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00:00Mixed markets today no real direction when it comes to the stock market. One thing is for certain inflation still top of mind. I'm creating goofed up. Bloomberg Markets starts right now. A little bit of red on the screen here when you look at the stock market down about three tenths of one percent. We've kind of been hopping between positive and negative territory all day long. And once again there's rebalancing flows like liquidity the July 4th holiday in the states coming up. There isn't really a massive bull case for stocks at the moment but there is a massive bear case either. And you can see that with kind of this waffling around in the stock market was not just the stock market arguably as the bond market as well. A six basis point move lower when it comes to yields. Ordinarily that would signal a risk off day but put that in the context of the volatility we've seen. It's not that big of a move just given all this kind of fed hawkishness that we are seeing. And of course you do still see a stronger dollar up about four tenths of one percent. Here's what's not doing though is not necessarily moving commodities although commodities were higher by almost 1 percent earlier in the session. Now about flat. Perhaps all the action isn't in stocks. It's actually in the rest of the market. We're going to keep an eye on that as we talk more about that inflation story. But earlier today let's get to our very own Francine Lacqua who talks to ECB President Christine Legarde as part of a panel to include Fed Chair Jay Powell as well. Lagarde saying that we are indeed in a new era for inflation. I don't think that we're going to go back to that environment of low inflation. And I think that there are forces that have been unleashed as a result of the pandemic as a result of this massive geopolitical shock that we are facing now that are going to change the picture of the landscape within which we operate. And when we think about inflation nationally we think about oil prices a lot of people paying a lot of the pump. But what it has to do is food prices as well. It's really what how much people are paying at the grocery stores that really matters. Let's bring in a true expert to talk about it. Ertharin Cousin CEO of Food Systems for the Future. She's also the former executive director of the United Nations World Food Program. She in charge the last time food prices were this high. And of course she's also was the U.N. U.S. ambassador to the U.N. Agency for Food and Agriculture. So who better to really ask about these challenges Ertharin. I have to talk about this inflationary backdrop because it's not just the war in Ukraine that's pushing things higher food prices. We're already on the rise. How much of this is really a legacy of the Covid-19 pandemic. Well Kitty thank you very much for recognizing that this is a crisis that what has been exacerbated by the Russian invasion into Ukraine but that had already begun as a result Covid also as a result of the impact of climate on the drought in in in both the eastern Africa as well as in the United States and the effects on supply chains and the court the high prices of fuel for the movement of food of food both globally as well as regionally. All of those factors were had already begun to increase the cost of food both domestically and internationally. The Russian invasion into Ukraine exacerbated that not just for those in the countries that directly import from you from Russia and Ukraine but also for the entire global community. Ertharin I'm curious though about simply what you do in a situation like this. I mean as we pointed out in your introduction you were in charge the last time we saw this massive increase in prices and the ripple effects went around the world even contributing perhaps to the Arab Spring. But I have to ask in that kind of situation how much can you really do when it comes to perhaps bringing these prices back down. There is a significant amount that you can do. First and foremost of course you must ensure we must ensure that we provide the humanitarian assistance that is necessary for those who can no longer access food across the globe. And that work and the I must applaud the G7 for the additional 4.5 billion dollars that they committed to supporting humanitarian response. But we need to remember that medium term just like emergency response begins now. And so that means investing in farmers access to the supplies that are necessary for them to plant to ensure that the harvests at the local level are available to fill the gaps in the global food system. That is that that's now created by the geopolitical situation. Ertharin stick with us for a second. I want to put this into context for our viewers when it comes to the price action in particular. For that let's go very quickly to Bloomberg's Abigail Doolittle. Abby walk us through what we've seen when it comes to food prices. Well created it is really pretty amazing with all the inflation that we're talking about this year and what you both are talking about with food prices up more than 10 percent over the last year. If we break it down to the individual commodities not surprisingly we're looking at huge surges. We have wheat up 22 percent corn up 20 percent. We also have soybeans up about 16 percent. What makes it so amazing. This comes after big gains. Last year for instance over the last year wheat up more than 43 percent of course. Wheat corn soybeans and so much of what we eat now. Thankfully there is one commodity. I don't know if it qualifies for our food but thankfully for me at least coffee up just one point seven percent this year. As for how this compares to the commodity surge overall in the top panel here we're taking a look at the Bloomberg Commodity Spot Index since the March lows of 2020 up more than 100 percent. More recently moderating that has less