>> people are talking more bearish and they are investing. >> i don't think that far above goal. >> for the base case, we think the fed will end somewhat below 5% policy rates. >> what the fed wants to see if their action is done. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa horowitz. -- lisa abramovitz.

>> nothing has changed in 50 years. >> that was in a concrete proposal. >> it wasn't macro economics and it was an oil economics and i think a huge body of people who support the president and don't support president have common ground. >> a windfall profit tax, with less than two weeks to go with the election, they can't do anything about it. the question is does it have any influence whatsoever if it is toothless. >> ed morse, "going long crude

looks risky. he says he is still with that but the answer is how you get to hundred and can you imagine the rhetoric at 125? john: storage capacity was at eight decent level and the weather has turned that -- turned out milder than expected but i think it has nothing to address next year so this energy crisis is going nowhere fast. lisa: if you cannot bill the stores -- build the stored -- you don't have the stockpile in the u.s. to go back to that point, at what point do we refill to create a buffer? tom: unit, low of 36 degrees and

saturdays. is that what this debate is about or is it about the business of germany? >> without we would have industries shutting down across europe. i don't think you can escape the fact that europe is turning lower and we have the pmi's that were in the 40's so europe is not out of a tricky situation but it is not the worst case situation. lisa: the cpi report was not just energy underpinning the gains and that is not lost on people that the headline number, people said it was stunning and it was the idea that this is being fueled by energy but it is not because under that is 6.9%. it was stripped out of energy. tom: --john: is that the new normal? tom: this is a war going on and

one of the -- there's a war going on and you have these kind of banners. tom: --john: i can't believe it is november and ridiculous how quickly this year has gone. october was a massive month of gains. tom: i know you don't follow the down but the dow with all sorts of data back to october and there is a record move, second-highest since the 1930's and remember the gloom that we saw in august about equities. i would suggest it is not a june equivalent and i watched the vix to start the day, is 20 at -- 25.83. john: euro-dollar is lying -- sliding across -- the weather is

better. tom: there is growth gloom. it is away from the fed. john: curve flat or. --flatter. lisa: it feels like we are dancing on the head of a pen with respect to where we are headed and when we reach the bottom or capitulation and today, the earnings continue and we will get a third of the earnings of the companies in the s&p 500 and huber comes before market and curious about the service. airbnb aftermarket, curious about travel and how much that can hold in given some of the crimp. so five --sofi technologies --

in swath of the economic outlook critically with respect to the consumer, get the bank of england becoming the first major central banks actively to sell its holdings with 750 pounds -- 750 million pounds of short guilt --gilt. gilts are one of the best-performing asset classes in october. because what happened on the political sphere. at 10 a.m., get a slew of u.s. economic data, including the ism manufacturing and the gringo day at -- granular data will be underpinning that. we are sorry getting the jolt shock of things but it is going to be interesting from the labor market and the manufacturing how much do we see some sort of

softening or easing in the tensions to get the fed a little bit of a breath of relief. tom: i was like pmi, so much -- so what. john: anything south of 50 contracts. pmi's in europe in the 40's and and a china in the 40's -- in china in the 40's. did you see jp morgan last month and i was breaking other numbers up 21% in the month of october. tom: julian emanuel will be on with this. everyone is getting it wrong and they are performing and the big quality companies led the way and it is symbolized by jp morgan and anna, -- anaconda copper. john: eric, what you make of that monster move in october.

-- what do you make of that monster move in october? >> when you think of volatility right now, it implies there are moves and it was a huge move and the best months in a 70 six and we think that there is a natural desire to own stocks and people want to say the bottom may be in. we think this is a good time to reposition one portfolio and a good time to rebalance back but we think this is a move -- tom: what do revenues do? how do you handle 9.5% revenues as julian emanuel models it at evercore and that number will migrate in. how do you manage that with quality stocks? >> where you have to start his own quality and there have been

plenty of times where we have emphasized there are times to be more small-cap and mid-cap. now is not one of those times. we think the old economy will work. you should have some exposure to equities and there are reasons to be excited about utilities and oil. the energy space is one of the higher conviction ideas we have in emphasizing those make sense. the key thing is thinking about rotating into tech, will be went rates will come back. there is no guarantee will we will -- that we will be at the 2020 playbook. we have to see their earnings and we are not at that conclusion but the old economy utilities, energy is great places to be. lisa: do you care or pay attention to what president

biden said about windfall taxes? >> we do and there has been a pavlovian response from the energy complex which is oil prices go up and you send out rigs and find an too much supply hits and you see the cycle continue and now, you did a great job covering this. if you look at esc and activist shareholders, there have been strength -- restraint to go out of find and if this -- there is not going to be a balance from shareholders to let companies go out and find and start project so we think that this is probably going to have a reverse impact that the white house may want which is the white house wants lower prices and if this is meant to provide another piece of evidence for activist shareholders to restrain these companies, they are probably

setting prices higher. john: eric freedman there. this president on the campaign trail, in 2019, said i will win fossil fuels. it cultivates the environment where the fossil fuel companies are doing what they are doing. lisa: you have altered since -- politicians wanting to transition up -- to a green economy where it is not possible and that now is a very fossil fuels now. john: do you remember when the former president when it to rebuild -- and that democrats said it was a -- it was tantamount to rebuilding oil? tom: we can stay -- say where is the economic foundations on taxation. i see politicians and business

gospel. john: if this is not fair, can you tell us what percentage of the profits is fair? tom: the gentleman from virginia was suggest yes, that is true. john: this is bloomberg. lisa: it is the fed's most aggressive timing campaign in four decades and treasures believe that the state of rate hikes is at an end and the fed will begin smaller increases. in the u.k., rishi sunak's government says that all britons will have to pay more taxes. he met with a chancellor to discuss the budget and according

to the readout from the treasury, they agree that tough decisions are needed on tax hikes and spending cuts. north korea is renting the u.s. with what he calls powerful measures. at the american military doesn't end exercises with south korea and others. and maybe after from kim jong-un to lay out groundwork for nuclear tests. the u.s. and south korea started joint air drills after exercises on land and sea and air. twitter is limiting content enforcement. the social network has frozen some employee access to internal tools used for content moderation and other policy enforcement that is affecting the ability to clampdown on information. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa retail -- i am lisa

mateo. this is bloomberg. ♪ >> rather than increasing the respite in america or giving consumers a break, their excess process are going to shareholders and buying back stocks. executive profits will skyrocket. enough is enough and if they don't, they will pay a higher tax on excess processes -- profits. john: the president going after big oil. equity features of about eight or 9/10 of 1% on the s&p 500 and we can head over to our good friend manus cranny. >> thank you.

joining me now is this special presidential court nader and it is good to see you. we were playing a sound bite about buybacks and dividends would bring the wrath of -- taxes but to his speech, let's talk about last night. the president warned that there is a risk of a windfall tax if you don't reinvest. is this just political kite flying? >> it is great to be here with you in abu dhabi. the president -- this has been a consistent message from the president and the administration asking companies to take their profits and and best them back in america -- invest back in america. we have been experiencing

elevated prices as a result of geopolitical anatomist, not because i markets, -- of markets, but we have a devastating war in europe. the perpetrator of the war is one of the biggest gas producers in the war and using energy as a weapon. rises have increased and we are having a huge economic growth from post-covid. we are telling companies make a profit but there is a level and limit to how much profit you can take. >> you weren't saying that to oil for companies -- oil companies when companies were -- prices were at $20 a barrel. >> $100 and 90 dollars is historically when companies do invest in the problem is they are not doing what they always used to do. >> i am not here to represent big oil but i am putting the

proposition, which is, people have said to me, you look at the emigrations guidance of eight to oil. we have neither the discussion of a new taxation format and we have a host of no drilling on federal land and we have various messages, which are, respectively, schizophrenic. how can you prepare for five years with policy changes like this? >> i don't think it is schizophrenic and we have been clear to craft -- we have to deal with a short-term and medium-term and long-term and we are at a time where we have to increase production because we need to make sure to ensure global economic growth, we have to have reason will be placed and -- reasonably priced and affordable resources. the goals of where we want the world to go by 2035 and 2050, we

have to accelerate our investments in oil and energy. those are consistent with each other. investing right now, there is a certainty. we said now that we have released 180 million barrels of oil to the. , we need to buy it back. we need to buy more arrows. the president has told companies, i will tell you what price i will buy back, at $70 or so, i will buy back at large amounts so i will provide you with certainty up rise to some degree -- up price to some two. -- of price to some degree. >> i know it is a lengthy document. can we move on, which is the price cap from the u.s. and i think the language is, $40 to

