>> pandemics change behavior. consumers might be worried. >> shortages on the labor side and supply-side. >> interest rate, the whole bond market controlled by the fed. >> we should be reflecting. inflation is above 3% and let's re-anchor it then cash it there. -- we anchor it there.

tom: good morning, everyone. our studios in new york and washington, the meeting of the imf and world rank but meetings of goldman sacks. -- goldman sachs. the pulse of the american consumer retail sales. jonathan: story we have been obsessed with. upside risk, downside risk to growth. we had upside risk on cpi, 8:30 eastern when we get a downside surprise on retail sales. it is exactly what was predicted into the week. tom: in moments, david blanchflower will join us. here it -- he is fiery about consumer slowdown. oil at 85. jonathan: comp are advancing.

commodities rallying -- copper is advancing. commodities rallying. closing out the week and poised for another week of gains. tom: there is confusion in the air. reset leads encyclopedicly. what is the narrative -- lisa reads encyclopedically. lisa: -- what is the narrative? lisa: how much do we see consumers starting to show more discretion with what they want to buy, even though they are supposedly flush with cash. that does not bode well for the momentum of growth. i am not saying the end is near but it could potentially slow

the momentum. jonathan: what did they do time to hundred years ago? lisa: i wouldn't know. jonathan: is that what they said, tom? tom: save us with the data check. jonathan: we snap back quickly, up .4%. retail sales, 27 minutes away. tom: exceptionally important research by the gentleman from dartmouth. david blanchflower joins us now. we are thrilled he could join us. i will digress. i don't john wants to -- jon wants to jump in.

they got it right and nailed it on the minimum wage. now we have big tap bidding up labor to $17 $18 an hour across america did what is the effect of big tech on minimum wage? david: living in new hampshire, my kids used to go and work at the local cinema, and they would work for 10 bucks an hour. the northern part of the united states, the minimum wage was fine but we are seeing the labor market adjusting to a shop and firms having to pay their the question you are thinking about is, does that continue in the future? just because of he wants up rise in wages doesn't mean it is going forward. at 3% bonus announced for staff but that lives prices next year and does nothing next year. we are emerging from a

bottleneck. i don't see anything actually that suggests the prices in 18 months will continue to rise. it is a wants of jump with economy that is adjusting to pay for shortages but a rise today doesn't mean arise for tomorrow -- doesn't mean a rise for tomorrow. jonathan: looking at 4% growth next year, what is the recession call about? david: dave wilson put out a chart yesterday, if you look at what predicts all six of the last six recessions, it is actually consumer sentiment, consumer expectations. and if you look at the paper i have coming out, that turns around april or may. it looks identical to what happened in 2007. these data are precisely what explains six of the last six recessions and nothing else does and there are no false calls.

the question is, what is going on. question is it is about the spread of covid p we sell this amongst women who are fearful -- covid. we saw this amongst women who are fearful to go back to work. we saw this in the 18 to 25-year-olds and 18 to 45-year-olds. it is women being fearful. it would not be surprising to see false and retail trade. all the other data is completely messed up. this data is the best you have and it now is flashing red. lisa: we had the participation rate, labor market, and the issue of the importance of consumer sentiment surveys which have been called into question by some people. others would argue that if you look at other surveys it shows a

different picture than the university of michigan survey. how would you respond? danny: they can make stuff up, but the question is what does the data show? the metrics show that these things part predicted, you not like it but it is factually what it does. we have data since 2007 on the eight biggest states, and the expectations predict behavior 12 months ahead. don't look at the data, run it yourself. the data shows you can predict exactly this data, but the question is is this the one that gets it wrong? i think the concern is the other data looks crazy.

