i'm going to answe it really mar that much? because over the past six days, they have implied they could have actually purchased up to 30 billion sterling in long dated yields and they have purchased less than 4 billion. so effectively, yes, when we had >> right now the market has been the news there was some headline and we saw a decline. the 30 year yield in the u.k. held hostage by technicals, by went from 5% overweight down to sentiment, politics and geopolitics. >> there is an uncertainty 3.8% on the announcement. 120 basis points. factor keeping markets on edge. >> i would expect that to be a so far they have not grouped volatile environment. about 50 basis points and they >> there was a concern that something might happen in the are trading close to 4.3%. my bottom line is, yes the boe u.s. market. >> we are very much watching out for that turning point in the fed. >> this is bloomberg can do some things, i think they surveillance with tom keene, were explicit about the 14th of jonathan ferro and lisa abramowicz. jonathan: next payroll, for our october but these are going to

only last in the moment. audiences worldwide come out history is abundant with good morning, alongside tom examples that central bank keene and lisa abramowicz i jonathan ferro. interventions, moves, actions futures -4%, jobless claims a cannot reverse when you have the little off ahead of payroll. big crisis of confidence. jonathan: thank you, as always, tom: something changed come out vasileios gkionakis working tomorrow all of a sudden matters through big issues in the for the fed meeting going up and european market. far more than that it has to confirm that jolt statistic from they do not have a package that size. lisa: correct and they are earlier this week. saying it is going to weaken no but then stasis, we have not matter what, what does it mean pulled back. jonathan: and negative this longer-term yields are going to morning. be much higher? it is a tricky a pushback from fed speakers. issue which is why people don't i went to the fed speaker today know what is going to happen. jonathan: this and on twitter, and kept scrolling down. lisa: we are getting there. the strategic midterm reserve. do you like that? pretty much everyone except for lisa: i think that signs -- jay powell, he is the one that will be saying the same thing and all of them will probably seems accurate. jonathan: we will have that reiterate what mary daly said yesterday, stop thinking we are conversation later, dan morris will join us later. going to raise rates at a looking forward to that. futures down by .7%, live from certain point and then cut them. they are pushing back on the

idea of rate cuts in 2023. new york, this is bloomberg.. >> keeping you up-to-date with the market keep saying you're wrong and that is it. news from around the world, with jonathan: if you want to signal, news in the first word, i'm lisa that is not what you want to do. the pushback. lisa: people are getting more mateo. prices will in steady as there cuts in the global market and the market has been right. are the biggest production cut since 2020. this is a consequence of the fed they plan to adjust daily output getting it wrong and the market by 2 million barrels, moving a being more credit -- more correct. jonathan: let's talk about the -- a move from the u.s. that would increase oil for producers. previous three days, up almost 11 percent. tom: it's i did a lot of north korea is ratcheting up attention in the region, firing technical studies today, -- two suspected short-range elliptic missiles. the aircraft carrier ronald jonathan: controversial. tom: you were ahead of me. reagan has been deployed. kim jong-un launched his first all of a sudden it is controversial, but only about rocket over japan in five years one thing. there is an election in november earlier this week. that is all this is about. north korea is sized the u.s. jonathan: operation midterm. for the carrier in the they were saying opec-plus is peninsula. aligning with russia. millions in britain will be stating the obvious because it

dragged into a higher tax is the plus in opec-plus. bracket over the next years, lisa: and the minister was there costing more than the prime in vienna. it is not much of a stretch. minister's tax cut. the response would be releasing the government is reducing the more of the strategic petroleum rate of income tax but also freezing the threshold where reserve into november. it raises issues about stability people start paying and that will force them into higher tax in the market going forward and brackets. the use all of the road -- atlanta fed president says he reserves at a time when you're not seeing the crisis levels. favors lifting interest rates to as high as 4.5% this year and wants to keep tightening to jonathan: it is not the best reduce inflation. use. this is in line with fed operation midterms. policymakers. lisa: anyone else? markets are projecting the likelihood of a 75 basis point jonathan: there is a range. hike at the next meeting in lisa: some people say it perhaps november. 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. gives stability to the economy i'm lisa mateo. at a time -- you are laughing this is bloomberg. ♪ but i'm trying to provide the other argument. jonathan: i'm just smiling. lisa: you could make the argument, and a time when you are seeing concerns into

dwindling demand, they will use the time. jonathan: very diplomatic. i agree. tom: remember this, we brought the bramo-cam with us. jonathan: futures -1% -- -.7% on the s&p. things have calmed down. we were deeply negative yesterday and we took a big chunk out of that as we got to the close. futures down .7%. the euro-dollar giving me nothing, totally unchanged. after all of the drama of the previous three days as we got the opec plus talking about too many barrels a day, crude went nowhere. $87.70. lisa: we can get into how much they are actually cutting because they are not meeting

production targets as is. it might be able million barrel cut and it might be less depending. there is a lot as we see meandering price action. 7:30 we get the ecb monetary policy account. jonathan: there is no detail whatsoever. lisa: great. so we are not going to get into details. people will be looking for it anyway especially after the ecb speaking yesterday. christine lagarde talking about several consecutive rate hikes in the meeting after there was perspective for the downside of the ecb yesterday. 10 year yields jumped by more than 16 basis points, the most going back to march 2020. it was a reversal of the potential pivot of the first two days -- earlier days of the week, the australian central bank, make your gamble. but early betting is it has to do with gas prices in europe. the u.s. initial jobs claim at 8:30, how much does this give the tea leaves of the market?

some of the projections on bloomberg surveillance have been dire in terms of how low they would have to go before the fed starts to accelerate or how high the jobless rates have to go before they pull back. some of the questions heading into tomorrow's non-formed pre-roll and today this is for you. minneapolis president neel kashkari, chicago president, cleveland fed president and anyone else on the federal reserve who wants to speak are welcome to come on the show it we will make room. jonathan: we get kashkari twice and metzger twice as well. twice in a day. -- mesler twice as well. tom: there is way over communication. jonathan: ticket look at that. joining us now, the head of u.s.

strategy at citigroup. vasileios gkionakis, can you walk me through the next leg of where that will come from? vasileios: it is coming very soon. the high of the last few days, to a certain extent there is dollar weakness because there were quite a lot of short acquisitions down there. in equity, and bonds and the long-term dollar. it is a practical rally. a bear market rally. it will still come to an end either through positioning or something else tomorrow. but the big picture remains being dollar bullish. i think what we have learned in

recent days, you can get governments still going ahead with the plan to boost growth, and no government has ever been able to target for something like that. apparently we will be going ahead with increased borrowing. have not had anything to suggest we will do this. i hope we will. but if it does not happen, the >> there is a collective u.k. is going to be really bad. gold will be killed as well as a assistance in order for us to be sterling. tom: the 10-year gilts and also effective. we have to be proactive. sterling felt today. does fx follow fixed income or does fixed income color -- follow the current market? it has to be. vasileios: typically, the fx jonathan: the saudi energy

will be following yields. minister, a fantastic job from our team in vienna, austria but i think when you are in covering opec-plus. situations where there is a live from new york city, good morning, futures -.6% on the s&p 500. crisis of confidence with this, i think this correctly describes foreign-exchange and bond market yields higher, the euro-dollar what is happening in the u.k.. you get the conference factor of not doing much, 98.84. most things together. crude has done a lot over the effectively what is happening is previous three days, up by you are getting the pricing hire almost 11% on my screen. of risk premiums and when this happens, you get to move yields up by almost 11% over the higher and exchange rates lower. previous three days. this morning, down by .1%. but in median terms, from a $87.67, getting information from fundamental perspective, the issue will be that sterling is the kremlin in a conference going to remain a short observer call. he said the outlook cut is -- absorb her. and pretty -- absorber. looked at stabilizing markets. it is not a sign of solidarity with any country. in 1972, it led to the pound, it some pushback against the white house. the price targets are that lost about 38%. russian oil is destructive and hurts everybody. right now, it is even a week or tom: nothing on the words from

ukraine, i was stunned of the deficit. i think it is unavoidable if headline yesterday of people these policies carry on. beginning to pundit that ukraine could go after crimea in 2014. lisa: what does the bank of jonathan: the price story for england to on october 14? the european was complicated, vasileios: that is a very good that has blurred the lines for a question. lot of people. tom: it is. and it is an opec meeting. is he still in vienna? i don't think he is. with annmarie hordern in washington, she is focused on the election. maria tadeo is not and she is in prague this morning. maria, away from the narrowness of the u.s. debate moving onto the first tuesday of november, what is the response to opec-plus across brussels and continental europe? maria: the reality is oil is a conversation for the united states and here there has not been much reaction because europeans are focused on gas. you will allow me to get technical. yesterday the head of european

commissioner, ursula von der leyen sent out a letter in which she said we will intervene in the gas market and prices need to go down. what the europeans are focused on is the gas price tax. that is the main focus. but this is a complicated situation. you talk about a price cap, there are at least five different formulas with i could work and the germans worry that any intervention would kill the little supply already in the market. not a lot of reaction on the oil for them. very much a gas story today. jonathan: i want your response to this. i'm on twitter, not mine, but i will use it all morning. the strategic midterm reserve for the rest of the year. annmarie: if you look closely from jake sullivan and others yesterday, said this is what the president could do. the issue is that at the moment, and we should note additional sales will be coming down the

pipeline in the next few weeks. but the ftr right now, the levels they are at are the lowest since the early 1980's. there is a lot of pushback from republicans that the fpr has been politicized by this administration because it is not an emergency situation or disaster relief. it is used to push prices down. the white house talked about the fact that they were able to get prices down from five dollars in the peak in june to now just under $3.90 a gallon on the national average. this is something we could see because this opec-plus position has put them in a bind. they still have to deal with the fact that gasoline prices and inflation are top of mind. american voters, and americans are voting now in some states. early voting is open. this is a big issue and the timing and optics was a huge snow for the white house. lisa: this is why when you have

the kremlin saying this is not political, people will say this is like a company saying we are not about to collapse. things no one wants to ever say. i'm curious how much pushback there is to saudi arabia from the u.s. because of the snow. the fist bump did not work and discussion did not work. now russia is there. all of this pushing against an agenda. annmarie: the timing is terrible in terms of the president. just under three months from his landmark trip to saudi arabia and this comes right before the midterm election. but i would say there has been u.s. officials obviously leading up to this reaching out to their counterparts in the gulf to advise them against this. what is clear is that saudi arabia put the price of oil above their relationship with the united states and its decision. jonathan: i want to give you the final word. we hear from people that we secure the energy we need to get through this winter, but we made

