Bloomberg Surveillance TV: July 23rd, 2026

Summary

Bloomberg Surveillance TV: July 23rd, 2026

Podcast Summary
Broadcast July 24, 2026
Hosts: Jonathan Ferro, Lisa Abramowicz, Annmarie Hordern
Episode Theme: Navigating Volatility – Markets, the Fed, and Geopolitical Shocks

---

Overview

This episode of Bloomberg Surveillance brings together leading voices from finance, economics, and politics to assess the current market volatility, ongoing concerns about the Federal Reserve’s next steps, and the impact of escalating geopolitical tensions—particularly the United States’ conflict with Iran. Interviewees discuss how market broadening, yields, inflation, and government spending signal shifts in economic fundamentals and policy, and what investors, policymakers, and everyday Americans could expect in the coming months.

---

Key Discussion Points & Insights

1. Tech Earnings Miss and Market Broadening

Segment: [01:51–04:25]

• Host Jonathan Ferro opens with declining tech stock prices after underwhelming earnings (Tesla, Alphabet), questioning if this signals a Capex or pricing problem.
• Jim Carroll (Morgan Stanley Investment Management):
  • Insight: Current correction is a healthy earnings cycle adjustment, not a crisis. Growth in tech earnings is “unsustainable” at past pace, with markets efficiently rotating to value and other sectors.
  • Quote: “Markets are being very efficient in terms of taking down some of these more technology company prices...in anticipation of slowing earnings going forward.” (Jim Carroll, 02:54)
• Abramowicz notes the unusual resilience of the market despite rising yields.

Noteworthy Dynamics

• Carroll emphasizes the market’s broadening into sectors like healthcare, industrials, and materials, which counterbalances tech declines.
  • Quote: "If many of these hyperscaler stocks go down and bond yields go up, that would absolutely spell a disaster for equity prices...But that's not happening right now." (Jim Carroll, 04:33)

---

2. Federal Reserve Policy Uncertainty

Segment: [05:26–09:15]

• Scenario: Question posed: If Fed Chair Kevin Warsh hikes by 25 bps next week, what happens?
  • Carroll: Market would react negatively; current inflation is supply-driven (oil shock), so a rate hike isn’t appropriate. Higher oil is already a headwind—raising rates would compound, not solve, the problem.
  • Quote: “Why would you hike into a headwind into the market? That doesn't...make a lot of sense.” (Jim Carroll, 05:59)
• Annmarie Hordern probes if entrenched energy price inflation would force the Fed’s hand.
  • Carroll: Not yet visible in Fed’s macro models; rate hikes would only be justified if inflation becomes persistent and broad-based.

Strategic Fed Shift

• Ferro asks if Warsh is “strategically reintroducing volatility” at the front-end of the curve.
• Carroll’s Perspective: Yes—Warsh’s “real time” approach uses the short end as an inflation shock absorber, aiming to stabilize longer-term rates for borrowers. The new Fed is incorporating more supply-side data, moving away from the Powell-era focus on demand.
  • Quote: “If you get the shock absorber right, you get a smooth ride for the back end of the curve.” (Jim Carroll, 08:16)

---

3. Congress, War Funding, and the Iran Conflict

Segment: [11:02–18:54]

• House Speaker Mike Johnson and the Republican-controlled House pass a $1.15 trillion defense bill, including $73 billion for the Iran war and additional priorities (farm aid, the Save America Act).
  • Johnson: “[Iran’s leaders] want to make a deal...but every time...they want to change it...They're not ready. They'll be ready very soon.” (Mike Johnson, 11:15)
• Congressman French Hill discusses U.S. strategy:
  • Priorities: Keeping military stockpiles high, assuring sea lane openness in the Persian Gulf, and preventing a nuclear Iran. Disappointment in lack of more robust international support.
  • Quote: “After decades of trying to pay the Iranians...the long standing Obama negotiation, the risks to Iran having a nuclear weapon were rising...” (Hill, 12:56)
• Hill stresses Senate inertia on budget, possible government shutdown threats, and defensive rationale for sustained military spending despite public opposition and rising gas prices.
  • On public resistance: "No one wants high gas prices...It's been 50 years...We faced assault from Iran...killing Americans, killing our allies, threatening our interests..." (Hill, 15:37)
  • On affordability: “[Countering global threats] cost money. And America is in a leading position both in intelligence and in military affairs.” (Hill, 16:48)
  • On yields and rate hikes: Defers the decision to the Fed, focusing on “meeting the needs of national defense.” Points out the link between conflict, oil prices, and market volatility.