$60 is something i understand. the you believe $60 bookkeeper russian oil flowing onto the market because a conversation i have had with everyone here, people are worried about the distinctions in europe to -- and does $60 keep russian oil flowing? >> i don't want to argue with the uber article -- bloomberg article. all these numbers that are rumors and leaks that are not substantiated by reality and people should ignore those. i hope people will ignore those numbers and we have always said that our goal was to keep the russian balance on the market while we restrict the revenues to russia at a point where they are using the revenues to finance the war. we have to figure that out and there's a difference in the bonds between when we were at

$120 a barrel versus $76 a barrel so we will have to figure out what the right price will be in order to make sure that russia is still incentivized on the market, while we make sure that are not over profiting beyond that level. >> what material higher than 60 -- what it be material higher than 60? >> i can't speak on that because we will have rumors but we understand how the market works and i want to make sure goals are achieved. >> i want to understand the potency of the price cap. it is unlikely for india and china, the biggest customers for russian oil, will sign up. we don't know but given the price cap, it is a fairly impulsive proposition if two of the biggest customers of russia

won't sign up. >> i disagree because -- you don't have to sign up. it is not a membership. as long as you are purchasing russian oil at a lower price, that is what we want to achieve. you have a market price of brent. no one buys strictly brent. do you really believe that india and china are not going to be negotiation -- negotiating? we know russia is not selling rents right now at a discount. >> you are at a pack -- how would you describe saudi and u.s. relations? are they broken? >> i think people attached to much of the drama and soap opera of things.

we have had an 80 year relationships and we have ups and downs and we have a broad range of interests. we had a significant disagreement. i don't shy away from that. we had a disagreement about the opec decision. we think it was a mistake to announce a cut of 2 million barrels but we will talk to them and we will have a relationship that serves our interests. we have to evaluate how that works. >> the last time you are in the region, you left here and did you leave saudi arabia with an and convention -- with an convention with a belief that you will get more oil from the saudis? were you misguided? >> one of the things i never do is talk about my conversations with government officials. i will say that the good thing

about my conversation, i am straightforward with them and i appreciate they can be with me. they knew that we believe that a cut right now under this environment was not good for the global economy and not good for their consumers and not good for our economy of consumers. >> president biden's trip to saudi arabia was about oil? >> no. our interests are varied and deep and look at what we achieved on that trip. there were flights from israel and sick. -- security arrangements and extending the cease-fire from yemen. we had achievements on that trip that had nothing to do with oil. at the same time, when we

announce the trip, we had an increase of production in july and august and in september. saudi in august had its highest production levels. >> it was a shock and promoted immediate news conferences. the question i want to know, is the white house serious about retaliation? what will you do and it -- it it going to be arms sales or no opec --nopec? >> i have to deal with the relationship let's -- and we are looking at the interests for the united states and our own interests in the region. we have strong interest in the gulf with uae and saudi and the

rest and we will look at actions that we need to take that best serve the american interests and what we think are the best security interest for this region and economic interests around the world and that will guide every decision we make. >> thank you so much for taking the time and at -- it has been good to catch up and i will fact check my $40 to $60 price. amos hochstein. it is a wrap from the hallowed halls care. john: great work. tom: manus cranny, that voice is experiencing -- shakespearean. it is great. john: what you like to talk about the content of the conversation? tom: i have never heard this and

i want to hear from curry, morris and others. i want to hear from adults about what i am hearing, which is politicians talking price. of oil -- price. of oil --price theory of oil. john: the difference between rhetoric and policy, if you will sit there and say it is a limit, what is the level or limit or percentage that you think it is right to distribute the capital returns back to shareholders and what is wrong and that is the difference between rhetoric and real policy. futures is positive. this is bloomberg.

john: this market running away to the upside of the s&p 500 up nine tensile 1% and adding to the gains through october. the s&p up eight percent. best month on the year and the nasdaq up by one point 2% and the underperformance of the nasdaq 100 clear. it to, tens and 30 shaping up

and yields heading south. 441 -- 4.4141. who would've thought the weather moves the affects market? first it was the u.k. talking about mild time. the euro-dollar positive. tom: i want to go back to the global wall street and this is over -- old news but you mentioned people wait s&p and this is a important time to talk about s&p is good map -- math. in the dow is bad math but the idea then you adjust for equal way where apple has the same weight, as colgate-palmolive. it is a day after halloween but the geometric serious which is even more led than equal weight and all of these bear studies by

adults and by pros. john: you are stripping out the muzzle of big tech. -- muscle of big tech. the small caps through the month of october, 11% on the russell. you can call it a squeeze and maybe a bear market rally. tom: there is a headline. i don't know anything about it and we will learn about it and give you the news on that but we are going to learn from freya beamish. i will notice that the bloomberg financial condition for the u.s. comes in and it was from restrictive to are more accommodative study and is this better going to affect meeting with the more accommodative tone that they have to adjust to? >> there is a clear case to make that the outside of the fed that

we are getting this sort of stage one of the pivot, i am not sure we are quite bare in terms of the fed and i think, we go back to the argument that -- the mismatch at base in the u.s. economy is there to be worked out. we are getting to the stage in the hiking cycle where people are thinking about arbery going to get an overshoot in -- are we going to bit empty -- to get an over suit in the fed entities to be a recession for the fed to hit its inflation target and i don't think we will actually come back sustainably to that 2%. the endgame is that we will have a higher inflation target but to be moving in the right direction, we have to get an unemployment rate above 4.5%. that is the euphemism of has to be below the growth.

but that means there has to be a recession. charlie: --tom: freya beamish, with that said, you said it they have to move the unemployment rate up. do they have the capability to move the unemployment rate up? >> this is why it is taking so long because we are in a very for an cycle here with regards to the balance sheet. in previous cycles, the fed was able to slow the economy down to the liability side of the private-sector balance sheet because there was that leverage. there hasn't been a credit cycle and eight the 2010s and it has been in china and the asset cycle has been in the u.s. as a result of the lack of wage growth driver in the developing markets and the result of that is that the monetary policy has been moves. there was -- there has been a

asset cycle that has been good for the price of assets but how do you move from a situation where there isn't leverage to slowing the economy down? the ways in which the fed policy affects the economy is muted. on top of that, you have the overhang of the massive fiscal, list and -- stimulus and the cap -- accumulation of price gains over the pandemic that is sitting there and that desensitizes the real economy to the timing that the fed is trying to embark upon. they need to get unemployment about before .5% level and the idea that they will just hit that level and move sideways is very unlikely. probably because it needs to go above the 4.5%.

also because they don't know how far they have to go so it is easy for us to say, looking back at the 70's or previous hiking cycles, that the fed has overshot in hindsight. particularly in this cycle where there is so much uncertainty, they are feeling their weight and they want to err on the side of dealing with the inflation. lisa: what you are saying is important which is the idea that the economy is less sensitive to rate hike so they have to go further than naturally would be the levels that people would expect. what about the other side where inflation is coming from and i point to the 10.7% cpi figure in europe. how much is it due to a weaker euro and important -- imported inflation driven by the federal reserve? >> i think a great deal and it

is a role reversal from the 70's where it was the bank that was exporting the inflation and the shoe was on the other few -- but. --foot. it is the u.s. that has the -- we see some evidence of that and we can't this miss that and say it is imported inflation and the imf had a chart looking at the resentful -- residuals of various levels of inflation and trying to see whether that could be explained in shortages and inputs and labor costs and there is a relationship so we are not dismissing any kind of building heat within europe and i globally, there is a key change which relates to the value of chinese labor and allows wage growth to move faster but the bulk of it has been imported inflation and the impact of this energy shock and when the shocks

were coming through, it will take 12-18 months for this to pass through the system and in that period, you will not know the drivers. i one --lisa: i want to pick up on the bare context that we will saying we will have to have a higher inflation target longer because of the inflationary forces including deglobalization and regional globalization and move away from chinese labor. how much is underpinning that and what is the appropriate inflation target over the next 10 years in be developing world as a result of these macro forces? >> the appropriate target is somewhat higher than 2%. before we get there, we will have the barrage of disinflation that will allow people to have a

bit of a tactical play. the tectonic plates drivers here in terms of the global interactions are the fact that china appears to be exhibiting the flattening of the phillips curve that the u.s. was exhibiting in the 2010s. it takes more labor market tightens within china to generate that wage inflation and that tells me that this was pre-covid, this tells me that china that reached the lid and that lifted the lid in wage growth's across the road and making develop market wage growth more responsive to labor supply mismatches. that is one of the drivers and the flipside of that, the debt cycle moves back to a develop market with the banking sector

and balance sheet in that household sector found sheet being clean and that leaves space for the inflation driver of credit to return to develop markets. have wage and credit inflation and we don't behalf -- we don't have to say which one is important. john: freya beamish there. a massive rally in chinese every markets on a rumor over social media that china has found a committee to find a way to exit covid sitter -- covid zero. tom, quote, "not aware of what you mentioned" and that is part of a discussion and pardo reason why we saw markets in china fly

in. tom: we saw xi jinping codifying him for a third and it appears the kneeling -- and list term and this is right on cue. lisa: i wonder how many of these rumors are being spread after what happened with the foxconn factory and some of the stories are brutal. people are being held in a closed-circuit encapsulation and not provided the food they need if they get sick with covid and escaping and walking 25 miles to escape. how much are these stories really fueling this shift in terms of social opinion and officials? john: you have to think that raises questions for apple in the future of the country. lisa: they said it will be hard to move out of there and there was a story about tesla sending shanghai workers to california

to boost production because they can do better in california and that speaks to another point. john: tesla sending workers to twitter. lisa: i won't get into that. john: futures off -- up about 1%. julian emanuel coming up. from new york, this is over. -- bloomberg. >> president biden's promise to impose higher taxes on oil companies that most windfall profits will be all but impossible to deliver in his proposal comes as gasoline prices are high week before midterm elections. many democrats have unsuccessfully saw a so-called when for-profit text for more than a decade and no such proposal is likely to pass the senate.

