mark: welcome to the bloomberg audience. i'm mark crumpton. vladimir putin is vowing russia's annexation of four occupied regions in ukraine is a reversible. russian president also demanded ukraine in -- in the fighting and resume talks. >> recall the kyiv regime -- we call the kyiv regime to immediately stop the war.

war that started in 2014 comes back to negotiations. mark: in a ceremony at the kremlin today, "they will come our citizens forever." in response to president putin's move, the united states is censuring the head of a bank, as well as prominent russians and businesses. the sanctions announced today are among the most sweeping actions taken since putin's invasion of ukraine in february. justice ketanji brown jackson made her first appearance on the u.s. supreme court encz in a courtroom ceremony today, three days before the start of what is likely to be a divisive new high court term. chief justice john roberts, walked with jackson down the courtroom steps, wished her a

long and happy career. jackson was confirmed in april as the nation's first black female justice. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. >> i'm jon ogre. welcome to bloomberg markets. >> and i'm katie greifeld. let's get a check on the markets. this is remarkable. you have an s&p 500 that is pretty much unchanged. now it is just treading water. the nasdaq 100 always higher, but we will call that unchanged. all of this is coming in the

context of a bond rally. you can see 10-year down. it had been down a basis points earlier in the day. you add that together and you have a vix that is not doing too much, but it is above 30. that is its fifth straight day above 30. jon: it looks like the s&p 500 will have its third straight losing quarter, something we have not seen since 2008 in terms of individual stock movers. everyone has been talking about nike during the trading session, and the inventory glut weighing on the minds of investors, which shares down more than 11%. carnival's quarterly picture not inspiring investors in travel and leisure. other cruise operators are struggling today. same with that retail story. lululemon was dragged down by the nike story. they announced a settlement with peloton. we will continue to watch those highlights. macron, the stock is up, but it

is the same time the production outlook is raising concerns for the rest of the sector, and obviously the story of the broader economy. katie: definitely a head-scratch earlier today we caught up with deutsche bank chief global strategist, who said stocks will stay at an unprecedented fourth quarter rally. take a lesson. >> i would completely agree, given where we are basically in the cycle, there is really no case for equities based on either earnings or the valuation of those earnings. what i'm calling for is bear market rally number five, and it is likely to be bigger than number four. i would argue at this stage you have to be tactical, because we have this cloud of recession. jon: let's get some more perspective. joining us now, steve chiavarone at federated hermes. bear market number five sounds like a song. we are doing quite a song and

dance going into the fourth quarter. what is your current view on where the markets are headed? steve: i think it is certainly a possibility. you can kind of see the set up. maybe qt -- q3 earnings are not as bad as feared. at some point the fed is going to slow down from 75 basis point hikes. that is, in our view, probably a december thing. the elections. if you get good luck that may provide comfort, but it does not change our outlook that q4 -- a bounce in q4 would be a bear market rally. the session is at this point the base case. consumer is showing some signs of stress. housing is obviously moving in the wrong direction. the fed, even in light of what happened in europe, fed to speak is committed toward hawkish and us. think it would be an opportunity to sell, not add. katie: with that top-down message from the fed, really

sticking to their guns, where do you hide out in this market? where'd do you find safety? steve: we have been at max overweight cash for a good number of months. when i mean cash, i mean invested cash. money market strategies, very short end of the short space. we are itching for longer duration. at some point next year we would expect the yield curve, the federal funds rate versus the 10 year yield would invert as the growth continues to deteriorate. we think it is too early for that. we still have 10 year yields higher, today notwithstanding. we are still not confident the market has fully priced in where the terminal rate is going to go. in the equity side it is really about defensive dividend payers. i don't want to be loaded up on growth has risk on pes and earnings, cyclicals are sensitive in an environment where growth is slowing.

so dividend-pain companies, short ration in getting that dividend, and i a defensive model. we think that is the place to be. jon: i want to talk about market mechanics. katie used that soundbite on the deutsche bank view. bank of america making an argument that selling might be a bearish signal. there are a lot of people already in cash, as you spoke about between is there a need for others, institutional investors, to maybe save face and follow suit? steve: you have some options. which i thought would have been more of an impact today. you're going to have some tension rebalancing at the end of the quarter. the area where i see most potential for selling is actually in housing and real estate. you have had somewhere between 30% and 40% of the buyers have been institutional investors in the real estate market. at a 7% mortgage rate, all of a

sudden the cap rates don't look as good as they did. you could see a pullback of buyers there. also the attention the market moves have gotten in the last week have made this a mainstream news story. you are seeing retail not by the debt this time. that gives way that could be another source of demand for the market that dries up. jon: before we let you go, you mentioned you are itching to go long duration. what would you want to see before you finally took the leap there? steve: i would like to see core inflation stopped rising for six minutes, if we could. i think the market has been trying to figure out what the terminal fed funds rate is. once that is priced in and growth starts to deteriorate, you would expect that bonds would fall. that is going to follow core inflation. since the last meeting even though the fed took their terminal rate up to 6.4%, what have we seen? we have seen a