2023 incredibly fragile. can you walk me through what people are talking about not just this winter but next year as well? maria: it is. we look at storage it is 90%. one of my contacts told me yesterday they expect 100% of storage across the eu sooner than participated. --anticipated. you could be looking at the next two to three weeks. tecumseh next year, this is a complicated situation, on the volume especially. countries like russia have had the nord stream explosion. ukraine, whether the pipeline will hold or not is a question. this will be complicated going forward. for a lot of european leaders, with a focus, the domestic agenda is getting europe through the winter. jonathan: maria, thank you and annmarie hordern. this is where the conversation goes, it is what next year looks like. if you achieve what you want to achieve for this winter, how do

you repeat the act? it's tom: it's about gas in europe and over there it is a discrete conversation as it started outward. in the u.s. it is about the election and i'm told nevada is one of the two in the election. a gallon from las vegas went from $4.82 to $5.54 and that is a substantial jump. jonathan: we talked about that, in the wrong direction. we have seen that in the last couple of days. lisa: how much is that something that will remedy that, with releases from the strategic reserve versus friction in the refinery? there are a lot of complications in order to get even lower energy prices. here is the flip question. what happens if the outlook but does not raise prices? what does that say about the global economy? that is something people were wondering after these moves. jonathan: it is what tom said though, it is important.

what happens if china drops covid zero and comes back online? tom: i'm all over it. i looked at hong kong flight yesterday, united airlines saying they're going to start in january. off we go. jonathan: a big change. live from new york city, futures lower, this is bloomberg. ♪

jonathan: live from new york city this morning, good morning. price action this thursday. .7% on the s&p. we switched things around almost by the close, futures down point 8% on the nasdaq. two tens and 30's shaping up. we see some calm in the bond market after trading like crypto's. yields up by a couple of basis points on the two-year, 4.17, crude accident -- absolute surging on the previous three days. energy stocks up more than 12%, crude up by about 11%. just an inch lower, 87.69 brent

crude, down .1% there. we will catch up with francisco from bank of america. tom: that is an important conversation. he has been very informative. i have to point out, we can get this back on. we are right at the resistant level. this is an important conversation with pantheon macroeconomics ian shepherdson, always sharp on a global view. this peal down of the central bank of the u.s.. you talk about the importance of fed persistence. if we get data that persists, walk us through how you perceive the data trail to be forward to where the fed has to make a decision. ian: yeah. well, december i think is shaping up to be potentially an interesting meeting. the new fed dot plot shows 125 basis points of hikes november

and december together. it looks to me that if we get more data that looks like the jobs report this week showing a big drop in job openings. we also get a couple cpi inflation reports. we get three before the december meeting. my guess is it will be much better than last month. if that is the case i think the fed is going to struggle to convince markets it needs to do a total of 125 basis points in the last two meetings of the year. but let's be clear, we need both of those things to happen. the fed has been very clear, chair powell last week, saying it is not just about the current inflation rate. and we need to see a run. fair enough. it is all about the labor market. what they are concerned about is even though there is a strong downward force abundantly -- downward force of inflation, they are looking at wage growth of 5% plus.

even if inflation comes down quite rapidly by next spring, we are worried about where it will be in 23 and 24 if it does not moderate. i do think they want to see moderation in the labor market as well as better inflation numbers. here we are with the possibility of that happening as soon as the end of this year. so this will be extremely interesting in december. i'm wondering if in november the case has already been weakened as well. maybe from the blue. you got a 12% drop in drug -- job openings in one month. things are starting to move. the fed is not moving yet put a few more weeks of numbers like that and there will be movement. tom: this is november 2 into december 14 when they really decide the rest of the season. jonathan: and you can ask the critical part. tom: it is a critical part. i'm becoming a sophisticate.

jonathan: what you are saying about december now is what you said about september 3 months ago. what are you surprised by? ian: yeah. well what pushed us to 75 in september, we had horrible inflation numbers and that made it impossible to do anything less and they had to put the sledgehammer down. there is a good chance things change now. so many resellers are talking about they've got these inventories, we are hearing from the car businesses that inventory is rising again. neal dunn the pressure on prices, used car prices are down 13% since january and the rate of decline at auction is accelerating. there are things i would hope would happen by september that did not and they in the data. so we need more of them. just the snapshot of a few good numbers is not enough. powell has been very clear about that. but still a long way away, inflation reports, two more pp

reports, that is a lot. we have reached a tipping point where all of what these companies are talking about will become visible in the hard data. that puts the fed into a different place, especially if at the same time, the jobs numbers are like anything like what we saw next week. lisa: has the fed turned into just the fed is just wrong? we could hear from 15 more fed speakers today and 25 tomorrow and they could all tell as we are not going to cut rates next year. they're still going to cut rates because the data is moving faster than you are acknowledging. do you think the market is right and the fed is wrong? ian: it is a point. rates have gone up over the last year so much that in normal circumstances i would be screaming about recession and stop all this pop is talk, stop

declining -- the climbing. he will have to signal soon. i'm not saying that as it would be normally, the fact is the household sector in the u.s. is still sitting on one point five, $1.3 trillion -- 1.7 $5 trillion -- 1.7 $5 trillion in savings and that is upsetting interest rates. particularly in the corporate sector, there a lot of cash as well. i would say in a normal economy you have done enough and you are in danger of triggering a recession we don't need, but the consumer is holding up extremely well. hounding notwithstanding. and the corporate sector looks ok as well. but there are enough strong in the wind, you can see some of the regional fed surveys and capital spending has weakened a lot. you can see it in this market and the jobs numbers. you can see it in some of the consumer surveys as well. maybe things are beginning to

waffle. some sectors it is not a collapse, but is it the sort of economy where you need to be hiking by 125 basis points at the next two meetings? that is far from clear to me at this point. i'm hoping that by december it will be clear and it will be clear they don't need to go so aggressively. every incremental hike i think is raising the risk of triggering something we don't need. the u.s. does not need a recession. lisa: ok. the u.s. does not need a recession, other people would disagree. including some people from the federal reserve based on the forecasts currently in play. what is your view if we do get a recession of the depths, based on the trajectory of rate hikes we see and how quickly the data is changing with the weakness people are expecting earlier in the year? ian: my general rule is that

recessions are proportional to the imbalances in the private sector that preceded them. the whole point of a recession is to force the private sector to change its behavior from overstretching to coming back to normal. if it is not very overstretched it is not mean a deep recession. it will be much more like 1990 2001, mild. but i don't think we need one at all. the crushing of margins that it is going to impose on the retail sector, it will bring inflation down faster than the fed thinks even without any meaningful item in this rate. but before we have never seen the upside. there is the speed of this fashion and we have never seen the -- but we are in uncharted territory and when you are uncharted territory, maybe the prudent thing is to ease up and look around. that is the thing come out when you don't know where you are. maybe pause, give the data the

time to break one way or the other end if they don't come out carry on. but if they do break for the downside, there will be quite long legs. if you are still hiking aggressively in november and december and yet inflation is already breaking to the downside, what you have done is impose the inflation report on the economy for next year which it probably does not need. jonathan: is this uncharted territory for newcastle united? ian: [laughter] tom: i have been whining for years that there is something amateur about more goals. manchester city is doing up. jonathan: let's be frank, harland is doing that. tom: are they changing the way the game is played? jonathan: they are changing the way the game is. it is the most prolific.

lisa: is that the most americans? i want more goals. click -- the quintessential american response. [laughter] jonathan: it makes a ton of sense. tom: this game at newcastle, it's like when you go to see -- jonathan: at newcastle, that is a real atmosphere. i would love to watch a game up there. lisa: do people there say they would like to see more points? jonathan: they would like more points. that is the conversation we have after every game. tom: to tie it into opec, i don't think it is getting up. jonathan: there is a tension between the rest of the league about where the money is coming from. tom: trying to make this a legitimate business. jonathan: a good effort.

