally proclaimed king in a ceremony dating back hundreds of years. He is succeeding his mother who was the country's longest reigning monarch when she died Thursday at the age of 96. Her death set off a 10 day mourning period that will end with a state funeral at Westminster Abbey. European Union energy ministers hold an emergency meeting in Brussels today. They'll discuss the first political steps on how to prevent Russia's cut off of energy supplies from leading to rationing blackouts or even social unrest. The EU is considering a series of radical plans to tame runaway energy prices and keep the lights on. Kim Jong un is raising the stakes for any military confrontation with the U.S. and its allies. Kim expanded the circumstances under which North Korea would launch a nuclear strike. North Korea listed five conditions for using weapons of mass destruction. One of them is if Kim's leadership is threatened. The U.S. Justice Department will appeal a judge's order for a special master to review documents seized from Donald Trump's Florida home. Federal prosecutors say the ruling has awarded a review of potential national security impact. They also want to continue using the classified materials as part of an ongoing criminal investigation. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Lisa Mateo. This is Bloomberg. Think what we asked of her and think what she gave. She showed the world not just how to reign over people. She showed the world how to give. How to love and how to serve and as we look back at that vast arc of service it's sheer duration is almost impossible to take it. A beautiful tribute in parliament from the former prime minister Boris Johnson just moments ago a tribute to Britain's longest reigning monarch. Live from London. Good afternoon to you. Alongside Tom Keene and Lisa Abramowicz some Jonathan Ferro run about an hour and twelve minutes away from the opening band in New York City. The state of things in financial markets looks a little something like their equity futures bouncing back the last couple of days. We add to it by about 30 points on the S&P 500 up 29 up seven tenths of one per cent. Yields back in lower down negative 4 basis points at a 10 year to 320 753. But at dollar weakness and that some euro dollar 1 0 0 42 euro dollar that currency positive almost half of 1 per cent. One of our great inventions the Bloomberg Financial Conditions Index John shows a more accommodative less restrictive state of financial conditions. That's not what Chairman Paul wants that an unwarranted easing of financial conditions would you say. I would suggest it is something worth watching into the weekend and into the Monday. Or you know who we need to call 1 800 Kashkari who likes to see grandma whether the market should be where the market is. I think time is about to offer forward guidance. I think that that's illegal. So I do think that is Kashkari speaking. Exactly. Oh he just as well. We're thrilled that you're with us folks on radio and television. And as we begin this 10 days of mourning and our commitment to London here with Bloomberg Surveillance it is good to speak to the editor in chief of Bloomberg John Micklethwait. And what is important here is his commitment to the literature with Adrian Wooldridge and the number of books that they have put out over the years. I want to go to a what if John because we do not know the schedule forward. There is in the first time I walked into it I fell apart Westminster Hall not Westminster Abbey but this small hall right next to it that that one person on a night in 1941 said we need to save Westminster Hall let the Commons burn and there has to be some heritage there some symbolism as you more in your queen. I think Westminster Hall also was the place as I remember it. And I may have got this wrong but I think Charles the first went to shortly before he was executed and there have been countless other people. So it is it is actually very related to the monarchy and to British history. And so it's right at the middle of things. I do think actually strangely in this case I think there is something very wrong. Your sense of history Tom is correct is that there is something at this precise moment very sort of historical about this. And there's also a sense of the monarchy from an earlier age. If you look at the inheritance from Charles's point of view is coming into a kingdom that is in danger of breaking up. He is coming into a kingdom that has got poor relations with its ancestral other half in France and Germany and things like that. And he's also got a sort of brand new chancellor if you want under the old terms in this trust. So there is there it's a it's a not easy inheritance. And I think in terms of history from the monarchy's point of view this is an unusually difficult time. Notwithstanding the huge amount of coming together that is happening at the moment. John how do you expect that he is going to reposition this monarchy in a way that you describe. I think I think it's a mixture between trying to keep the inherent strength that his mother had which is the ability to bring people together. You and I just talking before you could become from wildly different backgrounds in this country. You could come from wildly different races genders everything. And people saw this woman as a center of what this country was about. And in terms of international influence she was she was about as strong as soft power can get. Everybody you met around the world doesn't matter. Even talking to rulers in Asia. Last couple of weeks ago they are still fascinated by this woman who is after all met everybody or did meet everybody. And so as a kind of weapon of soft power she was extraordinary. Now you have a new person coming in. And I think for Charles the sort of challenges possibly to step back a little bit in terms of his advocacy. He's no longer the heir to the throne. He is actually the he's he now is the person at the middle of the English constitution. He selects who the prime minister can be. That means you have to perhaps come a slightly more objective figure. But the second thing is how how do you update the monarchy quietly. Without losing that sense of power. When you talk about updating the monarchy. One thing that Queen Elizabeth the second dead. Was it she became an icon of culture. She became as one historian said. She has Tower Bridge and a red double decker bus on two legs not to mention big bad afternoon tea village bats and sheep flat tells. How much can the new king King Charles the second really move at a point a chicken Charles a third come out and actually represent something cultural. And if not what relevancy will this monarchy have. Quite interesting. The world in which just thinking whilst you were talking the world in which John and I grew up with John massively younger than me but that Carol Massar stamps. The basic fact is the thing you were used to seeing was the monarch's head on a stamp. Well now we don't see as many stamps. It's difficult to imprint the monarch's head on an email. And issues like that. I do think it is. It's a question of rebranding. When you looked at the Jubilee celebrations recently in which Charles was raised in the middle. You know there were some things that worked. But in great big images on on top of Buckingham Palace there were other things which may be just felt. It was a bit like watching your kind of granddad tried to dance. There was there was a little bit of that. So it's a very difficult thing. And at different times the clever thing about the queen is she was quite good at letting the junior royals go off and try things. There was a famous thing called It's a knockout which is too painful to go through. But you were dressed in medieval costumes and sort of through sponges at each other. But. I don't you know you've got to explain this girl was a kind of game show that appeared on television which the more I think about it the less easier it is to defend to any audience that stretches beyond this particular kingdom. The royals had a game show they did once and it did not work out well. So they perhaps that perhaps was something that went on a game show entirely work. They were like it was like a guest version for charity but it didn't or totally work. And I cannot remember the full details of so pleased. I don't expect to go it. But John is probably not as he says a decent place to pause and reflect just for another moment. There have been times in the history of this royal family even with Queen Elizabeth on the throne where they've had difficulty connecting with the British people. Do you think King Charles is going to have that difficulty. And I think of a particular generation very much enamored with the late Princess Diana who were uncomfortable with Camilla taking the title of Queen. I think that my personal view is that that moved on I remember that very well. But my my sense is that has moved on and Charles has sort of pushed himself notwithstanding certain Netflix series has pushed himself back into the and several films has pushed himself back into the middle. And he is he is now a more respected figure than he was then. But the interesting point is this is that the thing that determines a monarch is that old said Harold Macmillan. Thing about events dear boy events. You know it's what nobody could have guessed what was going to happen to Elizabeth. Nobody can guess what's going to happen to Charles. We know he faces some things like the possibility of Scotland and Northern Ireland maybe leaving his union. We're here for ten days. You have a restaurant. You were supposed to hear the Bloomberg Country Territory. It was banned from mentioning the Crown on Netflix for a whole time here. Just got John Micklethwait from London. This is blowing back. Live from London. Good afternoon to you. Good morning to you stateside about an hour away from the opening bell in New York City the shape of things looks a little something like this on the S&P 500 decent rally the last couple of days. We had some way to bet on the S&P. We advance that he won points up eight tenths of 1 percent. Yields lower by 5 basis points 326 77 10 days of mourning here in the United Kingdom. We'll be on top of those events for you. Couple of