CPI and Fed Week | Bloomberg Surveillance 12/12/2022

The Fed doesn't want to actually grasp
the nettle and tighten financial conditions.
We've got them going shifty now and December 50 in February and another
twenty five in March. We think that next year what we're going
to see is a Fed that's continuing to tighten Google's risk and we'll put it
under quite a bit more of sound cycle. Strong lessons about needing to get
inflation down. The stagflation problems that we've seen
this year. They're not gonna go away anytime soon.
This is Bloomberg Surveillance with Tom Keene, Jonathan Ferro and Lisa
Abramowicz. Why is your bracket so good?
Oh, please. Seriously, how is your bracket that
good? Here's the way it is, folks, and we do
it from March Madness is what Kailey Leinz taught me this.
She only she only goes with like Netherlands and the others have orange
in their jersey like the Cavaliers.

You chose blue.
It's a blue theme that she. So you've got to France and Argentina.
And that is slowly very various things. I promise.
This is gonna be a refuge for English football fans for the next couple of
hours. We're just not going to talk about it.
Life in New York City this morning. Good morning.
Good morning. Your equity market positive by about a
quarter of one percent on the S&P 500 this week.
T.K., we're told it's all about two things.
It's a huge week. Inflation are going to get that survey.
And then, of course, we have a Fed meeting.
Join us for that, folks. We'll be there on Wednesday.
I think it is. And John, what's important to me is to
see if Powell can keep the ball contained and the goal and not put it
over the crossbar.

You've got to keep taking note that the
answer is, I think he's going to be very contained.
He's going to be very on message. And because of that, I'm looking far
more at the inflation data and Michael Barr Morgan Stanley.
Yesterday's news. He knows how to make a headline over at
Morgan Stanley. Doesn't it make sense?
Yesterday is the final chapter of this bear market is all about the path of
earnings estimates, which he says are far too high.
I got on Twitter this week and there's like ISE was really busy this week and
Fox and somebody said, you know, he's going to be the number one strategist
years and he's not because he's too nice a guy.
Is that what the street likes to say? You got to be mean.
You got it. Not me, but you got to.
We believe we believe we bully people like Elvis seen as like Mike Wilson.
You know, they have grace and dignity and he's got humility.
And he nailed it this year. You know, everyone believes that we get
this death and then a rep next year, DEP and rep.
I keep saying that we're getting this downdraft where we retest the lows of
last year off the back of weak earnings in the first half.
And then, Tom, it's all gone, recover and began back to four CAC.
That is the consensus view on a street right now.
Let's get this out of the way.

I mean, everybody is an important notes
this week, including RTX will cover some of them for you.
And I agree with you and the consensus there.
Other data was inspired. Mike down.
Mike, darling, the whole blah, blah, blah, Wisconsin economics and, you know,
the whole nominal GDP thing. And then he spent the whole backside of
the note saying that Chairman Powell ought to play top golf.
Have you played top or haven't played a top golf?
You've got like there's three branches in the Washington area and DART is like
the S and that's that fancy driving, fancy driving range.
And he said they got to get on the same page.
You do that over a beverage of your choice at top because you have a bear
and you play golf. Okay.
Sounds good. You want to try that?
You ever played golf? They used to ask me to leave.
Let's wait for the price action briefly.

Up two tenths of 1 percent on the S&P.
Weaker losses last week on the S&P 500. The losses in crude.
Let's just say on that just a moment. Deputy ISE down for seventh session.
Deputy ISE down to the low 70s, just about holding on to a 70 handle.
Tell us a big deal on crude. Seventy dollars and 40 cents last week
on crude biggest weekly loss. Going back to April, we were down 11 per
cent on crude and some. That's even with the China reopening
story. Yeah, it is Edmund Morris publishing
moments ago with Nathan Sheets over at Citigroup.
There looks and he says, look, it's a tectonic shift in the next year.
He nailed this lower price outcome and he looks for, you know, maybe bounce
around and all that, but he gets out to sustain commodity weight due to GDP.
And the headline from it, Morris, as he goes bullish on gold, which we haven't
heard much of.

We have ignored the headline on Brent
City cut that twenty three Brent forecast by Dallas today.
Dancer waiting for next year. So they're coming in again even for next
year. Well, I don't think we got a sixty nine
point seventy 48, as you mentioned, and West Texas Intermediate to American Oil.
But come on, how many people look for? Sixty nine?
I'll have Morocco. Croatia.
Morocco, France is competing with Chairman Powell.
Why does that bother at same time? Well, we'll have full coverage.
Can you get a choice to make? Do you want Morocco, France?
Would you want a little bit more? Actually, if I was doing the first
thing, we're gonna have two screens and we see a screen.
How do you think they're going to go? No, just said on Monday I would do
fantastic Fed things better.

Maybe we should do that.
Maybe we should swap. Larry Canvas Senior joins us now.
U.S. Equity Strategy, RBC Capital Markets.
Larry, I just want to start with Mike's words and then we'll get to yours.
Mike Wilson says The final chapter to this bear market,
it's all about the path of earnings estimates, which we think are far too
high. Laurie, you on a similar page.
Do you agree with that? So I'm on a similar page with Mike, but
I don't exactly agree with him. I think it's a little bit more
complicated. So we're at one ninety nine for next
year. The consensus has been around to 30 to
31. And I do think that the need to pull
those forecasts down is going to create some headwinds from additional
volatility, perhaps a retesting of the low, but doesn't have to make a new low.
I'm not so sure. I think the main issue here is that the
buy side wants certainty around multiples so that they can come in and
buy and we can have a sustainable rally.

All the buy siders know and they've
known since June that next year numbers were too high.
If you look historically, most of the cuts down earnings years are in by
April. And if you look on a single stock basis,
when the rate of revisions to the upside is falling, you watch for it to turn
positive again. You watch for that shift from negative
revision territory back to positive revision territory.
And stocks typically bottom the S&P 500 price three to six months before
earnings estimate revisions for single stocks, stock going down.
What that means is that if we can kind of get all these cuts out of the way by
March, it's still reasonable based on the historical playbook for October to
be below. Now, that doesn't mean we're not going
to turn around. But I don't necessarily think that we
have to break to a new low because of this earnings issue and make it a time

Now, it's really, really difficult,
Larry. But what do you suggest people do
between now and March? So I think you have to back up and say,
what have people already died? And where are they?
And most defensive sectors are near peak multiples relative to the S&P 500.
And people have been loading into Staples all year, rotating into health
care since the summer.

I don't think people have enough
recovery trains for when we finally do put that final bottom end and start to
recover. So we tell people, look at things like
financials, look at things like tech. I look at things like small caps.
Those are areas that typically outperform when you're coming out of a
recession after you've made that final bottom.
And small caps, frankly, John, are already starting to outperform.
They put in their relative low back today.
So we think that people really don't need too much more on defense.
And, you know, I wouldn't necessarily dump all your defensive shares right
now, but I would start thinking ahead to that recovery trade, not just this final
churn. Laura, I think is a great Dave.
David, triple it pioneer years ago, who would explain to me the small cap and
mid-cap go once every nine years, once every eight years, whatever the pop is.
And I read in your research, you're really looking for that pop to be this
year. If we have a great zombie roll up, which
frankly we're beginning to percolate and see because money actually costs
something, kind of small caps react to the fact we now have a risk free rate.
We have zombie companies that have to do something.
How does it play into your call? So I think you want to be in line with
the higher quality small caps, the bigger names, the more liquid names, you
know, kind of where the typical small and mid-cap portfolio manager likes to

Not kind of the bottom three quintiles
of market cap where you get tend to get the dicier balance sheet, you tend to
get the lower quality names. We actually think there's plenty of
valuation appeal in that upper echelon of small cap right now, which is one of
the things that makes it so interesting to me because we haven't had that for a
really long time.

Are small caps correlated to the weaker
dollar? Finally, end of strong dollar
international played you cross correlate those two categories.
I think that the dollar is complicated for small caps.
They have been benefiting from an earnings perspective by dollar strength.
If you look at if you try to sort of match up the relative cycle with the
dollar over time, you're not you're going to just want to pull your hair
out. It's not.
Watch yourself, Laura. Be careful.
But recently, they've been benefiting from an earnings perspective since they
don't have those pressures. I think that what I see right now and
yeah, I just got off of a week of being in Europe talking to investors there.
They are very European based equity investors are very perplexed by the
expensive valuations that we have sitting in S&P 500 companies right now.
You don't have that same valuation pressure down in small cap right now.
So I think when you're starting to trip across borders, I think you've still got
the better valuation story here and that will be appealing regardless of some of
these currents.

But are they going to roll up?
I mean, I don't mean the quality small caps.
There's like three thousand, let's say, as a working number.
What are the other twenty seven hundred going to do?
Is there going to be one grand roll up because money finally cost something.
I mean, what do you mean by role of exactly mergers, transactions,
combinations, Microsoft taking out a teensy weensy bit of the London Stock
Exchange today just to get on board? That kind of stuff.
I think that you will get that in certain sectors where you have more
valuation appeal. I think industrials, even though it's
not cheap, is always an area where we see those roll up stories and the
reshaping thesis could further some of that along.
But I think ultimately those roll ups and that ended in a cycle that's really
more about what wakes up on the other side of this recovery and a sluggish GDP
environment growth is scarce and companies, I think, will feel more
compelled to go out and buy growth when you can find that in some of those
higher quality small caps, not necessarily the smaller ones.
But again, it might bring you back to some of those higher quality, you know,
more liquid type names.

And Laurie, you've touched on something
really important here, and that's about leadership in the recovery in the second
half of next year. Is it too early to draw conclusions
about where that leadership comes from? That's a discussion relatively happen
right now. Why is now the right time to have that
conversation? I think it's the right time because, you
know, you know as well as I do, John, when these functions happen and people
are convinced of these bottoms, they just sort of take off and you don't have
time to get in.

You have to do your homework early while
things are sort of quiet and turning around.
But I'll tell you, last week we did have a lot of discussions about what is the
new leadership typically in a sluggish economic growth backdrop, which I think
is the price we pay for a short, shallow recession.
Growth stocks outperform. But is it the old growth or is it the
new growth? And that's why I think a sector like
industrials is starting to get a bit overvalued.
Now, we're just neutral there. We don't like the valuations.
We have been talking to people a lot about how that might be the best long
term growth story in town.

And that might be one of the reasons why
you're seeing these valuations lift. People basically kind of looking at the
old economy and saying what's old might potentially be new again.
And that might be where you get for the better growth profile going forward.
Larry, this was brilliant. Don't be a stranger.
Come back soon, Larry. Have a seat of the RBC Capital Markets.
Just one of the absolute best. And we just had a 10 minute conversation
on the market that talking about the Fed.
What you make of that? I think it's good.
Isn't that refreshing? Yeah.
Then later on this this morning on a five page note and he says, look, you
can do all the Fed navel gazing.

I'm sick of it.
You know, we have the Fed show here and he says it's about markets and markets
will surprise and do better than the economy.
Gloom on the Federal Reserve. Did you read that piece over the weekend
from Craig Thomas and less CAC Michael McKee side?
Fantastic read over the last five interest rate.
There are no cycles in terms of the average hold at a peak rate was 11
months over the last five cycles. Eleven months.
And this market's price in NYSE like six weeks.
It's like a couple of months later after we hit the terminal.
Right. It's a pretty interesting debate, isn't
it? I think the parlor game, we're going to
try to avoid that, folks, not only in the Fed show, but through this important
sequence, CPI, Tuesday, tomorrow. Tomorrow.
Yeah. You know what?
We won't avoid this line from China. In the last 24 hours, the top medical
adviser in the country X and the risk from Micron, the same fatality rate is
the flu.

Now, a lot of people might say the same
thing in America. But to hear that from China is something
no real change, a big number. We're going to catch up with
Undercurrent a little bit later. From New York, this is Bloomberg.
Keeping you up to date with news around the world with the first word.
I'm Lisa Mateo. A man charged in the 1988 Lockerbie
bombing of a Boeing 747 that killed 270 people is in U.S.
custody. He's been identified as a former Libyan
intelligence officer.

The U.S.
calls the suspect a third conspirator in the attack, saying that he helped build
the bomb that destroyed Pan Am Flight 1 0 3 over Scotland.
Germany's Chancellor Olaf Schulz will host a virtual meeting of the Group of
Seven leaders today to discuss Ukraine's immediate needs.
That's following Russian missile attacks on the country's energy infrastructure.
Female President Biden spoke to Ukraine's president, Vladimir Zelinsky.
The White House says the president affirmed the U.S.
commitment to keep providing military and economic aid in the UK.
The government is planning for military staff and civil servants to cover for
striking rail, health, postal and other workers.
Strikes are planned for almost every day through the rest of the month.
Workers are demanding pay hikes that keep up with inflation.
It's the biggest wave of industrial strife in the U.K.
since the 1980s. The Federal Reserve looks set this week
to downshift on interest rate hikes after four straight seventy five basis
point moves to curb inflation. The central bank is likely on Wednesday
to increase its benchmark rate by a half percentage point.
Meanwhile, traders are pricing in Fed rate cuts in the second half of 2023.
Global news 24 hours a day on air and on Bloomberg Quicktake, powered by more
than twenty seven hundred journalists and analysts and more than 120

I'm Lisa Matteo.
This is Bloomberg. So I believe inflation will be lower.
I am very hopeful for the labor market will remain quite healthy
so that people will feel good about their finances and their personal
economic situation. Janet Yellen, the US Treasury secretary,
on 60 Minutes over the weekend, live from New York City this morning.
Good morning. We talk a little bit more about that a
little bit later. All right.
She was surrounded and that it was right after the shooting.
She had some things to say. FTSE was gay.
You should have heard the language used in my averages in my household over the

Some select words, select words features
right now up a third of one percent on the S&P 500.
This week has a real final week of the year feel to it?
Yeah, CPI tomorrow. Federal Reserve decision coming up on
Wednesday features trying to bounce back by a quarter of one per cent on the S&P.
There is a rally in the bond market yield to lower by five basis points to
352 32 on a 10 year.

I believe that's about 80 basis points
off the peak for the year on a US 10 year.
And a lot of people, Tom, lining up to say buy, buy, buy bonds into next year.
The price up you construct, there's a basic theme hearing again, you a curve
inversion negative 80 basis points really hasn't done much.
So it's a curve that shifting up and down versus moving around like a yo yo.
We've got Horizon Therapeutics to take out there by Amgen.
It's a real company. Folks want to make that clear.
These are people with free cash flow, Deerfield, Illinois out of Dublin and
it's real scientists. Immunology is a broad sense.
And, you know, we'll have more on this as is 26 billion, T.K..
Yes, it's like a it's like a real you know, we're all affected by this Twitter

These guys are going to go out for less
price to sales, I believe, than what Mr. Munster Twitter out.
And Twitter is a shell of a company compared to this is like real medicine,
real finance. In a way.
They go Horizon Therapeutics, which is what
China needs. Except they don't have Horizon
Therapeutics. They don't have efficacious medicine.
What China has is hope and prayer and occur and joins us and usually on
economics. But right now, I think we've got to go
to the society of all. How long was the weekend and occur in in
Beijing, Shanghai, Hong Kong and indeed west to Chengdu?
Clearly, Tom, events are moving at a very rapid pace right across China.
Even through November, there was no hint of a pivot by the government when it
came to Covid 0. December has been a totally different

Messaging out of the message you had to Beijing now is that, as you mentioned
earlier, only corn is on worst on the seasonal flu.
People who have symptoms are being told to stay at home.
Don't be troubling the hospital hotlines.
They're dealing with patients who do need care for, for example.
And that messaging is being rolled out right across the country in a fairly
sharp pivot trickling down to Hong Kong, as well as
some changes on the cards here, too. Some talk of reopening the border with
Shenzhen, which could mean much faster than expected.
Goldman Sachs today said all of these changes are playing faster than
expected. So all we know right now is all we know
right now, it's been a pretty sharp pivot, but I don't think anybody knows
where exactly or how exactly does that play out over the next three to six
months. And the longer you go on far away, an
amateur like me, we had the great advantage of our people worldwide,
folks, and particularly from Johns Hopkins University.
We learned that adults watch the hospitals.
Tell us about the hospitals in China.