tom: i failed, but good effort. jonathan: commit talk about bluecrest and go through this? 2016, 50% up, 17 54, 18 -- 2022, that team reportedly has put together gains of hundred 14%. lisa: and it comes after they closed their fund. because they wanted to be more aggressive and take more and not have to adhere to the standards of some, etc. and they crushed it. jonathan: can you think how many different market regimes have played out in the last six years? they have just crushed it. tom: jon i have looked at this very hard. to get beyond year three is statistically --

jonathan: 114 in 2022. tom: not surprising. lisa: you are like i reject this. jonathan: it is incredible. futures down .7% on the s&p, from new york, this is bloomberg. lisa: keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. it looks like president biden's move with the saudi arabia and crown did not pay off, they aided prudent with the opec-plus oil production cut. president biden hoped his visit to saudi arabia would encourage the saudi's to pump more oil. shout dropped -- shall dropped after the energy giant had -- the refinery and chemicals business shows signs of a slow and that could be worrying for

europe where energies are putting pressure on natural gas prices. researchers have dropped by about one million -- $1 trillion this year, 7.8%. part of this is due to valuation changes but stresses in the market are forcing a number of central banks to intervene to support the currency is. in the u.k., at least 340 billion was wiped out from the stock in the first month of liz truss. bank of england interventions and eventually a government in turn. someone said the u.k. market is on investable. 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. ♪

>> ipo says raising to a level

that we believe is restrictive enough to bring inflation down and holding it down -- holding it there until we see inflation close to 2% demonstrates that price stability is restored. jonathan: sitting down with mary daly, the san francisco fed president yesterday. good morning, the market shaping up on the s&p. bp negative again this morning just like yesterday morning, we are raised much of that by the close yesterday. futures down by .7%. yields higher by couple basis points, 10-year 3.77, after a surge in crude over the last three days, 87.23 this morning. negative .6%. the damage is done on nord stream. the security sector says nord stream damages from destination. the gasoline pricing probe has

been concluded. it has strengthened the probe, showing signs of detonation. the latest from security services. tom: i guess we will see more. i don't know how deep it is but it is not that deep to begin with. jonathan: as we get more headlines. tom: i think that is all there is to add. futures negative 27, the vix remarkably stable over the last couple of days which is notable by those looking for a cathartic mood -- move. julie norman is here on discussion of the war in ukraine, codirector of the ucl center on u.s. politics and has a real understanding of war and terror. good morning. it has been a conflict on this show and in the zeitgeist as well. the response that any institution should have to what happens in a war, never pretty but then there is torture.

how do you judge or gauge the reports week c from ukraine of t -- we see from ukraine? julie: it is what we have seen from the beginning and i don't think we should sugarcoat. it is a complex situation but we have seen so many russian atrocities in this war in different parts of ukraine and it is not just a lot of the tactics they have used in previous conflicts as well. it is part of a pattern for russia and i expect we will continue to see more as the work continues, including targeting of civilians which is a bit different than what they have been focusing on. tom: whatever anyone's politics, and the movies there is the geneva convention. what convention is there? how do we institutionally respond?

julie: we have these international law documents, we have a convention against torture, but it is only as strong as the will to enforce them and that is unfortunately minimal. we will see more in ukraine and what we have seen already is trying to change this rather than focusing on isolated events. human rights have been doing an excellent job documenting it. my sense is there will be some attempts at litigation after the war on human rights issues. but the focus for most of these international institutions right now is on the broader conflict and trying to put ukraine in the best position in a way that is advantageous for them. lisa: has it proven to be an escalation or de-escalation in terms of are we closer to some

sort of nuclear conflict or some end? julie: annexation was certainly a provocative move by russia, somewhat unexpected in recent weeks. ukraine has responded pretty much by saying we are going to continue with everything we are doing in terms of the operation and continuing to make gains in some areas. the entire international community has seen this so it has fallen flat. the next move, there are 70 options available for putin and i think we need to be clear eyed about that. ukraine has maintained they are in a good position going into the winter, but the war is still far from over. as far as we are hearing about the potential of putin being in a corner, we look at what would be impactful using things like a tactical, it is a small thing,

most analysts i think do not see that as imminent but something that is certainly possible and feeling much in the focus right now for the u.s. and allies of what that might be and what kind of response there might be to something like that if it were to take that course. lisa: given that backdrop, how do we take the fact that the russian energy minister went to vienna to join the opec-plus meeting? that they are agreeing to something that has been beneficial to russia at a time when this conflict, the war on ukraine is only protracted some of the animosity between western nations and russia. julie: absolutely. opec-plus choosing to cut the oil production, this is a slap in the face to ukraine, the u.s. and those just yesterday who are trying to have a price cap on russian oil. you kind of even that out if you

will. i think from this act, the fact that opec and especially saudi is still playing to their own interest, they are looking out for themselves. biden said in the summer, it is obviously only a very short-term effect and shows that the policy and economics of this conflict are in russia's favor with some of their allies and some states around the world. jonathan: julie norman, thank you, of the ucl center on u.s. politics. something not being discussed enough, the capacity of some of these nations is problematic. they had -- if they had a cap on output, we talk about a 2 million barrel a day cut, those few times in the last one he four hours, it works out about 800 k. did you see where the oxley ceo had to say on the sidelines of an event over in london?

the risk of living with a shortage that will drive up prices, they are going to continue to manifest itself as china starts to open up from covid. a really uncertain moment. tom: on the others either is a dampened demand because of -- jp morgan's effort, francisco at bank of america same idea. a migration to a persistent above $100 a barrel is faced with the generalization on pacific rim. we are here now. jonathan: where his demand next year? -- is demand next year? tom: after covid? jonathan: we could talk about this all morning, but what does it look like next year? i don't have an idea. lisa: nobody has an idea. someone from jp morgan yesterday was highlighting this, it is more expensive for oil producers

to increase production. a lot of the investment and these oil wells are not as productive. how do they gain that out with where the price is supposed to be? jonathan: brent crude right now, 92. slightly negative this morning. slightly lower with futures lower, for our audiences worldwide, this is bloomberg surveillance. ♪

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>> right now the market has been held hostage by technicals, sentiments, politics, geopolitics. >> it is the uncertainty factor keeping the market on edge. >> i would expect that to be a volatile environment. >> there is a concern in broader financial markets that something might happen in the u.s. market. >> we are looking out for that u.s. recession coming through, the turning point for the fed. >> this is "bloomberg surveillance." with tom, jonathan ferro, and lisa abramowicz. jonathan: live from new york city, alongside tom keene, lisa abramowicz, i'm jonathan ferro. futures down on the s&p, jobless claims are big this morning. tom: 207,000 four week moving

average on claims. a fully employed america. the fed wants us not to be fully employed. jonathan: well the fed might get something extra and maybe we can look at the soft landing. we can decide how skinny the leading strip is. we have to talk about this debate over a series of months, but he got people hoping. lisa: they got people talking about the pivot which i know. -- tom loves talking about. it's going to kill you. and as we have seen come out good news and good news being bad news, trickling into the fed again on the market. that said, going forward, it is because they are consistent. they're going to be showing until they have seen inflation come back. this is very clear cut. either the fed speakers are wrong or the market is wrong. jonathan: are they going to cut

in the recession is my number one question. there was a speech yesterday, got all the way to the bottom and in the second to last paragraph, listen to this. " if economic conditions we can appreciatively, for example if on a rises uncomfortably, it will be important to resist the temptation to react a reversing course shortly." think about what that means. if there is a downturn in the economy, and it reflects higher uncomfortably, but they're not willing to do that. tom: 3.9, you go to four, find. 4.9, you go to five, it is nonlinear and that is a different conversation. jonathan: there is a difference between what the fed wants to signal right now and what they may end up doing next year. ultimately this is what they're going to do. lisa: there's also a question about when it serves to feed into the economy. a lot of companies have pushed

out maturity. but those start to come up at the end of next year and they have to refinance. refinancing at a four to 4.5% fed funds rate is different than 1, 2, 0%. jonathan: have we seen unsecured debt? trying to push it around? lisa: i have heard about a couple of places bowing out, exiting stage left. tom: what is the news of the last 24 hours? we have not heard anything from twitter. jonathan: let's see how much we are going to pay for weakness. lisa: and i would speculate right now there are discussions among some legal teams. tom: always with the good news in retail, price targets up 28% on a 21% lift in 2022 sales.

the market, it is luxury, it is fancy. but nevertheless, we go interning season with stories like this. tom:-- jonathan: may be, but also with nike, fedex and the report. tom: well fedex was that we could report. jonathan: sorry, expecting weakness in the front half of next year and now talking about right now. lisa: the companies are having trouble adapting. jonathan: the prices are struggling to adapt and adjust. tom: it's ok. jonathan: they will adapt and adjust. tom: can we say strategist don't like this? harvey has had a hell of a week. he's right. -- no, but -- jonathan: futures down half -- .1% -- .5% on the s&p.