updates so far today. King Charles addressing the nation at 6:00 p.m. U.K. time. That's about 14 1/2 hours from now. Some account for that. We were looking ahead to a Bank of England rate decision next week September 15th. We've learned from the bank giving that the NPC will postpone that decision delay it just a one week. So some will get that decision on September 22nd. So a one week delay for the Bank of England. An important point here John is it's very fluid forward as leases mentioned a number of times not just the morning for the queen but the news for word into the weekend. And I'd start with the war in Ukraine. It's very flexible. I think it's good we're in London here given the European story that's out there without a doubt what we see with the morning and time inevitably. And this is going to be of no surprise to anybody. The front page of every single newspaper in this country including the Financial Times Alix Steel really quite moving is on the. If the queen had not enough died yesterday I think we can all predict what would have been on the front page of every single newspaper including the Financial Times this morning. Lisa it would have been on that massive fiscal intervention by the Prime Minister and the potential consequence for bonds also for currency also for credibility of a nation right now struggling to find the right policy response for something very difficult to pinpoint and very difficult to solve is to see if the early days of truss are delayed until the 20th through 2010. I think they have been already. She got a head start. DAX salmon. I think I need to work through those issues still. Well let us continue right now with an important essay entirely his professional wheelhouse. William Dudley joins us. He's a former president of the New York Fed which is a different Fred. And Bill Dudley puts to rest one of the great concerns of I'm really going to call collegiality the doom and gloom crowd that says oh my oh my God we're going to have some form of short term paper crises a liquidity crisis however you want to phrase it. This is the wheelhouse of the New York Fed Bill Dudley why did the adults at the New York Fed including you you've lived it. Why do you disagree with the doom and gloom crew. A couple of things that are very different this time. First of all the Fed has the experience of last time to go by. Last time they were surprised by the demand of banks for reserves and so they unexpectedly drove the amount of reserves too low relative to banks demand. That's why you got the spike in repo rates in September 2019. So they've learned from experience. Second they put in place a standing repo facility now which is available just slightly above market rates. So repo rates were to spike up. Banks would turn to the best Fed standing repo facility so you wouldn't see a big spike and be a little spike this time. Lastly I think you know the Fed's going to be tapering the rate of how its balance sheet shrinks as we get deeper into this process. At first we're running out 60 billion. The Treasury is up to 60 billion of treasuries and 35 billion of aid CMBS each month. But once the reserves in the system get to a significantly lower level the Fed is going to slow the rate of acid runoff and then it's going to stop. Space is going to stop. It's going to stop before they think we're at that critical point where reserves are too scarce. So they're going to learn from past experience. And I don't think they're gonna make mistakes. Right this time. Bill Dudley have we done this before. Here's the New York Fed. Down in the basement it's underneath one of the pizza parlors down in lower Manhattan. Have you done an experiment that says this is gonna work. Are you flying blind. Well I think you did the experiment last time following the great financial crisis. The feds shrunk its balance sheet and we had that experience in 2019 where they shrank shrink it a little too much. Right. They're going gonna learn from that episode and not do the things that they did last time last time. They never slowed the rate of asset runoff. They never stopped the asset runoff prior to the reserves becoming scarce. And I think this time they didn't have a standing repo facility. So I think this time they have sort of a belt and suspenders and they didn't have either a belt or suspenders last time. So their belts and suspenders for a problem that will won't necessarily repeat itself. But where are the belt and suspenders for a dollar getting too strong for the rest of the world to really sustain its momentum. Well this is a problem always that the Fed follows monetary policy based on what's best for the United States. And the consequences to the rest of the world are the consequences for the rest of the world. And a strong dollar is one of the consequences of the Fed tightening monetary policy now quite aggressively. The Fed actually wants the dollar to be relatively firm because a stronger dollar restrains economic activity and it reduces inflation because it reduces the cost of import imports into the United States. So the Fed is not unhappy with the dollar's strength. This is just part and parcel one aspect of how you tighten financial conditions. That being said Bill there has been a lot of discussion about the confluence of tightening around the world the fact that we got 75 basis points from the ECB. Deutsche Bank now calling for another 75 basis point rate hike by the ECB at the next meeting. We have a Federal Reserve doubling down on our hawkish message. At what point do we see all of these tightening cycles come together in an effect that we haven't yet priced in. That's going to be something significant and could move markets more significantly. Well I think what everyone is wondering about is could the central banks collectively overdo it. My view is that that's a very premature thing to worry about at this point. I mean look at the federal funds rate. The United States is still at two point three three percent well below well below what you would consider to be neutral in this current inflation environment. So let's get to a tight monetary policy setting first before we worry about whether the Fed is too tight for too long as maybe other central banks will ultimately turn out to be. The Fed has made it very clear that this is that they need to make the mistake on the era of getting inflation back right at 2 percent. So. So they're going to be tighter for longer than I think people expect. Bill you said something that that it's too premature. The conversation people are having wondering is whether that conversation that debate becomes a little bit more balanced. When do you think that becomes a little bit more balanced where people start to worry that they're either doing it they can sit back and say you know what. That's a valid concern at the moment. The focus is to front load all that good stuff. Hi. Hi. The bigger risk is to do too little not too much. When do you expect that conversation. That debate is a little bit more damage than it is right now. Probably you know first half of next year when we see rates you know 4 percent or higher. We see the unemployment rate starting to move up. The labor market is starting to lose some of the very strong forward momentum we've seen in payroll employment growth. You know as we see the housing sector continue to weaken at some point people start to think about oh how has the Fed actually done enough. Key thing I think the watch is really this status of the U.S. labor market. The U.S. labor market is much too tight to be consistent with 2 percent inflation wages at 5 percent plus or much too high to be consistent with 2 percent inflation. So I think those are the things that really focus on what's happening in the U.S. labor market. So well I'm wondering looking forward at what the sort of tea leaves are going to be. What about the roll off of the balance sheet. That has been a big issue and some people are even talking about the sale of mortgages from the balance sheet and that that could potentially be disruptive. Have you heard anything more on that in the past couple of weeks. I have not. I think that they're unlikely to sell mortgages in the near term for the simple reason that almost all the mortgages they own are now underwater. They're worth less than what the Fed bought them for. Fed already has a problem that their earnings are going to turn negative as they continue to tighten monetary policy. The return on their assets will be less than the cost of their liabilities and to exacerbate those losses by selling mortgages and booking losses. I just think that's not going to happen in the near term. Bill Dudley formerly of the New York Fed and a good friend of the show. And if Bloomberg opinion as well. Bill thank you. Lisa some big questions to ask that. What do you want to pick up on intervention coordinated intervention. Well he was talking about how it's a little too early to say that all of the effects come together. Talk to talk about a pause. We've heard so much about coordinated intervention about the currency coordinated intervention to take some sort of pause and how that's not going to happen because right now the U.S. is benefiting disproportionately from some of these policies. And that I think is a fascinating moment. And that's why it's interesting. He says it's premature. I got at least three emails this week on are we near a new plaza accord. And I do the math for some fancy Bloomberg math. I'm not going to go into it now but the bottom line is we are nowhere near. The calculus the first the second derivative of the inertial force that we saw in 1984 at Renault in Europe. You know how the show often goes. We'll have a conversation and then someone much much smarter will give us some feedback on what they think. So we were talking about Japan yesterday and the be okay. And I sat here and I said a few times that if I was the Treasury or the Federal Reserve my response to the Japanese would be quite simple. If you want a stronger currency do something about it. You're currently pitting yields down so-called yield curve control. I believe the upper band of that on a 10 year is 25 basis points. You're keeping rates unchanged. Everyone else is hiking. I think that's very