to do with food though. What we have really. Wang industrial metals energy and food in the bottom panel toward the top. They are both off of the highs but you can see both energy and food costs. Those grain cost as agricultural costs really sharply higher contributing to the inflation that you are talking about. Abigail Doolittle. Thank you as always. Putting those moves into some context let's bring back in Ertharin Cousin CEO of Food Systems for the Future. The context the AP was just talking about was actually bring in what you just mentioned the fuel costs as well the trade routes that really come in handy. And of course we're talking about this exacerbation of this magnification of this pain and food prices from the war in Ukraine. But I have to ask how much of that is perhaps changing where you're going to get your food around the world. A lot of those Ukrainian ports for example shut down. Talk to us a little bit about the changes in the globalization or the food systems around the world that we could start to see. What what you need to remember is that yes there are a probably about a dozen countries that does significant portion of their imports for food particularly for wheat and essential oils like sunflower oil come directly from Russia and Ukraine. And that list of course includes ever the countries in East Africa as well as in the Middle East and some in West Africa and as far away as some countries in Asia. But what happens when you take 30 percent of the commodities out of the global food systems as it increases the price of food for the entire global food system. Because you have less commodities there rising prices than occur. Then when you again magnify that challenge as you note with the increase in fuel prices for the movement of that food what it requires then is more regional production of food more and local production of food in order to substitute for those higher priced global food costs. The challenge is those commodities that were just listed wheat rice corn. Those come combined. That's about 60 percent of the of the of the calories that are consumed globally. So what we're going to begin to see is substitutions of foods more locally produce foods in sub-Saharan Africa. There's a there's a lot of work to increase sorghum. And the United States barley and and other grains that can substitute for those commodities that are in short supply and at a higher cost. But those are changes that take time. And that time in fact is what we don't really have the luxury of because the the effects of these higher prices are creating more it's creating more food insecurity in the system as we speak and making more people making those who were vulnerable to food insecurity to food to to on the as as as the present executive director of the World Food Program says on the verge of hunger. Putting them even in a in a more challenging position for accessing as accessing food right now. And the fear is our inability to invest today will result in not just an accessibility problem but an availability problem. Well let me go right there exactly where you left in which is this idea of if you have a food security issue that's creating countries around the world India Hungary Argentina for example to actually create these export bans which is having those ripple effects the very countries that were supposed to make up that lost supply from Russia from Ukraine there are the very countries that are really walking down. Is this the start of worldwide protectionism essentially when it comes to food. Just what we need to avoid. And some have said that this is the end of the global food cycle but the reality is that you don't walk back from globalization. We have an offer to globalization has provided more the most efficient food system that we've ever experienced as a global community. What we need to do is ensure however that we do provide the incentives that are necessary in the support that is required. So countries like India that at the beginning of this crisis were they were they did indeed increase the amount of food that they released into the global food system. But unfortunately because of climate they are now experiencing record highs affecting their own production capacity. With the projection of a reduction of somewhere around 30 percent in their next harvest. And as a result. Now India has limited the amount of food that they're exporting. And in Egypt what we're seeing is this is a country that is dependent upon exports upon imports. And as a result they're limiting their exports supplies. And I think when countries take this type of action to protect their own population they indeed hurt their own smallholder farmers because of price as well as they hurt net importing countries particularly during times when many of those countries are in fiscal stress as a result of the culprit of their Covid responses. Well that farming stories where we're gonna go next. Ertharin Cousin CEO Food Systems for the Future. Well she's staying with us because we still have a lot more to unpack. For now though let's go to Bloomberg First War News with Mark Crumpton Mark Shery Ahn. Thank you. NATO leaders are preparing to overhaul and boost the alliance's defenses in the face of the Russian aggression in Europe. They want to establish a new role model that would put about 300000 troops on high alert. President Biden says the U.S. will set up a permanent headquarters in Poland for the 5th Army Corps. NATO leaders are now meeting in Madrid. And U.S. National Security Council coordinator John Kirby says there is no reason Russian President Vladimir Putin should do the bolstering of forces in NATO's eastern flank as a provocation. He spoke with Bloomberg's Emory or Dern in Madrid. There's no reason that Mr. Putin needs to give you any force posture changes made in NATO's eastern flank as a provocation. NATO is we'll be always has been a defensive