---

4. Bond Yields, Fed Credibility & Market Volatility

Segment: [20:37–24:41]

• Sophia Kearney (Letterman of FH Financial):
  • On the Fed’s Next Move: Expects the Fed to hold rates for the rest of the year, with “more likelihood of a hike than a cut” due to oil-driven inflation and recent dissents among Fed officials.
  • Quote: “We think the Fed will be on hold for the remainder of this year...But more likelihood of a hike than a cut so far.” (Kearney, 20:37)
• Lisa Abramowicz questions whether sustained high yields will drag the economy.
• Kearney: No immediate drag; economy shows resilience, but a prolonged period of high yields could bite.
  • On market volatility: A less communicative, more nimble Fed may be emerging. Every meeting could now be “live.”
    • Quote: “We might be going back to this. Every meeting is a live meeting, depending on what needs to be done.” (Kearney, 23:31)
  • On dissent and expectations: Dissent at the Fed might help anchor inflation expectations.
    • Quote: “Maybe those dissents...would tweak the market...That could actually maybe help [Warsh].” (Kearney, 24:31)

---

Notable Memorable Moments & Quotes

• Jim Carroll on Tech and Markets:
  • "This isn't, to me, an alarm bell. It's just a natural progression of the...earnings cycle." (02:58)
• On the Unusual Market Environment:
  • "Yes, it's unusual...But that's not happening right now. And I think that's a really important signal for us..." (Carroll, 04:33)
• Congressman Hill on War and Gas Prices:
  • “No one wants high gas prices...But no one wants high gas prices. What we want is the Iranians to come to the negotiating table and stick with a deal.” (15:37)
• Sophia Kearney on Fed Policy:
  • “Every meeting is a live meeting, depending on what needs to be done.” (23:31)

---

Timestamps for Key Segments

| Time | Segment | |-----------|---------------------------------------------------| | 01:51 | Tech earnings and market adjustment | | 02:08 | Carroll: Healthy sector rotation | | 04:25 | Broader market resilience; yields discussion | | 05:26 | Fed policy scenario (Warsh, rate hikes) | | 08:10 | New Fed volatility strategy | | 11:02 | Iran war funding: Johnson, Hill, Hordern | | 14:04 | Senate and budget gridlock, looming shutdown | | 15:28 | Hill on gas prices, U.S. role, and war rationale | | 16:36 | Deficit, yields, affordability of war | | 20:37 | Kearney: Fed expectations, inflation, volatility | | 23:31 | Kearney: “Live meetings”, policy nimbleness |

---

Tone & Style

The conversation is frank, analytical, and studiously pragmatic, consistent with Bloomberg’s standard. Industry insiders, policymakers, and economists stress nuance and acknowledge uncertainty in both markets and policy. There’s a heavy focus on resilience—of the economy, markets, and American political institutions—despite shocks and uncharted territory.

---

Final Thoughts

This episode offers a multifaceted look at how markets and policymakers are trying to navigate simultaneous shocks—unexpected tech earnings, dramatic fiscal spending for war, and a shifting monetary regime. The takeaways: volatility may be here to stay, both as a feature and a tool, and the classic playbook for both markets and the Fed is being rapidly rewritten in real time.

Transcript

[IBM Representative]

The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand, but by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business IBM if you're

[Jim Carroll]

a QuickBooks customer looking to grow without the growing pains, you need the Intuit

[Brian from UnitedHealthcare]

ERP, the AI native ERP that upgrades right from QuickBooks.

[John Ferro]

Learn [e-mail] ERP Aging is real and

[Vital Proteins Advertiser]

so are the benefits of adding vital proteins, collagen, peptides to your daily routine. Because around the age of 30, your body needs backup to keep your collagen up to help support healthy hair, skin, nails, bones and joints. Available in the classic Collagen peptides, Collagen and protein Shakespeare and new Vital proteins collagen Sparkling waters so you can stay vital. Stay you. Visit vitalproteins.com to learn more and where to buy. These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.