intuitive to expect very obvious to expect a much weaker currency. And someone wrote and had a conversation with them. And the point they brought up I thought was really really important. What do you think is going to happen if they abandon yield curve control tomorrow. What would happen to the global bond market. Is that something that you think the Federal Reserve would like. That would be a rapid tightening of financial conditions in a way that perhaps would be in a disorderly way unlike what we've seen so far this year and I thought was just an important element to think about that we haven't thought about Dani Burger. I think that that's a really good point. I'm just wrapping my head around this how the calmness how the integrity of the financial system is the priority for a lot of these central banks over specific moved on and the magnitude of it sooner up on radio the Queen concert coming out of the private aircraft of Prince Charles I should say the United Kingdom's aircraft of Prince Charles. There is Prince Charles John down below as they come back to London King Charles the third in addressing the nation. King Charles to get used to that haven't we. To gonna take a while. OK. Essentials do not do that. You said something you said something earlier this morning that I think really resonated with me Tom when you said to see it in writing. Shocked to see it in. Right. Have been preparing for how long. It was completely wrong. Shock. And then you see in writing and all of a sudden it feels so much more real. My book of the Summers on the 17th century Charles one and two and just the three was a shock. Returning to London from Balmoral the royal family's holiday home up in Scotland. And Lisa were here from him a little bit later. Yeah life and about what is it four hours and 20 minutes from now. Young PM in New York about 6:00 p.m. local time on this. Right. Interesting. See whether he puts forward some sort of agenda or whether it's just unifying and somber address representing his mother. Dani Burger is going to join us the vice chairman of one of S&P Global and author of The New Map and Commanding Heights. That conversation coming up from London. This is Bloomberg. Keeping you up to date with news from around the world with the first word. I'm Lisa Matteo. In the U.K. it's the end of one era and the beginning of another. Two days after Queen Elizabeth the second died following more than seven decades as monarch. Her son Charles will be formally proclaimed king. At 73 he is the oldest person to accede to the throne in British history. The U.K. has begun a 10 day mourning period that ends with the queen's funeral. It's prompted another of the hits the Queen Elizabeth's death has prompted the Bank of England to delay its next interest rate decision a week and that is September 22nd. Now the original date fell in the middle of a national mourning period for the queen. The move gives policymakers more time to consider key inflation and jobs data due to be published next week. China is stepping up its defenses against Covid while chunks of the country remain under tight lockdowns. The government is placing more restrictions on internal travel. The steps seem designed to reduce the risk of outbreaks before next month's Communist Party Congress in Beijing. And that's when President Jean Ping is expected to secure a precedent breaking third term in office. Robinhood will distribute information on its users top stock holdings and a new index. The trading platform is offering a monthly snapshot of the top 100 stocks that its users are holding with the most conviction. Now Robinhood measures conviction in a stock by looking at how highly concentrated it is across portfolios. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Lisa Mateo. This is Bloomberg. For you she was your queen to us. She was the queen to us all. She would be with us forever. We will remember in perpetuity the values she never ceased to embody and promote the moral fortitude of democracy and freedom. A tribute to the late Queen Elizabeth a second from Emmanuel Macron the French president. Pictures come again now sent around the world of King Charles the third. Touching down from Balmoral Scotland just moments ago. And now heading to Buckingham Palace where a little bit later on the same thing in the United Kingdom 6:00 p.m. local time. So 1:00 p.m. Eastern we'll have an address from the king ton to the nation. And as you've rightly pointed out some not just the nation to the world I think to the world it is President Biden and Dr. Biden I believe John are confirmed to now attend the funeral and others will hearken back to 1963. It's my only equivalent to shock of Charles de Gaulle and how he Selassie of Ethiopia standing there at Arlington Cemetery seared in my childhood. I don't mean that there's an equivalent there but at the same time I do think that the enormity of what we may see I believe tentatively scheduled Monday of next week could be yet really signify when if a confirmation of that some one when waiting for confirmation. We're waiting for Casey as we're waiting for confirmation to come. This is an honor and we've had an extraordinary first day. John listen I say thank you to our team working around the clock since the death of the queen to bring you voices of perspective. Daniel Yergin is with S&P Global author of a few books on oil and also definitive The Commanding Heights The Battle Between Government and the Marketplace the Remaking of a Modern World. The Queen Elizabeth was so much a part of. Dr. Yergin thank you so much for joining us. And I go back to a conversation you and I had after the death of Baroness Thatcher of a funeral you attended with great emotion in London and the politics of Thatcher and such. There was a relationship of the commanding heights of British politics always with the queen. What will that relationship look like forward with a king. Well this is a king of course is very much part of the modern world. I actually I went to school with him at Cambridge where he was quite a good student. The queen of course was connected and was visible and the staff after it fell apart too. So this will be more forward looking. And Charles has carved out a series of issues that are that are important to him. But he will I think it is regal role. I'll have to be more measured in what he engages in. We spoke with Mohamed El-Erian of Queens College Cambridge this morning. And you bring up the linkage here of something the Queen Elizabeth and Prince Philip wanted. They wanted educated children. Give us give us the scope of King Charles the third's international view. We know so much of his English services. Give us the scope of his international view. I think he's obviously been very engaged with environmental issues that's been very much on his agenda and he's but he's also just had the job. As he travels the world of representing Britain and representing and being the symbol of the Commonwealth as well. So I think that feeds into it. And I remember one of our common professors said that he was a very good student at Cambridge and he would have gotten the very top honors except he had a few other things going which he had to be invested as the Prince of Wales. And that took some time. Took away from the classroom for a while. They're going to invest you as a prince of oil. Oh dad. And actually it's one that that's very relevant at the moment given some of the pressing issues at hand. And we'll get to that in just a minute. But when I look at the book titled Behind You The New Map in this question of the new order of Things and where the Commonwealth fits in. How do you see the alliances sort of shaping and what will the new commonwealth look like. Will it be the United Kingdom. There are so many questions around this unity. Well Britain is I mean is because after Brexit has to cast itself a new role. Remember that role closer to the United States and trying to be in a sense an independent global power. But it's doing so at a time when the economy is really in big trouble. And let's trust the new prime minister has a very difficult job ahead. It is interesting by the way she has embarked on a fashion light program right from the beginning. Definitely. She's made a turn and it really doesn't evoke the woman who is prime minister the longest in the last century and a half Margaret Thatcher. So Dan you are an expert in all things having to do with oil and energy. And this really is at the epicenter of what you are just talking about in terms in terms of this Thatcher esque program. Do you think this is the right solution. How important is it to target. We've been talking about all morning which is the demand side of things and dampen it in order to get things more into balance. Well I think demand has to you know has to come down if you can bring it down 15 percent through almost voluntary response to price and so forth that can take a lot of pressure off. It's striking how much Russian gas to Europe volumes now are down to 9 and 10 percent when it is to be close to 40 percent. Much depends upon the winter. But once you get the storage filled in Europe I think that takes some of the pressure off the market. But every government I just talked to some of the ministers and the different governments they're all having to rush out financial support to consumers to weather this storm that is just not well received the United States. But it's devastating for people's pocketbooks and the economy in Europe. Dr. Juergen Joan Farrow is brought up a number of times the failure of Germany and their hydrocarbon policy with Russia. You are definitive about this and indeed let on it in the commanding heights years ago. Let me cut to the chase and use brutal language. How bad Germany's screw up. Well I think the big mistake was not having it if it's not. I mean after the end of the Cold War Russia is a nuclear power. You have to try and integrate it into the global economy. And energy was one of the ways to do it. I think the big mistake the Germans made were they were confident they would just rely upon that they didn't build energy security and they didn't build diversity so that they were overly dependent. I think that was their problem. And I think shutting