alliance. The reason we have to do this is because Mr. Putin has been the destabilizing influence on the continent. Mr. Putin decided to invade a sovereign neighboring state. Mr. Putin is the one who is the aggressor. Mr. Kirby also said the United States is working hard to get Turkey advanced air defense capabilities. The European Union is effectively heralding the end of the era of internal combustion engines. EU members have endorsed a push to eliminate carbon emissions from new cars by 2035. Environment ministers struck a deal after Italy the home of Ferrari and Lamborghini gave up demands for a five year delay. And now to a Bloomberg scoop. Senate Democrats are working on shrinking the tax increases and President Biden's economic package. It is said to be part of a bid to cut a deal with Senator Joe Manchin and get it passed in the coming weeks. The changes under consideration would pare down some of the tax measures passed by the House last year. That could mean both corporations and wealthy households end up facing smaller tax hikes. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts in over 120 countries. I'm Mark Crumpton. This is Bloomberg. This is Bloomberg Markets. I'm pretty Gupta. We're discussing the fight against global inflation. U.S. farmers for example battling floods heat in a bid to replenish those food supplies. It's a little bit deeper. And to dig in with Bloomberg agriculture reporter Jen Skerritt. Jen thank you as always for joining us. There's a lot of challenges for farmers right now. Is not that easy to grow food. Can you walk us through some of those issues. Absolutely and you touched on a couple of really important ones. We've seen weather be a really big issue this spring. Parts of the US growing areas are dealing with flooding excess moisture and others are dealing with heat and drought. So we're in a scenario where every bushel matters. This year's supply is out of Russia and Ukraine are very uncertain. And so everyone is really hoping it's going to be a good year. But there have been a lot of challenges in terms of just getting that crop in the ground and also prices things like fertilizer are very expensive for farmers. So they're kind of in a big squeeze. Well done scared that context so crucial because we're going to bring and thank you as always we're going to bring back in Ertharin Cousin CEO of Food Systems for the Future who has experience in this kind of story. Ertharin in the United States is a massive exporter of of grains in particular. Why is it not that simple to simply plant more grow more export more and kind of solve this food price the price problem especially at a time where a lot of farming is subsidized so aggressively by the federal government. Well did you. The way you stated you make it sound simple but it is anything but the reality is our global food system is quite complex. And yes the US is a significant exporter of grains but so is Russia. So is Ukraine. And they have an effect on what is available in the global market. And you spoke a bit about to do with your last report on fertilizer. We need to to recognize that one out of every two people depend on agricultural products that use fertilizers and higher energy costs. And higher nutrient costs have escalated the cost of fertilizers both here in the United States and abroad affecting production across the globe. Further in 30 seconds very quickly I have to ask how long do you think this food crisis could last. Are we looking at years months. It depends upon what we do. If we take the action that is necessary to support both the what I call preemptive humanitarian spots investing in smallholders in the hope of up there about 500 million who produce 80 percent of the global of the of the food that is consumed in the areas where they work. If we invest in their ability to produce and fill the gaps in the global food chain to avoid an availability crisis we could see a situation that at the end of 2022 we could see light at the end of the tunnel. Our failure to invest both in our domestic production increases as well as the international support that is necessary to those smallholders will move this from and escalate this from an access problem to an availability problem and availability problem that will increase the cost of the. The number of people to some have suggested as many a hundred million more hungry people and increased costs of food here at home as well as certainly a story we're going to keep our eye on as we navigate the inflationary pressures around the world. Ertharin Cousin always a pleasure. Thank you so much for joining us here. Food Systems for the Future. Looking forward to having her back on. Still ahead we're going to dive into Bloomberg's Covid Resilience ranking and where the best and worst places are to be as the world enters this next Covid phase. This is Bloomberg. This is Bloomberg Markets. I'm creating Gupta Bloomberg's Covid Resilience ranking his use a range of data points to capture monthly snapshots of how the world's biggest economies are handling this once in a generation health crisis. China has uniquely handled the pandemic as President Xi Jinping vows to stick with its Covid zero policy. For more let's bring in Carrie Out Off associate professor of epidemiology at the Johns Hopkins Bloomberg School of Public Health. Carrie. Always a pleasure to have you join us. Let's I've in here because in the last week or so we've seen some pretty interesting developments this idea of shortening the quarantine period for China for the markets on a markets reporter at heart. That makes a massive difference in terms of people going in terms of exports getting out. But I'm curious why they made that change. So they are following the science here what we've seen with the Omicron is that the incubation period is a little bit shorter than ancestral strains from which we had those initial estimates of about five to