>> you have a situation in the u.k. a would call a crisis in confidence. >> the bank of england is having to manage the chaos the government has been creating in bond market. >> the bond market vigilantes are back. >> what we have the u.k. is symptomatic of what is helping elsewhere. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: here we go again. this is bloomberg surveillance on bloomberg tv and radio. with equity futures up a little more than 1%. tom: you are going to say same week same whatever.

jonathan: i was dr. to say anything like that. what an extraordinary week. all of the news in the united kingdom, you can brief us on that. all i need to know is i have restriction, restriction, restriction on the screen. the bloomberg financial conditions index is where it has been. jonathan: super volatile week. kitchen oops, goodbye crisis -- kit jukes, goodbye crisis, hello recession. lisa: we have talked about who blinks. jeremy hunt speaking today. the key question is what can he do to do is -- to restore credibility for this administration at the time there is a huge premium baked into the gilt market and the pound. jonathan: mike wilson of morgan stanley almost on the edge of constructive. lisa: he is basically saying

things good look good and then they look really bad. he is saying there could be a 60% rally in you look at the downside and it is dire. jonathan: until companies fully confess and recession arrives. bank of america later this hour. tom: some of the research notes are interesting. this comes off of the washington meetings. everyone in america is focused on the inflation story. the rest of the world is focused on dollar liquidity in the shortage of dollars. you see a deep in the bloomberg screen, there is attention on a monday morning that was not there a week ago. jonathan: let's look at the price action and start with the equity market. we are elevated on the s&p 500. the volatility yesterday absolutely ridiculous. the volatility of the football yesterday incredible. did you catch liverpool? tom: i cannot translate it but the liverpool defense was

world-class. jonathan: will touch on that later. yields in six or seven basis points on the 10 year. euro-dollar .90 750. crude up a little more than .1%. lisa: what i am looking at, 8:30 a.m. we get economic data. before then we are looking at jeremy fund and what could happen when he starts speaking in about half an hour in the house of commons around 10:30. what does he say? there had been discussion, different talkshows. we are seeing a bit of a dip in yields across all maturities. is it enough? if you take a look at how we have performed year to date, yields are high and the pound is low relative to the dollar, incredibly weak, even though you have seen a bounce on the heels of this.

bank of america earnings out around 6:45. 8:30 we get the earnings call. do they get the same constructive feel we heard from j.p. morgan or do they give a sense of the consumer more strained. right now bank of america shares up 2.5%. eight: 30 we get u.s. october manufacturing data. how much do we get a sense of a deceleration, rapid deceleration in inflation and activity at a time this is a tea leaf that is the first real data we get out of october. the citi economic surprise index has been trending upward. we have seen positive surprises. is that a bad thing for those who want to see the economy rollover sooner? jonathan: the chairman of the federal reserve says to look at it so we look at it. university of michigan inflation expectations 5.1%.

tom: on the left, and these are the words that float around, credibility, the idea of anchored and unanchored. there are 14 different opinions other than to say normally i ignore university of michigan and i understand right now it has a value. jonathan: lori calvasina joins us right now. it was not about guiding's for q3 earnings. what have we learned so far? lori: so far i have been disappointed that it sounds a lot like the last couple reporting seasons. not seeing any major cracks in terms of the consumer or demand. companies are getting ready for choppy are times. there is that. in terms of if you wanted the earnings band-aid ripped off, so far what i'm hearing is i do not know if we will get it this reporting season, we have to wait until february and march. tom: you and been lately or are

on the same page -- you and ben laidler are on the same page. you talk about moving to high quality. define what high-quality is as a comfortable place to be. lori: high-quality is a factor of discussion i have had with a lot of investors. if you talk to your average portfolio manager, odds are they have done some sort of back test that tells them things like higher earnings outperform over time so invest with me because that is the kind of portfolio i run. what we are starting to see is after a summer in the low-quality stats, negative earners, negative r.o.e., lo r.o.e., those names were working pretty well coming off the june low. what we are seeing now is more high-quality versions. this is frankly a silver lining heading into the end of the year because that bodes well for active manager requirement.

tom: this goes to the risk-free rate returning and maybe it goes to big combinations. all of the sudden zombies have to report. what we are talking about is not high-quality but all of a sudden it is zombie november. lori: that is a fair way to look at it. i would also say it depends on your definition of zombie. i think in general when you're going into a lower growth uncertain time investors cling to those higher-quality names and those are the ones that come through, manage through challenging situations better. investors are circling up and closing the ranks and clinging to what has worked overtime. you will not get beaten up by sticking to your philosophy. you will get beaten up if you underperform when you have deviated from your philosophy. lisa:, skin you see the s&p getting to the 3200 level which is the base case for mike wilson at morgan stanley even with the

constructive feel you haven't been selected names and select industries? lori: it is a great question. i understand why that number is important. when i talk to my friends they will often say 3200 is the next big battlegrounds. 3500 is your meeting recession drawdown, 27% drawdown from peak. if the market thinks the fed will not be able to pull that off and will price in something more challenging from an economic perspective, and average drawdown is about 32% in a recession going back to the 1930's and that exceeded 3200 mark. back to the pandemic we lost 34% peak to trough and i think that 3200 mark if 35 does not hold, 3200 is not the next place to go -- 3200 is the next place to go. in the pandemic when life was on the line and there was massive uncertainty, that is only as bad as the market felt.

i think 3200 is a good place to look. 3500 is proving to be a major battleground. lisa: how hard is it to convince some of your clients to be constructive when there is this high likelihood of that psychological level on the index? lori: what is interesting is i talk to people about it from a positioning perspective. what is the next thing you need to do? i showed them i charge showing defensive's art peak valuation. i have been traveling around the country nonstop since june and i tell them everyone i've talked to has plenty of defense. they own as much staples or utilities as they will own. the next thing to do is go on offense and that resonates with a lot of people. they know from that lived experience going back to the summer that when the low-quality stuff started to move, that is not where they were positioned.

that is where they started to see underperformance. people understand that if you're a longer investor the tide will turn and there's not a lot people need to do on the defensive side. jonathan: wonderful to catch up with you. lori calvasina on the latest in this market. the latest from the u.k., just getting this, the measures announced today will raise 32 billion sterling. the u.k. to shorten university -- universal energy support. shortening the duration of the support they will offer to offset some of the pain and energy to april 2023, they scrapped the plan to cut income tax indefinitely. more difficult decisions are coming on spending. this is not just a u-turn, this is a massive change in terms of who is running the treasury and what they are doing. tom: sterling with a pop to 1.13, breaking up to 1.14 would be a huge deal.

jonathan: it reminds me of something said this morning, goodbye crisis, hello recession. these initiatives will get us there quickly. tom: because i was away you and i barely talked. this guy ran the olympics. what does it mean that the chancellor of the exchequer was the guy who did the successful london olympics. jonathan: a piece of trivia this morning. tom: that has to be the toughest job going. to run the olympics. jonathan: you think he could run a marathon? i wonder how long he will be in the job. for this prime minister, it seems to me this is the phrase on friday, you have a prime minister in office but not in power in these headlines kind of confirm that. lisa: a lot of people can vary -- a lot of people comparing her tenure to the lifespan of rep --

of lettuce. jonathan: steve chevron in the next hour. from new york city, guy johnson london coming up shortly. this is bloomberg. leigh-ann: ukraine's government says russia has launched, because the drones. the explosions hit the center of kyiv, damaging several residential homes. in luxenberg, the eu foreign ministers are due to agree on the launch of a new mission to train around 15,000 ukrainian personnel in the eu but signoff on additional $487 million in weapons financing. eu nations have agreed to a new package of sanctions on iran on human rights valuations in relation to a young ukrainian

woman who died in police custody after flouting strict dress codes. the package targets people responsible for serious human rights violations. last month's deadly protests erected in response to the woman's death. mercedes is -- a new sports utility vehicle. the aim is to take on tesla's model y. the carmakers latest step to go all electric by the end of the decade. the eqe is the fourth model to use -- the energy crisis may hasten the move in renewables. >> europe in particular will be challenged in the next two to three years, and we are working on fixing that, especially germany that has been dependent on gas coming from russia. there is a lot of activity to deal with the short to midterm challenge. if we look longer, mid to

long-term, this may be a catalyst to go quicker into renewables. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. ♪