down nuclear power turns out to have been not a good idea. In fact reactors are going to be shut down at the end of the year and at least keep a couple of them even there for emergencies or maybe keep them operating. Even Japan after Fukushima did not close down all of its nuclear power Dani Burger some questionable decisions from that country over the last decade or so. Dani Burger. Thank you very much sir. Thank you very much indeed. I saw someone joke yesterday on Twitter and I won't name check them. I'll allow them to do that for the. The next time. Check me all the time on TV and radio with them with us. They talked about maybe Germany needing to adjust and accept some structural reforms perhaps even a package to make sure there's some European solidarity. Now you can see where I'm going with this please. It seems odd to me that Germany is asking for European solidarity on this issue when they've clearly made some very very questionable decisions on energy policy and foreign policy alike over the last couple of decades and sacrifices that countries like Spain might have to make through the winter. When the height of the debt crisis the periphery had to take on a massive amount of structural reform as well as the solidarity the continent 10 years ago. Well what you're pointing to is the real tension emerging in the European Union is only good when it's good for us versus something that is more wide sweeping and helping people out when they need help. Yes we do want another hour. We are going to join me for the opening bell and a stage Omarosa Mike Collins Jonathan. Gone up to coming up C.K.. Outstanding. Looking forward to it. This is an extended edition of Bloomberg Surveillance with Tom Keene Jonathan Ferro and Lisa Abramowicz ISE live from London from audience worldwide. Good afternoon. Good afternoon to you all. This is Bloomberg Surveillance Life on TV and radio alongside Tom Keene and Lisa Abramowicz. Some Jonathan Ferro counting down to the open in about 30 minutes away and equity shaping up as follows pushing higher numbers on S&P 500 futures up seven eight tenths of 1 per cent let's call it high by three quarters of one per cent. S.K. A decent push on the NASDAQ as well by 1 full percentage Jihye Lee. Earlier to one of our good equity girls. I said as a similar to the June rally that we saw sort of a half answer. Here's what I got. But I very see Dow futures up 214 32000 Dow 4000 aspects. And what really impressed me off the Gulfstream was the VIX was a 22 handgun. What were the fairy tales the equity bulls were singin through the summer. Rameau Something about a Fed pepper. Yeah. Then Chairman Paul came out in Jackson Hole Wyoming has said what pivot. Right. And then you have people are pushing back and saying you just don't know it yet. It's going to be hard. Why. And we have a consensus why we've advanced Jason Kelly. No I mean you can pretend that there is some sort of narrative. People are basically saying the dollar the fact that the euro is actually getting some traction that there's a better sentiment if I give a narrative. People will laugh at me and say you really going to try to give us something because you just on radio. John this is really important. RTS. Hold on. The short eventful half hour here in a serious tone. So here in London you know slammed the brakes and shot right now guys of ISE. I mean I'm sorry this our college board a prudential or and like 1964 College Bowl University of Alabama Alabama Crimson Tide Rotate and all that. Good stuff. Yeah. Yeah I know. I'm off to I'm up to speed. You know that college ball is a game where you'd gust questions and write parents that someday that will be like university challenge. Yes. Yes. Very good. The new chancellor won a few times you know. He's quite competent radically incredibly sharp. We're going to stop here. This is important. You can start to stink. Stop. It's already happening for a reason that made it the future of the moment. This cabinet of Prime Minister Truss is just stunning for the rest of the world. It's going to be really interesting. I think expectations are rock bottom because of the challenge they face. And it's a massive challenge at that. And they've come out with a massive massive solution to it. And Lisa I think a lot of people are thrown mad at it but it's incredibly ambitious isn't it. It's a targeted uncapped Tidjane Thiam. Well and Dan Yergin actually was much more delicate than we have been in discussing this plan. He basically said you know you could say it's feasible whatever but the pain is not similar to what is being experienced in the US. When you look at the U.K. and when you look at the European Union when it comes to just the scope of the household. Remember when Tom said he did wanna slow down the Shery Ahn and slow down as chancellor. I'm sure you'll be checking Dow futures. Next we start the Dow futures up 0 4. So so predictable. Thank you. Just come again about 20 minutes ago. Important pictures King Charles. Yes. Touching down in England. Coming back from Balmoral Scotland the royal family's family home holiday home up in Scotland. He's now heading to Buckingham Palace where he'll address the nation. And as Tom pointed out a couple of times in the last few hours address the world as well. See the motorcade had a gopher to Buckingham Palace right now. I believe we can catch up with Guy Johnson from outside Buckingham Palace and catch up with him and get his thoughts on what we can expect to hear. Guy in a roundabout four hours time. I think we're going to expect to hear. I'm going to use the word again John continuity. He is going to want to calm the nation. He is going to want to talk about his mother. I think that that will be the bulk of what we're going to hear today. He's going to pay homage to his mother. He's going to speak about Queen Elizabeth. He's going to speak about her incredibly fondly. He's going to speak about her achievements. And he is then going to look forward. He is going to talk about how he is going to build upon that and how he is he is going to work with what she builds. She earned the respect that she had. He has yet to earn it. He needs to do that. Some guy not to catch you unawares. I hope you read in on this as well. And the royal niceties of it. What is the difference between a queen a queen mother or a queen consort. What does a queen consort is. Camilla listens to her husband King Charles the third this evening. She has been a very controversial figure in British life in British royalty. The second wife of Prince Charles obviously following the death of Diana. She has I have to say if you look at the polling if you look at the way that she has been treated over the last few years grown into the role and she has gained respect. And I think what would have been unachievable a few years ago Tom is now what she is able to fulfill this role that she is able right up into that role as queen consort. So I think it's gonna be it's gonna be interesting to see how she grows into the role. But I think the the public's respect and and feelings for her have changed significantly over the last few years. Not only this afternoon in London on a lovely cloud shield but not rainy day. What kind of crowd turnout do you expect. And then through the week at different events is anyone measured that yet or guesstimate and the crowd attendance. Many Tom there are many people here. I have no idea of the exact numbers. I've certainly seen this area more more packed. But I suspect that over the next few days the numbers will grow. There is a steady stream of people around me there. There are hundreds of cameras here. We are we are sort of encircling Buckingham Palace the man behind the mall behind me. I look over to my right down towards the mall. There are many many people here. And those numbers will continue to grow over the next few days. Obviously we'll be watching. As the put queen's body comes down and people are able to pay their respects and to mourn her directly that there will be a shift of emphasis or location. But but there are many people here and that is understandable. This is a huge moment in British history day. Prince Charles the third Prince Charles was known for trying to push forward a greener energy agenda. That was a really important project to him. We've been talking all morning about how his role as King Charles the third will be very different than his role as prince. Yet a lot of people are wondering what this will do in terms of influencing policy at a time when we're actually moving away from that a little bit globally when it comes to trying to fortify some of the energy sources. What do you expect or what are you hearing on that front. I don't think he will play as a direct role as he had in the past. I think in the past he was seen to to create space for himself create an agenda for himself trying to explain what he was interested in. Now that he is king that role changes. It will be interesting I think to see what William does. He will assume that Buffy of Cornwall will continue his father's work. The duchess of Cornwall in many ways has been the launch pad of many of the green agendas and architectural agendas that the King Charles has pushed through as the Prince of Wales. So it will be anything to see how his son develops that process. But I think King Charles will be deference to Prince Charles Guy Johnson from Buckingham Palace. I think we're all looking forward to that address from King Charles the third a little bit later. Guy thank you. Building on that lease it was Greg Valliere of ATF this morning who wrote the following. Thanks Steve. Amari in D.C. for passing this song. We've sifted through thousands of words on this wondering what King Charles the third will mean for America and the world. The bottom line is important. He may lead the battle for a radical environmental agenda which has fallen out of favor as the dominance of fossil fuels continues to be a political economic necessity. People much close to the story here in the United Kingdom right now take a different view on this. And I think what we heard from Robin Nesbitt a little bit earlier from Shannon House Tom Keene was a suggestion that Prince Charles is going to be very very different to the King Charles