>> the issue here is does the fed get the kind of controlled moderation in labor markets and growth? >> we are starting to see. >> everybody has been gouging prices. >> this is bloomberg surveillance with tom, jonathan ferro and lisa abramowicz. jonathan: live from new york city for our audience worldwide, good morning. this is bloomberg surveillance,

live on tv and radio along with tom keene and lisa abramowicz, i am jonathan ferro. tom: we see the dow up 1200 points. but i've got to go around the globe from sydney to part this morning, how do you link in this shock from the bank? lisa: basically saying that we are closer to peak yield. does that count as a blink? tom: they blinked, but not in sydney. lisa: does this symbolize that central bankers around the world are heading the threshold for how much they can tighten policy in the face of financial stability risks, even after all of that fed speak that i ignored where they basically come out and say we are not going to blink and we have considerably more to go. jonathan: let's get to the

numbers and talk about where we are now. the two-year was -- the 10 year was a little north of 4% last wednesday. you've got this broader story where we have seen peak bond yields. tom: we are dated in the fourth quarter. we are also data-dependent up to friday. jonathan: is that bullish if we see peak bond yields in our future with weak earnings just around the corner? lisa: many people say no which is the reason why people are watching this story play out again. the eminent pivot, this has to happen from the fed, from the ecb. take a look at eastern european bond yields.

people are saying you guys are ridiculous and this is not what we are going to do. jonathan: six days of sterling strength. tom: you always want to go to sterling. jonathan: 1:14 this morning. -- 1.14 this morning. lisa: you want to talk about sterling as much as anybody else. tom: that is true and john is right about the move. honestly i've never seen anything like what we are seeing. jonathan: it is unreal. tom: i'm on my phone and i say you have to be kidding me. jonathan: it is now a conversation about moving the budget forward. that would be the logical decision, to allow the bank of england to come up with an accurate forecast. lisa: the problem is how did they bungle this so bad?

why did they rush this out if they knew there was going to be pushback? it really reduces confidence in the administration. jonathan: we have seen capitulation across the board haven't we? that is no longer your price targets. tom: i would look at swiss franc . what is the capital of australia, perth? jonathan: i want to say it is camera -- tom: it is all the same, it is just about the data. jonathan: australians will love us this morning for sure. a big day of gains yesterday for

the s&p, this morning up by 1.6 percent, positive 59 points. last week on a 10 year, a little north of 4%. we have come all the way back down. tom: a lower inflation adjusted yield. you do that with bloomberg financial conditions index, it is restricted. jonathan: five straight days of dollar weakness. lisa: right now we are also looking at fed speak. we didn't do it yesterday but today it is going to matter quite a bit. lori logan and john williams at 9:00. i want to point out, yesterday they basically said we are not going to pivot. we will see whether he reiterates that today.

mary daly at 1:00 p.m. yesterday we saw the biggest one-day decline in 10 year treasury real yield since march of 2020. it was a complete reset because people are not buying. officials say they still need to raise rates considerably. once the data -- watch the data, looking for support of loosening up the labor market which we have not really seen. the last time i got job opening data, we actually son increase, and a decrease. there are questions about whether the labor market has fundamentally changed and employers are going to hold onto their workers for longer.

-- ahead of a european central bank meeting over the next few days, how they address this belief in a pivot. they can come out and say we still have a way to go and we will keep raising rates and by the way, we do believe a recession is more likely. part of what is giving people confidence in this pivot story because it is recognizing reality and they are not weighing the political ramifications of hiking more dramatically. jonathan: the only group not forecasting a recession in the euro zone. pre-much everybody is forecasting exactly that, recession in europe. tom: i do want to go back to europe as the focal point, guard all the institutions.

the emotion of this. jonathan: let's get into it with our guest. this is a key ingredient for any equity recovery. before we get to talking about whether this is positive or not the risk assets, can you tell me why you think bond yields -- this time? >> it is difficult to see real yields continuing to hedge the room. recession risks are spiking. i think the disconnect is there and i think given where real and nominal yields got to, i think that risk is very interesting. lisa: given that, if they're going to retrace some very hawkish statements, what does that mean in terms of -- the

careful what you wish for? if the fed does retreat, that means things are pretty bad. >> i think it is too early to comment. very similar to where we were before during the june rally. i think bond yields have overshot and i think to your port on earnings, we are going into an earnings season where yet again, expectations are very negative and i think this is an attractive set up. tom: let's go to your huge track record on cycles of getting the market right. i want to go to revenue guesses and is it a slowing economy, everybody's going to try and guess -- given all the economic mumbo-jumbo, what is the --?

>> i think it is fear versus reality. markets are down 25% and earnings expectations have fallen quite a lot and not all recessions are created equal. rented we are almost certainly going into a recession outside of asia. this is not 2007 or 2020. this is much more a central bank driven recession and that is where we are and that is pretty investable. i think the bigger risk is being out, not in. lisa: how much are you buying with your conviction? are you loading up the truck? >> i think this is a u-shaped

recovery, and not a v. we don't need the top of the fed cycle which needs a little bit of visibility that may be coming in the next four or five months and i think all of these indicators are telling that but i am comfortable enough saying that i am fully invested and tilted more toward defensive, risks are pretty high but the more risk goes on, i think you have a risk budget into that. jonathan: decidedly bullish on this equity market. going in this direction, one point 65% on the s&p. lisa: we have to say defiantly bullish because it is so rare at a time when a lot of people are saying -- tom: i want to qualify your

opening about the markets we are seeing. the total return index. it is not 1.56%. jonathan: we will take that after the brutal year we have had so far. brutal is my favorite word. i love brutal. brutal for bears, maybe as a one-off. futures up by 1.6%. this is bloomberg. ♪ ritika: keeping you up-to-date with news from around the world with the first word, i am -- in ukraine, president zelenskyy liberating -- from russian occupation is now the trend. his forces have pressed further eastward and made gains in the south. the biden administration will announce another package of u.s. weapons within days. -- will try and reassure

financial markets about his economic strategy. now bloomberg has learned he will announce this sooner. he has been under pressure since the attack -- since the tax cuts he announced. tensions are increasing over kim jong-un's nuclear weapons program. the first time in five years, north korea fired a missile that flew over japan. that prompted a rare public safety warning from tokyo. the missile splashed down in the pacific. the former meta platform chief financial officer is donating $3 million to the aclu for their fight for abortion rights. they say this money will give them a running start, spurred by the supreme court's overturning of roe v. wade.

global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg. ♪

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>> that is the kind of

government we are. we respond when there are concerns and we act quickly. jonathan: the british prime minister earlier today. from new york city, good morning. elsewhere, futures positive. a lift again in this market with yields taking a dive lower. tom: very exciting in the report. going to the jobs report on friday, i saw the queen movie over the weekend and i wonder if this conservative party adored church hill. i wonder if we will redo that here.

jonathan: they are clearly changing course after the pressure of the last few weeks. lizzie in the u.k. there is a conversation about the budget actually taking place before the next bank of england decision. what can you tell us about that? >> we don't have a date yet. there are rumors -- they are speaking to mps around the conference hall and ideally this would be taken into account and it is not just what the government said. they want the offices of responsibility -- and how much all of this is going to cost, how much growth this is going to create. course it was the absence of a forecast in the first place that

is probably the reason why the budget does not align in the eyes of the market. this is the u-turn market, the u-turn -- tom: is the feeling in birmingham clear? >> i say there remains a massive concern that you've got this huge package and even the government admits that -- remains over costed, overfunded and it is not an emergency -- an emergency measure. this is what if -- this is what initially offended the market. are going to see more reversals

like it is open season now? she wasn't even the pick of tory mps to be the leader. markets perhaps taking concern -- cumber from the fact that there seems to be more malleability than we saw from the market thatcher impressions in the first place. lisa: to she have less power and less credibility in response to the malleability by markets and other conservative members? >> there seems to have been a change of wind since yesterday. yesterday we were hearing that mps were writing to the chair to try and remove this one year immunity that liz truss has. it is starting to have died down.