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>> we will not hesitate to raise interest rates to meet the inflation targets comment as things stand today at my best guess is inflationary pressures will require a stronger response that in august. jonathan: governor bill lee keying up the next decision for the bank of england -- governor bailey teeing up the next decision for the bank of england. yields headed south, lower on the 10 year. sterling, 1.13 again. the pound against the u.s. dollar, 1.1304. i would not just call this a

u-turn, this goes beyond that. for the new chancellor making plans to reverse everything and shorten the energy support program from two years through april 2023. tom: the bloomberg financial conditions index is original and shows the bizarreness of the moment and we have to dive into it. i will do it on the political end with guy johnson joining us in london. can you explain the politics. it is the chancellor of the exchequer running for office? guy: yes. tom: that is not a radio answer. we have to do better than that. he is running for office? guy: they are all running for office. it is open season. everybody is now running for office.

it is open season on liz truss. the real problem here, and i'm joking with you because it is amazing to watch and i cannot believe my eyes, but i find myself in a situation where i struggle to wonder whether or not they can make it stick. here is the problem. can you change leaders without a general election? can you credibly do that? that'll be a question that becomes relevant as the days progress. we have a relatively positive outcome from the markets this morning. that will buy list trust -- liz truss and jeremy hunt until the 31st. if that calms, perhaps there is a view she can survive longer than that. the tory mp's are not going to

want to bring the election forward. if the chaos continues she is gone and that looks like the base case at the moment. i would not rule out her remaining either. jonathan: go through the policies that have been announced and what that will mean for governor bailey when he sits down for the team. guy: the front end has come down 50 basis points. we are basically back down to 100 bps for the next meeting. that is where we were pre-mini budget. the front end has moved down but it does not go any further. the market is still pricing a terminal rate of 5.5% to 6%. this looks like a tactical rally this morning. the base case is still the bank of england has to do a lot.

it is not pricing the aggressive move it would've had to announce or the chaos to continue and we had not had a large traversal of the unfunded budget -- a large reversal of the unfunded budget. less than 175 pbs versus 280 only a few days ago. whether it goes further looks doubtful at this level. lisa: given the fact you are talking about everyone under the sun running for office and this is open season, there is a question about the credibility of jeremy hunt as he undoes everything liz truss put out as her platform. a much credibility is there in the markets and by other policymakers that this will stick, that this is going to be the policy moving forward? guy: i think this probably will stick. the reason for it sticking is the market reaction.

they are terrified of the markets in westminster. westminster is terrified of the city. you get a positive reaction, probably a tick in the box for this policy. it has gone further than some anticipated and he is indicated there are further cuts to come. it looks like he will shorten the duration of the energy relief package. we have already heard the announcement on corporation taxes and the other taxes that are going to change. i would say this is looking like it is the policy. the policy of this dash for growth that kwasi kwarteng and liz truss put forward has been completely reversed. we talked on friday that the u.k. needed a more sensible approach. given the market reaction we saw before and after, this new policy will be seen as the more

sensible. jonathan: looking forward to catching up later. guy johnson out of london on jeremy heinz u-turn -- on jeremy hunt's u-turn. the story this morning, goodbye crisis, hello recession. tom: this is so important. it is not the cliche of the bond vigilantes, it is the equity and currency vigilantes. i look up the messaging in washington i heard about the currency vigilantes, what will do about those available to swap lines and those not available and you wonder where the united kingdom fits in. jonathan: the president of the united states weighing in on the situation in the u.k., saying the plan to cut taxes on the wealthy was not a good idea, and he was not the only person who said it was wrong. tom: i will go with that. i just did some math, and united states is more restrictive right now than governor bailey. jonathan: kaiser this and on tax

policy in the u.k. versus the u.s. -- can i throw this in on the u.k. versus the u.s.? the top bracket 37% -- when you start to play 40% in u.k.? 50,000 sterling. i'm not sure the president of the united states is in the greatest position to talk about how much the wealthy is paying in taxes. it is a highly progressive tax code in the united states and something the social democrats do not communicate to the electric very well. the european model is based on getting many more people to pay a lot more in taxes, not just the upper echelon of society. that is a major difference that is not discussed on this side of the atlantic. tom: i think it is true and it will shift to where we are now. as you say is much more progressive. the trump tax cuts, whatever anybody thinks of the politics, they were popular.

jonathan: later we will be joined on citi and, what you call them? the fx vigilantes? tom: they are out there with a vengeance. look at yen. jonathan: the president said i'm not worried about the dollar, i worried about the rest of the world. lisa: the u.s. does not worry about the dollar as much and they do not care about the rest of the world as much. jonathan: i am pretty confused by that. i am always confused. they got it done against the dodgers. was it a good game? tom: phenomenal. real baseball. ♪

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jonathan: good morning. here is the price action. out of a futures pushing higher. the nasdaq higher by 1.35%. snapshot of the treasury market for you. yields are lower by eight basis points. a two-year last week.

we backtracked with that. two year yields climbing. your 10 day yield climbing. can you get your head around that? tom: i cannot get my head around this. lisa: it comes because you are seeing this. they were talking about the likelihood by the end of this year. it is a possibility. it is a game changer. tom: front. -- frontload. jonathan: yields come down by 38 basis points u.k. 30 year.

these are truly historic moves. the support that we are going to offer offsetting. ultimately, what they are saying is that there is more to come. tom: absolutely. we are down to about 2.5 standard deviation. tension. he is global head. we are thrilled that he can join us. what i noticed in washington is little focus on central banks and maximum focus on dollar liquidity among the flesh countries and ones more challenged. how critical is a dollar shortage worldwide? >> i would say the dollar was

the talk of the town in washington, but the message we came away with wise, we came away thinking that the fed is still the central focus. there is a lot of concern with the dollar, but there is not much that can be done about it. when it comes to foreign exchange markets, they seem to be operating in a relatively orderly way. markets have shown some signs of concern. tom: what does the bank of japan, the ministry of finance do with their unique experience? what is the reality of a second intervention's efficacy? >> we expect more of the same. we expect it will come very soon

come as early as today. at the same time, they reassert that japan was different. so we see no reason for it to change. we do think that the dollar-yen would come down once we see signs of intervention. lisa: the goal was simply to slow the pace. where is the new red line in the sand? is it 150 or 160 or 180? >> we think there is no clearly defined red line. it is probably by politics or

when they are about 2%. we do not think politics will be before then. it is quite a long way from here. until then, they said it was dollar-yen with two handles a day that was raising concerns. we do not see a line in the sand anywhere close. lisa: the current crisis has been what averted. we will be sharing from jeremy a few times throughout the day, trying to stave off some of the pain we have seen. how much credence to you guys to foreign investors coming back. >> we think that the buyer for investors to return is very

high. at the heart of that, what we think are the most relevant real interest rates are just negative. that kind of environment is the buyer for investors to see major appeal is incredibly high. tom: the flow realities of emerging markets. is it like the 90's for emerging markets right now? >> there is a lot of optimism and maybe a touch of complacency. the appreciation of the dollar has been much more extensive than it has been across emerging markets. at present, we see more concern,

but one of the issues i'm concerned with is that maybe there is a little too much complacency that they are in a better position. but the base case is, maybe we have to watch some of the developed markets like u.k., more closely. tom: where is the trade i can make any on? forget about the imf. we are going to make some money in the next couple of days. >> we think the stronger dollar will continue and there are balance sheet pressures that make it even more likely. we see further dollar upside. they continue to be short, the

australian dollar against the u.s. dollar promised until the end of the year. lisa: is a stronger dollar from here predicated on this idea that the federal reserve will raise rates by early next year? or is it predicated on the fact that data will continue to be strong. it is really the resilience of the economy rather than the rate hikes themselves? >> i would put more weight on the fed and those rate hikes because they reflect the outperformance of the u.s., but the central driver has been the client in asset prices around the world. fed interest rates are the primary driver. both matter, but it is about the fed. jonathan: always great to hear from you. the range that we have had on sterling of her cable has been phenomenal.

