Guy as a markets reporter, lunch unch is something you never want to see. That is where the stoxx 600 is. But it is just above the 200 day moving average. Marks and spencer, intentionally going back to the ftse 100. There is a review going on. It was up 4 yesterday and today. It tells you about the consumer. Consumer is spending money. Admiral, here is another interesting story. This stock is up by 6. 9 . Its auto business is doing better. What is happening is renewal rates are going sharply higher. The inflation rate within the auto sector is high at the moment, being pushed through and sticking. As part of the business is recovering. The stock is up five 6 . Alix the reason i think this one is significant is it closed below the 50 day average yesterday and we are not getting followthrough selling. This is a sign. The filly helping target. It closed at 23 low yesterday. The bars pretty low. But they did lower their forecast so it was not all sunshine and roses. This is where it gets disruptive. You look at the dollaryen and at one point you look at levels that triggered intervention in september. The stronger dollar also putting pressure on the u. N. The u. N. Is getting hit too. Youre a 2014 low. I had not registered how low how much it got hit recently. Do we like this . This that wind up helping . I am not sure but i am wondering where that becomes destabilizing, if it does. Guy we do need to keep an eye on the destabilizing markets significantly. The u. K. Has had a rough couple days. It was the way to story yesterday and today is the cpi story. It is the details within the cpi story indicative of where the bank faces. Headline inflation is coming off but holidays are still causing issues. They are very expensive. What we are seeing your Services Inflation remaining very sticky and core remaining sticky as well. These are the issues he is having to focus on. There has been hence we are going to see a pause. It is this white line, this very sticky services number, that is quite problematic. 7. 4 is the figure. It raises the question of whether the bank of england can pause here. The banks pricing significantly more work for the bank to do that here. Is the bank of england prepared to do it . Alix if you are data dependent but the data is good, how does that work . Governor Andrew Bailey spoke to Francine Lacqua earlier this month. Bailey it is the last mile where policy is doing the work. It will have to remain restrictive to have this effect of urging inflation down, particularly next year. Guy governor bailey talking to francine. The word restrictive is what triggered the notion of the bank was almost done. The data does not point us in this direction. We will adapt the question from the last hour and continue in this hour. As a pause possible given the data . Joining us to discuss this, Bloomberg EconomySenior Reporter kristine aquino. Bloomberg markets managing editor. Philip, let me start with you. You cover this touring day in and day out. Has been a growing expectation the ink is near the end. The last mile. Does the data support the idea we are in the last mile . Philip it does not at the moment. The wage data was massively above their expectations. Services inflation you pointed to work acting 7. 3. The previous Inflation Report or Monetary Policy report forecast was below 6 for their expectation on this print today. It has gone up significantly and is way above where they were expecting. There is definitely no immediate indication they can pause. Alix does the market have it right . The market price in 6 . Kristine they are also reacting to the data. We know especially in the u. K. That markets have continuously pushed the break of england one way, only for the bank to push back. That is what we are seeing again now. Looking at the inflation data, as philip mentioned, it looks there looks like there is no way they could be pausing. An inflation surprise for the third month that we have seen Something Like this. I think what we heard from the bank of england is kind of a tacit admission that in addition to needing to maybe keep rates higher for longer, it is also potentially admitted inflation may have to be above target longer than expected. Guy alix steel, you talk about the markets being right this time. And i were joking just a moment ago. The market has been right. The market has continued to be right. I think philip asked a question to the Deputy Governor at one preference at one conference. The market continues to be right. Alix as i said these words, i was going to say the markets have been right the whole time and guy will call me out which you did. What else is the market telling the bank of england . Philip they are obviously very worried and thing much more needs to be done. Then again, just a few days ago, only 5. 5 was fully priced in for the peak interest rate. They have moved themselves. To be honest, he has got some time. It does not have to make a decision until midseptember and by then, it would have seen the next inflation print and next wage data. These metrics have been moving around. If you think back to the other star of the year, around february, the bank debt first indicates it may be nearing the end of the rate hike cycle. Then things swung back. Everything got very inflationary. The next two releases are going to be critical releases. The releases we have have this week are important. But we can see a complete reversal and have a big collapse in wages or inflation. This is going to be the determining factor. Guy the other thing the question poses is about a pause. And whether or not, kristine, we have had so much policy still to come through that what we now need to do is