Like I know there's famous hospitals in
Hong Kong and Shanghai and all that. But I like to believe that China is
under a hospital for the state of this this virus.
Well, you know, obviously has its world class medical facilities good.
A lot of the expert commentary in the build up to his outbreak was making the
point it doesn't have enough on the kind of ICU coverage that saved lives in
Japan and South Korea have not got weakness in its hospitals is clearly
going to be a concern when you have an outbreak on the scale.
Now that people are talking about, our colleagues in Beijing are talking about
and writing about anecdotally, there's obvious disruption going on in hospitals
in Beijing in terms of people turning up, looking for admission and either
can't get it kind of get or or I don't need to get it.
That was a similar story, by the way, in Hong Kong when they were trying to
manage Covid 0 while the disease spread as well.
So I think no doubt that one of the concerns among China is the low
vaccination rate among the elderly and of course, whether or not the hospital
network can deal with an outbreak on a scale of what's expected over coming

When it comes to helping end up, what do
you think they believe is the lesson from the West as they've gone through it
in the previous two years? Well, it's tough to know just one out,
John, because a lot of experts are saying they're going to go through the
same kind of exit way that the West went through that this is inevitable.
China, some of the official messaging coming out of China saying actually
their vaccination rates, vaccination rates are reasonably high.
They're making the point that their vaccination rates of their elderly was
hired and the vaccination rates of the elderly in Hong Kong, for example, that
are saying they may not have a Hong Kong style hit on the way out of this.
But regardless, everyone is keeping a very close eye on how to coming three to
six months.

We go.
Nobody's quite sure how it will pan out. Whether or not it is a severe public
health crisis or if they can navigate it, can mitigate it, maybe it spreads at
different speeds around the country. We're talking about a vast continental
sized economy. But regardless, people are wondering now
on the other side of it what happens. Already it's clear that China is
reopening faster than expected. We know in the interim it's going to be
very bumpy. And of course, public health is number
one. But if when China gets through all of
that, economists are talking about maybe a a faster growing Chinese economy next
year. And money expected as recent as only a
few weeks ago. That's what I wanted to get to.
When do we really underestimated the potential for inflation to build and
build quickly in Europe, in the United States, as we reopened?
What's different about China as it reopens?
Why is the potential for that perhaps a little bit lower?
Well, again, you get different takes on this, John, there's an argument out
there that China could actually put a bit of a floor under slowing global
inflation next year.

Let's say it reopens.
You're going to have two stories on domestically in China, for example, this
year. They bought the lowest part, imported
the lowest amount of oil since 1990. Obviously, that wouldn't happen if
China's economy was reopened and humming again.
There wouldn't buy more import materials.
They would need more commodities are indoors and all of those materials
prices for those would would go up or at least be kept steady.
And an external China, you would have Chinese tourists, Chinese students,
Chinese business people all traveling again, looking for airlines seats, look
for hotel rooms for real estate. So that's expected to spill over to
global trading partners and put a floor on a global inflation.
So there are two ways of looking at it. People are saying there's a near-term
China economy story, which is going to be pretty bumpy.
But if and when China fully reopens and reconnects with the world like a humming
China, economy will probably add some inflation pressures to the rest of the

And very quickly here, what should we
look for this week? I mean, it is as you said earlier, it's
a moving story. Where are we on Friday, end of the
weekend and into the holidays? So every day they're taking down some of
the defenses to head against Covid, either true signaling and messaging or,
for example, is health and safety tracking apps that they were using.
So keep an eye on what further barriers they continue to take down over coming
days. Tom, that will indicate the speed at
which they are dismantling this massive Covid 0 operator that had been built up
right around China. And of course, don't forget, we're
heading barreling towards Chinese New Year, which comes early in January this
year. And that's going to be pivotal test for
how willing the Chinese authorities are really to live with Covid Lunar New Year
just around a corner and a current.

Thank you.
What a change. And it's happened so, so quickly.
I got back to those comments from China's top medical adviser downplaying
Tom the fatality ophthalmic chronic, comparing it to the to the flu.
But, T.K., that's a massive shift in a row.
Yes, short amount of time from Chinese authorities.
Well, yeah, Chinese authorities, but they're only one authority, which is
Mr.. I mean, I I take the point.
It's a massive shift, but a shift. What if they don't have the medicine,
they don't have a program of vaccination?
Maybe they're going to develop a program of vaccination within a totalitarian
regime. That's why I still think making a call
on Chinese growth next year, Tom, is really wonderful.
I wanted to go there then. If you get a clean reopening, maybe you
can make a call. But as Zander pointed out right now,
some it's whether we get a repeat of what happened.
The West, which has stopped start an incredibly lumpy.
Thanks for listening this morning, everyone.
They don't care about inflation.

What are you going?
What are you taking this. At the University of Cambridge.
Okay. Someone's you know, they slept in a
Queens college. This is Mohammed talking once again.
Snowden talked once more. World Cup.
Yeah, it's 20 above zero Fahrenheit Snowden.
OK, what would you like me to say? I want you to explain.
And this came from a sophisticated Mrs. King.
Why didn't England go down the field more and just attack?
I think they did. The initial tactics were spot on.
They contained in backpay. They turned the left side.
The French left side, which the massive strength into a weakness.
Sakura attention. It really.
Tom Keene. Yeah.
Theo Hernandez. Ultimately, ultimately.
Then the substitutions happened. Think it was the substitutions that I
just couldn't make sense of from Gareth Southgate at the weekend.
But we can't keep doing this. Give the UK a break.
Giving them a break. Taking up. Coming off the back of the biggest
weekly loss on the S&P 500 since September, going in to CPI, the Federal

You know, that was really mean.
That was really cruel. Futures on the S&P.
Looks like this positive, a third of 1 percent on the S&P 500, on the Nasdaq up
a third of 1 percent. We're doing okay.
As we kick off the trading week into the bond market last week, 10 year yield
just a little bit higher by 10 basis points.
Likewise, on the two year time, the whole curve just shifted up a little bit
last week and now it's back lower again, right the way through the curve and
flattening my market to a 19 VIX. Even an 18 for a cup of coffee is we're
back to 24 point to 1 as we go into the Fed meeting on Wednesday.
If we have the cathartic spike, that's what junior Emmanuel Abacha was talking

We had the cathartic spike in the VIX
yet. Let's say you're a John Joel Weber.
Like they know what they think is what he was going to opinion on is what I
know is there's some tension in the ones jumping in with the VIX.
Let me finish the bond check. Ten year 352, two year 432 crude looks
like this seven day losing streak on WTI.
We're down three quarters of one per cent on crude on Brent were down three
quarters of one per cent also. And we are clinging on to a 70 handle.
We have just had the worst week, biggest weekly loss since April on WTI crude.
Some makes sense of that. Makes sense as Ed Morris, as you know,
we're talking about Mike Wilson and equities would add more stood and oil is
just shrugging.

I believe Deutsche Bank was a great co
fantastic record. Busy week ahead for market.
You're going to hear that all week, CPI data tomorrow.
Later in the week, retail sales and eurozone PMI and CPI plus 9 central bank
decisions on tap, including the Fed Reserve ECB and Bank of England.
All of that clearing the path for investors to look ahead to the new year.
If you look at what we all enough for the U.S.
economy of the eurozone economy next year, there's a slight chance of
recession. Absolutely right.
But probably at best, a mild one based some in the U.S.
and the eurozone, of course, to help the overall developed is going to calibrate
that, too.

Jeff, you have been my man and some
looking ahead to next year. And you know the conversation we're
having a conversation about the potential for a recession.
And it's just not in the data yet. It's in the market.
We can talk about that. But you certainly don't see it in the
labor market right now, do you? Yeah, I go segmented here in a lot of
people say I'm wrong here. There's a part of America right now that
is in recession. But, you know, you can just say a little
take half of America, whatever you want to do.
There's a lot of pain out there. While there is a buoyant, employed
America, are they booming? I don't think so.
Some is not there, to your point. That's good.
I think even last year, the GDP data was so much better.
Consumer sentiment was pretty self given everything we'd seen in the last twelve
months with gas prices and inflation.

And C.K., you've made this point many
times. I think we all have around this table.
There's a massive difference between how people feel about this recovery over the
last couple of years and what the DAX Hampshire.
That's what the markets will do and the economics of it.
This may be an underpinning that they can be separate.
And I'm hearing that a lot of outlooks right now.
Let's all look right now at Stifel, their chief economist, Lindsey Pigs, who
joins us right now. Lizzie, I don't want to get into the
silliness of pivot this or pivot that. Where are we right now?
What is your real GDP call for this ending Q4?
Well, I do think there is enough momentum or ongoing resilience in the
consumer that we will see a second quarter of positive activity, albeit
markedly below the near 3 percent pace we saw in the third quarter.
But the bigger question is, can we maintain that going into 2023?
And I don't see that resilience being able to be maintained as we continue to
see some of these variables increasingly weigh on the consumer, i.e.
elevated prices, negative income growth, negative manufacturing activity, a
housing market that's under extreme pressure.
So I think that we can argue you can check the recessionary box for nearly
every sector of the economy, even at this point, except for the labor market.
But even there, we're starting to see cracks.
We're starting to see signs of emerging weakness.
So while we do maintain that positive trajectory through December, I think 20
0 3 is opening the door for a recession.

Let's do algebra Monday, Lindsay.
It's y equals. I don't know what it is.
C plus I plus G plus an X is out there somewhere.
Can you split your analysis between domestic final sales in real GDP?
Can you pair off trade dynamics? Are they part of getting to a recession?
Oh, absolutely. And I think this this when we pass
through the trade and inventory data, that's really what complicates the
earlier weakness that we saw at the start of the year and why it's likely
that we don't see a technical recession in hindsight called for the first six
months of 2022. Because when you strip out that
volatility from trade and inventories, we see that we actually had positive
momentum from December into the first quarter of the year.
So this is very much complicating the picture and we'll continue to complicate
the picture going forward. If we look at third quarter GDP now, one
of the largest contributors to that top line increase was trade contributing
nearly 3 percent.

But a lot of that was reflective of the
weakness on the import side, and that reflects a declining demand or at a
level of declining demand on the consumer part.
Again, highlighting the fact that consumers are on increasingly fragile
footing as we turn the calendar page into the next year.
Lindsay, there will be some people tuned into this program right now listening to
another recession call for 2023 and wondering why on earth the Federal
Reserve is hiking interest rates by 50 basis points on Wednesday and probably
signaling they're going to do a whole lot more after that.
Lindsay, how do you reconcile those two things?
Well, remember, the Fed is trying to slow the economy.
So the fact that we're seeing increasing calls for recession in 2023 means that
the Fed's earlier policy initiatives are already having the intended effect of
tapping down investment, tapping down consumption and resulting in a
significant slowdown in the economy. Now, the reason the Fed is so focused on
continuing to raise rates, not necessarily at the supersized 75 basis
point increase that we saw earlier, but 50 basis points that, as you said, more
work to come down the road is because inflation is still elevated.
And at this point, with the labor market still arguably on modest footing, the
Fed is hyper focused on bringing down inflation, reinstating price stability,
which the chairman has said time and time again is the bedrock of the

So how much more damage do you think
another 100 basis points of heightening does?
Well, I think it ensures that we do see recessionary conditions.
But depending on the behavior of inflation, depending on what we see in
terms of international factors, that will determine the depth and duration of
the downturn. But again, from the Fed's perspective,
it's not about whether or not we see negative activity.
It's about whether or not we can get inflation on a meaningful downward
trajectory back towards the committee's desire to present, you know, with me,
target range.

What's your probability getting back to
2 percent until England wins in football again?
Lindsey, I mean, come on. Are we getting back to 2 percent, 25 or
is at 26? Well, if you look at the Fed's
trajectory, they're still very optimistic that we're going to see a two
handle by 20 by the end of 2023, maybe early 2024.
But I think the reality of the data suggests that committee members have
been calling for this meaningful improvement in inflation for the better
part of the past two years. And we simply have not seen that come to
fruition. So the Fed, the market continues to.
All right. Appreciate the complicated nature of the
inflation equation at this point. And that's why, along with a 50 basis
points increase this week, we do expect the Fed to meaningfully revise higher
their expectations, policy and inflation going forward.
This is VIX, a one to one service inflation, isn't it?
I mean, we're going to get a reversion to David Malpass.
World Bank was greater in this years ago.
Where do you get a logic? Goods, disinflation?
Dare I say true deflation.

But services isn't going to get there.
What will you what do you see as a sustained services inflation above 3
percent? I think that's absolutely reasonable.
But you're right, we are going to see this bifurcating between goods and
services. And already we're seeing it in the data
outside of inflation. Manufacturing turning back into
contractionary territory while we look at the ISDN services index.
And that is still arguably on solid footing.
And so this bifurcation I got highlight the difficult nature that the Fed is
going to face in trying to tackle broader inflation pressures,
particularly as we see this wage price spiral continue to accelerate.
Lindsay, you and John are way too young to understand this.
We survived this before. If we really come down with services
elevated to 5 percent or 4 percent or three point eight percent, life goes on.
Right? People adapt, right?
Absolutely. And we will come out of this.
But I think the trajectory of how we come out of this depends on the Fed's
resolve to reinstate price stability. If they start to get cold feet, if they
start to pull back prematurely, then we could see inflation become entrenched in
the economy, meaning that we don't see that improvement.
Back to the Fed's 2 percent target.

But if they stay the course, it will be
more painful in the near term. Well, we could see the economy emerge
faster and with more gusto as we begin to get back to a potential level.
After that, 2 percent target is reinstated.
Lindsey, thank you. Lindsey VIX that of stay full me this
coming at the same time we're having conversations about maybe shift in the
inflation target from 2 to 3. Larry El-Erian talking about in the FTSE
potentially pushing back against the idea at the moment.
Heard the same thing from Bill Dudley, also pushing back against the idea as

Why did this come from?
Was this Adam posting? It started.
Does she know? Three know from two who say Dr.
Poses when such a supporter remember Jackson Hole?
Yeah, yeah, yeah. Mom came out in shorts and a t shirt
with three cents below zero. Folks, a heritage of this is the courage
of Olivier Blanchard and the laureate Joe Stiglitz.
I'm going to guess 2009 where they just said, let's frame out 4 percent
inflation and people went mental. I mean, people went absolutely
apoplectic over this 4 percent number.

And it's a model.
An atom is very clear to say here's 3 percent path is with nuance is different
than what his colleague Olivier Blanchard says.
You get to 3 percent. My answer is put a band around it.
I mean, three percent, maybe two point seven percent or whatever.
How far is that from a John Taylor like 2 percent?
My answer is we're splitting hairs here. The backdrop matters.
I think you start questioning the inflation target income at a time when
inflation is too high. I think people not question your
credibility today. Even three, never my to some.
Isn't it just the time? A rising question.
Don't you just turn around. Push it out.
Push it out. Another twelve months.
Yes. But it's like when England was
unanchored, they put in Sterling. What?
It's sterling. Okay, men, let's go.
Sterling. Is this punishment for 10 years of
trolling the Red Sox? Is that what this is?
So go there. Come on, move it to India.
You mentioned this earlier for people just tuning in.
The big worry was in backpay, Carl Walker did a phenomenal job.