[Sophia Kearney]

Bloomberg Audio Studios Podcasts Radio News.

[Bloomberg Surveillance Host]

This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro along with Lisa Abramowicz and Annmarie Hordern. Join us each day for insight from the best in markets, economics and geopolitics. From our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from 6 to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always on the Bloomberg Terminal and the Bloomberg Business App.

[John Ferro]

We begin this hour with stocks adding to losses following an underwhelming start to tech earnings. Jim Carroll of Morgan Stanley Investment Management joins us now for more. Jim, welcome. The numbers from Alphabet, the numbers from Tesla. Do we have a Capex problem, a spending issue, or a positioning and price problem in this market?

[Jim Carroll]

I think it's a readjustment in prices, honestly. I mean, you know, look, there's been a lot of expectations for many of these companies. The earnings have been decent. It's just that they're not beating expectations in the way that maybe, you know, people want them to going forward. And look, the earnings run so far for the first half of this year have been very strong. Of course the markets are forward looking. They're looking into the next six months, into the next 12 months months and what they're saying is that the pace of earnings is just not going to be what it was because effectively this run rate of very accelerated earnings is really unsustainable. But that's okay because these companies in this sector has actually been performing not so well this year. It's actually the value sectors, the broadening of the market that's done better this year so far. So I think markets are being very efficient in terms of taking down some of these more technology company prices in the growth sector prices in anticipation of slowing earnings going forward. So this isn't, to me, an alarm bell. It's just a natural progression of the, of the earnings cycle.

[John Ferro]

So, Jim, just to build on that peak earnings growth is a sufficient enough reason alone to stay away from these names.

[Jim Carroll]

I wouldn't say that because it's a question of, it's a question of the valuation. I think that, yes, you know, second quarter earnings will probably mark the peak. I mean, it's going to be hard to beat that going forward. But that does, doesn't mean that the cash flow and that the run rate of cash going forward is going to all of a sudden dry up. Look, what we're hearing from the broader economy is that they have a lot of demand for technology, for compute, and for all of these things that many of these hyperscalers provide. So the demand, I think, is going to be there and it's only going to grow. It's just that the earnings growth rate may not be as fast as it was like in the first half of this year, just going forward. And I think that's these, you know, many of these companies are adjusting in price, and that's actually a very good, healthy sign. And meanwhile, John, you know, as all of this is happening, the equity markets are holding up and they're holding up because the markets broadened out. So, so to me, this is, you know, you know, this is. Okay.

[Lisa Abramowicz]

How unusual is it, Jim, to see the stock market holding up and the broadening out continue with yields continuing to climb?

[Jim Carroll]

If we were having this conversation six months ago, nine months ago, we would have said if many of these hyperscaler stocks go down and bond yields go up, that would absolutely spell a, spell a disaster for, you know, for equity prices broadly. But that's not happening right now. And I think that's a really important signal for us to take away. So is it unusual? Yes, it's unusual. Is it, is it, is it a shock right now? No, because what we're seeing is, is the other side sectors of the markets, the other broadening, if you look at the health care sector, if you look at the consumer, if you look at financials, if you look at industrials, if you look at materials, all of these other sectors are holding up and they're in there making up for some of the losses that we're seeing in the technology sector that people were quite frankly worried about.

[Lisa Abramowicz]

Let's say next week Kevin Wash comes out and announces that the Fed had just hiked rates by 25 basis points, is prepared to take further action to limit inflation and frankly gives what the market already has priced in. Would that affect things in a negative way or in a positive way?

[Jim Carroll]

Yeah, that's a really good question. I'm going to say that it's actually going to impact things in a negative way. And the reason I'm going to say that is, you know, number one, I don't think that the Fed is going to hike rates, you know, this year. But, but the other issue here is that this is a supply side shock. The Fed's tools, monetary policy is there when the economy is overheating because of demand side issues, you know, that taking place, you know, higher wages, you know, rampant hiring, a lot of spending, things like that. When you have a supply shock, when you have an oil or an energy, you know, shock that's coming through, a rate hike is basically just saying we're going to hike into something that's going to slow the market in the future. Higher oil prices is a headwind to the market. Why would you hike into a headwind into the market? It doesn't, to me that doesn't make a lot of sense. So that's why I think the markets would take it negatively when it comes

[Annmarie Hordern]

to what they should do though. Higher oil prices potentially can become entrenched in this economy, especially when you're dealing with an economy that is farm to road to table when it comes to things like groceries. At some point is the Fed going to have to move given the fact that last year they said the cuts were insurance cuts?