for every recession i have seen in the world, the unemployment rate goes up and now it is slipping up. it is -- sloping up. if you asked me which data i believe it is these data. lisa: underlying this is that you don't think the labor market is as tight as other people think. that is the presumption that seems to be baked in. can you explain this at a time when you see job openings and wage hikes to entice people back into the labor force? danny: the best analogy is that this is like a hurricane hitting the coast of florida. presuming what happens when that occurs is the prices plummets and the economy adjusts. go back to april 2020, the unemployment rate went from 3.5%

to 20%, and wage growth went from 3% to 8%. unemployment rises like crazy. the bottom part of the labor market drops out. there are adjustment costs coming and people are withdrawing from particular kinds of work. in terms of having to pay people because they don't want to work in consumer facing places. and that was the surveys saying if they were forced to go back to work they will look for another job or quit so we are seeing people retirement. this is an economy by a shock and people are fearful. fear rose dramatically in may of this year and is particularly driven by women being fearful they will go to work and bring something home to their families. that is consistent with the data, whether this is predictive, we will see. but to be mindful the people

have no mechanism to predict the last six and these data predict the six of the last six. so it is mindful to them to come up with, how do you predict recession with how you are talking. jonathan: always good to catch up. before you go, we were all thinking of the late, great alan krueger and i know you were too. what are your thoughts on that? danny: i am so pleased they got the prize. but if you read the thing from the nobel prize, most of this was with alan. i was pleased but it was a sad day. it was a great day for the week he did. he was issue in for the nobel. he should have been there on the stage. his work was brilliant and

wonderful. we miss him hugely. jonathan: we all miss him this week. 11 thinking about the work of alan krueger and others -- you have been thinking about the work of alan krueger and others that it had to change and make it be something we can work with. danny: eventually you have to stop and start to award the people. in essence, it probably should have come first to kruger. but i think we will see and you could look back and say what did peace -- that what did these people find? i think increasingly what we will see a prize given to people who found stuff. and they found stuff about the

minimum wage. they worked on stuff about immigration and the rate of return to schooling. i am impressed, this guy it a great guy and we missed him in the academic community. jonathan: hear, hear. from new york city, this is bloomberg. ♪ leigh-ann: i'm leigh-ann gerrans with bloomberg's "first word news." a coalition deal to form a new government. agreeing on the basic principles of a ruling alliance. olaf scholz will precede angela

merkel. a global energy crunch, oil futures hit $85 a barrel for the first time in three years. futures jumping as natural gas prices hit records. raising revenue for oil producers, risking slowing down economies emerging from the pandemic driven slump. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm leigh-ann gerrans. this is bloomberg. ♪

>> all of our corrections have

been really caused by the fed over tightening. they are telegraphing they are going to keep the market high and use the labor market for transitory inflation. i think they may be right but we have to push it way into 22 at the earliest. jonathan: from new york city this morning, good morning. equity positive .4% on the s&p. yield higher by three basis points on tens. cpi in america, at some point we should have earnings from goldman sachs as well. in germany, the spd, olaf scholz said to be the next chancellor of germany. they got the minimum wage they

wanted and these are the coalition talks wrapping up. the fdep, the more conservative part, no tax increases and preserving the debt break. the fdep, the coalition coming together. things seem to be wrapping up in germany. elsewhere, news out of the u.k. from the telegraph, we were told by the administration that travel would reopen and the start of november could we never got a date. the telegraph is set to lift the travel ban for u.k. on november 8, the telegraph reporting. net news coming in the last 20 minutes. tom: that means we will miss the conference. jonathan: we missed that. it ends today. tom: let me ask lisa.

let us move on with julian lee. this is a guy with precise, wonderful acuity on oil. the london school of economics is thrilled -- he is from the london school of economics and bloomberg is thrilled to have him. a rate of change of oil, the cost of labor, what does it do to production now and into the next 18 months? julian: i think production now and the next 18 months will be very much driven by russia, and the other countries of the opec-plus group and what they decide to do. they are the ones who have the spare capacity that they can come online very quickly. they other ones who make the

decision about how quickly. everything they have been saying for the last month or so suggests that they are not at the moment intending to open more quickly than they had planned to do back in the middle of july. that is where we are seeing costs of production starting to creep up, labor costs going up. energy and grilling -- drilling going up. everybody is getting more for the barrels they are producing. perhaps the non-opec plus production past the u.s. pale -- u.s. shale, the publicly traded ones, are taking a cautious approach to boosting output. lisa: how important is the