Down that side, that pay was almost
absolutely contained. And as I mentioned a little bit earlier,
that was meant to be the strength of France down that left side.
He said real quick, the lobby are down. They turned that side into a weakness.
Sacca was phenomenal. He was terrorized in that defense for
about 90 minutes, just playing the field.
So why was he taken off? So to me, the conversation there were
the beverages. That is sort of like what burst the
conversation had to be. Come on.
They kicked the ball from farther out. That's about the first goal, is it is
that you don't like matchday analysis? Yeah.
It's my nerves to kick the ball. How do you feel about Harry coming back
dispersed? Don't you think?
Has he going to feel no one knows.

I think it's you know, it's a little to
miss a penalty with the stakes that high.
It's a lot of pressure, but some do you know what?
Out of everybody. Who would you have picked to take that
penalty spot? CAC you wouldn't have picked you.
Nobody else from anybody on a single case.
Anyone else is allowed. Most folks I don't have all I know is
Argentina wears a blue jersey in France and that's why they're in the finals,
your bracket. And that's why you have absolutely wipe
the floor with me back in the bracket. What is it?
The 18th is the finals next Sunday. This Sunday
bistro. You wanna watch it together?
You missed the viewing party. I didn't miss a beat tonight.
We'll talk about today. Behave behavior.
So Amari turned up mental pictures for a third of one percent.
This is pulling back. Keeping you up to date with news from
around the world with the first word.

I'm Lisa Mateo in China, Covid is
rapidly spreading through households and offices after the country's pandemic
rules were eased. Now that's led to turmoil and poorly
prepared hospitals. Some facilities are struggling to find
enough staff and others are suspending non Covid treatments.
President Biden and Treasury Secretary Janet Yellen have reaffirmed U.S.
support for Ukraine. CBS CBS asked Yellen about how long
American support can carry on, and she replied, as long as it takes.
Meanwhile, President Biden told Ukraine's president Vladimir Zelinsky
the U.S. is committed to aiding Ukraine and
holding Russia accountable for the war. Scientists in California have made a
breakthrough in nuclear fusion technology.
Bloomberg's learn that for the first time, they produce more energy than
consumed in a reaction.

It took place at the Energy Department's
Lawrence Livermore National Laboratory near San Francisco.
While the results are considered an achievement, it's still a long way to
creating a viable technology. Microsoft has agreed to buy a stake in
the London Stock Exchange Group. The move will give the software company
a 4 percent equity holding, which is currently valued at about two billion
dollars. The stake is part of a long term
agreement to help LSC develop data analytics and also cloud infrastructure
using Microsoft products. The group will spend a minimum about 2.8
billion dollars on cloud services over the next 10 years.
Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than
20 700 journalists and analysts and more than 120 countries.
I'm Lisa Mateo. This is Bloomberg. The dangerous war is extraordinary and
it can go on for years. But this oil and gas thing, it looks
like the Europeans will get through it this winter.
But this oil and gas problem is going to go on for years.
So I know I was, you know, in the government or anywhere else, I'd say I
have to prepare for getting much worse.

That was Jamie Diamond at JP Morgan, CEO
on CBS over the weekend from New York City this morning.
Good morning. CPI data coming tomorrow morning.
Then it's on to a Federal Reserve decision coming into all of that
equities activated by just a quarter of one per cent on the S&P 500, on the
Nasdaq by about a third of 1 percent. Yields are down.
Treasuries are up 350 to 14. The whole curve shifting low, which is a
bit of curve flattening in the mix set.

So that move lower, led by tens and led
by 37. I'm going to call it resilient dollar
here off the blush. You know, we had a strong dollar.
We were just about I know that story, but it's sort of like churned, I think,
ready for tomorrow's massive turnaround that's come from the end of September
for euro dollar to go up from what was in 95 to about 1 5 1 6 at the moment.
Sonali Basak know better than me. But is everybody shut down for the year?
I mean, certainly after Wednesday, after Wednesday, until, you know, gone year
over year. I'm out.
I'm taking a rest a year off after that. You are?
Yeah. I don't know if anyone noticed that yet,
but we'll work it out. I'll leave it to 32.
Are you going to. Last time I did that and the bank having
that hiked interest rates, didn't they? You still got to be away in the ECB on

Then after that, as far as the schedule
is concerned, we're done. I think a lot of people would wrap this
up in code that day on 2022. Well, what we'll do is a day afterwards
we have ECB bank meeting them. Break out the Tang mimosas.
Oh, nice. Special talk about Horizon Therapeutics.
It's really, really interesting story. We'll get to that here in a few moments.
Right now on a story that matters to you.
The big shock, your voice coming in in a breath of fresh air with the concern of
refined products. Stephen Schork briefs us.
His research note with a short group of the Schork report is absolutely
definitive on dynamics, on valves, in pipelines.
Stephen Schork, what is our integrity now of our system?
If we get a cold like Aberdeen, Scotland is getting.
Yeah, absolutely.

And a lot of dire straits here.
It has to be called as far as the distillate market, Tom, here in the
mid-Atlantic and the New England market areas, the northeast United States
consumes 70 percent for space heating, a home heating oil and light.
There's still a dearth of products. We've had a significant sell off over
the past week, a week and a half in this market.
And quite frankly, my clients, the heating of the people are on the boots
on the ground. People who have to consume, maybe they
buy and they sell and distribute heating oil.
They're perplexed by the move lower. They cannot find product that very
difficult for them to find product. And yet prices are still moving lower.
So it is a conundrum for some of my home heating oil people.
Right. You know, I look at how they blast
through the great chart out this week.

And as he writes up his Bloomberg
opinion piece on the spike, the surge in English utility costs.
Do we get the same surge if we get the same cold or are we are we managed in a
way where distill its core oil, gasoline, diesel, the rest of it, where
we don't see a spike like they see in Europe?
We won't see quite the spike that we've seen.
But we are. We have and we will continue to see a
spike in demand not only for home heating oil, but, of course, our
electricity costs. Our natural gas costs are sky high
relative to recent norms. Tom, probably the only market if you
heat with propane, that is the only market here in the lower 48 where there
is actually a surplus of propane.

We are swimming in propane, whereas in
our other heating beats use be at this. Fuels are natural gas.
There is there's actually no product. And that's a piece of thing.
We got to the deck. We're using not six days a week in
Istanbul because like it sells like hockey, golf.
You got the kids. So outside your profile, three pieces,
they're really hot. You'll definitely ridiculous.
Steven, can you talk to me about the demand supply backdrop gone into next
year? We've drained a big chunk of the SPDR.
Europe managed to refill natural gas, but only doing so through Nord Stream
and take us through most of this year at the back end of this year because the
cold snap didn't kick in until now. Stephen, I want to understand the
dynamics into next year. You heard that warning from Jamie
Diamond at JP Morgan. Can you run us through that right now?
Of course. I'm going to agree with Jamie that the
long term structural imbalance between supply and demand globally is not going

And yes, we have for the moment dodged a
bullet with regard to the start of the winter and the Ukraine war.
But we're not addressing the long term issues of bringing more infrastructure
to sate growing demand. The narrative has shifted to a point now
where it's moved away from supply, which has been the real bullish driver, and
now it's a demand picture. I think all the Wall Street banks now
are singing the same course about economic contraction in the first half.
If we look at the Federal Reserve Bank's favorite recession indicator, the three
month, 10 year yield, it has rarely been as bearish as it is currently trading.
I mean, version right now.

So and then, of course, we look at the
employment numbers now the latest job numbers seem to be relatively
constructive. But once again, people are not working,
especially men in their 20s, the 40s are not working.
And we're looking at a huge chasm between the household numbers and the
establishment numbers. 1 1 survey of job says, yes, jobs are
growing. The other one says no jobs are
contracting. And then one that says jobs are
contracting really can meld with what we're seeing in the tech sector.
Tech, the the white collar, the the haves are now starting to see massive
layoffs, layoffs they haven't seen since the Great Recession.
So there's a lot of minefields to kind of navigate in the first half.
It's certainly pointing towards an economic contraction.
And therefore, that is really, I think, the overhang on the market right now.
We're worried less about supply and more about dwindling demand for the new year.
Is that worry about amount misplaced given China's reopening?
Could China fill the gap even if we do rollover next year in China?
Ken, Phil, absolutely.

Fill the gap.
And there is that demand. But.
But they were giving a nice little gift by the West.
They were giving fantastic negotiating price saying, OK, Russia, you can't sell
your oil for more than 60 dollars a barrel.
Now, of course, the Indians and the Chinese will continue to buy Russian
oil. They will buy it above 60 dollar.
I mean, they will negotiate, but there are far better negotiating deals.
So while this demand will continue to grow, as China continues to lower their
their mitigation protocols, we're still going to be buying oil at a well below
market value. Stephen, one final question.
Really important. How is an electric vehicle thing going?
I mean, you follow tangentially over from your expertise in hydrocarbons, but
from where you sit. How's he doing?
These are going to be the biggest drain on the environment.
That will make one hundred and twenty years of mining for coal and oil look
like a year like they were members of the Sierra Club here with the amount of
progress we have to dig up. Now, personally, guys, I drive an
electric hybrid.

It is a 17 gallon tank.
I just drove. I just had to refill my my car after not
filling it for two months. I drove nearly 14 hundred miles while
the combined electric seventeen gallon tank.
That's the way of the future. Inform and getting out.
Here's a compromise. We have to work together.
It's not as if we are the people. Stephen Schork, thank you.
I think you're just done. I stood in Detroit at the North American
International Auto. The international piece of that simple
Mercedes said just what Stephen Schork said.
The certitude each way is baloney. I caught up with Mercedes on Friday.
You missed that. I missed that.
Caught up with the CEO. And I just had to drop their prices on
that offering in China. That's a drop that prices working out
what's going on in China right now and it comes at taxes in China.
So I spoke to at Ludlow about Tester in Shanghai and reduce factory hours.
And I was trying to work out is it production line upgrades or demand one
or the other or both. And he said perhaps a little bit more of
that production line upgrades than they a weaker demand picture.
But I guess we'll see.

We'll see.
Apple got similar issues over that at the moment on the production side.
We talk science by all means immunology. Horizon Therapeutics is taken out today
by Amgen. This is a logic company with legit sized
Deerfield, Illinois, Dublin and the rest.
And what's great about this for those you on radio, the academics of this crew
is heavyweight.

And these are people that went to all
sorts of schools like Muhlenberg and Pennsylvania, Franklin and Marshall and
the fabulous Harvey Mudd out on the West Coast.
And they've got lots of graduate degrees and ramped it up first in science.
And the best thing about this is the leader, Tim Walberg, was actually a
patient. He was grievously ill in immunology
years ago. It's amazing how he got into it.
It's a great story. It's you know, I don't think there's
enough said about this about these biotech companies.
They got prodigious academic chops.

And then to do the financials that
they've got with Andy Pearson, it came from Bain and Company.
And and, you know, they put it together, boom, you know, to 26 billion dollar
deal, 20 percent premium. Muhlenberg has gone.
Do you want hockey? That's what it means.
I can just say, you know, we D1 hockey. No, I was not D1 hockey at the time.
What division will you. Division 5 division.
Yeah. Was that because you wanted to cuts with
high school? No, just that was there was the time
where the rink was sold out and the streakers went by.
I was on ISE. Hey, I'm on ice and the place goes
mental. I think there's a flight and it's three
guys going naked around the top. Coed go tigers.
They run. They made the national lose the next

That's that kind of hockey.
John Tucker. Yeah.
This was this is the Zamboni you pulled. The Fed doesn't want to actually grasp
the nettle and tighten financial conditions.
We've got them going shifty now in December of 50 in February and another
twenty five in March. We think that next year what we're going
to see is a Fed that's continuing to tighten forwards with on the removal of
some cycles from Forbes about Kurumi Mori inflation down the stagflation
problems that we've seen this year. They're not going to go away anytime
soon. This is Bloomberg Surveillance with Tom
Keene, Jonathan Ferro and Lisa Abramowicz.
This was supposed to be a World Cup free zone for the duration of the program.
It's been a success, but you are refusing to drop it.
I want to like hang out like they do in Qatar.
You know, no tie on.

And they got the shoes of the white
soles. Have you noticed?
I'm not into that sports presenter with the suit and their sneakers and no time
for that. I'm having fun from New York City this
morning. Good morning.
Good morning to you all. Equity futures aren't just about
positive on the S&P 500. We've got a big week coming up.
We've got CPI coming up tomorrow. The Federal Reserve decides on
Wednesday, Bank of England Thursday alongside the ECB.
What more do you want? What you want is clarity.
And we got there from Lindsey Pigs. It's Steve.
I thought she was great on this. This passing of goods inflation back to
a disinflationary trend of some form, but services inflation.
And that is the mystery the next year. What does servicing 70 percent of the
economy, what does service inflation do? She has it like a lot of people,
sustained service tax shelter. Gonna be talking a lot about that maybe
on Wednesday. I'm sure there's also a service sexy.
But that's a different we're not gonna talk about that when we talk about the
dot plot.

You love that as much as I love this
thing. So do you have a dot plot on top?
Oh, I that he that. The essence of the decision comes down
to the top line. How far does one he 2040 comes garbage.
And with Richard Burton pushing back against that, I have told Mike McKee
when this market trades on projections from the Federal Reserve, what he going
to say and when I'm going to say it's Euclidean garbage capacity, it's France,
France is going to win.

So it's garbage.
And then what? You just you're not going to listen to
whatever the Fed thinks is going to happen?
No NASDAQ mistake. Oh, I think I think it will be very,
very good press comments, I believe. Vice Chairman Clear it will be with us,
which is a yes. I felt really I and Mr.
Duffy coming out the other side of the news.
I didn't know that.

That's a show that's been CAC. I mean, I don't if Bill knows that yet.
But first, let's get to the price action briefly.
As we keep saying, keep town in new massive week, I think defining week
coming up for the next couple of months at least with inflation on DAX tomorrow.
Then a Federal Reserve decision. For those of you that do follow the
Delta flight, it is about the 2023 deal and how far that's going to come up.
Chairman Powell has been leading us to believe that will bump higher at the
next meeting.

Equity futures right now up a quarter of
one per cent. The whole curve shifting lower 2s at the
30s. Just a little bit of flattening for you.
Were down about five basis points on a 10 year 352 51 euro dollar.
Not doing much of one at 566 crude, doing a lot over the last seven days,
down for a seventh consecutive session on WTI crude.
Tom, with just about holding on to 7C. We've just had the biggest weekly loss
on WTI since April and we're doing this as China continues to make an effort to
reopen. And we're going to talk about this
later. The top medical adviser in China,
China's top medical adviser, comparing Armstrong to the flu.
Now, that is a massive change from, what, a month ago?
Oh, two weeks ago.

A few weeks ago.
I would time it to the party Congress and that they've got the political news
out of the way. So now finally, they can take anti
science and try to nudge it towards the 90s culture and society.
Oh, I do. I think that, you know, you know, we're
just regular nut jobs, but we're showing the claim of Horizon Therapeutics and
what they're doing with Amgen. These guys are the anti science that
everything at Horizon Therapeutics is science.
I mean, they're joining us around the state.
Judy ISE Haidi Lun place to say is Michael Schauer, CEO of Market Filled
Asset Management Michael Barr. This is great.
We're not going to talk about England. Let's do it.
I don't know. I don't know how many clients invest e
trouble this morning.

Let's talk about markets.
The consensus view next year is recession.
The consensus view next year is that we get this dip in the first half off fear
of bad earnings and bad earnings materializing.
And then it's something you want to party around and we end up something
close to where we are right now. What you make in that cute little story
for 2023, I mean, it sounds a little bit easy.
You know, I do think bear markets end. So at some point this market shot him
and will go up again.