.5% on the s&p, yields higher by couple basis points on a 10 year, 3.77. -- 3,77. tom: can we talk about what we talked about in the last hour, sterling is bad. jonathan: we did not talk about permanent solutions. tom: we had warnings. jonathan: i care about three dates, october 14 when the gilt market operation ends, november 3 we get it banking decision. tom: and as lauren summers says, how'd the mess in your country affect ours? jonathan: there is the fed speak, tom. lisa, how much of that have we got? lisa: i'm looking forward to a lot of important dates. 7:30 and we get the overview of

the previous eating. interesting to see some of the hawkish fed speak. 10 german yields yesterday surged by the most going back to march 2020. yes because of the hawkish speak and reversals, but also on the heels of the natural gas increases, the price increases i should say. some concerns. we've got viewers from the chicago talking about the tea leaves to figure out what will it take for the fed to pack away some of the rate hiking expectations? we are seeing claims dwindled near all-time low levels. today we also get to fed president neel kashkari twice, chicago fed president charlie evans, fed governor chris waller, and another twice. should work for everybody. jonathan: i can't wait. tom: it is too much. jonathan: kashkari twice.

tom: we should give more formal speeches like in new york. jonathan: but we spoke and we are listening to him and a week later we are talking about a pivot again. dan morris of bmp par -- bnp paribas now. june was aggressive and everyone's are talking about a pivot. is it a bear market rally this week, what is different between now and then? daniel: we have to keep in mind what might be a driver for a sustained rally, but at least for a few weeks right now. we appreciate on one hand the sentiment is very bad. no one likes equities and no one likes risk. but at the same time, because the sentiment is so low, you get a bit of good news and i think you can see some of the price action we already have.

so going into the third quarter earnings season and we have private -- surprises, market is looking for good news, i think it will be up. tom: this goes back to dr. coronado years ago, this incredible parsing of gdp. what is the part of gdp in europe, the united kingdom and the u.s. that your focus on? dan: it is really going to be the price indices. these discussions we are having all comes down to how inflation evolves in the month ahead because everything depends on that. it does not matter if we don't pay that group to the inflation. it is looking at the price entities within the national account and in particular, looking in the u.s., what is happening with services, inflation and so importantly, it meant inflation. metas going to be the most sticky and the one that may

require the fed to keep rates higher for longer as they said they are going to do. jonathan: a tough time for anyone. credit suisse, here's a headline for you. looking outside to the investment bank spinoff off, the stock trading higher than swiss trading, the bank is considering the boutique model for advisories making credit suisse talks advising the first name. the first name -- talk about the legacy of that first name. tom: it is a magical legacy to say the least. but i get it. maybe you change the curtains. what i would focus on is the most important guy on the block today for the bank of zurich. christopher , chcua. they are hemorrhaging the talent as they did years ago. jonathan: this is what happened

with deutsche bank a few years ago. this is the problem. it is not lehman that is ok. ridiculous. when a bank goes to these problems, retaining talent is problematic, retaining and attracting clients even more and your way to growth is difficult. lisa: it is not a lehman moment. anyone saying that is looking at this in a specific fresh a simplistic way. people thought financials would do well in a rising market and perhaps credit suisse is its own story. but on a broader level, there are these issues the become more prevalent when dealmaking pipeline dries up. jonathan: dan morris, can i get you in this? i know you can't directly talk about credit suisse but talk about how difficult banking systems are in europe when you so have these problems across the continent. julie: --

daniel: i don't know that it is so negative. we have an overweight investment and credit even in an environment where we appreciate the workplace and recession this winter. one reason for that is even if we move interest rates higher, you talked about companies have to refinance the higher rate. the good news is on the one hand with price spreads, risks might be lower given companies have been able to raise a lot of cash at lower interest rates. balance sheets are generally in good shape. that should lead to less problems potentially for the banks. jonathan: dan morris of bnp, thank you. credit suisse trading higher, up by 3.4%. this still trading at 325. tom: when a stock is under five and you are in the banking business -- jonathan: peloton as well.

how did that work out? things you never want to say. the ceo of doug jones, is a turnaround sale of the company likely? nonviable. more to come from new york. this is bloomberg. lisa: keeping you up-to-date with news around the world with the first word, i met lisa mateo. the price of oil is holding steady a day after opec-plus agreed to the biggest production cut in 2020 -- since 2020. it will be more than 2 million barrels. that is with a view from the u.s., seeking more oil from producers. russia repeated the warning it will not sell crude to any country that adopts this price cap. north korea ramping up tensions, firing twoth u.s. carrier the ud reagan has been deployed. they launched their first rocket

over japan in five years today -- this week. they're focused on waters east of the peninsula. a new study shows millions more britain's will be dragged into a higher tax bracket over the next three years and i will cost twice as much as prime minister liz truss' tax cuts. the government is reducing the rate of income tax but is also freezing the threshold where people start paying and that will force them into higher tax brackets. 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. ♪

jonathan: live from new york city this morning, good morning to you all. slightly negative on the s&p 500, thursday trading negative on the s&p. yields not doing much on the 10 year, up a couple of basis points, equities down .5%. corporate news, one from peloton and another for credit suisse. peloton cutting its workforce by roughly 500 globally for about 12%. the ceo saying the structuring work is complete.

this came from dow jones about 15 minutes or so ago. what jumped out at make about turnaround sales on the company not on its own. what a turnaround in the last two years. lisa: considering how much the shares had blown up during the pandemic in a positive way and deflated. this is the fourth round of layoffs to give you a sense, leaving us with about half the number of employees globally. this is a hail mary to get to the point where they are viable in the new era back in june. tom: i am the worst offender. is the fed over? is it that simple? tom: -- jonathan: it is not about -- if you have a product you love it does not make a good business. they still of the product. lisa: there is --jonathan: they still of the product.

-- love the product. lisa: now some of these companies are finding the investors are not there. jonathan: like unsecured debt. lisa: from a social media company, correct. jonathan: which is likely going to 12%, likely to go up to 15. we can talk about that later. the latest news from credit suisse, trying to bring in an outside investor to inject money into a spin off of its advisory and investment banking business. they do not want to do an equity rate. tom: five just per share. joining us is there leader, michael, with terrific perspective on what banks do when challenged. i'm going to cut back from the future that you and i lived and drive it forward. there was a government, a

company called bear stearns and as mr. jamie dimon to his regret says, jp morgan came to the rescue. where is the swiss government and where is the j.p. morgan in this discussion of credit suisse? >> you have to think that competitors are looking at the share price and asking the question of when does this make sense if the fed's an acquisition target. but if you are credit suisse you want to make the point you don't want these shares at this level. you have seen some ideas floated out there, could we bring in some capital in a different, more creative way to allow for what will likely be a fairly dramatic restructuring of the investment bank, and how do we fund that? this seems to be one possibility, this idea of a spinoff and credit suisse has had a long-running banking

franchise, the big question is does that brand name or bringing back the first brand name help, or have they lost too much talent? lisa: i want to talk about the urgency, we have heard about the turnaround plan by the at the month. does it have to be next week? bloomberg reported some of the clients pulling back from credit suisse, more departure from the talent they have. how much of this is expedited by the reaction market? michael: there has been that chatter out there. the company would like to stick to the date it put out there of third-quarter earnings, october 27, coming out with a robust plan. i think they don't want to rush something but there is that market speculation out there. you've seen shares turned down quite a bit this week.

but the company keeps pointing to the fact that they have over $200 billion in liquid assets so there is not the same fear we have seen in past cycles. tom: you've got encyclopedic knowledge of this. is this being driven by the board, the chief executive officer, the chairman, the swiss government? who is driving the car right now for credit suisse? michael: we've got a few parties. we have reported in the past that the board has been somewhat split on how dramatic it would be on the investment bank. they are coming to a consensus. they have assigned a special committee of the board to look at the future of the investment bank and how much of the players are there, the investment banker, the masters there,

christian on the executive side. you have a number of experiences going through the room you are also seeing -- what you are also seeing there are a lot of opinions here. the swiss government probably has a few. jonathan: thank you and thank you for the latest from credit suisse and from a. a tough time to restructure a company. peloton trying, too. i heard a great podcast last week with jeff curry and another. jeff made the point, to your point, the story from peloton to opec, his point was basically we had zero rates for so long, what do people do to make long-duration investments? they were throwing money into things like uber, food delivery, peloton. and if they really build out things like refinery.

to put a conclusion on it, it is a revenge of the economy. lisa: you cannot do that by issuing more derivatives. the reason it is so hard to invest in a supply demand dynamic in things like oil, copper, some of these other precious resources. tom: to line up the ducks, is peloton an example of a zombie company? is credit suisse's zombie bank and is twitter zombie social? jonathan: not to me but there is a relationship between what is happening with the likes of peloton and opec-plus and the oil market. lisa: to your point, it does not mean it is a bad company or has a bad product. but perhaps it is structured in an era where money was free and people were willing to finance a model that perhaps looks unsustainable in a different market, the question of the zumba vocation -- zombification,

the funds rate. jonathan: four or 5% is different. i would say maybe 5% for some of these companies. coming up shortly, marilyn watson from blackrock. this is bloomberg. ♪

jonathon: live from the exit of this morning, good morning to you. a little bit of calm, but a big swing. down about 0.5%. i think we're just about 6% of fellows of september 30th, stood down about 20% on the year so far. and we get to the bond market, a week ago yesterday, a 10 year yield. just a little bit higher on the session by about two basis points. last week at 35. in the commodity market, we have broken up big time in creep. over the previous three days, up 11%. on the s&p 500, about 12%.

