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‘Bloomberg Surveillance Simulcast’ Full Show 11/22/2022

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Read Time:132 Minute, 58 Second

We're going through an inflection point
right now, like we saw earlier this summer.
The economy is rolling over. The data is rolling over.
And as hawkish as the Fed wants to talk, the markets are starting not to listen
to it. We don't really know how far and how
fast inflation would fall. A lot depends on what the Fed does.
If the pad slows down their very rapid rate of increase, will that allow us to
avoid a recession? We're still going to get a recession at
some point, although maybe not right away.
This is Bloomberg Surveillance with Tom Keene, Jonathan Ferro and Lisa
Abramowicz. Good morning, everyone.
Jonathan Ferro Lisa Abramowicz Tom Keene on radio, on television, we're in a
holiday mode. No, we are not.
It is a busy Tuesday up to the economic onslaught, the data dump that we get
tomorrow, the data dump this morning as the price of Bitcoin dom semi desert is
there. This is the story.
That story maybe oil is a story. We'll give you full World Cup coverage.
But Lisa Abramowitz, it really broadcasts what?
Well, bitcoin front and center Sonali Basak to join us in 15 minutes.
It's not just what we have seen in FTSE.

This is not just an idiosyncratic
moment. We're also seeing it in others.
We're also seeing the potential for a big bankruptcy that is much more
substantial with Genesis potentially filing if they do not raise funds as the
Winklevoss, as you call them, and how much to endure in the story.
Yeah, with something that is more of a contagion event.
Ala Peter Shears comments yesterday to remind people that earn involved in
Crypto Winkle VI are two twins. Were people quake?
Excuse me, women quake and stop in their tracks when they come into the Bloomberg
building. And these guys are challenged, aren't
they? Well, I'm not going to weigh in on
Winklevoss. I'm not going to they're challenged by
each morning with Genesis and the rest. There is a question, an existential
question of what's behind this? Is this an asset class that was built up
in the era of free money that is coming down and to what?
And I think my question is, why have we not seen further fallout as of yet to
bring you up to date? Robin Wigglesworth in the Financial
Times published an hour ago, a brilliant some of this quoting at length Sonali
Basak in our crypto team reporting on Genesis and will have that for you.
Fifteen thousand seven hundred on Bitcoin after an ugly overnight as well.
I will say that to me, the real tone is.

Last week we saw a shift.
We saw better than expected news out of China.
Better than expected news with respect to the actual story.
And you're not there. Exactly.
This week we're not seeing the same thing.
We're seeing worse news. Well, I know with lockdowns are
affecting potentially a fifth of the entire economy.
You're seeing a cold snap in Europe that's testing some of the resolve that
we have seen in terms of how much buildup of energy they have.
And we're not necessarily seeing the fallout in markets.
Right. There's still resilience.
And so here is why are we not seeing more?
Because they're looking at the Fed and doing the parlor game after December
14th.

I would suggest our guest is so
important today. We're going to get right to it with a
data check and leases re futures up ADAS.
She says there's a lift to the market is fractional,
even two tenths of a percent, including the Dow Jones Industrial Average.
John from Doha e-mails in and says Tom Moore quotes of the Dow is the VIX
twenty two point four for yield? Well, a little bit of a story today with
yield coming in and maybe some of the angst that Lisa's talking about.
Dollars churning after a strong dollar yesterday and yen 140, 130.
And I got to go to oil, which is sort of all over the proverbial petrol map.
Eighty point five, eight on American oil up nicely here on news over the last two
days as well. I need a Tuesday before Thanksgiving
brief. All right.
Well, let's talk about it. It definitely is a Tuesday before
Thanksgiving brief. We do get a slew of earnings, including
some retailers, including Dick's Sporting Goods, Burlington Stores,
analog services. To me, I'm really excited to hear from
Dollar Tree before market.

Dollar Tree has done really well this
year, up more than 24 percent. And this is typical because usually the
dollar stores, the discounters do best in a downturn.
I am watching to see what their outlook is, given that people are downshifting
in the face of higher inflation and lower discretionary spending.
Today the roster FSB. Yes, CAC Dollar Tree.
I got to interrupt here. You got a tiara on the Bloomberg
terminal. We've got to sell the terminal today so
we can pay for the bird. Dollar Tree per year last ten years,
fourteen point four percent per year. Yeah.
And no one guessed that. I didn't guess that.
No. And it really speaks to the sort of two
Americas, which I think is really. I'm so sorry for interrupting.
No, it's the reality. Please, everybody, just note that he
just said he would never interrupt again.
I'm going to hold up a sign every time it happens again because it will happen
again probably in this show. Fed speak today includes Cleveland Fed
President Loretta M., Kansas City Fed President Esther George and St.
Louis Fed Fred President Jim Bullard.

Tom, you were talking about how we were
hearing the roster of Fed speakers perhaps moving away from a hawkish
stance. I don't know.
The interpretation of the rhetoric is the same that we've heard before.
They're going to necessarily downshift, but that's not necessarily bullish
because they're not going to go to a lower Tom Keene.
We heard from Citigroup yesterday with comments on Bullard tilting just 7
percent terminal rate. I think he's got to recapitulate that
today and finesse what he meant by moving the markets with a 7 percent
yield. Well, that's a stunning statistic.
I mean, although he did move it for about a half a second and then it went
right back down. So we'll see who's sort of narrative is
the dominant figure at 1 p.m. Eastern.
There is an auction. This one's a really interesting one,
Tom. Thirty five billion dollars of seven
year notes from the U.S. Treasury.
Why is a seven year important versus. The five and the 10, what is it, some
in-between immaturity? It's a less liquid security.
It tends to be a messier auction because there isn't necessarily.
I'm not talking to you like you're a dummy.
You're asking me why.

I think it's interesting.
I'm telling you, I think it's interesting.
I like the seven year auction. Look, those yields nearly 4 percent.
There's been a distortion here. A lot of people seem to like this area.
Okay, well, okay. We'll go there.
We'll give you the World Cup schedule. And mean, I'm looking it up.
I think I think Argentina. Did you watch yesterday?
I watched a little bit yesterday. It was fun.
I mean, the U.S. game was like, wow, they should've won.
But Gareth, Gareth, you know, we've talked it from David Blanchflower to
give us expertise on this in the coming days like me on his wells on Denmark.
I believe playing good against Nordic joins us, founder and CEO of Exempting
Data. Come on.
Yan's world stops Denmark, Denmark, Tunisia as well.
What do you think? Denmark is really percolating with a
chance here to make some noise. Yeah, well, I hope they can do a little
bit like England did yesterday.

OK, so got a terse, terse comment there.
Yeah. Let's get to it with a dollar.
What does the 2023 view here on the dollar?
There's been big figures moves this year.
Can there be big figure moves next year? So this year has been essentially one of
the strongest in the history of the dollar, right?
Massive run up against some of the biggest currencies in the world.
Like seeing the yen move and so forth. And then in the last couple of weeks,
we've seen a big reversal within that bull move and
like are positioning indicators that we track that a data have have had some of
the most extreme signals. Right.
Real money investors were very, very overweight dollars.
All the trend following investors were really max long dollars and we had this
very violent wash out.

So now everybody kind of has to decide,
OK, this is really a big change in trend or is it just some kind of repositioning
in the market? And the repositioning was definitely a
big piece of what was going on. And we can already see as soon as the
news from China, which was actually quite important to the turn in the
dollar overall, as soon as that is less positive, the dollar kind of looks like
it wants to go back to the appreciating trend.
Right. So I think for me, the key is global
growth. We can talk about the Fed, and the Fed
is important, but our most important variable for the dollar is what's going
on with global growth.

And if we still have a problematic
growth situation in China. If Europe doesn't recover, then it's
hard for me to see that there's going to be a strategic turn in the dollar.
We can have like wiggles and we'll have a big wiggle now over the last couple
weeks. But a strategic search requires that
global growth is going to get better. And for me, that's too early to make
that call. We can go into detail with that.
Yes, you're talking about China. And that was sort of giving some fuel to
this risk appetite. The idea that perhaps there are tip
toeing away from Covid zero. It seems like it's the opposite today.
And yet the narrative in the market is not cooperating.
You're not seeing the off move in equities.
You're not seeing a strengthening dollar.
What do you make of this? The idea that a lot of the reasons
behind the rally are turning on their head, but the market is not.
Go to the first thing I'd say is that there's been optimism around China,
right.

And the optimism was based on the notion
that there was going to be a move away from Sarah Covid policy.
And what we're seeing in China is that there might be at the CIA to somehow
relax those policies that have had a disastrous impact on the economy, but
isn't really feasible. Right.
We now have cases that are skyrocketing. We have a population that has been told
that Covid was very scary and something that should be avoided at all costs.
And this could go on for a long time in the sense that they only have around
call it 20000 cases per day. Right.
Go back to when we had a peak in United States, which is a smaller country
population wise, where we had a million per.
Right.

So this we in the early phase of
acceleration and this could go on for a long time.
And they are they just got to let it run.
That's that's would be a country. Pretty strange way for them to go from
one extreme to the other. So there's going to be a gradual, messy
process here. I think it's going to be hard for the
markets cope with that, although that seems like they're coping with it right
now heading into 2023. It seems like the consensus is you might
see some more dollar strength and then it will turn into dollar weakness.
You will see Europe start to outperform.

You will see Asia start to outperform.
You will see the US underperform. Where do you push back against the
consensus right now? Yes.
And it all it all comes down to inflation and inflation expectations.
Right. What we saw after the CPI print, one CPI
print, that was better than the trend we had.
Markets rallied enormously. There was also after that that the
dollar had one of it, one of its biggest moves ever in a few days.
So it really comes down to inflation.

Have we turned the corner?
Well, we got stick services prices. I think it's it's pretty clear that
goods prices are starting to normalize. But the market is also hoping that that
services prices will also normalize. If that's not the case, it's going to be
a big problem for risk assets, right? Yes.
That's being priced now that the worst is over inflation.
If that's not the case, we're going to be back having risk assets under
pressure. Yeah.
Thank you. Go to Denmark.
Jens Norvig with us is sounding like I want to point out again, he won the
beauty contest, institutional investor three years in a row in foreign
exchange. I can think I can say no one's ever done
that. I may stand corrected on that.
Oh, is C.D. out with a stunning laugh?
Let's remind ourselves, Lawrence Boone nailed this.
Oh, he's way inflation statistics.

Lisa's still six point eight percent
globally next year among those nations. That's not inflation going away.
And it's the theme of hiking into weakness that they really highlight.
Perhaps not a recession, but pretty darn close, particularly in the developed
world. And radio and television.
Stop what you're doing next to show gnarly basic genesis.
Good morning, Bloomberg Surveillance. Keeping you up to date with news from
around the world with the first word. I'm Lisa Mateo.
Well, digital asset brokerage Genesis is warning potential investors it may have
to file for bankruptcy unless it can raise money.
Bloomberg's learn the firm is struggling to attract funding for its lending unit,
which suspended withdrawals after the collapse of FTSE X.
And Genesis has spent the last few days seeking at least a billion dollars in
new capital.

The always C.D.
says central banks must keep raising rates to fight inflation, even as the
global economy sinks into a slowdown. In a new report, the organization warned
that inflation and its impact on real incomes will only get worse if
policymakers fail to act. It raised forecasts for inflation next
year in China, and increasing Covid cases has led local authorities into
reintroducing measures like expanding testing and lockdowns.
It's now estimated that a fifth of the country's economy has been affected.
That's despite the central government's call for more targeted, less disruptive
coble Covid 0 measures. Disney's returning CEO Bob Iger has
taken his first steps towards reorganizing the entertainment giant.
Iger has asked his top deputies to rethink the corporate structure.
Meanwhile, he announced the departure of a top manager.
The head of media distribution, Kareem Daniel, and the richest person in the
world has seen his fortune declined by more than one hundred billion dollars
this year, according to the Bloomberg Billionaires Index.
Elon Musk's wealth has fallen to a little less than one hundred and seventy
billion after Monday's eight point six billion loss.
His stake in electric carmaker Tesla comprise the bulk of musk fortune.
Those shares fallen 52 percent this year.
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 Matteo.

This is Bloomberg. I think we have one more big lie down.
Do I think we're gonna see some selling off in Bitcoin?
I think one of the things that supported it recently are the fact that there are
a lot of whales who have a vested interest in keeping it higher.
Peter Shear on fire. Yesterday we went from Katie Greifeld
with the reporting on f f RTX, f RTX, whatever it's called.
Over to Peter Shery Ahn nailing good get picked up by the media.
You know, like, you know, he really did the job yesterday.
Honest. Are you any more knowledgeable on Big
Dog than I? You know, I'm still not OK.
He really does. The one thing that I will say is to
conflate Bitcoin with the entire crypto universe.
Yeah. No, no.
I don't get hate. I don't agree.
Okay. I don't agree.
Let's see if Sonali Basak. I think it's an underlying John Farrell
on assignment today in Doha. Lisa Abramowicz.
NIKKEI. Tom Keene.
Really drive forward the conversation on for those you your global Wall Street.
It's simple.

Lydia ballyhooed Sonali Basak and
company put together an important update on Gen.
Robin Wigglesworth two hours ago on the FTSE quoted that story at length.
Here is we go into a moveable feast of a difficult Tuesday for crypto him.
His basic joins us right now. What are you looking for to happen with
Gen.. This Tuesday if they file for
bankruptcy? How far does that contagion also go?
So you have Gen. Lending, which is that lending entity
that had been kind of caught up in this liquidity crunch here in the Bitcoin
industry. But it is part of the empire that is run
by digital currency group that is very sober.
Former Houlihan Loki banker, a creator here of what was a predecessor to
NASDAQ.