But I think the thing you've got to
remember is we are still in a bear market, bear market.
But I don't think completed its business back in October.
And you've got to concentrate on, you know, I think surviving the difficult
start to next year. We can worry after that as to whether or
not, you know, late 2024 looks like a great place to be.
We're back at 4000 or whether you're still, you know, dealing with, you know,
with this mess.

But, you know, I think this is a bear
market rally which has run its course. I think the corporate projections, when
the earnings come in, in January, are going to be really quite conservative.
And I think the odds of some form of panic are reasonably high.
When you look at the character of a low, what does it tell you that makes you
think it's not V low when you look back to October?
You know, very I don't think the narrative has really changed.
I still think the people still think of the S&P 500 as the place to be.
They still kind of want to own the same things they owned.
You know, a year ago, people are, you know, haven't really given up on
technology leadership.

They talk as if they have.
But, you know, and I think allocations have really changed yet.
And, you know, the lows I have seen or read about, you know, a little bit more
desperate than what we saw in October. October was what I would call short term
panic. But everybody was still grasping for the
opportunity to get back in. You have been a student of the income

I want to go to my great mentor,
Madeleine Deci of the London School of Economics.
And Lord, I would say it's all about profit.
You pass XP axe versus the challenges of the axe forward.
Is the NDA and VIX going to be challenged just because the profitless
the game's over? I think the danger to me and DAX is with
the profitable part isn't as profitable. And you have these incredible corporate
margins in mega cap tax. They've just been literally licences to
print money and have been given the kind of valuations that you only see in great
bull markets. You know, I think that their profits are
going to be less certain in 2023, and that's where the worry is profitless
take. You know, it's down 80 percent.
It's got fairly small market cap now and it's not somewhere that I want to be.
But that's not what pulls the index down.
It'll be the big guys with Paul Sweeney VIX.
Dani Burger.

Do they get revenues come in or is it
down the income statement where it is about margins?
I think it'll be hard to maintain margins in certain cases.
You look at somebody like Amazon is going to be a sort of margin story.
But, you know, I think top line revenue growth projections are going to be a
little bit wobbly next year. Something you've talked about that I
haven't heard many other people talk about is the potential for a lost decade
in parts of this equity market. Yes.
And when you talk about the lack of capitulation you've seen when it comes
to people who just want to buy growth every time we get a growth step, can you
walk us through why you think there is real potential here for a lost decade in
some of these growth equities that dominated the bull market in the last 10
years? A lot of the story is simply the
overcompensation that you had post, I'm gonna say 2017 when it when when a lot
of this kind of move was was multiple expansion.
You know, on the Bloomberg terminal, there's a there's a function G, which
literally shows you P PS.

And what we used to joke around with is
G.G. back in the late 1990s.
And what you could see was that all of these price progression was multiple
expansion, though earnings are actually fairly steady now.
Tech wasn't as egregious as you had genuine growth of earnings in large cap
technology companies, but you had a big expansion of multiples.
You did. You know, I think, you know, in many
cases they've overgrown, they've grown to the point, but it's just extremely
difficult to project forward and over five years and see the sort of growth
that you had 2018, 2022.

And that's kind of how markets work is,
is that, you know, indexes have, you know, wonderful periods of time.
It's been really a wonderful period of time.
And the S&P since 2008. And then the index constitution sort of
just becomes where you don't want to be. And it takes doesn't take five years to
fix that. It takes about a decade, sometimes 15
years. What we thought we had the cheat code,
didn't we? It was passive investing.
Yeah. You just bought the index.
Yes. You ignored everything and you hold onto
the index. Are you saying that there's a real
challenge now to passive investing just at the index level for the S&P?
Just like I said, I don't think, you know, living aspects is going to be the
place to be. There may be another form of passive
investing. Sure.
Maybe it's equal weight. Maybe it's global.
You know, if, you know, people bought ECM in 2002 and sat on it for a decade,
that's all you had to do. So I still think a form of passive
investing will survive. But the S&P 500 that's unlikely to be
the place to be.

I look Michael and map.
Be sure this gets up here. This Jihye Lee function has outstanding.
Michael Scheuer uses as you and the terminal to take APL equity.
G.E. goes where you can pretend you find your
inner Michael Shaw. I guess I should say you have a
paragraph on what the buzz is right now and it is in the spring of next year.
And that is a collapse of commercial real estate.
One of the one of the great services has commercial real estate down 13 percent
nationwide. And you're saying there's some real
liquidity, commercial real estate issues here to discuss that.
You know, I think there's a real problem of a weak commercial real estate prices.
It's nobody's fault, but there's no public market for commercial real
estate. And therefore, price discovery doesn't
really exist. So you know what you've seen in the.
Real estate, particularly over the last six months, is just transactional
volume, as has ground to a halt. The deals which had been done were
largely negotiated before interest rate projections changed.
And yet in all of these large funds which exist, nothing actually marks to

So, you know, I think that the Navy's in
in an in an awful lot of investable product are largely mythical.
It's not that the buildings have collapsed in value, but they're still,
in theory, worth what they were worth. But good luck getting somebody to
actually buy it for. That's not going to happen.
So here's the question I've got. When it comes to private markets, does
that introduce a new layer of risk next year for public markets?
Do you see that bleed through from one to the other?
Yes, there is a bleed through because people own both.
And so what happens when we start to panic about the value of our private
portfolio as we start to deal risk in their public portfolio?
And so there is there is an obvious link.
I think the link is perhaps more obvious in credit markets than in van in the
direct link in equity markets.

But I think if we if there is a sort of
credit story to this Fed tightening, it's likely to spill over from Faber
Credit. It's likely to spill over for the labor,
commercial real estate or venture capital lending.
But those at worst, verde were the two areas of excess where banks pull back
and the nonbank lenders really went to party.
It's just hard to believe, Tom, that the price to pay to blow up 10 years of
central banking easing is 15, 20 percent on the S&P.
I've mentioned that a few times.

I find that difficult to get my head
around. When you write a chapter of this in the
economic history books and we say, yes, we had 10 years of easy money, zero
rates and a massive balance sheet and we tried to unwind it in the price we paid
was 20 per cent on the S and P I. I I struggle with that.
I really do. I struggle with that.
Well, it's a resume shoved into me that as you mentioned, John, and I think it's
I think everybody watching and listening knows this.
We believe it is about money. I call a dire straits economy.
That's what we have for three years. Money for nothing.
It's over. Martin, that was awesome.
You see it every month, every micro thing.
Where does enough the rank for you and in guitarists all time in office to make
the top five with him at the Bluebird Cafe in Nashville.
Total classic top five all time.

Top ten.
You know, I had a style. He is a stylist.
DAX is a hell of a nice guy. I out of market felt this was awesome.
He's a hell of a nice guy. Features on the S&P up a third of one
percent. Tina Glenn Beck.
Keeping you up to date with news from around the world with the first word.
I'm Lisa Mateo. A man charged in the 1988 Lockerbie
bombing of a Boeing 747 that killed 270 people is in U.S.
custody. He's been identified as a former Libyan
intelligence officer. The U.S.
calls a suspect a third conspirator in the attack, saying he helped build the
bomb that destroyed Pan Am Flight 103 over Scotland.
Germany's Chancellor Olaf Schultz will hold a virtual meeting of the Group of
Seven leaders today to discuss Ukraine's immediate needs.
That's following Russian missile attacks on the country's energy infrastructure.
Meanwhile, President Biden spoke to Ukraine's president, Vladimir Zelinsky.
White House says the president affirmed the U.S.
commitment to keep providing military and economic aid in the UK.
The government is planning for military staff and civil servants to cover for
striking rail, health, postal and other workers.
Strikes are planned for almost every day through the rest of the month.
Workers are demanding pay hikes that keep up with inflation.
It's the biggest wave of industrial strife in the U.K.
since the 1980s.

It's Amazon's biggest acquisition ever.
The biotech giant has agreed to buy Horizon Therapeutics for twenty seven
point eight billion dollars. Now that represents a 48 percent premium
since developer of auto immune disease treatments disclosed it was in talks
with three potential buyers. Both Sanofi and a Johnson and Johnson
unit dropped out of the running global news 24 hours a day on air and on
Bloomberg Quicktake, powered by more than twenty seven hundred journalists
and analysts and more than 120 countries.
I'm Lisa Mateo. This is Bloomberg. I said they're people and I wanted
people that work for me to take seriously the harm and misery that was
all experienced by all too many Americans.
It is not just a data point. It's the people behind them.
That was Secretary Yellen on 60 Minutes over the weekend dropping the F bomb
there, T.J., over the weekend. What do you make of Janet Yellen
unleashed Michael Barr least academically.
60 Minutes is third, fourth over the weekend.

But some this is coming all after we
thought we thought at this point, the year that maybe Janet Yellen was leaving
the administration. And that seemingly is not what's
happened. I mean, she's younger birds than it was
watching. Says for sure.
What I would say, John, is let's review why she's acclaimed in the modern era
and is this word slack and has a massive, massive conundrum for the
American economy as a level of slack of Americans not participating in our
modern technology economy. You see the rumor about about Moynihan.
You see that rumor. No.
The reporting, I think, was from Fox News last night that Moynihan was in the
mix to be the next treasury secretary. Well, now that reports in the rounds in
the last couple of days, which is which is odd.
Yes, I would. But we should talk about Lawrence
Diamond being in Lawrence. Yeah.
We've done the Dennis a few times. You know that rumor that Target seems to
make headlines that anyone wants, that that target seems to shift around Wall

That again, doesn't it?
But then the politics runs into the do we want somebody from Manhattan to be,
you know, running the ship and that runs it.
Let's do this is too important right now.
Emery Horton surviving a weekend. And she understands that in the heat of
the America's Cup. As you look at Washington and all, you
need to take phrases from the America's Cup.
And so what we're going to say is right now we press on and we pull back with
Anne-Marie right now. After the.
Is Washington riveted by the World Cup, Emery?
Some more, I think, you know, it's across America.
Whether or not you grew up either following soccer or football for giants
and whether you enjoy it.

I mean, I personally will obviously love
the World Cup. It's unfortunate for me.
It's every four years. But we have UEFA, another competitions
look forward to. But I think people were more into it
when America was winning. But now, I mean, who do they decide?
Who do they? France.
Emory. Let's go to John Denver right now.
Almost cinema. West Virginia.
I mean, Joe Manchin doesn't want soccer. We know that.
But is he the next to fall in the cinema independent sweepstakes?
I mean, to me, that would be a shock to see Joe Manchin do a cinema because he
needs to get re-elected.

There was tons of questions about this
over the course of the past year. Of course, who's negotiating with the
White House on Build Back Better, with which later basically became the smaller
version of that for the Inflation Reduction Act.
And so far from him and his team, it's that he has no plans to register as a
Republican or an independent. Greg Valliere, actually, Tom talked
about this today and the quote was, I have it up right here.
Could Joe Manchin consider a switch that potentially would scramble the Senate
map or we're hearing that Manchin has no interest in leaving the Democrats, even
though, as you say, Tom, he does face a really important and critical and
potentially difficult re-election. Well, on the next Senate, it is a
difficult 17 days in the calendar year. Give us an update on Mr.
McCarthy of California. I mean, I mean, here's the other point
of tension I would say, into the holiday season.
Well, of course, we are waiting for the Republicans to anoint him right, the
House speaker. The biggest story right now on the Hill,
of course, is spending of the next government.
And right now, they have till the end of Friday this week to do so.
The Democrats were supposed to come out with their spending bill today.
The Republicans had said, if you do that, we will not be signing up for

But what we here are hearing is that
over the weekend, they have made some progress.
There are about 26, 27 billion dollars apart.
It sounds like a lot when you're talking about one point seven, one point eight
trillion dollars in something, it's really not.
What will likely happen is that they'll kick the can down the road and they're
going to extend it. Not so unlucky for all the journalists
and politicians on the Hill till December.
Twenty third. And we'll see whether or not they are
able to get a full year of funding or then it just gets kicked into the new
year. Ed Murray, what a moment with the
treasury secretary on 60 Minutes with Norah O'Donnell looking back to her time
at the San Francisco Fed back in 2009 and reminded of the word she used to
remind her staff that real people are gone through real issues.
And I'm hesitant to use this word rehabilitation, but I'm going to use it
because there was a belief that by the end of this year, Treasury Secretary
Janet Yellen would no longer be treasury secretary, that she'd be on a way out.
And it just felt was like going through the media over the last couple of weeks.
It feels like the rehabilitation of Janet Yellen.
Can you walk us through what's going on here?
Yeah, she sat down for a lot of interviews.
And it's not just, you know, the name brand networks like 60 Minutes for an

She also sat down with Stephen Colbert.
Right. She's coming more into, I would say,
American household shit. She also just had this really important
moment for her where she signed the first first female treasury secretary to
sign R dollar bills. So there's been this exciting times for
her. And she says that she has no plans on
leaving and she's getting out there talking to the press a lot.
So it does seem that that is true, even though there was lots of rumors sparking
that she could potentially be saying goodbye to that post following the
midterm elections, of course, in midterms where the Democrats didn't do
as bad and actually did much better in the Senate than many were expecting.
If you go back, though, to that report on Friday from Fox Business, the name
knew his name, that was potentially going to take on that post as Brian

He also has refuted that, saying that he
has the best job in the world watching him.
Raimondo is another name. I think the best part of the last twelve
months that was thrown around, he wasn't it?
Yeah, Gina, Amanda was definitely thrown around commerce secretary.
She's been this key, critical voice on really integrating the private sector
with the government, with the White House, explaining a lot of what the U.S.
administration, the Biden administration is doing when it comes to things like,
say, chips and how you trade with China.

Also, she's been really at the forefront
in bringing manufacturing back to the United States, really touting that chips
act and the money this can mean and the subsidy.
This could mean for companies if they make these chips, the United States.
So she was also touted and there are many that would like to see her
potentially take that next step. But no one seems to put on Janet Yellen
out. I'm glad you bring this up, because,
John, I really haven't thought about it. Do we have a house cleaning, a
constructive house, that convention? You know that January.
That phrase we use that cabinet reshuffle.
We always get that paid periodic cabinet reshuffle.
Anne-Marie, we asked Brian DAX about it. I think it was a little bit evasive.
Is it fair to say he was a little bit evasive in our conversations last week?
Emory, where is that reshuffle of this administration?
Are we looking for one? We definitely are looking for one.
I mean, there's rumors about Brian Deese.
You guys asked him pretty directly and he did not want to answer.
You know, these are awkward moments for these individuals when they're deciding
what to do next.

And then, of course, there was that
Acciona report that, you know, potentially Ron Klain would also be one
that's looking to go, especially given where the president is, would be a time
for him to leave the president in good shape, foreign policy.
They were able to continue this united front with the West against Russia.
You have falling gas prices. This is something wrong.
Clean has been obviously obsessed with and of course, the midterm election,
there was no red waves potentially. This is his moment to leave.
You know, you say you should leave your job at the peak show dad as a viewer at
your job. This could be that moment for him.
But with Biden, he really likes to keep his staff with him.
So it's very difficult for people to leave the, quote unquote, Biden family.
These jobs are exhausting. Yeah.
Which is why you expect people like Ron Klein to make a move.
Can you tout some never to miss a World Cup viewing party at my house ever
again? Ever again.
There was so much fun. And you really get an insight of what
kind of soccer dad John is going to be here.
It'll be going to be pretty.

And there that's actually scheduled in
press press for years. There was some press on land.
There's some real casting going on in. Now, imagine how much thinking you might
say that you might show me. Never mind that F bomb from Janet Yellen
and the amount of F bombs at my place on Saturday.
Is there going to be a Gareth reshuffle? I mean, I wrote his biography.
He Googled. He shot.
He missed a penalty shot in 96, 25 years ago or whatever.
But isn't he a success? I mean, based on recent World Cup
history, what are we talking about here? Semi-Final last time around a
quarterfinal and getting really, really close to getting past France.
And you'd have to think that would open up the path to get to the final this
time around. A final the European Championships, they
lost to Italy on a penalty shot outward, T.K..
I mean, I think there's a lot of people that would like to see Gareth Southgate
stay with a team, but whether he does remains to be seen.
Have team coverage from London on that.