up 9289. that 2 million barrel per day cut from opec-plus, that is certainly not what the president wanted from the crown prince. tom: writing eloquently of california, up $.62 per gallon. is that all this is about for america? jonathon: midterms. tom: strategic reserve. let's k some single names -- jonathon: let's get you some signal names. lisa: let's talk about how many of these are idiosyncratic for systematic. this morning, the dow jones reporting that they are planning to cut 12% of their staff.

it seems like their last ditch effort to avoid a broader disassembly of the company. this is a forced round of cuts -- the fourth round of cuts so far this year. down more than 76%. they're not alone in terms of job cuts. late last night, general electric reportedly laid off hundreds of workers and some of their renewable energy units. their wind units, how much this really represents what we are seeing in demand. they cited many reasons as they talk about this. we heard from meta platforms. those shares are down your today. they expect be a smaller company next year. this year, not layoffs, but basically pushing people out. either way, they are shrinking. moving all around. is this a good thing or a bad thing? our -- our job cuts what these companies need? you are still seeing shares

lower 1.7% ahead of the open because there is a dire feeling. is this the last ditch effort? tom: it is going to be interesting to see. we will follow that as we can. joining us now, marilyn watson head of global fundamental strategy at blackrock. we're thrilled she could join us this morning. you have been in the halls of the bank of england. how do you distill the chaos in england and also at their central bank? >> i think it's a combination of high inflation, the bank of england raising rates, then the new government and at very poor communication around the budget they announced. i think that really completely took investors unawares. there was no sign of how they were going to cut expenditure,

along with the cut in taxation. i think you just added, on top of brexit, these deep issues where seeing in terms of economic activity we are seeing in the u.k. i think it created a lot of harm, essentially, in the markets. jonathon: big time. when you learn to ride a bicycle in the u.s., do you call them stabilizers? tom: training wheels. jonathon: is the market going to struggle without stabilizers? >> i think they have signaled the tempering measures they have announced, i think the bank of england is keenly aware that they want to keep the market stable, so they may in fact need to do a little bit more. at the moment, they are trading a very fine line. they have a very, very measured approach to monetary policy. every step that they take is very, very fine and nuanced.

any tweaks they make to policy will be seeing the full effect until at least 18 months out. there are times when it's just policy for a longer-term trajectory, yet they are dealing with a volatile market right now. i think the bank of england is obviously incredibly keenly watching what is happening. i think they will be prepared to do more if they do feel the need to keep the market stable. but i think it is also a globalist moment. we have seen volatility across all markets. we are seeing volatility here in the u.s., in europe. it is not just a u.k. phenomenon, but i think in light of the fact that we have issues of global activity, issues specific to u.k., and then the fact that many central banks are draining liquidity from the system at a time when inflation is high, i think it is a confluence of many things, being exacerbated in the u.k. lisa: which means it is this

issue of stabilizers or training wills for other central banks, in terms of finding evening. are you expecting a lot of central banks to fail at their attempts at quantitative tightening, having to buy bonds on the long end, trying to control some of the moves they are seeing? >> i think that's a very good question. we have never been in this environment before, where we have had 70 central banks that came away from positions of such policy. they had these massive balance sheets, huge programs, incredibly loose. we have never had a starting position where they are starting to tighten from the covid low levels, given how high inflation is as well. i think it does remain to be seen. here the u.s., the past is pretty laid out -- the path is pretty well laid out. i think in the u.k., it remains

to be seen. in europe, we do expect the ecb to continue to raise rates for the next two meetings. but in terms of reducing its overall bank balance, in terms of qt, still a little bit unknown, when you have this program on the one hand, a pet program on the other hand, and it is a fine balance that they are trying to juggle. lisa: right now, there is a conversation -- i'm not going to get to into it. i don't want to do that. [crosstalking] but i am curious whether you have in your mind a level at which term yields could rise before the financial stability risks become more pressing than the inflation once. >> i think it's not just the level to which they rise, it is also the speed with which they do that. so, we don't have certain levels we are currently looking at,

where we would be overly concerned. we don't think we are going to get to extreme levels, but we do think is the volatility increases and you see a dramatic shift either because the economy is much worse than we expect or because of the fact that we don't know, but i think half of it is the speed and how this reacts, not just the endpoint. jonathon: a final question, just take a step back from all of this. can you tell us how the world has change for you and all of the team, with rates where they are now, and even this is may be something we have to live with for a while. fixed around 350 -- 3.5% to 4%. >> the world has changed completely from one year ago, five years, 10 years ago. but there a lot more optimism, in terms of fixed income actually giving you decent yields.

obviously, you want to be cautious in this averment. fixed income now is a decent, good asset class. you can get a decent return, with total risk at the moment. i think i'm a long-term, going into next year, a very huge number of opportunities of fixed income we haven't seen for such a long time. i think in terms of the team and investors in general, i think this is a far better environment going forward and we have seen in such a long time. jonathon: do you think we can break out into this environment, new equilibrium are normal, for a sustainable basis? do think we can? >> we have seen in the past. we have certainly seen higher rates in the past. i think to a certain extent, to get back to a healthy financial environment, i think to have rates a little bit higher, it is beneficial for a lot of different businesses. i think it is certainly possible

to get to a sustainable level. jonathon: the world has changed, that's for sure. marilyn watson of blackrock. after being boring for a long time, we have all seen stock shows over the last 10 years. [crosstalking] [crosstalking] tell us about fixed income. tom: it is there. he talk about the risk-free rate, which has been gone for? number of years -- for x number of years. on a math basis, that is what it is. it is a whole new math. i will take marilyn's point. we have been through this before. i don't show this gloom about our inability to live at a higher rate. i will say i'm watching the real yield very carefully.

not only the real yield, but property target. jonathon: appreciate that. lisa: i will just at this, to give a little gloom to offset that. that was way too optimistic. in all honesty, the real tension here is how much debt has been issued at rates that are not sustainable at this point. so what happens -- [crosstalking] does this end up with corporate failures if this does persist for the decade to come? jonathon: that will be in a massive way. coming up, stephen schork. i'm sure they have something to say about opec-plus. looking forward to that. live from new york, this is bloomberg. ♪ >> keeping up-to-date with news

from around the world. with the first word, i lisa mateo. alibi president bidens meeting with the crown prince of saudi arabia, it didn't pay off. they added -- they aided vladimir putin. president biden had hoped saudi arabia would encourage them to pump more oil. detonation blame for damage to the nord stream pipeline, delivering natural gas from russia. the security service is investigating an increase in suspicion of sabotage. a weaker third-quarter performance for shell. signs of a slow down. that could be a warning sign for europe, while making sure industries are not going under pressure of storing natural gas.

in the u.k., three hunter $40 billion was wiped out in the nation's stock and bond market in the first month of liz truss's government to their unconcerned about tax cuts, though the pound hit a record low. one strategist says investors found the u.k. market is not investable. president biden heads to new york today to meet with ibm, which will announce a $20 billion investment over the next decade. they will focus on semiconductors and artificial intelligence, among other things. ibm has said they will directly benefit from president bidens chips act, which is aimed at ensuring a secure supply of semiconductors. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪

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where a policy is moderately restrictive, somewhere between 4% and 4.5% by the end this year, then hold at that level and see how the economy and prices react. jonathon: bostick there. is it a forced pivot or a cut? lisa: that's a push. do you think anything was bullish that he said? jonathon: i'm asking for france. lisa: you're asking for you. you are asking for jonathan ferro. jonathon: cutting interest rates in a recession? tom: a list talk about cutting interest rates, a guy is looking at power starts. [crosstalking] jonathon: make it a little bit more simple. take about financial stability concerns.

that's the argument. it is not my argument. that is the attitude in places like u.k. and may be, too. tom: two ratings there. it was brilliant and gloomy on whether we are stuck here now. definitive yesterday on explaining. jonathon: the ecb said this moments ago on their accounts. growth control should force more rate. but that is where we are at right now. is it ok to say they are not able to do this? [crosstalking] tom: it has become a parlor game of trade ability. like the hedge fund you mention earlier that is up so much. are they trading around this? i don't think so. jonathon: they are traders.