And we don't agree.
She doesn't think bitcoins, the underlying ISE just adamant about this.
There is an underlying to every transaction.
How linked is all the basic chit chat in the world you're in what Katie Grifo is
doing, the rest of you. How linked is that to the price of
bitcoin? Think about the fanaticism over the last
couple of days as Genesis. Such a raised money for this unit.
They were calling finance, they're calling Apollo.
And a lot of investors here were very concerned when they looked at it at the
end of the day, because they said, first of all, their regulatory concerns here.
Second of all, we're untangling all the contagion from the crypto industry.
And third of all, it's even investors here who wanted to get involved in the
first place in this era can't get involved because it aforementioned
problems we've named.

I guess another way to ask what Tom is
asking is we often look at the price of bitcoin as a reflection of the
contagion. Is that an accurate way of gauging out
the weakness or is this that haven almost amid the storm in more peripheral
crypto assets? The reason it's not an accurate way is
because people put real money into then by that coin.
And so the idea here that there is not an onboarding here is a false concept
one, and that it's not a real vision. It's not a fake asset that's flying in
the ether.

You pay money to buy bitcoin, you use
dollars to buy bitcoin, you put your dollars in exchange.
Let's say Coinbase is balance sheet, for example.
It's five billion dollars in cash. Ninety five billion dollars in customer
assets held one to one. People are worried about that one to
one. Therefore, you have Coinbase bonds
trading at 50 cents on the dollar, right?
51 cents on the dollar. So, yes, to your point, your people are
worried about the underlying. But these are still companies that if
there are underlying people are willing to pay for them.
Why isn't there more transparency? There was a story today about FTSE
having actually more than expected reserves, right.
That they had more than a billion dollars of cash that they found.
And people thought, wow, you have money to give to creditors.
Why are we looking under rocks and in the kitchens of a couch to try to find
money for an institution that supposedly is real?
Yeah. And that's the important part.
We're talking with the institutions now, not the underlying bitcoin.
And so when you're looking at RTX, are you looking at Genesis?
People are peeling back the curtain here and trying to see what is this entity
who owes who what? And what did they do with that money?
But they're going into Delaware court today.
Yes, Mr.

Dunlop, he's an adult.
The dollar record is a claim, Mr. Muscular Man, for being a dog.
What are you dolts in the room going to say to this unregulated, unaudited
offshore industry? I mean, the broader industry, as well as
RTX, whatever it is, they're gonna say exactly what they're saying now, which
is how much money do you have? How many assets do you have?
How come you don't even know you're going to treat them like adults?
You're going to treat them like a dog. They're going to get adult answers.
They're going to try to. Yesterday, you had a stare.
Over the weekend, you a statement from RTX and they hired Perrelli Weinberg,
real U.S. investment bank going back and looking
at the assets, trying to figure out what assets they could sell, what assets they
can recapitalize.

And then I said this as a surveillance
remote from the Bahamas. What I think every week.
That's no, I think everything says no. Yeah.
I think that surveillance in the Bahamas is what everything says.
I am wondering, snarly, as you talk. There is a rumor.
I don't want to spread rumors, but we've talked about it on this show before that
perhaps certain institutions are so entrenched.
In this asset class that they have a vested interest in, not mass selling and
in trying to keep things afloat and finding an entry point.
So how much are you hearing about that? That basically there is enough
commitment to keep it going for now until something further breaks.
A lot about that now because you could argue that this wasn't started with RTX.
You could argue that this started months and months ago when the cracks started
forming in the bitcoin industry to begin with.
Come on.

This started when it was 60000 and went
to say 40000 Matt Miller become 60000. It was levered up to 60000.
OK. That's the problem.
And so now what you have is you have an instance where that leverage came off
the system. Three arrows blew up.
They had lenders. And now you had Genesis, which was also
a counterparty here that DC G had also poured money into to try to bring out of
that hole. And now everybody is feeling the pain
from that hangover. How much surprise among the people who
you speak to is that there is not more contagion, that there hasn't been
greater fallout.

We're in the middle of it.
The reality is, is that neither Genesis nor BLOCK VI have filed for bankruptcy.
We don't know who their creditors are, which means once we see more
bankruptcies come to the surface here in the lending industry and many of my
sources say maybe crypto lending is over, which then you wonder where that
flaw is once again when you don't have leverage in the system maybe at all for
many, many years.

So it's just going to happen today.
I mean, I mean, it's Thanksgiving week. Everybody's good or ISE.
You know, everybody's sliding through the week given huge news flow and that.
Are you seeing today for Genesis in Connecticut, they have said on the
record that a filing is not imminent. But you have to wonder if part of the
reason for that is because they keep on finding new people to reach out to.
So we have reported finance. We have said they reached out to the big
banks. You can make it big.
Yeah, exactly. And the reality is, is we've heard that
Apollo is one of a number of traditional financial counterparty that have fielded
calls here from Genesis.

So now everybody's in it.
Everybody is looking at the books. He is thinking about what they can go if
they get him. I'm watching the underlying fifteen
thousand seven hundred after a difficult 24 hours.
A little bit of a bounce right now because I'm not going to pontificate
about what I see there. Technically, it's completely in a Sonali
Basak. Thank you so much.
Congratulations on a story that was at the top of the pile for global Wall
Street this morning on Genesis. And Phil Collins is not involved.
I know what you're watching. You're not watching that.
You're watching Argentina versus Somalia.
Came out, whispered to me. O m g Argentina's my.
This is not what he's right.

Just a little one.
Here it is. Dow Jones Fox.
Yeah. Appreciate that.
Simone Foxman giving me the inside story from Doha.
Saudi Arabia is beating Argentina with 30 minutes to go.
Thank you, Tom. I think we're at it.
How is Ferrell's show? Actually, this is interesting because
Saudi Arabia is way behind Argentina. Argentina is the favorite.
You've got Lionel Messi, who's going to try to come and claim his victory in his
last role. I'd like to
not watching soccer today. Yeah, I know.
But, you know, he's going to mock me all day.
He's going to try to make me feel like ISE Dow Jones right.
Lanes Team World.

World Bloomberg Surveillance.
Good morning. Bloomberg Surveillance, you say good
morning to you as futures a little bit of a lift here, fractional lift with
factional move in the VIX, a VIX twenty two point five 0 in from that 24 level,
I guess it's a better tone to a market churning year waiting for the economic
data. What do we see?
78 statistics tomorrow? Lisa Abramowicz Tom Keene.
Yeah, exactly like a third in particular with Fed meeting mans, which you've
gotten somewhere that you can skip tomorrow.
But I'm curious how he get as you have shaped narrative around how much
inflation is starting to crawl out. I noticed oil with an elevation last ten
minutes, Ukraine with an argument here with Gazprom over natural gas flow and
we'll have to continue to watch it.

West Texas.
Eighty one dollars up from a 78 level in Brent crude, 88, 63 drifts back towards
a 90 dollar level. We keep score at Bloomberg about who
gets it right, who gets it wrong. We really pay attention, who gets it
wrong and ask why. Always informative for global Wall
Street. We particularly pay attention to people
that absolutely nailed it. Oh, and Paris, compounding that large
group of countries that they study and study and study have nailed the global
slowdown, the vector of it, the slowdown that we see.
And they further drive that to a two point two percent statistic for real
global growth next year. Alvaro Pereira joins us now.
Acting chief economist at the OSCE and of course, with his Portuguese
economics. And I'd also point out of your British
Columbia crowd, which tells me that it's all econometrics.
How good are you now? It.
Oh, you UCD of guessing the statistic.

Is it?
Do you have a lot of confidence in degrees of freedom and trying to
guesstimate out to 2024? Well, Tom Waits.
It's a very, very challenging environment, but we have very confident
of our forecasts. We we've been, as you said, we we warned
about the slowdown. And right now we're saying that, listen,
we are we are facing the largest ethnic energy crisis since the 1970s.
And we have a dramatic picture that shows exactly that.
Governments around the Alix Steel are spending around 80, 18 percent of GDP
just in energy.

And this is as much as we did in the 70s
and 80s. And so a very challenging environment.
So we feel very comfortable with our forecast with your GDP growth slowdown
from whatever it was in 2021 down to three point whatever down to two point
two. How does China play into that vector?
Well, for China, we are fork. Remember, this year was the lowest
growth for China since the 1970s, with the exception of the height of the
pandemic.

And we are forecasting China next year.
The rebound to about four point six percent, but going down to four point
one percent at 24. But there are still risks that we think
that can plague this central scenario. First of all, it's fairly possible that
if the street Covid lockdowns continue and they become more pervasive, then
certainly growth is going to be a lot less than we are forecasting.
And the second one has to do with the real estate market.
If the adjustment on the real estate market is less smooth than we would like
it to be, it's very possible that also growth will be negatively affected in
China.

So we are seeing a bit of a rebound in
China, but risks are certainly fairly high over there, too.
Overall, you pointed out that this is really an energy crisis, which isn't
necessarily the way that everybody else would frame it.
They would view it as a pandemic crisis. They would view it as a free money for
decades kind of crisis that is cut, that have come to a head.
They would view it as an inflation crisis.
More broadly, why do you view it through the lens of energy primarily?
Well, first of all, the energy crisis is a direct consequence of Russia's
aggression on Ukraine. And so which has led to lower growth and
more prices rising everywhere. We see that even before the war, prices
were starting to go up. So you're absolutely right about that.
But clearly, inflation became a lot more pervasive, more entrenched.
And also the pressures have intensified after the war.
And we have, I think, a very interesting estimation, our forecast, which is
trying to see whether this is mostly because of a supply shock or it's mostly
a demand shock.

Well, if it started as a supply shock
right now in many countries of the U.S. city, you can see that it really right
now it does matter. Demand and supply.
In fact, in some some some countries like the UK, demand factors are now
having more of an impact than the supply factors.
So right now, what are we talking about? Very large inflation
in many parts of the world. Monetary policy has to continue to be
decisive. It has to do what monetary policy has to
do in order to get out of this situation.
I think we are starting to see some positive signs in some parts of the
world.

So overall, you say that you think that
probably China's economy will recover next year, which might actually increase
demand for certain goods, including energy.
How will this factor into how much developed markets have to be hiking
rates have to be countering that increase in demand.
The increased momentum that we see heading over from the east.
Well, what do we highlight as well is that this inflation is having a
tremendous impact on people's incomes. Right.
If all across the world we have a dramatic picture on real wages in all
across the world, real wages are going down.
And that's why we focus so much that right now.
If you want to ease the pain, if you want the pain to be as short as
possible, it is absolutely essential that we continue to be the dominant in
this fight against inflation. If the economy starts recovering, as we
expect in the second half of next year, then certainly this will will
give a bit more pressures on prices. But I think as long as monetary policy
is doing what it's doing and remains steadfast on fighting inflation, we'll
be able to have lower inflation going forward.
Overall, when Bloomberg Surveillance visits you at central Portugal for the
ECB confab here next year, you're modeling out 6 percent global inflation.
Every single central banker is going to say that's unacceptable.
Do you perceive that as a stopping point?
Or do you have a different statistic where we get to a vaunted 2 percent?
Taylor Perfection.

What do we do when we get inflation down
to six point eight or dare I say five percent?
I think what matters right now is when when we're going to have inflation
peaking and in coming down steadily and so the trend is going to be very
important. I'll give a good example of Brazil when
they start that there was one of the first countries to face significant
deflationary pressures and their central bank decided to hike interest rates very
decisively for a few months. And now we're starting to pay off.
I think the last reading of we had also from the United States is positive.
And so what we need to do around the world is exactly to assess the
situation.

Some countries have acted a lot more
than others. But what matters right now is to get the
situation which inflation peaks and starts to come down.
Durables, it has to be durable. It cannot be only one data point.
And this is what we need to monitor in our forecast.
We forecast that basically inflation will start to pivot around mid next year
and we'll continue to come down, even though it will remain fairly high in
some countries. At the end of 2013, I don't want to get
in trouble, but I'm going to get you in trouble with your academics and pretty
teaching at the University of British Columbia.
How do you respond to a central banker gaining out a two year recession as we
got from the governor of the Bank of England?
You have a confidence in establishing a real GDP view out 24 months or dare I
say 36 months.

Well, listen, I know this forecast.
You know, and I know that all these forecasts are our best scenario are our.
What do we expect? Things will evolve.
Things change. You know, nobody expected a pandemic
three years ago. Nobody expected a war.
You know, just just just a few months ago, you know, things change.
What I can tell you is that our forecasts, given what we know today,
what we've seen, the data we've fair, where we are fairly confident about our
central forecast right now.

But risks, as I said before, are rising.
And so risks that think and go wrong are there.
But right now, our central scenario is not a recession, sluggish growth, but
not a recession. This has been wonderful.
Don't you prefer? Thank you so much for joining us.
Alvaro Pereira de ALWIS, S.D., with a really important summary.
And we give this great focus, folks, because they've been so out front and
the vector and so all these institutions and you know, I go back to the World
Trade Organization where you wouldn't expect this analysis.
And they were really leading a global slowdown, maybe with a Pacific Rim view.
And you get the same thing from OCD.

And it really highlights the uncertainty
around inflation. Right.
Is it demand driven? Is supply driven?
Is it a bit of both? How do you understand what happens when
China comes back online and we'll have that a factors in Jonathan Ferro.
People take shots at him constantly. The pinata known as Lawrence Summers.
The bottom line is this is a stagflation analysis of two years.
You've got nominal GDP of let's let's rounded up and be optimistic.
Three plus six is 9 percent nominal GDP a year from now.
No, I don't see anybody modeling that out.
And what's the counter impulse? Do you see fiscal spending?
Do you see a monetary easing? Well, that's what point do we see some
sort of response? And if we don't, then we're not seeing
that there's really, really good that you bring this up.
Well, certainly say and the answer here is focus land of Deutsche Bank in
February.

I guess it's this year.
I can't. I know I'm done.
Two years ago. I can't remember now.
But in February, Focus Lando was on the show and he said, you've got to see
fiscal spending because of a war in Europe.
And, you know, have we really seen that yet?
I'm not sure. We've seen that fiscal stimulus.
We've seen it in Germany. And then there's been a lot of pushback
elsewhere simply because of, you know, just the concern about inflation, the
concern that they're not allowing them to spend as well.
I see you're distracted. And honestly, I have to be honest, it's
a really good game.