six days. Now it's about two to three days from the time someone's exposed to the time that they have symptom onset. If they are going to be symptomatic. And so what China has done is that they've reduced that quarantine. That was 21 days 14 days in a government facility and seven more in a home environment down to seven days of quarantine. And that is upon entering into the country. There is an additional three days that would then take place after leaving the facility the government facility after seven days. So it's still a big ask. And it is still exceeding what we know to be. The median duration between exposure and symptom onset. And Kerry this is a policy that doesn't look like it's going to abate anytime soon. China very proud of the fact that of all the deaths that they have prevented is something that has been a reason to keep the policy going. But I have to ask as well what happens in the case of another very and one perhaps more contagious of Micron. Does the quarantine period then extend even longer. Do we go backwards. To some extent. It's likely that that we will continue to track these incubation periods because they are so important when we see something become a bit more contagious. That's usually an indication that the incubation period is shortening and so that virus is spreading faster and faster. And so yeah if we have another variant that emergence continues to be even more infectious and spread faster there may need to be more changes. But China could also rebound a little bit. Right. If they do see cases rise if they do see deaths increase in and although I think China can definitely take credit for saving so many lives. You know one thing that they have not published is is their access to deaths. So that is an important indicator of understanding not just directly from Covid and Covid related deaths but also from the fact that when you're in lockdown you may not be seeking the care that you need or if you do seek care. But the hospitals are overrun as we've experienced here in our own country. Individuals may not be receiving the timely care that they need to excess deaths is a good indicator of that. We still don't really know what that picture is in China. Care. We've got about 30 seconds here. I want to ask simply about the asymptomatic cases and how they're actually going about counting some of these cases and simply their testing methodology. Sure. So in China the government and we should make note that that although we saw this federal policy there are still provinces that have different policies. So if you are traveling to China and know where you're going and know where those policies may be changing. Be prepared for additional changes if things change in terms of case numbers. But one thing we have to recognize with these these changes and increase it or the shortening of the incubation period in these asymptomatic cases is that individuals over there are tested every 48 to 72 hours. And so your availability to move around freely in public spaces is highly dependent upon that. They do count both symptomatic and asymptomatic cases. In their case counts will carry Althorp from the Johns Hopkins Bloomberg School of Public Health giving us a little bit of context around the China story. And of course a reminder that the school is supported by Michael R. Bloomberg the founder of Bloomberg LP and this network coming up. Jay Palace Promise. We discussed the outlook for a soft landing with Michelle Meyer of MasterCard Economics Institute. It's really interesting to talk about this in the context of this inflation story. We heard from that panel in central this morning where our very own Francine Lacqua how hawkish is too hawkish. We're going to break it all down. This is Bloomberg. I'm John Tucker and welcome to Bloomberg Markets. And I'm creating you pull off that right into the price action here because that volatility that we've been talking about today not showing up that much actually kind of a muted session. But remember it's the last week of the month last week of the quarter. A lot of this is just going to be those rebalancing flows. Check it out. The S & P 500 down about four tenths of one percent. A lot of action. The bond market down to six basis points on the 10 year yield. But once again put that in the context of volatility. It's not that big of a move. The dollar strength story continues up four tenths of a percent for the Bloomberg dollar index. And take a look at this. The commodity story on the surface it's flat. But John really if you look at that from a 1 percent gain earlier this morning you do see that volatility at least look there. But on the index level for stocks not that much going on. Tell me something more exciting is happening underneath the hood. Well I think one of the trends we are starting to see critique is that analysts are not waiting for negative news. They are laying out the scenarios and showing more of a willingness to be aggressive. Carnival sell off today sizable after Morgan Stanley raised concerns about what would happen if there's another demand shock. Palatine. UBS with some very cautious comments right now on the user realities. And obviously with the economic uncertainty when you've got companies like Bed Bath and Beyond that come out with challenged sales perhaps these analysts feel justified because they have those numbers. Remember you could seen some analysts sharing cautious views now quitting. You've got the likes of General Mills that have had some positive numbers able to place some of their items higher deal with some of the supply chain headaches. But clearly not all companies are going to be in a position to do that as we watch this uncertain economic road ahead. And the answer NIKKEI economic road ahead. I have a lot to do with the I word inflation the R word recession. Earlier today Bloomberg Francine Lacqua talking to Fed Chair Jay Powell on both of