i think there is a famous line from michael platt, an investment is a trade gone wrong. have you heard that line? [laughter] tom: yes. jonathon: what is amazing about that company and white stuff to sit down with them, and this is a pitch by the way, they seem to manage avoid becoming part of the worldview. if you think about the gains from 2016 through 2022, i was going through this yesterday. 2016, trying to slow down tax cuts, 2017 tax cuts, 2018, trade war. the rate cuts, pandemic, massive inflation, this year a huge weight height -- rate hike in cycle. that amounts to a worldview. think along the previous decade, there are some good years and bad years, but largely because they're pretty consistent about how they saw things. to make that move from regime to

regime, from year-to-year, it is pretty phenomenal. lisa: it's beagles to a nobleness of thought and execution. tom: it does exist in the oil patch and the research note. stephen schork, get his magnificat -- magnificent statement on the oil economy. stephen, thank you so much for joining us this morning. the simple question is, what does opec-plus mean to a gallon of gas? far more than that is the nuance. how does their decision impinge on the distal it we take from a barrel of oil? >> their influence over the market is the price of crude oil. by constricting the production or increasing year-round. obviously, with the move been made now or the move made yesterday, 2 million barrels off

the market, we are clearly looking at fewer fuel barrels as we go off the fourth quarter. i want to be clear here. opec made the announcement of the 2 million barrel cut, but their 13 members, and i want to add that four of which are in sub-saharan africa, are struggling to maintain their current quotas. by announcing 18 million barrel cut, given what opec is actually putting out to the market now, and only amounts to 750,000 to 800,000 barrels per day. that is still not an insignificant number, therefore it has the huge potential for impact in oil prices. we don't consume oil. we consume gasoline, jet fuel, diesel fuel, so forth. to answer your question, our refinery capacity has been slashed by more than half over the past 10 years. we don't have the ability to turn what crude oil there is out there into what we need, into

everything we need. the statement on economics of scarcity, you cannot produce anything that everybody wants. that is the current situation when it comes to oil derivatives. we are producing what people want the most, and that is gasoline. therefore, what refining capacity we do have left here is geared toward massive gasoline production. the other derivatives, heating oil, diesel fuel, jet fuel, that suffers. as we look ahead to heating season, thousands of homes are located in the mid-atlantic. we are going into this winter with a thimbleful of heating oil. it is a dire situation. we are going through this winter and we don't have enough supply. it is going to be a very volatile and very expensive -- tom: could we get the heating oil from europe? lisa: that will be difficult.

we are trying to provide them with oil and natural gas as well. stephen, to your point about refineries and capacities, given that there has been talk about the strategic oil reserve trying to lower gas prices, have a terrific its limits of refineries, where even a release will make a difference? lowering prices further, we are kind of out of bullets. >> exactly. we never really had bullets. it is stupidity on stilts. we have been trying to manipulate the price. we, being the white house. for the last 52 weeks, we have dumped 200 million barrels of government crude oil onto the commercial market. but we have to show for that one year later, in new york, heating oil prices are one dollar 46 per gallon higher than they were one year ago.

we have been drained. over the last two weeks, we have drained one third of our emergency supply of oil. what does that mean? one year ago, we had 42 days supply worth of crude oil. today, we have 26 days left. that is the lowest level since 1983. keep in mind, the strategic petroleum reserves are for emergencies. imagine last week that hurricane ian did not go to tampa or to houston or new orleans. we are simply the least prepared ever for an emergency or the only thing we have to show for that, one year on, it is a 30% increase in it distal it costs. we're just going to put more oil into it. we will do what hasn't worked in 52 weeks, we will do more of that. jonathon: speaking of the strategic midterm reserve.

remember that. stephen schork, thank you, sir. tom: don't get me going on it. i love how these guys go narrow. jonathon: i'm here to get going. live from new york city. just to wind you up. this is bloomberg. ♪

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>> we are going to have to accept some pain on the domestic economy to bring inflation down. >> i think the most important thing to remember is we are in this situation because of omar stimulation of the economy. >> i think the markets have been too optimistic. >> the caution of the day has been in terms of where we are with capitulation. >> it is highly likely that the interest rate will decline. there will be disinflation. announcer: this is bloomberg surveillance with tom keene,

jonathan ferro, and lisa abramowicz. tom: good morning, everyone. a most interesting thursday, jobs today. we start october. i'm going to call it on october. jonathon: we are very focused on economic data. job openings clapped by one million a little earlier this week. hoping we can get a soft landing. jobless claims later this morning. then, payroll tomorrow morning. tom: that is tomorrow morning. but someone told me we have a moving average, or is it about the element of inflation you see there? jonathon: we're waiting to see what comes out of this labor market, that's for sure. i don't think we can forget, when we think about the totality of the data, it is one data point that is much brighter than the others and much, much better. we will see, next week. tom: the central bank with lots

of movement here. lisa, i look at the jobs report tomorrow and i agree with john, it is about price change and what that signals. lisa: then, there is this issue with workers between a rock and hard place. one of the regional banks showed that people are losing money at the fastest pace going back in history, according to some measures, in terms of real wages. they are so deeply negative, more so at a time when inflation is hitting a lower income americans. we want to see people keep pace with inflation. is wage inflation such a bad thing, especially if it offsets that? tom: we will talk to tracie mcmillion in a moment about the spirit but let's stop the show for what no one is talking about. 6% plus mortgage rates, housing, rentals imploding. is that too strong a word? if you own a house right now, if

you bought it not that long ago, this is a wake-up call. jonathon: it is going to be a big one. tom: in england, that is a big deal. jonathon: isn't this the objective? isn't this the goal? tom: yes, it is the goal. it was way out of control. jonathon: we need a distinction between what is problematic at the moment and was objective for the federal reserve. tom: to see housing decline like they are, to see rentals coming in. lisa: when you talk about house formation and that people cannot go out and afford to have their own homes, it does become a political issue, but it does not speak for lower rates. it speaks to keeping them where they are for greater home of fort ability. -- affordability. tom: we go to bloomberg reporting in zurich and london.

we saw updates and it wasn't pretty. jonathon: i came forthwith right now. restructuring with the capital they might need. it is not a surprise that many of us are reporting this investment. ultimately, the clock is ticking. they need someone to announce by the end of the month. tom: i am not a fan of this. lisa: you talk about after credit suisse defaults rose to the highest levels and became the most expensive insurance, going back to 2009. it is an indication of the likelihood of restructuring, of some default, credit default event, not necessarily liquidation wholesale. tom: let's get the data started. trusting in sterling, not so good. jonathon: not so good. it has been week of days. the dollar is stronger.

10-year at 375.51. we are down 0.5% on the s&p. tom: if you're watching for the breakout right there, as jonathon mentioned, a big pop over the last number of days. tracie mcmillion, wells fargo investment on asset allocation. how valuable is cash right now in the jobs report tomorrow? >> we will see them holding some cash in a portfolio, holding shorter-term fixed income and equity side is all-important going into tomorrow's raid on the jobs market. we do expect that the job numbers will be something for everyone, in terms of the job being likely slowed, relative to the august numbers. for that, we are positive for the fed.

we will account for any increase in participation rate, decrease in earnings, decrease in the workweek, that would signal to us that the label market -- the labor market is stretched. the message for tomorrow is continued strength. that in the end of limit rate is going to stay staggeringly low at 3.7%. jonathon: when you get into this, you typically wait for a countercyclical circuit to break. where does that come from? it will come from the fiscal policy maker. where is it going to come from? >> it is probably not going to come in the near term. it is probably eventually going to come from the fed. they will stick to their plan to raise to 4.5% by the end of the year.

there'll will be a 50 point race in december to get it to that level. probably a couple more basis points to get to terminal rate. we will start cutting by late 2023. that is probably where we get that turn. that is in anticipation of a manageable cut. but it is probably not coming for another year or so. lisa: we have been talking about the death of 60/40 for the past month. how much are we going to see a rebirth or incarnation of 60/40 may be starting early next year, if you start looking at the potential for some sort of rebound, as well as a run a fed cuts? >> it has been really ugly for global bonds and stocks. i was looking at the end of

september numbers for global stocks, down 20.3%. the 60/40, the global 60/40, has had very abysmal returns over the past months as well. the good news is there is a silver lining for fixed income investors who have suffered. rates have reset higher, and that does mean that they are getting these higher rates for a longer period of time. should we see cuts next year, that can also provide capital gains for the fixed income economists. as we see things recover from the expected recession, a boost in equity by the end of the year next year is small. we would broaden that diversification for now. income commodities exposure, and

other fun exposure, too. broadening diversification is helping that very narrow 60/40 provide this year. jonathon: thank you. tracie mcmillion there. 60/40 has had a tough ride this year as we reset with bond yields at these kinds of levels. the push back to that view at the start of the year is a bigger way going to your end. lisa: what is going to get away from these asset classes is then moving in tandem away from the right direction. how do we get them moving in tandem and the right direction next year? jonathon: what is going to break the correlation? that is the question. tom: i don't think there is anything that is going to break it, other than data dependency. we have prayers toward a soft landing, but it could go the other way. if covid continues in china and if we continue with what we have got, what to the central banks do? they have to continue this trend. [crosstalking]

jonathon: then, we had cpi. all of a sudden, we pushed that story once more. tom: part of the story is, whatever the inflation, 6%, 5%, it is unacceptable to any authoritative institution. jonathon: everything sliding down. what is life look like at the boj after the governor is gone? lisa: some people think they are just buying time for six month or so until his time is up. he wants to cap this error of yield curve control. perhaps that will coincide with this perfect weakening of the dollar. it will give them plenty of room. regardless, we are looking at an era where perhaps we will see the end of quantitative feelings. but perhaps not. jonathon: can't get away from it. tom: at blistering note that we forgot about productivity.