oklahoma inventories fell to the lowest level since 2018, plummeting yesterday's data? julian: that clearly puts pressure initially, particularly on the wti price, clearly crude being drawn out to feed at least in part the recovery in refining still going on post hurricane. i think that it's not the most important thing we are seeing at the moment. what is really driving this outward movement in prices we have seen has been the recovery in demand, the slower pace of recovery and supply, and as we move into the northern hemisphere winter, this growing

expectation that we are going to get a one-off boost demand from fuel switching from very expensive natural gas and coal into liquid fuels among those industries that can make that transition. lisa: what the price point to get opec's attention? do we get a hundred dollars a barrel and then opec says we will open the taps? julian: if we get to $100 a barrel they will make that call, but i don't think this is particularly a price driven mindset. i think they are looking ahead to 2022. there forecast and balance markets the next year, i think they are very concerned. they are looking beyond this

winter. one of the things to bear in mind is if they make a decision to increase to more than four heard thousand dollars they planned -- to more than $400,000 they planned won't take until the beginning of december and any oil produced predominantly will come from russia and the middle east. that will take another six weeks from then to get to refineries in either the united states or china, which are both the same sailing distance away. that means that oil isn't going to arrive until january and by january, refiners are going to be starting to look towards the end of winter and sort of the maintenance season they as they look to spring. you could argue that opec has already left it too late to do

anything very significant. jonathan: interesting. julian lee, a bloomberg, a similar feeling tomorrow around -- yesterday around the administration. maybe everybody thinks we are leaving late going into the winter. tom: i think we are in a pandemic and asking too much of the institution. we continue to forget this is a generational natural disaster. jonathan: crude up .9%, 81.89. u.s. retail sales five minutes away. tom: fascinating to me. they are all different. it is not so much the retail banking operation and how they are doing. it is about the compare and contrast of goldman sachs with the traditional morgan stanley and, frankly, the others as

well. jonathan: is at 8:30. sonali bostick we'll be breaking it down. -- will be breaking it down. tom: mike mckee does goldman sachs and sonali does morgan stanley. this is bloomberg. ♪

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jonathan: from new york city, from our audience worldwide, on radio and tv this is "bloomberg surveillance." . surveillance." goldman sachs, this is what the numbers look like, 13.6 billion for revenue, the estimate 11.6. equity sales and trading, up to .2 one million per the number is 3.1 talking about one billion for that particular unit. revenue across the business, 5.6 one billion, the estimate for $.14 billion. investment banking revenue, 3.5 5 billion. i know you don't -- 3.5 5

billion 5 billion. the bar higher than what we saw earlier in the week. tom: is this the support of the government directly benefiting the financial sector? that's how certain people in america would -- jonathan: they still have to execute. equity sales and trading fantastic at goldman sachs. upside surprise on retail sales. let's talk about these numbers. sonali basak we have to start -- sonali: you are having goldman sachs come in with $3 billion in equity trading revenue, above

all of the peers this quarter alone. investment making, they shine, also a strong beat. they also beat in the consumer business bringing in $2 billion worth of revenue. across the line, they have beat expectations. to tom's point on the return on equity, 23% just about compared with less than half of that percentage to years ago. this is shaping into not only a different bank under david solomon but turning into a firm that says they will compete in the businesses they own and that they are new at. lisa: tom said it is goldman sachs versus morgan stanley, how does that stand out? sonali: they are showing that they are going to compete with

their rivals. we knew that the prime broker share was consolidating, but this is showing they are ready to pick up clients everywhere. tom: i remember in the heart of the pandemic you had the courage to get into a plane and talk with him. he said they need to enhance the scale paired what will they enhance in 2002? sonali: they are still trading so much more cheaply than morgan stanley. we have seen smaller acquisitions, most recently green sky, adding another lynn -- loan origination, thousands of people in atlanta. they are growing and adding in wealth management where it morgan stanley compete hard. they are looking to gain scale.