that comes after moscow halted its involvement in a green agreement and russia has impeded unsubstantiated claims that ukraine has used the core door for military purposes. in brazil, protest by supporters from president jair bolsonaro have intensified. he refused to concede defeat to lula. protesters blocked the main highway and they say they don't agree with the results of voting. bargain hunters may be looking at credit suisse. the chairman says they will end up disappointed. >> we will swipe again so we don't have any takeover discussions at that point. lisa: he spoke to bloomberg in hong kong. global news, 24 hours a day, on

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

>> here is a certainty we are getting holing -- oil companies. we have released millions of barrels and we need to buy it back. we need to buy a number -- another 200 million barrels. we have said the president himself up -- have told companies i will tell you what price to buy back and i will start buying back and i have large amounts. john: amos hochstein there. equities futures up by almost 1% in tidy routing -- rally. features higher on the s&p and yields are lower almost 10 basis

points on a 10 year. in the fx market, euro-dollar 9944 -- 87.94 improve. >> i will call that two dollars down from the latest uproar. short-term, one week out and we will be in washington and annmarie hordern joins us. i went out and looked in pennsylvania, they manufactured 13 thousand barrels of oil per day and how do the president's, stop play in texas and oklahoma, forever going republican. how did his comments play from scranton to pittsburgh? >> you can make the argument that he made maybe comments and

the wall street journal said that gasoline prices have dictated the president's approval rating. gasoline goes up and the president -- approval ratings go down. it is shortsighted when it comes to policy but -- because congress will not enact an -- a windfall tax and they flirted with this idea months ago. this congress wasn't able to carry the loophole when the democrats were able to pass legislation and they have control of the senate and house and there is no way they will pass a windfall tax. for the president was trying to do was off the make a higher earnings, and look at exxon, $7 million an hour is what the prophet ian -- ended up being and he is using it -- that americans, for the past few months were dealing with higher energy costs. john: what are the policy

options for the initiation? >> the president said yesterday he is calling for the tax and it is not likely possible and another issue for the policy was to basically have an export ban of fossil fuel buttocks, not crude but actual products like gasoline and diesel. the timing of the speech is not just so interesting because of the midterm elections but interesting because we are going into the winter and something that is not making the front page news way -- in the way gasoline prices are is the fact that this nation is low on diesel stockpiles and there are some places that are even dealing with emergency measures when it comes to diesel. i mentioned this because another policy they may be doing is something to do with stockpiles and asking private companies to increase top files -- stockpiles. tom: steve short --shork nailed

this call. lisa: people have -- how much it is going to be colder or warmer than people expected and how much the republicans are proposing? how much is the main linchpin is the republican talking park, -- talking point, we are better than in --them. >> when it comes to the republicans, something that they really hammer the administration on is the fact that the president ran on a campaign that he wanted to put an end to fossil fuels and the republicans are saying you can tax them or make an incentive for companies to produce more production. when it comes to aid for ukraine, right now, at the

moment, there is still a majority of five -- bipartisan supporters but we have been talking about there are questions saying that there won't be a "blank check" for ukraine and we had a credit letter was -- that was rejected but it was outlining the fact that maybe -- if tens of billions of dollars were going over, you should mirror the concern that at some point that there will be a diplomatic path. john: i wanted to go to a letter that was written by tim reddick sectors -- senators to a former president. you can find the letter from senator markey. i will read as follows. to go back over it is shocking. " the increasing -- illustrating the recklessness of investing taxpayer money and -- in what

will be likely become friendless -- stranded assets." the former administration wanted to refill the spr and at the time you had democrats telling the former administration to any investment on taxman -- taxpayer money into the oil patch was reckless because they would become stranded assets and why is it not right to hand that money back over to shareholders because aren't they basically agreeing with the democratic senators? >> they are and this is the big debate and criticism he will get from the industry. you are running any talk about and socialize and running campaigns on the fact that you want to get rid of our industry and you are asking us to produce more and what oil industry will say is that you cannot just overnight have more refineries or produce more oil.

this takes years and months and sometimes decades of planning and what the administration's entire communications towards the industry would be, we want to transition and we don't want your assets and there are some who say, if there is higher oil prices, maybe there will be more dvds. the big problem the demonstration has is that they went into their entire four years, the administration going into their leadership not realizing" predict the kind of energy prices they were about to have and their rhetoric did not match the moment. john: thank you. i don't think we have heard the end of this. as soon as we got exxon and chevron, we said the same thing. as soon as that dropped, we were waiting to see what the president said. lisa: that was basically what he

was saying. john: no one believes the threat that the president was dangling over them. tom: everyone i was talking to -- we go and maybe that works and i want to see a cogent walk-through by perry and blanche and morris and the rest of them through the micro economics around what we are hearing the politician state. john: we have a guess that will join us in five minutes time. futures up is about 5% on the s&p. this is bloomberg.

xfinity rewards is a program whose sole purpose is to say "thank you" with experiences big, small and once-in-a-lifetime. sometimes it's about cheering hard enough to shake the stadium! sometimes, it's as simple as movie night right here at home, on us. you mean the world to us. so we're bringing you closer to what you love. kinda like this. welcome to 30 rock! join xfinity rewards for free on the xfinity app today. our thanks, your rewards.

>> people are talking more bearish than they are actually investing. >> i don't think that far above goal. >> we think the fed might end somewhat below 5% policy rates. >> the fed wants to see what their actions have done. >> the central banks have been wrong before. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa habana visits -- abramovitz.

lisa: on the record, you have just brought it up. john: the morning. i am jonathan ferro. future is up 9:10 the s&p and what a rally we have seen in october. tom: the equity markets are up and there is too much made of the dow. a big month on all of that. i think everyone was like -- i am dow first but everyone has been overemphasizing the historic month in the real news is the underperformer is listed. you mentioned small-cap up and even the nasdaq and the dow up to 33 thousand and seven on features and tv will -- julian emanuel knows that matters --

all that matters is the dow. john: do you have a doubt forecast --dow forecast? >> i don't but my father worships the dow. john: 390 time -- 3.9 510 -- on the 10-year gilts. euro-dollar 99.34 -- .9934 and 8790 -- 87.90 include and that president sounded fiery. tom: there are different oil discussions in kyiv and ukraine and survivor -- survival and being cold. here is a different story and i go back to what i mentioned to annmarie hordern. pennsylvania is oil.

over to how, john payne and cleveland. how does his rhetoric play in the pennsylvanians of the world -- pennsylvanias of the world? john: brent crude with a 94 door handle and the oil patch a big discussion. lisa: we are getting a sliver of earnings on the oil patch and we will parse through those and the investment at a time where people are saying we need that to be sustainable over the short-term and even medium-term before we get to a greenest furniture -- greener feature. youtuber came out -- over --uber came out and beat expectations and the stairs were surging over 9% and it is interesting to hear about how the actual driver base increased dramatically and they went back up to volumes going back to 2019.

people still have money to spend, whether it is ridesharing or on food delivery and airbnb is reporting after the bell and a slew of other earnings and we will hear from spfo technologies --sofi technologies and a whole swath of the s&p 500 reporting. about 750 million pounds and what effect would actually have on two-year gilts and it could hinge on whatever physical progression -- projection that have on richie sunak. all coming -- data is coming out and i itself manufacturing is expected to come out at the 50 level. if it comes in below that, what is it mean and it becomes about

that, how do people grapple with the potential for supply-chain descriptions easing a bit? manufacturing seeing a recovery at a time where that is not what people probably -- don't want to see? john: we are looking forward to the data and there is an energy whisper on earnings and it is saying, these are our capital returns. tom: we heard from the administrations alex hochstein and -- and was hochstein and there is a reticence to talk about it. john: julian, wonderful to have you with us. what a rally we have seen in october. we asked a guest eric freedman, what he thought but that -- about it. do you agree with him? >> know, and the next week or

two could be choppy and you have elections next tuesday and there is likely going to be a back and forth as we have seen over the last couple days but from our point of view, we know the fed is going to downshift. i don't want to call it a pause. we know the trajectory is going to change and the market is getting comfortable with that. at the same time, just like the july earnings season, the numbers are coming down and it didn't matter, stocks in july and it doesn't matter now because people have been under invested in the last thing, the stock bond correlation. you can't get away from that. u.k. set the line in the sand. when we resolved the political issues, that would stop the move up in guilt -- yield. tom: i want to go to machinery.