pablo at the new york fed wrote a definitive, short paper on this. i'm holding it myself on. he says the productivity decline is from not computing, not from technology, but small computing. the miniaturization is a huge part of this gloom over productivity. lisa: another way of putting this is that we waste a lot of time on our phones. [laughter] i think that that is what you're saying. jonathon: a message for the kids at home our message for us? lisa: we are doomed. [laughter] tom: should i get on tiktok? jonathon: i think data gets you through that, tom. from new york city, good morning to you. claims. 20 and its away. -- 20 minutes away. lisa: tom, i will fall you

tiktok. news from around the world, this is first work and i'm lisa mateo. opec-plus agreed to the biggest reduction cut since 2020. the alliance plans to slash daily output by 2 million barrels. that move drew rebukes from the u.s., which is seeking more oil from producers. meanwhile, russia repeated a warning that it will tell crude to any country that is part of the price cap. north korea is ratcheting up tensions in the region. it fired two suspected short-range missiles toward the waters or u.s. ronald reagan had been deployed. north korea criticized the u.s. for redeploying the carrier and the waters east of the peninsula. another thailand, a north -- a mass shooting that begin in a day care center has left at least 36 people dead. most of the victims were

children. authorities say a former police officer used an automatic weapon. they say he later killed his wife, child, and himself. plans to hire 150,000 seasonal workers. that is not the same as last year, despite predictions of a lackluster holiday shopping season. amazon says the employees can more -- can earn more than $19 per hour on average paid this comes after walmart slashed the number of holiday workers it is hiring from 150,000 in 2021 to 40,000 this year. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪

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>> i think we need to do one more 75 basis point tightening. the tightening raises the policy rate. see equities go off to the races like you have the last two days. i think that is going to be counterproductive to what he is trying to accomplish. jonathon: that is the problem right now. question for me. kind regards. lisa: [laughter] [crosstalking]

jonathon: i pick up the 40 out of my own money, tom picks up the 60. tom: that is the one that makes us go. jonathon: that same cafe, i walked out without paying and they chased me. forgive me for doing that, if you are watching. but i would not make you pay, tom. they chased me out of mcdonald's for not paying. tom: we are 11 minutes away from ace -- from job statistics. an important report. in wonderful, wonderful shop. bipan rai joins us, head of foreign exchange strategy in canada. so much more in the time we live in the time of living, which is strong dollar. i want to talk about the x axis of the belief that the dollar is going to weaken.

everyone has been wrong, wrong, wrong. is your dollar study short-term or to go to the british medium-term or long-term? where on the x-axis are you studying when the dollar breaks? >> we're probably looking at the medium-term to long-term. if you want a specific gauge for how long or a way to calibrate that, i would say potentially the early to middle part of next year. we are looking toward the dollar on a sustained basis. tom: but the question is, what does em do along the way? are you petitioning developing colonies from e.m. or the essentially the same against the strong dollar? >> you look at the way trade is this year, it has been relatively robust compared to the dollar. most of the stronger dollar story has really been concentrated predominately around the euro or the yen, now

late gains in the sterling. we think it will migrate more toward a stronger dollar, which is commodity currency, the backdrop as we move forward. that is predominately do to this being built up with these amenities in canada, as well as australia and new zealand. lisa: for the past couple months, and i mean 1.5 months perhaps, we haven't seen the same kind of dollar strengthening. we have seen a little bit more stasis at much lower levels versus the dollar for the euro. how do you expect to get this kind of stability with rate hikes on both sides of the atlantic? >> talking about stability of the dollar, we need to see worse -- where expected stability is going to come from. the stability lasts a little bit longer. i think a lot of sources of concern earlier, particularly

with data security, they push further. a lot of it depends on how serious the situation will be. for that, we really need to look at the weather reports or at least see what the weather is going to look like this winter. we are migrating away from this concerns of the dollar is going to continue into the euro and the yen. that doesn't mean that the dollar still cannot depreciate along with some of the other currencies. i very much agree with some of the other rhetoric. we are going to look at a higher for longer story. if that is the case, we need to look at where french -- where french -- were situations are fragile. that, to me, is somewhat concerning, especially in canada and austerely. lisa: [crosstalking] at what point is this going to

determine the trajectory for the euro? what are we looking at in terms of what the euro-dollar should be? >> if it will be a stronger -- a color that expect the winter, we will look at a stronger dollar. that is when we start worrying about whether or not security risks, or at least natural gas security, is enough based on what we have now. one of the key things is the fact that the larger economy, and of course italy as well, both of them are we orienting their energy story away from russia. that is a structural change, something they hope to address in the next year or two years. jonathon: thank you, sir. it is not a one winter event. how may people have to come on and tell us that? in fact, given how we have storage up in europe this winter, i think that expense a much harder it is going to be next winter to do the same thing again. tom: you see this in every

single study. the american civil war, they thought it was going to be over in six months and that didn't work out. there are many others as well. he get to the were in ukraine. right now, the zeitgeist is that ukraine may make a -- toward crimea. we are talking about mud. it is no different than any other war. maybe they will sit through next spring to get through that war. jonathon: have we confronted the reality of what could be happening in europe beyond this winter? lisa: discuss to the point that he made earlier about how we have not invested enough in the ground and physical goods. you were talking about this sort of come back with the real world. how much can nations like germany borrow, especially at these rates, to do fiscal investment in some of the structures to get the natural gas needed that will not be supplied probably by the nord stream pipeline? jonathon: you don't want to talk?

tom: i'm not really focused today. jonathon: i can tell. can i give away your secret? tom is meant to speak next he knows in radio that the next person who speaks owns the silence. [crosstalking] tom: i have a copyright on that. i am like one foot out the door. i'm quitting. this is the new team with the kids. i am quiet quitting. it has been a strange year. i imagine i will go away for couple of days. for five days. i'm going to research the euro and see the effects. lisa: [laughter] jonathon: i explored the effects. tom: can i make this clearly? i have been to paris twice, coming up this week. i hotel room in paris is 80%

more than it was previously. with the euro conversion, the hotel said that october is like july. [crosstalking] jonathon: guess what, tom. you are on vacation. this is bloomberg. ♪

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jonathon: live from new york city this money, good morning. futures lower by about 0.4%. looking for jobless claims, an estimated 200-4000. the previous number 193,000. michael mckee at the table with us. waiting for the number two draw. michael: it is that 219,000. it just dropped. that is a change from the 193,000 it was originally reported last week. we will get the updated numbers in just a second. that means that we are seeing a slight increase in jobless claims. 1,361,000 continuing claims,

just marginally up from the week before as well. it looks like people are still getting jobs. i was interviewing mary daly yesterday. we talked about this. she said claims are lasting because at this point, the data is telling you that there are still a lot of openings, so people who are losing their jobs can get jobs. claims are going to be really slow to go up because companies at this point are not laying off people, they are just not filling new jobs. jonathon: when she looks at the totality, does she see the heat coming out of this labor market yet? michael: so far. we are seeing that in the job creation numbers. we will see a reasonable decline , not a terminus drop off, and that will to just companies are starting to cut back a little bit on their hiring that is what they want to see. they don't want to see the

unpleasant rigo shooting up, but they don't think that's going to happen at this point. companies need workers. lisa: that was a really good interview, by the way. you ask her about what it would take her to cut rates. she really put coldwater on this theory that there are going to be great cuts next year. this is coming from someone who wants to see workers succeed, who wants to see americans employed. explain some of the tensions that she feels with higher unemployment and potentially still restrictive federate. michael: she talked about a story of going out to a walmart in the san francisco area, dressed in a sweatshirt and jeans, not telling people that she is the san francisco fed chair, and asking people, what are you most concerned about these days? she said everybody complained about inflation, nobody said there was a problem getting a job. so, their concern is that workers are worse off, even if they are getting raises, because they're not keeping up with inflation like they would be for

a small number of people losing their jobs if the fund rate goes up a little bit. is the unemployed it rate going to go up a little bit or will it skyrocket? that is going be the question. in the past, it has often skyrocketed. you get a much larger increase and you get a recession. but so far, this is holy water. jonathon: he said when that happens, we shouldn't immaturely step away. michael: you look in the 1980's, when paul walker went back to cutting rates a little bit because unemployment was coming down, then it started to go back up again. flexion started to go back up. they had to start raising rates again. they don't want to repeat that mistake. jonathon: you get the feeling, tom, these people are really way down i the weight of history. [crosstalking] tom: most of these people are making it up as they go. they are sitting on a theory.

where is the theoretical structure for all we are seeing? jonathon: people are worried about repeating history. tom: that is fair, and that includes the bank of japan. michael mckee tomorrow -- is there a press conference for johnston? there should be. michael: there will be. [laughter] jonathon: that is the news conference. futures are raised in the morning, losses now on the s&p. tom: it has been a relatively resilient market. michael: all it takes is a few more layoffs next week and the bear market is over. tom: are we done? let's go there right now. michael mckee, thank you so much. we greatly appreciate that. nela richardson, chief economist with adp. i want to cut to the chase and say the new emphasis on tomorrow's jobs report, what are you in adp focused on? >> good morning. i can't think of a better way to

start the conversation with wages. it is all about how wages are driving or not driving inflation. that is what we are focused on. it seems to be a michael economist in a macro world. you are, you look at the collective decision-making from small to large firms. what we are seeing is that timing has been a very important factor in the entire dynamics of the labor market. we are now starting to see more people, at least according to the august report, enter the jobs market. with all these -- we sell these deceleration in growth for changers. i think that is notable. it means that switching jobs is not paying off quite as much as it did this summer. that might reduce some of the pressure, in terms of inflation. tom: adp is wonderful at this. what is the character of the job market differential right now?