she has been working in the dark corners of the conference hall and evening -- evening -- even cabinet ministers are worried she is going to be a lame-duck for the rest of her premiership. now we are going to see liz truss pushed around by tory mps on reform and cutting bonuses and she may not be able to materialize her plan for economic reform and if she can't do that, then how are they going to win this election? jonathan: it will be a hard time for sure. lizzy burden over in birmingham my covering the conservative party conference. the party of liz truss -- the government of liz truss not even a month old and we are already having a conversation about how this might be the beginning of the end. tom: nothing has changed, has it? jonathan: how many times have we

seen this movie play out in the last five years? tom: and then this. jonathan: it is 2 billion sterling out of 45 billion in tax cuts. the approach is the bigger point, but that is domestic u.k. politics. the issue across europe is much bigger than that. the initial plan to cap energy bills was the big one. that was a lovely unfunded capital liability and germany has joined in too. this is far more interesting then the drama. lisa: angry that they did not have a better sense before germany announced the fiscal spending plan.

and it affects their ability to plan and figure out the other nation of what they want to do but really at the heart of this, how much flak is this bond market giving the fiscal policy makers to go forward with some of these plans? tom: this is the heart of the matter, three or four streets over, they get the same bargain that the midlands had? two americans, this is unimaginable -- to americans, this is unimaginable. jonathan: if you can see more energy, you will see a bigger bill. you would just be charged a unit cost that has been capped by this government. lisa: the problem is that ultimately this comes back to how do you dampen demand because you don't. you are getting into some sort

of downward cycle where you are bailing yourself out only to have a bigger hurdle to bailout. that is what the fear is. we are talking about how this is a idiosyncratic story. you had that pretty shocking statement that this is not responsible but they are not alone right now. tom: a headline out 20 minutes ago from the kremlin. quite positive, that is their language, that elon musk is speaking peace in ukraine. i didn't know whether to mention that or not. jonathan: you've got 15 seconds to explain it. tom: no, i can't. i looked at it and said really? i did not trust it. jonathan: live from new york. this is bloomberg. ♪

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jonathan: equities looking good here on the s&p 500. higher by 1.8%. equities up across the board. the biggest one-day rally since july. some weight to it on the nasdaq 100. yields lower.

yields lower again by 11 basis points. we are way off of the highs of last week. yields lower, equities up. sterling climbing. tom: is the crisis over? ritika: more to go -- jonathan: more to go. i'm not saying the volatility we had a week ago but we still have some issues. tom: we will give you some of that perspective along the way. right now she has one of the greatest parchments in the united kingdom. real expertise on china. she joins us now. are we in a global recession? >> i think we are heading that way but we are not quite there

in the u.s. china is probably coming out of its recession but it is still weak and will not be getting its reopening boost until next year. the real problem is europe and i think this is what is moving markets at the moment, that there is something much wider going on. tom: the news flow, clearly australia blinking is important. what are the ramifications for other central banks including the ecb, that it decides enough? >> what is happening is there is a global shift toward a higher returns environment but you can't get there in one go. the real economy just can't handle it and there are these powder kegs of financial

accelerators being left behind, creating low yield in the 2010s. trying to get 2010 level of yield to a pre-global financial crisis where we think we ultimately will be ending up, trying to do that in one cycle which is the covid cycle is just too much for the real economy and for financial markets. i think what we start to see now is qe comes back in a very different guys from the 2010s. it is a response to provide liquidity were necessary to provide -- prevent yields from rising more rapidly to keep yields from dipping lower and i think forces are much wider than the narrative around the u.k. suggests. what is happening is there has been a redirection of funds in favor of the energy funds, in favor of russia and the

nonfossil fuel club and what that does is you are handing funds to companies and countries that are much more likely to want to invest in the 2010s. in that process you are dragging yields higher. lisa: there is a lot there and i wanted to hone in on one thing you said. the quantitative easing this time around looks very different. is that mean the tightening is over and we are entering a new easing cycle of trying to reduce the pace of bond yield increases? >> i think as far as the u.k. goes, yes, it is dead before it gets off the ground. the quantitative tightening doesn't really get off the ground. you get this qe that is not the same flavor as the 2010 and it is there to prevent yields from rising too rapidly and that is probably the case for europe as well, where if anything we are

more worried about the u.k.. with germany already having suggested they will go alone on the fiscal front. where does that leave countries like italy, where we have been much more worried about those structural issues charting to arise in the area and moving back to easily translate into something similar to what the bank is doing with regards to short-term labor. it is a very different flavor of monetary policy since the 2010s. lisa: how much of this is a european story and how much is a global story? how much is this the example rather than a story of specific nations facing specific inflationary pressures? >> there are so many idiosyncratic problems rising at

the same time that we can say something some -- we can say something systemic is going on. i would definitely point out problems in china that can arise perhaps not until after the reopening, so the second half of next year but i would definitely point that out as a structural turning point for china as well. i think fiscal authorities are very much leaning against and you have this battle that speaks to the longer-term secular trends that have been fast forwarded by this energy shock. that deterioration of the geopolitical environment, these are all factors that speak to the need for higher returns and the likelihood of higher returns in 2020. but i think it does lead to

capitulation from central banks, first in the form of pushing back against the financial accelerators as we have seen in the u.k. and fed pension funds fiasco. as a result of the slowdown in growth, governments are supporting their economies through fiscal spending but the cost of doing that is that yields are much higher, so you're getting this spend on energy happening at higher yields and therefore the property market and yields more broadly are starting to tighten initial conditions and tamp down on growth in that fashion. central banks turn from worrying about inflation in europe to worrying about the financial accelerators and you get the capitulation in that sense. i think we are in different positions because inflation is more embedded in the long term

has to be focused on inflation. tom: model out how they get the 2% even that a huge body of people say that is an impossible event. soon they get to four and five and recalibrate? >> that is where we are getting too, furthered on the line that they will eventually explicitly or implicitly revert inflation targets higher. just because there are so many secular forces pointing in favor of higher inflation and not all of them -- there is also this change in the relationship in global labor markets and credit as well that suggest china is no longer a cap on wage growth in developed markets. therefore you have faster wage growth and faster credit growth and both of those things are inflationary. leaning against that means you

are accepting this politically unacceptable -- much higher unemployment rate in order to get inflation back down again but the point that i would get across is that there is too much reliance on leading indicators that are simply monitoring what it the fed is doing and the demand should be in balance in the u.s., both in terms of the good markets and the labor market is still great enough that you have this underlying demand in the economy and therefore while the rest of the world has good prospects for a slowdown in inflation, i'm worried you can get upsides in inflation in the u.s. because demand remains relatively strong. we are very much looking out for that u.s. recession coming through as one of the key turning points for the fed but it does not seem like we are there yet. jonathan: thank you for joining

us this morning. tom i am so pleased you brought up the difference between australia and the rest of the world. a key difference, two to 3% as opposed to 2%. also australia in the last quarter was running -- that is another key difference. the rba back in the pandemic, it basically said you probably won't get a rate until 2024, and look at where we are now. lisa: but that was all the central banks. they all completely got it wrong. that is different than 10% inflation, different than 9% inflation and when you're talking about that, you perhaps can push back, especially if the underlying drivers don't have the same edge as the united states. jonathan: on the federal

reserve, the overwhelming line of attack right now is we are committed to not pulling back. if the market conditions ease somewhat, then they can tighten. lisa: this is the reverse consequence of the market. other people would argue that the fed tightening is affecting other areas than just talk market price just as much if not more in creating some sort of restriction in the economy but if the market doesn't buy what they are saying, it forced the fed to more aggressively double down. jonathan: that goes against the theme of this morning which is yields and the equity market is up 1.8. tom: i am speechless here because i am waiting for the data and all of this is by friday but june is busting out all over october.

jonathan: maybe the data is softening just a little bit. lisa: people want to see what they want to see in the data. jonathan: isn't that always the case? possibly. futures up by 1.8%. ♪ lisa: keeping you up-to-date with newsom around the world, i am lisa mateo. the oil market is looking -- substantial cut in supply at its meeting on wednesday. the price of west texas intermediate was -- after rising monday. currently many nations in the cartel can't meet current quotas.

the new york fed president, john williams says the central bank still has a ways to go when it comes to raising interest rate. speaking in phoenix, williams said interest rates would not restrict economic growth. he says he expects gdp to be close to flat this year and grow modestly in 2023. in florida, the death toll from hurricane ian has risen to at least 68 people. insured losses are estimated to be as much as $57 billion. president biden we'll head to florida wednesday for a first look. exports from india went over the billion-dollar mark in the five months since april, a sign that the country is making progress with its bid to become a force in electronics. they are on pace to double their output of iphones over the a year. -- over a year. global news, 24 hours a day, on

air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg. ♪

>> elevated inflation today is the most pressing issue facing policymakers and by creating long-term upward price pressure, secular shifts in supply chain management could prude -- could present additional challenges for policymakers during a period of inflated elevation. jonathan: the atlanta fed president. live from new york this morning, good morning. we have a squeeze and bounce again. pushing higher on the s&p, by 1.8%. yields are lower by six or seven

basis points. the euro is stronger. i blame -- for the last 24 hours. he came on this program yesterday and said i think they have an -- they have one rate hike coming in november and that will be yet because the financial stability issue will pop up as a per merry concern. tom: every seven or eight years, all of a sudden, the green book matters. lisa: i'm not buying it. jonathan: and that is why we love you. lisa: i don't buy it because none of those financial stability concerns have bubbled over. suddenly we are expecting their is to be a response to prevent it from happening. jonathan: making it more likely that it will happen. they will keep hiking. are you up to speed tom?