Roberts half which is something Geico just months ago. Which is interesting because you wonder how this will affect the alliance between President Biden is trying to push a similar agenda and King Charles the third. But don't expect the same person as when he was Prince Charles evolves. And you know I'll be honest folks I don't know the details in front of me and I don't have a forage binder to brief me on it. But Prince William and the Duchess of Cambridge were the primal scream that Lisa. I know. Move their three children to a different school district. A number of weeks ago. How does that get derailed now. I mean you wonder about a normal family's scream of we want our kids to go to school versus school B for whatever reason. Johnny's looking for a reason with Tom Jones and most Greens. But but seriously to your point their lives change with this as well. Massively everyone's life change. And for those of you just tuning in we will have an address from King Charles the third. We'll get that at 6:00 p.m. local time. So that's about 1:00 p.m. Eastern Time. No doubt. We'll bring that to you. Life on Bloomberg TV and a Bloomberg radio. No doubt you're also interested in the opening bell which is about 21 minutes away with equity futures up eight tenths of one percent. No doubt you were all asking the same question. Can I trust this rally of the last couple of days. Let's try and answer that question for you. I capital Anastasia Amoroso joins us right now. Anastasia can we trust this bounce this rally. I wouldn't I wouldn't just yet. And part of the reason is that we're in a pretty treacherous part of seasonality here. We're in September and typically we see that the market kind of tops out and the first deals second of September and kind of the first week of September. And then let's face it we did not have any major economic developments this week but we're going to for the rest of the month we get the inflation print. Next week we'll see how that shapes up. We're now in the Fed blackout period window. They can't talk about it anymore until September 21st. So I think the market at this tried to extrapolate any sort of data points that we get. And then the other thing that I would say John a lot of what supported the rally over the summer time those forces are going to work in reverse. If we are hitting this sort of potholes and what I mean by that. You had a lot of the CTA community the commodity trading advisors that have been adding length. And you know now that we're kind of trading below the key moving averages they may not be chasing the market higher here. They might be net sellers. You also have the blackout window for buybacks as well. And corporate buyers have been the largest force in the market over a period of summer. And that's not going to be the case in September. So I think it's nice that the futures are looking green today but I probably wouldn't quite trust it for the month of September. Anastasia I definitely sympathize with the bearish outlook and some people might say that that's an understatement just generally in life. However in this case people are making this case for a long time. Right. Things are going to get worse. We haven't seen the full scope of pain. People are not fully pricing in recession. And yet we're seeing another weekly gain after a string of losses. But still the resilience sort of surprising. So what's working against the bears. What is working against that to get people somewhat enthusiastic even if momentarily. Yeah I think we see the big change over the last couple months has been as we're now in this kind of soft landing scenario I think that ISE actually is a scenario for a big part of the market. It's interesting though I was in a big client presentation earlier this week and I asked the question who here thinks we're in a recession. And about 50 percent of the people have actually raised their hands. So maybe 50 percent of the people think that. But the other 50 percent still think that we're in the softer soft landing scenario. That means that the market is likely to be kind of trapped in this range. I think that's what we've really established was this range of between thirty seven hundred two forty three hundred on the S&P. Anastasia what is Bitcoin presentation when you go to a Bitcoin presentation. What does it look like. It was a client presentation and Tom Keene was a client where I get update. We certainly did discuss some crypto. We just got some. I'll look for alternative energy and many more topics. So that's a crypto discussion in the next six months that he's trying to cause trouble. That's just why do you use it to do something good or crypto discussion for the next particular decision but go to the backs of that just to try to create a Segway that's not totally abrupt. Dani Burger. The this question of some of the more peripheral asset classes that have gotten defrost if you will make up words because we're tired here on surveillance. But I am wondering from your perspective whether that's something that we haven't seen the bottom up or whether it's fair to look at some of the things that have gotten most beaten up you know the pandemic darlings that have gotten absolutely eviscerated whether we've seen the bottoming out in the frothy or sectors or whether there's more to go. I think it's definitely broadly speaking that space is worth looking at kind of the unprofitable high growth you know tech area. But I would be very selective there. So for example you mentioned some of the pandemic darlings. I'm not sure that would be the top rate for me to look at right now because yes the valuations have reset but the cattle is there was the pandemic is hopefully very much in the rearview mirror. And if you look at some of those companies that had this outsized you know couple of years of revenue and earnings growth I don't think that's going to be repeatable in the next several years. So I'm not really it to pick up the pieces there. But if you look at parts of technology whether is your favorite semiconductor stocks or software stocks or clean energy style I very much think the catalysts for those are still in the years ahead. And we are looking at earnings growth that should outpace the S&P 500. So those would be the types of companies that I would look at. Anastasia Amoroso thank you for my capital on the latest stunning pictures coming in from outside Buckingham Palace. King Charles the third on the way to Buckingham Palace is stop the car. He's got out surrounded by security and one by one some walking along. People who have come to mourn his mother the late Queen Elizabeth the second shaking hands with them. There was an absolutely stunning cautionary note. John help me here. We've never seen this. So you have to remember this is someone that lost their mother yesterday as an aspect of it that doesn't get discussed much. King Charles the third taking over who shake hands. And we'll have an address from the king later on today in about four hours time list for that 6:00 p.m. local time. This is a human story and it is also a leadership story. But to your point he is mourning the loss of his mother and he's going to give a speech shortly that will demonstrate that loss. But also he needs to step up into a new role. That is not the Prince Charles role. It is a very different one as we've been talking about all morning. And it looks like he is trying to follow in his mother's at least ground work of trying to be with the people and not necessarily be just in the car. I talked about those comments that resonate with so many people that the late queen and short national identity and dignity distinct from politics and at times. Prince Charles has weighed into several topics. Tom hasn't been shy about doing that on things like architecture things like the environment. And there's been a suggestion throughout the whole of this morning in our conversations and Lisa just echoed them that King Charles will have to take on a very very different role. Tom Keene Michael Barr and think about what he can and cannot say. And in this very new position for his security I think was trying to nudge him away. Here it is Donald Trump moment who pushed back many years. A special moment. A special moment. We'll hear from the king himself King Charles the third as I say at 6:00 p.m. local time for our audience on TV will leave you with those pictures. I won't cross over to Bloomberg's Ross Matheson who joins us from here in London. And Ross Unnatural we start to think a little bit more about what we can expect in four hours from the king when he addresses this nation and the Commonwealth. What are your thoughts. Well as you were saying this is a man who's obviously now become king and needs to go into that role. But also he's someone who's just lost his mother. And you can see from those pictures he's engaging with that crowd. But he's also clearly a man who is going through grief at the loss of his mother. They can expect him to talk very personally about her mummy as he has he has sometimes close to quote her and the genuine affection they had with each other particularly the last years of her life. You saw that come out much more publicly than before. So he could be pretty candid about about that and their relationship. He'll also have to sort of talk to the nation really now as they came as people who are going through this grief with him this change in the U.K. with him. And he has to sort of set out some sort of vision in a way really in that moment. Can he also be that source of comfort for the U.K. that his mother was over seven decades through times of turmoil. Can he really reassure the nation that he's with them and he's going to work with them. Rose you could lead all of our worldwide reporting that we have. Please identify the size of this funeral will be a comparison to what we saw for John F. Kennedy in 1963. I can't imagine anybody will not show up. Everyone must attend. Right. Well that's right. I mean this is this is a monarch who wrote for seven decades the longest ruling monarch in British history. This was a woman who spent all her life travelling around the world building those relationships not just with Commonwealth nations but of course with America with many other countries