is it airline pilots, bartenders? what is the job sector that matters right now? >> it all matters, tom. but i think where we are in from point is we are rebounding. when you look at hospitality, that is important. when you talk about inflation, what is driving inflation is low pay, low-wage, low skill jobs. do we still want to be that bartender or waitress? bartenders can actually make pretty good money. [laughter] are we going to see low skilled, low pay workers still see acceleration at pay? that did not happen in the 10 years of expansion leading up to the pandemic. will we see it after we get over this hump of getting back to normal when it comes to jobs and getting inflation down? that is the concern that

low-paid workers won't see gain over the last 1.5 years or so. lisa: given that backdrop, i would like you to comment on what michael mckee was talking about, this expectation that the unemployment rate might rise. it may peak at 4.5%, still well below some of the peaks we have seen in recent downturns. how quickly could that move away from the fed, based on what you're are seeing in the micro data? >> let's start with the jolts. i think that is important. to see one million fewer job postings, we at adp believe job posting peaked this spring. we were not surprised to see this decline. that is the first indicator. the second is the timing issue, which is really prevalent. more people are coming back to the labor market because they want and need to work. yet, firms are slowing hiring. that is what is going to cause the unemployment rate to increase. that denominator is really

important. is not number of jobs created every month, but the people entering the labor market right at a time when firms may be slowly hiring. i'm really focused on the denominator. lisa: we are looking at this, hoping to get better numbers. from what you're looking at, what kind of downturn are we looking at, based on some of the rate increases that are expected and based on the pace of weakening, the pace of loosening of this labor market? >> i think you are going to see it at different angles. maybe you could call it a downturn by a variety of cuts, as opposed to one big stab. sorry to be graphic in the morning. you are seeing some sectors with weakness in construction and manufacturing. if we see inflation really hit pocketbooks in consumer spending, you might see consumer

services take a bit of it as well. all those gains in leisure and hospitality might swell. businesses are vulnerable for structural reasons, as fewer people go back into the office. that might change the complexion of support jobs. in the same time, we might see downturn dynamics by monetary policy. praising that all-out is very difficult today. jonathon: always lovely listening to you. nela richardson of adp. i can tell you the market now is unchanged on the s&p 500. i can also tell you that yields were higher, and now they are fractionally lower on the 10-year, and on the front end of the two-year. in and around 375, as claims come in. i use the word worse loosely. maybe this is exactly what they want to see. lisa: actually causing them to

pause. the fact that they are trading is much as they are shows confusion, talking about markets we have seen. it is hard to say that this is really going to cause the fed to readjust. however, that clearly spreads hope that the market will actually prevent the circuit breaker to what we have seen in terms of a downturn. tom: the thermometer here is the bloomberg financial conditions index. this is really good. imf uses it all the time. in fact, this is going against chairman powell. we have gone in a matter of days from a negative, restrictive 1.46 standard deviation, reached through negative one and advanced this morning to a less restrictive -.94. jonathon: they want to keep it restrictive, i agree with you. but worrying about further down tight and markets, this is the kind of data set that alleviates some of those worries. you have the economic data coming in to change the

probability that the fed has to go further. i say that because it can change again tomorrow morning. one of we learning about, in the way that the market is responding? i know lisa is bracing for it. [crosstalking] lisa: hopefully, if the data cooperates, we don't have to be as punitive with data rate hikes. the data was not cooperative in september. but now, it is starting to get more so. jonathon: a change in the last couple of weeks big not talking about a lot of upsides, but a limited downside. lisa: all of this is bullish. we talking about? jonathon: i am making it personal. coming up, think of america, and those over at j.p. morgan still are not coming out. lisa: [laughter] tom: would you like to expand on that, please? from new york -- jonathon: from new york, this is bloomberg.

. lisa: keeping up-to-date with news from around the world. with the first word, i lisa mateo. president biden met with the crown prince of saudi arabia less than three months go. it did not pay off. instead, the saudi's snubbed the president and aided vladimir putin with that oil production cut. shares of shell dropped at the energy giant pointed to a weaker third-quarter performance. that is likely to end a run of record earnings. shall refining and chemicals business shows signs of a slowdown and that could be a worrying sign for europe, or major industries are buckling under the pressure of foreign and natural gas prices. over in sweden, the government lames detonations for the damage to the nord stream pipeline delivering natural gas from russia. the swedish security service says the investigation has increased on suspicion of sabotage. danish and german officials are

also investigating. for the fourth time this year, peloton is laying off a significant number of employees. the ceo told staff today it is part of the effort to save the struggling fitness company. roughly 500 palatine workers are being let go. that's dropping 12% of the workforce. at&t's ceo says they have an 18 month lead over t-mobile and elon musk. this a they're not going to have the satellite up for testing until the middle of next year. at&t has been working with space mobile as its satellite partner. the company still needs further approval from the fcc for satellites in space. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪

>> we are going to have to

accept some pain in the domestic economy to bring some inflation down. so, yeah, it is an odd situation. but it is a fed right now saying we need the economy to flow to help on the inflation side. tom: bank of america, really interested in them yesterday. jonathan ferro is preparing for the next -- a more constructive take before job claims. lisa: i cringe, too. but benes is good news. the idea -- really, you thought i would not give you that? tom: there it is. tomorrow will be fascinating and important. as we digressed to go to what matters to radio and tv, particularly across america, but with a global view on housing on

the brink. it is a brilliant research essay from oxford economics. adam slater joins us this morning. congratulations on a very thorough look at housing. if you go deeper on housing in america, what do you see? >> thank you very much. compared to a variety of other economies, which is what we do in the pc mention, we find that it is toward the top of the risk scale, but not at the very top. there were some factors for the u.s. that may be a little bit concerning. the scale of rate hikes and increasing mortgage rates valuations, perhaps the canary in the coal mine, if you like, with some turnaround in the last couple of months. lisa: i want you to eliminate.

in places like canada and zeeland and australia, there is actually a risk there for a more protracted downturn. what is the distention between the decline in prices and a housing crisis? >> that's a good question. the scale of decline is obviously important. what we think at the moment is that our guitar poised between decline, may be 5% or 7%, and something much deeper at 15% or 20%. how much you need to cut costs to avoid a crash, depends on what you mean by crash, exactly. we usually think about things like mortgaged liquid sees and financial instability through that channel. we think it is quite plausible that some of these markets are

going to sink by 15% or 20%, may be more in places like canada, for example. we are less concerned about financial instability then we would have been 15 years ago. tom: what is the character here -- and i want to go back to america here. it is a: 50 am here. what is the character of america with the housing worries in a relatively conservative mortgage market, versus a floating rate regime, like you see in the united kingdom? >> they are certainly employment opportunity more. it is hardly a regime, or like a short-term fix regime. but you are right, it is very different structuring and most of the economies that we looked at. but of course, that did not preserve u.s. money well enough after the global financial crisis. you can get problems in other

areas. for example, if you build negative equity, like we have seen in past situations, you get foreclosure sales. each one of these factors include fixed-rate mortgages. it is not enough to prevent a downturn. lisa: how much is what we're seeing with mortgage rates going to accelerate the trend of the emptying of big cities? they have gotten more expensive, although they have not necessarily seen the price gains other cities have had, versus perhaps making them more relatively affordable and seeing more stability? >> it is about value in many cases, meaning bigger mortgages, therefore higher mortgage rates.

how that balances with affordability, it depends you have to model that quite carefully. it has come quite a long way. but you have to model that carefully. tom: thank you for the notes. adam slater, with a global view on housing, with a mixed story country to country. we have to go, lisa, 20 talk about this morning, which is that no one is talking at the fed today. we don't have headlines on that yet. a mathematician in cleveland is going to give us a mathematical view, i am sure, on what they need to do, which is to move forward. lisa: and what we haven't heard, which i find really interesting, is no talk about shifting that targets 2%. that has remained very sticky in the conversation. they went to cs get back down to that. there is no discussion at 3%.

there is only this idea that you want to stay high, and terms of where the fed funds rate remain, for longer, even as you see generation in the economy. tom: it's not even 2.2% or 2.4 percent. there is just this religion in institutional spots ability -- spots ability -- responsibility. lisa: michael mckee talked a lot about how we are sort of walking about the streets -- how she walked the streets and how it colored her view to see inflation where it is. that is such a massive concern and charge on people's income, in a way that even puts that as part of their broader mandate beyond just simply targeting a number. tom: you mentioned this earlier. we don't have a chart, but radio doesn't look that good anyway. that area above the line of the

wage boom of the pandemic, now there is a new into graham below the line of real wages going down. it is a fancy phrase, long and the tooth, but it is getting old here. this negative wage growth after adjusting for inflation. lisa: when you start seeing higher income households shopping more at walmart [crosstalking] tom: do you believe that? lisa: we heard in the numbers. they are starting to see more people shopping a better areas where they can get better feels. when you get the whole food and you get the paycheck, you give it over to the checks for the grocery stores. but how much do you end up shifting gears just to save money? it is a shocking difference. tom: i have done a check in the answer is, yes it is. six bags, seven x, eight bags is

$20 more than it used to be. will there be negative data tomorrow for jobs? a: 30 tomorrow. we will have at least the headline data on radio and on television. usurers improve negative eight right now. stay with us. this is bloomberg. ♪

jonathan: bad news, good news.

live from new york city. friday negative, the can down to the open start right now. >> everything you need to get set, this is bloomberg: the open with jonathan ferro. jonathan: we begin with the big issue, payroll. >> the jobs re