tom: i think we brought the show to a dead silence. jonathan: what do you think they will do? tom: it is october which means -- is ignoring this conversation. decades of experience in oil and he knows in october there is vienna and also the string of hotels where the elite meet and that is beginning today. paul, is the consensus opinion that oil will rise back into the hundreds? paul: i think we will get one million barrels a day cut from opec in what will be a brief meeting. i was told the position was already taken and i was hoping i

would get a chance to get out to vienna but evidently the decision will come tomorrow. we will get about half of that actually delivered, but still enough to bring the market in balance in q4. tom: the elite meet to greet at the international -- intercontinental hotel, -- about russia? paul: i have to say i'm going to wear a black tie for the awards. we've had the ceo of aramco talking very eloquently. we had protesters outside the intercontinental, yelling in my ears but the problem is there is not a coherent solution. nobody has one and that is one of the issues.

china is adding more coal production than the entirety of shell's energy production. and again, talking to the ceo of aramco about the lack of capacity and how demand is remaining strong. lisa: and that is the crux of the matter, how much a potential cut of one million barrels is an issue of a lack of capacity rather than the appearance of lack of demand. from europe and the united states, saying we need lower prices at this point, why are you effectively causing an increase in prices and potentially laying the groundwork for that going forward? paul: first i think the saudi's have enjoyed $100 oil and would

rather be closer to $100 oil. -- give themselves more breathing room. it does not sound like it is happening. we are still using 2020 quotas which is -- i don't think there is going to be that kind of agreement and i think it will be a pretty strong cut decision led by saudi and uae. jonathan: a 15 minute meeting? 15 minutes or more? paul: more than 15, i think. i was hoping it would -- it sounds like we will get a decision tomorrow. jonathan: there we go. paul sankey, thank you very

much. i remember in the summer when president biden went to see the crown prince of saudi arabia. it was a fist bump? there was a hope that maybe they would change things up -- change things up and now they are talking about a big cut. lisa: do you think -- jonathan: nothing comes close to how awkward that fist bump was. lisa: that sets the bar pretty low for us. we have seen a plateauing in gasoline prices. it basically bottomed out how much they will come down. this has been a huge political issue heading into the midterms at a time when this was the one thing going for the inflation year-over-year input. tom: to fancy for tv -- too fancy for tv. we are $10 away.

jonathan: potentially a global recession. you can see why opec-plus is having this conversation. it makes sense. paul said coal in china, that is problematic isn't it? lisa: from the standpoint of how much pollution is going to be put in, if they are supplementing the equivalent of shell's total output with coal in a single quarter? it speaks to a potential of generating more economic activity which could speak to demand not slowing as much as it might. this goes to the point that paul was saying that perhaps a one million barrel cut, reflecting a cooling in demand. jonathan: you got a sense of that worry. the concern from people in this oil market about the lack of spare capacity, that these guys

in many places are at maximum. tom: on radio it is tough to do but my fingers are crossed that petrol is much more sensitive than we perceive. the two lines crossing are really hypersensitive, where one little thing moves and equilibrium gets out of point. there is a constraint in saudi arabia. that moves that price. jonathan: that was beautiful. tom: am i doing ok? jonathan: that worked wonders. that was an intriguing segment. this is bloomberg. this (announcer)g. enough with the calorie counting,

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>> the big issue does the fekete controlled moderation -- does the fed get controlled moderation and growth? >> we are seeing companies rip off the earnings banded. >> people have been watching prices for ages. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz.

jonathan: a sprinkle of capitulation. from new york city morning, good morning. for our audience worldwide, this is "bloomberg surveillance." a bit of capitulation out there on wall street. tom: i don't know what the shorts are doing on the short cover. we are looking to australia to blink. they went 20. that is the currency. jonathan: i appreciate that. tom: i didn't know new zealand was to the east of australia. that is how dumb i am. will we see more of that but the data coming in? jonathan: yields lower. lisa: i don't know if i agree that they blinked. i think they peaked. there was heated debate among fed officials. it is not so much the destination.

it is the pace at which they raise rates. are they willing to experience breakage? are we seeing blinking, or perhaps a retracement in the pace of how quickly the central banks will raise rates? jonathan: 75, to 50, 25. lisa: this is the perverse element of the whole thing. the more the market is comfortable the more the fed will have to be that much more aggressive. jonathan: capitulation. jp morgan. market collapse. they came up with a note last week that says the following. 22 price targets are at risk. i would say there is a bit of capitulation in the mix. tom: others? jonathan: ray dalio of bridgewater. when the facts change, i change my mind.

i no longer think cash is trash. your take on that? lisa: you talk about adjusting to the facts. he is getting on board with it trained that's building up a bunch of steam. -- a train that's building up a bunch of steam. people are flooding the cash. he is saying, hold on a second. actually it is not terrible. jonathan: somebody said cash was trash. tom: my problem is i'm doing two and 20 on triple leverage. at some point when the facts change, and we need to focus on the facts along with the well-intentioned -- jonathan: the data. tom: the data does not matter. i'm going to payrolls for the three-month moving average.

268,000. lisa: it is now in reverse. the fed keeps saying we will not blink. we will not retrace. that is causing rates to move oil. -- move away. jonathan: he sounded annoyed, didn't he? maybe a lot. we are committed to not prematurely loosening policy. futures are positive in a big way. price action for you on the s&p 500. up by 1.6%. equities up by 60 points on the s&p. yields are lower five basis points, 358.94. yesterday it was down 17 basis points. the two-year was down that much as well. last wednesday, 4% at that level.

74 off the back of that following the euro strength. tom: this is the curve moving, not elastic. jonathan: shifting lower. by a couple of basis points today. euro-dollar, 98.97. tom: still hovering below parity. we look at dollar dominant. perhaps it will not change that much. lori logan of the dallas fed, mary daly. line them up and they are speaking today. perhaps they will repeat what we heard yesterday. they are committed to continuing with these rate hikes. is it in a pivot? s buying premature. yesterday we saw the biggest one-day drop in 10-year real yield going back to march of 2020 and people started to believe.

10:00 a.m., the data. some semblance of where we are in the labor market. in the july reading -- this shocked me. increased job openings. how much are we seeing the labor market cooperate with what the fed saying they want to see? are we looking at a lagging indicator to dictate future policy and create dissidents for the federal reserve? 11:00 a.m., christine lagarde is in cyprus speaking with the ecb president at a time when you are seeing the same pivot happening in europe. it is slightly different. yields cutting dramatically yesterday and today. it is different because there is a belief they will engage in quantitative easing, to buy bonds, control the pace of increases to control financial stability. jonathan: and keep hiking

simultaneously. lisa, thank you. let's get to amy wu silverman. great to have you on the program. a shoe and a half has dropped. what do you mean like that? amy: the question of the day has been where we are in terms of capitulation. the volatility in the market has been the question. we have had a reprieve now but we have been watching since august for volatility. for september, we certainly got it. vix up 22%, the highest on record for this decade. there is more to go. tom: amy, i look where we are throughout the third quarter. i have a gauge on the fourth quarter. do the cross moments work right now? do they work?