around the world. You saw the affection with which the French president spoke of her last night even when he's had his own tensions with the UK government over Brexit. So you can imagine every leader will want to come here if possible. You'll also see the British people want to be involved in that just the crowds that we're seeing outside Buckingham Palace today. It really will be a momentous moment for the UK to send her off with that funeral both on an official level but also a very personal level for many people here in the UK. Ross Brilliance catch up with you. Thanks for being with us this afternoon Ross Matheson. As we look at pictures of King Charles the third. Shaking hands Tom walking down towards Buckingham Palace where we expect to see an address from him in about four asked High Flyers anarchists as well. We've never seen this. And what's so interesting about this is to compare it with the fiction that we've seen and the different movies of recent years. It is so radically different. I've been told. We will take a course that address by King Charles the third and fourth life on Bloomberg TV and on Bloomberg Radio at 6:00 p.m. local time. That is 1:00 p.m. Eastern Time. One thing that is always in our thoughts though separate from this is this coming Sunday marking the 21st anniversary of 9/11 in the United States. The New York Stock Exchange which typically observes a moment of silence will do so right now. We can head over there to observe that moment of silence for just a moment. Let's listen in. Paying tribute to the victims and the heroes of September 11th with a moment of silence on the New York Stock Exchange some still deeply emotional. Every single year and to think we're now in year 21 21. Yes the 21st anniversary is Sunday editorial. It gets worse every year. I am surprised that it gets more difficult every year. It's true. We'll continue to bring you the latest events out of the UK through the town over the next 10 days as well as we count down towards the opening bell. Difficult to make that turn somber and never get on a program like this. The secondary threat that we've got. So in about eight minutes time we'll get that open about NIKKEI. Some move is just briefly with equity futures rally. Let's get over to AP over in New York Harvey. Hey John. Well with equity futures rallying at S&P 500 on pace for a third day higher the first time that we'll see that in about three weeks. Not surprisingly we have nice gains for stocks led by big tech Apple Microsoft or higher. But in video the chip maker really leading the way up almost 2 percent. This of course as yields are lower that helps valuations look better. But we also have a report that the supply time it has improved by about a day. J.P. Morgan Chase up about six tenths of one percent. So falling yields not weighing on banks. Oil is higher. Brent crude back above 90 dollars per barrel. As you know WTI above 85. So we do have big oil higher up two point one percent. But commodities overall we have a nice rally that Bloomberg Commodities Edge DAX up 1 percent. So you can see Alcoa up three point two percent on strength for the metals. John. John it's a brilliant day to check that through so many Dow and former IBEX components in one of the best. I'm not sure she mentioned the Dow that did she. No she didn't. But it was good to see the makeup. It was a bizarre move. There is a flight. Clearly she knows the rules of the chef. She had some people that jump that patients. My Collins joins us now. We're going to talk about it down with you. We are going to talk about the Federal Reserve chairman the spoke yesterday. Mike he talked about this need to re anchor inflation expectations that the clock was ticking. Was that a man doubling down on the comments from a few Fridays ago. Yeah it certainly seems Jonathan that the central bankers around the world are starting to get a little nervous that these inflation expectations are becoming embedded in wages and prices even as we're seeing a lot of the inflation data forward looking data really start to roll over. In fact we're gonna get a CPI number next week. That could be negative right month over month. So but but these central banks are clearly doubling down on their trying to convince the markets they're going to get rates high and leave them there for longer than the markets believe right now. So the harder part of the curve might not be the front end but rather the long end and a lot of people had conviction. A couple of months ago the long end was where to stay because inevitably central banks would get inflation under control and yields would had lower. Do you agree with that premise or are you moving away from that because of some of the credit risk being introduced by fiscal plans because of the inflationary outlook. Yeah I still think the long end of the curve is going to remain pretty well anchored but I think the bang for your buck not not to get too too inside baseball here but is really in the intermediate part of the curve. That's where we're trying to focus right now. Right. Right now the markets are pricing in a funds rate by next spring of about 4 percent and then slowly going down maybe another 40 basis points throughout next year and then another 60 70 basis points in 2024. I think that's really consistent with the Fed's expected path. But the chances are that this economic outlook continues to deteriorate and they have to. Central banks globally have to reverse course and work more quickly. So so you could get actually a lot of bang for your buck kind of in that five to 10 year part of the Treasury curve. Mike Collins of Major Mike always great to catch up with you sir. Thank you. Pictures just come again. If King Charles the third entering Buckingham Palace on foot. We will hear from him in about four hours time. Some say make it about three and a half hours time. Now an address from King Charles the Fed to the nation and the Commonwealth. A little bit later choreographed but sometimes it's not. That didn't feel choreographed did you. No not at so. At one point folks he pushed water security the way the car stopped. I got out of the car to shake hands Lisa and make his way on foot into Buckingham Palace. It's important because what he's trying to do is follow in the footsteps of his mother who is very far away. Footsteps of the people around her life. From London this is bling back. The opening bell in New York City just seconds away. Live from London. Good afternoon. Futures positive six tenths of 1 percent on the S&P on the NASDAQ 100 higher by eight tenths of 1 percent. Movement in the bond market. Let's take a look at things twos and tens. Your bond market shaping up as follows yields down by two or three basis points. They were much lower. Lisa moments ago they sent Lewis Fed President Jim Bullard. He speaks again. Yeah he was speaking to Bloomberg News saying he's now favoring a third straight 75 basis point rate hike and he expects the Fed to hold rates higher for longer next year. That Wall Street is underestimating this. And he said I wouldn't let one data point sort of dictate what we are going to do at this meeting. So I am leaning more strongly towards 75 at this point. You are seeing a tick higher on the front end is new. I'll tell you what this. This headline is a pushback against where we are right now. So repetitive. The timing is important but it is new Bullard. Markets underpricing higher for longer rates. This for you and I. And for us as well. Tom this was the standout part of the conversation for us in Jackson Alix Steel. Yes it was the pushback from a whole host of Fed officials who thought the market pricing not for September in the meetings after that. Thought the market pricing through 2023 was too dovish looking for rate cuts and the push that he's trying to establish and clearly not alone. Right. And that's important here. He says that markets are under pricing higher for longer rates that they're going to hike maybe towards 4 by the end of the year and then they're going to sit there and maybe sit there for up to twelve months. And it's telling that he's doing this after the market already moved on those prior responses. And it comes as we speak with different strategists who say that they're not buying the Fed when the Fed is saying they are not going to pivot. And perhaps this is the Fed saying listen to us we're not just making things up. We're seeing and again what's so important to me is what's changed today is the Fed and then on one day later to the Bank of England. I think it's just great to see it on the nine at nine o'clock hour here that Caterpillar leads the Dow up this morning. Oh is that right. Two point seven zero. Didn't I say yes against City of London rules. You know the Dow you have the authority from the Square Mile coming into the office every Thursday. Priscilla said authorities FTSE King Charles. The third is changing with a wonderful walk about. We just see you know we quote it wasn't that great wasn't it. Well it's history making. I'm sorry. I mean this isn't like Netflix folks. This is real. And for the next 10 days we thrilled to come to you from John's United Kingdom to let you see these moments that are not choreographed. That was the first moment some for me and I suggested might be for others as well where you felt like the nation was gaining something. And the last 24 hours has been about losing something in the next 10 days will be that way as well. The way the king engaged the crowd gave you a sense that we were gaining something. Can and you'll hear it again repeatedly. Long live the king and we'll hear from the king himself at 6:00 p.m. local time. So we will with the aspects of 30 Dow up 196 DAX today. You Caroline Connan as you're going to school whether he's going to cut your mike in a moment. That is one of the first on the S&P. Let's get some movies. We can do that with. Abby back in New York Abby. Hey John. Well we do of course have a nice start here for stocks. As you all were just talking about the major indexes are higher than S&P 500 upward 13 for the first time. We've seen that in three weeks. A big help. Apple up about six tenths of 1 percent. That of course is the heavyweight. You were talking about the move in bonds. We have