I was actually looking at it the break
and it is she picks up my phone and, you know, I don't pick it.
I mean, we go for it. We go from Saudi airings in the 76
minutes. Saudi is upsetting Argentina 2 to 1.
Argentina's with some huge efforts here. But that gets to Jens Nord fix Denmark
and Tunisia. And, you know, they're sort of like this
basic Western world layup. Denmark lay up well, says, oh, yeah.
What we're witnessing here.

So Lionel Messi scored a goal.
He scored a goal in the tenth minute. And then the Saudi Arabian goal, the
second one was amazing and really imperils pharaohs probably watching this
in 0 2. Rondo clearing up is probably the thing
that was football. Well, he's actually crying for another
reason. When he has been talking about football.
It is notable that these underdogs come out.
You know, it's notable that on global television for global Wall Street, two
people without a qualified to get day data
check futures up to twenty two point five, three if you're brave.
Stay with us. Keeping you up to date with news from
around the world with the first word. I'm Lisa Matteo.
U.S. prosecutors have begun an investigation
of FTSE months before the crypto exchange collapsed.
Bloomberg's learn that prosecutors in New York had started poking into FTSE
massive exchange operations. It was part of a sweeping examination of
crypto currency platforms with U.S. and offshore arms.
U.S. Defense Secretary Lloyd Austin is urging
China to avoid what he called destabilising actions toward Taiwan.
Austen met with his Chinese counterpart in Cambodia, their first face to face
meeting since House Speaker Nancy Pelosi's visit to Taiwan in August.
It's the latest effort to put the U.S.

China relationship on a more stable
footing. The European Union's executive is on is
designing an emergency natural gas price cap.
Now it's trying to avoid the kind of record high seen in August without
risking the security of supplies. The European Commission will discuss the
final shape of the so-called market correction mechanism today.
And China reportedly is set to find Jack Myers and group more than one billion
dollars.

According to Reuters, that would pave
the way for the end of a regulatory overhaul of the fintech firm.
Beijing's crackdown on the private sector included the halt of arms massive
IPO in 2020 at the World Cup. England, Argentina and the Netherlands
all won their first matches. Meanwhile, the US and Wales battled to a
1 to 1 tie. England and the US square off on Friday.
Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than
twenty seven hundred journalists and analysts in more than 120 countries.
I'm Lisa Matteo. This is Bloomberg.

As we work to bring policy to what we
call a sufficiently restrictive stance, which really in simple terms means the
level required to bring inflation down and restore price stability, we will
need to be mindful, adjusting too little, believe inflation too high and
adjusting too much could lead to an unnecessarily painful downturn.
Mary Daly of San Francisco can't say enough about it.
There was some real terse comments here about the social consequences of other
Fed dances to December 14th. And the next year is well, it is the
Tuesday before Thanksgiving. We're not struggling for news.
Slow in the news flow today is really about bitcoin.
The weight on Genesis Sonali Basak I thought was wonderful here half an hour
ago fifteen thousand seven hundred on bitcoin.
I usually don't quote them, but today it is front and center returned to the
markets in equities.

A the market bonds yields come in a
little bit after the quiet of yesterday. Oil with a lift here.
We'll get to that in a moment. Brent crude,
59 dashes again to ninety. I'm struggling here, Lisa.
Of not children with is to understand food because having a blast has done
terrific work at Bloomberg. The core commodities really are up all
that much. And yet, listen, I know that when I'm
preparing to do stuffing in aisle seven at the store, that it's really expensive
and you do the work on this as well. Hold on a second.
Just surveillance correction. You are not preparing to make stuffing.
You haven't prepared to make stuffing for the past two decades.
But we will pretend that we are both trying to cook.
I can't cook either.

Let's be honest.
But for those who do, my stuffing tastes like diesel fuel, which is what this is
really about. Well, that's exactly right.
Diesel fuel also in short supply, stuffing mix year over year increase.
Sixty nine percent. Everything having to do with wheat is
more expensive. And if you take a look at the Farm
Bureau, they did a study and it shows that Thanksgiving dinner is up 20
percent year over year. It raises a question of how much further
I can go. How sustainable this is.
And why couldn't hack covering all things having to do with Thanksgiving
dinner? Perhaps he makes stuffing better than I
do because I can't make stuffing head of research into easy enough.
Man CONOR, what's behind this incredible lift across the board food prices,
particularly what it has to do with wheat?
Yeah, I think it does boil down to the Ukraine invasion.
We do know that the Black Sea, which is essentially Ukraine and and the and
Russia, they account for a quarter of all your wheat exports globally.
So the fact that for a long time, the beginning of this year, exports out of
this region was blocked, that caused havoc, absolute havoc.
And it came at a time when there was dry weather issues in other key wheat
producing regions around the world.

You name it.
You know, there was. There was Europe.
There was parts of the U.S. I think we had a big shortage.
And globally, stocks were at levels. But you haven't seen for a long time.
It was very uncomfortable. So I think you're just seeing that river
beating across. You know, commodities across the food
chain have been very, very tight. And on top of that, the cost of
shipping, that stuff, the freight has been extortionate, too.
So it's all leading to the food basket, which has ultimately today so much more
expensive for the average shopper. And Tom, talking about diesel and how
that really is behind this, and that really speaks to the shipping story, the
idea that even transporting the food is getting more expensive.
Are there any signs of disinflation, of some sort of relieving of this pressure
in the near future, or is it more of the same?
And even then, some.

So diesel is absolutely critically tight
right now. I think in Russia, it's a massive
exporter of diesel to Europe. This seems to be critically low levels
of diesel stocks around the world. But just going back to the food itself.
What I would notice is that the United Nations FCO food price index that
actually peaked in March. Yes, it was at record high levels at
that point in March 2023. But since then, it has been steadily
coming off. Now, that's the absolute futures price
level when prices are at those highs. It takes a time for it to filter down to
the supply chain and ultimately to the retailer.
So that's going to take a while to filter through.
But I would say prices have peaked. One thing about agriculture commodities
is that farmers are very responsive. So when you do see high wheat prices,
farmers will do everything to plant more of that crop.
So as long as weather permitting, they will plant more of that as soon as the
next harvest.

You can't have a dying to talk to you.
And this is the global reach of EDF man. And that is if China extricate itself
from its misery and we get a Pacific Rim restart or dare I say, boom.
What does that do to the corner hick world?
So that is the big, big story, if you like, that commodities are desperate to
look forward to. It really will have an impact.
And every time, you know, when rumors were coming out that China's about to
lift its Covid zero policy or even to go some way towards addressing some of that
commodities have been rallying.

So it really it's the one thing that can
really help things take costs. I don't think that's going to happen
until Q2 of 2023 at the earliest. And we've seen actually an exponential
increase in cases most recently. So that's caused causing short term
damage. But yet the hope that they will
eventually open up, we'll see what we saw in Europe and America, where pent up
demand for going out, eating out restaurants and things that you couldn't
do in lockdown.

We'll definitely see a short term
bounce. But you have to remember one thing about
China, the structural story is that China is no longer as commodity
intensive and hungry as he was, say, a decade ago.
So the drive will not be as extensive. There will sort suddenly be a short term
balance and that will be very beneficial, but it will not be long
lasting, unfortunately. Kono, thank you so much.
Greatly appreciate it this morning with EDF.
I want to squeeze one more question there.
ISE informative, but we just can't do it.
This morning, just really interesting there in food.
You know, we make jokes about this, but this is real hardship.
I mean, I look, I remember I did a whole thing on race for Bloomberg, on the
economy, Lisa, years ago. And it was the cost of food in America.
I can't run with the numbers, 8, 9, 10 percent.
And in Cambodia, the cost of food is 60 and 70 percent of the paycheck.
We make jokes about it. But even in America, the percentage of
people flat on their backs from this food inflation is arguably, to me bigger
than the gallon of gas inflation that's out there.
And you're seeing that in terms of discretionary spending and in terms of
consumer sentiment, how much that's deteriorating into the winter months.
I do wonder when you talk about whether this is supply side driven or demand
driven inflation.

What rate hikes are going to do, right.
I mean, this is the question if we don't necessarily get some sort of increase in
the production of oil. What does rate hikes do other than make
it more difficult for people who are at the lowest details of their incomes
sphere to be able to afford it? I don't know.
These are some of the things that I expect that we keep.
We'll keep hearing from Fed officials. And we heard also overnight from ECB
members as well. While I quote Murray daily said she's
always had a real focus on the broader America as of all the other Fed
officials. And if you want to see in Turkey, why
don't what's a Butterball cost at the store?
I don't even know. I just know that I don't even know the
statistics from Farm Bureau, because that's what's up in front of me right
now.

There she is.
Twenty eight dollars and ninety six cents for a 16 pound turkey.
It would increase of 21 percent every day out again, which is just phenomenal.
Like fancy fancy turkey stuff. The wild turkeys.
Ninety five dollars. Ninety nine cents.
For one bird, that's a sprawl of America.
We spend too much time talking to people, spend 70 bucks on a beast and
there's a whole bunch of people out there looking at 30 said, well.
But how many of the people who previously were looking at 70 are going
to 30, which is the reason why Wal-Mart perhaps gain share with people perhaps
migrating lower in terms of the price savings just in pharaoh cooking for
Thanksgiving. Yeah.
Could you see him? I can see John basting the beast.
Lemon gelato for dessert? Actually, that would be good.
Yes, it would be better than what I'm going to do.
You can join up. I'm gonna survive bitcoin.
This is Bloomberg. Good morning. For going through an inflection point
right now, like we saw earlier this summer, the economy is rolling over.
The data is rolling over.

And as hawkish as the Fed wants to talk,
the markets are starting not to listen to it.
We don't really know how far and how fast inflation would fall.
A lot depends on what the Fed does. If the Fed slows down their very rapid
rate of increase, will that allow us to avoid a recession?
We're still going to get a recession at some point, although maybe not right
away. This is Bloomberg Surveillance with Tom
Keene, Jonathan Ferro and Lisa Abramowicz.
Good morning, everyone. Jonathan Ferro, Lisa Abramowicz and Tom
Keene on a Tuesday before Thanksgiving. Yes, it is quieter, but it is not.
In this hour. In moments.
What do you do for 2023? We'll dive into that with a cautious
view with Wells Fargo. John Farrell on assignment right now
with Argentina stunningly on the edge of losing to Saudi Arabia.
Mr.. For our report on the tour's inner our
inner messaging system as well. Lisa, all the news today, it's really
sort of comforting to get back with Tracy McMillian back to like what do we
do for 2023 away from Disney blowing up or Bitcoin blowing up?
Well, the problem is, is that we have to get through a bit humbling up or Disney
having a huge management shift in order to get to 2023 and nobody can really
game out how that's going to go.

I mean, that one consensus that you're
feeling in 2023 is and I love how George Sarah put this yesterday.
It's unlikely that so many bad things could happen all at once the way that it
did in 2022. What's interesting here is that the rare
optimistic call, there are people out there looking for a constructive 2023,
but just up against O ECD this morning, folks.
And all you need to know is the migration on real GDP growth.
Is Bank of England like and the migration of inflation doesn't get it
done down to six point eight percent global inflation next year.
All of a sudden you and I are looking out to 2025.
Yeah. Hiking into weakness, saying that there
is a need to really keep hiking in order to crimp some of the demand and get
inflation down. You're talking about bears, right?
I'm going to throw out one that's sort of notable Marco Clinic over at JP
Morgan. Almost full capitulation here, basically
saying that the only way to have a sustained rally in asset prices is for
the Fed to start cutting rates.

And he doesn't see that happening in the
near term. This is somebody who has been a perma
bull for so much of the cycle, basically coming out and saying, if I'm done, it
doesn't seem like it's in the cards right now.
Well, you're going to see that we're seeing a lot of 2023 research.
We can do that with Wells Fargo here in a moment.
But my research is just there's mass uncertainty.
Let's talk about bitcoin is.

This is the lead story this morning,
advanced by Lilly Abood and Sonali Basak and company at Bloomberg and Genesis.
Genesis is not RTX, right. It's considered to be perhaps a little
bit more with respect to institutional money.
It's the Winklevoss twins. It's a lot of people who thought of this
as much more stable, stable coin. We look at this, it's almost like we're
on the same day. Well, I could.
Well, we could discuss that another time.
There is a bigger question here, which is where are we in the fallout of the
crypto turmoil? Does she know basket basic saying we're
in the middle of it? How much more do we have to see it?
How much is this a symptom of what we've seen in terms of the withdrawal of easy
money? Stay with us through the day.
And I believe correct me wrong, Amy, on this if I am wrong.
But we have crypto this afternoon.

We will really dive into this with a
complete effort. We're going to look forward to that.
Says your correct television. This one.
Am I correct? She you know, she's talking to you.
She hasn't talked to me. What can I say?
Futures up for Dow. Futures are 44 bonds.
There's a movement today after yesterday's quietude.
Yields come in a little bit, 5 percent. We are looking for the two year yield to
get out there. It did not 4.5, 0 percent on the two
year tenure yields seven point three point seven, nine percent as well to
Stearns gives me nothing.

And the real yield is a little bit one
point forty six percent on the real yield.
Oil with a lift, 88 71 on European Brent crude.
Global Brent crude back towards ninety dollars in dollars.
Churning today is not much of a story. I demand a pre Thanksgiving brief Lisa
Abramowicz if you insist. Let's talk about we're looking at today,
including a slew of earnings. We already got some of them, including
Burlington store as Dick's Sporting Goods coming out.
Dollar Tree is what I am watching. How much do you see an ongoing flight to
some of these discounters because of this feeling that people want to
downshift, given the fact that Dollar Tree is up more than 24 percent so far
this year? Just this is the winners that tend to
merge during downturns or a soft patches in the economy.
Today, the Fed speak includes Cleveland Fed President Loretta Master.
Kansas City Fed President Esther George.