think about the impact this is going to have. If you look at the average numbers at the moment, lets call it circa 3 and wages are higher. You have to close the gap between where the average of mortgages that people are paying and the average wages are. I am wondering how the bake judges this and what it does with this in terms of its understanding. A much have we done so far . How much is to hit . How much of an affect are we going to have . That may be takes as to the pause. We have tightened a loss, lets see what happens. What case can be made for that . Kristine that is exactly what the bank of england is working with at the moment. They recognize they have the policy like they are contending with in the u. K. Because of the way the mortgage is structured. But also in general when it comes to Monetary Policy, you can easily gain a situation where the economy is already feeling the impacts of policy you delivered six months ago. Guy but the bank has been pushed into rate rises by the data. That is the conundrum. The longer a variable lags, i am wearing whether a bank model is the Bank Understanding of the economy and its models are good enough to understand the data pushing toward rate hikes and the understanding of how much of the policy is still to come through. Kristine when it comes to the forecasting ability of the bank, there is a reason. It is being reviewed by ben bernanke. They have seen time and time again surprises from the data versus their own forecast. It is particularly a huge thing in the u. K. , especially because they have the highest nominal inflation rate of all major economies. The fed has less then half the inflation rate they are contending with but Jerome Powell and the rest of the fed is trying to walk the hawkish line. Our data dependent but you can tell they want to air on the side of more rate hikes. The bank is unique in this, perhaps this guided lease so. Depends on what the review reveals. This is part of what makes the u. K. Inflation growth conundrum particularly interesting. Alix also things like Airline Tickets and hotels will come down. Philip, say we get to 6 and stay there a bit. Happens to the economy . Or even just higher for longer with these rates . Philip once again, we have been saying rates at 5. 5 would crash the economy. 6 will crash the economy. The economy is appearing to be more resilient than all of us. The latest tvp numbers have been better than expected. We have the stock market showing resilience in peoples pockets. It is entirely possible that we can sustain 6 rates without crossing into a recession. We will be in the sight inflation territory we are in now until nation disappears. Alix guy is going shopping for jeans with will have an whole different impact on stuff. You never know. Philip aldrick, u. K. Economist Senior Reporter and kristine aquino, managing editor. Thank you. Coming up, is the pause possible given the data . Emma wall Hargreaves Lansdown joins us. This is bloomberg. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com i definitely think it a posits not only possible but probable. The Biggest Issue we are all trying to grapple with is be want the fed and economy to look like it did the last 10 years. It is more likely to look like the fed we had 10 to 15 years earlier than this where you had Interest Rates that were not negative and are getting used to that. Guy caros life, chief Investment Officer at bmo carol schleif, people Investment Officer at bmo. Is a pause possible given the data . Depends on what side of the atlantic you reside. If i am american, am i thinking about the answer to this question differently than if i live in the cave . Emma i think very much so. The news in the u. K. This morning is very welcome but if we are playing whackamole, that is changing. The service upi is changing. There is risk we can see in the u. K. Which is different from the u. S. Which is like optic inflation. In the u. K. , the bank of england still has more work to do. The Federal Reserve potentially has less. 3 is still higher than their target but much closer than high 6 area then the high 6 in the u. K. Alix what is the case for playing whackamole and just for this . Emma if we are talking about the u. K. , they will continue to whack the they cannot afford to continue to whackamole because the u. K. Consumer is, despite headwinds and challenges, looking considerably robust. People are getting wage increases. The jobs market is looking reasonably healthy. It is patchy and some ways inflation is up to certain sectors, not across all sectors. People were spending an mns. People are managing somehow to absorb Insurance Premium increases between 20 and 30 thats 20 and 30 . Premiums are really going up in the u. K. People are managing to absorb increases in prices across the board. If you are the bank of england and trying to walk the tightrope of not setting the consumer and not setting corporate, you can have further to go. There is also the fact of timing. U. K. Did take longer to start raising rates so technically we are behind in terms of our rate cycle but it is quite a difficult time. Guy what does it mean for bank of england assets . Do i pause by guilt . We are of 4. 