[Jim Carroll]

Yeah, so. So if it does become a pervasive, you know, higher level of inflation that's seeping into the core, you know, and it's becoming very, very permanent, then, you know, absolutely, the Fed would have to hike interest rates. I don't think that we're there yet though. I don't think that we're seeing really, you know, the material signs of that that would be running through their large scale macroeconomic models, what they call the FRB US models. So I still think, you know, look, there might be a Dissent, I mean, you know, and I think that Warsh needs to explain that. But, but I think that, you know, a lot of what Warsh is really looking at is his task force and trying to decipher the data and have new data points come in that can help him, you know, disseminate. But, you know, and it's a great question, but I just don't think that we're at the point where we're seeing widespread inflation to the point where the Fed would feel the need to hike interest rates, at least not at this moment.

[John Ferro]

Jim, this is new territory. And given the average age on a trading floor right now, it might be territory that they've never experienced before. We're going into a meeting next week and we don't really know what's going to happen. And that might be a feature, not a bug, of new leadership. You've written about this, Jim. Do you think they are strategically reintroducing volatility into the front end of the curve? Can we just start there?

[Jim Carroll]

Yeah, I do, John. I mean, look, so, so the way that I think that Warsh is approaching this is that he wants to have more contemporaneous, more real time policy reaction meaning, you know, Fed interest rates, hikes and cuts and you know, depending on the cycle, think of the front end of the market as a shock absorber to inflation and inflation expectations. If you get the shock absorber right, you get a smooth ride for the back end of the curve. And the back end of the curve could get more normal, stabilized interest rates. And that's where most borrow. That's what corporates borrow. That's where people borrow for mortgages, for cars, autos and everything else. So I think the uncharted territory that we're moving into here is that, is that, is that Wash will likely be more volatile in terms of his short term views on, on inflation and interest rate policy. But that's there to smooth out the long end. And I think this is a very, very different Fed right now that's going to introduce more supply side indicators, not just rely solely on demand side indicators to help make their policy decisions going forward.

[John Ferro]

Stay with us. More Bloomberg surveillance coming up after this.

[Jamie Lynn Sigler]

Hey everyone, I'm Jamie Lynn Sigler. When I got my diagnosis, I was in my 20s and it turned my whole world upside down. But over time I decided I wasn't going to let it hold me back from my life. I decided to take charge. And after talking to my doctor about my options, the choice for me was obvious. Boom. That's Qysimta learn more about Qysimpta [e-mail]

[IBM Representative]

so there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions. Resolving 94% of common question, not noise Proof of how we can help companies get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Let's create smarter business. IBM.

[Steph from UnitedHealthcare]

Hi, I'm Steph and I work at UnitedHealthcare. When I think about UnitedHealthcare's members, I think of my own family. My niece was diagnosed with an ultra rare genetic disorder. I know how hard it is for families at UnitedHealthcare. We can make it easier.

[Brian from UnitedHealthcare]

I'm Brian. I care because I know what it's like to not speak the language. It's not easy. Health insurance is complicated. I would say our job is to make everything easy for our UHC members. I work for United Healthcare. I'm committed to care.

[John Ferro]

Under Savannahs this morning, doubling down on the war.

[Mike Johnson]

We don't need the hormone street, but we do it because we have to do it, because we cannot let Iran have a nuclear weapon. They're getting hit so hard and they want to make a deal. But I say they're not ready to make a deal because every time they make a deal, they want to change it and everything. They're not ready. They'll be ready very soon.

[John Ferro]

So here's the latest this morning. House Speaker Mike Johnson delivering a win for President Donald Trump's effort to fund the Pentagon. The House narrowly passing a record $1.15 trillion defense bill, setting up billions more in spending for the war with Iran.