the derivative mathematics, doesn't work now or less useful? amy: it's been an interesting narrative. when it goes askew, these are the metrics we look at auction. they narrative has been that is been quite broken this entire year. i don't really know that shifted too much. you look and they are quite low. you have to bear in mind when you're at a higher volatility scheme these numbers seem, on a relative basis, lower. the math does not work in your favor from that perspective. it does not mean people are not buying. we are seeing it even with the reprieve we are getting in the market arena. lisa: september is the third-most volatile month of the past decade. people look at this and say we are worried about financial stability risks, that it will cause things to pullback with

the rate hiking plans. how much of it is in the opposite way? they stress tested a market that is seeing liquidity withdrawn, and it passed. it actually gives fed officials conviction to keep going. amy: yeah. it's interesting. let's say that will keep them on their path, which would actually generate more volatility. interesting cycle we are seeing. i think historically when you look to october, october tends to be a volatile month with the bump we got in september. i think with the critical earnings season that is going to continue the reprieve is we have gone through a big quarterly -- a no man's land of idiosyncratic data for the next two weeks. then we are back in the hopper again. don't count it out even though

we are dropping back to the 20 handle level. jonathan: the equity markets talking about peak yields, peak dollar, peak volatility. you future for your research how much we will shift towards a higher volatility resume. how long can we end on that? have clients got on board with your way of thinking beyond the next quarter into next year and perhaps longer than that? amy: i think so. it has to do with the fact that when you shift to a different rate regime by its nature it has to shift along with it. one think i will tell you clients are looking at is -- you were talking about how cash is not trash. yields are incredibly attractive. you have a stock like apple that's only down 2% but it's been a bumpy ride. the volatility has more than doubled. that is how much yield you were collecting on something like that now.

even with the higher volatility regime people are looking at harvesting on attractive names of high quality. jonathan: amy, thank you. it's incredibly wall street. tom: is like picking apples. jonathan: and apple pick. tom: let's talk volatility. pulling in premium and harvesting hedging. jonathan: volatility, higher vol for longer is the point amy is making here. if we can pause for a moment, on days like today we will talk about peak yield, peak fed, peak vol. do we just hang out at 4% on a risk-free rate? how much does that change the market from where we were for

the last 10 years? lisa: especially the borrowing class. companies have not had to reengage at these levels. when they do, suddenly their entire model starts to shift. jonathan: from new york, this is bloomberg. ♪ lisa m.: keeping you up-to-date with news from around the world, i'm lisa mateo. president latimer zielinski said liberating settlements from russia is now the trend. -- volodymyr zelenskyy. the biden administration will announce another package of u.s. weapons in a few days. chancellor of the exchequer and the u.k. will try to reassure financial markets about his economic strategy. he planned to release his medium-term plan next month. now he will announce it sooner.

he's been under pressure since tax cuts he announced in september led to a selloff of u.k. assets. tensions increasing over kim jong-un's nuclear weapons program. north korea fired a missile that flew over japan. that prompted a public safety warning from tokyo. the missile splashed down in the pacific about 2000 miles east of japan. the biden administration will announce restrictions on china's access to u.s. semiconductor technology. that set s closing of washington's efforts to fight beijing's ambitions. they could hurt growth in the sector. former chief operating officer sheryl sandberg is donating $3 billion to the aclu for the fight for abortion rights. the organization says the donation will give it a running start against state and federal efforts to overturn roe v. wade. bloomberg estimates sandberg is

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>> we are facing difficult times. you have an unprecedented level of inflation.

they key point is to stand united. that is what i think there is a need for an action plan at the local level against inflation. jonathan: the french finance minister sitting, bloomberg. live from new york, we will catch up with maria in a moment. price action on the s&p 500 and beyond. we build on the gains from yesterday. 1.6% on the s&p. equities of i-59 point. yields lower by 4% or 5%. the dollar weaker. euro-dollar positive .6%. cash is no longer trash. responding to the sum of that perhaps. 60/40 down 20% on the year to sake cash is no longer trash would have been a good flip 10 months ago. tom: it is what it is.

everybody is adjusting. we will see more like ray dalio. the bullet jp morgan readjusting. jonathan: it took 10 months. tom: you wonder if this is like the 12/31 three-month early. i would wait for the data. the friday jobs report set you up for the november fed meeting. we will have to see. futures up 61. maria and luxembourg, i have five ways to go and i have a headline from the kremlin of an hour ago. 200,000 mobilized. translate mobilized if you can. maria: i'm not sure that number is accurate. we have heard so much from the russians. in real time they do the complete opposite. some of the evidence we have is that it has been very difficult to bring men to the front.

there have been questions about the kind of training they have. they are facing a professionally trained army. the kind of equipment -- a lot of this i would be cautious to tell what the russians would spin. on the battlefield ukrainians are making headway. tom: among others, the supreme allied commander is hugely suspect of "mobilized" 200,000. jonathan: maria, talk about the tension between the german government right now and that package they announced in the last week. maria: this is a heated one. a number of things. you have to go back in time for the past seven days. we had the nord stream explosion

and the germans came out with a mega package of 200 billion euros. ok. we have our response and we can deal with it. we are willing to spend. do not mess with germany. this has repercussions on everyone else. not everyone has the fiscal capacity germany has. today was deemed a reaction. countries are worried this will create fragmentation in the euro area. behind-the-scenes, the lack of human occasion and clarity, they were taken aback by the package. they were not expecting it. i spoke with the french finance minister. it should be clear to everyone the only way to deal with the crisis is on the european level. this is not every man for himself. it has to be done jointly and in coordination with all member states. lisa: what is the german response to this? maria: it will come in handy but

i spoke to christine lagarde -- christian lightner. there's been miss communication or misunderstanding of what the german plan wants to do. 200 billion euros looks enormous but the size of the german economy would fit in that. there responding to the size of the problem, which were germany is also enormous. he says they are not the only country coming up with domestic measures. it has created political tension behind the scenes, no question about it. jonathan: thank you. maria tadeo, thank you very much. i'm going straight to a note from citi. we continue to see fundamental economic risks in low risk asset prices. friday's job report is growing

in importance. a softer reading would continue with the bad news is no news narrative. tom: nothing to offer on good news is bad news. jonathan: veronica clark, we can explore this note a little further. lisa: no news is bad news. the other point they are making is right now still the economic risks are tilted to lower risk assets. they are not necessarily seen the groundwork. we are not seeing though the initial jobless claim. the labor market is really loosening enough to give the fed pause. we heard from j.p. morgan yesterday. it would take three consecutive months of 100,000 jobs being created for the fed to

second-guess their moves. jonathan: expanding on our conversation in the last week. it will take a lot of work to get this labor market to crack. the line i heard from several people as you cannot fire you could not hire. we've had two years of corporations trying to get lots of people on the payroll. they can't find them. job openings are skyhigh. if you're looking for the labor market to crack, it will crack. they cannot hire the people. hiring freezes. not layoffs. tom: i was making some fresh tang. the survey is a signal of that. lisa: at this point, and this is to the point, if you have high inflation and you don't have a labor market showing signs of great weakness, how do you know you are making it towards her ultimate goal? it puts the fed in a bind.

that's a lagging indicator that it will not crack. the risks are greater the fed will over tighten and create a real downturn to achieve lower inflation. jonathan: he said 200k. does that add up? lisa: if there's of structural change in the labor market, maybe you can make that argument. the fed is not making that argument. jonathan: tom tzitzouris will join us soon. futures up by 1.5% on the s&p 500. this is bloomberg. ♪

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jonathan: ray dalio says cash is no longer trash. yesterday and again this morning, up on the s&p 500 by 1.5%. nasdaq up of your percentage point. driven by what is happening in

the bond market with yield ever lower. on a 10-year last week, 4%. right now, 358 on tens and twos. here is where the 10-year -- yields up about five basis points on the 10-year. down eight or nine into the curb. equities up. the dollar beaker for a fifth straight session. the longest losing streak for the dollar going back to september of 2020 one. -- 2020 one. -- 2021. a little earlier this morning, peak rates, peak dollar. tom: absolutely. it was going before australia. not 50 basis points. it was the fuel of the pacific. jonathan: she is right to frame this.

many people are on board with it. the more the market rallies, the more likely it is it will not back away anytime soon. that's the cross asset price action. good morning, lisa. lisa: the single names are basically a continuation of the story you are telling. which names do best of the regime you're talking about. the fed is potentially pivoting from some of the aggressive rate hikes. big tech doing really well. shares of nearly 3%. apple shares of nearly 2%. same as facebook's parent company, meta. they say they will be a smaller company next year than this year. apple is facing a number of headwinds in the semi conductor space indicating a much lower pace of demand. this comes even though amazon will be of the cross hairs of consumer activity if you get some sort of pullback in consumer spending. this raises a lot of questions.