6 at the moment. What is this befriend the best assets. Do i look at the 250 or a saint tournament. At the 250 or . How does this change the narrative . Emma they do not like the idea that there will be more rate hikes. We saw this at the beginning that they believe there would be stronger wage data. Ftse came off actually. The mix you are talking about is interesting because from smaller domestic stocks, they have had such a difficult time over the last few years. There is interesting value to be heard about that and Smaller Companies in the u. K. Have been bashed again and again. Lets not forget brexit. Also, a lot of the pain has been have been hlaved. If you are a small u. K. Company and have managed to make it through brexit and covid and restructuring, you have been able to build in efficiencies not across the board but there are Smaller Companies have done the work to get themselves to where they are more robust and resilient. Alix what do you do about cyclicals . In europe, cyclicals have started to decrease. I am wondering how much more this has if we wind up seeing noah pozner higher for longer . Emma europe is an interesting case. Talk about the euro but it is a group of Different Countries with very different drive. Germany has had a hard year in terms of growth. France has had better in terms of the stock market because luxury stocks have absolutely helped the French Market outperform two seemingly form resilience against things like price rises and luxury stocks. In europe, it is more difficult to tell. There are opportunities potentially that we are slightly underweight versus on the markets. Guy our bonds a balance to equity at the moment . How do you there is a lot of uncertainty so you do not diversify . But how much correlation is there between assets . I keep seeing days when bonds and equity go down. Emma it depends whether you are investing for growth or income. Price volatility is here to stay for a little while. You cannot have this much macro uncertainty and Political Uncertainty as not have stock market volatility. If you are looking for income, bonds are incredibly competitive. Deals like this despite inflation being high. If you can fix 5 for 10 years inflation will not be 5 for 10 years but that is very attractive. If you are looking for growth, granted when things become strange, they become more correlated, but it should be for the longterm. Over the longterm, you see good diversification if you mix up the asset classes. Alix coming up, the view from the worlds biggest sovereign role funds. We will had to worry norway about what is worrying an executive 20. Trillions of dollars. I was hesitant to get the hearing aids because of my short hair. But nobody even sees them. Our nearly invisible hearing aids are just one reason weve been the brand leader for over 75 years. When i finally could hear for the first time, i started crying. I could hear everything. Call 1800miracle and schedule your free hearing evaluation today. This allnew ariya is an elegant ev. Yeah, with 389 horsepower. And allwheel drive. Its beautiful. Its a beast. Its electric. With an edge. Oh, lets go with that. Alix norways Sovereign Wealth Fund is one of the biggest in the world. Spoke with the ceo about some big risks he is factoring into investment decisions. One of the new things is the length the link between climate and inflation has become stronger. We have seen the climate affecting prices and all these kind of things. But the new thing is the change from Global Warming to Global Change is fantastic. There are parts of the world where you cannot even work. Therefore the leap between climate and inflation is stronger than before. Guy in spain, for a long time, that has been trained. They call that the siesta. Are there places we will look in europe outside . In italy, you stop working in the middle of the day forever. Where is that a new development . Nicolai it is a new development in many countries. We have seen heat waves we have not seen before. July is the hottest month we have seen since the world began. It is not called a siesta anymore. It is called global boiling. Jonathan from your perspective, what have you chance . Nicolai i think you need to take into account that inflation may be higher for longer. Guy the ceo of the Sovereign Wealth Fund. This talk about global boiling. That sounds of a step change. We are at boiling or simmering. That is something that we will talk later about what is happening it hawaii at the moment. The impact it is having and the impacts on markets has not even gotten started yet. The pushback is enormous. That is the other fascinating part. Alix but we are still seeing the government spend. I think it is interesting we are seeing the connection made between government and climate change. Other areas around the world, particularly in the u. S. , are putting a lot of money on that. That is interesting that he has proved it. Guy we are going to watch with other ships. Inflation stays higher. Have the markets and a Central Banks go back to that. As talk about some things we are watching in the european close. A bunch of single socks. And a macro raid. The reason i bring the chart of his look is he the one year. It is up by nearly 70 . Talks about the changes happening in the company but the consumer as well. There are a few out there that we are focusing on. It is not all oneway traffic at the moment. The market is reasonably well balanced. You have a market going sideways. Anglo american is the one i wanted to highlight. These were all 52week lows. They are chopping around but this is a market fighting direction hard to figure out. The closes next. This is bloomberg. Wow, you get to watch all your favorite stuff. Its to die for. And its all right here. Streaming was never this easy, you know. This is the way. You really went all out didnt you . Um, its called commitment. Could you turn down the volume . Here, you can try. Get way more into what your into when you stream on the xfinity 10g network. So, youve got the power of xfinity at home. Now take it outside with Xfinity Mobile. Like speed . 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