right now, you have a single statistic and it keeps coming up. revenues are ticking up on your earnings edge and 9.5%. what is the glide path of revenues you see with your optimism in june of next year? >> we know the story is the story that none of us as adults have faced in our investing lifetime and revenues are being driven by the ability to pass on prices in and -- inflationary environment. the glide path is going to moderate. can margins be maintained? they have slipped. that is the question confronting corporate america. lisa: do politicians want to see the profit margins maintained? the more that profit margins are maintained, the higher the rates will go at a time where there is a lack of test heavy between

market policy and the market response? >> this is part of the narrative and there are number of ways that policy tightens and this is part of the dialogue we have seen in the last 24 hours, pointing out the energy industry, we do want to see margins come in. this is why the challenge of the soft dish --softish wedding is intense -- landing is in text -- intense. tom: a lot of people have tax losses and how do you play the shell game of tax loss candidates into january 2023? >> we are showing connected to the idea that you don't want to take money out of the market. could we go lower, absolutely but that is contingent on, we move from contingent on

recession to deeper inflation. tom: they put a manual with me because lisa didn't want to sit next to someone's optimism. -- so much optimism. [laughter] john: we heard the fed won't hike 75. when he came to the recession, there was no recession but the recession was short and shallow. we are a long way from where we started the year and we have been wrong through 2022 and what gives you confidence about 2023? >> we have to understand that when you have a year like 2022, the left tail and the right time and we talk about options, they are very large. when you look at it and this is one of our favorite graphs, the bond stock return quadrant, it

has been in lower left over eight on president nature over the last 60 years but the upside of that is the year after the only other time it was lower left, 1994, and you had a massive return year for bonds and stocks and we respect the concept of seasonality. it is not the be-all and end-all but we all know be dated that supports good years after midterms. john: did you see the latest institution investment survey? our top economists -- a tough economist -- artillery he has earned 42 times -- a type so he has earned 42 times -- a title he has earned 42 times. tom: the basic idea is that he has been doing through cj lawrence and no one is as

wrangler as edward heitman. he has the shopping thing going and -- sharpie thing going. he is looking at railroad crossings in kansas city. lisa: you just take a sharpie and talk about railroad crossings. tom: i had a deal once and i had a paragraph on page 42 that said that didn't -- john: i wanted to give him a proper set out and we went -- you went on a rant on sharpies. i appreciate that emmanuel is staying with us. november, equity teachers is looking good up 91%. julian talked about the correlation between bonds and stocks and treasury is running,

and heals down by 10 basis points on the 10 year. -- yield is down 10 basis points on the 10-year. >> i am lisa mateo. federal reserve policymakers are expected to raise interest rates another 75 basis points at the end of a today meeting that begins today. it is the most aggressive tightening campaign from the fed in for decades and this -- stratus -- strategist believe this stage of rate hikes is at an end. rishi sunak's government says it is a never -- especially the ridges, and he met with a chancellor on monday to discuss the budget. according to the read up on the treasury, they agree that tough decisions are needed. north korea is threatening the u.s. with what he calls powerful measures at the american

military doesn't end exercises with south korea and others and the rhetoric may be effort from kim jong-un to lay the ground for nuclear tests. the u.s. and south korea started joint air drills after exercises on land and celie -- sea and air. a big takeover in the medical device energy. johnson & johnson has agreed to buy a company in a all cash deal. they develop technologies designed to assist and replace pumping functions of the arts. twitter is limiting content enforcement just before u.s. elections. they have frozen access for employees to internal tools and that is affecting the staff ability to clamp down on misses ration -- miss information.

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

>> we have never had a recession where jobs were growing and jobs continue to grow not in recession, comma, yes.

if they keep raising the interest rates like this, we will see a slowdown. >> austan goolsbee there coming down to the opening bell to kick off a trading month of number with equities positive on the s&p. features up by 8/10 of 1% on the s&p and the bond market yields lower. three .9448. just a massive rally over in china. rumors going around that the government was putting together and forming a committee to access -- assess ways to exit covid zero. that official said he is not aware of what you mentioned. that is where you are at.

i massive move into the session. tom: we are in the 7.261 per dollar. i will digress her julian emanuel. -- digress with julian emanuel. i want to talk about the brilliance of how sausage gets made in this is under the guise of hit -- and heitman. -- and heitman --edh heitman. people are grinding away and how to guys like you do what you do with animals like michael to -- chu? >> it is football and the financial industry. you have to have a great team and you are only as good as your weakest link on the team and frankly, it is -- you cook the soup and come up with ideas and you think about how to execute

them, and fortunately, we have returned her for -- we have a terrific platform. >> are you like a dictator? >> you have to take in opinions and viewpoints and i will tell you that working with people younger than i am -- if we don't learn from millennials, you have missed a lot because the perspective is different. let's think about it this way. we are affecting politics and world outcomes are twitter 24/7. tom: we have a risk-free rate and the to the young people like michael chu have any understanding that is coming with the risk-free rate? >> the metamorphosis is much quicker and more profound than i would have thought and i think that also explains why the retail investor stays engaged and something we are seeing that

is different now is this transition from simply only -- owning stocks to owning call option plus cash. you have your leverage and cash and getting three plus percent on it. lisa: people have been coming on the show all year and been saying it is time for stockpicking. as time for a bond picking and i was looking at the returns and on funds that were actively managed have underperformed by the greatest margin for years when you take a look at the bond bond index. why has that been so difficult if it does seem clear cut that there are certain secular trends that makes some stock making successful? >> you have to disaggregate stocks and bonds because we have seen the vix is lower than we might have anticipated on balance for a down 25. you never spiked over 40 whereas

the treasury volatility index has been at the all-time highs. it has been much more destabilizing in terms of liquidity and security selection, and that will dissipate. lisa: when you talk about the gravity being back on the bond market, are there is that will come back in the same way. i point to big tech, the question of, the deflation of a tech bubble that will not drive the economy in the same way. >> it is not a bubble but we have gotten to the point where the returns were driven by a handful of stocks. it got to -- maxed out at almost 25%. what will likely happen is -- and you have seen from time to time in components, they go

sideways why earnings -- while earnings catch up to valuations. those are secular growers but they won't prop the market to the extent they have. lisa: this raises the question about the idea of risk-free rate being something. you have a real yield -- but you take a look at the metrics, how much is that doma -- eliminate buybacks and some of the financial engineering that supported the stock market for so many years? how does that bleed into valuations? >> it will change the discourse into how companies allocate their capital but you are in a environment where the good companies -- that has bifurcated to a greater dissent -- extent this year, are throwing off time --tons of cash. it will be a weapon that will be

deployed more judiciously where you will return to a strategy of buying low and less high. john: and get you in trouble politically if you are in built oil patch. -- a oil patch. it is different if you are a tech company. lisa: it depends because if you have a company that is buying the competitors and have a antitrust push -- john: what if all your production is in china and you have fat margins that you get from american consumers? when does the christmas tree index come out? when do we get that? >> very resume --soon. tom: i learned a lot from this conversation and your father-in-law, loves the doubt? --dow?

that is heartwarming. >> 91.5 and state fully invested. -- stayed fully invested. john: i was trying to think julian alali go and you couldn't help yourself. tom: julian emanuel's father-in-law loves the dow. . john: it is called the bloomberg market for a reason. i am sure i have offended the entire -- half the audience. this is will break. --bloomberg.

xfinity rewards is a program whose sole purpose is to say "thank you" with experiences big, small and once-in-a-lifetime. sometimes it's about cheering hard enough to shake the stadium! sometimes, it's as simple as movie night right here at home, on us. you mean the world to us. so we're bringing you closer to what you love. kinda like this. welcome to 30 rock! join xfinity rewards for free on the xfinity app today. our thanks, your rewards.

jonathan: two hours away from the opening bell. equity futures across the board here on the s&p, the nasdaq a, the russell, i'm sure the dow is too. what a run we saw in october. underperformance from the nasdaq 100, up 4%. the russell small-cap cap, biggest monthly game on -- gain on the comeback.