are we seeing the high flyers and the knee-jerk impulse of the market to go to the high beta temp aid as the next leaders of the market? a lot of people saying this will not be the case. rvi -- rivian symbolizes what you are seeing. shares are up nearly 9% because he indicated they are producing more than expected. rivian has disappointed quarter after quarter. shares are down 60%. how much are we seeing as a lastgasp of the old playbook? tom: there we go. it's a toxic equities space. apple down 18%. it's an especially important conversation. he's had a fixed income and

combines economics like no one. tom, i will cut to the chase. which matters right now, phenomenal yield are the real yield? tom: definitely the real yield at this point. that is are indicater of how they are rising as of last friday. tom: the 10-real yield. which duration of real yield is the most valuable for global? tom: financial assets. fives and tens in general. you are talking about one to two year. tom: i look at the spread we have. the importance of the economic data, the jobs report. do you agree data dependency is critical in the fixed income space? tom: yes. we are worried about the labor market, focusing on the average hourly earnings.

the friday earnings is always the most important data point in any given month. especially now. inflation is still sticky. that has got to come down and eventually pivot. i don't see up fed pivot. jonathan: it is frustrating for betty. equities up, yields down. peak hawkish nest. -- hawkishness. does the fed 75? -- does the fed go 75? tom: we're looking at a short covering here in equities and bond. positions got stretched last week. the bank of england has blinged already. the market is saying we have a weak manufacturing report, the fed will be blinking soon. i don't think that's true. the rally is telling us there are those worried the fed will blink.

i don't know if there is a direct correlation yet. we have to wait for the friday labor market report first. lisa: given the volatility we were talking about? tom: we need to have tactical durations. you have to be managing your duration exposure. you cannot be forever shortchanging long-duration. your credit risk exposure on the high-yield side. we are looking at bonds. lisa: what exactly are you buying? i'm looking at a bank of america survey in investors. they were more underweight investing rate credit then yield. basically saying they will not see something it can do what they have in the past. they will be rate-driven and slowing borrowing costs around the world. tom: i think that is what we have seen so far.

a rate-driven selloff in investment credit which has faired high-yield, particularly the energy space of high-yield. that will change in 2023. more and more it is like it is heading towards a recession. earnings contraction. tom: what does your world mean to jason traynor? what is it mean for jason traynor, the enthusiasm on a megan equities? tom: the world's most important financial indicator is the 10-year treasury. you are looking at real yield being a drag on essentially nominal earnings. they both feed into both portions of your equity valuation. jonathan: one piece of feedback today from multiple people. how reliable is the bond market right now? we are struggling to price the

risk-free write. if i cannot price the risk-free asset, how do i price the risk asset? tom: the more volatile the 10-year treasury is, the more reliable. yields are not meant to be static. the period of the decade before was unusually stable yields. even in the early 2000 they were stable versus the 1970's and 1980's and 1990's. that's not normal. any given year you can lose 5% or make 10%. they have become properly priced. 10-year yield risk and risk premium during the duration. a lot of folks don't like that. they have not seen that in a long time. lisa: perhaps this means it is more reliable from a market pricing perspective. not that is reliable if you were to go along apple. -- go long apple.

you can draw the distinction of how much you are pricing and what it means for the global financial system to see a range that is true price discovering for decades. tom: it make it harder to be a leveraged investor. you are using treasuries as your "glue." if, volatility chasing investment strategy, it's a lot of leverage. that make it hard to deploy the strategies. tom: what's a 6.58% 30 having your mortgage due to the housing market? tom: to grind to a halt. tom: price up of how much? tom: on a regional basis. let's look at the early 1990's. the iraq invasion, home prices are 50%.

1990. it's a regional phenomenon. looking at similar patterns with high energy costs in the northeast. new york, new jersey could be down 25% in the next 12 months. the national economy is probably looking at home prices flat. tom: i have a friend from england looking at the 60's and 70's on the upper eastside. tom t.: new york city will see a bit of a strain. you're talking about the flight from the city, the work from home. although things will affect the city economy. more so than you typically would see in the downturn. jonathan: you would give away his home address if you had it. thank you. good to hear from you. tom: absolutely. you saw the mathematical cliff. i cannot say enough about that. jonathan: i guess it's a feature

of normalizing. something a lot of people have not lived for in a long time. tom: my quote of the third quarter, the risk-free weight when away and all of a sudden the gravity is back. jonathan: gravity has returned and central banks are getting out of the way. lisa: suddenly it changes the notion of it. if you're talking about having a two-way bid market. it means suddenly it gets more exciting to going to the bond market in a way that perhaps takes attention away from the other markets. this is a new regime. for who? jonathan: i think it's a great thing. lisa: if you're a bond investor. pretty batted her long big tech stocks for the past two years. i think that's a statement because those of the dominant names in the indexes. jonathan: it could get difficult

if we hang out at these levels. yield low or this morning. equity futures marching higher on the s&p by 1.6%. yields down six basis points. dollar weaker. this is bloomberg. ♪ lisa m.: keeping you up-to-date with news from around the world, i'm lisa mateo. the oil market is looking to opec to deliver a substantial cut in supply at his meeting on wednesday. the price of west texas in be accrued -- intermediate crude rose 5% on monday. many nations in the cartel our meeting current production quotas. any agreement -- john williams says the bank has a ways to go when it comes to raising interest rates. he said interest rates are not at the level that would restrict

economic growth. he said he expects real gdp to be close to flat this year and grow modestly in 2023. in florida, the death toll from the hurricane has risen to 28 people. as much as $57 billion. president biden is heading to florida on wednesday for a firsthand look. samsung electronics has announced the -- u.s. chip buyers with more advanced technology. they are looking to triple its revenue by 2027. samsung is the world's largest chipmaker by revenue. cathie wood bought shares as they plunged the most in four months. a fun fact by her firm but 132,000 shares on monday. the stock was down 8%. this is her second purchase and

tesla and 2022 after a year of selling down her steak. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪

>> more than anything else, it's what happens to euro-dollar. they will both suffer from concerns about blackouts and the war in ukraine getting worse. those of the drivers. jonathan: a little earlier on. looking at a weaker dollar this morning. equities up. let's look at this rally on the s&p 500. up 1.6%. equities up by 60 points on the s&p 500.

dollar is weaker, euro stronger. look at the sterling. the pound stronger for a sixth straight session. last week, one of 3.50. this morning -- 103.50. it is a 10% move in a week. tom: it depends on where the decimal is. that wraps around to the politics. lindsay burton is covering it. birmingham? jonathan: birmingham. tom: i did ok. g10 affect strategy, jordan, i want to go to the news of the day. the bank of australia linked. maybe it is a new trend or maybe it is not. banks start blinking like they did in canberra, what is that

mean for your call on the dollar? jordan: i think that is everything, tom. are we going to have more than a blink? it stands out with a central bank with a mortgage market where most mortgages are variable, their floating. they react to what is happening for everybody, not just the marginal house purchaser. in the u.s., with two-year and 10-year fixes, the impacts come through with a different lag. in the u.s. it is much slower. in the u.s., your last guest was talking about the slow in house prices. when it comes to central banks, they are looking at inflation nowhere near their targets. what is going on now is people are asking the question are we going to listen to with the bank

of england said last week? will the fed or the ecb think twice about what they are doing in case we have financial risk building up? it's all about mood music and action by the fed or the ecb. central banks will still be hawkish. right now we are in that quiet space. are they both canaries in the coal mine? jonathan: you fade in this move? jordan: you mentioned a 10% move. i broke that in don't chase flash crashes and that is what we had in sterling. huge moves. 5% move lower. when you have that, everybody gets convinced. then you have mean reversion on the reaction and that is what has happened. in the u.k.'s case, just

reducing the top rate tax costs nothing, 2 billion pounds. we are talking about 100 billion. this is all about mood music showing they will not be as zealous in policymaking. taking the facts as they are, apart from that 2 billion pounds, i am skeptical. i think core inflation in the u.s. or main stickier than all the other leading cases signal. commodity prices -- core inflation will be stronger than you think. look at job openings in the u.s. that is ridiculously high and they are not falling enough to say we are having a weak labor market. this feeds into the fed not being happy where things are. the softness in yields, i don't think it will last. lisa: we were talking about how

the price action you are seeing a 10-year treasuries and two-year treasuries indicates stability and price discovery and away we have not seen in years. is the same true for the fx market with the pound rallying 10% off an incredible --? jordan: laws that is poor liquidity. positioning in sterling being one-way. the pension situation meant the flow going through the u.k. was huge. it is hard to say there is price discovery going on. it is just everybody being one-way and pensioners being bailed out buy a program that comes to an end in less than two weeks. i think prices will raise and affect. the u.s. has oil and lng exports.