[Annmarie Hordern]

So when it comes to this, the President really wanted Congress to act. The House did. The issue is we're probably not going to see the Sen take this up very quickly. This is part of reconciliation. They approved $95 billion part of that, as you mentioned, 73 billion in funding for the Iran war, 12 billion in farm aid, and 10 billion aimed at incentivizing states to adopt elements of the Save America Act. So all these are the President's priorities. The issue is only the House was able to push it forward. And it potentially might be a very hard vote ahead of the midterm elections for some individuals to take that vote. And I don't see Senate Majority Leader Thune acting on this very quickly.

[John Ferro]

Well, let's talk about the view from the House. The Republican Congressman French Hill voting to pass the budget saying that bill, this bill ensures our military has what it needs to deter our adversaries and defend American interests around the globe. Congressman Hill joins us now for more. Congressman, welcome back to the program. It's been too long, my friend. Let's get into some of these issues. You understand well the asymmetric nature of this conflict we have at the moment, the American workforce, the American military is spending an absolute fortune, an absolute fortune right now to fight and defend American interests and global interests for that matter. In that strait, the Iranians are able to use very cheap one way attack drones. Do we really want to get drawn in to an enduring billion dollar skeet shooting over in Iran for as long as the eye can see.

[Congressman French Hill]

Well, first, thanks for having me back. It's always good to be with Team Bloomberg early in the morning. The spending bill for budget reconciliation was important to make sure we keep our stocks high. And I think it's important for the American people understand after decades of trying to pay the Iranians, offer the Iranians diplomatic capability, the long standing Obama negotiation, the risks to Iran having a nuclear weapon were rising and Iran's provocative nature, threatening its Gulf neighbors, using terror with the Houthis to close the Red Sea, to attack Gaza, to continue to disrupt in Syria and Lebanon. I think the president just took the decision we have got to prevent them from having a nuclear weapon which he initiated this spring. So I agree that Iran shouldn't have a nuclear weapon. And we also need global open seas in the Persian Gulf. I would hope that we would have more support from around the world for those international waters. And I think that's something that I've been a little disappointed in in our strategy is not the maintenance of those sea lanes.

[Annmarie Hordern]

Well, we do have the Senate majority leader though when it comes to the funding, saying earlier this week that he's not going to move on the House budget blueprint until the Senate it solves the September 30th funding fight. So when do you actually think we're going to be able to get that money that you think is critical to our troops and military actually out the door?

[Congressman French Hill]

Well, I would hope we could get that done before September 30th is the answer to your question. I think Senator Thune recognizes that the House is now passed also, you didn't mention it. But a continuing resolution fully funding the government until December 4th, that's also a tool that John Thune has that he can bring to the Senate floor because he's fearful that Democrats in the Senate once again to try to get an election advantage, if somebody considers it, one will try to shut the government down. Chuck Schumer's done that twice over the last during this Congress for the longest shutdown in American history. And what I think John Thune has now in his arsenal of suggestions is one, we have a CR to fund government with no additions through December 4th so that we don't have a government government shutdown. And secondly, he could use the Budget Reconciliation Reconciliation act in the Senate potentially to fund government for the rest of the fiscal year. So he's got some choices and I'm sure he'll work with his new Budget Committee chair, Senator Johnson, replacing Lindsey Graham on what those options are.

[Annmarie Hordern]

Was this a hard vote to take? The majority of Americans oppose this war and now gasoline prices are north of $4 a gallon across the United States.

[Jamie Lynn Sigler]

It.

[Congressman French Hill]

Well, I don't think anyone wants high gas prices. There's no question about that. And it's unfortunate that the Iranians don't recognize that they have a once in a lifetime opportunity to return their country to an open society that is lives in peace with its neighbor, not the largest exporter of terror or threatening Europe and Asia with ballistic missiles and a nuclear weapon. And so I think that balance is pretty clear to me. It's been 50 years, five my entire work career. We faced assault from Iran, killing Americans, killing our allies, threatening our interests, trying to assassinate our officials on our own soil here in the United States. And so I think that balance is just something we have to cope with. But no one wants high gas prices. What we want is the Iranians to come to the negotiating table and stick with a deal. And that's what we need to continue to have our allies, including the Pakistanis and others, help forcefully make that case.

[Lisa Abramowicz]

Days Congressman, can we afford a protracted fight right now with our yields climbing, with our deficits climbing, with the bill already significantly higher than some people were prepared to pay for?