how do they push in a bigger way and command? jonathan: goldman up in the premarket by 1.6%. an upside surprise. michael mckee, retail sales looking good. michael: i will see her headline and raise her a little bit. retail sales of .7%, we were expecting a .2% decline for retail sales in september. august came in more disappointing .7% gain. it has been revised up 2.9%. -- up to .9%. a forecast was for a .5% gain and rose 2.6% in august. particularly good news on retail sales so far.

motor vehicles, oddly go up 7.8% . this is a weird number because, actually it goes up half percent, but we were expecting a decline because sales fell to 12 million in the month. other big news, electrics and appliance, health care and personal stores. gasoline stations up 1.8%. we are seeing gasoline prices rise. food surfaces and drinking places, the only service category and retail sales and also highly discretionary, of .3% on the month. people cut back but are still going out and spending some money. the other numbers that came in, retail came in and it

is characterized as strong. one of the reasons it fell was a longer delivery time index. factories in new york having trouble delivering. import prices up .4% after a .3% decline last month. if you take out oil you only get 1/10 of a percent. tom: michael mckee will digest this and be with us. thank you. and sonali basak as well on the success of goldman sachs. to summarize, we finished strong. jennifer lee, senior economist, we are thrilled she can join us. is the consumer with the glasses half -- the glass is half full or empty?

jennifer: good morning, everyone. very strong strength across the board. results with the auto sector and stronger auto sales. i will take it with a grain of salt. a little bit of relief. more chips into the cars and off of the lots. this is what i always look at, is the dining out. that speaks volumes about where the consumer is at and they are confident and comfortable enough to go out and have lunch or a glass of wine on the patio. that is good news. tom: how is the ambiguity if the inflation and rates go up and a better economy, there is a group this is ambiguity will tilt towards what was me and -- woe is me and others saying it's

not. which is it? jennifer: we don't want to see the fed or any central bank staying on this emergency accommodative mode forever. that is obviously not good news. finally going to do it. a big announcement. the fact that they are doing it speaks volumes. we are finally moving away from this emergency measure and get some semblance of normalcy. lisa: can you respond to pointing to a very different story than other indicators and we are seeing ongoing strength.

can you pair the differences as you wait for that 10:00 a.m. eastern survey? jennifer: the surveys are interesting to look at but it depends on the timing of the survey, when you are catching, i hate to say it, but your mood can change from day to day. it is the overall trend. university of michigan, we will wait until 10:00 but the numbers have been low, but they are off the bottom which is a good sign. i think there is a mix between what we are seeing for the board member and the university of michigan. i think it all was back to the fundamentals, whether or not there is a job out there for the average american. still almost 11 million jobs available. wages are rising.

yes, swayed by the day-to-day stories about the delta variant's or with -- delta variant or with all the supply issues, the average consumer knowing they have a strong net worth speaks volumes. jonathan: jennifer lee, thank you for joining us. a positive tone with a better than expected retail sales hoping to lift yields to the curve. tens of three basis points to 1.54. those numbers worth repeating. tom: you wonder how it translates over. i get the worry. john deere is not goldman sachs, but i am humbled by how i have been wrong, corporations adapt.

each and every case, it is underestimated. jonathan: a final word on that, this bank executing. sonali: more and equity trading and advisory and equity underwriting and every one of its peers and did it more efficiently with a 40% efficiency. and higher costs. jonathan: happy people at goldman. it is christmas eve maybe. sonali basak, thank you very much. kate more of blackrock, -- kate moore. this is bloomberg. ♪

leigh-ann: i'm leigh-ann gerrans with bloomberg's "first word news." asia-pacific steps opening to international travel. a 14 day quarantine for travelers starting next month. others have said they are doing away with restrictions or easing rules on entry. in the u.k., as many as 43,000 people may have been wrongly told their coronavirus test was negative. the government said it was because of errors in a private laboratory. operations there have been suspended. amazon has up peeled and $8 million fine over data protection rules in the european union -- has appealed an $8 million fine over data protection rules in the european union. they denied there was a data breach.