one i 3.50. this morning, briefly. tom: a frame set out. i have done a study where it breaks out, but we are nowhere near that word reversal. that is evident across every feature of this debate. jonathan: november 3, there is talk of 100 basis points, 125. with this budget, does he have to go as fast, as far? lisa: the market is saying no. will he have to do better than that this time around? you could say we have a cap on how high yields can go. still, as you point out, the levels are a far cry from what they were.

the risk premium built in is going to be something that stays around for a bit. jonathan: it is one aspect of this announcement that jumps out. april 2023 is when the support for the energy situation will end. tom: that is an important point. you have been good on this. a lot of europe is looking at it. jonathan: they have reversed that plan. lisa: how much investment happened if the bond vigilantes are back? suddenly, we have 20 days until the midterm elections. spending is a massive issue.

it is a time when the cost of financing is very high. jonathan: the markets are basically forcing the government to push people out. tom: we are getting back to that rate. it is when you have that. can i talk about another restructuring? goldman sachs is on the edge. i do not know what is going on, but this is a big deal. it is a goldman sachs do over. jonathan: a corporate restructuring as far as letting go of initiatives.

tom: this should be above the radar. is this a bank of failure? it is a big deal. jonathan: bank of america numbers could be due any moment now. we are bouncing back. this is bloomberg. >> keeping you up-to-date from -- with news around the world. newly appointed u.k. chancellor set of plans to bring order to reassure markets after liz truss' academic program triggered weeks of economic turmoil. a shortening of a planned universal energy support. >> no government can control markets. but every government can give certainty about the sustainability of public

finances. that is one of the many factors that influence how markets behave. for that reason, the prime minister and i are committed. on friday, she listened to concerns about budgets and confirmed. >> meanwhile, hunt will address parliament with more details later. china said to stop selling lng in order to assist -- ensure its own supply for the winter heating season. they had been reselling to europe, offering some relief. they are likely to have spurred the move by beijing. this is bloomberg. -- global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> whether the committee would one to pool some proposed order thought of policy rating increases from 2023 into the december meeting, i think that is a judgment that is premature to make. jonathan: ready to go by november. that was jim out of st. louis fed. joining us now for more -- >> cc what we have been seeing at other banks, a rise above expectations. there are provisions for loan losses. more than wall street had expected. basically numbers.

they met on equities. reported zero days of trading losses. keeping expenses broadly in line. they got a little jump in their shares on monday. i these numbers enough to keep wall street happy? lisa: from your perspective, what is the most gettable asset? they really blew it out when it came to equity trading as well, which is unusual for other banks. lexi look at what is going wrong. how much of an overhang will that be? -- starting to see some cracks in mortgages. will that hurt in future quarters? tom: best in class powerpoint.

in consumer banking, 34% more zelda transactions -- zelle transactions. digital inking is the win for these banks. >> it is the win and very political. again, jamie dimon answered the question. tom: this is a huge issue. we will speak with one of the experts on the future of banking. thomas's chief executive officer of this. he is definitive on the pulse of american banking. tom, when did they capitulate and realize that the future is digital banking? >> that is happening right now,

right in front of us. what was remarkable during the covid period was how much digital engagement there was. we have been watching very carefully to see if they would slip back after covid came to an end. that has not happened. we think it would be good for consumers and take friction out. it will help with expenses with these big banks and make them profitable. tom: maybe this is a little bit outside, but there is a risk-free rate. finally, we have the math back to where it was. are there zombie banks to be merged? >> we think it will restart. when things are disorderly is when consolidation and banking slows down. stock prices have been volatile. my expectation is asked in as things settle and become orderly

again, we will see consolidation. a lot of it is what you talked about earlier, revolving around the ability to invest in tech lng. lisa: tom keene mentioned this question of consolidation, mergers and acquisitions. i wonder if they for some of these acquisitions this year. how concerned are you based on the last of provisions that it could be a potential risk in the future? >> what you are talking about, what are the valuation and commitments that were made a while ago? they have been negative for the banking industry across the board in finance. we would expect that there would be negative marks for things like that and the bond holdings. that is really one of the themes and that is why we think during

this conference call coming up, there will be a lot to talk about. frankly, bank of america, it was our expectation that they would improve their capital ratios and bna very strong position. they can withstand, so we would expect that there would be negative love marks, but we believe it is well-capitalized. lisa: who you think will be the winner and hoodie think will be the loser of this earnings season? >> is almost like a continuum. you are under pressure. our analysts are looking for 55% , in total, across-the-board and thinking revenues. the only down 2%. it suggests that the

year-over-year pain is real. here, a vision a bank, if you are one of the big super regionals, they are in the second quarter of a four quarter run where they will show 20%, year-over-year. that has not happened in my career. it is very strong on the revenue side. jonathan: good to keep -- good to hear from you. what we have seen the last couple days is the benefit. what people arguably see is the harm done by higher interest rate. tom: bloomberg has a real heritage of looking at inking and all of that. we are looking at the grinding grind of consumer banking. i looking at double-digit loan growth.

double-digit this and that. on the revenue side and consumer side, this is a constructive story. jonathan: you get higher interest rate. passing that on to the base. you can speak to this. mortgage origination. that is the side of things bacon start to see things punching the other way. >> the credit card businesses is where you are seeing them punching higher. jonathan: they are telling the economy what we already knew. the third quarter, it was all right. tom: no question. the goldman sachs restructuring, you wonder about traditional banking. how much is the restructuring

going to be? a lack of consumer banking. >> so much of this was about diversifying goldman sachs. a lot of it still comes from i.b. and trading. jonathan: it is not happening. futures on s&p 500. live from new york, this is bloomberg. ♪

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>> under the circumstances, they continued to raise until they see the need to slow down. >> i think they will continue to be on this path for the next few months. >> it is going to be the primary fear of her recession. >> this is bloomberg surveillance.

jonathan: good morning. for our audience worldwide, this is bloomberg surveillance. i am jonathan ferro. i have to say, actually a pretty interesting situation. tom: you have to look not at equities but the holistic whole. front and center is the yen running away. all you need to know is that it is troubling for the leadership of japan. jonathan: inching closer and closer. lisa, briefly. lisa: how much is that what we are seeing right now and how far can it go?

does it go further at a time when suddenly there is a rate that people have to pay to borrow money? jonathan: he has shortened the duration of the support. moments ago, bringing up a really important point and i think this will get a lot more attention. it does not have the money to subsidize for everyone beyond six months. many voters will field the high pain of high electricity prices. it has implications for ukraine. tom: i will go with that. what upsets me is that china, where there is clearly a slowdown, where would brent crude be if you had the judgment demand? jonathan: coincidental that they have the meeting with that?