And St.
Louis Fed President Jim Bullard. We get a shift in tone.
Do you start to hear about concerns about the lag effects?
And that's something that sort of people touched down in the last hour and talk
about this and keep this up on television and radio.
We're looking at the three mugs of Master George and Bullard.
And this is the strength of the Federal Reserve system.
Well done on Madison Avenue, the country in Broken Tooth 1987 and in 19, I think
it was 12. We started the Fed Reserve modernized in
1951. And the heart of it is the regional
presidents are different and independent.
And what I love about what you're saying, Liza, these are three starkly
different voices today.

And the one consistency is inflation is
the first and foremost concern and that rates are going to go higher before they
hold us. Hold put at 1 p.m.
we get an auction. U.S.
is playing to sell thirty five billion dollars of seven year notes.
These tend to be difficult auctions because they are less liquid than other
parts of the curve. The yields are higher, three point
eighty nine percent. What is the demand like?
It means just gives you a sense of where we have been considering the fact that
we were near zero and not so long ago going up almost 4 percentage points is
sort of shocking. And now the dumb question of the day is
their tax loss selling and bonds not the same.
Not to the same degree as stocks. So it's not going to be affected in that
kind of manner because there's a huge international investor.
We do lots of fancy stuff here and equities, bonds, currencies,
commodities. But part of it is to get back to basics.
Tracy McMillian is in charge of basics at Wells Fargo Investment Institute, is
head of Global Asset Allocation Strategy.
Tracy, let's get out front of your view next year.
What do you see for use of cash in two thousand twenty three?
So I said, good morning, Tom, and thank you for having me.
So for twenty twenty three, we're actually seeing equity markets move
higher, but it's going to be a really tricky path to get there because the Fed
is likely to be under three different regimes as we move into 2023 and we
start the year with them continuing to tighten, then we think we're going to
see a pause and then we think by the end of the year they're going to be cutting
rates as we look through a moderate recession.
So we think the markets are going to be looking out to 2024 by that point.
And we see about 10 percent upside from here.
So we would cautiously be dollar cost averaging into equities.
We're also starting to take a little bit of risk in fixed income by moving out in
duration.

Tracy, help much how concerned are your
clients right now, how much fear is there?
So there is some fear. But I would say with relation to other
downturns, that 2008, 2009 financial crisis, even the pandemic, we're not
seeing the same level of fear at that at this point.
Now, that doesn't mean we won't see that eventual fear and capitulation that we
do tend to see during bear markets. But this has been a really well.
Ellen Brown bear market. And it's been very orderly so far.
So we really haven't seen that kind of fear from our clients that we typically
see during a bear market. We're going to hear from a host of Fed
speakers later this month. We are going to hear from Fed Chair Jay
Power, I believe, on November 30th at a Brookings conference.
What are you looking for to understand what the pivot point will be in terms of
not just pausing rates, but actually starting to cut?
Sure. So what we're looking for is inflation
to start to come off the boil and we're starting to see that with the latest
inflation data.

We're starting to see it in grades data.
Maybe not so much, at least from the CPI in terms of service ends and the fact
that the services inflation really hold them to this tight labor market.
So we're watching the same things the Fed is watching.
We're watching inflation data and we're watching the labor market data.
And it's really going to take both of those cooling before we think the Fed
will start to cut rates. Attrition, really.
And thank you so much with Wells Fargo. Greatly appreciated.
This morning is the Zelig, the stories for 2023.
And I'm going to give John major credit on this.
And I think it was three years ago where John coined the idea that the outlook
for a given year starts in March, because there's there's so there's just
so much uncertainty and all the confidence is gone.
But how much is it reset in March, then reset again in June and then reset
again? Kember I mean, it's not indefinitely.
And this is pretty pandemic that the the I remember, you know, I can't remember
the Edsel because we believe if you believe there was always this voice
there, someone with a boat, OK, it's we would suggest it's a problem because the
market tries to get ahead of everything.

So they try to game out the entire year
and that first quarter and then you have to reset and go to the next year.
That's jammed into another couple months.
I would suggest what we haven't talked enough about and I give the whole shore
team and everyone credit for this. Lisa is your world.
When we when we cavalierly say bonds are down 15 percent in price, you can use
the word never.

We've never seen this.
And grizzled veterans who remembers 78, 79.
That was a walk in the park compared to the rationalisations at 12, 31, 22 is
going to be made among old and. It's been the worst year on record for
benchmark treasuries. This is the way of saying it.
I mean, I mean, you take a look at benchmark bond indexes and see them in a
bear market. This is unheard of.
Right. And so this is a reason why sometimes
you're a bit skeptical of the incredible optimism that people have about bonds
next year. They say, well, this is the time to buy.
It's a great time for bonds. And you're like, really?
You guys just suffered the worst losses ever in your existence.
How much, though, have we seen the fallout from this?
And this is what you say, my world. Is it possible to have the benchmark
full faith and credit, safest instrument get totally blown outright and not see
anything blow up? The great David Goldman, who was at Bank
of America, wrote a chapter in my book years ago precisely on this and that the
mistake is to watch the doom and gloom tranches.
And Margi Patel yesterday agreed with Mr.
Goldman that you watch quality out there to see what it does.
The quality is pullback 15 percent.

And you see if that recovers here,
there's a bet on it, wouldn't you say? There are a lot of people are betting on
that pretty vociferously, saying that next year is going to be the best year
for a long time. Well, sort of.
That's before it breaks closer. Surveillance breaks loose of my bracket
has been blown up. I am so done.
We're like a day and a half into the World Cup.
You're all day.

I was all Argentina.
I am so gone. Saudi Arabia, stunning.
Argentina. Stay with us.
Yes. Anna Edwards watching Denmark.
Good morning. Keeping you up to date with news from
around the world with the first word. I'm Lisa Mateo.
Digital asset brokerage Genesis is warning potential investors it may have
to file for bankruptcy unless it can raise money.
Bloomberg's learn the firm is struggling to attract funding for its lending unit,
which suspended withdrawals after the collapse of FTSE.
Genesis has spent the last few days seeking at least a billion dollars in
new capital in China, and increasing Kobe cases has led local authorities
into reintroducing measures like expanding testing and lockdowns.
It's now estimated that a fifth of the country's economy has been affected.
That's despite the central government's call for more targeted, less disruptive
Covid zero measures. The European Union's executive is
designing an emergency natural gas price gap.
It's trying to avoid the kind of record high seen in August without risking the
security of supplies. The European Commission will discuss the
final shape of the so-called market correction mechanism today.
Bob Iger will be paid about 27 million dollars annually to return as the CEO of
Walt Disney.

The two year deal includes a base salary
of one million and a bonus equal to that amount, as well as stock awards with a
target value of 25 million each year. The amount is actually lower than pass
packages. Former CEO Bob Shape Back received
thirty two and a half million dollars in fiscal 2021, and Iger, who was chairman
at the time, received just over forty five million.
The richest person in the world has seen his fortune declined by more than 100
billion dollars this year, according to the Bloomberg Billionaires Index.
Elon Musk's wealth has fallen to a little less than 170 billion after
Monday's eight point six billion loss. His stake in electric carmaker Tesla
comprises the bulk of mosques must fortune.
Those shares have fallen about 52 percent this year.
Global news 24 hours a day on air and on Bloomberg Quicktake.
I'm Lisa Mateo.

This is Bloomberg. There could be a growing split between
what you might call American economic pressure on China, almost economic
warfare, and Europe led by Germany looking to China in many ways to
compensate for the loss of economic ties with Russia.
If there were a crisis in the United States wanted to introduce sanctions, I
could imagine a big transatlantic split. Richard Haass of the Council on Foreign
Relations is just brilliant. Yesterday, on the linkage of our
diplomacy, our foreign policy, with our domestic policy and the uncertainties
moving forward.

Lisa Abramowicz and Tom Keene with you,
John Farrow on assignment, Denmark, Tunisia.
Coming up is well, futures are based. Dow futures up 68.
I'm going to call it just like stocks are open today.
Futures are open. We'll see what happens.
Yields come in a little bit. And Lisa, that's sort of the growth
thinks that's out there. Yeah, and there's concern about how far
it can go. Can I just say you keep trolling, John.
You basically keep implying that he's just ditched us to go watch the World
Cup.

So we'll find out.
Hopefully he'll come back and give us a full report.
I'll give it a more intelligent report than you do.
We know that for certain. I like to say that my bracket is
completely blown up with Argentina losing it, sort of like, you know, March
Madness. I'm sort of out of it like immediately
64 in that he has been so loyal and occur and joins us now, chief Asia
economics correspondent. And I'm as guilty of this as anybody.
I say I've been to China and I've been from the airport in Hong Kong to the
Mandarin or, you know, maybe some fancy Bowen Hotel in Shanghai in China.
Right now, it's getting serious. Chongqing is in such wan.
It's 800 miles from Hong Kong. It is one of the four cities, states of
the People's Republic of China.

Tell us about the quality of the Covid
locked down. We see an inner China this morning.
Well, look, it's getting worse by the day, Tom.
China's Covid cases are surging. We had a top health official son from
launch who went to Chongqing today. He's a kind of Chinese equipment doctor,
5G. That what the authorities are trying to
do is they're trying to thread this needle by not enforcing mass widespread
lockdowns that we saw saying Shanghai earlier in the year.
But they're trying to do more targeted restrictions on the ground.
It's not just Chongqing also beside us here in Hong Kong.
Congo is the epicenter of this outbreak.

But obviously, the crisis is asking that
the officials are the asking is how are they going to do that?
Hoping to control his outbreak without going under draconian measures.
So no more Africans. Around a fifth of China's economic
output is now being hammered by the latest Covid restrictions and Covid
testing is going on. So it's all it's all heading the wrong
direction for Covid 0 0 over the last 50 years.
The city's state reality of China. Is it the mayors that the leaders, the
generals, if you will, of each given city, have a voice and they're very
powerful? Have they been quieted by President Xi?
Or can they give him an urgent response to, hey, this is what scares me is
happening in our city? Well, there was a recent time delegating
more kind of authority to the local level, authorities telling to your
point, allowing them to respond to code, but as they best see fit.
Well, of course, the instruction was also you're not to lie flat and you have
to continue to control the virus.

So obviously, our own colleagues in
Beijing and Shanghai are reporting. The question becomes, how can they pull
it off? How can they allow the economy to
breathe while also controlling the virus?
What kind of draconian restrictions that are being forced through?
So it is the big dilemma. I think there is a feeling that among
China watchers that China is heading into a very difficult few weeks.
It's going to be probably the biggest test of Covid 0 since the pandemic
began. Nomura also out today making the point
that China's hospital network, in terms of ICU beds and the like, isn't as good
as your Taiwan or South Korea is in Japan.
So there's a real, real critical. A couple of weeks now facing China on
its policy. And I here in the U.S., there also is a
bit of a Covid wave, although there is enough immunity that people kind of
shrug it off.

And I do wonder, you know, ISE people
gather for Thanksgiving meals and prioritize getting together regardless
of any health concerns, what the social unrest is like, the social pushback in
China amid another round of shutdowns. Well, again, as you well know, Liz, it's
hard to be too scientific, but open source social media does suggest there's
a lot of fatigue, exhaustion and maybe resentment toward the ongoing Covid era
restrictions. We had some analysts on Bloomberg TV
today and Asia hours making the point that people are fairly tired by the
ongoing restrictions as it is. That's obviously understandable.
But the whole crux of the issue is how does China navigate away from Covid zero
with ISE having a fairly serious public health disaster on its hands.
And that's the big changing out here.

How can they navigate the to get the
vaccination rates to where it should be? Either way, Chinese made of vaccines or
Western made vaccines? And then how can they, of course, keep
the economy ticking over when you have an eggs away from Covid 0?
And other countries in Asia that come out of Coke Zero went through a pretty
rough time when they were pulling out of it in terms of worker shortages, supply
chain disruptions and everything else. So it's not going to be simple for
China. A lot of economists today, Goldman Sachs
included, who are making the point that it's going to be a very slow portrait,
torturous process for how to navigate out of this.
That said, almost everyone who I've read believes that China will make its way
out of this next year.

This is the consensus trade that you
will see outperformance in the world's second biggest economy because of how
low things have been this year and because they have to start the process.
Can you connect the dots and all the things that have to go right to get
there to make sense of this consensus call?
Yeah, it's because expectations have been so low when he said it's probably
not too hard to see how China could at least recover somewhat from here.
As you mentioned, if they can navigate out of Covid 0 in a somewhat controlled
fashion, obviously the consumer will be ready to go pent up demand just like
we've seen in every other country around the world.
Goldman Sachs thinking that will happen in the second half of next year.
But don't forget the real estate side of it, real estate slump accounting for
almost a quarter of economic activity.

You know, as we've said before,
economists say that the recent measures to shore up the real estate sector are a
game changer. So there is a scenario where we could
get into, say, mid next year where maybe China's obligating to cope with sort of
things better than it has been. Maybe the real estate sector has found
its found its feet on China's getting up and running again.
And thank you so much for your work each evening for us from China and the
current running, all of our economic analysis from Hong Kong on the Pacific
Rim.

I wonder, a victory lap for one L.
Abramowitz grandma killing it yesterday on the equity watch.
A rare and difficult thing for your interview with one.
Peter Oppenheimer really got some major traction out in the media.
People talked about it as well. Ian lingered and Bonds published just
moments ago. A plethora of unknowns is what Ian
Lingard sees in Oppenheimer. Sort of said the same thing in the
equities space, right. Which is the reason why they say kind of
meandering performance for a while. But the meandering performance ends up
leading to something where there are new highs later on in the existence of the
stock market, which is not next year. Does he does he participate in the
market now or is Goldman Sachs London in cash, participate in the market?
It seems like there are pockets of opportunity.
This is the consensus also, right? It's sort of where's the leadership?
Good to go.