Is that what you're trying to make,
January? Yeah.
So we trying to make happen a snowy, snowy UK until today.
So say rooms. They say Flying Castle features up a
quarter of one percent on the S&P and this airplane pack. Mike Wilson and Morgan Stanley this
morning just absolutely brilliant, we're all focused on CPI and the Federal
Reserve this week.

He calls it yesterday's news.
Says the final chapter to this bear market is all about the path of earnings
estimates, which are far too high in the opinion of the team over at Morgan
Stanley. Let's get you some price action.
Your equity market looks like this on the S&P 500, up two tenths of 1 percent,
up a quarter of 1 percent. Also on the Nasdaq, slightly firmer
giving into a massive week ahead in the bond market sees ease and 30.
China erased some of a move from last week.
I guess the two year last week up 7 basis points.
The 10 year up around 10 basis points this morning in the bond market.
Two stents and 30 shaping up as follows.

Yields down by about 4 basis points on a
10 year, 353 60 on a 30 year down, let's call it 5 basis points, 351 and just
wanted a two year 433. So you've got some curve flattening in
the mix. And just to round things out on crude,
just want to sit on oil. Longest losing streak on WTI potentially
since August 2021. We are down for a seventh session, some
with nudging lower by 24 cents away. Redundancies just to persist, just as
grind down lower and lower. And I'll add our adults, tell me where
we're going to end up. You're about to see a sixty nine handle
on West Texas Intermediate is important, John.
I think we've got to reframe tomorrow's festivities.
And what you need to know, folks, as we all talk and I do this as well year over
year, the adults are talking month over month.
And it's easy for you. The Bloomberg Surveillance both month
over month, CPI zero point three percent is a 20, 30 day move.
And then also core inflation, the same statistic, zero point.
Can we get a point to on core just to get that kind of deceleration, those of
the last four weeks there and then it goes into the year over year.
But just to frame that out to me, you know, where new Fed decision Fed
position, the inflation decision, inflation.
Tomorrow morning at eight thirty Eastern Time, the Fed Reserve decision, then
onto Wednesday at 2 p.m..

We've mentioned this a few times.
The Fed just one of nine central bank announcements coming this week ahead of
that decision. Investors weighing in on what to expect
from the central bank. The Fed doesn't want to.
Doesn't want to actually grasp the nettle and and tighten financial
conditions to the extent that would be necessary to really can a guarantee that
recession coming through it. This is the conversation right now.
T.K. Will he lean against the easing of
financial conditions that we've seen in the last couple of months?
CITI ANDREW HOLLAND, HOST, PUBLISHING Just moments ago, they say the following
We see a hawkish risk to Wednesdays meeting despite the slowdown to a 50
basis point rate hike pace. Looser financial conditions are likely
to sit well with a committee that is likely now more concerned with
persistent inflation driven by a rise in labor costs, Hollande hopes, and a team
at City Hall just moments ago where jargon free here, free and fair for you
you'll like it's in English, but for us we're like, what?
Well, to grasp the nettle.

Grasp the nettle to property of a plant
to inject toxins into the skin of any person.
So his power going to graft that not, you know, have did you know you have
talk you to have metals, you must have Nestle said.
Did you not call them nettles? It's like spiky, spiky blushes.
Yeah. I go into Central Park once a year to
crush the net. So you don't have that phrase here was
sorta. But no, it's okay.
It's for him. But I'm here to translate whenever
you're doing that every day because we're grasping the nettle is.
Well when I look at John seriously in a grass and nettle and you mentioned it as
a dot plots, are they actually going to move the dialogue, the dot plots.
I'm not so sure. So they moved the top plot of the
September meeting in the latest projections.
Every time we've heard from Chairman Pound, he has indicated that the twenty
three dot will get higher.

Now, some how much higher, I think, is
the conversation with ultimately going to have?
Does it have a five handle for 23? Yeah.
And is that a hawkish surprise if everyone's expecting it anyway going
into Wednesday's meeting? Kill me.
I don't I don't know. There's many dots.
There's like, what, eight, nine, ten dots?
And I guess one dot matters. And what I know is Deborah Cunningham,
with long term maturity of twenty seven days, really doesn't care about the
dots. She joins us right now from Federated
Farmers. I got to ask you about this, because
it's major, major in the news in New York City, Deborah Cunningham, your
world. A visible, publicly traded short term
money is somehow linked to any potential blow up in commercial real estate.
What should our viewers and listeners look for in the short term paper world
that begins to show tensions within commercial real estate next year?
Well, first of all, let me say good morning to everyone and tell Jonathan.
I do know what stinging nettles are.

I grew up in very rural central
Pennsylvania and I understand the term and I've had it on board.
I'd grab the nettle and it's painful. It doesn't last very long.
So. So going back to the commercial paper
market and how that might be linked to commercial real estate, really
from the standpoint of asset backed commercial paper, that's probably the
clearest link. And what you might see backing asset
backed commercial paper are a number of different types of assets.
They're usually very short term, quick turnover types of assets that are credit
card receivables, they're trade receivables.
But there are some commercial real estate receivables, very small amount in
asset backed commercial paper depending on what program you're looking at.
And if you start to see liquidity dry up a little bit on that paper, if you start
to see some sort of spreads widening, which we have not seen even write a wall
amount. That's probably the sector and that and
the banking sector.

The banking sector, obviously, with
their real estate or commercial commercial real estate portfolios also
has exposure there. We have not seen that yet.
This is wonderful. Very importantly, Deborah, can you count
is it is it a shadow banking system or a shadow asset backed system or is it very
countable and observable to the industry?
It's very countable and observable. I mean, obviously, bank portfolios are
fairly transparent at this point. We get a good look into the portfolios
and the loans on banks balance sheets. And I might note that when you look at
the banking sector today compared to the 2008 banking sector, the balance sheets
look a whole lot healthier, a lot more reserves, a lot more not a lot fewer non
performers and better access quality on the asset backed side.
There are what are called monthly transmission reports that basically have
the same data comparing the portfolio that back that paper, similar to what a
bank would be. So it is transparent, but you have to
look for it.

So going out to distant maturities like
two years or beyond. How do you deal day to day and adapt to
the massive curves curve inversion version 15 spreads that the convention
of your world. Is this curve inversion like 78, 70,
1981, 82? Or is it different this time?
You know, I think coming from a zero base makes it a little bit different.
We've operated for most of the last 14 years in a zero rate environment.
And I think to a large degree, what was what has built up from an inflationary
perspective, what has built up from a business cycle perspective is a little
bit different than anything that we've had in the past.
So I do think there will be, you know, we're expecting either slow growth or a
mild recession. But in either case, I think the
important part that is distinctively different in this business cycle and why
it may look different from, you know, a curve inversion in the bond market yield
perspective is coming from the base of zero.
Makes it different.

Deborah, coming into Wednesday, what do
you think there is scope for surprise? I think perhaps you're going to continue
to see the Fed voters and the dots themselves you were talking about before
I came on the segment, before I came on. I think you're going to continue to see
that go higher. So, you know, I think the higher, sooner
and for longer, just as missing, the sooner right now.
I still think the Fed is very much on a on a glide path that is higher for
longer. So I think you're going to see that
terminal rate and that central central rate go increase.
And I think the timeframe for which it remains at that higher level will be a
longer, longer time frame.

Well, longer will come down to the data
and we can talk about that time frame. Now, as for the peak, I think Goldman
has got it at five to 525. I think others have the same kind of
ballpark when it comes to longer. Deborah, I won't ask you to guess where
the data comes in. I want you to help us understand how you
think this Fed will respond to that incoming information.
How high is the hurdle for the Federal Reserve to cut interest rates at the
back end of next year? How bad would the data need to be?
Well, I think you really have to see inflation.
Inflation is the key. So, you know, we've seen it go from ten,
nine, eight, depending upon what measure you're looking at.
Down to, let's call it eight, seven, six.
And so you've got two percentage points from an annualized perspective taken out
of the system with, you know, 300 plus basis points in increased rates in that
time frame.

Now we're we're on a path toward that
end. So it should take less increasing rates
to get another 200 basis points and then another beyond that.
But getting down to 2 percent, I think is pretty difficult.
I don't think you'd get there quickly. And I think the Fed will have to look at
the data and sacrifice to some degree the inflationary side of it going.
Maybe they get to 3 or 4 percent, but I don't think they want to sink the
country into a more severe recession. And as such, I think that they will
likely have a time frame when they have to, you know, sort of weigh the
differences between. Am I going to have inflation and other 1
percent lower, but a recession, that's maybe 2 or 3 or 4 percent worse?
Or do we think this is an OK place to stop for now?
And I think that takes us well into 2024, Deborah.
Kind of a federated armies.

Fantastic, as always.
Tom, this is the conversation right now. High for longer is the longer piece of
the high for longer phrase where there is great debate when you have a market
pricing in cuts and a Federal Reserve is basically saying we're having nothing to
do with it. I mentioned this in a previous hour.
I mentioned it against the people. Just tune again, create horrors and less
cap on McCormick out on Bloomberg over the weekend with this article.
Over the last five interest rate cycles, the average hold, the peak rate was 11
months. Eleven months.
When you go back to the 95 cycle, some money held for five months, peak rate at
6 percent and they went back to 525.

And you wonder if we do get a reset,
Tom. Is it a reset of recent memory where you
go all the way back down again, or is it just kind of an adjustment away from
five, back down to something like four to the strength of their article or one
of our bond axis with a great credit? Tours of economics is nobody has a clue.
And of course, I just I I I think what I would say, John, is look at consensus
and be very wary of it. And consensus has been that we come down
with some rapidity. And just like maybe we do have a crystal
ball like, no. We done.
And my question really is not about where you think the economic DAX is
going to be. It's how you think the Fed will react to

It's a reaction function.
The Fed is going to react on a reality that they don't look at.
Three point seven percent is any type of success.
That's not mission accomplished hugely. And to me, that's the heart of the
matter in the heart of our discussion on Wednesday as well.
We've got time, Mack. Coming up.
Good on efforts. Need that.
Looking forward to that. It's going to be in the studio.
Intel from HSBC here in New York. This is Bloomberg Quicktake correction. Keeping you up to date with news from
around the world with the first word. I'm Lisa Mateo in China.
Covid is rapidly spreading through households and offices after the
country's pandemic rules were eased. That's led to turmoil in poorly prepared
hospitals. Some facilities are struggling to find
enough staff and others are suspending non Covid treatments.
There's a sign that China and the U.S. are taking steps to ease tensions.
Beijing described its meeting with U.S. diplomats that included talks on Taiwan
as in-depth and constructive.

The two sides met outside the Chinese
capital. That was a follow up meeting to the last
month in Indonesia between President Biden and President Xi Jinping.
That led to a resumption of cooperation on several issues.
Scientists in California have made a breakthrough in nuclear fusion
technology. Bloomberg's learn that for the first
time, they produce more energy than consumed in reaction.
It took place at the Energy Department's Lawrence Livermore National Laboratory
near San Francisco. While the results are considered an
achievement, it's still a long way to creating a viable technology.
Private equity firm Toma Bravo has agreed to buy Cooper software for an
equity value of six point two billion dollars.
That represents a 77 percent premium to the California based companies closing
price on November 22nd.

Prior to a Bloomberg News report on its
potential sale, Toma Bravo outbid Visa Equity Partners for Cooper.
Microsoft has agreed to buy a stake in the London Stock Exchange Group.
The move will give the software company a 4 percent equity holding, which is
currently valued at about two billion dollars.
The stake is part of a long term agreement to help LSC develop data
analytics and cloud infrastructure using Microsoft's products.
The group will spend a minimum of 2.8 billion dollars on cloud services over
the next 10 years.

Global news 24 hours a day on air and on
Bloomberg Quicktake. I'm Lisa Mateo.
This is Bloomberg. We're in a different place.
CAC. I think the problem is that Michael Barr
lags are involved, overplayed its way through the minefield.
When I look at the solider and the a market now know a wave of what pool was
he putting in. Kathy Jones, a Charles Schwab game
against the Fed decision coming up on Wednesday.
Before we get there, CPI coming up on Tuesday.
I've said this a few times this morning. Michael Barr Morgan Stanley says
yesterday's news. It's all about the earnings in the first
half of 2023. And I think a lot of people on the
equity side might agree. Your equity story looks like this in the
equity market, the S&P and on the NASDAQ as well, where it's just a little bit
firmer, Tom Keene, a pay quarter of 1 percent on the S&P, up by about 11
points. Could be interesting.
Yeah, there's a little bit of a lift here and a march in the VIX carefully
hasn't given any love yet.

It's still a point of tension.
24 point to 6. It is time for global Wall Street to
lean forward for one of the great, great calls of the last number of years in the
persistency in courage of HSBC to see strong and resilient dollar.
They amend that sorta. So we have a sort of kind of like
discussion with their mayor.

How to research America's head of USF
strategy with the great Paul Markel as well.
There's an ambivalence to, you know, you're not calling for a weak dollar,
right? Well, we're calling for a dollar
correction, a kind of amounts to the same, but it's not this big trend
reversal. In other words, we don't undo everything
that we've we've delivered by virtue of dollar's strength over the last 18
months or so. Let's talk to people like Jano, you
know, trade off of the folks in the breaker.
John's doing Fairfax trades here.

You know, start rumors.
You would want to do that. But is it a tradable come off the bloom
after a pun? There, come off the bloom.
Get that. The great, great.
Nailed that. Okay.
But is it a tradable come off the bloom or is this going to be a messy sludge or
nobody really makes big figures? Well, look, our thought process was we
described that we thought to be this would be the chop before the flop.
We'd had this really choppy period and then we'd get a flow of 20.
Yeah. Nice phraseology, but completely the
wrong way around.

Because what we've had is the flop.
We're still kind of waiting for the chop.
You know, this the reversal we've had over the last year, we changed our
dollar view for dollar bullishness to dollar choppiness and then weakness just
a month ago. And in that month, we've had like one of
the biggest monthly declines in the dollar.
So it's really no even for quote unquote, a bear like us.
Now, our newfound bear like us, it's been a big old move.
I wonder, is the choppiness about to come, though, you know, into the CPI,
into FOMC and into kind of the beginnings of January, where everybody
thinks they know what the trend is for 2023 and then they're all Sydney forced
to revisit in the first couple of.

Is there a risk that we're overplaying
the one side of the currency pair? When I think about euro dollar, which
got down to about 95 and then we avoided the worst case scenario coming, it's a
win. So we had that period of mild weather
for the Europeans. When I think about Sterling getting down
to one or 350, I think intraday the end of September, coming back through 120,
largely it was the other side of the trade.
It was the sterling side, the euro side that really kicked off that move.
We cleaned up the policy story in the UK.
We avoided that terrible Windsor and the shutdowns we anticipated.
Maybe they still evolve. I don't know.
But do you think we're overplaying the U.S.
side of the currency pair? I would say, look, 20 22 showed us that
the dominant thing to got right was the dollar.
I mean, we could at the margin, we had periods where the sterling was was the
swing factor.