lisa: i do not think so. basically, people i expecting the economy to come in with the slowest pace. tom: the first time we heard this, it was a global recession and we are there. i did not know that. i have been down at martin's tavern in georgetown. french onion soup. jonathan: i bet you were. spiked french onion soup. i bet that is delicious. tom: it was. jonathan: talked a lot about the 10 year. tom: i'm still not used to those yields. jonathan: it is up up and away.

lisa: there is this question of the 4.75% being the funds rate as of the end of this year. the u.k.'s new chancellor has released his statement earlier, but he will speak at 10:30 eastern. what kind of triggers could there be to extend some of this aid? how much are they going to cut spending? we are seeing 30 year yields coming down. how much can you get, strengthening in the pound when you are guaranteeing a recession. we did get bank of america earnings. we got the call at about 8:30 a.m.

what kinds of problems and delinquencies? what will their threshold be for lending at a time when consumers will not have as much to repay their loans? empire manufacturing going back to where we are in the cycle. people i expecting a slowdown. it will not be in the of the other side. we have seen so many economic surprises to the upside that has been treated as bad news. jonathan: they have jumped out for all of us with the bank numbers. that is $898 million for the third quarter. i think the direction of travel here tells the story. tom: it is always there when you have some kind of slowdown in gdp. i think there is a caution or a gloom element to the financial

story, but the other side is the efficiency that they are getting from digital banking. as tom said, -- it is like bloomberg surveillance. jonathan: i think mike might take issue with that. what catches you right? >> it is a consumer that is still relatively strong. i think that is what we are seeing. not by its severity but by its duration. despite consumers eating into savings, consumers are not

worried about losing their jobs. this is all taking longer to play out. but i think they are not necessarily right here and right now. tom: let's talk about the zombie companies right now. >> i think you have a lot of pressure. what u.k. has tested and shown is that the old system of stimulating your way out of any kind of recession or financial market pain is not being allowed . inflation is holding you at bay. you are in this scenario where you will have pressure and credit cracks in the federal government. central banks cannot come to the rescue as easily had -- as they have historically. there is a multi-quarter

downturn, not something that will reverse quickly. lisa: i pictured a mattress stuffed full with dollar bills. is that what you are doing, or is there a more nuanced approach? >> it is more nuanced. you do not want to put your cash under the mattress. prime money market strategies, you can go a little further on the curve. you want to have the quiddity in your cash portfolio. you want to take that money and move it when the time comes. we think that the time is approaching, but you can get pretty yields as you go into cash strategies and go a little further out on the curve. i think you will be over four within two weeks.

that is not a bad place to be. there will be some compelling opportunities, but cash is king right now. jonathan: you said now is not the time, but the time will come. what do you look at? >> there is a game of chicken going on right now. what you have seen is that the initial u-turn has had mixed results. get the unemployment up and the growth down. on the back of that, as recession overtakes inflation, that is a key concern, but that is not happening yet. the terminal rate goes up as rates do. that is the dynamic that needs to stop. you need to see it over a minute. what we are concerned about, if

you move higher, a $92 average, you could have a new headline for inflation in the u.s. and i do not want to be dying in front of that. jonathan: it is that the output, the economic numbers keep coming in resilient. the fed, priced at a high terminal rate. tom: this is an important distinction of the shift versus the dynamics that are out there. this was the basic feel. i'm trying to dazzle you. jonathan: i appreciate that. you know that gain that we played of things you never want to say? this is something that you never

want to say as a spokesperson of a government. we should do an end of year program based on headlines of things that people should never want to say. that is near the top. liz truss is not resigning as prime minister. just speak to the moment that the u.k. is in. tom: we talked about it. jonathan: we will have some of that footage for you. we will also here in a detailed way when he announces more measures. there is more to come. tom: so you think that there is more substance.

nominal or actual spending cuts? jonathan: we will see. you had airtime. tom: it was a fair penalty kick. jonathan: it is like handholding. this is bloomberg from new york. >> keep you up-to-date with news from around the world. in the u.k. come the newly appointed chancellor has set out plans to bring order to the public finances and reassure markets. he announced a further rollback on several tax cuts planned by the prime minister and the

shortening of planned universal energies or. grexit is a deeply held value that i share that people should keep more of the money that they earn. it is a time. it is not right to borrow to fund this tax cut. >> hemal address parliament later. they have agreed to a new package of sanctions aimed at iran. this after a younger man -- young woman died in police custody. ministers are also discussing reports about iran's military support for russia and its war against ukraine.

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>> and remain extremely confident about the u.k.'s long-term prospects. growth requires confidence and stability. the u.k. will always pay its way. this government will take whatever tough decisions are necessary to do so. jonathan: we played that game about filing things that you never want to say. u.k. will always pay its way. things you never want to say to

the market and yields responding. tom: to me, the major parsing of a given budget is when you say budget cuts, are they inflation adjusted budget cuts? are they outright nominal budget cuts or a combination of the two spread out over the different programs? jonathan: we will get more detailed by the end of this month. the dimension of all of this is offsetting the pain. the fact that it has been cut through april 2023, they might revisit it or they might have to extend it. they will come back in april to see, but this will be more than one issue. tom: what is that housing overlay? we are having a housing issue.

donovan: they still have to put rates up. see your point, with -- i will save that debate for another day. tom: are there protests in the u.k. like we are seeing? you guys are all wired up. aberdeen is spelled correctly. jonathan: you have more u.k. subscriptions than i do. tom: i learned that there articles are so long they are almost unreadable. jonathan: i cannot get through the new yorker.

tom: lizzie is wired into what we are seeing. lizzie, what are we going to hear from the chancellor? lizzie: you are asking if there are protesters in the u.k. trying to get his music played in the u.s. we are expecting more detail on this absolute shredding of the economic policy, which is ironic because they were shredding -- it is really in tatters. all of the reversals on the tax cuts. perhaps as humiliating as this rollback on the energy rollout. doing u-turns, liz truss

continually taunted debris that her energy bailout was bigger, but now jeremy hunt is saying that in order to make the books balanced, they will need more targeted support. it was a huge criticism of the bailout that people who did not need the money were getting a, but the hope will be that this will calm the markets. jonathan: do we have to pay royalties? this is our soundtrack now on bloomberg surveillance. lizzie: when the sendai were on on the day of the budget, he was playing money, money, money. jonathan: tell me what more we can expect from the chancellor by the end of this month and what it means for next month.

lizzie: he needs to balance the books. what he has announced so far is expected to save 32 billion pounds, but they were projecting a fiscal whole. what you might also see is a rolling back on supply-side reform with really controversial, the other side past the parliamentary party. when you get to that stage, you have them asking, what is the point? the answer when i am speaking is very much a question of when, not if they will go. lisa: the music adds the effect in terms of the whole upheaval.

is there anything that liz truss is doing now as she seeds control to paint an agenda that is a lot different than what she initially put out there? lizzie: he does not have broad support in the community. as you say, he is in the driver's seat, which is why they are questioning whether they should crown him as prime minister which would mean there is a new leader. it would add to pressure and if you look at thep wipe out the party. >> thank you.

down in westminster. oppenheimer has thrown the towel in. we are updating our price target based on the target. we now see under 12% potential by year in to establish the target of 4000. i believe it was something like 5300 at one point and that is gone. tom: he has been dead on. if you put a time on it, always, you get in trouble. i would suggest he is extending out his view. because the calendar is moving on. lisa: one person.