europeans don't have either of those things. when the imported that natural gas from russia priced in euros, not anymore. it's in dollars. it's a fundamental shift 22 europe being about 90% this year -- pointing to europe being about 90% this year. tom: when the scandal was breaking there was a research report. it was scary accurate about what the mess would be in the british pension market. what is the trade opportunity right now? where is the big figure opportunity right now everything considered? jordan: where we are today. lower u.s. yields back to by mood music, potential for china, masks being taken off. all that mood music stuff, not fundamental game changers. i suspect we will have a strong

hourly earnings number. i think the job data will hold up on that side. i think folks will be surprised again that the u.s. jobs are not slowing down from all the growth we had. then we get the cpi the week after. the trade is dollar weakness. looks like everything we saw and may and august -- in may and august, the long drawdowns, the trend is still there to parity envelope. jonathan: congratulate tom for saying birmingham. we have been working on this. jordan: next is the birmingham accent. tom: the full english out there is different. jonathan: jordan rochester, thank you. we are in trouble. i'm not sure how we even got to this.

canberra is the capital of australia, but the rba is in sydney. tom: this started decades ago. it is so fast for what we're are doing we make errors constantly. jonathan: lisa has never made an error. tom: you make errors and then you correct them. jonathan: is birmingham like maryland? tom: don't correct that ever. lisa: i never make mistakes. i do everything perfectly. tom: when john says maryland it's like downton abbey. jonathan: mary land. tom: the orioles are there. it is a merry land. ♪

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>> was inflation comes down, --

>> i think the economy shows resilience. >> i see earnings going sideways. i think we are in a growth recession. >> this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: we are together in new york on radio and television, thank you for joining. do we look to cindy, australia for a list. teachers up 62. jonathan: they go 25 basis points, i get it. pink yields, pink dollar, pink fed. take your pick. tom: an important conversation, citigroup, their linkage to the jobs report friday into what the fed does going forward. jonathan: good news, bad news. bad news this friday could be

seen as good news for this market. lisa: the ism data came in softer, giving wind to markets, a reversal. this idea we have enough ammunition to talk about weakening. you have accelerated moves. i wonder if this is the case if you see outstripped moves because of -- positions where people are taking a pause. tom: you mentioned earlier, the rate deal, capitulation, i get it. great. is this a true capitulation, i do not see it. jonathan: we have seen a repricing, it is important. we have taken the peak funds rate down to 440. that is feeding into the -- inequities. if you are pivoting, pausing at the fed for reasons like financial stability over session at risk, or the fact we are in a recession right now, is that

bullish? tom: tom stored on high-yield, what is high-yield dynamic signaling? he is grim on the spread market of troubled debt. lisa: there is a question if we will see a default cycle. have we readjusted to 10 year yields a rain -- remain around this 4% level? how much have we priced in potential weakness, what that does to rearrange the rest of markets is finance at 0% rates. tom: let's go through the data. i'm going to look at the real yield, 1.37%. jonathan: stocks up, up, and away. on equity market, s&p 500.

we talked about equities up, yields lower down five basis points on a 10 year. last week, 34%. this bond market, we see 360. you see for 45 on twos. you've got a weaker dollar. tom: the real value is what we say in commercial break, i wish all of you could see the conversation with our guest as we prepare for the hour. jeffrey you joined us, senior strategist at bmi melon. i am learning every step of the way, i want to talk about the dynamics of every nation and every political leader as they try to amend power to the elite. the elite are the prawn sandwich brigade, there is no question about that going back to truss in the united kingdom. are we making -- for the elite that will crush the middle class? >> you are allowing the

manchester united fans to reminisce about the old days. we have to acknowledge, that decision with the policy, you have to be extremely cautious about the is to be should all effects even before the chancellor launched the budget, we were concerned about the distributional aspects of the energy support plan. why is he subsidizing higher households at the same level as lower income households? this will generate a lot more volatility in policymaking and translate to market issues down the line. jonathan: are -- concerns bigger than financial stability concerns? geoffrey: this time around, you can see the -- volume at the end of the day, a precautionary

saying the bank of england says we will be on the other side of this. as i mentioned last week, it is whatever it takes when it comes to financial stability. at this point, it is back to inflation. until inflation is under control, monetary policy will have to chase inflation. that is where financial conditions are tight. there can be no rest for financial stability until we tame inflation. the two are intertwined. lisa: do you think we overplay financial stability concerns, based in the u.k. and the fear -- in the system? geoffrey: i do not think we have overplayed it. don't automatically assume what happened in the u.k. is going to cause markets to crack. i think that side of it was --, especially in terms of the days

of, central bankers have overdone it. they are going to abandon inflation targeting. lisa: is there truth to this idea central bankers are rethinking ways in which they want to raise rates? perhaps not necessarily the target they are changing, but as long as they are willing to raise rate hikes the opa is going slower, but not -- at wholesale from a tightening cycle. geoffrey: it depends on which specific -- financial stability context you want to manage. australia is a terrible example for the rest of the market. there cycle is not linked to where the u.s. is linked to china and the likes. australia has been highlighting domestic households within cutin. i think markets are missing this, the rba heavy cited -- they wanted to frontload things.

it shouldn't come to much of a surprise they will hit peak yields, terminal and the rest of the market, as well. jonathan: the federal reserve within the next month or so, another 75? geoffrey: that has to be the market base case until they see -- in the market or elsewhere, anything remotely close to what happened in the gold market. we are not seeing that at this point. we need to acknowledge that financial stability is something they are monitoring. we are not where we were in 2010, 2008. there are so many calls at their disposal, they can handle this and will be on the others of financial stability. i think markets believe them. jonathan: how sustainable is that effort? geoffrey: qt is sustainable,

especially in the u.s. where they have a better -- inflation versus natural stability. the boe have been cleared -- swollen qt to preserve financial stability to monitor it, once they know where the risks are. they covered their bases and i think they will be able to preserve the qt framework, that is a monetary policy operation. as the fed's hike, monetary policy will begin to impact financial stability. there can be a new argument there can be a new discussion about. i think they are going to continue with qt as well, that is necessary to spread inflation. lisa: that is the u.s. story, what about europe? could you see a reversal of qt and quantitative easing? geoffrey: i think europe -- they have the tpi's to manage any

spread widening. it hasn't been an issue the last few weeks or so. i think qt will take place in europe when the market is ready for that. on rate hikes, that is where europe is one step behind the rest of g10, i think that is protected in euro-dollar. with the latest inflation prints, i think they need to accelerate. jonathan: i am not going to explain with the prawn sandwich brigade is. thank you. geoff is a united manchester fan. back in the days, the manager of manchester united football club, the atmosphere at the stadium was dreadful. he referred to those fans as the prawn sandwich brigade. the wealthier crew unpacked their prawn sandwiches and didn't make too much noise. he wanted more noise, more support in the stadium, a bigger

atmosphere. tom: we have the same thing here. i am critical of the new york yankees. when they play a fabulous team, all the empty seats from the prawn sandwich club. i give steinway credit for this, a down fancy to sit in the same chair. jonathan: empty corporate seats drives me nuts. the u.s. open, it will be open around the boxes. people got free tickets and didn't just show up. tom: when i went the other day,-- lisa: prawn sandwich. what is the other side? jonathan: pie. tom: if you are a tourist, like me, i am eating it with a fork. lisa: even i knew that was not right. tom: jon ferro is on the phone saying, what are you doing? i was so embarrassed. you grab it.

jonathan: eat away. you start to the maryland fingers. thank you to bloomberg subscribers for helping me with that, maryland. i understand the status with tom's pronunciation, the summer first, they would have officially changed their pronunciation to mary land. this is bloomberg. lisa: u.k. prime minister liz truss said she hasn't decided whether welfare payments should be increased in line with inflation. that is an issue that threatens to cause another fight with her conservative members of parliament. they enter video, she said pensioners would see their payment rise along with inflation, but she wouldn't commit to the claim other welfare recipients.

ukraine president zelenskyy said -- settlement from russian occupation is now the trend. his forces have pressed further into the eastern donetsk region and seek gains in the south. the biden administration -- u.s. weapons within days. tensions increasing over kim jong-un's nuclear weapons program. for the first time in five years, north korea filed -- fired a missile that flew over japan, that prompted a safety warning from tokyo. nationals -- missiles splashed down about 2000 miles east of japan. book your travel flights now. the wall street journal says hi places -- high prices will rise in the coming weeks. kayak shows the average price for domestic travel during thanksgiving week this year, up 48% from this time last year. during christmas, up 50%. global news 24 hours a day, on air and on "bloomberg quicktake."