stronger-than-expected pce number today, we have seen larger than expected unemployment claims, then we saw higher than expected home sales during that is going in the wrong direction. while the futures market has priced in the terminal rate, what if the fed has not gotten it right yet? what if the terminal rate is not 4.6%, closer to 5%? it starts with core inflation, and right now the incoming data is going the wrong way. we are content to collect our free percent in cash, maybe 4% on the short end of the yield curve and not make that duration call yet. although we suspect it is coming at some point. katie: it is amazing that cash and treasury bonds are yielding about the same thing. we have to leave it there. steve chiavarone of federated hermes, is so much. we want to bring you some news. hollywood super agent area emmanuelle is trying to pave the way for a settlement between

elon musk and twitter over their disputed $44 billion takeover. here with more details is kurt wagner. he covers the company. is anyone expecting this? kurt: people have been expecting some discussion of settlement. having ari emanuel jumping in the middle of this is surprising. it is unclear to us, as you can tell by this story, for people that have read it, that we are not entirely sure, was the stone at's request? is twitter going to take this seriously? is this an agent who is used to doing things for clients and friends being helpful? the fact they're going to be discussions about settlement, i think that is inevitable as we approach this trial. there is too much money at stake, $44 billion here for there not to be at least this cautions about something like this. jon: i see an opportunity for

hbo to bring back "entourage," with a new storyline involving elon musk. there are ties between ari emanuel and elon musk. steve: -- kurt: this is not someone jumping into the mix without any connection. emmanuel reached onto a twitter board member, so there is obviously a relationship there as well. this is how these things tend to work. as we saw yesterday with the dump of elong's text messages, you see how many people reached out, many of them it appears to be unsolicited, with offers to invest, offers for advice, here is you should hire as ceo. when you get in the midst of a deal like this it stands there is a lot of people that come out of the woodwork wanting to be helpful, given how powerful he is. katie: kurt wagner, thank you so much. just what a story.

coming up, brazil's presidential election has been shrouded by an unprecedented level of tension and violence. we are going to dive into the issues with robert but from "the economist." this is bloomberg. ♪

katie: this is bloomberg markets. i'm katie greifeld with jon erlichman. brazilians will head to the polls this weekend. the new president faces daunting challenges, including surging food and fuel prices. the state of the amazon rain forest. in lingering questions over the health of latin america's largest democracy. joining us now is robert wood, the principal economist for latin america and the caribbean at "the economist." great to have you with us. we had a heated debate on thursday night. how does that set us up heading into sunday's vote? robert: absolutely. and it started to get quite personal. between the president, bolsonaro, and lula. we do see this as a two-horse race, but there were other

presidential candidates in the televised debate. really what you are seeing and what you have seen in brazil is a little bit like what you have had in the u.s. over the years, and growing polarization on the left and right. and really it has just been building and building. you know, we are going to see voters go to the polls on sunday. we think it is going to be a win for the leftist, who was, of course, president, started his term 20 years ago. and on the right of course, bolsonaro. the polls are showing quite a large margin, but you do have questions over the reliability of polls at the best of times. and we are really going to have to see. the big question is going to be, can lula convince enough voters

from the other candidates -- there are some other candidates in this race, in the first round , more centrist candidates -- whether lula can convince them to vote tactically for him. a lot of those voters for the more centrist candidates would probably vote for him in a second round runoff, which would take place four weeks after. to get him to win in the first round outright would potentially relieve tensions and obviate the need for a second round to start off with. jon: so it could be a month-long affair. we will be watching. and we understand right now, robert, that the president is going to be addressing the media , a possible hurricane update on the ongoing federal response efforts tied to ian. we want to go live to the white house now to get a quick update on that.

pres. biden: i've directed that every possible action be taken to save lives and get help to survivors, because every single minute counts. it is not just a crisis for florida, it is an american crisis. we are all in this together. i have spoken to governor desantis on multiple occasions, as well as mayors and county officials, both republican and democrat, from the places most affected. i spoke with governor mcmaster of south carolina this morning as well. last night i received a request for an emergency declaration from governor murphy master, which i approved right away, just as i did for florida. this allows for immediate federal funding for the state to shelter people and provide other essential support. by approving it ahead of the storm's landfall in south carolina, we can get supplies and provide shelter if necessary. i messaged -- message to the people of south carolina is simple. please listen to all of the warnings from local officials