he pushed it out but he did not abandon the call. jonathan: people get it wrong sometimes. would you hold onto it for a while? lisa: my question is how much can you ask out, simply because of the resilient you that we have been seeing? jonathan: live from new york city, this is bloomberg. ♪

jonathan: good morning. after an ugly closed on friday, bouncing back. helped out by the bond market. yields come in and drop away after kicking up higher, much higher. on a 10 year yield, climbing for

11 consecutive weeks. having a little look at the forehand, back and away. the bond market is all over the place. remember the 30 year plus is where that operation was taking place. it is helped out by the chancellor this morning with yields aggressively lower. even back and away on the duration support they would offered to consumers in the u.k. around the energy crisis. i think we can call it that. it was initially slated to last two years. we will have to backtrack on that board revisit it. it is pretty clear the direction from this particular individual. tom: it is about accommodation and restriction. showing that new restriction. the bloomberg financial

conditions shows new record restriction except for that covid moment. absolutely. jonathan: keep it there and wait for inflation to come down. it is what they tell us that they are seeing. they believe that the risk of doing too little is bigger than the risk of doing too much. they think they have more work to do. until they see inflation coming down, they will get them to back away. tom: this is nationwide, not just about the big cities. jonathan: you have a housing recession. tom: if you thought at the top of the market, it is not a recession.

jonathan: we will get miller on the show to talk about that. let's get you some single news. lisa: depression is leading people to be less mobile because they do not want to sell their home at this point. i am watching a series of earnings. this can be seen in the airline industry. united coming out with their earnings and heard from delta last week about how much you will see those airlines actually cater to some of the business travelers and some of the upper end travelers doing much better than the jetblue of the world. united airlines is up ahead. jetblue also up but year-to-date, you can see this more clearly and i keep coming back to the reason why this would be so difficult.

you see pockets of strength. they are dictated by the areas. united airlines down sharply. delta is down similar. jetblue down catering to florida and a lot of families and vacation at a time when people are we thinking whether they want to fly around. some of these tickets are incredibly save. the money is declining very quickly. tom: my memory itemized airline fares were up 42%. lisa: this stems from business travel and people who can afford it, but a lot of cannot. so many people have canceled or not gone on vacation or they just drove because it is punitive for people who have constrained, discretionary income. tom: it will be interesting to

see how they will do. i some chaotic that we have had. head of the fundamental fixed income at blackrock with decades of experience. i want to cut to the chase. what is the pain of level. what does it signal? >> that is a great point. high-yield spreads are not where we have seen historically, but the cost of capital has gone up substantially and investment grades, you are talking about an index that is a 6% yield. you have companies that were

funding at 4% to 5% that cannot get funded within 10 now. there is the cost of capital that has gone up substantially. there are a lot of savvy liability management strategies that firms employ by refinancing their mortgages to be a years ago. there are very attractive liabilities on the balance sheet, but the next thing that one might put is going to be more expensive. tom: d by that into the fixed income asset? does it make it not an easy decision? >> you guys were just talking about this. this is a very intentional and

aggressive tightening of conditions in an effort to slow and loosen up the neighbor market to get inflation back to target. there are going to be some things that probably break along the way. it will be hard to do it without some of that happening, but i also think that it is really hard to look more than three to six days forward. if you can take a step back, you can build a pretty reasonable portfolio. you can go in and do the game selection. you can build a high-quality portfolio including treasuries.

we have not been able to do that in nearly two decades. things are starting to look reasonable. there is more stress to come, but things are looking reasonable. lisa: things are looking reasonable. i wonder about some of these mutual funds or open ended funds. it makes sense that on a thesis basis, but they are underperformed dramatically. there is a forest selling about how much you want to. creating some sort of fissure as you see things that happen in the u.k.. >> that is the right thing to be focused on.

you tighten this aggressively, things are going to break. almost always, it is in the levered strategy. i would argue that the push towards a much more aggressive fiscal policy kick off our pressure in already deteriorating market, but the real stress was the business model. the increased margin calls. importantly, if you have to pay higher margin calls to maintain the leverage, you are in a difficult spot. i would not be surprised if we see more of that before this is over. jonathan: just picking up.

let's pick out 30's because that is where the bank of england was sitting. 42 basis points this morning. lisa: this was in response to other programs from the bank of england. there are some more details coming out and it is clear that they are leading the charge. we're looking at how that edifies some of these moves. jonathan: the policies that were announced in the last couple weeks i potentially being revisited in the years to come. if we have more of a growth problem, if we can get them to go lower, a lot of people might be clamoring for these initiatives.

tom: there are other is to say you get this to take care of itself. you look back to 47 and you actually get the deflation. but the point is if you come on, what is the path? jonathan: do you think it is part of that? tom: a blistering note that the only thing that is working. lisa: how much is that offset the force that you are talking about? have you seen the discounts? jonathan: you are upset with nike.

: i think if a child really liked air jordan's and parent must say no -- jonathan: that is not real. or is that is a real conversation in your household? lisa: it is really expensive. that is what i am saying. tom: i had connie's. jonathan: none of this is going on. from new york, this is bloomberg. >> keeping you up-to-date with news from around the world. newly appointed u.k. chancellor jeremy hunter set of plans to bring order and future the market. he announced a further rollback.

>> no government can control market. there can be certainty about the sustainability. that is one of many factors that influences how markets behave, and for that reason, the prime minister and i are committed to cutting corporation tax. on friday, she listened to concerns about the budget and confirmed. >> meanwhile, hunt will address parliament with more details later today. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

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and helping you plan for future generations. this is "the planning effect" from fidelity. >> we have terrible sentiment not much better on main street. we have a fed orchestrating a policy that seems clearly us this -- clearly unsustainable. it will not last long. jonathan: always great to catch up with jim. what they should do and what they should not do. ultimately, we have to talk about what they will do and those people say they will hike by 75 basis points. tom: now is when the lifting is difficult. we have been way out front and now is where it matters. even in the first meeting.

jonathan: jamie dimon said over on cnbc, the next 100 basis points are the most painful. tom: yes. it is data-dependent. i am not spending much time on it versus the challenges of the powell approach to the rest of the world. what do we do with a ¥149? jonathan: it does not work. you do not scare anyone off. tom: even coordinated intervention is difficult. it is a discussion with leland miller to eliminate on china. he is outstanding, the cofounder and ceo, hugely prestigious effort. we have to go to the news over in london today. says he has never seen anything, even in pestilence and conflict like the postponing of china

gdp. this is your wheelhouse. what was your response when they postponed q3 gdp? >> i think the most obvious reason is that they are very busy on the party. you saw all the pictures of people just sitting there, very silently and without moving, watching the speech. they probably cannot work because they are too busy listening. i do not think there is anything nefarious about it. it is probably making sure that there is not another bomb dropping off. tom: what happens? >> it will take a few months for him to get the positions. where does he pivot, if at all?

everybody is wanting to see a pivot. there has been no indication that it is coming. it is not just announcing covid zero is over. it is, here is the policy. here is how we are going to deal with the fallout. this is a many month, maybe year-long transition. is he going to pivot on covid zero? probably not sunni -- probably not soon. lisa: they talked about a more business friendly environment. >> look, it is hard to see what is talk and what is not. all throughout 2022, some party official would come out and say, we are doing this differently or

using this crackdown and nothing meaningful ever happened. we will have to wait and see. i think it would behoove him to have some sort of outreach. the europeans, i think you will see some of that moving forward, but in terms of making china more appealing, you have to have regulatory certainty. you have to be ending covid zero. there are a lot of obstacles. it is not just saying, we are going to be friendly. lisa: this year, a lot of people say it is probably a highball estimate. you talked about 18 to be a hand. the target is 5.5%. it would be the biggest since setting targets in the early 1990's. how much do you think this will be a problem where they start to inject more stimulus and start supporting the housing market versus the reality of a new

china with a bigger middle class? >> i do not think it is a problem at all for them. 5.5 was not only gone but the fake, let's pretend that we got somewhere near five was gone. they can blame it on covid zero, but there is a reason for not hitting these numbers. they have changed their priorities set. they still talk about high levels of growth, although the narrative is changing, but that is not what they are focused on. they will try to deliver enough growth that they do not have a problem, but they are trying to do changes that are painful. tom: the 720 yuan gets you out to a new week strategy. what is the level where that unravels?