the largest in london offering money to recruit drivers. they are facing a shortage of drivers and trying to hire 1000 drivers after demand jumped in september. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm leigh-ann gerrans. this is bloomberg. ♪

tom: the bloomberg surveillance. a one hour conversation on goldman sachs. christian bolu joins us with an important look at goldman sachs. i am going to go retail on you. lisa has other thoughts. would you say it is grossly underestimated? i want to talk to you about clay christiansen and the classic innovator's dilemma and all of the major banks scared stiff. how solid and goldman sachs doing, challenging the innovators dilemma in doing ne-yo bank --neo banks.

christian: physical footprints or technology, creating something interesting. it is not perfect. if you have a robust payment feature, but i think the point is it is a good job and has been under looked. when you think about the partnerships they have acquired, it speaks to the progress of the franchise. tom: will the old banks build their neo banks like goldman or will they acquire them? christian: i think acquisitions are excessive. it will be diluted to acquire a new bank.

lisa: more broadly, why do think the goldman sachs transformation has been under by other analysts? christian: the part of it is we are in a very robust capitalist market. a lot of it is driven by traditional goldman, strong m&a, strong equities traded, things traditional. i think, the broader transformation, markets important, and asset manager,

not easy. a lot of good stuff going on underneath but the reality is result is dominated by an awesome estimate. lisa: if you look at asset management, it is the investment banking, training that came in $1.5 billion in revenue above the expectation. a blowout quarter. is this the cycle peak or is this goldman sachs gaining share from the european peers? christian: i won't exactly call it a peak. fixed income starting to slow down, m&a is still growing. we are very strong here for 2020 and 2021 will be the best years

for investment banking since 2009. we know what happened after 2009. i think we are close to something that feels near a peak. it gained market share, fixed income, shares almost doubled, 7% in 2017 to 12%. today in equities, 100 basis points since 2017 as well. you have market share for goldman. it is a combination of a strong market in market share gains. lisa: we compare open sex to morgan stanley, who is winning? christian: when you think about strategic evolution, it is clear morgan stanley is ahead.

it is basically an asset manager , growth weights comparable to any in the industry, almost 10%, so they really -- they are there. they have figured out strategy. i think goldman is more of a process. if you would ask me in terms of a strategic transformation timeline, morgan stanley is clearly ahead. tom: is there an urge to merge? i mentioned scale earlier. is there a frenzy in the interest rate environment or the debt acquiring environment to do transactions, to do combinations to generate scale? christian: i think so.

figure out strategy and take advantage of very accommodating markets. fast-forward asset manager and it has done wonders. multiple extension on buying companies for growth. i certainly believe that cover m&a in this environment where innovation is happening quickly. m&a makes a lot of sense. tom: christian bolu, thank you for the brief. american wall street, dow futures over 35,000. lisa: we are seeing that tilt

upward. you wonder at what point the narrative has shifted to something fundamental. today, retail sales beat. there is inflation right now, people are still out there buying a lot. that is giving people a lot of bets that perhaps the fed will hike sooner rather than later. tom: adam posen was on fire about a middle ground, not the gloom of high inflation, the idea of disinflation, but finding a new center a tendency that can be comfortable. lisa: he highlighted the differential between respected economists, that will the fed's biggest risk be behind the curve and having to hike quickly or are they potentially just needing to let things go the way they are to get to a new run rate that is more sustainable for this economy. tom: the worries of the bank of

japan failure of decades ago. thank you to all of our staff here in washington for getting me to the studio on time. rumor has it i will be with jonathan ferro and lisa on monday. lisa: we'll see. tom: stay with us, this is bloomberg. ♪

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jonathan: from new york city,

good morning. the tone of this market is looking good. the countdown to the open starts right now. >> everything you need to get ready for the start of u.s. trading, this is bloomberg: deal been with jonathan ferro -- bloomberg: the open with jonathan ferro. ♪ jonathan: from new york we begin with a big issue -- wall street heavyweights pushing back. >> unless you embrace the analytically meaningless phrase of " transitory." >> worker shortages. >> this inflation round is not transitory. >>