There are still areas that couldn't
perform its stock picking. It's not necessarily going to be a
wholesale kind of a catastrophic moment. He also pushed back against the Mike
Wilson view that we could see 3000 on the S&P.
He doesn't see that as necessarily being in the cards.
It's interesting. And we want to see everybody
recalibrate. I get the feeling they're going to
recalibrate into this Tuesday, into Wednesday.
They will not be recalibrating on Friday, although Lisa will on Friday,
please pay attention to Bloomberg Surveillance and Friday, her guest for
the entire Bloomberg Surveillance. Damian says our long overdue on emerging
markets in the next year. The markets, futures are open.
Futures up 9 VIX twenty two point four three.
We're watching oil.

Brent crude moving to ninety eighty
eight point five eight. Good morning. Good morning, everyone.
Bloomberg Surveillance, Lisa Abramowicz and Tom Keene thrilled you were this
year on an eventful Tuesday, Sonali Basak scheduled to be with us, I believe
in the next hour she and her team are working with Lydia, valued here on an
important story on Bitcoin, on Genesis. Were watching that very carefully.
Bitcoin. I'm going to say and I'm speaking as an
amateur ugly 18 hours comes back nicely. Fifteen thousand eight hundred on
bitcoin now up 120 points.

John Farrell is on assignment here.
And Lisa were through. I think we're 30 minutes away from
another game. I think so.
And people will be watching that one. And the last one was really good.
Actually, I was looking it was amazing. And it went for like 100 minutes or
something because they get hurt and they keep.
They have to play 90 minutes. I think that's the rule.
So they play out longer. I think John actually took off
specifically. So he did not have to hear us talking
about the World Cup. I think he could just, you know, focus
on the game and people who know better than ISE.
I'll give you a sense of what I'm watching today, just in terms of some
specific companies in the earnings really that has been going on, Best Buy
coming out with better than expected earnings, sort of shocking because it is
all online and now people are coming back to the stores to buy tact by other
things, actually reinstated a dividend to increase their dividend.
And they talked about operating income, meaning that it will be slightly higher
than expected for the current fiscal year.
You're seeing those shares up more than 7 percent.
Zoom shares are down sharply after disappointing earnings yesterday.
They reported their slowest quarterly sales growth on record.
They also cut their full.

Your forecast is really goes to the
whole are we post pandemic? Are we ever going back to zero?
You never were on zoo. This was such a high point.
Dana Telsey with us. But you follow this more than me.
It's highly idiosyncratic. Am I right about they're wrong?
It is. I mean, in terms of the tech story, till
now, the retail, the just the whole tech retail thing, it's just stock by stock
right now. It seems to me it's about inventories
and what people have done. It's about the mix of customer.
It's about the type of product. The one unifying feature is that the
discount stores have done well. Right.
We saw that with T.J. Maxx, Ulta, Jim Maxwell Cosmetics.
Right. And we've also seen online not fare as
well.

Amazon not doing as well, even at
Wal-Mart. The online sales didn't do as well.
It is in-store purchases that people really knew.
Have the thing where you're in your living room and you go, Athena or
whatever is Amazon like for pharaoh? What's it called?
Alexa. Alexa?
Have you ever thought you have one? Yes, I do.
You really have. I genuinely haven't.
We've already got over this. I occasionally ask it to tell jokes to
my children so I don't have to. Are you serious?
And get up. The other stock I was going to look at
with Dell technology has had to shift the topic.
Dell, I think there is a lot that I have it like Sara that I've asked for jokes.
Their jokes are actually so bad. Everyone, here's a Brando Brando in the
living room. What's it called?
Alexa. Alexa.
Alexa, what are the seven year auction? Do you think they're going to get rid of
it all? That's the rumor that they're going
they're going to lemonade.

Alexa, eliminating a lot of the staff
tied some of these issues. I don't know that they're gonna
eliminate that, but I will just say Dell ISE slightly lower after cutting their
revenue. Is there other stuff coming out today?
I mean, everybody's racing into Thanksgiving.
I guess it's you know. You mean the earnings surge here?
There's some earnings coming out. Were very good for them for futures
advance up. Eleven off the day to check 80 points
for Ferro is well in the spirit of Denmark, Tunisia.
We had Younes Nord with us of Denmark, of course, all of his good work and
foreign exchange.

And we now go broader to the Baltic Sea
and East Anders Persson, chief executive officer for global fixed income.
We make note Sweden is not in the World Cup, but then he will nod to Denmark
here in a moment. What is it like?
And explain to our American audience, particularly those that are not into
soccer, you don't make it. Italy didn't make it.
Sweden didn't make it. It's not a big deal, actually.
It's a big deal. Yeah, I mean, I think any European
country, but probably any country maybe outside the US when when a country does
not make it to the World Cup, it's, you know, it's a deal.
And we have to quickly figure out what other countries are going to start
cheering for us.

It's like the heritage of Matt Miller
nationally and of course, cheering for United States.
But Denmark is my my second go to here and I was beaten in making it.
Well, the heritage intervened. That's really important because it was
Chicago. The Chicago Cubs didn't make it for
decades. It's good to see it as well.
What does the 2023 view you have? Can you acquire bonds here for a higher
bond prices? Lower yields?
Yeah, we we are we are becoming increasingly more constructive on the
bond market here as we're moving into to 2023.
I think where our view is that the market is pricing in more and more of
the uncertainty here and more broadly kind of the volatility uncertainty, we
do expect to continue for the rest of the year.
But as we move into 2023, when the Fed hopefully starts slowing down, they're
hiking, hopefully maybe wrapping it up. We do think that that's that's going to
be a good time to really start lagging in further into the broader fixed income
markets. I think the spread widening could start
a little bit here and we could retest some of the wives, perhaps, but the
yield levels are very interesting.

The income opportunities are very, very
real. So while we're a little cautious near
term, we're really focusing on net income generation, part of fixed income.
The vast majority of fixed income returns comes from income, as you guys
know, not capital appreciation is where you can have these entry levels for
investment grade corporates and close to 5 percent high yield at close to 9
percent. It's starting to become very interesting
and we actually think it's a bit of a sweet spot from a broader asset
allocation compared to equities compared to some other options as well.
A lot of people would agree with you, Enders, and I want to go broad and I
wanted to sort of get existential because it's a four ahead of the
Thanksgiving dinner and I want to bought my kids with some bond existential
reality. And there really is this issue where the
Fed raised rates far beyond what anyone had expected.
It didn't cause a massive blow up.

It didn't cause a massive cascade of
defaults like so many people at thought. And now we're talking to some people
about potentially the best investing experience ahead that they could imagine
in bonds. Can you square that?
How the Fed could raise rates so much and not cause some real damage to a
corporate debt sphere that blew up over the past few decades?
Yeah, I mean, I think I would say we can't count on that
complete fear just yet as we're sitting here today.
Today. Yes, that certainly is the case.
And bond markets and credit markets are holding up quite nicely.
We still have, you know, the uncertainty of the Fed policy area.
If they continue to be aggressive and too aggressive, that could change or
could change quite quickly. That's not our base case.
We're expecting sort of a mild recession next year and we're expecting the credit
is going to hold up quite well. As I mentioned, we can we see a little
bit of spread widening potential here. But we're not expecting a total blowout.
But, yeah, I mean, it's it's these are unique times and unprecedented times.
I know we keep going back to that.

And I think that's the part that the
market is trying to handicap. How different is it this time and how
will this play out next year? But, you know, ultimately, when we take
a step back, we are finding the fundamentals are holding up.
Okay. Obviously, they are deteriorating
earnings are seeing some pressure as you just touched on.
Yeah. But it's not like things are falling off
a cliff. And I think that's that's the comfort
that we're seeing that companies are coming into this prepare.
They have pushed out the maturity wall. They are very focused on making sure
that they're preparing for tougher times, which is unusual usually when
you're facing a recession and it comes sort of out of nowhere.
That's a unique time that we're dealing with this year.
How much is your bullishness hinge on there being some sort of recession next
year? And I say this because if there is not,
then the Fed's going to keep hiking rates and you're going to get that much
more pressure on this space.

How much are you counting on that?
Yes, we are counties that are counting on a mild recession next year.
We don't think a soft landing. You know, it's not impossible, but I
wouldn't call it at least my base case at this point.
So there's going to be no. Almost like Goldilocks will be some very
mild recession that keeps the Fed comfortable that they've done enough,
particularly on inflation side. We sort of need to see that the labor
market having some cracks, not too much of a crack, but some crack.
And that would be sort of the best case scenario.
My Amanda Lang, we see a little bit of this slowdown in inflation or a fair
bit, let's call it not a complete fall apart.
Very, very quickly. Are the foundation, the heritage of new
Vilas municipal bonds? Is there value now in municipal bonds
versus taxable ISE? Yeah, we're definitely finding a lot
more opportunities on on immunity muni side at this point.
It's been a very challenging year.

Flows have been very negative, but we
take a step back. Credit starts are very, very strong risk
reward. We think it's increasingly attractive
and munis, we think is a good risk reward.
All in all, this should perform quite well in a variety of scenarios,
particularly in a sort of moderate recession next year.
So, yes, overall we find good value in that space.
And as Pearson, thank you so much, though, gets you out here 20 minutes
before the people to the west take on Tunisia.
Anders Pearson of Sweden. Naveen, thank you so much for joining us
this morning. Lisa, this conversation.
Coming up, folks, we're selfish on this. It's New York.
It's on the edge. A cold gets warmer the next couple days,
but nobody has briefed us on New England, New York City, New York Harbor,
hydrocarbons like Stephen Schork and the fact that there really has been
incredibly low inventories of diesel, which you've seen that dice, this
divergence between diesel prices and gasoline prices and how much that's
going to become an issue heading into the winter.
And this is about it's not about folks.

The war in Ukraine, Russia, Saudi Arabia
beating Argentina. It's about distill.
It's not in my backyard. Am I right on that?
A big part of it. Yesterday was really interesting.
Did you see the price action yesterday with no prices?
Just please lunging in the crude space, the Brent brighter side of things
falling below eighty five dollars a barrel for the first time since
September. On this Wall Street Journal report that
OPEC plus was considering increasing production, sort of a nod to the Biden
administration, OPEC plus came out, denied it, and now prices are flying
upward.

How much is that really the swing
factor? At a moment of real tenuous ness about
demand and supply, come on. The swing factor to me is under current
reporting on Hong Kong on children cheating.
I hope I'm pronouncing that right. Excuse me if I did not seriously.
Eight hundred miles northwest of Hong Kong.
To me, that has more to do with the oil noise than anything else.
Yeah, but this is all rumor and speculation.
How do people we deal with that and I understand that.
But my point is, is this is what people are trying to game out in some kind of
material way.

And there's no way at least lets the
family's secrets out. We're in a meeting, folks.
This is like 18 years ago. And they're like, Tom, we can't call the
show Bloomberg rumor and speculation. We should.
Yes, it was short list. This is not Bloomberg rumor and
speculation times. It averages up a ISE Bloomberg
Surveillance. Stephen Schork, radio and TV.
Next, must listen for your heating bill in February.
Good morning. Keeping you up to date with news from
around the world with the first word. I'm Lisa Mateo.
U.S. prosecutors have begun an investigation
of FTSE X months before the crypto exchange collapsed.
Bloomberg's learned that prosecutors in New York had started poking into hefty
ex's massive exchange operations.

It was part of a sweeping examination of
crypto currency platforms with U.S. and offshore arms.
The World Health Organization warns that millions of lives are at risk in Ukraine
this winter. The U.N.
agency cites damaged or destroyed infrastructure that has left 10 million
people without power. That's about one fourth of Ukraine's
population. China reportedly is set to find Jack
Moss and group more than one billion dollars, according to Waters.
That would pave the way for the end of a regulatory overhaul of the fintech firm.
Beijing's crackdown on the private sector included the halt to vans massive
IPO in 2020. Tesla is changing its marketing approach
in China. That's in the face of fierce competition
from domestic rivals and uneven demand. Tesla's now extending insurance
subsidies of up to eleven hundred dollars for new buyers.
Plus, it's even advertised on local shopping channel.
Last month, Tesla cut prices in China for the first time in 15 months.
Billionaire investor Carl Icahn holds a large, short position in GameStop.
Bloomberg has learned that Icahn began shorting the videogame retailer during
the height of the mean stock frenzy.

That was around January 20 21.
Shares have lost 71 percent of their value since then.
Global news 24 hours a day on air and on Bloomberg Quicktake, powered by more
than twenty seven hundred journalists and analysts in more than 120 countries.
I'm Lisa Matteo. This is Bloomberg. We're not so negative about the
downsides. We just think there'll be more
volatility and a trend towards a lower market level before we get control.
The reason we're not quite so negative is because there are some positives.
We do think that the U.S. economy will avoid a hard landing.
Peter Oppenheimer, chief global equity strategist, Goldman Sachs, an interview
with Lisa Abramowicz for the worldwide headlines yesterday.
Really, really interesting on his tentativeness of getting in to 2023.
We're not going to waste any time here.

John Farrell, Keith for Denmark,
Tunisia, he is on assignment. We're unsure when Mr.
will be returning. Brown I are here because we don't care.
And here on a Tuesday, it was futures up 8.
Here's what you need to know. Zydeco Pipeline was a phenomenal song by
Aaron Neville years ago. Daniel Lenoir produced it down in New
Orleans and it is a key, key oil pipeline along the Gulf of Mexico.
It is the focus now of our next guest.

Stephen Schork is principal of
narrowness and acuity on the hydrocarbon market, its short group.
Stephen, let me summarize for our audience.
We're up to our eyeballs in petroleum and the price is going to go down.
Do I have that right? Well, in the near-term, we certainly are
risks to the downside. So we had the market that switched into
contango. This is not mix WTI crude oil market to
contango, meaning that the price this month is cheaper than the price next
month that occurred on yesterday's expiration in the December contract.
Why are we in contango? Well, simply because, to your point, the
zydeco pipeline, which is a significant pipeline that takes oil from the shell
patch in West Texas that's being produced and takes it to the export
market in Houston. Well, there's maintenance now that's
going to last well into December on that pipeline.
So your oil flows are lower, but you're still producing oil in West Texas.
So if you can't move it into Euston, you have to put it somewhere.
And it's very important as far as the night mix is concerned, because where
that something's going to be is up at the nomics terminal complex up in
Cushing, Oklahoma.