do you have a level where this becomes difficult? >> i do not because it is a dollars story and not a yuan story. if this was a renminbi exploding because of the chinese economy, he would have a different dynamic and people would read into it differently. right now, the chinese goal is to maintain relative stability, relative strength as much as possible against the rest of the world, but making sure that things do not break on the way up. there is a number and it depends on how strong the dollar gets over the next few months. jonathan: he is great, isn't he? tom: when i first met him, he was looking at utility costs. i feel like they are refuting statistics. he would say that the statistics out of china got quotes around

the word believable. i think that works. lisa: they just entirely scrapped the ones that were due tomorrow. exactly. there is that. cannot pretending but they are not disclosing. jonathan: i think this is an interesting thing to ponder. is it good or bad for the global economy, -- is covid good or bad for the global economy? tom, you said it about a million times. can you imagine if you had that full throttle demand and what that would mean for the labor market? tom: i do not even take it over to investment. somebody who is an adult, we have talked about it.

tom: will there be an into the policy is the hope. lisa: what does that do to natural gas prices? the question is, does it help some of the supply chain? tom: it is great to be back. jonathan: how long have you been away? keep up. are you here? present. ♪

>> under the circumstances, the fed is going to keep addressing as aggressively until they see the need to slow down. >> the fed will be on this path far another few months. >> the more aggressive they get, the more you will get recession fears as the primary fear. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. jonathan ferro jonathan: lisa abramowicz -- jonathan ferro, lisa abramowicz, and tom keene. it does not matter. we are looking at goofy stuff. jonathan: chaos here are chaos elsewhere? tom: chaos here!

the padres won. it is the second largest beating of a team like the dodgers. the dodgers lost. jonathan: are you done? i'm just joking. tom: what is so what about 10:30 this morning on global wall street. jonathan: the debt market, financial markets are so severe it has for the government to do a u-turn. tom: i saw it, jon, this weekend. is the united kingdom on the edge of becoming italy? jonathan: i don't think so. it has its own central bank doing its own thing. it does not compare to what is going on in the euro zone debt

crisis. this government has been forced to do something it did not want to do. the chancellor is leading the country right now. not the prime minister. rishi sunak -- tom: let's bring it home. some up all of this international blather -- sum all of -- sum up all of this international blather. people who are looking at rent's up, tuition is up and food. lisa: moynahan is talking in the earnings call and to saying the resilience is still there. you are seeing consumers continue to spend, albeit at a slower pace. this is the dissonance. where?

what does that do to consumer expectations? jon mentioned earlier the report we got on friday about the one year ahead inflation expectations as reported by the university of michigan. i do wonder if this is significant. jonathan: just set the scene -- you get one of those calls from the university of michigan. you get the call out of ann arbor. " where do you think inflation will be one year from now?' and they say " 5%." lisa: they have been somewhat accurate in terms of reflecting the zeitgeist in america! stop laughing at me! this is just looking at the gasoline prices. tom: the flip-flops with a beard and a tan with the liverpool --

jonathan: i will tell you exactly where inflation is going to be one year from now. we spoke to -- who was it we spoke to? he said " no, they target core pce." chairman powell is looking me to look at eci! that is the problem with the fed right now. tom: we will be joined in a bit by invesco. i want to dive into the data. i want to lead with the bloomberg index, which is the most restrictive. that is stunning. jonathan: the objective to blackrock's point. the bank so far is telling us

what we already knew, which is the economy is resilient that consumer is ok, there may be a storm on the way. that seemed to be the commentary of the last 2 months. tom: what else do we see? jonathan: nothing. tom: the dow is up 280 points. lisa: i see complete chaos. that is what you said! jonathan: should we get 30k hats? lisa: you would storm off the set! jonathan: $10,000 to charity and i will do the show in a 30k hat. lisa: [laughter] tom: it is likely the a tom no leaves blowing from labrador -- autumnal leaves blowing from

labrador on down. jonathan: is leaf peeping a term? tom: no -- lisa: no. tom: i'm not a leaf peeper. jonathan: peeping leaves. tom: tom: is that a moose? tom: -- tom: is that a moose? lisa: that sounds wrong. tom: we are going to try and save the show. rob, you do big, institutional money. it is a bond bear market. how do you extract yourself from the price declines you have enjoyed? >> it has been a bond bear market. underlying that, we have seen such increases in yields.

yields have gone up in the past couple months 150 basis pointss or s -- points or so. for the first time we have quite a bit of value. that is where we think clients are starting to generate or lock in longer-term returns. we think that is a compelling investment. jonathan: when do you think they will start delivering some price appreciation? we had this conversation earlier. when do bonds start behaving like bonds? when yields start to fall. when do we get that? >> in terms of the bond market, we need to disaggregate the front end from the longer end. we see signs of stability on the longer end. i would not be surprised if we got high yields this quarter. with the fed committed to 75

basis points a meeting for the next 2 meetings, it is probably second quarter here where we get a peek in the two-year == -- peak in the two-year. i have been favoring moving into investment because of the widespreads. we are -- i do think -- lisa: how do you deal with investors who want short-term investments, who won the ability to withdraw their cash, when even investment-grade debt is not immune to the technical selling that will come into effect if there is some kind of international event that sells -- forces people to sell what they can, not what they want to.

rob: i think you are referencing the kind of event we had in the u.k. investors, the u.k. pension funds who had a lot of allocated assets and this ldi strategy are forced to sell their those -- sell those higher-quality assets. we have seen a lot of the selling that has come out of the u.k. pension funds. we do not see a lot of leverage in the system this time relative to some of the past times. at least it is not obvious where the leverage is. jonathan: have you ever heard of leaf peeping? rob: i have! i am from new england. if you are from new england, you know about leaf peeping.

the peak time of terrorism in main. jonathan: peak leaf peeping. i'm in shock. the amount of fact checking i have had to do on this show, particularly with you. leaf peeping is an informal term in the u.s. and canada in which people travel to places where leaves turn color. tom: can you see ferro and those boots up to your knees, dark brown ones? lisa: we have someone writing in and saying in boston they are called "leafers." the amount of traffic -- and it was kind of hilarious -- going

up to see the leaves, people were pushing each other. i am not doing the peeping. i did go upstate this weekend. jonathan: it was gort -- lisa: it was gorgeous. jonathan: the longest trip i have done is from mumbai. this is bloomberg. ♪ >> keeping you up-to-date with news from around the world with first word news, i'm leigh-ann gerrans. as germany grapples with an energy crisis and an acute shortage with the is compounding manufacturers' problems. the lack of skilled labor is starving manufacturers from hermas to bmw of the staff they

need to keep pace with demand. 50% are -- it is costing the economy as much as 80 $5 million per year. in nigeria 603 -- $85 million per year. in nigeria, at least 603 people have died following major flooding. someone point 2000 people are now -- some 1.2 thousand people are now displaced. credit suisse is paying $495 million to settle a case that contributed to the 2008 financial crisis. it will resolve claims tied to more than $10 billion in securities. global news, 24 hours a day

online and on bloomberg quick take. i am leigh-ann gerrans and this is bloomberg. ♪