powered by more than 2,700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪

>> the decision will come tomorrow. that should bring two million barrels a day. it is enough in what is effectively a market imbalance in q4. any cut will affect the rate price. jonathan: the crude market in the past 24 hours, that was the founder and lead analyst at

thank you research. $84 60 five cents, that is the commodity market. equity market and beyond, equities up 1.7% on the s&p. 358.50, 10 year down five basis points on the session. dollar weakness, euro strength. 98.96, euro-dollar positive .7%. tom: we have not seen that yet. the joy, -- duke economics, he has put money where the mouth is, great work in energy and sustainability. his work on charity, the internship program at the royal institute of -- london is something he works on. thank you for joining us.

we turn to opec, maybe not sustainability, but there it is, opec-plus. you are heated with what they do, not they say. what is the extinction -- distinction? >> opec announced a production cut. we have seen that count list times -- countless times. to know that saudi arabia tends to be discipline --their commitments. members, you can think about venezuela, nigeria, they do not tend to a moment what they promised. they need the money, the lower income levels. the burden of actual enforcement tends to fall on those core, persian gulf members,

particularly saudi. will they single-handedly carry this potentially one million barrel a day production cut? we will see. it happened during the first days of the covid crisis in 2020. saudi arabia was amazingly disciplined at that point. now, these are very different times. lisa: how much is demand declining versus the expectation that it will decline in the face of slower growth? pavel: to be clear, global oil demand is tracking to a significant up here, between 1% and 2% growth in 2022. there is still some post-covid catch up in that. the real question now is, what will demand be next year? we think it will be -- perhaps not as much as six months ago

before all of the monetary tightening around the world, but it should be up. i will remind by way of historical background, only four times in the past century has global oil demand inclined. 2020, covid. before that, we have to go back to the global financial crisis. before that, to the early 1980's. unusual for oil demand to strength -- shrink on a calendar year date. lisa: how much will oil prices increase if opec does approve a cut, and you see demand increasing -- decreasing next year? what is the resulting price of a barrel of oil? pavel: one million barrels a day is 1% of global supply. elasticity -- on average, a 1%

reduction in supply, creates a irease in prices. we are talking about five dollars a barrel extra. remember, we have other variables in relation to the oil market, including the war and every think flowing out of that. russian supply of oil has declined and will continue to decline. tom: i want to go to your wheelhouse of sustainability. is esg altered by the war, by the moonshot in gold have seen in australia, newcastle? how does es adjust to the next decade? pavel: the war has not changed the basic paradigm that esg will be a source of pressure on

fossil fuels, both in a fundamental sense and in an investing sense. for example, let's zoom in on europe, which is in the middle of an energy crisis. yes, there is a dip, maybe 2% within the mix of europe in terms of pole consumption. we are talking about barely 12% of europe's electricity coming from coal this year. by 2030, that number will probably be in the mid single digits. the trajectory is heading in one direction. coal is the biggest public enemy number one in a climate sense, this is where a lot of investments of major institutional investors are focused on.

not essentially oil and asked, but certainly, those sectors are on a final favor from the carbon perspective. jonathan: wonderful to get your thoughts this morning. headlines out of europe. olaf scholz with a meeting with the dutch primary. schultz says germany seeks a considerable reduction in energy prices. i assume he is talking about this winter. beyond this winter is the conversation he tried to have over the last several months. lisa: and what it takes to get considerably lower prices. it is causing consternation among european allies. what does that mean for the rest of the block back cannot afford that kind of support for their energy companies and bills for their household? jonathan: this was the issue maria was getting up -- at this

morning. was she in luxembourg? this is the issue. in europe right now, the package from germany was so large, who else can follow like that in southern europe? tom: that is the dominance of germany. germany is completely dominant. what i would note, what you mentioned a couple days ago, the difference between 9% and 10%, netherlands 11% inflation. double-digit changes from dialogue. jonathan: the minister from uae, market outlook. i want to assume that is going to take longer than 15 minutes. this is bloomberg. ♪

jonathan: data out later in the united states. durable goods, job openings, all coming out in about an hour, 30. equity futures, elevated. futures up 1.6% on the s&p. the biggest one-day gain on the

s&p since july. yields lower yesterday by 18 basis points. another 360.52 on a 10 year. lisa: the issue is it is basically readjusted with pensions, investors seeing -- in duration heading into a downturn. is this something that is a head fake, people covering their shorts, reassessing before the next leg of whatever the fed communicates next? jonathan: the rba down 25 instead of 50, it speaks to the price action. yields are so much lower now compared to where they were a week ago. 10 year, 430 now. tom: we have seen a shift in yields, not the dynamics of the yield curve. 10-year yield 1.38 percent. what i would note, this is where the pros focus on the fixed

income market versus the other markets that get signals. jonathan: i want to turn to citigroup. andrew hoel and horst, this is what they had to say. we continue to see fundamental economic risks, higher rates and lower asset prices. friday jobs report is growing in importance, a softer reading would continue the good news is good news for equity markets. tom: there it is. i've got my prawn sandwich over here. leave me alone. -- joins us now, global market economist at citigroup. we had a gentleman from duke speak this morning. veronica, we get a good jobs report over 200,000, maybe 300,000 jobs. we are so far distant from a nonfarm payrolls, which is what

the fed desires. do we get there abruptly? veronica: i do not think we get there yet. we will be watching for signs this year into next year. we start to see that slowing in job figures, we are expecting a to 65 k on friday, which is strong. still slowing. as we are getting into mid next her, i think that is when we see the negative prints that start to pop up. tom: our wage dynamics and the wage part of the friday jobs report signaling each inflation? veronica: we are a bit higher on average -- earnings. we are expecting a .4% month on month increase. expecting the unemployment rate to fall to 3.6%. both of those together is what the fed doesn't want to see, which is still a tight market.

what the fed is looking for in all of the wage data, the job data, the inflation data, signs of a loosening labor market. i do not think we get that yet. lisa: we were speaking to tom for sally in the past week ago, he has said there has been a structural change in the labor market. we may not see weakening in the jobs, in the labor picture just because people have such a hard time hiring enough workers during the pandemic and afterward. do you think there is truth to this? veronica: absolutely. i think if you look at the number of people who left the labor force during the pandemic and you look at the overshoot of job openings, we have around 11 million versus 7 million before the pandemic, that is 4 million people that of black. it doesn't seem to demand is going away. the fact job openings are so high, we will get that data later this morning, it could take a wild to see the slowing in hiring. lisa: how should it be looked at

in terms of understanding the weakening and pace of weakening in the economy? are you some pathetic to the view that perhaps the fed is looking at a backward looking indicator in order to make forward-looking moves at a time when the economy is moving faster than we have seen it move in decades? veronica: that is fair. these monthly job figures we get are some of the last ones to turn. i think if you look at the labor market data as a whole, something like initial job openings, those tend to be a lot of -- a leading indicator, a sign of a strong labor market. tom: what is the under shoot, the blink by the federal reserve of australia? what does that signal to citigroup? veronica: i am not an australian economist. i think markets are looking for a sign maybe central banks are

reaching the highest level rates they can get, but for the fed, i would caution we have been here before. we have been here before and it hasn't happened, the fed has had a big focus on domestic data, inflation. tom: ok. away from labor market data, what data matters to determine a powell peak? veronica: inflation. inflation is the most important. since that september meeting, you have had one data point that, the the inflation last week. it looks like the fed's forecast in september is 4.5% -- by the end of this year is still too low. we will be looking at the details. you still see strong services, that is telling you underlying inflation factors are still high. lisa: let's look past this friday when we get nonfarm payrolls, which may be

increasing in import, and beyond to earnings. we have seen preliminary earnings report that highlight increasing weakness, the pace at which companies are revamping expectations. what do you look for in these earnings boards to reassess how either deep the downturn is or what the fed response could be? veronica: we are looking at business sentiment. -- policy impact data, we are seeing earnings -- equity prices are lower, saying i need to cut costs, i need to not hire as many. that is what causes the loosening of the labor market that brings inflation lower. i think there is -- you see that in working sentiment, you see that in the hard economic data. lisa: this lag, do you think a response to the lag is to go slower? is one of the key debates among

fed officials, move slower. the same level as where there is targeting on 4.5%, plus or minus. you think this is something they are going to ignore, keep going at the pace of doing frontload and stop when they get to that 4.5% and figure out what the damage is? veronica: i think that is a sentiment -- the fed will go more 75, another 75 basis points hike for november. it would make sense, maybe give yourself time to see the beginning in inflation, -- the weakening in inflation, the weakening in the labor market. it seems they are on the front loading path. we think rates of 4.5% are going to stay there, maybe even go higher. jonathan: when is good news just good news? veronica: maybe at the end of 2023 when we are fully coming out of a recession.