[Congressman French Hill]

Look, it's not whether we can afford. There are a lot of challenges that we have in the world that we have to be prepared for. China infiltrating our telecommunication networks and threatening our infrastructure here requires a major investment. Countering that is a significant investment. Countering terror around the world that threatens our interest and our allies interest, countering Putin's advances in Europe and his unwillingness to quit his invasion of Ukraine. All these things cost money. And America is in a leading position both in intelligence and in military affairs.

[Lisa Abramowicz]

Congressman, I guess I'm watching the bond yield space, not to surprise you, you know, here in my seat, but I'm watching how yields have reached the highest levels going back to earlier of last year. Last year. Looking at the fact that a rate hike is almost evenly priced in next week for Fed Chair Kevin Worsh, do you think it's appropriate to potentially hike rates a bit to bring down the long end of the yield curve as the US Is facing all these bills that are getting more expensive to pay?

[Congressman French Hill]

Well, that's a decision the Federal Reserve will have to make. I think what we have to do in Congress is make sure we meet the needs of the national defense to counter the threat threats that we have that are threats that we've inherited for decades and coped with for decades. These are not new threats, not new forces that we face, whether it's Ukraine, the Middle east, generally the Gulf, or Iran's threatening in the region. So I just think we have to be prepared, preparing for a common defense and funding that is one of our most important obligations here in Congress. We, of course want the Iranians to come to the table. You've seen the volatility so since February in global oil prices based on what's happening there. And the minute they come to the table, bring peace and work with their neighbors to reopen the Gulf, I think you see, obviously gas prices and crude oil prices drop precipitously, as we've already witnessed at least twice in the last few months.

[John Ferro]

Stay with us. More Bloomberg surveillance coming up after this.

[Jamie Lynn Sigler]

Hey everyone, I'm Jamie Lynn Sigler. When I got my diagnosis, I was in my 20s and it turned my whole world upside down. But over time, I decided I wasn't going to let it hold me back from my life. I decided to take charge. And after talking to my doctor about my options, the choice for me was obvious. Boom. That's key. Simple. Learn more about qsimta [e-mail] so there's

[IBM Representative]

a lot of noise about AI. But time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM.

[Steph from UnitedHealthcare]

Hi, I'm Steph and I work at UnitedHealthcare. When I think about UnitedHealthcare's members, I think of my own family. My niece was diagnosed with an ultra rare genetic disorder. I know how hard it is for families at UnitedHealthcare. We can make it easier.

[Brian from UnitedHealthcare]

I'm Brian. I care because I know what it's like. To not speak the language is not easy. Health insurance is complicated. I would say our job is to make everything easy for our UHC members. I work for United Health Care. I'm committed to care.

[John Ferro]

Yields still climbing. Here's the take from Sophia Kearney, Letterman of FH Financial writing. We think the Fed will be on hold for the remainder of this year and through the first half of next year. That being said, there is more likelihood of a hike than a cut so far. Joins us now for more. Sophia, good morning. Good to see you.

[Sophia Kearney]

Good morning. Thanks for dropping by.

[John Ferro]

Thanks for being here. What's the argument for a hold given this backdrop right now?

[Sophia Kearney]

You know, I think the big thing is one, you guys just hit on it. Things are changing very rapidly. Right. A week and a half ago after cpi, PI is maybe a different picture than where we are now with WTI crude at 90 and Brent almost at 100. But that being said, you know, the Fed is working off the data they have and we did just get that better than expected June inflation data. So. So I think that this meeting puts them on a hold. That being said, right. More likelihood of a hike than a cut without a doubt this year. And I think the really big risk is where do we go from here with what we've seen in oil, with what we see in expectations and from what we have. You know, we know there are several people on the Fed, Lori Logan, Beth Hammock, Neel Kashkari, that dissented only a couple of months ago because they really were worried about inflation. And now there's more upside.

[John Ferro]

Inflation risk, CPI API of the last week. Why is that a source of comfort for you?

[Sophia Kearney]

Well, you know, I wouldn't say it's a source of comfort. I do think we cheer one good data report, right. We just got the jobless claims number super low. But we also have to remember it's one month. And it was one month that was so good that in the context of inflation you have to go, that's just one month. I think part of it is a reaction to firms are a lot quicker to change prices right now. Right. We had oil come down and we saw the immediate reaction not just in energy prices but also in different core inflation.

