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The Fed is expected to hike 75 basis points, more economic pain seen and strikes spread.Fed weekThis week brings the fifth Federal Reserve r [View in browser]( [Bloomberg]( The Fed is expected to hike 75 basis points, more economic pain seen and strikes spread. Fed week This week brings the fifth Federal Reserve rate-setting meeting of the year, with the odds strongly favoring a [75 basis points hike](. This would bring the target rate to 2.5%, the level it reached at the peak of the last rate-hiking cycle in 2019. Former Treasury secretary Lawrence Summers believes the Fed will have [to do a lot more]( to bring inflation under control, and cast doubt that a recession can be avoided. More optimistic is current Treasury Secretary Janet Yellen, who does not see any ["broad-based weakness"]( in the economy, and expressed her belief the Fed will be successful in its fight with inflation. Investor skepticism Investors are skeptical that the Fed can tame the worst [inflation]( in four decades without driving the economy into a recession. Over 60% of 1,343 respondents in the latest MLIV Pulse [survey]( said there’s a low or zero probability that the US central bank can rein in consumer-price pressures without causing an economic contraction. Around two-thirds of respondents expect the 10-year Treasury yield to peak over the next nine months at below 3.7%. The survey was conducted July 18-22 and included retail and professional investors. Meanwhile, bond yields are ticking higher Monday. Strikes surge The pandemic has put unprecedented strain on global supply chains -– and also [on the workers]( who’ve kept those systems running under tough conditions. A surge in strikes and other labor protests is threatening industries all over the world, and especially the ones that involve moving goods, people and energy around. Employees are demanding a better deal as inflation eats into their wages. Nearly 2,500 members of a union that represents three [Boeing Co.]( defense locations in the St. Louis area voted to reject the company’s contract offer and plan to strike starting Aug. 1. Stocks gain [Markets]( are looking tentative before the Fed meeting later in the week. The dollar faded earlier gains and stocks traded steadily in the green as of 5:40 a.m. New York time. Investors are monitoring the recent weakness in economic data amid expectations the Fed will inflict more pain on the economy to get inflation under control and as European Central Bank Governing Council member [Martins Kazaks]( said there may be more big increases in interest rates. Coming up... It's relatively quiet at the start of a busy week on the data front that will include a Fed rates decision and US GDP. UK Conservative Party leadership candidates Rishi Sunak and Liz Truss face off in a TV debate. Today's US data include Chicago Fed national activity index at 8:30am and the Dallas Fed's manufacturing activity index. Earnings include Cadence Design, NXP, Sun Communities, Brown & Brown, Squarespace, Newmont and Whirlpool. What we've been reading Here's what caught our eye over the weekend. - Musk [denies report](he had affair. - [Wheat prices]( jump after missile strike. - Jan. 6 panel to `get to the bottom’ of [Secret Service]( texts. - [VW CEO]( ouster plotted. - [Monkeypox](proves elusive foe. - New York City’s [public bathrooms.]( - The $9[Trader Joe’s]( sunscreen And finally, here’s what Joe’s interested in this morning I was on vacation over the last several days, and I tried to mostly tune out the news. But the one thing that I noticed is that for the most part the lines have been going up. The S&P 500 is up about 8% since its mid-June lows. The Nasdaq 100 is up over 11% in that time. And crypto is up a lot more. Since it’s Fed week this week (economists expect a 75 basis point hike on Wednesday) it's worth thinking back to last month's decision for a moment. In June the Fed hiked 75 basis points, and the basic logic went something like this: high headline inflation (which is heavily influenced by gasoline prices) created the risk of consumer inflation expectations becoming unanchored to the upside. And so regardless of the cause of the inflation, the Fed had to act aggressively to stamp that out. The upshot of that logic, though, is that Fed policy starts to become extremely connected specifically to gasoline and oil prices. And since the entire market right now is so sensitive to Fed policy, the further upshot is that the entire market is linked to gasoline and oil prices. And well... that's exactly the story we're seeing play out. If you look at when the stock market bottomed, it almost perfectly corresponds to the top in gasoline prices, as measured by AAA. Back last month, [I wrote that oil prices were the whole ballgame now](. And there's probably no reason that's still not the case. Inflation will definitely slow if gasoline prices keep dropping like this. And that in turn means (all else equal) a Fed that doesn't need to go as hard to hit its goals. The question then -- and this is still what's TBD -- is whether the decline in oil (and other commodities) is simply a function of a recession materializing, or whether the market is finding some level of balance that's consistent with a soft landing. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. 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