what a run. bond market, guess where they are? lower. 11 basis points lower on the 10 year. where does that come from? the two year. five basis points, a few fridays ago we had a look at 460 something and now down another five basis points on for position eve. that's a thing, lisa. lisa: i'm sorry, it's not. jonathan: in the fx market? it's not. lisa: moving on. [laughter] jonathan: mike mckee will tell you when they wake up down in d.c. actually wake up. not get out of bed. lisa: i'm fully aware. i understand that. wake up. there's inflation. jonathan: 99.37 on the euro-dollar positive. i don't think i've ever seen the weather forecast across the bloomberg they read headline before, but that's basically what we got early this morning.

you're up set for mild weather in november. tom: november winter? jonathan: it's what you expected to be cold. no? tom: i'm worried about february. jonathan: meteorologist around the table? tom: i think winter is january and february. jonathan: sure but the fact is we are expecting colder months and if we get a mild november and lisa, into a mild december, that's a good news with storage capacity where it is going into winter. then the tough job is next year, refilling the stores with the gas that comes from where, since you don't have access to russian gas? lisa: and if it comes from the united states, when does that become politically fraught? in will we be getting redheads for the weather? it may be. where will we get the marginal extra supply. this is part of the reason why small caps have outperformed.

they are not as associated with headwinds. uber shares, absolutely surging after beating expectations. they have the drivers coming back and the demand is very much still there, speaking to the consumer story. premarket trading, airbnb shares are up 2.5%. most of the shares are down by the end of yesterday through the full year, this isn't exactly a massive resale of their claim in valuation. but still the idea of resilience in stocks, the sands are surging after china announced the ev system for chinese tourists to travel and they are just loosening up in general in china where there are rumors of it. that is where you are seeing a number of chinese companies, alibaba, as well as software gaming companies, young china,

it's really interesting at a time when basically they have had this situation with china zero rumors, that it might get abandoned and they might be talking about an exit strategy. things flying, officials come out, disregard, doesn't matter. it's interesting. jonathan: every single morning our producer picks out a stock to say what it does but billy billy, i've never heard of that. lisa: i know, i looked it up. of course i checked. it's interesting to me, they are online entertainment services. i thought you would be really into that. jonathan: i'm impressed. tom: jp morgan is a moonshot. jonathan: up 20%, that's a monster move. tom: billy. [laughter] jonathan: grandma went there. lisa: all right. [laughter] tom: saving us right now. lisa: i don't like it, it's just fun to say the name billy billy.

say it, it's fun. [laughter] tom: they are laughing at us. lisa: please, let's move on. tom: royal dutch shell, fun to say. james foley, they did a fancy log study on the bloomberg and china. if you extrapolate it out on the moonshot of weakness, you get the eight you on in the summer of next year -- yuan in the summer of next year. can you extrapolate out some of these beleaguered currencies? ticket lily china. jane: on the news you were just referring to, will they pull out of covid zero or not? that's been leaning on the market expectations for growth in china and therefore on the value of what we remember because we know that chinese growth this year is really disappointing and a weakened economy means a weekend -- we

akened exchange rate. it really depends on whether we are talking about commodities exporters or importers. certainly the ones really struck by the energy crisis and in dire streit -- dire straits, there is a degree of doom for these now and that will be tough to break. we have talked about it before, if you can look at the doom loop as a fundamental and keep driving it lower, it refers to the feedback as respected. holding the dollar instead. jonathan: coverage very -- tom: with coverage very dollar centric, jane foley, can central banks manage a dollar turnaround? jane: they would like a dollar turnaround. there has been a keeping up with the joneses to some extent, central banks starting to hike interest rates before.

looking at the bank of england, you got the ecb and next time they go, could be this week, but they could be hiking into a recession. that's not something they want and they don't really want to be doing 75 or even 50 basis points into a recession but as long as the fed does large interest rates, that potential impact on their currencies really keeps alive the possibility that they may have to go back to large increments, which crushes demand. this isn't just about a doom loop for em. it's clearly not what you want when you have got energy prices crushing demand as well. if the fed were to ease up it would be a relief to a huge amount of economies around the world. lisa: so if there is a step down does that mean we have seen peak dollar? jane: not necessarily because, this is the interesting

thing, dollar is a safe haven. until you can really answer what else you are going to buy, you can't really say, yeah, i want to purchase risky assets, go back to em in the euro, the dollar retains a fair amount of strength around the euro. energy prices have gotten lower and that's great news but it won't stop and it hasn't stopped. aluminum smelters, manufacturers moving out of europe. next winter, the one after that, where is that energy going to come from, i don't think that is something the euro has really priced. lisa: how much could the dollar rally based on the backdrop that is poignant when you think about the industries moving out of europe as they know it isn't a one winter problem? jane: we could still have

euro-dollar going lower. maybe not in the near term is a market it's excited about the warmth where the energy prices are not as expensive as they could have been but moving into the proper winter after christmas into january and february, getting cold there, the reality of the week set of data out of germany in terms of manufacturing production, the pmi etc., coming into fruition, that's the sort of environment where we could see the euro-dollar moves back to 95%. jonathan: if you had asked me a few weeks ago if the bank of england had been selling assets, i would have said i don't think so but they are. is that positive or negative? jane: pulling their credibility back from the abyss is positive, we will have to see, the assertion is so tough but for now the credibility is a good thing. i have still got a negative

forecast for sterling and that is really because all of the fundamentals that existed before that miniature budget are fundamentally still there. it's actually worse because consumer confidence is worse as we are headed into that recession if we are not already in it. yes in terms of credibility, the prime minister and the bank of england, it's that sort of, it's worse than it was a few weeks ago. this is a tough set of environment, the sterling headed for a bumpy ride. jonathan: the dollar, weaker through the g10. jane, thank you as always, coming to us from forever bank, qt selling assets for the bank of england. here we are. lisa: always a good thing when they can claw their credibility. elaborating on that, it is remarkable that they are able to actually go through with their

plan and not cause massive disruption based on what's happened politically to really give them a bit of a reprieve on this. that's actually a testament to something. i mean, i don't know what. is this politically motivated? is it basically bank of england in the driver seat with fiscal policy? how much is this really what we are looking at here? jonathan: i think it's important to recognize why they are actively selling and not just allowing balance sheet rolloff. the market going so much longer, you would be there along time to get the balance sheet down in the u.k., which might be different compared to say the united states, treasury with average maturity in the market being shorter. lisa: that's a great point and they are also focusing on short-term debt, not dealing with longer-term debt right now. they are going to focus in the short on concerns around pension plans. jonathan: stocks and bonds, the

bond the market -- the bond market yielding lower. in the united states, the 10 year down 11 basis points. live from new york, this is bloomberg. ♪ >> keeping you up to date with news from around the world, i'm lisa mateo. president biden's promised to impose higher taxes on oil companies boosting their windfall profits will be impossible to deliver on as gasoline prices are still high and be before elections. democrats have unsuccessfully sought a windfall profit tax for more than a decade but no such repose will is likely to pass the current senate. in brazil, protests of credit -- against a bolsonaro have intensified. he's remained silent over his loss, refusing to concede defeat. truckers backing bolsonaro block to the main highlight -- highway

. they said they don't agree with the results of the voting. bargain hunters may be looking at credit suisse and think the bank could be the target of a hostile takeover. the chairman says they will end up disappointed. >> we will do it again, so that we don't have any takeover discussions at that point. lisa: bloomberg has learned that tesla is sending people from china to help with an expansion for their factory in fremont, california, which could help the u.s. facility ramp-up election. 200 people from that plant will head to the facility on assignments that will last at least three months. 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'm lisa mateo. this is bloomberg. ♪

♪♪ this... is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you. this is what it's like to have a dedicated fidelity advisor looking at your full financial picture. making sure you have the right balance of risk and reward.

and helping you plan for future generations. this is "the planning effect" from fidelity. ♪♪ what will you do? will you make something better? create something new? our dell technologies advisors can provide you with the tools and expertise you need to bring out the innovator in you.