[Steph from UnitedHealthcare]

Right.

[Sophia Kearney]

Core was the big surprise rise. We saw that core inflation that was flat, that actually came down to 2.6%. And so the other way you think about it is now it's going the other direction. Are firms going to be equally as fast to pass along price increases from fuel again? So I think we have to put that in the context of its one month, but I do think it sends the Fed into the meeting next week on that sort of wait and see, more than ready to take action.

[Lisa Abramowicz]

Do yields at this level start to impede economic activity in the U.S. you

[Sophia Kearney]

know, I don't think just yet yet, because again, I think we're in this very volatile period. But I think the longer we're here, maybe. That being said, you just mentioned it. We have seen a less interest rate sensitive economy. Right. Even in the last couple of years when, you know, the Fed tightened rapidly, we saw, we keep joking this word resilient, this remarkably resilient economy, and we've continued to see that growth. So I think it depends on how long we see yields at these high levels, because the big thing is we've been in a very volatility volatile period. Right. If you look at the evolution of the yield curve over just this last six months, we've been high and low, largely high, since the war in Iran began. But we're seeing a lot of movement and I think it becomes we have to see a sustained hold at these high levels.

[Lisa Abramowicz]

If it's a more volatile market and it's a more volatile world, does it make sense for Fed policy to be more volatile as well in terms of not just forward guidance, the lack thereof, but also for them to be able to kick up rates one month and then take them down another month?

[Sophia Kearney]

Yeah, I think that might be where we're headed. Right. With that lack of Ford guidance, lack of commitment to a path forward, they want to be nimble and maybe that's a good thing. Right. A lot of people think this is a big shift. We've had Jay Powell for a long time, for eight years, who was very clear in his forward guidance, very communicative, but he really was the one that set that precedent. Right. We haven't always had a Fed that is this communicative than we've gotten used to. And so we might be going back to this. Every meeting is a live meeting, depending on what needs to be done.

[Annmarie Hordern]

You think next week is live as well?

[Sophia Kearney]

I think it's live, but I don't expect that they will make a change. I do think there's a not a small chance there could be dissents.

[Steph from UnitedHealthcare]

Right.

[Sophia Kearney]

Again, we have heard some vocal people that are in favor of raising rates, that concern of inflation. Again, I mentioned Beth Hammock, Lori Logan, but I don't think that there's necessarily the group yet that's ready to make that change.

[John Ferro]

Do you think that does wash a favor, dissenting next week?

[Congressman French Hill]

Maybe.

[Sophia Kearney]

Do you think, you mean given him some credibility in that?

[John Ferro]

Yeah, on the margin, maybe helping him anchor inflation expectations without really doing anything?

[Sophia Kearney]

Yeah, I think it could. That's a great point.

[Annmarie Hordern]

Right.

[Sophia Kearney]

It could sort of set the tone that we are ready to react. And Marsh has been nothing but clear that inflation is the Fed's number one mandate.

[Brian from UnitedHealthcare]

Right.

[Sophia Kearney]

That the statement from June was, was quite short, but it ended very clearly. We will get inflation back to 2%. He reiterated that week, last week when he was doing his congressional testimony, they are committed to 2% inflation. And so maybe those dissents with that would tweak the market, I think to think, oh, September probably is live. That could actually maybe help him.

[Bloomberg Surveillance Host]

This is the Bloomberg Surveillance Podcast bringing you the best in markets, economics and geopolitics. You can watch the show live on Bloomberg TV weekday mornings from 6am to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app,

[Steph from UnitedHealthcare]

Get the

[Sophia Kearney]

news you need in just 15 minutes.

[Jim Carroll]

Start your day with Bloomberg Daybreak, the podcast with a global view on the stories that matter. I'm Nathan Hager.

[Sophia Kearney]

And I'm Karen Moscow. Join us each morning for curated stories on current events, politics, business and foreign

[Jim Carroll]

relations, plus one conversation on the day's

[Congressman French Hill]

biggest developments, all in just 15 minutes.

[Sophia Kearney]

Subscribe to Bloomberg Daybreak for a precise,

[Steph from UnitedHealthcare]

thoughtful take on the stories that matter.

[Jim Carroll]

Listen to Bloomberg Daybreak each morning on Apple, Spotify or anywhere you listen.