Around the world, John good morning. Good morning Karen, the international concern growing over monkeypox, the World Health Organization has declared the monkeypox outbreak of public health emergency. The White House physician says president Joe Biden is improving from his COVID-19 infection and a destructive wildfire near Yosemite National Park burning out of control through Tinder dry forests, thousands of residents have been evacuated. Sports the Yankees beat the Orioles the mets top the Padres, the Red Sox folded, the Blue Jays, Dodgers beat the Giants and the nationals beat the Diamondbacks. Global news 24 hours a day on air and on Bloomberg quicktake, power plant more than 2700 journalists and analysts in more than 120 countries on John Tucker, this is Bloomberg. Okay, John, thank you. It's 5 19 on Wall Street live from the Bloomberg interactive broker studios. This is Bloomberg daybreak as we get started on a very important week for investors. Lori calvina is with us this morning head of U.S. equity strategy at RBC capital markets. Lori, it's great to speak with you this morning while we all get ready for this fed decision coming up on Wednesday. The markets have pretty much priced in a 75 basis point rate hike. What do you think the market reaction is going to be from whatever the fed does decide on Wednesday? Well, well, thanks for having me as always. I think that as always with these events, it's really more about the details in terms of the commentary that's made afterwards. And at least at this point in time, it seems like there's pretty much a consensus in terms of what the fed is going to do, but I really think it's the forward look. One of the things that I continue to talk to investors about is just the whole sensitivity of the fed to how these policies are reverberating in the economy. So I think if there is any indication that the set of sensitive to that issue, I think that's something equity investors would care, but of course, unfortunately, I don't have a crystal ball. So it's hard to say exactly what Powell will say, but I think that sort of understanding besides sensitivity there is something equity investors are always keen to know. Yeah, we sort of have a dueling forecast for what the fed could do as we get further along in this tightening cycle. We've heard from Morgan Stanley strategists saying that the recession risk is growing and the stocks may have more room to fall here while JPMorgan Chase is saying that maybe inflation's peaked and there could be tailwinds for stocks. What's your view on recession risk going forward? So I'll tell you that I'm in the camp that agrees that the recession risks have risen and we do need to be vigilant, but I'm an equity strategist. So I care about how equity markets digest this as opposed to making the economic call. And I will tell you that with a 24% drawdown already in the S&P. It's come very, very close. And that's where we're at the low and mid June. It's come very close to pricing and a typical recession. And if you look at small cap stocks, they essentially are pricing in a recession. They're already pricing in, for example, a big spike in jobless claims they're already pricing in a plunge in ISM manufacturing back to truck like levels if you just look at the relationship between the performance of those stocks and those economic indicators I mentioned. So I am more interested these days in adding on to rebound trades, we think that defenses are overbought and overvalued at this point in time. And I will just tell you, John, that if you go through the east DFC function on Bloomberg, which is something I do quite frequently, there aren't that many economists that are actually calling for an outright recession, the voices calling for the recession are quite loud. But if you look at streak consensus economic forecast, it's really more for something coming close to contraction in the fourth quarter. And really moderating to below trend type levels. And I think that's what equities are digesting at this point in time. I don't know, late last week, you made a pretty significant call to go overweight now on small cap stocks. Talk a little bit more about that. Why you're thinking that we should be heading more toward small caps as opposed to larger ones. Yeah, so John, small caps for my first professional child, I spent about 7 years exclusively covering the space back in the day, including the early kind of O 9 period, which was quite dicey for the asset class. And one of the things we know about small caps is they do tend to price and risks quite early. So I mentioned they're already pricing on this big deterioration in certain sensitive economic indicators. But if you look at the valuations we're at historic lows and small versus large, you're also, if you look back at mid June, we were trading around 11 times the forward PE multiple and the Russell 2000 and that is typically where the index bottoms out at. If you also look at CFTC positioning data positioning among asset managers and teachers market for Russell 2000 features was well below financial crisis lows. Making essentially massively new all time lows. That is astounding to me. It tells me whatever your view of whether or not recession is coming. This is one area of the market where it has clearly been baked in. And we do know going back over time, recessions are historically fantastic buying opportunities for small caps. They underperform going in, midway through the recession, you tend to see a big pivot. And they outperform very strongly on the way out. And we think that we're getting closer to that inflection point if we aren't at it already. Got about a minute left here, Laurie. We are going to hear from some big names in big tech this week in earnings. What's your expectation there? So I think that this is a bellwether group. I do sort of care more about what classic tech is saying as opposed to the communication services Internet type names. Very keenly watched the software companies to see what the clues are in the corporate behavior. And I think the corporate reaction is going to really tell us how deep this economic carnage economic damage that we may be facing gets. So I think that's really what I'm going to be looking for. But I do think that tech stocks are reasonably valued at this point in time. So keep a close eye on the commentary. Yeah, we'll be watching Ford. Thanks. As always, Lori, great to have you on with us. Laurie calvasina. Head of U.S. equity strategy at RBC capital markets. Right now, S&P futures are up 13 points. Down futures up 98, NASDAQ futures are higher by 51 points, ten year treasuries down, 1530 seconds, the yield 2.80%