>> i just see this huge, huge, huge quantity of global headwinds with u.s. markets still discounting growth in 2023 and that looks too high. i think the underlying earnings picture has to come down a lot and that will be a double whammy. jonathan: james, wonderful over there at aberdeen. good morning to you. your equity market is delivering quite a pop on this november 1 morning, tuesday morning. feels like a monday, tom, your first day back. yields are lower by nine points, 10 points, three hundred 9489. in the fx market, dollar

weakness throughout all of g10 on the euro-dollar. tom: talking with jane foley about those emerging markets, we still had indonesia with its own calculus and china, 7.26 you on is quite a weakness, extrapolating up to eight if you believe the math into the summer of next year. experts on 7, 5, 8 yuan or more, chief economist for bloomberg economics joins us now with more of a tilt on his true expertise on china. i don't get it, tom. you are going to explain it, now. they are shutting down the disneyland in shanghai and at the same time giving luxury retail a massive new store in shanghai. which story actually describes the greater china? tom: so i

think you are right, tom, there is a huge contradiction there right now. on the one hand you have the china land of opportunity, the world's second-biggest economy, country of one point 4 billion consumers and in a decade perhaps the world's biggest economy, companies were luxury brands are betting. on the other hand you have millions under lockdown, china with a property slump and pmi data showing the manufacturing sector in contraction. taking an optimistic tilt, you say that this shall also pass. covid zero will come to an end, eventually good for growth. it's difficult to see how we get there in the immediate. tom: if they turn the vector

around, going from 3% to 3.4%, all in conversational gdp, what does that due to to the greater pacific rim? tom o: so china has historically been a very specific driver in the pacific rim and the world. asian neighbors, korea, japan, vietnam, locked into that cycle. then you've got global commodity producers like australia and brazil tied to the construction cycle. with china suffering from covid zero and a property slump, it's dragging the region and global commodity markets down. the hope was that perhaps there would be an exit from covid zero coming down the pipeline. not tomorrow, not next week, but perhaps more to the end of the

first quarter of 2023 were we would look at a chinese economy opening up and returning to the property sector. it could then be a much more optimistic picture for china, its neighbors, and the global commodities. lisa: how much is this noise, at a time when xi jinping painted a very different picture, in terms of how friendly they were to outside business, the growth trajectory that they would tolerate? are we still looking at a lower growing china regardless of covid policies? really looking more like 4% as opposed to 6%, 8%. tom o: it's a complicated story, lisa. right now you have extraordinary factors around of. we talked about covid zero, we talked about property. those factors will not be there forever but even when china exit , we aren't going sector 6%, 7%

growth. you've got demographics, debt, more challenging relationships with the u.s. and access to technology, meaning that china to 2030 is growth in the 4% to 5% range. on top of that, xi jinping has the view that the benefits of growth need to be shared with chinese workers and households meaning a smaller slice of the pie for entrepreneurs and multinationals and global investors, what it means is that the china investment story in the years ahead looks very different from the chinese investment story in the years behind. lisa: what does that mean for the global picture with inflation and economies moving out. stripping out covid zero as a factor are we looking at something much closer to a recessionary scenario next year

with slower growth for a longer time based on the changes around these policies and china tom o: you mentioned inflation -- in china? tom o: ironically the weakness in china, think about a world where china has ended covid zero, pumped stimulus in, lifted growth, perhaps artificially but at least in the short term backup 25%, 6%. a world where oil is expensive. a world where soybeans are expensive. a world where powell and bailey and lagarde have a much more serious global inflation problem to deal with. the weakness in china right now,

certainly not news for xi jinping or investors in china. perhaps it's giving a world currently obsessed with and inflicted by high inflation a bit of a break. jonathan: great to catch up, tom. it's been quite a thing this year, what if china comes back online. how much will things change of that's the case? tom: to meet its science and it's about covid and all the good we have from johns hopkins and others through the crisis. can you imagine? the logistics must be overwhelming. jonathan: where is crude the day that happens? right around 94, wti, up up and away. tom: no question. jonathan: and isn't that what he's getting at here, covid zero

in a time when we have scarcity of certain goods. lisa: is it good news or bad news? covid zero. if this is the issue, are people underestimating the inflationary impact of the end of covid zero at a time when these disinflationary forces are controlling the narrative? tom: "bloomberg intelligence," 15% of u.k. mortgages fall and now look set to double their monthly book -- bill. jonathan: brutal. rates and business loans, rent for small businesses here in america. not good. ♪

when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo, i was barely eating but the weight wasn't going anywhere. the secret to losing weight and keeping it off is managing insulin and glucose. golo takes a systematic approach to eating that focuses on optimizing insulin levels. we tackle the cause of weight gain, not just the symptom. when you have good metabolic health,

weight loss is easy. i always thought it would be so difficult to lose weight, but with golo, it wasn't. the weight just fell off. i have people come up to me all the time and ask me, "does it really work?" and all i have to say is, "here i am. it works." my advice for everyone is to go with golo. it will release your fat and it will release you.

>> i think the fed is going to have to step down to a lower pace. >> it's going to take time and that's the mantra. >> too early is a risk.

could it fly? hiking further at a later date? >> it's a huge, huge quantity of global headwinds. >> it's a huge -- everyone is waiting, but we are not quite there yet. >> this is "bloomberg surveillance." tom: jonathan ferro, tom keene, lisa abramowicz. on television one day before the fed meeting. we will have coverage tomorrow with michael mckee. but right now, 11/one, fourth quarter. it's able market. jonathan: is that what you are -- a bowl market -- bull market and that's the talking point into the year. jonathan: i think a lot of people are still calling it a bear market with this underperformance of the nasdaq.

jp morgan stood out for me and you as well, tom, something like 20% in the month of october. jonathan: i don't read those -- tom: i don't read the triple equity strategies, those are all cash, but give me the update. jonathan: 4100, it's got a range leading into that upper range of that range. upper side of the range, yeah, that's the squeeze that will ultimately have to confront dire earnings from q1 of 23. tom: lisa, we are going to hear from julian emanuel, real optimism there from evercore isi . and jane foley, the doom loop, whatever she was talking about, she was on the edge of the vini, so negative. [laughter] lisa: the idea that they were talking about, the stock bond correlation moving the way you like, giving rise to this ability to pick stocks and talk

about the equal rate and the dow more frequently, it just had its best month. jonathan: we've done very little -- tom: we've done very little fed conversation. lisa: we gave that to you in a silver platter. tom: i know but the important thing here is that we have seen more accommodative financial indexes and things have eased and i wonder what that means for jerome powell tomorrow. jonathan: should we check in on the real world, businesses? 37% of small businesses employing half of all americans in the private sector were unable to pay their rent in full in october. if you compare where they were the month before, it's getting a lot worse. massachusetts to new york, new jersey and pennsylvania. tom: lizzie was blistering in

her first comment, fancy people in new york. jonathan: waiting for things to show up in the labor market but in the meantime it's in other places. tom: the labor market is the heart of the matter, i wonder how he is going to address it tomorrow. lisa: i do wonder about the division between big business and small business. how much do small businesses have the power to get efficiencies of scale on the order of side without necessarily raising prices so much that they cannibalize the same kind of pricing power. and that being what you are seeing. tom: on the data front, migrating down to an optimistic 25.82. jonathan: there's a lift in the treasury markets, yield lower by nine or 10 basis points. i can't give you why.

they are not going to try and neither am i. euro-dollar, positive 6/10 of 1%. what have you got? the equity one market doing well, bond market doing well, kind of a reverse of the story from the last several months. this is the one to watch, isn't it? crude, 88 dollars a barrel, one point 7%. rumors overnight that china might be dropping covid zero or appointing some kind of committee to assess ways to exit covid, all of that good stuff. we will see, tom, but is certainly a lift across the board. tom: going to slip in some questions here now to victoria fernandez euston. generally, lisa, with important financial great -- questions, victoria can you explain why so many people hate the houston

astros? they are in philly tonight. can you give us the love so that the nation can embrace the astros? victoria: absolutely. look, it's the only teen that has ever reached the al cs six years in a row. consistent, on their game. they had an issue six years ago, people need to get over that and move on. let's go, astros. [laughter] jonathan: that small issue of cheating? [laughter] tom: well, we're going to move on here. lisa: get over it. [laughter] tom: we need to give pharaoh a brief on this. -- jonathan ferro a brief on this. do you believe in the lift in stocks? victoria: well, i believe in it in the short run. you have got really depressed sentiment with the technicals telling you the market should continue to do well. on the short-term yes, you're

going to have a lift, but the bed is nowhere near the end of raising rates. they will continue to go, 50 or 75 in december, we will see what the data tells us. they will continue to raise rates into the first part of next year and i'm not even looking for a pause until spring where they hold rates for a continued amount of time and i think we will continue to have that volatility in the market. right now, though, we need week data for the -- weak data for the fed to pause and consumption is strong. people wanted earnings to just collapse of but we are not seeing it happen. financials are similar to where they were in june. there is really a mixed bag here. november is typically a strong month in a midterm election year . short term you could see things doing well. tom: some people -- jonathan:

some people will be looking back at october, the russell up, jp morgan at 21% on the month and wondering if they should get on board with those things so far of the last few weeks. what do you say to them? victoria: they need to be tactical if they are going to make terms like that in the portfolio. long-term, you got that broad buy on weakness sell on strength, that's what we have been doing with diversification. it doesn't hurt when you have got the dollar very is and there is concern that we will continue to have a strong dollar because of the fed raising rates more than other central banks. a little bit of small caps makes sense. we like financials but when they run up significantly, you can trim those things as we will have some pullbacks in the market going forward. i think you can be tactical in some of those areas. health care, we like.