those as part of a panel that included ECB President Christine Legarde as well. Powell maintaining that the U.S. can avert a recession. The path back to 2 percent inflation while still retaining sustaining a strong labor market. We believe we can do that. That is our aim. There's no guarantee that we can do that. It's obviously something that's going to be quite challenging. And I would also say that the events of the last few months have made it significantly more challenging. OK let's get some more perspective on those comments. Michelle Meyer chief U.S. economist at MasterCard Economics Institute joining us now. Michelle it was it seemed pretty clear that Chair Powell wanted to stay with a narrative that would be supportive of more interest rate hikes. But he talked about the pathways through which those rates can rise and the economy can avoid it avoid a worst case scenario. Can you walk us through those pathways from your vantage point and what is in store. Sure. So I thought the panel discussion today was was great to all the central bankers up there together talking about these same issues which is that they want to fight this inflation shock. But they wanted to do so without compromising the real economy too much without impairing the labor market too much and clearly without pushing the economy into a recession. So there's a few dynamics there at play and one that share power spent some time talking about which is this rebalancing between demand and supply. The hope is that the the Fed the central banks can cool down demand. But at the same time supply will start to come back as a money supply chain. Issues will hopefully be resolved in some time where you can get this balance where you can have this more stable inflation environment. But as Chip Harlow noted as ECB and Legarde noted you know it gave me a fair amount of luck. Right. They don't really know when they'll get to that balance. They don't really know at this moment how much they need to do in terms of monetary policy. They're going to figure it out as it comes along as they see the dodgy data evolving as they see that transmission through the markets as well. Michelle some comments that really interested me was that when Christine Lagarde said well we're not really going back to what used to be the normal or quote unquote normal of the last two decades really. And have to bring that back to the point that you're just making here about the supply chain issues. The assumption baked into this is that ultimately they will heal. But we're looking at a time of arguably globalization protectionism as in when it comes to say even the food supply. Can we go back to quote unquote normal at all. We don't know what normal is and I think that they were giants have put that they were underscoring that which is look we've had some significant changes since the pandemic and it questions how much we progressed in terms of globalization. Right. These global subtract supply chains ends up being a lot more fragile. And we have seen some onshore and we have seen some localization. And Legarde said specifically is it going to be the case that you manufacturer where you sell you sell where you manufacture. And if that is the case then that means that you're not going to have as much disinflationary pressure. But you also probably won't have as much productivity. So they're trying to sort that out. What is this long run environment look like. How has the world fundamentally changed as a result of the pandemic. And what does that mean for how we will arrive at this steady state for inflation and for potential growth and all these targets that they're working with. To me at this point it's still too early. I know. Look yeah there's a lot of a lot has happened in the last few years as a result of the pandemic. A lot has happened in terms of how we're embracing globalization but we still have a long road ahead before we sort out how this is all going to shake out. Michelle I just want to circle back specifically on the labor market which was brought up today as one of those justifications for being able to push rates higher. I guess the question is what happens when we start to see some weakness there. I know you've been watching that closely. So maybe you can share some perspective with us. Of course we all are. I mean at the end of the day you know what happens in the jobs market is going to inform overall consumer spending. It's going to be an indication of the health of the business community. It's critical. The data so far has shown the labor market is strong. Right. If you look at the high frequency jobless claims numbers which is going to give you a proxy for layoffs they've remains at very low levels. Certain industries are announcing that they're cutting their workforce those related to the housing market those you know in more of the parts of the economy that have had those excesses that are starting to deflate. But broadly speaking there's not much evidence yet in these high frequency data points that we're following the survey measures that there are you know large scale cuts in the workforce said to me the first step would be that perhaps you start to see removal of job openings perhaps you start to see some slow down the pace of job creation. That would actually be in some ways a good thing and that it's again getting to this more healthy normal equilibrium for the economy. Obviously more worrisome would be if you see these kind of large scale layoffs which at the moment is not happening. Michelle Meyer fascinating stuff. The US chief economist at MasterCard Economics Institute always a pleasure to have on our show. Coming up Susan's financial is on his way to playing with the big banks. We speak to chairman CEO Bruce Vance on about the lenders expansion and how it's helping support New York's workforce. That conversation next. This is Bloomberg. This is Bloomberg Markets I'm creating