A couple of peers were, euro was.
But I mean, look at us this week. We have got an ECB meeting.
We have got an AM talking about who knew, you know, and back.
But I think there's a recognition. And the reality is you've got to get the
dollar right. And in a way, before you get the dollar
right, you've got to get the S&P right. Because risk appetite has been the core
of everything that's happening in the affects market.
And the safe haven dollar. So I'm not trading rates next year.
I'm trading sentiment. You're trading row.
Row risk on risk. All right.
Well, know that all the way to that. So when you think about paying some of
that choppy dollar weakness through G10, what's the select currency pay?
You want to do that through? I think the high beta currency is on the
way up and the dollar should be the high beta currencies the way down.
So your Aussie, New Zealand, your gnocchi, stocky and less so the Canadian

And we've seen that even in this dollar
sell off New York, Canada's underperformed others.
So I think you go to that. I mean, RTS, I'd say the Aussie props
and the Kiwi Norway and Sweden. I know that's what your day trading just
as we came off, came on air. But, you know, he said for the Braverman
side, therefore, the braver man, and that's why you're still having to do
this gig as well. So I yeah, I think Aussie US dollar,
Aussie US dollar and New Zealand U.S. dollar, they'd be the two.
Is China reopening reinforce that trade I think is being overplayed a little
bit. Why?
I mean that transition is going to be complicated towards, you know, a
reopened China, perhaps markets slightly over egging that the tourist angle and
what that might mean in terms of flows.

But it is encouraging.
And the pro growth stances and. Bridging.
But you look even at HSBC, we've been looking for a rebound in China six
months down the road for two years. So, you know, as has the market.
And it's difficult because every time we think, OK.
Right. And they get it.
We don't forget the fear. And you get the leadership there with
the Hong Kong position. The Hong Kong and Shanghai Banking
Corporation. What is the pair in the Pacific Rim to
play Asia Open? I think Korea will be one.
It's they are done by Batum K or W against one against the dollar.
I mean, I think you got to go against it.
I think green, I think is the cleanest way.
I mean, I think you do admit to your question earlier.
You do have to come back to a dollar view now.
Then how do you express it in Asia? In Korea is one option, right?
I guess the round is another.

My best option.
Brazil is one you could like says if you out there.
And for sure. Mohammad from Cairo in Cambridge e-mails
Zune. And he says, Would you tell us there
about Durham Corner? I mean, I mean, if we get a correction.
Morocco final. Yes.
I mean, you've got all these obscure currencies.
I mean, go in there. You know, you look long.
The idea, Durham, I would you know what? I'd love to give it to you.
I'd run away.

I would love to give you the big figure
in that cross, but I've no idea. But I as I was mentioning in the break,
I am trying to dust off my family tree to see if I've got any Moroccan heritage
in there so I can join in the celebrations when they be Croatian, the
final three nil. I spent fantastic to see you.
Think of Croatia, Morocco, finally. Is that what you're looking for now?
Some have always been counter insensitive HSBC.
So why not soccer? Guys, can I ask a question?
They played before the Sunday game like the third such a stadium Wednesday.
Nobody home, right? Yeah.
Yeah, that's never a great game.

I mean, everybody's like, don't hurt me,
right? I don't know why they play that game.
I really don't. Yeah, it's a tricky one.
It's okay. I think it's finding it.
Finding the bronze medalist, isn't it? And also, how many wondered how easy was
it to get tickets for this World Cup? I'd love some insight into that because
every time I watch the game, they say it's another sellout.
And I'm like, look, I can understand I'm totally with you gaslighting me, because
I could see literally France. England was like thousands of empty
France. England, I thought was bizarre.
But why do they keep saying it's a sellout when there's thousands of empty
seats? Well, look, in English, you might think
they're all down the pub, but, you know, that could be a risk.
I don't know it just when you can sell a ticket mean you have to turn up.
Stephen Engle made an appearance here.

Have you spoken to state major?
I have spoken to Steve. Major.
I dunno if he's been NASDAQ any of the games.
I think he's he's watching for Hong Kong's focus.
Scarlet Fu. It's a very Premier League football
starts in the new year against Hellman. We can sort of move on with life and
forget about it. Yes, you keep bringing up this England

He just won't let it go.
I'm fascinated by it. As a foreigner, I mean, I am a foreigner
to soccer. Okay, let's get let's get to the foreign
point of view. Do you think we've set the stage for a
great World Cup in four years time in North America?
It is us and Canada matters superior to where we were 90 days ago.
Is it a big deal? I think yes, it will be a big deal to a
new America. A young guy who is an older, younger
audience. Right now, I'm focused on is Carlos
Rudolph going to end up with the Red Sox?
That's all that you like about that? He's like them, Bobby.
He throws only fastballs high in the strike zone.
But that's a diminishing America.

And it's an older America in the new
America, I think, will really embrace it.
Does Fox have the talent to tell me Telemundo is gonna do it?
I'm sure they will. I watch and tell them when I was there
in 94. For the original USA soccer World Cup, I
said it's too early for the U.S. but Arnold Beasley said, what more you
know. I'm still living off of that flute.
Yeah. He played a loss to Ireland from New
York. Much riding in that fine atmosphere I
got right in that final. I can remember that farmers ill penalty
shoot out. Oh, yes.

Roberto BAGGIO over the bar. I think Frank up a race.
He missed the penalty. They Massaro missed the penalty, as you
remember this one, yet remembers nothing about markets.
Oh. Oh.
Is Dara one of your friends that. Yeah.
He paid you before he came on to mind. You got me trade in Nike stock.
Sammy Lin. Seriously, Maria Tadeo is on leave today
and we thank her for her comments the other day.
That was really her only shot competition gave.
I think Maria very courageously gave to a lot of the American audience, frankly,
global, how people really care about it. We I will say with great certitude, we
just don't get that national identity is wrapped up in their football team.
Yeah, it was integrity for countries like Brazil, the countries like Brazil
on the international stage, it's something they're super proud of.
So for that to go the wrong way, you do okay?
I think so.

I don't have DAX coming back.
Maybe I don't know, you know, if I'm around a table, maybe that what the
handbook is a sports correspondent. I appreciate that.
Fantastic catch. Everybody has a happy holiday at HSBC to
you as well that South Korea looked good.
Futures up a third of one percent. You've got such a Tottenham bias to your
writing preferences. They're in the finals, you thinks for
his plan on Sunday. Rocker, maybe this is flowing back.

In 2023, there's this sort of kind of
limbo era where it's not really clear what's going to happen.
We expect to see a lot of volatility here as we've reprice earnings for next
year. All the cables from the inverted yield
curve. All the indicators, I mean, I think go
along. There are things that are rolling over,
are falling into next year. We do think that we're going to continue
to see housing. We we're going to see good week.
Slight chance of recession. Absolutely right.
Probably at best, a mild one. This is Bloomberg Surveillance with Tom
Keene, Jonathan Ferro and Lisa Abramowicz.
Good morning, everyone. Jonathan Ferro, Lisa Abramowicz and Tom
Keene on radio and television. Brando off today talked enough about
grandma. We'll get to the three day weekend, a
three day weekend here. And that's how it ends, too.
Tomorrow, inflation and due. Wednesday Fed.
Yes. We'll be with you Wednesday afternoon.
And I'm going to get right there, John. Inflation is a mystery.
CPI coming up tomorrow morning and how the Fed response to it.
Not a mystery. Another 50 basis point hike expected
anticipated on Wednesday.

And that's how much your favorite piece
of this is, the dot plot for 2023. How much hard is that 23 dok go relative
to the last projections we got back in September.
I'd also suggest you look to the news conference as well.
The last few times the chairman palace spoke, I think risk management has been
a big, big part of the approach to communication.
Do they think the bigger risk now after a 50 basis point hike on Wednesday, if
that's what we get, is over tightening or under tightening?
Do they think the risk of doing too little still outweighs the risk of doing
too much? And if that shifts time to a little bit
more of a balanced view, I'd suggest that's probably a little bit more damage
than what we heard in the ISE was a shift idea because there is a history
going back a solid 20 years that they always air on an asymmetric basis.
And if you get back to symmetry of some some way in decision making, that would
be a shift in the game, in the game, in the parlor game of trying to figure out
the view forward.

But I'm going to go back to inflation
and has Michael McKee would say you go beneath the headline data and you've got
to look at the pass of goods, inflation and service inflation.
And the thing I see we'll get to the data check in a moment is seventy dollar
West Texas Intermediate NASDAQ. Does that change the Fed debate?
Can you imagine if they're having this meeting with a 120 oil, seven data
losses, Anna Edwards crude as a big, big change in some, to your point?
There are a lot of people looking for year round triple digit crude.
We didn't get it.

You know, the equity strategists would
say this morning some forget about it. CPI, the Fed, they've done talking about
the Fed Reserve. They now want to talk about the
consequences of this tightening cycle, 400 basis points plus in a really short
amount of time. They want to have a conversation about
the weakness they expect in earnings to dominate this equity market in the first
half. That's the overwhelming consensus view
on a street into next year. I'll go there.
But on Thursday or Friday, I can't remember when exactly.
Just to put Corish, I think Liz Ann Sonders headed out the put the
negativity versus the call, the more optimism view the gloom out there.
Witness the put call ratio, which is maybe an antiquated number.
The gloom out there is tangible.

Neil DAX of Renmark, which sit in that
chair and Neil would say to us, what recession?
Look at the economic data. It's resilient.
And in fact, the conversation I think he'd probably like us to have is a
conversation when maybe you've got to push that further out.
And what does that mean for that consensus view for how equities will
perform through 2023? Yeah, I I.
To me, it's a mystery to it. Let's get the data here and do a
complete data check. Either Jeremiah was just brilliant.
It was brutal ambivalence. It's only here in Tallahassee.
It's not back. I heard from Steve Major of HSBC Jason
Kelly. Steve Rosen made it to one game and he
said that the atmosphere was fantastic. He said it was a lovely experience.
That was the feedback for all the from the abuse this World Cups taking gun
into its home. He said it was a lovely experience.
Features right now up a third of one percent on the S&P.
Big week losses last week on the S&P 500 driven by the move like we saw in
Friday's session in the bond market, yields just a little bit.
Love somewhat down three or four basis points on a 10 year, 354, 33.
Talked a lot about trade already.

Let's finish on Eurodollar T.K.
1 A 5 54. We're positive there.
A tenth of 1 percent to DAX point. I actually think Dara Mayer, if HSBC
made a wonderful point. Federal Reserve.
Federal Reserve. He's talking about the ECB coming up on
Thursday. We've barely mentioned debt some four
weeks. Let's go there.
This is something that I'd been hugely remiss on journalism.
Better job at this than I do. You go Legarde has to come out within a
horrific war. We can all agree that's worsened since
the last meeting. But to me, the real history is the Bank
of England.

The chart of the weekend was having a
blast as electric utility chart, which was truly fogs a long shot of expense.
Winters arrived in his nose on the ground.
It's getting cold. Strikes are kicking in over the next
couple of weeks as well. So the GDP backdrop, both for Europe and
the United Kingdom, the Eurozone and the U.K., then the growth backdrop gets a
little bit more difficult. And both central banks expected to make
another move, the ECB. Tom, did you ever think the ECB would be
hiking its 75 basis point, 50 basis point?
Increments. Tom, there was a moment in time of the
pandemic when I thought we'd go through a whole cycle again.
But the ECB never hiking interest rates. Here's where we are.
I go back to the war and I think it's a true wild card that they have to tread
carefully. John asking for a friend, should
Americans fly to Heathrow now? Well, I'm flying.
It's a threat. Next wait.
Yeah, but you've got like you can get to Aberdeenshire five times.
Hold that passport control.

There will be strikes and it getting
ready to draft people in from the army. Is that right?
That's what I've read. And we'll see if there is strikes at the
at the border for passport control. We'll see if that actually materializes.
At the moment, a difficult my I'll show IRA Jersey to join us later in this hour
with a nice bond update from Bloomberg Intelligence.
And we're thrilled. Moments ago, we got Will Kennedy to come
in on hydrocarbons and oil. Seventy one.
Forty American oil right now. Tony Rodriguez joins us.
Had a fixed income strategy at Naveen.

Tony, I want to go to the heart of
Naveen, the sore, which is municipal bonds, which is a world of their own.
What does the demand for municipal bonds signal about the greater bond market?
Well, good morning, Tom. Good to be with you.
So interestingly, the demand that we are seeing recover a bit in the municipal
market is really reflective of something that we think is similar across not only
the municipal market, but the taxable market as well.
And that is a signal that we think investors are becoming significantly
more comfortable with both interest rate risk as we personally expect that we may
be seeing the highs in U.S. long term rates so far for the cycle.
We're expecting lower rates at the end of twenty three.
And where we are today, some greater comfort on that front and also comfort
around the actual credit, strength and credit health of state and local

So we think they're in very strong
condition, fundamentally. And we also think that applies to the
U.S. consumer balance sheet and the U.S.
corporate balance sheet. So the fundamentals are actually in a
fairly good spot, despite the fact that we certainly are expecting to go into a
weaker economic period and twenty three where we're thinking we're likely to see
a mild recession. This is something that I mean, Brando's
not here to provide requisite gloom. But Deborah Cunningham and totally it
was constructive. It is some constructive up to Tony's
point on state and local finances. Tony, I don't hear it talked about
enough. And I think that these guys got a lot of
cash, haven't they? Can you walk us through just how strong
that financial position is? So, John, as you know, through a lot of
the fiscal stimulus or direct payments made the state, local governments as
there were two U.S.

And that certainly helped to ease some of the debt burden and any of a
liquidity squeeze that we might typically see in a slowdown period.
So as a result, the need for, say, the consumer worse, state and local
governments to retrench in the face of slowing economic growth, high energy
prices, et cetera, is a bit reduced. It's a result of that.
And we think not that we will avoid necessarily slowdown mild recession, but
that does that will help underpin a milder, shorter recession as a result of
that fundamental credit balance sheet strength that we see relative to
previous periods entering slowdowns. It's only that's the shallow of
Shorten's shadow. You have to understand the shadow peaks
of it. Can you help us understand the short
piece of it? Why do people think that if we do get a
downturn, it will be short? It won't be for very long?
Why is that? Jonathan, I think the main reasons there
are, again, when we think about the Federal Reserve pausing as we suspect it
will be after their final increase in March, but certainly at the latest one
more increase at their May meeting.

So it is that pause that we expect to
see from the Fed that allows, we think, the economy to kind of reset, digest
that higher level of rates, see the slowdown occur in the housing sector,
and really build the baseline for a recovery in 24, which, by the way,
Jonathan, our forecast would be for about one and a half percent growth.
So it's certainly not a strong recovery. It's just a return to really below
average growth. Tony, with all the heritage of New Veen,
we've had an historic drop in bond price this year, blended whatever number you
want to take. How many years does it take to claw
back? Are you looking at a three year horizon
to get back? You know, Tom, I think it's more likely
to be closer to a two year horizon.

I think we'll get a bit of a tailwind
from lower rates. But you bring up a good point that
despite the fact that in the equity markets we've seen, maybe we'll call it
a run of the mill bear market at around 20 percent.
We've seen the worst bear market in bonds in over 40 years.
So a lot of the damage has really been around kind of higher quality, longer
duration assets in this particular market downturn.
It's only just a final word on the Fed. On Wednesday, I want to squeeze this in
something I've been talking about it. He has no interest in the terror plot.
Never has done. But I think a lot of other people, too.
Tony, where is there scope for surprise when everyone expects the Fed to maybe
push 23 RTS five handle? Well, did you make a good point,
Jonathan? I don't think there's still surprises in
the dot plot.

I think that Scott at this meeting will
be in the press conference and how hawkish
Chairman Powell decides to be, given that he was interpreted as being fairly
dovish coming out of the Brookings interview.
I think you'll see a pushback. I think that could be a bit more hawkish
than what the market's currently expecting, Tony.
Wonderful to hear from you, as always. Tony Rodriguez, there have no in how
many times have we heard Shorten shadow short and shallow?
Haidi Lun short and shallow.