trimming the up days on these days taking them off the table. lisa: is the 10 year still the ballast that so many had hoped they would be and are now re-upping that this is the area for historic value of the next few years? victoria: if the terminal rate is at 475, the top out on the tenure should be four and a quarter. we have been there for years, with that duration around the fixed income portfolios to do that. spreads are actually holding in pretty well. we think that you can do that in the fix portfolio, remembering you will have market value volatility with bonds that have a maturity date to lock in the higher rates which we think as you go into next year, rates will fall. jonathan: do we get into trouble

for saying go astros? victoria: not at all. jonathan: will the sponsors reject us? [laughter] tom: talk to you in a couple days, victoria. jonathan: can you imagine? six years, get over it? lisa: i guess it happens frequently. [laughter] lisa: let's move on. tom: economists emailing in, thank you so much for watching. they cheat. jonathan: that's right. i didn't realize. tom: well he had been with the angels. it will be fun to watch. he's huge. like with the yankees huge. they are all big. it's a great deception. the smallest guy on the field is huge. jonathan: was it always like that? that guy? tom: yeah, the littlest guy on

the field is a big guy. those days of normal are over. i would point out john that as we look at the astros, and you know it goes back to "field," the great ray liotta, i can't believe he's dead. that was the whole black sox scandal from 1919, 1920. i remember in my youth there were still people talking about that in real-time. jonathan: when you were a kid on the ice, how tall were you, 6'3" inches? something like that? is that normal? tom: one year in the ncaa i was the tallest player, then two years later i was the second tallest player and it wasn't good. the big difference, we had shorter sticks. they didn't lengthen the stick.

i was hugely penalized because i had a five strike that wasn't long enough. jonathan: is this what you tell people about why you didn't make it to the nhl? tom: exactly. [laughter] jonathan: coming up, tracing the midterms, just him -- just a week away. this is bloomberg. lisa: with the first word, i'm lisa mateo. federal reserve policymakers are expected to raise interest rates at the end of their two day meeting that begins today. it's the fed's most aggressive tightening campaign in four decades in some strategists think their of rate hikes is at and and and smaller increases will begin next month. in the u.k. the government there says that it's inevitable they will have to pay more taxes to restore stability to public finance is. especially for the riches -- richest. according to the readout from

the treasury, they agreed tough decisions are needed on tax hikes and spending cuts. north korea threatening the u.s. with what they call powerful measures if the american military doesn't end military exercises with south korea and others. the rhetoric may be laying the groundwork for the first nuclear test of five years by kim jong-un. they started joint air drills after exercises on land, sea, and air in recent. a big take over any medical device industry. johnson & johnson is buying a company 7.3 build -- $17.3 billion in cash. abiomed develops heart pumping technologies. and uber reported recovery with increased ridership. helping to ease concerns that rising inflation cut into the

number of people taking uber. 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'm lisa mateo. this is bloomberg. ♪

>> what we do need is people pulling together to address the production issues. you could have a crisis and you

need people cooperating. jonathan: brilliant to hear from the chairman at s&p there. from new york city this morning, good morning. here's your equity market, up 1%. just got a message from michael who said this, the rangers are pitching against the phillies tonight. tom: because of the rain? interesting. that's a good correction. jonathan: stick to football in the future. tom: you getting big response from the ncaa. jonathan: lsu, saturday night. tom: i just liked purdue. destined. wanted to play 500 ball. something like that. putting it up 6% on the 4100. jonathan: far and away. sure. tom: looking at washington right

now, we do this with henrietta, who understands the process on capitol hill. give me the process of gridlock. if we presume gridlock on wednesday, into next week what does it look like on wednesday? henrietta: i've got clients asking if this is something where we won't have to worry about vc for a couple of years and that's the case. the outcome of the elections in the base case assumption is we land at 50:50 conceivably where we are today anticipating that democrats will lose nevada and pick up pennsylvania with more in the turnout of the election and the same thing we have got now. tom: you have seen the theater on capitol hill. do you expect to see the theater of big oil executives saying to

you solemnly swear? henrietta: it's possible if after the election gas prices are high and in the senate, in the house there's a high likelihood they could be called up. a 0% chance for passage, it's a convenient bogeyman going into the last week of the election cycle. politicians love a bogeyman. lisa: to speak to the polarization, how much can the democratic party be on the left side? henrietta: democrats are trying to speak to pocketbook issues and explain to voters that they get the memo, understanding gas prices are high. something they are being judged on.

on the democratic side they are trying to find a message it's that course of action with windfall profits. lisa: what proposals do the republicans have right now? henrietta: ironically it's to extend the 2017 jobs act fiscal stimulus, their primary argument by democrats have gotten us in this position in the first place, reckless federal spending and a $5 trillion bill tom: bloomberg surveillance, you see it on tv, cover to cover, you're

the only one who has read that in washington. will it matter to a gridlocked washington next year? henrietta: i have to defend myself, ben bernanke once told me a joke about elvis. as someone who went through it, that disaster, all eyes are on the fed, to your point. the hike coming is something that we have to anticipate. my one holdover from the great recession i would say is that if we look ahead to what we have coming out of 2023 it's a high likelihood of recession connections in the united states and the eu with a fiscal stimulus out of congress. having the fed reducing interest rates, is a nightmare for investors but i am happy to see it go up. lisa: what was the joke? henrietta: my gosh, i can't

remember and i've never been able to remember but it was about elvis, ben bernanke told me and i'm thrilled about it. lisa: thank you so much for this human fabric of the past feeding into the future. you wonder how much there will be a less friendly approach to the federal reserve coming. just saying. ethic it's already started. tom: that's right i think we will be seeing it from a few more. jonathan: will go down there. tom: i would say that we don't know, monday of next week or even tuesday morning who is going to win many of these elections. the polling is that uncertain. there's a real tension to wednesday morning when we wake up. jonathan: it's pretty easy to make the assumption that we will be seeing more complaints about the federal reserve.

jonathan: republicans -- tom: republicans, it's widely presumed, they could bash the strong dollar much more than they have the biden at the -- administration. lisa: and how much is this feeding back on the federal reserve? there was an article today on the bloomberg at talked about how right now, what we were talking about all year. given the discussion on covid, with an increase in the supply side demand. it's a surge in inflation. that's fascinating. jonathan: labor markets are

lacking, but if they are waiting on a big and bold indicator to do more damage, that's part of the argument to say slowdown. you've got that timing in the pipeline, six months is wait. i've heard that from so many. going back to the damage that has been done, small businesses are already suffering. jonathan: you can see it -- lisa: you can see it in that so many people cannot afford the same things by reaching into their savings. it's not an economy in that respect. jonathan: remember carl? he's coming up next. ♪

xfinity rewards is a program whose sole purpose is to say "thank you" with experiences big, small and once-in-a-lifetime. sometimes it's about cheering hard enough to shake the stadium! sometimes, it's as simple as movie night right here at home, on us. you mean the world to us. so we're bringing you closer to what you love. kinda like this. welcome to 30 rock! join xfinity rewards for free on the xfinity app today. our thanks, your rewards.

jonathan: tom: i have answers

for you. a weaker dollar, new york crude is at 88.43. a little bit of data later. on job openings, to have many data points during the next 24 hours. tom: was a constructive pmi, above 50? jonathan: above 50. it is less washed than elsewhere. in europe, we watch that. we watched the pmi. it is the many fracturing number that has been the one that people watch a little bit closer.

it's coming out at 10:00 a.m.. senator warren, sanders asking chairman powell about region -- recent projection and rate hikes. you will see so much more of this. you expected from those two. you will expect it from others too. tom: you may see it from the other side as well. this goes from ultra accommodative to accommodative and where we are now somewhere in neutrality. i have been guilty from this, speaking from 60,000 feet. landing with the fed tomorrow, chief u.s. economist carl h riccadonna. everyone wants to look out to december, how does powell frame december in the vicinity of 2:44, p.m.. ?

carl: the focus will be on the fed's credibility around this messaging. they have previous highlighted the need to see some realized improvement in the inflation numbers, not just risk -- wishful thinking. if we look at the core cpi, the rate of change relative to the 12 month is not telling us things are moderating. i think what could happen, the fed is eager for a downshift at some point. i think that powell could take a step away from that and rather to committing to december he will say, theory tom is approaching for a downshift we will let the data do the talking. we have before the december meeting, two jobs in forths, two inflation reports. tom: is the rate regime now, or

what we see in january or december, same that it felt the last time we were in this level of nominal rate? carl: i think debt levels have gone on in the economy. sensitivity has only increased. it is true over the last 50 years as well. monetary policy is biting into economic activity. we see that very clearly in the housing sector. we will see it through other channels. you alluded to the manufacturer ism. the strong tolerant -- dollar taking its toll. finally, today the ism headline will also slide into contraction as well. we are absolutely experiencing several channels where regulating is tiding -- tightening.