So we're looking at a situation where
we're going to be building supplies at the nomics terminal complex right next
week. The surprise to me, Stephen, as an
amateur is West Texas Intermediate breaches 70 dollars.
We get a sixty nine print on American oil.
Is that in your realm of possibility? Sumi?
Yes. With regard to not this was one of our
more bearish cases and this is really at the tail end of our modeling of where we
could go.

Certainly, I do expect to see
oil find a base here, assuming we do not go into a significant recession.
And we have to keep in mind, this is the biting puts, right?
This is the level 17 dollar oil, the low 70s that the White House has said this
is the level we're going to start buying oil to refill the SPRO.
So if you're sitting there, why would you sell 70 dollar oil when the United
States government's going to come in and start buying 200 million barrels at that
price? So they're in effect without recession.
Is your floor in the market, Tom? So what about the ceiling?
Right.

Because we were talking about the tight
market, about, you know, two minutes ago and we were talking about oil prices are
going to rise beyond 120 dollars a barrel on that, certainly, Brent, and
close to that on WTI. What's changed so materially in the
physical market to make that completely an obsolete argument?
Yeah, absolutely. So the 100 to 130, which is where we
were in the first quarter or second quarter of last year, that's
unattainable to say that we could get back up there, but we can't stay there
because that's where we saw the demand destruction.
So that is short of something catastrophic happening in supply in the
market that a market cannot go up and B, are not.
So what is change now, of course, is the weakening economies around the globe.
So it is a near-term bearish picture at this point.
As we said, the Russians are front running the price caps.
So they've dumped a lot of oil on the market.
The refiners in Europe, fearful of that price gap, have bought all that oil.
So you're having a hard time now selling physical oil.
So a lot of this physical oil is getting rolled forward in to the first quarter,
which is going to keep the market supplied.
And the fear now, of course, is Covid with China.
And when is that economy finally going to reopen?
There is some optimism that it can reopen fully by next summer, but there's
still a lot of skepticism in that.

So without that demand in the market,
you've got this lowest scenario of oil prices.
I thinking that low 70s, low 80s. I think this is the bottom of the
market. And therefore, we're waiting for the
demand because we think about this. CapEx is challenged.
Interest rates are moving higher. Your hurdle rates for cutbacks are that
much higher. So you're still looking at a market
that's going to be a dearth of capital, which is not going to go, of course,
obviously, and to bring in more oil to the market.
So your long term picture is still bullish.
That still gets you back to about 1. Hundred dollar range, but we just have
to get over the short term hurdle.

Could you foresee a time where you see
the price of gasoline go down and the price of diesel stay high and even go
higher? Well, that that's the new dynamic that
we're in. Lisa, because right here in my hometown,
Philadelphia, the once great epicenter of the East Coast refineries, we've lost
55 percent of our refinery capacity. So three years ago, we had a refinery in
South Philly that produced our process. Three hundred and thirty thousand
barrels of crude oil a day. That was a lot of gasoline, a lot of
this fuel about what, right into our home market here in Philly.
And then, of course, 90 miles up the Jersey Turnpike into Linden, New Jersey,
in the New York Harbor Market. We no longer had that.
So that diesel fuel has to come from somewhere.
And keeping in mind that gasoline is your best margin for a refiner.
So this is where they maximize.

So this is where you bring more gasoline
to the market at the expense of distillate fuel, diesel fuel.
So now we have to. Yes.
I'm sorry. I just this is so important socially.
Stephen Schork, and you've been so dead on this.
If we affect a shortage of heating, whatever fuel in New England, in the
greater northeast, how do you perceive a government response of this?
I mean, what is the linkage of not in my backyard to government regulation,
investment incentives to fix this problem?
Well, the short term fix is for it.

For this winter is the northeast
northeast heating oil reserve, which we have 2 million barrels of heating oil
sitting in tanks up in Connecticut and Massachusetts.
And you also have that for gasoline, too.
So that isn't in fact, that and I'm surprised we haven't seen that yet,
because here in Philadelphia, 45 minutes up the northeast extension, Allentown
was out of diesel. They they'd closed down one of their gas
stations up there because they were out of diesel fuel.
So we are running shortages into this, Mark.
OK, Stephen, I don't mean to interrupt. I was in Paris and on the way out to see
DG. There were lines, lines, lines I've
never seen waiting for a gallon of gas. Are you predicting that for Allentown or
for Albany, New York? Well, certainly that that is the risk.
I think gasoline where we're going to be, you know what, we'll get through
this because that's where the price incentive is.
Both disappear with diesel fuel.

We're already running shortages.
And that was shortages, Tom, before we even had any sort of heating demand
while in the markets. So we're looking at the Northeast, the
mid-Atlantic and New England markets that are 70 percent of the homes or a
market he heats with heating oil. So that that is an absolute risk that
will continue all through the cold months.
Absolutely brilliant to hear the short report, folks.
I can't say enough about it. Yeah, I've got the e-mails.
No, we protect the copyright of all of our guests.
See Stephen Schork of the short group for five pages every day of shocking
acuity and the hydrocarbon market. Lisa, we come out of Paris.
You go northeast. It's like 4:00 in the morning or
whatever. We're getting united out in.
The lines I saw were different. They were all trucks.
It was all diesel lined up for miles at gas stations.
And we safety's off now. But couldn't you see that in a couple of
months time? I was short saying possible, I guess is
how I would frame that as possible. Futures advance up nine points.
Stay with us.

This is Bloomberg. Stocks can still lag from here and it's
not going to express itself. Regardless what we're doing on the
quantitative trading in the bond market, I think we just like the rest of the
market, are looking for a pivot to the next big trend.
2022 was essentially one big trade, one or more of our concerns away from
inflation. Prices will stabilize and then we'll be
thinking more about the recession. I think twenty three will probably be
rather muted color return year, but I still think equities will do better than
bonds. This is Bloomberg Surveillance with Tom
Keene Jonathan Ferro and Lisa Abramowicz is treading water to Turkey Day.
World Cup in the background. Welcome back.
This is Bloomberg Surveillance. Jonathan Ferro.
Lisa Abramowicz. On this day with a holiday shortened
week, it is a quiet week. Except that it's not.
And we've been talking about this all week.
We get the 20 23 outlooks. We also have some key data coming out
tomorrow, including consumer sentiment. It's a data dump.
I mean, basically, am I right in that we're squeezing Wednesday, Thursday or
even Friday into one day? Exactly.
Tomorrow is going to be the day.

We aren't friends.
That's actually what I'm most interested about, especially in light of what we
were talking about with 20 percent inflation at the Thanksgiving table and
people going out. How much is the conversation around the
table? Not going to be Bitcoin?
Not going to be. How do you get rich?
How do you just basically survive in an environment that's really the tightening
of the screws officials advanced? We'll get to the data check in there.
But let's wrap up the script here. Michigan is something that's just sort
of tossed out. People look at it.
People don't. Lisa, the five to 10 year inflation
statistic, nobody pays attention to this 3 percent.
That's not what Jerome Powell wants. Jerome Powell specifically has said they
pay really close attention to this and they care very much for the 5 to 10
percent, 10 year inflation. Well, we're not there yet.
Right. We've seen it kind of fluctuate back and
forth. But what if you start to see it go up?
What then? How does the Fed respond?
What do you see? Sentiment plunge even more there than
actually.

Jed Rameau, we love the second.
But does that actually give the Fed a little bit of not comfort, but a sense
that they can pull back, right? This is the reason why on the margins,
this might matter quite a bit at a time when people are gathering around and
kind of resetting. That's usually what happens.
Time going on is going to reset. We were set for leftovers on
Thanksgiving. I'm going to reset to the new home sales
to two. Yes.
At 10 o'clock on the twenty third tomorrow as well.
But what we're really going to do is reset into that inflation report and the
labor report.

All of a sudden, an important first week
of December. How much can you actually start to see a
labor market loosen up a little bit? Right.
They've wanted to see this and we really haven't seen this yet.
You talked about this top and I think it's an important point.
Tech jobs. Is that the tip of the iceberg?
It's own idiosyncratic story or is this, you know, something that is a tea leaf
for what's to come? You know, Ben Layla was brilliant on
this this morning, and he was absolutely.
He did. The tech angst is way overdone.
He says, look, Amazon is exiting 1 percent, maybe a little bit more of
their employees, and they're hiring in key areas while they lay off people.
Yeah, I have real trouble carrying the text angst over the greater economy and
talking about angst. We are seeing more shutdowns over in
China and it is not feeding through all that is I, but it's not feeding through
to markets because you are seeing a bit of a left.
You're seeing the Nasdaq up nearly four tenths of a percent.
The S&P is a little bit of a number Hang Seng.
This is a little bit of a lift.

And how much is it, despite the
negativity, the hurt out of China, despite the fact that there's a bit of
cold weather in Europe. There's a sense that people are kind of
pushing fast pass these things. Howard mentioned 88, 77 and Brent Crude.
Stephen Schork moments go look for the Schork interview in its entirety out on
digital. Maybe it'll get out on YouTube.
Eighty eight dollars, 78 cents and Brent crude.
I mean, I hung on every word that Mr. Schork said.
There was a clinic on oil up to her eyeballs.
Could you get under 70 dollars a barrel West Texas Intermediate up to the
legitimate angst? I believe he said.
Allentown, Pennsylvania, with a dearth of diesel fuel this morning.
And we heard the OCD earlier this morning talking about the energy crisis
really fueling a lot of what we've seen in terms of the inflation on the yield
space. You are seeing it come in just a touch.
Others still very deeply inverted yield curve.
We haven't talked about this, but the gap between twos and tens has is still
staying around. The lowest going back.
The most negative since 1981.

You know, I sense we're going to
recalibrate what you bring in Mr. Quinlan here, as I'm sure he's done this
before. It's in his law in New York, Jacqueline
Adams, CIO, market strategy at Merrill and Bank of America, Private Bank.
Joining us now, Joe, how do you recalibrate for next year, given the
complete lack of clarity? Well, it's going to be tough heading
into the new year. Lisa.
We're looking at a recession here in United States, shallow first half of
next year. Europe, I think, is already in recession
and China's flatlining. That's around 65 percent of world GDP.
So it's a shopping mark it into twenty three.
But we do think on the other side, say second quarter, third quarter of next
year, we're going to be buyers of equities.
We're going to reset here in the United States will lead the way.
It is a chop in a churn as we go through the central bank tightening endemic in
China and recession. Energy related in Europe.
So it's very choppy. How much does that really hinge?
That sort of bullish call in the second half of next year hinge on a quick
deterioration in the economy and a quick response from central bankers?
Well, I think we're seeing the downturn in the economy.
And I think if the Fed just pauses in January and February, not necessarily
you'll have to cut.

That's kind of the green light for the
equities that kind of rebuild that base in for the the next bull market.
So they don't have to start cutting. We don't.
I don't think they're going to be cutting anytime soon.
But just a pause. Let the medicine work.
See how quantitative tightening is working its way through the economy.
Now the consumers hanging in there. You talked about the labor market for
sure. So I think we just need a pause.
We'll build the bottom from full market.

Joe, the pauses there and it hinges on
inflation. OCD came out with an inflation call
today where global inflation next year, again, with all the angst in Europe is
six point eight percent. Let's be optimistic.
It's lower in America. I think we can do that.
And Bank of America, no doubt, would lead on that.
Michael Caperton and the rest. Joe Cridland, does inflation actually
come down enough next year in America? I think it does.
Tom, I really do, because you're going to see the productivity gains come back.
You've seen the economy weaken.

Commodity prices have rolled over.
When you talk to the people in the energy patch materials, their costs,
their material costs are coming down. So I think I'm not in a deflation camp
is hard landing when it comes to having prices come down hard.
But I do think we're headed in the right direction in Europe, by the way, is
going higher, as you mentioned, and Japan could be an outlier as well.
So I think inflation comes down significantly enough next year that it
gives it gives the Fed pause and the markets a lift.
We look forward into 20 deeper to twenty three and twenty four.
Well, OK, we get a pause and then we lift.
Is it a lift with quality? I mean, Joe Quinlan, you've been known
for decades with a comfort in quality ownership.
Define what that is.

Is it a free cash flow analysis?
Is it a persistency of revenue analysis? It's going to be core competency.
Tom, it's going to be brands. It's gonna be good management.
I think it's gonna be the global breath as matters as well.
You know, when the Fed is done raising rates, the dollar is going to peak roll
over. So multinationals will have their day
again, so to speak. We're looking for a second half recovery
in Europe. Europe's a big market for U.S.
multinationals. Reflation in China and the rest of Asia
is going to help.

So we're looking for large cap quality
names to push ahead with its health care technology, financial fields,
industrials in particular time. We've got it.
We've got a big story out there that we're not ready to talk about.
And that's the rebuild of Ukraine. Now, it's too early to talk about that
given what's hap getting there. But that's going to be very important
for U.S. industrial.
OK. Well, let's wrap up the script, because
this is hugely important. Focus Landover over Deutsche Bank agrees
with you as well. I get that for Europe.
I get it for Germany, etc.. How does the rebuild of Ukraine assist
our viewers and listeners in America? Well, remember, because U.S.
corporations, they're more ingrained in Europe than they are here in the United
States. You know, Caterpillar, Deere, big
material companies, they have the plants already over in Europe and they'll be
right there on the front lines to help rebuild.
So it's not like we're going to be exporting Caterpillar machinery.
We're going to make it in Europe and send it right across the border.
So U.S.

Companies are very well-positioned to
tap into that future to be coming out of Europe.
There's a lot of time before then. And as we look out to next year, when
consensus has been a shallow recession, I know that that's what you were talking
about as well. How do we know that a shallow recession
isn't a new transitory? That's good question, Lisa.
We won't know until afterwards. But here's what I tell clients in
recessions. They're not.
We've had them before. They're not terminal here in United
States. Recessions typically claims we get you
know, we kind of shoot the zombies, we get weaker, players go under the
stronger players get stronger.