>> my expectation is that rates will have to move higher for a sustained period. i do see risk around moving too abruptly to this new higher level. moving too fast can disrupt financial markets and the economy and a way that ultimately can be self-defeating. jonathan: interesting comments, i have to say -- higher for

longer, but ultimately question the speed at which you do that. tom: the pioneer growth -- jonathan: she told us both. tom: that is an interesting theme from someone, regional, agriculturally based. jonathan: some of these states, tom, they have unemployment rates so much lower than the national average. tom: futures are up 38. we are talking to the gfx strategist from nomura. almost up to 149. numerous doesn't have a relationship with the governments, so i think you can speak freely. what is the state of japanese reserves? a lot of the reserves are immovable and they only have x number of interventions

available, if they decide to act. >> the size of the reserves are massive. tom: but is it reachable? >> it is usable. it is at least $100 million in cash. that is a significant amount for this market. you saw a big drop in the yen. why have we not seen them come back in? we are looking for 150. tom: you are looking for further weak yen. >> i think positioning is a part of it. when they intervened, it was not a good trade. i am taking on the largest central bank in the world. i'm going to focus on the pound or the euro. a lot of people took their short yen positions off. i said " this is a big number.

where is the position -- where the position is lightest is the yen." jonathan: this is short-term technical stuff. can we look ahead to next spring? how does policy change? >> i think they are waiting for the fed to do their pivot. they will pivot by february or march and the bank of japan will be rescued. they will not need to change yield curve control or being aggressive on monetary policy because the underlying fundamentals of japan, core cpi is nearly nine times slower than america. in april, we get the wage negotiation data, and if it is strong, if we have second-round effects from japan, then maybe we get more hawkish going forward. lisa: in the u.k., i went to get your thoughts about what is

going on over there. have you rethought that base? jordan: the fiscal moves are causing huge volatility. from trading brexit over the years, do not trade sterling based on politics. it is too fast. if you were short sterling, the moves have been extremely volatile. if you trade the politics, it is like having a chocolate teapot. it is really poor in practicality terms. for me, slowing growth in the u.k., the bank of england hiking into a recession, that makes the u.k. asset base look really unattractive to investors. there will be possible blackouts in the u.k..

they are tightening fiscal policy in a dramatic way. i do not expect the energy price cap to be changed. it can rally because of this euphoria, but it is short-term. we will be in the same situation where europe and the u.k. look unattractive. lisa: the japanese and british stories have something in common. and that is that they are very much on the others of the dollar story. the dollar stands out as the strongest. when does the rest of the world start to impede on what we are seeing in the u.s.? jordan: february and march. that is the time i have for dollar weakness to come back in. the projection for the gas story in europe hopefully says, " we have made it." by that point, the fed should be approaching their terminal raise. 550 is where we have it at

nomura. " they have got to 550. the only way from here is down." u.s. high rates are driving the dollar. jonathan: have you done momoji gari in japan? japanese leaf peeping? jordan: we have a conference in kyoto. it is one of the most special things in the world. jonathan: don't you believe me?. i am very cultured -- don't you believe me? i am very cultured. jonathan: jordan, thank you. we are going to get some news on credit suisse. tom: quite the news. jonathan: the investment bank

chief is said to leave the company in the coming weeks. it will likely see the unit ceased to exist in its current form. his announcement is expected to be made on october 27. that is also when we get the bank's new strategic review. as you know, credit suisse has been in this for a long time now. we have had leadership change, after leadership change, after leadership change and the date and everyone's books is 10 days away. lisa: how much will they need to know about this strategic review before it comes out in order to appease markets? how much can trickle out before they have to release it early? tom: 20 years, this guy has been through morgan stanley, deutsche bank, goldman sachs

international, then lehman, then nomura, then bank of america. the whole ib model, it is almost like ib is under threat right now over " what do we do next?" jonathan: it has been focusing on the overhaul of investment bankers. tom: ok. jonathan: we will see where he lands next. much more from credit suisse still to come. jordan, this was special. tom: what did you call the leaf peeping? momiji gari. lisa: do you actually speak japanese? tom: -- jonathan: sure. from new york city, this is bloomberg. ♪

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jonathan: live from new york city this morning, good morning. the s&p 500 pushing higher

through most of this morning. last week, a week of losses. monday morning air up on the s&p 500. back up aggressively then down, all over the place on the bond market. a 10 year yield higher for the another consecutive week. on the 10 year for 11. lisa: we have had a shift in the psychology of said members. the cpi is coming out hotter than expected. people are surprised by what they have gotten wrong again and again. jonathan: the survey negative 4.3. you make much of that? lisa: mckee did not come on. he would have come on, if he thought it was a big deal. it is slightly deteriorating.

tom: have not looked at it. -- i have not looked at it. jonathan: i am aware. tom: we are going to pause. it is usually a slot we have at 8:31. we do this with all of her. -- we do this with oliver. all jon and i want to know, you have the football sponsorship, the football team from munich as well. we see the sponsorship of sports. what is the value of alianz of byron munich? >> it is hugely positive because it is the best brand of sports, at least in our country, and we have been associated with it for many years. tom: now you have a bond bear market. some would say that your best

position in that market would be to sell. give us an update on bond asset management and the view forward given this great bond bear market. >> the current circumstances are tough, but it is good to be with a great company. people are watching because we have a very long duration business model. we believe it will be great for pimco and us as the industry stabilizes. the money will come back into bonds. think about the accumulation at the interest rates that we have. what does it mean if you reinvest at 5.7$ instead of zero -- 5.7% instead of 0%? jonathan: what are the lessons you have learned? >> if you have an economic idea

that is not anchored in economics, that is very dangerous. brexit will start to pay the price. markets have dominated again. we are coming out of 15 years of quantitative easing, no fiscal discipline, no monetary discipline. people have to get used to the fact that the laws of physics hold again. lisa: this gives room and give rise to bond vigilantes. are you the bond vigilantes? do you go through some of the policies and say, " not going to buy this company, not going to buy this nation because of what they are doing"? oliver: i would not think about negative selection. we are looking at companies and properties that properly manage. 3 years ago we had 3 times the

financial stimulus in the united kingdom that we saw a few days ago. suddenly people wake up to the fact that what has been done is really a disaster, and suddenly the price -- because of inflation, people have started to reprice assets fundamentally, not just bonds. we are not at the midpoint of repricing assets. lisa: when you said actively selecting specific companies, this makes the active selection that so many fund managers talk about now as reigning supreme. where does that leave passive management? oliver: it is different between equity markets. if you, have large-cap equity you can invest very effectively. if you are in the bond market and you do not know where things are going, you should be with the people who do. all of our colleagues are

proving themselves right now. tom: the liquid markets have repriced. what does that look like? we talk a lot about pulling back the veil on some of the carnage that has taken place, and we get told that public markets are strong, the resilience is there . what is going to happen in private markets? oliver: i'm not a great investor. jonathan: just picking up on what you said. oliver: it is very hard to see it. it doesn't mean that it doesn't exist. people have to face a lot of scrutiny. watch out more, not just leverage, but liquidity. people do underestimate credit traps and that is something we need to look for. you see that in private equity. are they trading amongst each other? it will go through real estate,

private equity, slow-motion, but it will come. tom: talk about conservative money, pension money. forget about ldi and the gyrations in london. normal, institutional money. what will the shock be? oliver: we have to think about resilience. the shocks will be harder than people anticipate. diversification is a thing that is never there when you needed the most. people need to look at their models and ask " how come the world completely missed out on inflation?" in november of last year we started buying inflation bonds a lot. the question is why is that happening? the first answer is, i do not know why, but we have to de-risk. tom: how do you de-risk?