we are happy heading into recession the next year, maybe by q2. we will see consumers have exhausted their excess savings from the pandemic and the fed will be at the level of 5.25 on the federal funds rate. this will fix the inflation problem but it will steer us into recession. lisa: to fix the inflation problem how long does the fed have to hold rates at 4.25? carl: we think the fed will be holding at the terminal rate of 5.25 throughout 2023 and then rate cuts could start in 2024. don't look for the fed to be the white knight heading to the rescue with rate cuts. they will be much more stingy with the lowering of the fed

funds rate keeping it in restrictive territory. we are looking at 50 basis points per quarter at the start of 2024. it will be a gradual moderation of that restrictive stance because it will take time to choke the inflation pressures out of the economy. we are seeing inflation and sticky categories like rents and services excluding rents. it is taken more forceful policy action to been the trend in those categories. lisa: a lot of people will say 4.25 rates for a full year, next year is start to get a little bit different. one of the contours of a recession with the full year or more of 5.2 point rates? carl: i think recession starts in the q2 of next year.

we need to be sure not to succumb to recency bias. the covid recession and the global financial crisis before that, the contours of this recession look more like a run-of-the-mill recession if you will. if i had to draw a historical parallel is a 1991 recession. i will look for the unemployment rate to back up from 3.526%. tom: you've been a great student of history. the critical thing here is that life goes on. there is a whole glue crew out there that we rollover a diet i just don't buy it. carl: we don't roll over and

die, there is a decent demographic trend compared to our developed economy peers in asia and europe for that matter. there is population growth. maybe we see improvement on them ration front and all of these demographic factors being that life goes on. you will get hiccups along the way and those hiccups are not recession but structurally there is a growth paradigm in place. lisa: senator warren and sanders put out a note talking about how they want to talk better with fed chair jay powell in the pain it could have on the economy. if the fed lacks the will to get to 5.5, what will be the length of time that inflation could remain high and the ramifications for the economy? carl: if they lack the political

will to forcefully act against inflation, i don't think that's the case at the moment. a slew of fed officials have made it clear that inflation is job one, priority number one and they will do whatever it takes to accomplish those goals. as long as jay powell is at the helm, they will have the political will to make sure this plays out in an appropriate fashion. if they don't act forcefully, the not only do you have higher inflation over medium-term horizon but anchoring of inflation expectation. john mentioned crude oil prices at the start of the segment. crude oil prices in the 80-90 dollar reign mean the concern we have seen over the past 100 years, they improve shortly and they could move higher. nothing antagonizes inflation

expectations then bracing -- rising prices at the pump. we have seen this in the newark fed survey of consumer expectations on three and five year horizons. fed officials are looking at that notch up inflation expectations. it is still in territory consistent with the -- out the right goal in the wrong direction. they will say, let the data do the talking and if we see some relief, maybe they can downshift in december but we will not get table pounding confidence on that point. jonathan: we have to leave it there, carl h riccadonna. senator warren, there's a quote

that jumps out on page four that recent statements for the federal reserve report the disregard of employed americans. lisa, senator warren that has said in a distant. lisa: 11 members signing that letter talking about what the fed's goal really is and what is necessary to potentially curb inflation. they have raised concerns about moving too far. detroit saying, it is not worth it and this highlights increasing political tension. tom: this carefully thought out letter with seven questions at the end. question six says richard

clarida recently stated until inflation comes down, the fed single mandate is the central bank? did he make that comment on our fed show. jonathan: there is a series of questions in there. the seventh about the forecast of recent statements and this will be the key point of our conversation going into decision date tomorrow. i imagine the chairman will get asked about it in the conference. tom: is this a window into 2023? jonathan: in the next hour, tiffany wilding of pimco. this is on fed decision eve. that's going to catch on. it's really working. tom: annmarie hordern had 14

kids at her door throwing them schedules and reese's. jonathan: she went and bought a lot of candy for them. from new york, this is bloomberg. >> i only got one trick-or-treater. keeping you up-to-date with news from around the world. spacex is set to launch its rocket from florida on a classified mission for this space force. this could take as early from an hour from now. the falcon 9 handles most of spacex business. elon musk electric car company is sending workers from china to help with an expansion of fremont, california. it could help the u.s. facility ramp up production. the assignment will last three months.

the biden administration's restrictions on u.s. citizens assisting china's administration on chips. the stations were introduced from keeping cutting edge technologies out of peach to china's military. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo, this is bloomberg. ♪

>> next year inflation will be lowered, the unemployment rate will be higher. the federal reserve officials will have a much harder time balancing the cost of their dual objectives. maximum employment and stable prices. the tim tatian to reverse course

will be pretty compelling. tom: that is a gentleman that the people you listen to, they hung onto every word. head of research for all of the fed under alan greenspan. he has written much on economic growth in america. lisa abramowitz and tom keene. lisa, i have to be honest, we have gotten more talk on the astros and the phillies. suarez is in the pitch battle of anger. as the astros and equity strategist is barely on speaking terms. lisa: the fact that yankees fans

are rooting for the phillies tells you everything you need to know about the astros. tom: futures are up 42 right now. i thought this was so important that we should dive into it. edna curran and others have lived the quarantine. i want you to speak of the nuances of quarantine that you have lived and observed in hong kong. do you suddenly get out of it or our government authorities easing out of it? which is it? >> hong kong was cut off for the the rest of the world, two weeks in the hotel. they have lifted that and there is still a rigorous testing in place.

that is deterring global business people from landing here in the way that they once did. don't forget, on the china side you haven't crossed the border because there is so quarantine process on that. if you think of australia, they stopped their core team. the reopening story is a long way to go. tom: after congress, i have heard very little about the central bank in large government money, even fiscal policy. do you see a plan out there? or is paging making it up as they go? edna: what is happening at the moment is that they appointed a

whole slew of officials and they will be taking up positions in march. we won't get a retooling of the policies just yet. keep an eye on the works conference, and make known their policies for that year. everyone is asking when will the economy be a covid zero? new officials will be taking over key roles in we may hear some new language from them. lisa: we are hearing and seeing the economic data coming out of china that is disappointing and pretty terrible relative to what they are used to. how much is this becoming a pressure point at a time where

people are estimating a less than 3% gdp growth for china? enda: it's a peculiar down torn. the story has been is a growth entrant but that is not happening this time. we had the official and private sector manufacturing gauges out yesterday and today showing that factor slowing into -- the pmi, shows a slowdown in global manufacturing. trying to explain to tom, there is the sense of when there might be a pivot for china. lisa: there's another question as well, behind some of these numbers are companies directing their manufacturing out of china because of the liability of the policy whether it has to do with

covid zero or how friendly the administration is to the rest of the world. how much are you hearing about that, about people moving out of manufacturing in china? enda: china has become more expensive than other countries but remember, china was the place to do business because it did not have the lockdowns when other people were struggling. there is certainly negative sentiment among the global community, they are looking for other options and moving elsewhere? where are those options? who offers the scale in production china you can argue what that value is. to sum up what you are getting too, sentiment towards

investment in china is negative. is a question of when companies will put actions around those words. tom: thank you for the brief in your late work in hong kong. i am just going to frame up the fed meeting for tomorrow, the real yield is a general statement has run from 1.61% down to an adjusted yield of 1.42%. lisa: this is where yields are above the expected inflation rate. people say that real yields are still very negative. this highlights the tension of markets. john and myself have not tried to explain today. has the fed gone as far as it could go? are we seeing a short squeeze? are we seeing people seeing not

nowhere where else to go? how do you give a narrative that feels very technical? tom: i will not game short squeeze dynamics. there are a lot of people that do that to a great extent. but will i will say, this fed is going into a meeting less restrictive than even two or three weeks ago. the weeding two or three weeks ago is different than the one tomorrow? lisa: they might go into a more hawkish tone. tom: futures of 42, dow futures up 43,000. this is bloomberg, good morning. ♪

hi, my name's steve. i lost 138 pounds on golo and i kept it off. so with other diets, you just feel like

you're muscling your way through it. the reason why i like golo is plain and simple, it was easy. i didn't have to grit my teeth and do a diet. golo's a lifestyle change and you make the change and it stays off. golo's changed my life in so many ways. i sleep better, i eat better. took my shirt off for the first time in 25 years. it's golo. it's all golo. it's smarter, it's better, it will change your life forever.

jonathan: monster rally in october. live from new york, good morning. equities are flying. the opening bell is around the corner. announcer: everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ live from new york would begin with november. >> everybody is waiting for the fed meeting. >> the rate hike on november 2. >> slower base hike. >>