Creative destruction.
I mean, that's what's going to happen. So we're not going to know if it's
shallow or not. And we do think it is because going into
the recession, households are in good shape, relatively speaking, for
corporations. Housing markets were all there, but we
know that. So this is a recession as well,
telegraphed, well prepared.

That's kind of the backdrop for, quote
unquote, shallow. Joe.
Thank you so much. Greatly appreciate it.
Merrill. Bank of America, private bank as well.
We'll get all of the different views from Bank of America here as we draw
from all the other firms. I mean, you know, we make we make jokes
about it, but this is really serious stuff.
And particularly after this this absolutely unique year.
How do you recalibrate? Next year?
I have no you know, I get page one and page two is Peter Lynch would say, what
do you write on page 40? Well, right.
Right now, page one and page two. There is there are a couple of themes
that have emerged. Page one, buy bonds, buy long term U.S.
Treasury. That's number one with the number two.
We're going to see peak dollars some point next year.
These are some of the consensus trade, but.
Right, High Flyers. Correct.
A lot of these have been hung for a long time.
Right.

The other potential consensus is
starting to see around the edges is China being a potential outperformance
is because of how much bad news has been baked in.
These are some of the things. And short, shallow recession is also
consensus. And that's also a question about whether
that's actually achievable. That's always hazardous.
I have trouble with that. What I will say and I say this with a
lot of force, corporations will adjust. They will adapt.
You saw this with Disney yesterday. What's day 2 on Disney?
I mean, I wrote a memo to employees, wants you to go to Disney Land and enter
the Magic Kingdom and do a photo shoot. There are a lot of questions here in
terms of streaming strategy, in terms of what the teacups at Disneyland in
Anaheim is so much better than Orlando.

Do you agree?
I have never been to Disney World. I was at Disney World when I was 5 and
they still continue teacups. I get that.
I get motion sickness. You just fall apart with the team.
So I don't really understand. It's like what I wanted.
You like the teacups, you like Josh Show once with the teacup spinning around.
It was great. Is that the other name was Bloomberg
Surveillance? Spinning teacups and Bloomberg shops are
great. Really.
Futures up 40 were advancing. Dow futures up John, 108.
And good morning.

Keeping you up to date with news from
around the world with the first word. I'm Lisa Mateo.
Digital asset brokerage Genesis is warning potential investors it may have
to file for bankruptcy unless you can raise money.
Bloomberg's learn the firm is struggling to attract funding for its lending unit,
which suspended withdrawals after the collapse of FTSE ex.
Genesis has spent the last few days seeking at least a billion dollars in
new capital in China, and increasing Covid cases has led local authorities
into reintroducing measures like expanding testing and lockdowns.
It's now estimated that a fifth of the country's economy has been affected.
That's despite the central government's call for more targeted, less disruptive
Covid zero measures.

The European Union's executive is
designing an emergency natural gas price gap.
It's trying to avoid the kind of record high seen in August without risking the
security of supplies. The European Commission will discuss the
final shape of the so-called market correction mechanism today.
Best Buy has surprised Wall Street with an upbeat outlook.
The consumer electronics retailer raised its profit forecast even as U.S.
shoppers cut back on spending on discretionary goods.
Best Buy also said that comparable sales are now expected to fall only 10 percent
this year, slightly better than the previous forecast.
And Societe Generale has stepped up its effort to eclipse rival BNP Barraba in
share trading. The French bank has agreed to merge
large parts of its equity business with Alliance Bernstein.
The two will unite their cash, equities, trading and research under a joint
venture. 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 Matteo.
This is Bloomberg. I don't see a sort of self fulfilling or
self perpetuating wage price final.

And if you think we're going into
recession, as I think we are going into not only a European but also U.S.
and global recession, that's very negative in all sorts of ways and
uncertainly people against police and their jobs on the back about that.
But we know from experience that does bring inflation down.
Inflation is going to be coming down. David Riley, huge value.
Yesterday, chief investment strategist, Blue Bay Asset Management, his comments
on England were also important as well. They tee off here in England, in the
U.S. I think it's on Friday.
Yeah, it's on Friday. John wants me to come below 50 Ninth
Street. I don't know.
We'll see. Well, I think that both of you will be
enjoy here at the south end of May. Come with us.
Maybe you guys, because we don't think you could you could call and zoom in.
You know, it was you know, we could do a remote.
That would be great.

We'll have to see there.
Right now, we're watching Denmark, Tunisia, and they're got to be solved.
Don't you think it's going to be a totally different game after what the
world just witnessed with the huge upset of Argentina?
I was going to say a different game. How much are we going to start to see
the underdogs really start to lose some inroads here?
That's pretty incredible. Argentina was one of the leading
candidates to win World Cup analysis here with Lisa Abramowicz and Tom Keene.
It's a value. This morning, futures up 17.
A little bit of an asking me figure, of course.
I'm waiting to get to Isaac Bolton's key, Isaac Bolton's key with us, Ohio
Wesleyan, which means he's encyclopedic on Ohio, which I'm told is one of three
or four states that really, really matter in 2022 on
2024.

It beat THG, encyclopedic on the inside
the Beltway chat, Isaac, Ohio. How do you adapt?
Just after what you saw in that Senate race?
Well, I'll tell you, I think there are many takeaways from election night.
But one of the main ones for me, Tom, is neither Florida nor Ohio are purple
states anymore. I think that we need to.
Right. Operate under in the assessment that
both of those are going red and that really changes the electoral map from
the next presidential election. I strongly, strongly agree with you that
the runner got redder and the bluer got bluer.
What does it mean for a majority Republican House?
How did they prosecute gridlock, given the polarity that we learned about
the first Tuesday of November? Yeah.
Look, when we look at the composition of this new Congress, I think part of it is
due to our primary system. Right.
And when you look at the House of Representatives, what I find interesting
is roughly only 15 percent of those 435 seats were really competitive, which
means that the rest of them were decided in the primaries.
And frankly, that's not really good for governing.
It's good for politics because both ends skew to the extreme.
But it's not good for the actual governance of the country.
And so that means we're going to have to look towards these deadlines once again.
All of us have to focus on deadlines, whether it's spending or the debt
ceiling, because those are the forcing mechanisms for legislating.
Meanwhile, we are looking at ongoing concern in the labor market, not with
respect to layoffs, with respect to strikes.
And I do want to bring this to you, because I've seen a slew of notes and
concern about this.

A huge railway strike as there the
standoff kind of hardens with the Biden administration's outreach to them.
How likely do you see some sort of stoppage in the rail system in the
United States, given that this is really pervasive and it's gone on for months
now? Well, I'll tell you, there is real
palpable concern in policy circles that we're gonna have
stoppages and I would say this even in doing my rounds on this.
There's concern in policy circles that even you're going to start to see
pressures in these these marketplaces and ripple effects even before
stoppages. And you have lots of folks around the
country who are traveling. Not to mention the goods and Christmas
time and everything else that comes out of it.
My contacts generally believe the Congress will be able to act here.
There's a law called the Railway Labor Act, and that lets Congress come in to
either impose a resolution based on what the president's emergency board
submitted this past summer or to basically punch and kick the can down
the road to require operations as is for, say, three or six months.
My sense is that you will get some movement closer to the deadline, in part
because there is a Republican House and that Republican House is not going to be
nearly as friendly to some of these unions and will most
likely call for a reversion back to that plan in the summer, which was not as as
accommodating well as some of the one off union agreements we've seen since
then.

There's a broader issue, Isaac.
Earlier in the year, we talked a lot about the shift in power to labor, to
the worker to basically be able to demand higher pay, especially in light
of the inflation. Right now, it's getting harder.
We've known we've talked about a bit of a loosening, a little bit greater slack
in the labor market. From your vantage point politically, is
there also less willingness to allow labor to sort of came the upper hand at
a time when economic growth and frankly, the mix of Congress has changed?
Yeah, so. So I think a great example when we think
about this is the Biden administration's independent contractor role, which came
out and spooked some of the folks around these ride sharing apps like Uber and
Lyft, for example, or Door Dash, the Biden administration actually took a
less aggressive stance in that rulemaking than some expected.
Now, part of that is due to the limits of its also,
they don't want to be responsible for driving up costs even further for the
average consumer. Isaac, very quickly here we are running
out of time, but I've got to go to this.

There's ISE task riding on something I
never thought you'd write on, which is Congress doing something about targeted
stable coin. Are we actually going to get regulation
to police this industry blow up? So the simple answer, Tom, is we're not
getting comprehensive reform anytime soon.
The most that Congress can be expected to do with with the crypto evidence of
the past few weeks is to focus on something they kind of understand, which
is stable coins, stable coins look a little bit like money market funds, a
little bit like deposit accounts. They get that.
And that's something they can legislate on the rest of it.
I think that we are years away from a comprehensive legislative solution.
So instead of breaking the buck on a money market fund, you break the big
dog. Is that how this works?
What is a stable coin? Yeah.
Well, all that the really pushing for NIKKEI being Congress in this instance
is stability and transparency, ensuring that you have a one to one.
You used them.

That's it.
Okay. That sounds like my Thanksgiving dinner
conversation to stability and transparency.
ISE equal to ASCII. Thank you so much.
Been way too long. It Beatty AIG stable coin.
Lisa. I get it.
Well, hold on a sec. There are basically is this concept like
tether, for example, that it's helped me.
It's pegged to the dollar. So there is a sense that there is a
direct relationship and there's some reserve.
So it's not that they're allowed. While you have seen it go below that,
which is speculation that there is not enough in terms of what's been put aside
to back it and a lot of people push back on that.
I don't know. These are big questions.
It's unclear what's going to happen. It's unclear with the followed as and
how unique some of these crypto assets are from one another.
I think we're on a date calendar here at our world headquarters.
Sonali Basak may darken the door with us here in this already.
Give us an update on stable coin.

I can't see this with a straight face.
Stable coin. The dough Sonali was leading on the doge
shots into that bag. Yeah, my kids were two.
They were really into. Are you serious?
Yeah. You let them do that with your
allowance? No, no.
They knew it was based on a game that they played and you could get dogecoin.
I mean that was part of the whole thing was why is it different than what we're
going to. Right.
I mean that sort of money that they have online in the metaverse that ISE says
having there is a pulse on a Tuesday, equities advanced futures up 4 5 6 have
become S&P futures up a good three tenths of a percent, up 14 points.
VIX comes at twenty two point two.

Stay with us.
Dana Petersen, chief economist, the Conference Board soon Bloomberg
Surveillance. Good morning. Bloomberg Surveillance Lisa Abramowicz
Tom Keene Jennifer on assignment this morning, your futures advance up 13, Dow
futures up 110. The VIX comes in for actually oils.
What's least in our falling eighty nine ten least that we may get a ninety
prenup. Brent crude, that's on a small item.
It's amazing how much it's just gone from one side to another.
It was below five dollars yesterday for the first time since September.
BLINKEN You'll miss the moving oil. We're going to go to gas in this
section. You're going to get to Dana Petersen
with the Conference Board's rules. She can join us.
But first with an update of the last 60 minutes, unstable coin, the unstable
Sonali Basak joins us now. What have you done the last hour and 15
minutes to give us a window into the life of bitcoin at Bloomberg?
Well, first of all, we reported that Genesis may seek bankruptcy if they
can't find the money they need.

They are still talking to folks across
Wall Street who are getting a very intimate view into what the balance
sheet looks like. So how do you finance the crypto
ecosystem? You're asking about stable coins.
There's a whole other thing happening where there's dozens of private equity
firms looking at ways to onboard into private equity funds.
Using stable coin, which I heard you guys talking earlier, is essentially
back one to one to the dollar or another Fiat.
Are they looking to save Genesis or not save?
But are they looking to assist Genesis, big smart private equity money, big
smart hedge funds and the major banks, are they out there?
It's like anything else in distress.

What do I get from my money to a?
I mean, they don't do a Warren Buffett convertible preferred, do they?
Nothing's over till it's over. That's the reality in this situation.
Bankruptcy is certainly a possibility here.
And if that does happen, there are plenty of people on the line that want
that to happen because then they recoup some money rather than lose it all.
So you see with RTX, for example, they had nothing and now they have a billion
dollars.

So what's the oxygen?
What's the oxygen between stable coins and things that were more established
and used for some sort of substitute fiat currency and bitcoin and some of
the other crypto assets that don't have the same kind of ballast?
On one end of the spectrum, I hear you guys talk about this a lot with this s
FTSE, the Securities and Exchange Commission, the war in the United States
that exists between the FTSE and tokenization, the FTSE token other token
organization, tokenization. So are these assets listed as securities
or not? That is the big fight between Coinbase
and the S.E.C. and many others.
Then you have state bitcoins which are essentially, as you say, one to one with
sir in more safe assets. You want to see the reserves here?
That's a big thing that people are really finally coming to in this
industry. We want to know what's backing every
single asset here. But it should trade one to one with the
dollar if it's a U.S..

What's your sense in terms of the next
development here of contagion? If you say you're midway through or
we're midway through, whatever is happening in terms of this meltdown?
What is the breadth of losses? The breadth of pain?
The breadth of potential opportunity, given the fact that so many institutions
are interested? We were talking about this yesterday on
radio for a bit when Mt.

Gox failed after 2014.
What you had was firms like Fortress come in and buy Bitcoin claims at
hundreds of dollars. And if that was the case and Bitcoin
flew past ten thousand dollars, you're still pretty rich.
And so is this an opportunity here to buy assets on the cheap?
Remember, some of these assets are purely cash.
Some of these are loans. Some of them are tokens, which to your
point here, without that regulatory clarity, people are concerned.
So part of this is they're trying to buy bitcoin because they believe it's 16000.
It's a value. There are certainly people who buy that.
There's certainly people who come on this show that are trading it on the
side that I'll take you back to what IBEX were this here until late tonight
with her story with Lydia Booth and our crypto team.
Look for crypto on Bloomberg Television as well.
Today we migrate to something more stable and that would be economics.
Dana Petersen joins us of Wesleyan and University of Wisconsin Economics at
Madison.