oliver: if we were completely in an endowment, you would selectively take risk. in this environment, we cannot. lisa: given that you are based in europe right now, how concerned are you about the prospects of the pain you are experiencing now in business will not just be this winter. it will also be next winter. it will also be potentially for years to come if there is not some sort of sustainable energy plan put in effect? oliver: i am a born optimist. the first thing is that people have been overselling germany, if i may say so. we have had a demand contraction on gas down 15% this year.

italy has been only 2%. we will have enough gas to make it through the winter. what will be the implication for industry to reprice its product and supply chain to a higher energy price? that has happened. i believe in their, engineering capabilities very similar to western switzerland. we invest in innovation. we will be very good. we need for europe to realize now one important thing -- germany needs to refocus on reinventing its business model. it is always cheap energy from russia, successful exports to china, and america providing all the security. that formula is ending. that will require a lot of energy on the german people. that means we have less attention and tolerance for doling out money to other people.

tom: this is not why we had you in. you people finance barry munich. will you guys steal harry kane. are you going to bankroll this football team in munich to steal the jewel of the united kingdom? oliver: even if i knew the answer, i would not be able to tell you. jonathan: that is the only reason-- tom: i said get the guy from allianz in because these are the guys who are going to steal harry king. jonathan: i like the dartmouth fans. oliver: every german is our client. jonathan: how many stadiums do you have? oliver: quite a few. 12. jonathan: across europe or worldwide?

oliver: worldwide. it has been a great investment. football does something that politics cannot do. we unite people. we bring people together. we make them enjoy their lives regardless, most often on both sides whether they are winners or losers. it is bipartisan. jonathan: if harry king goes from tottenham to munich, that is un-american. -- tom: if harry king goes from tottenham to munich that is un-american. jonathan: football is the greatest sport in the world. tom: we will take that under advisory. can you have the first discussion of the world cup on bloomberg surveillance? tom: do you think you can -- jonathan: do you think you can make it happen? when a world cup? -- win a world cup? oliver: i am crossing my

fingers. the point is to have a great tournament. jonathan: we never want to do this winter world cup ever again. i think it is a travesty. we are taking a month off in the middle of the season? tom: -- in the middle of the season? tom: that is idiotic. oliver: we are always great at criticizing things. jonathan: that is what this show is about! it is good to see you. lisa: a breath of fresh air. jonathan: from new york city this morning, good morning. this is bloomberg. ♪ leigh-ann: keeping you up-to-date on news from around the world, i'm leigh-ann gerrans. the newly appointed chancellor jeremy hunter set out plans to bring order to public finances and reassure markets after liz truss's economic plan faced

weeks of turmoil. he announced a further rollback of the tax cuts announced by the prime minister. >> no government can control markets, but every government can give certainty about the sustainability of public finances. that is one of the many factors that influence how markets behave. for that reason, although the prime minister and i are both committed to cutting corporation tax, on friday she listen to concerns and confirmed we will not proceed with a cut to the corporation tax. leigh-ann: meanwhile, they will address parliament with more details later today. russia launched kamikaze drones this morning, hitting kyiv homes. foreign ministers are said to

agree on a new mission to train ukrainian personnel. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than two 2700 journalistss. i'm leigh-ann gerrans. this is bloomberg. ♪

>> i definitely think we will see another 75 basis point move in november. i had thought they would slow down to 50 in december. i will cling to that for the moment that if the inflation numbers come in the way the last 2 have, it is not clear to me that they can step down from these 75 basis point hikes. jonathan: --

tom: onto december meetings in the fed. lisa abramowicz, jonathan ferro, and tom keene. the vix under 31.35. it is a story that has been anticipated and it shows not a fractured goldman sachs -- that overstates it -- but a goldman sachs looking to the end of the year in 2023. william cohan's book on goldman sachs, chapter two is called " the family business." goldman sachs has always been that emotion from the 19th century. solomon is completely removed

from that chapter. how far is he removed from the people who want goldman sachs who is a family business. >> they do not want to run goldman sachs like the partnership eight used to be. there is one prime ceo and everyone falls under. what is the market on david solomon? this is the third major reorganization of his organization. with this one he is undoing some of the signature moves from his last major restructuring in 2020. that seems like a move that has been made under pressure. jonathan: what is -- tom: what is the pressure versus a publicly traded board structure? is there heat from the board or selected members, or is it from the managing partners, whatever

the main phase is of the partnership? sridhar: if the goldman sachs stock had been outperforming everyone else, there would be no pressure. that has not been the case. in the last four years the firm has not been able to re-rate the stock. it has not been able to get that jump relative to jp morgan. when there are so changes and the ceo is trying to change the very fabric of goldman sachs to what he hopes it will be down the road, it will create a certain level of discontent, and that will bubble up to the surface. lisa: how much has david solomon lost the faith, not only in the investors, not only in the board, but people in the rank-and-file of goldman sachs? sridhar: it is -- he would argue that 4 years is not enough

time. he still has enough time to make the pivot and tell his story to shareholders and analysts that presents goldman sachs as a company for the future, but when he has to make strategy reversals and about turns, it just becomes harder to land that narrative and make sure that it sticks. lisa: what was the story with the consumer unit? sridhar: that is important because one of the big changes they are planning is deconstructing the consumer unit as it exists now. the partnerships they had with apple, general motors, green sky will exist as a standalone business much smaller than what it used to be. tom: how does someone like apple responded that? sridhar: apple doesn't mind as

long as they have the leverage in the relationship. they don't care about the dynamics that goldman sachs. what they are doing with the consumer is equivalent to the demotion of pluto as a planet. lisa: [laughter] jonathan: does that -- tom: does that put utah on the pluto? sridhar: that is part of the reason they have such a big presence in utah, for the tech platforms that they are building. lisa: what now? goldman sachs will announce earnings tomorrow. is this a sign that there will be big negative surprises having to do with the consumer banking unit? is this because they are failing to deliver on the fundamental level or is this a coincidence that comes ahead of a new financial cycle? sridhar: hopefully no surprises

because we have been telling our listeners and watchers that there will be a big loss. this reorganization will change some of those numbers, but equally important, because the consumers were not acting the way they were -- equally important, david solomon had not necessarily been playing up the strength of trading at goldman sachs, which is goldman's core business and to something they are really good at. tom: how many weeks has he left? sridhar: i expect the goldman sachs board and his management team will cut him some slack. tom: i'm not saying me! i'm speaking for the audience on radio and tv.

i'm looking at the intraday on yen. we moved in on stronger japanese yen. these are teens you moves, but they are germane -- teensy weensie moves, but they are germane. lisa: they are staving off the declines they say versus u.s. dollar. a sea is driven by the change in the u.s. dollar. you said the imf is really concerned about this. when does this become a problem that really impedes back on the u.s.? not yet. tom: i will not go to the numbers now. equity markets lift here. futures are up 51.

dow futures are up 347. lisa: some of the rallies have been shocking. going back to morgan stanley when he was talking about the possibility of a 16% rally in the next couple of months heading into earnings, and then back down to 3200 for the s&p. tom: one question i had i was never able to get to, there has been shifts in the yield. what has the spread market done? lisa: it has widened, but not as much as you would think. significant, but in certain pockets. tom: a really interesting monday. we will stay with jonathan ferro. 30,000 level again on the doubt. this is-- the dow. this is bloomberg. good morning.

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jonathan: the stocks are up, yields are down. the countdown to the open starts right now. >> everything you need to get started for the -- ready for the start of u.s. trading, this is bloomberg the open with jonathan ferro. ♪