jonathan: dear me. we have got to wait that long, the end of 2023. tom: i was looking at the wirp, we are all -- the prisoners dilemma, four boxes, good news, good news, bad news, whatever. it is a -- this is busted game theory, look at the fundamentals. there are recessive statistics starting with china, to me, that is way more important than the financialization of our dialogue. jonathan: it makes sense to have the argument. veronica, fantastic to catch up with you as always. it makes sense conceptually, you want to see the better data out of the way. lisa: when it becomes the point the fed is not the main driver of price action -- it still is. that is the main point, the fed is still driving the activity,

the time when they want to pull back, they want to not be this puppetmaster behind the scenes, which they have been for decades. jonathan: job openings later, is that the key data point for you today? lisa: absolutely. they are looking at the labor market, they are not going to take their foot off the accelerator until they see jobs become less prevalent, until they see a loosening in the market. you are not seeing it in the initial jobless claims. that is the key data point of the day. jonathan: tom, you get a job openings to down without smashing the labor market up too much and causing a recession. tom: i am with select people. mike mckee tells me jolts really matters. the bottom line, i do not care -- the bottom line, for me, is simple. we are arguing about the implement of people in america, i think it is absurd. jonathan: it is worse than that. i think it is worse than that.

this is going to get difficult for this fed, something we have talked about for a week. if on a plymouth starts to go in the wrong direction over a long period of time and this fed is hiking interest rates, the communication from the fed gets harder. -- this labor market is cracking over the past month. jonathan: nobody wants to see people lose their jobs. lisa: how do you see normalcy to inflation, it puts the fed between a rock and a hard place. communication is going to be fraught. tom: i think there is a underestimation of the technology overlay, the entrepreneur cheryl -- entrepreneurial spirit. it is systemic uncertainty right now, but to focus on conceptualization of it like it is a parlor game does no service. i think companies will come with a vengeance. jonathan: and will be

data-dependent. the companies will adapt. lisa: the most important -- tom: the most important thing we did today was abramowitz on the wall. jonathan: where did that come from? lisa: keep it there. [laughter] tom: we are all together. jonathan: that is new. lisa will come with a stick tomorrow. [laughter] this is bloomberg. ♪ lisa: the oil market is looking to opec-plus to deliver a substantial cut in supplies on its meeting on wednesday. the price of west texas intermediate was around $84 a barrel after rising within 5% on monday. currently, many nations in the cartel cannot meet their production quotas so in agreement on headline reduction announcement would not lead to a drop in actual barrels.

the u.k. seized the prospect of a deal with the eu on northern ireland's trade arrangement within months. people familiar with the matter tell us the government has softened its approach and has led to a significant shift in the dynamics over the past month. that could draw a line under brexit negotiations more than six years after the u.k. voted to leave the eu. in florida, the death toll from hurricane ian has risen to at least 86 people. -- losses are estimated to be $57 billion. president hyde and heads to florida wednesday. -- an aggressive five-year plan to learn u.s. chip buyers with advanced technology. he companies chip manufacturing unit is looking to triple its revenue by 2027. samsung is the world's are just chip maker by revenue, but is playing catch with taiwan's

semiconductor when it comes to manufacturing. global news 24 hours a day, on air and on "bloomberg quicktake." powered by more than 2,700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪

>> i am stumped, mystified, surprised that fed officials do not seem to acknowledge that just focusing on the fed funds rate is part of the monetary tightening cycle, is a mistake when you have qt two and a soaring dollar. i think they've got one more rate hike coming in november, the financial stability issue will pop up as a primary concern. tom: sydney rba blinks this morning, big news 12 hours ago. a controversial comment about a

fed that has "one more move left." a parlor game, we welcome you all on radio and television. what do you think of the doctors effort? lisa: i hope the are bay only raises by 25 basis points. i think there is this issue of a different market. drawing the distinction between australia and the united states is going to be important for discerning the tea leaves for the federal reserve versus the rba. tom: what we see in the fixed income market, fixed income matters. for me, it was when amazon blew up and lehman brothers was way out front on the dynamics of amazon versus the buy only equities certitude out there. what does the -- say about the ballet? lisa: there is a resetting right

now as you are getting real demand into -- along end into treasuries that are 10 years out, 30 years out. how much is any indication, it goes back to what tom was saying. this is giving him confidence, the rebuy ability -- the reliability of this market because you are seeing real price suffering for the first time for decades. tom: -- drifts away in the bond market. look for his interview out on bloomberg digital. paul -- is somebody who was at the journal of the fts, i have got to read this. he is with bloomberg opinion. we are honored he joins us this morning. paul, the litmus paper on csg and is over to bear and lehman, clearly on accurate, clearly off the mark. how off the mark is it, what is the state of -- versus our collective memories? paul: one of the simplest ideas

to think about today would be the liability, the funding of -- credit suisse today, and -- in 2007. how much things have changed. for example, in 2000 seven, credit suisse deposit long-term debts 37% of funding, now, it is about 75%. lehman brothers, the other way. short term funding and trading liabilities -- was about 76% of their balance sheet at the time. forget the -- cover duration, fund duration, all of this modern stuff. in the simpler sense, the funding structure of banks today is different than now it was in -- how it was in 2008. lisa: certainly, the price

valuation we are getting with respect to stop moves and the cds market are black of faith that makes it more difficult for credit suisse to race -- raise money more effectively without reducing their evaluation. how much is it wishing credit suisse into an acquisition fail that means credit suisse no longer be credit suisse as we know it now? paul: -- two the bank, from the beginning it has either to find a injection of extra capital money to fund the products they think might be more attractive to somebody else, or find assets to sell. we have seen a story how they may sell -- four agate -- for an example. i do not think they saw the capital raising is one of their first options going straight to the equity market. as time has gone on, the fact they may want to raise some capital -- at the end of the

day, to speed up restructuring, not to solve problems they have today. it is allowing them to restructure faster. that might happen, that helps the shares more. they are in no position to do it. they would have to be really desperate to come to market at that point. lisa: we were talking about the distinction between australia central-bank and u.s. central bank. what is the difference between credit suisse and european banking at large, the question of is it a indios and granite -- idiosyncratic moment, or a -- in a tumultuous economy? paul: the main difference between, when you think about the big german banks, the returns, the real lending and business they do at home have distantly been very low for a long time. this has made deutsche bank much harder to turn around, much

harder for investors to see as promising in the future. tom: i have the great paul of davos asking the banker types, windy the european banks merge cross-border -- when do the european banks merge cross-border? do you think the european banks will get what we saw in -- a million years ago? paul: -- was born out of a different time. the problem is, european banking markets just do not work in a -- way, not a single market. it is a bunch of retail banks together across europe, turn them into a single bank that has real savings. tom: thank you so much. spectacular essay on credit suisse, he says calm down, everyone.

lisa, we stagger to 10:00 a.m. let's review jolts, which is a real measurement two ways of a jobs market, unlike claims. it is a two-way study. lisa: how much are companies posting openings? what we have seen anecdotally, a lot of companies are still hiring. some are freezing, meta-a plan -- meta-plans to be a smaller company next year. from the peripheries, you're getting a lot of postings that go back to july. we saw an increase on a month over month basis. tom: with the pandemic and shock of fiscal impulse, the savings rate that has been depleted. it is absolutely original labor analysis in the friday jobs report. this is completely original from anything i have seen. lisa: there have been a lot of people who have retired, out of work because of long covid. the uncertainties hitting these

companies, happened to be translated into some kind of policy by the fed. tom: is -- going back to her, now that covid has drifted away? lisa: a lot of people retired. if they do, this is what they are hoping for, the perfect landing. this is the goldilocks scenario to come back and, lower wage increases. tom: retirees, possibly come back to work for -- futures up 58. dow futures up 378. put them together, two days in a row, up, up. stay with us. this is when berg. this is when berg. at booking.com, finding perfect isn't rocket science. kitchen? sorted. hot tub, why not? and of course, puppy-friendly. we don't like to say perfect, but it's pretty perfect. booking.com, booking.yeah. jonathan: good morning good

morning. the countdown for the open starts right now. >> everything you need to get set for the start of u.s. trading. this is bloomberg, the open with jonathan ferro. jonathan: we begin with peak everything all over again.