If the Fed is going to push back against
this interest rate cutting stuff, does that downside get a little bit more
prolonged because they won't respond to it?
I had this conversation this weekend. Part of watching financial media is to
grasp where consensus is great. If you're in the game, you gotta know
where consensus is. And I think we try to deliver that every
day. And yes, you know, beyond transitory, it
became short and shallow in gaming. There's no research.
What so ever that you can game a recession?
None. Ze consensus for next year is driving me
nuts, isn't it? IBEX is just a little bit too cute.
I'm with you. It's way too cute.
We've been talking about it for for a number of months now.
You know, I look at the work of Martin Feldstein and what James Durbin, M.I.T.
did here with NBER. And the answer is this is complex stuff.
And we all speak with certitude.

You know, we believe first half equities
down, second half equities up. Here's our outlook page, 55 pages full
CAC Iran, which is where we are basically right now on the equity
market, features positive a third of percent.
This is pulling back. Keeping you up today with News My Round
the World with the first word, and we see Mateo, a man charged in the 1988
Lockerbie bombing of a Boeing 747 that killed 270 people is in U.S.

He's been identified as a former Libyan
intelligence officer. The U.S.
calls a suspect a third conspirator in the attack, saying he helped build the
bomb that destroyed Pan Am Flight 1 0 3 over Scotland.
Germany's Chancellor Olaf Schultz will host a virtual meeting of the Group of
Seven leaders today to discuss Ukraine's immediate needs.
That's following Russian missile attacks on the country's energy infrastructure.
Meanwhile, President Biden spoke to Ukraine's president, Vladimir Zelinsky.
The White House says the president affirmed the U.S.
commitment to keep providing military and economic aid in the UK.
The government is planning for military staff and civil servants to cover for
striking rail, health, postal and other workers.
Strikers are planned for almost every day through the rest of the month.
Workers are demanding pay hikes that keep up with inflation.
It's the biggest wave of industrial strife in the UK since the 1980s.
It's AM Jen's biggest acquisition ever. The biotech giant has agreed to buy
Horizon Therapeutics for twenty seven point eight billion dollars.
That represents a 48 percent premium since a developer of auto immune disease
treatments disclosed it was in talks with three potential buyers.
Both Sanofi and Johnson and Johnson unit dropped out of the running and rebellion
has scrapped plans to make electric vans in Europe with Mercedes.
The agreement was just signed three months ago.
Rubin says it will focus on its own consumer and commercial vehicles and has
been a tough first year production for the company.
Revision lowered its full year output goal and then had to recall almost all
the vehicles it had built for a minor defect.
Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than
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I'm Lisa Mateo.

This is Bloomberg. Long term structural imbalance between
supply and demand globally is not going away.
And yes, we have for the moment dodged a bullet with regard to the start of the
winter and the Ukraine war. But we're not addressing the long term
issues of bringing more infrastructure to sate growing demand.
The narrative has shifted to a point now where it's moved away from supply, which
has been the real bullish driver, and now it's a demand picture.
Stephen Schork, that principle and they sharp.
Great morning in the last hour on Bloomberg Surveillance.
Thank you for being with us live from New York.
Case and price action quickly in the equity market.
The S&P and the Nasdaq push in just a little bit higher by third of 1 percent
on both of those in the bond market.

Yields are low by 3 or 4 basis points,
353 97 euro dollar into the ECB on Thursday for the one side of the trade
into the Federal Reserve on Wednesday for the other Eurodollar month five
sixty three and a finish on crude, just a tenner right here in the last, I would
say 20 minutes or so. Crude now positive by three quarters of
one per cent, briefly on a seven day losing streak.
Looking to snap that now with WTI crude at seventy one fifty Tom the lower the
session. Seventy dollars and 25 cents came very
close to of 60s a little bit earlier. And we are very fortunate to have with
us. Now Will Kennedy for any number of
reasons. We've got eight ways to go here, John,
but let's do it with all Kennedy running all over hydrocarbon coverage out of
London, Kennedy making every penalty shot he did in his youth in school joins
us. Will Kennedy let me go to the the
society of the public governor as well. Between cold weather and strikes, how
frozen is the London and the United Kingdom economy now?
Is that something you're writing about of crisis or is just just partly DEC?
I think people are just gonna start Christmas early.
They're going to stay at home for the next 10 days.
Obviously work very hard from home and then, you know, just get through the
Christmas period.

It's hard to move around London right now.
It's very hard to move around the UK. A lot of people are meant to be having
Christmas parties this week, and that's not happening in many cases.
So there will be an economic hit. So time for a bit of hibernation, I
think. Oh, that sounds good.
Will Kennedy having a blast writing today about something I've really
focused on, which is we have all this fancy Bloomberg Surveillance talk with a
war going on. As to the war, can we repair a European
relationship with Russia? Well, Harvey, I think that it's likely
he thinks that economics and proximity mean that the gas will flow eventually.
I'm a little less sure. Perhaps.
I think a lot of people would point to the political unity, to the to the
feeling that, you know, it would be impossible to do
business with Putin again.

I think most people's view would be that
as long as Putin's in the Kremlin, it'll be very hard to resurrect that gas
bridge. But that means some tough times ahead
for Europe. I think as we go into next year, what's
abundantly clear is a lot of people thought this might be a short term
crisis, but 2023 looks pretty tough on the energy front as well.
So those political pressures that have you described are not going to go away
anytime soon? Well, the Europeans are talking about a
multi winter crisis. Well, could you help us understand how
the Europeans will achieve next winter, what they achieved this winter?
How did they get storage capacity, get capacity up to where they want it to be,
get storage up to where they want it to be without Nord Stream available to them
next year? Well, how is this going to work?
It's gonna be tough.

Clearly paying top dollar for LNG
supplies is gonna be a big part of the picture, and of course Germany will have
the ability to import LNG in a way that it didn't in 2022 if new terminals
opening up in the north of the country. But that will be incredibly expensive
and of course have knock on effects through the rest of the world.
Demand destruction is clearly part of a picture.
I mean, I think one of there's a lot of focus on storage, but one of the reasons
why we're getting through this winter, albeit at a big cost,
is that we're just using less gas. And a lot of industry has worked out how
to use less gas and slowly and at the margin investment and other forms of
energy, particularly solar and wind. And I know that I have problems with
intermittency on some days will start to fill some of that supply gap for
electricity. Well, when people ask you about China
reopening, what you tell them about how it might potentially complicate the flow
of energy around the world.

Well, you know what's
slightly mystifying about the recent price action in crude that you described
at the beginning, you know, this really big slide we've seen is that this end of
Covid zero should, on the face of it, be quite bullish for China.
It will eventually mean people driving more, flying more.
And it's the last piece of pandemic lost demand to be refilled.
And it looks like that's going to happen in early 2023, but it's not happening
quite yet. And I think there are a few reasons for
that, one of which may be that, you know, the mode to Covid zero could be
very bumpy indeed. And it's a bit early as you consider
your positions at the end of the year to take a position on what it means.
So you're reporting is China will not open up to the end of the year.
No, no, I don't think that's the point. I don't think that's the point that I'm
making. Clearly, Covid there is.
It's happened. The end of Kevin Cirilli is happening.
But if many people get ill in the interim, that's not necessarily good for
the immediate prospects for the economy.

It could be a bumpy ride.
Before we reach China reaches the point that the US and Europe has reached out
towards the end of the pandemic. Look will it where we are sort of year
end in and what we're sitting on our desk.
We had a lot of people with higher oil prices.
The demand did not materialize. And we focus on Ed Morse here of
Citigroup, who was really brilliant about a call to the 70s.
Is anyone framing out a persistency of under, say, 73 dollar Brent crude of
West Texas Intermediate under sixty nine sixty eight dollars?
I mean, a lot of people are cutting their predictions right now.
A lot of people are less bullish than they were.
And I think it's not so much the demand side.
I think what is probably surprised people is the supply side.
And obviously the big event in the oil market was the introduction of European
sanctions on Russian crude on December the 5th earlier this month.
And I think one of the things we're seeing now is that that event did not
have the impact on the market that many people expected.
Right now, the flow of Russian crude is being re ordered, but it's still

It's going to Asia.
China's buying India's buying, Russian production remains high.
And I think that's probably one thing that a lot of people got long about the
market. They expected.
Big constraints in the flow of Russian crude and they haven't happened, and I
think that's changed the balances. And it's perhaps one reason why prices
have have remained face subdued. But one thing that we don't know is what
the Russian response will ultimately be. We had those comments from Putin at the
end of last week that when he teased that he might consider cutting
production as a retaliation, we'll have to see what happens.
Well, Kennedy well, wonderful, as always, to catch up with you and the
whole team after in London on crude.

It's been amazing to see credit get
lower in the way it has done some bit of it this morning at 1 percent now on WTI.
But the previous six days, lower, lower, lower, lower.
No, no. I just.
It is the shock of the year, no question about that.
There's other things Covid version, I think, where there now negative 80 basis
points as well. You read Maria with us today.
She's still in treatment for the Spain loss.
But, you know, I read the articles in the media, including Bloomberg, Kevin
White writing it up for Bloomberg. And bags of cash, and you have alluded
to this over the years and we're trying to do it, folks, in a journalistically

Okay, let's see how this goes in the
next 60 seconds. But the the the European Parliament in
one of their leaders, a vice president, Jihye Lee of Greece.
You know, her like is visible from about maybe seven or eight years ago when I
was in London show through the Greek NYSE articles.
Don't mince words. Bags of cash.
So let's be really specific. Arrested in an investigation into a
suspected bribery by Gulf state.

That Gulf state hasn't been named.
People suspect it's cancer. A Khatami spokesperson said he was
unaware of any investigation, denied misconduct.
As you might expect the line to be what's happened as a consequence and I
understand on this. This lawmaker, even Carly, has been
suspended by the parliament's socialist and Democrats group.
And expound from the Greek center left PASOK party as well.
What they found was cash worth about six hundred thousand euros.
Tom seized by Belgian police and 16 searches in Brussels on Friday.
So, I mean, I don't have the clarity there or the detail.
I don't think we're doing this is all I've got so far.
So this story has been pieced together piece by piece over the last couple of
days. Glow, you know what I mean?
It's been too involved, right? We haven't got confirmation of that.
It's from New York. Features up.
This is Bloomberg's. 60 minutes away from the opening bell,
equity futures on the S&P and the Nasdaq slightly elevated up a third of one per
cent here on the S&P 500.

Bond yields allowed by three basis
points on a 10 year 354. If there's a turnaround so far in this
market, it's coming the commodity market for crude, but its crude was lower for a
seventh session. It's now higher by seven tenths of one
per cent, some seventy one dollars in about 50 cents.
Big weekly loss. Read this way.
Glad you bring your biggest weekly loss since April last week.
I'm looking at Red Zone, Green Zone on the Bloomberg Commodities Edge DAX and
going back to September.

And frankly, you could even talk it up
back to July. It's sort of been up, down, up, down,
up, down. And now it's bouncing off the bottom.
Like you say, it's been a little bit of a commodity lift.
Just intriguing to see it in the low 70s as China reopened as a reopening.
That's the question to hear the chief medical adviser of China compare all
micron to the flu. I would say, Tom, there only is a bit of
a turns. I heard from the Chinese in the last
couple of weeks, that's for sure. Well, there's no question about that.
The other thing we're looking at, of course, is the inflation report
tomorrow. And I think to slice and dice that Jonas
is tangible. This is not just one report.
Powell Wednesday will probably feature other inflation series besides what we
see tomorrow. Well, it's intriguing some because he
said there is no space for nuance at the last news conference.
And then at Brookings, he used a lot of nuance.
He started chopping and dicing in three different ways, services like shouter.
So we'll see what kind of power we get.

Do we get the Brookings panel at this
news conference? They on the one hand, this the other
hand, that son of academia or that kind of stuff doesn't kick the ball over the
crossbar. Oh, another ticket, Harry.
Nice. Now.
You're welcome. My next guest is, you know, they don't
like their penalty kicks movie. And welcome to New York from from
England and Chevron to show. Here is chief economist at Pantheon
America Exalted the soccer talking to in a bit.
What is the distinction? What is the nuance of tomorrow's
inflation report or for that matter of the reports, plural of the coming days
and weeks, we're gonna see something that looks a lot more like the last one
than the two before that. So Paul Sweeney been very clear that one
good CPI report, one good anything report isn't gonna change his mind.
We've got to see a sequence.

If you look back over the last couple of
years, we've had good numbers. They've got everyone excited.
And then the next month we get blindsided by a rebound and that's
happened over and over again. So we got to see a sequence of decent
numbers of no matter what comes out tomorrow.
They're going to do a 50 basis points at the meeting this week.
It's really what it was. It matters over the next two or three
reports, building up a picture by the end of the first quarter where we may be
sitting on maybe three or four good reports.
And at that point, the Fed is in a very different place.
Your voice sounds like Alan Greenspan leading his career here.
Can you tell us about Harry and the Shepherdson voices?
It's like a weekend effect.

It may be connected.
There is a lot of shouting over the weekend, a little bit in my voice.
Survive. Yeah.
Saturday, that was. That was brutal.
And I heard a TV remote was remote. It the batteries might have come out and
exploded against the wall. But, you know, these things happen.
Things happen. So let's continue.
And if you can't talk, we'll do sign language.
It's like the dots. What are we going to see?
The dots? Is that the sign language of the Fed
meeting? We're going to see more dots.
But you know what? The dots are a lot less important than
they used to be. That data contingent.
Everybody is a slave to the data, the fed, the mikes, everyone.
So, yeah, the dots are going to rise. They'll probably add in one or two more
hikes for 23.

So possibly a five handle.
But of course, you if the next two or three payroll reports a week and the
next two, three core CPI reports a week, then the game changes no matter what the
dots say in early this year. And I remember the report right through
the report. You said that by the time we get to
September, the slowdown in this economy will be so obvious.
This Fed would have to back away. What surprised you about how things
actually turned out? Was it the fact that the economy hold
up, hold out, or the fact that the Federal Reserve has tolerated the
weakness that you've identified was a bit of everything?
I think they haven't put as much emphasis on the weakness of the housing
market as I thought they would because housing in total meltdown and they've
been very resistant to buy into the idea that that's symptomatic of any broad
sort of weakening.

Plus, we've seen a more sustained
increase in rents, which is a big chunk of the core CPI is now rolling over,
beginning to roll over. But as of now, the last few prints have
been quite big and the margin expansion, which has driven up inflation more
broadly, although it is clearly now beginning to reverse on the back of this
improving supply story. It's been a bit more persistent than I
hoped it would be. So it's kind of a two or three things
around the edges. But looking forward into next year, I
think very dangerous to assume that what's happened over the last few months
happens again over the next few months. There's a lot more signs now of a pretty
clear inflection point in both the growth and the inflation numbers.
So, for example, start as you pick up on layoffs now, which we just haven't seen
at all, started in tech. Now it's broadening out at the same time
that we're seeing indicators of slow hiring as well.
So the payroll picture, which has been great looking into next year, looks a
lot more softening coming through in the first few months.
With all that in mind, how high do you think the bar is to cut rates?
Well, the bar to cut rates is about the labor market.
The inflation numbers and wages were not going to get rate cuts until all three
of those things have a materially different from where we are now.
So, yeah, they can they can slow down the rate hikes already because of what's
happening on the inflation side.

But they can't cut until the labor
market is really eased substantially. Wage growth at 5 percent or thereabouts.
No way are they cutting rates because there's no one at the Fed who could
plausibly argue that's consistent with 2 percent inflation.
So that's the final piece of the jigsaw. It will be the last piece to change, but
I think it might change a bit quicker than markets expect.
So where do we settle if we're going to become unanchored, if we're not getting
into 2 percent? I'm not predicting that.
But if that's the reality, what's the level of inflation, which is not your
new 2 percent, but where they have to make some really difficult theoretical
decisions, that this is a very difficult debate for to have value above the

Saying anything other fair and I get it
back to the target is is impossible. But there is, of course, a body of
opinion. I'm not sure I'm with it, but there is a
body of opinion that says structural forces.
Geopolitics mean that returning to those two or less that we were seeing
consistently before Covid will be very difficult.
At which point the Fed will have to have a serious conversation about whether the
2 percent target is still appropriate, but they can't do that while they are
fighting to rebuild their credibility after the transitory fiasco.
They haven't done that yet.