Gupta with John Erlichman Citizens Financial has been on an acquisition spree gradually building its business but not only has been growing physically it's also diversifying its business lines as well. Joining us now for a special in studio treat its citizens financial chairman and CEO Bruce Van Sohn. Bruce thank you as always for joining us. Let's start there. You're growing very quickly at a time when a lot of people are calling for inflation a decline in spending recession. Is your bank really prepared for all those risks. Yeah I think so. So we we went after a couple of smart acquisitions last year somewhere to build up our commercial bank and capital markets capabilities. And then the other big play was to get into the New York metro region which really was a gap in our footprint. So we had New England covered Midland covered but had that hole. So now we have 200 branches in the greater New York area top 10 deposit market share. And you know we're excited by what we think we can do here. Bruce I'm here in Toronto and obviously a lot of the Canadian banks have been acquisition hungry in many of those same regions the last few years as people are hearing about this expansion you've been embarking on at a time when there's growing questions around the economy. If you were to continue down that path what would give you confidence when everyone's reading headlines that are pretty concerning right now. Yeah. So I think it's important to note that this year we're really just focused on integrating what we did last year. So I do think you're going to see banks really focus on making sure they have a strong balance sheet a strong liquidity and funding position. As the Fed embarks on Kuti who knows what happens to surge deposits. So there's we kind of where we would come out of the pandemic and shifted from defense to offense. So last year was kind of the year of offense. I think we're now more equivocal. So we've got to think defense but really focus on integrating what we just did and making sure that we launch those things off to a good start. So that's really the playbook for this year. Well speaking of launching things you built out your capital markets operation quite aggressively at a time when investment banking was kind of falling off a cliff. You just started seal of deal volume dry up. Do you think the deals that you did put out were well-timed. Yeah. So you know what's interesting we have relatively good diversification across the customer base. So we do a lot of work with sponsors and with corporates. We've invested in building up some verticals around some growth areas like health care which are pretty resilient and also kind of data and digital infrastructure companies through the D.H. Capital acquisition. So I think we have enough diversification that our revenue outlook should stay reasonably stable. It won't be at the highs that we had last year. But right now there's still good levels of activity in MSA. There's good activity in the loan markets not as much in the public debt markets and certainly in the equity markets that's fallen off. But that's a relatively small percentage of the overall business that we do. So where's the pain points. There has to be some you're hearing this across corporate America across the banks. They're concerned about this undeniable slowdown in the economy. Where's the hurting for you. Yeah I think that the thing to watch is just the inflation and the impact that that has across the economy and across the the customer base. So particularly kind of the lower end of the economic spectrum is most impacted. And therefore they're spending more on food more on filling up their cars with gas. And so that's really biting. So you know we tend to focus more on affluent customers and borrowers. So must be as big an impact. But we want to make sure those folks are able to get through and give him good advice. And I think the Fed is on the case now. They're really prioritizing bringing down inflation. And I think that'll be to the benefit of the economy and to and to the citizens of the country who are who are kind of starting to suffer a little bit from these higher prices. Well and to that point Bruce I mean obviously in the local area of New York you're trying to allow for some workforce development for those people who maybe want to move beyond a lateral job opportunity right now. Do you think if things cool off for the economy that that's still is possible. Well I think you know you have to look at the fact that unemployment is at three point six percent. And even with rates going up most forecasters say it might head up into four four point one. When we survey our customers they're still constrained in their business models by having a lack of skilled talent. And that's the number one thing. If they could get more of that I think they could grow faster and. Be more successful so it's a great opportunity in a tight labor market to bring people from less represented groups into the economic ladder and give them the skills that they need that they can have and have good careers and make good incomes over time. So we've been already down to Chinatown and we're going to a series of neighborhoods to convene community partners talk about the needs in those neighborhoods and then make grants and work with partners who can help small businesses to grow and become more digital and be more successful and to help individuals upscale themselves so they can take advantage of the opportunities that are out there in the market. I think companies are also looking beyond just college degrees. They're looking for underrepresented people who are smart and hard working and just with the right training can get the skills to unlock some new economic opportunities for them. Bruce really quickly before we go you talked about last year being an opportunity to play some offense in the banking industry. The ability as we saw