a rally there that means yields down. That helps valuation on the big tech and growth stocks look better. So we again have a rally for Apple and some of the other tech such as Microsoft and in video. But even with yields lower banks are higher too. So it's a broad based rally. Take a look at Bank of America. One of the big money center banks up one point three percent. Oil a rally there as well. WTI crude back above eighty five dollars per barrel. That has Chevron up one point four percent. And then finally rounding it out it is again a broad based rally. Commodities higher to that Bloomberg commodity index up more than 1 percent. A piece of it has to do with China. Of course that's CPI data coming out better. They are the world's largest user of natural resources. Copper higher. That means Freeport Mac ran and other miners up 3 percent. Tom John and Lisa Harvey thank you. We're gonna build on this some place to say good friend of this program over the years. Jonathan Golub of Credit Suisse. John you've become a little bit of a rarity. Someone is constructive on this equity market but more bullish. So let's talk about it. What is the bullish s the big argument going into your read. Well I mean I recently there's a lot of very very positive news that's not getting enough press but the most important one is that inflation expectations are absolutely collapsing on where inflation is going to be a year or 18 months from now. And if you look at the one year break even. It's actually predicting that in a year from now we will be below 2 percent on headline CPI. A lot of that is on energy prices. But nonetheless that would be a really big deal. And that's ultimately the reason why the market is saying that the Fed is going to blink. Because if we get to the first quarter and inflation is you know something in the ballpark of 4 percent and the prediction is that there's momentum behind this then it's going to keep falling. Why would the Fed unnecessarily drive us into recession kill you know several million American jobs if in fact inflation is heading in the right direction. There's a bunch of other pauses. But that's the most important story right. John you've got the advantage of Credit Suisse Securities Research. What do they say about this prison corner in Q4 as well. Gosh time. You know this is one of those situations where I find myself in. And on the other side of the conversation with a lot of our analysts the the estimates are coming down across most of of the coverage universe you know across sectors. And the reason is is that companies deliver it in a really really strong second quarter results but then gave very very poor guidance on what the future was going to look like both for the third quarter and then for all of next year. So the analysts listening to company management not you know not looking at the macro data and they have no choice but to lower their estimates in line with that. You know that you know their inputs. And then I'm looking at this environment and saying you know it doesn't look robust. But you know following such a strong second quarter I just don't get why estimates are falling as much. I looked John at the estimate dynamics all that's out there. We're going into a weekend and as you know John all the Gloom crew publishes Friday afternoon. It just seems to be the racket. What do they get most wrong. I think that the big issue is is one of timing. There's always a recession in our in our future and there's two big signals that are quite negative. The first one is that the weekly jobless claims it's people becoming unemployed for the first time. Those readings are going up and that's a legitimate concern. However with so many open job positions these people are getting redeployed into other jobs and the unemployment rate is not going up. So that is something that I think that they're they're only looking at half of the story. The other thing is is that you know the yield curve is inverted. But more importantly the three month to 10 year part of the yield curve is going to invert. When the Fed makes their next move. And that's a really good. That's obviously a big issue. But if you look historically it takes eleven months from that point of time on average to get to a recession. So yes remember recession. But it may be you know a year from now 18 months from now and being early on calling a recession is being wrong. I love how stock analysts are increasingly becoming a bond strategist and vice versa and that seems to be the theme that continues throughout the year. John I want to really tie this together with the question about the pivot and this idea of lower rates. And there's a conviction that the Fed cannot do the damage that a lot of people fear. Today we heard from Jim Bullard coming out yet again saying we don't know what the market is looking at. I'm paraphrasing obviously but that's not what we're seeing. And we plan on doing something that does not look anything like a pivot. How do you get conviction to simply discount that. So Lisa think about this in terms of game theory you know the Fed needs to get inflation down in order to stop. If they tell you that they're going to stop right now you know three four six months from now then inflation expectations are going to rise because the Fed has done. So if they even want the opportunity to pivot. They have to talk really hawkish late. And so you have this very strange dynamic where the CPI next you know next Tuesday is expected to come in at roughly 8 percent a little bit lower than where it was. But a year from now it's expected to be back in the normal range. The Fed needs to manage what's going to happen 12 or 18 months from now. What if they talk too dovish late too early. They're going to they're not going to achieve their goal. So I think that's what you know if there's a bullish argument it's that in many ways of course the Fed is going to talk cautiously. They have no choice. So ignore it. And and so what is the Fed going to do. They're going to just keep pounding and pounding on this hawkish theme and try to ultimately win that conversation. A John Tucker you'll know a couple of days ago and it was a title that I haven't really read much of before earnings estimates collapsing a chunk. When was the last time we talked about that. Because that's what the equity bears have been suggesting. We still haven't had. And that's going to lead to the next leg lower in the equity market. Can you just build on the detail beneath that headline. Earnings estimates collapse and jump. Yeah. So so far this quarter since the end of June. And this is what we're talking about how would our analysts are saying is is a bit different than what I'm seeing right now. The estimates across Wall Street are down about five and a half percent for the third quarter and an over 3 percent for next year. Putting this in perspective this is a really big downdraft on earnings that they're not expected to go negative. But but this is a move really substantially in the wrong direction. What's most concerning John is where it's coming from. And big tech is by far the worst of this of this whole picture. And it's not like it's one group. Internet retail is having a hard time. The big communications companies like Facebook and the Googles on weaker are advertising and software and semis and hardware. So it's it's extremely broad based. And what my guess is is that if the economic data continues to be where it is right now and if you look at the Sydney Economic Surprise Index it's jumping. The data's coming in better than I think you're going to get. Pretty good beats. But the corporate management in the analyst community like I was mentioning before is much more skeptical. So John where do you think that skepticism is justified when it comes to winning so would you acknowledge that some of that around the earnings expectations is justified. Is there in part of the equity market each day while clear off. Yeah I mean so I think that there's actually a really big problem in the technology space in many ways. What we're experiencing now feels a lot like Y2K when we all started working from home. We got new heads at laptops and we signed up for Netflix and our employers had to get new software an infrastructure to allow us to work from home. And there was a massive increase in tech spending but that old activity from the future. And now we're seeing really pretty poor results. I don't know a big fan of the Fang definition but bank stocks had a negative earnings growth of negative 24 percent in the second quarter where the overall market was plus 10. This I think is the biggest difference between tech to the downside versus the market since the iPhone came out well over a decade ago. So that area is actually expected to be weaker. Where I think that you may see more upside is the consumer I think is in better health. And you know even in other areas like like industrials and materials I think that things are OK. I think going to see solid results from defensive shares. What they're really really expensive. So you know Deb but the hold up. OK John. Fantastic catch up he said. John I think of that Credit Suisse with a much more constructive view. Yes. Equity market. Some concerns though. Legitimate concerns Tom around the tech sector in the equity market and the Onyx expectations in the year to come. Absolutely. Oh a moment there maybe of optimism on American capitalism. This is a queen who has seen many prime ministers. And of course it began with Churchill before that. Winston Churchill spoke in Fulton Missouri of our special relationship. Joining us now the former secretary of state of the United States is U.S. special presidential envoy for Energy John Kerry. I must call you Mr. Secretary. John you and I did climate change in Davos a number of years ago. But today we turn to the British royalty and the future of the United Kingdom. There must be a new special relationship with Prime Minister Truss and with King Charles a third. How do you see that special relationship forming. Well that's obviously internal to Britain. And you know I have total confidence. King Charles is very savvy. He's been thinking about this and preparing for it for a long time and standing in for his mother in