When those efforts Jackson Hole was out.
Eight minute speech. I mean, it's direct, pretty blunt.
Striking down the hall and beyond has not repaired the transitory challenges.
Not yet. I mean, inflation is still too high.
There's no way around this. Of course it has.
It's not their fault. You know, we had a pandemic.
It's not it's not their fault. But it was the way that they dressed it
up as being transitory. I can't if they define transitory as 18
months, we wouldn't have any problem, but they didn't.
So there is still a battle to regain credibility.
And while you're fighting to regain credibility, you can't even hint of a
hint that you wish the target was a bit higher.
But I have to down the line 12 months ago when the Fed came out for forecasts
with forecasts for the following 2 1/2 months.
They had fed funds at 90 basis points to and 2022.
We're gonna get close to the 5 percent.

With that in mind, how much should we
pay attention to the projections that come out on Wednesday?
This is something that frustrates Tom a lot and others to how much attention
should we how much weight should we put on those projections?
Well, if you're trading fixed income on the day of the meeting, it's all you
care about. Sure.
But if you're thinking about where the Fed is actually going to be six months
or twelve months from now, you need to take your own view on where you think
the data are going to go, because they can say whatever they like.
They can put whatever dots they like into the plot.
But they'll do what the data tell them to do ultimately.
So the decision for this week is baked in.
But immediately after that, we're looking at February 1 for the next
decision between now and then. We've got CPI reports, PPA reports,
payroll data, wages, data, everything. And those things can begin to move them
away from the dots immediately, because the fact is, we don't know when.
This is why Paul keeps telling everyone.

We have to be humble.
We have to be nimble. We have to be data dependent.
The days when you can sit in the middle of an economic cycle, say, yeah,
tomorrow is just going to be like today. It's fine.
We know it's going to happen. That's not where we are.
So when you think about the dots and this is hard to get fed official to
really be transparent about this, if they did indeed think the following way,
do you think those dots to signal where they want to tell people, where they
think they'll be to get financial conditions to tighten now, or is it
actually a best guess of where they think they'll be?

Because there's a difference.
There is a difference. And there's a bit of both, depending on
the circumstances, depending on what markets are saying.
If markets are or not where they want them to be, then it becomes a game of
psychology. And I can I can understand that because
the last thing they want is to find financial conditions running ahead of
where the woman to be, which means that they might not be able to do what they
think they're going to be able to do.

It's it's it's very much a catch 22 for
policymakers, because markets are so attuned to every little change of nuance
that the perceived change of nuance that the Fed can find itself generating
outcomes that it didn't really want, just the way it communicates.
I'm going to bring this up and it's good of you to bring it up today.
The Bloomberg Financial Conditions Index of Chicago Index, the Goldman Sachs
index there are running against Powell. I don't understand how he can act to
save face until he gets a restrictive summation of financial conditions were
nowhere near that well. I mean, is there anything you control
directly as rates? And to some extent, short term
expectations of rates and everything else is much more difficult, which is
why he's maintained the hawkish talk, though, of course, there was that shift
of the Brookings speech, unquestionably, which I guess is because perhaps we're
beginning to see some fracturing within the views on on the committee as well as
in changing the language in the statement, the talk about lags and the
cumulative impact.

That's a that's a real change.
You've got to hold everything together, which is not necessarily
straightforward. I find it odd that people didn't think
there was a shift at Brookings when it clearly was the way communicated.
There was the same waiter. He's been a blank wall until Brookings.
And it wasn't that. It was a massive shift.
It was just the fact. It was the nuance, a shift with some
emphasis on the risk of over tightening. And I hadn't heard that in the NFL.
We haven't you know, he been pretty much a straight arrow in the previous press
conference. Your voice has to heal.
I mean, I guess you're going to do that because you've got Morocco, Croatia in
your bracket.

But can I ask a question?
What happens to the Premier League after this big event?
John, you've said this is highly unusual.
Is it just back to normal the next day? My biggest complaint about this World
Cup has been a schedule that the players have had to play, a really condensed
fixture list ahead of the World Cup, and they have to do it after the World Cup
as well.

And we've seen injuries.
And I don't think it's I don't think it's just by accident that we're seeing
these injuries start to pile up for some of these big players now who are going
to be out. Well, this is what really nobody wanted
it in the winter anyway. Not good.
But, you know, you got to come back in January basically to actually quite
answer your question time. You've got to come back.
You can have a lot of football to play for the big clubs.
A lot of players did so well in the World Cup.
They redo their compensation values worth more now because they did so well
in the World Cup for England. Well, no other teams.
I think Jude Vatican's transfer value is just stopped.
Boeing's reason probably put a zero on the end of his of judges on ISE again.
Now, kind of raise the question of how many clubs could afford him.
I know.

And not many is the answer.
Now, maybe man C I think Liverpool in the next for him to write from my
hearing. What about AC Milan?
He'll look like a genius at the end of the game.
Shery Ahn. He's like 40 revitalise.
He was like, yeah. He will look after our players in Milan.
We look after our players. It was very cool this week and I could
tell he really support now he and what happens?
City support for the World Cup. For the World Cup.
But my interest has gone in different World Cup, finished on Saturday and over
the bar that was there.

I just switched off covering CAC to
finish out of the channel. Oh.
For your voice. I recommend taking a tank of Jeff Holt
saying Time to hang his tank. You think he'll squeeze all that?
And this was fantastic, sir. As always, rest up the risk.
It's better take it. Smash the TV.
You see that cast iron? It's got plaster on from Smash, not the
TV in Shepparton. To him, it denies, I'm told, is actually
a football accident. Futures are funny, S&P by a third of one
per cent. Coming up, dances.
Okay. Richard Bernstein Simitian Principal
Asset Management are in Canada. Claire Harbor Asset Management Order the
next hour on Bloomberg TV. Keeping you up to date with News My
Round the World with the first word. I'm Lisa Mateo in China Cove.
It is rapidly spreading through household and offices after the
country's pandemic rules were eased. That's led to turmoil and poorly
prepared hospitals. Some facilities are struggling to find
enough staff and others are suspending non Covid treatments.
An investigation into alleged bribery involving European Parliament lawmakers
is growing.

Four people, one of them a lawmaker,
were charged with corruption and money laundering.
Police seized close to eight hundred thousand dollars.
Two countries cut Iran. Morocco were cited in some of those
legal documents. In Peru, protesters battled police,
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Prior to Bloomberg Bloomberg News report on its potential sale, Toma Bravo outbid
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The group will spend about a minimum of
2.8 billion dollars on cloud services over the next 10 years.
Global news 24 hours a day on air and on Bloomberg Quicktake.
I'm Lisa Mateo. This is Bloomberg. Police figures confirm that this is a
very challenging economic situation here and across the world.
And it will get worse before it gets better.
We have a plan that will more than half inflation over the next year.
And if we stay the course, we can get back to these strong economic growth
that we need. The caution that the chancellor of the
exchequer there, of course, CBOE meeting coming up later this week.
That was Jeremy Hunt. I believe that was taped and filmed
before the loss of England. We'll have to see if he has a different
tone right now. This is a joy.
We will get to the World Cup. We do so with the person I know more
committed to American soccer than anyone in my universe.
And it's IRA Jersey's chief U.S. interest rate strategist at Bloomberg
Intelligence. And the trap here, ISE.
We've got a glorious 10 minutes with you and spend too much of it on World Cup

People really want to know, is head of
our U.S. interest rate strategy what you think
about the view forward? Which generation is your biggest mystery
in the next year? So I really am worried about the belly
of the curve. Like what happens with the five year in
the seven. I'm worried.
Go, go. Why are you here?
They say Madam TV. I'm worried about the belly of the Covid
continues. So?
So because there is a lot of uncertainty about what the future path of interest
rates is.

So I think what what that means is, yes,
you might have two year yields that stay in the you know, for the quarter, four
and a half percent range as the Fed maintains its policy.
But there's a there are significant questions as to when they're going to
cut. So Anna Wang with Bloomberg Economics,
myself and a lot of others think that they're going to remain on hold for all
of 2023, maybe into 2024 until it's very clear.
And you just heard Ian Shepherdson mentioned that the three big things that
need to change in order for the Fed to cut interest rates and those things
might not change until 2024 or maybe even beyond.
So because of that, that the five year is going to go up and down along the
yield curve based on changing expectations of are they going to cut in
2023? Are they not going to come in 2025?
And that's going to change the expectations that are embedded in that
belly of the Treasury.

So to to conditions.
Two questions here. One of them has to do with the curve
moving the vanilla curve from two year out to tenure as well.
Ian Lincoln, among others at BMO Capital Markets looks for truly historic
inversion, not a negative 100 basis points as well.
What's the ramifications to our viewers and listeners with a Beyond Volker curve
version? So so during the Volker era, we actually
got the negative 200 basis points on the cup of coffee for a cup of coffee, but
it stayed for nine months between negative 100 and negative 150.
Interesting. I don't I think that that's a reasonable
expectation during this environment, too.
So our target is now about a 150 basis point inversion.
At some point it probably is.

Our flag was at the same hawker like
duration. Well, so durations are still are
significantly longer actually. But but will it stay there for nine
months you mean. Yeah.
Yeah. It I think that that in inverted curve
is going to be a fixture for 2023. I think we hit that peak inversion
sometime right around the time that coed finishes raising interest rates.
And then after that we actually start to to what we call bull steep.
And so two year yields wind up going down million.
And because we wind up pricing in cuts at some point in the future, it's the
strength of that of that rally in the front end of the curve that I think is
is very suspect, because our view is that we're going to wind up with policy
rates with the overnight interest rates staying 5 percent for a long time.
So that's going to make it difficult for two years to rally very quickly, but
they probably will rally a bit.

Forget about bond guys.
Trading spreads from the belly of the curve out to vanilla 2s tens or even
something like three months, 30 year, blah, blah, blah.
What's it mean for mere mortals to have a curve inversion like late 70s, early
80s, a double recession in the early 80s.
But it's not the early 80s, is it? So what's it going to mean?
Well, so what does it mean?
It means that it's hard actually to make money and carry and roll down.
So one of the ways that when the yield curve is steeper that you that you make
money in fixed income is you'll buy like a 10 year bond that becomes a seven year
bond eventually.

And and the price actually will wind up
staying relatively constant or even rise because interest rates fall over time.
Now, that's not going to be the case. Now it's actually just the opposite
where you actually roll up the yield curve.
So so one of the challenges with that right now is that it's it's or one of
the good things I should say, it's easy to own 10 year bond yields, because if
you buy the 10 year now in the not too distant future, the the price of that
bond might actually go up, which which is a kind of an oddity.
But just because of the shape of the curve, I think generally speaking, what
does it mean for like the the overall. Economy.
It's actually good, right? Because most thing one thing is much
different today than it was prior to the global financial crisis.
So one of the ironies is, is that we have five and 10 year bond yields that
are that are lower than short term. And, you know, it's not gonna affect the
financial sector in the same way that it has in the past.
What you just heard there, folks, is the single most important thing you'll hear
this week on Bloomberg Surveillance, an hour Fed meeting.
Let's dive into this further IRA jersey on why curve inversion is, quote
unquote, good for the economy, because it's not like the late 70s, early 80s.

So if you think about it, if you if you
go by car, for example, you know, that's usually a say, a three to five year
loan. Yes, three year interest rates are high,
but five year interest rates, visa v, short term interest rates aren't very
high. Right.
So you do have an inverted curve. You just about everywhere.
And then if you're a corporation borrowing money.
Yes. Interest rates are higher.
We stopped three and a half percent, 10 year Treasury yields.
And then you add onto that another hundred or 150 basis points for four
credit spread.

You're talking about 5 percent yields,
which is much higher than it was not long ago.
But I'd rather borrow 5 percent 10 year yields and I than I would necessarily 6
percent to year. So this inversion isn't having as
detrimental of effect. You know, we're talking about financial
conditions. One of the effects of an inverted yield
curve is that financial conditions aren't as tight as they might be
otherwise in real terms. Right.
So and I think some of the financial indicators that the financial
conditions, indicators kind of don't get that wrong.
And so, you know, we're going to actually be digging in over the next
couple of weeks into the financial conditions indexes that we have here at
Bloomberg in order to kind of ascertain hatred, not only what's driving it,
cause we know what's driving it.

It's the stock market going up is what's really making financial conditions a bit
easier. Right.
But it's Greenspan. Yes.
But but what's going on in the credit markets winds up being, you know, I
think from on a going forward basis, super important, because if you see
credit spreads tighten a lot, that creates more of a problem for the Fed.
That just means that. Right.
That has more accommodative. Bremer has been talking about this like
crazy. The spreads haven't moved.
That's right. Spreads are the same.
And now you've had a 75 basis point rally and your yields.
That's actually made financial conditions much easier.
Excuse me, MetLife Stadium, 2026 finals of the World Cup is John Farrell?
Asked an aunt a half ago. Will America embrace the World Cup?
I think so. You know, so I actually was in England
during the 1994 World Cup doing my postgraduate work and coming back from
England at the time. All of a sudden people were talking
about soccer, which had never happened before in my lifetime.
And, you know, now now I think 2026 could be another impetus to grow the
sport even more in the United States, where it is going to be on, you know,
everyone's billboards.

It's going to be in all the major
metropolitan areas in the country. And you know where we are here in, you
know, New York, New Jersey, Pennsylvania, it's going to be great
because we have rooms at MetLife as well as games down at Lincoln Financial Field
in Philadelphia. So we're going to have a lot of great
soccer here in our area. France, Argentina, your wisdom, Matt
Miller. What is the age group?
You're in central Jersey. You're doing so.
So I coach I coach an adult team right now.
So your coach had adult team? Yeah, we had a big 3 1 win last night to
finish our fall off all season.

And we go into the spring on a on a
high. Who looks more adult for answers
urgently? Well, definitely Argentina.
But, you know, both teams have a lot of depth.
And I think, you know, France with guys like killing in Bombay and, you know,
Olivia's your route. You know, the man with the greatest hair
in soccer and world sports probably looks.
Yeah. You know, I thought for sure, I you
know, those two teams are really good. I mean, it's amazing, though, the
underdog story here, right? This World Cup with Morocco and and
Croatia in the now in the semifinals is it would be great to see one of them in
it. I mean, I always root for the underdog
and in matches like those. So it'll be so.
So I'll be wearing my my red and white stripes.
OK. We'll have to see you the Friday before
the festivities. I believe it's Sunday.
The 18th is the finals will be shooting at IRA Jersey.
And here was appropriate wisdom. Let me give you wisdom on a day to check
on a Monday before a crucial Tuesday, a crucial Wednesday.
I think the world stops Wednesday at two thirty.
We migrate forward futures, futures up 9.
They've advanced nicely through the day, buttressed up with the 4000 level.
John was talking about earlier.

Dow futures up 60 points, thirty three
thousand eight hundred. The Dow, the VIX goes the wrong way,
twenty four point three six. We'll get a good set on this here.
And 35 minutes to IRA Jersey Point Curve Inversion.
I'm still not used to negative 80 basis points.
You show a substantial inversion jersey suggesting we can get more inversion
along the way in Sterling for real. Kennedy, thank you for being with us.
We'll from London once. Three rounded up, 123 strong sterling
today. Please stay with us through the day.
I'm Bloomberg Radio and Bloomberg Television.
Good morning..

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