Thrilled that she could join us this
morning. Always see.
Came out with a big fancy report, Dana. Yours is more important.
How have you tweaked your view for next year on real GDP?
Well, we think that the economy is probably going to be flat next year, and
that incorporates a couple of quarters of recession.
Maybe the fourth quarter this year is a little bit negative.
But really most of the bright we think we'll be in the first quarter of next
year, minus one and a half percent.

And then second quarter, minus four
tenths. And then kind of a moderate increase in
the back half of next year. So all folding up into pretty much,
again, flat growth for the economy. How do you respond to what the
conference board has seen over the many decades of when inflation spikes up?
As a general rule, it's stochastic and comes down with quite a plunge with
great rapidity. Do you buy that?
That we could see that? Well, when I look at the components of
what's driving inflation right now, a lot of its rents.
Right. And then the other aspects are services,
non housing services. But when you look at rents, they're
really sticky and they tend to reflect what has already happened in the housing
market. And we know that rents are difficult to
come off because certainly people being pushed out of the new and existing home
sales market, they're going to go into the rental market.
So that means that we're probably going to have a period of time where rents are
still going to continue to push up inflation data.
How much do you buy this idea of a shallow recession?
Well, our own forecast suggests that, yes, the recession will be shallow, and
indeed, along with that, you might not have a really big hit to the labor
market.

A lot of that is a function of labor
shortages. So if you have companies hoarding
workers and still also hiring people, especially in those in-person services
and other types of jobs where you physically have to be at work, that's
going to support consumption. And so we may not have a really deep
recession, but that sort of is a bit of a bet on the fact that things will
deteriorate quickly enough for the Fed to pause for the lag effects to actually
kick in and show us that there is some sort of active deceleration in inflation
that gives the Fed confidence. Right.
I mean, without that, if there is momentum, how much does that really cast
this idea of a shallow recession aside? Well, I think the Fed is looking at the
data, right. So already the housing market tends to
react very quickly to interest rate hikes.
And we're also starting to see consumers dial back their expectations for how
many like durable goods they're going to purchase, especially things that need to
be financed.

So the Fed is already seeing some of
that evidence. But certainly there are lags and it's
not clear how long those lags are. But I would suggest that the Fed, you
know, still have some way to go in terms of raising interest rates, but that
those interest rate hikes are probably going to be smaller than what we've
seen. Dana, I'm fascinated and this is the
heritage of the Conference Board, which going back to 1947 has always aggregated
our economics.

Are we so polarized as a society of the
haves and have nots that you can't aggregate your macro analysis as the
conference board has done for decades? Well, I mean, the good news is that even
though we do have aggregates, we also look at individual income groups,
especially with our consumer confidence. What do you see that?
Well, the youngest and the oldest groups are, you know, a little bit more
disgruntled than the folks in the middle.
And certainly people who are at the lower end of the income spectrum are
being hit harder by inflation. So we can look at those details there.
I'm pleased, Lisa. Well, I'm actually wondering just under
how much this has to do with homeownership, right?
If the younger people are not able to get into homes and they're seeing their
rents increase and it's absolutely prohibitive to go and buy a home for the
first time because interest rates because mortgage rates are 7 percent,
how much is that this distinguishing feature right now between the haves and
the have nots? Well, it certainly is a distinguishing
feature.

But let's not forget, during the
pandemic, the biggest increase in homeownership was among the younger
groups. Right.
Gen. Gen.
While the millennials. Right.
Because many of them have children now, they have been able to get jobs and
they've accumulated some savings. And certainly there were injections of
cash for the fiscal stimulus. So that did help them, at least in the
pandemic. Those who were not in their early to buy
homes. The millennials have their kids play
investing in Doge off their couch. I mean, that's all it is.
They now want to go back to what we're going to see her on the inflation
guesstimate for December before the Fed meeting.
Is that a mystery to you or do you have some confidence in the conference board
pick for what inflation will be before December 14th?
Well, we think that inflation is going to continue to ease.
We probably reached a peak earlier this year and we're seeing food and energy
prices come off. Certainly in the last few months in
terms of their contributions. And that's really important in terms of
bringing down the aggregate level of inflation and also things like utilities
for for hope for people.

If all the people who live in homes, but
certainly we're concerned about, again, the rents and services prices continuing
to rise and place pressure on upward pressure on inflation.
Dana Peterson, thank you so much with the Conference Board.
Did she tell me I was disgruntled? I think that's what I heard.
Well, I was just distracted. I did not let my kids until, like, put
real money into Dogecoin. But they were really familiar with it
from roadblocks because I let them play a lot of video games, 16000.
Exactly. Up almost 400 dollars in Bitcoin.
I don't know what to make of it. It gets us here on radio.
Matt Miller and Paul Sweeney will chime in and then crypto on television this
afternoon, conflating crypto and bitcoin.
I have learned is perhaps a little better.
I got a lot of mail. It's important to sort of highlight how
much love we really do get. Coming up, we're going to talk about
that love and also the road ahead as we try to chart is something of a consensus
into 2023.

Barry Bannister of Stifel, Nicolaus.
Nadia Level of UBS Nubians. Brian NIKKEI all joining us on the 9:00
a.m. show.
Really, I'm curious how much people are looking to China as sort of the
peripheral deciding factor to your point earlier, Tom?
Not only with oil prices, but also global growth.
Joe Weisenthal up a dollar. Seventy three Brent crude.
Eighty 17 going back up near 90.
Again and again, that's the back and forth that we've seen on oil today.
Not much else going on yen with that move yesterday, 141 comes back a little
bit with a stronger yen. Lisa, I do want to go to the seven year
auction series that we made jokes about it, folks.
But actually, I find the Inbetweeners seven year auction actually a lot more
informative. Do we have auctions next week?
I think that that is going to be on hold.
I am pretty sure I will get that, too.

I think that this week is the auction
week, whereas one thing that I'm watching, Abercrombie and Fitch, they
did better than expected, which is surprising because you would think that
marginal income would not go to teenagers.
But I'm just thinking that it's really interesting that that sales came in
ahead of what the expectations were. It just highlights this point, this sort
of bifurcated picture of retailer to retailer over the years as a brand like
12, Abercrombie and Fitch is I think there's been like iteration of
Aeropostale. She's selling that exists.
Like, were you thinking of? I don't know.
What do I know about that world? I don't know.
Glossy a you're talking about with one where everything is too glossy.
I think there's potential here.

You know, fewer good lines out of VNS at
lines outside Sephora. There's the rub.
That's a talk about a racket, but really good stuff.
We will see. Keeping you up to date with news from
around the world with the first word. I'm Lisa Mateo.
U.S. prosecutors had begun an investigation
of FTSE months before the crypto exchange collapsed.
Bloomberg's learn that prosecutors in New York had started poking into RTX
massive exchange operations. It was part of a sweeping examination of
cryptocurrency platforms with U.S. and offshore arms.
The World Health Organization warns that millions of lives are at risk in Ukraine
this winter. The U.N.
agency cites damaged or destroyed infrastructure that has left 10 million
people without power. That's about one fourth of Ukraine's
population. Goldman Sachs is forecasting that the
S&P 500 index and its earnings will see little change next year.
The firm expects margins will contract due to upward cost pressures from wages,
commodities, goods and services. Goldman urged investors to own defensive
sectors with low interest rate risk like health care and consumer staples.
China reportedly is set to find Jack Ma's and group within one billion
dollars, according to Reuters.

That would pave the way for the end of a
regulatory overhaul of the fintech firm. Beijing's crackdown on the private
sector included the halt of aunts massive IPO in 2020.
And waiting times for Apple's most expensive iPhones are rising to what
analysts say are record levels. And that's happening just as the holiday
shopping season kicks off, according to Apples Web site.
U.S. customers who order today would get an
iPhone 14 pro delivered in New York on December 30th.
The delays threaten to hurt sales and derail a rally in Apple stock.
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. Going through an inflection point right
now, like we saw earlier this summer, we're starting to see that shorter term
signals and longer term signals are kind of at odds.
And so I think we just, like the rest of the market, are looking for a pivot to
the next big trend. Kevin Kaminsky there with Alpha Simplex,
a really great feedback from that yesterday on turtle trading on trend
following focus.

She's up 40 percent this year, down from
being up 55 percent or something like that.
Doing better than good on the trends this year, even though it's been a tough
number of weeks at any other time. I would pick up on that right away with
one big road holds very weird holds with roots or rather holds wealth management,
important books and the wisdom of decades on how not to lose money.
Of course, Masters in Business gets huge numbers for Bloomberg in the podcast
world. Very.
We are going to stop now and this is without question my most important
conversation of the week. You and I remember executive life is one
example that in a 7 percent money world, they guaranteed 11 percent or 12
percent.

There's always a yield hog out there
permeating crypto. And I go to crypto dot com, which is a
sponsor of the World Cup and Cutter. We can get a calculated reward up to 14
and a half percent per year on cryptos. We can get rewards, a stable coin reward
up to eight and a half percent. Barry, it's the same old shell game.
It's too good to be true. So I have a vivid recollection.
During the pre financial crisis, when the 10 year was yielding two and a half,
three percent and the securitized subprime mortgage sellers were saying
this is just as safe as riskless treasuries
only it's paying 200 to 300 basis points more.
And I have a very vivid recollection of saying to someone, either you are going
to win a Nobel Prize in economics or go to jail.
There's nothing in between. And that very quickly unraveled and
proved to be true in the in the great financial crisis.
It's amazing that it's not even 15 years later and when people felt only instead
of 300 basis points, hey, we're going to give you a thousand basis points, more
risk and reward, two sides of the same coin, 15 percent guaranteed in a zero
percent world.

It's not just stuff.
RTS percent, even percent. Right.
It's just outright it's outright absurd. The underlying on so much of that with
great homage to Mark Pittman, who was a fabulous reporter for Bloomberg with
that idiocy of 2007 and 8. Barry Ritholtz, the underlying there was
something called libel or maybe a spread libel.
Oh, yes. The underlying here, I would
respectfully suggest, is the price of bitcoin is this catastrophe we're seeing
hinged to the price of bitcoin or hinged to something else?
It's not the price of Bitcoin, it's the growth of Bitcoin in unit growth.
We know that the price growth that we can guarantee you 15 percent
asterisk.

Look in the footnote, as long as Bitcoin
is growing at 20 percent a year, which we know eventually comes to an end.
It always does. It always has.
It always will. So saying we're going to give you
something guaranteed. Right.
But it's dependent on a highly volatile asset that has a long history of
swinging up and down and going through these massive crypto winters from day
one. This was deeply flawed, but it appeals
to people's sense of magic money machine.
One of the magic things here, folks, is I don't manage money.
Ritholtz does withholds his losses and gains.
He has to justify every tick of the day. I take huge issue with media elites who
go to billionaires and gazillion years it got in on the floor and even at
16000, 16000. Exactly.
They're still in a profit mode. How do you perceive how much damage is
out there? How many people have been run over by
Bitcoin from 20000 and 16000, or dare I say, if it breaks even lower?
So I think of Bitcoin and some of the other crypto as a single large cap
stock.

When bitcoin was 3 trillion dollars,
what is it? An apple half to Amazon's?
It used to be very face and cost is now intrinsic to Facebook.
So it's not an asset class like fixed income or equities or real estate.
It's a pretty narrow group with a very, very deep narrative that had a lot of
very, very strong adherence. The problem is the narrative.
Have all broken down, right? Defy right, decentralized finance turns
out to be a fantasy cause when trouble comes, the first thing people say are
where are the regulators? Where's CAC?
ISE Su Keenan cut Gensler slack because of the uproar.
It's not audited. It's not this is not that.
And it's foreign. It's offshore, you know.
How do you regulate? The Securities Exchange Commission can
regulate securities.

How do you define bitcoin as a security?
It's an asset that trades. But is it a security under the legal
definition that gives them authority over it?
And an arguably the reason Gensler didn't hasn't wanted this in an ETF is
there's no control, there's no audits, there's no ability to guarantee the
safeguards of a trade. The way we can with every single share
of stock, pretty much every single bond that's out there.
It's a very, very different regulatory environment because you have control.
And the whole purpose of Bitcoin or other crypto currencies is
decentralized, user controlled, transparent.
No need for regulators. And that turned out to be a phantom.
Let's switch gears here for the last minute.
Do your clients want to own equities into 2023?
Are they scared stiff, petrified? So we have done a very good job on
educating our clients over the years not to think in terms of days, weeks,
months, quarters, but years and decades.

Our clients don't care about 2022 or
2023. They're much.
Even our bond clients, absolutely. They're much more concerned about 2030,
2035, 2040. Come on.
I'm not concerned about 2040. Ferro is, but yeah.
Okay. I've got the ostrich there.
And your piece. They're concerned about their
retirement, their generational wealth transfer, their philanthropy.
Things like that don't matter quarter to quarter, year to year.
They matter over the arc of time. Any giving year in the market can be
plus 20 percent, minus 20 percent or worse.
But there has never been a 20 year run in U.S.
history where equities have been negative and very, very few 15 year
runs. So we've had a huge decade from 2010 to
2020 and then 20 and 21 were massive after those sort of gains.
You look at this year this annus horribilis, and you have to just say
this is something that you have to accept occasionally some drawdowns.
The difference between equities and crypto is equities or a future stream of
income. It's a discounted cash flow, whereas
crypto is you're just hoping the price goes higher and that's very different.
People already coming in very rude.

Hold successful again.
Thank you so much, Mr. Business.
I can't say enough about it. He really downplays it.
It's like all sharks. I'm doing a podcast.
The Boaz Weinstein this weekend spoke very.
What's he say? What's his major thing?
You know, he talks about the Fed. He talks about credit.
He talks about not understanding where we are in the cycle and how possibly of
an era for traders. Right.
Is in the cost. There is a new risk free rate.
We'll talk to Reynolds about that next time this afternoon at 1 p.m.
after our Genesis story this morning, Bloomberg crypto Jonathan Levin will be
with Jeremy Blair as well. Futures up 20.
They advance Bloomberg Surveillance..

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