improvements in the economy to provision last to set aside less money for potentially bad loans was also one of the themes. But as we watch this uncertainty on the economic front is that going to impact your own credit provisioning. Yes. So what's very interesting is that if you listen to the banks talk like us we're in the best of times in terms of credit. So the consumer is in good shape. There's no migrations through delinquency buckets that concern us. And corporations are in great shape. And so we really have a continuing decline in problem credits. And so we kind of look forward and say it's hard to see that even if the economy slows that we're going to end up with significant credit issues and higher provisioning. The market is not saying that. So you know bank stocks have traded off very dramatically from their highs in February. So we'll see how it plays out. You know is Mr. Market right or the bank management teams who feel that we're in good shape. The economy's on a more solid footing than Maple. Maybe people worry about and therefore this should be thanks for oversold and this should be a good year for banks over the second half of the year. All right. We'll see how it all plays out. Bruce thanks very much for your time. Bruce Franson chairman and CEO of Citizens Financial. This is blooper. Time now for what it's worth and it isn't a money number but it's putting a real cost on the economy Spanish inflation unexpectedly surged to a record rising 10 percent. The data coming as the ECB gears up to raise interest rates for the first time in more than a decade. Earlier today at the Central Bank's Annual Policy Forum in Portugal Bloomberg Francine Lacqua moderated a panel that included the ECB president Christine Legarde and the Fed chair Jay Powell. They talked about the current challenges facing the global economy. If what we see for example is the revision of the world into competing geopolitical and economic camps in a reversal of globalization that certainly sounds like lower productivity and lower growth. And in many parts of this side of that you see you see aging demographics. So a shrinking workforce. And you see economies that are growing more slowly and whose workforces are not expanding. So that's some that's certainly a possible outcome I think probably to some extent a likely outcome. And in the shorter term can the economy. Can the U.S. economy actually deal with a possible onslaught of interest rate hikes. So the U.S. economy is actually in pretty strong shape. So if you look back a year the U.S. economy grew more than five and a half percent. It was really the big reopening here. And so we had expected this year to be that growth would moderate to a more sustainable path. We also of course are raising interest rates. And the aim of that is to slow growth down so that supply will have a chance to catch up. We hope that that growth can still remain positive. But if so if you look at the strength of the economy households are in very strong financial shape. They've still got a lot of excess savings from from you know forced savings from not being able to travel and things like that and also from fiscal transfers. So households are overall not not every household and not not the ones at the lower end of the income spectrum but overall in strong shape. The same thing is true of businesses. Very very low rates of default and things like that. Lots of cash on the balance sheet. The labor market is tremendously strong you know still averaging very very high job growth per month. So overall the U.S. economy is in is well positioned to withstand tighter monetary policy. We think it is automatically a tradeoff between fighting inflation or taking care of the economy. And how far are you willing to go with interest rate hikes. So I guess I'd say it this way. Our aim is to is to have growth moderate. It's a sort of a necessary adjustment that needs to happen. So that again supply can catch up. It could be supply of workers. It could be it could be time for the supply chains to you know to improve. So the sense of that is that if we can get right now supply and demand are really out of balance in many parts of the U.S. economy. Labor market being a big example of that. We need to get them better in balance so that inflation can come down. And that's the aim of what we're doing now. We don't have precision tools. Obviously monetary policy famously a blunt tool. That is our aim. That is our intention. We think that there are pathways for us to achieve that to achieve the path back to 2 percent inflation while still retaining a sustaining a strong labor market. We believe we can do that. That is our aim. There's no guarantee that we can do that. It's obviously something that's going to be quite challenging. And I would also say that the events of the last few months have made it significantly more challenging thinking there particularly of the war in Ukraine which has added tremendously to inflate inflationary pressures around food and energy commodities and agricultural chemicals and industrial chemicals and things like that. So it's gotten harder. The pathways have gotten narrower. Nonetheless that is our aim. And we believe that there are pathways to to achieve that right. Fed Chair Jay Powell speaking earlier at the ECB ISE Annual Policy Forum in Portugal. Credit obviously the markets reacting to that. I'm John Erlichman from Critic Gupta. This is Bloomberg.

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Bloomberg Markets: Americas Full Show (06/29/2022)

Kriti Gupta tackles food inflation and Covid resilience with Ertharin Cousin of Food Systems for the Future and Keri Althoff of Johns Hopkins. Then, Kriti Gupta and Jon Erlichman talk inflation and consumer banking with Michelle Meyer of Mastercard Advisors and Bruce Van Saun of Citizens Financial. (Source: Bloomberg)

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