these recent months. So he already has relationships with most of those folks. And I think I think we'll be very very skilled at sort of marking that line between the requirements of the constitutional monarchy but also urging as former monarchs have a certain sense of direction for the country they love and serve. John Kerry you have a special relationship with the former queen the deceased queen. And then a few years ago you were at a meeting with her and she said oh I saw you on the telly. And it was the acclaim of course of what you're doing in climate. Describe what Queen Elizabeth the second meant to you and the Kerry family. Well I first of all it was it was not a few years ago it was just recently in this past year at an event that King Charles had organized with businesses from all around the world to come in and be supportive of the climate efforts. And he's been deeply involved in those climate efforts in fact. That's why I'm here. We were meeting going to meet yesterday in Scotland and I just was there. Obviously that meeting was canceled that he was summoning business people from around the world together with non-governmental organizations to try to work and exhort action on climate which has been a passion of his for many many years. But my family has always been affected by the queen because my mother spent some period of time when her father was over here doing business and she lived in England. And they all grew up very much as Anglo files fans of the queen particularly. And so you know I but I think everybody feels that way. You know she's lived with much of the population of the planet for a long period of time because of her longevity and the length of her reign 70 years. So there are a whole bunch of people for whom that's the only leader the only sovereign monarch of Great Britain that they know. Secretary Kerry you talked about the role of current King Charles the third in pushing forward the green agenda and the concern about climate change and the need to address it. Do you expect based on your conversations with him with the Monarch Party that we're looking at right now that you will continue in that role as king not just as prince. Well that's up to him to decide and to work out appropriately. I hope he does because I think he's had impact and his voice is critical going forward. It's not political. There's no ideology in it. It's not a Republican Democrat slash Tory Labour issue. It's a universal issue defined by science. And he's been way ahead of the curve for 50 years. But he has been engaged with consequence. So I hope he will be. But it's up to them. You know that he and the palace would decide which direction it will go. Secretary Kerry. Right now it is deeply political with respect to the energy crisis and how it's addressed. And with respect to how to heat homes and things that are being used now include coal. And there is a real effort to bring down prices. So how does this fit in to the efforts to just simply keep households warm to keep things running keep economies in shape going forward. How does that work. Right now. Well it works the way the Europeans and others are making it work. The government of Great Britain has been very clear that working on energy but energy that part of energy policy is not directly. It's not happening because of climate. It's happening because of the war in Ukraine and it's happening because of shortages and other things that contributed. In policy terms that is not the purview of the monarch. That is the purview of those who are in politics. But what he's been doing is urging people to take the climate crisis seriously and to show the ways in which one can enhance an economy. One can make people's lives healthier and safer and cleaner by moving towards an alternative broad based new energy economy a new future. That's something he's been talking about for 50 years. So I think that's different from the politics of the specific energy policy about whether you bail people out or whether you're providing you know a support for the price of fuel as they are. As has been proposed here in Great Britain that's up to the politicians to decide. But I think that His Majesty understands the line between involving and that kind of thing vs. exhortations to greater action. Remember that his predecessors both his mother and the kings prior to that were very outspoken about how to get through the war how to summon the the needed resolve to be able to stand up to the deprivations of the war. And yet even Winston Churchill relied on the king and his engagement in that. So I think that on the climate crisis he understands better than anybody how to do that. I hope his voice will continue to be heard. He spoke at the World Economic Forum last year made I thought a very important speech and contribution in his leadership on this on the Sustainable Markets Initiative which has brought the private sector to the table. It's been vital because we can't solve the problem without the private sector being deeply engaged. And he's been way ahead on that curve to jump before you go. Can you just take a moment to describe the scenes behind you and what it was like to see Charles walk through the gates of Buckingham Palace asking. In all honesty I can't describe that because I'm facing the other way and talking to you and I haven't seen any of that play out. So I thought I thought you might have seen a few minutes ago. That's fine John but please review that. And it was really magical. It was really magical to see. Well thank you for being with us and thank you. I had a camera try to see it John Kerry than the US. I'm sure especially residential. And I know the climate. John Kerry that he missed the moment. He's there at Buckingham Palace. Too many missed the point the moment. But again it's how schedules have been blown up including ours. We're here for ten days. All of a sudden we knew this moment would come. But here we are. And Secretary Kerry's of climate change in Scotland. Things change. That's where we are for the next 10 days. David Merrick joins us now. He saw Olympic senior executive editor for Europe. David before we reflect on that we've got to push forward sir. What's going to take place in this country when we hear from King Charles the third at 6:00 p.m. local time David. Any thoughts on what we can expect from that address to this nation and the Commonwealth. Yes. Well it's going to be a hugely significant moment for the new for the new King Charles. He's clearly been preparing for this as John Kerry said for for a very long time. But that initial pledge to the nation. You know we all heard many times. Queen Elizabeth's vow which she made her a session to serve the country for the entirety of her life. And that was the vow that she made that she clearly kept working until the very end this week. So what will King Charles say. The whole nation will be listening and the broader Commonwealth and world as well. What sort of king is he going to be. You know he's he's in his 70s is the oldest monarch British monarch to ascend the throne. So we've been living with him as Prince of Wales for an awfully long time. But of course it is going to be different with him now having succeeded his mother some of the issues that he cares about which has been talking about his leadership on climate change. We can expect that to continue. But in what. In what fashion. How will that differ from before where there's actually the monarch. David the enormity of the moment of a new prime minister which I would suggest is under duress and X number of prime ministers in the Y number of years with you know and I don't know that statistic but it can inflate here with the death of Queen Elizabeth. Linked the two together the moment of a new prime minister a new king. That's extraordinary. It is extraordinary. And the two leading figures in this country are of course the prime minister and the monarch. We were just getting used to the new prime minister Liz Truss on Tuesday. She travelled to Balmoral to shake the queen's hand. The queen's last act as monarch or official act ready. And the country there is a sense of crisis in the country that what we were talking about the energy crisis the government were preparing the new government of this trust were preparing a huge package of support for households and businesses up to 200 billion pounds worth of subsidies really eye watering numbers. We were expecting an emergency budget to come in the next couple of weeks. Right now all government business is suspended. So a very different sort of administration in Downing Street was being put together by Liz Truss and now a different monarch in Buckingham Palace. It's a it's an entirely new Britain with those two new leaders at the front. David Merritt. David thank you. Thank you very much. It's somewhat a day. And we've got nine more days of monarch in this country. And I think we're all waiting now for that address from this king in a few hours time. And we move on from the address to the events of tonight. And frankly the events of tomorrow. I think we should hear from the prime minister tomorrow as well. Looking forward to hear from the prime minister. And Lisa looking forward to hear from the king. Yes it's regime change on many levels. And this idea of a new path forward in a new environment in a new world order which we've been talking about globalization or regrowth glug. We have sort of a regionally globalized kinds of worlds. We are now looking at a new crown after one had been in place for 70 years a generation a nation in mourning. And the stat I mentioned at the start of the program and I'll end with it Alisa 70 years on the throne longer than 85 percent of this country has been a life. It's amazing amazing to try and get your head around when she came to power. The images we're not able to be transmitted. They used film and they had to ship it over the Atlantic to the United States. Guy Johnson is going to pick things up from here and guide you towards that address from King Charles. The third line from London. This is Bloomberg Surveillance.

Channel: Bloomberg Television

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Id: Ry2lgX0XY1c

Length: 191min 37sec (11497 seconds)

Published: Fri Sep 09 2022