and follow their instructions. as you all know, the situation in florida is far more devastating. we are just beginning to see the scale of that destruction. this could rank among the worst in the nation's history. you have all seen on television, homes and property wiped out. it is going to take months -- years -- to rebuild. our hearts go out to all of those folks whose lives have been devastated by this storm. america's heart is literally breaking. watching people watch it on television. i want the people of florida to know we see what you are going through and we are with you. we are going to do everything we can for you. i say to the rest of americans, imagine yourself in that situation. water rising, walls lapsing, streets turning into rivers. charter boats on top of automobiles. watching the home and community

you worked so hard to establish literally washed away. and folks across the country are waiting to hear from parents and grandparents who live in florida , just hoping and praying they are ok. my direction, we pre-deployed the largest team of search-and-rescue experts in recent history, because so many rescuers need to take place now and be there in place now in the water, now. the united states coast guard has been deployed as well. six aircraft, 18 rescue boats, 16 rescue helicopters which were in the air yesterday, and are at it again yesterday -- at it again today. working with our defense department, state and local first responders, they have rescued 117 people on the southwest florida coast so far. just this morning i spoke with lieutenant commander of the coast guard, christopher hooper,

who is leading the cervix -- the search-and-rescue operation there. i emphasize this is one fight. everyone working together -- coast guard, defense department, customs and border patrol, florida fish and wildlife, local officials are doing everything they can to rescue people. they said, mr. president, we will not rest at night until we know they are safe and sound. they talked about how they rescued a 94-year-old woman who had the courage to be hoisted up onto a helicopter, the wind blowing, as well as a one-month-old baby. not at the same time, but a one-month-old baby as well. and so much in between. we also spoke to aviation survival second-class tech mission zach lash, who described how difficult a decision it is for people to leave everything and come to safety. i told him how proud of him i

was and thank him for all of the work he and his co-skis -- his coasties are doing. i'm grateful for the state and federal folks working hard. they are working as one team, from the governor to federal folks. my administration has approved four more counties in florida for individual disaster assistance, in addition to the nine we announced yesterday. what that means is, the federal government is covering every cost, 100% of the cost, to clear the massive debris left in the wake of the hurricane in these counties. it all needs to be cleared out for communities to begin the hard work of trying to get back on their feet. that declaration also means we will cover all of the extra costs for emergency personnel who are saving lives and providing for public safety. because phone lines and internet might go out, fema is

registering people directly to be able to get help. they are setting up disaster recovery centers and shelters all across the state so we can get survivors registered for the help they need as quickly as they can possibly get it. if you cannot get to a center, we are sending out mobile teams to meet people where they are. getting the power back on is also critical. i want to recognize this is impressive. 44,000 utility workers and restoration personnel from 33 states and the district of columbia were working around-the-clock to help get power back on for millions of floridians who have lost it. i have ordered more than 400 personnel from the army corps of engineers to florida, with more than 250 generators to enables -- enable power supplies for hospitals and shelters. last night my homeland security

advisor coordinated with owners and operators of the grid so nothing will stand in the way of getting the power back on. yesterday i was briefed by the leaders of fema, the coast guard, the army corps of engineers, and other organizations that are at the tip of this beer right now. i directed them to provide me with information on warehousing and health facilities, and power and sell service, and other infrastructure has been most effective, so we can per ties and focus efforts, and expand them with the help is needed most. in addition to what we are doing for florida and south carolina, we main focused on recovery efforts in puerto rico as well. i will say it as long as we are going to stay with it and stay at it as long as it takes. i spent a lot of time with people in the aftermath of disasters. i have immense gratitude to the first responders and emergency crews, who always show up, no matter what.

times like these, how americans come together. they put aside politics, put aside division. we come together to help each other. because we know if it were us who just lost our home or a loved one, we hope people would show up to help us as well. red cross volunteers, volunteers as far away as the dakotas, and utility workers from minnesota and nebraska and vermont have traveled to florida in the past few days to do whatever they can. that is america. that is who we are. we are going to keep doing everything we can, and we will do it as the united states of america. god bless all of you who are hurting, and god protect the troops and all of those brave souls risking their lives. i want to say one more thing. i want to also speak to mr. pruden's remarks this morning. you know, america and its allies are not going to be intimidated.

we are not going to be intimidated by putin and his reckless words and threats. jon: the president now talking about vladimir putin, but also sharing an update on the federal response efforts to hurricane ian. katie: you can follow all of this on the bloomberg. we have to leave it there. for jon erlichman, i'm katie greifeld. this is bloomberg. ♪

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>> keep you up-to-date with news from around the world. here is the first word. i am mark crumpton in is a hurricane that is barreling toward south carolina. the storm is threatening to carve a new path of destruction. when it roars ashore near the city of charleston later today. meantime, florida continues to reel under the storm's impact. nearly 2 million homes and businesses remain without power and lee county, the hardest hit, has no running water. damage estimates