>> i think we are going to have some momentum here with technicals telling you the market should continue to do well. >> monetary policy is writing into economic activity with a glide path. >> it will moderate but can margins be maintained? >> we still think there is in front of us. >> we will have a higher inflation target. >> this is bloomberg surveillance with tom, jonathan ferro, and lisa abramowicz. jonathan: it's fed day, this is bloomberg surveillance on tv and radio.

equity futures are just about unchanged on the s&p 500 stopped its operation step down. tom: i don't buy it for a minute and richard collaborative will join us, the former vice chairman and looking back three meetings, july 27, september 21, november 2, there is nothing transitory going on today. jonathan: we are starting to see some pain in the data. we see it in the earnings a little bit but globally, you see that with the global demand forecast being cut. i was looking at jobs yesterday in this market flipped on job openings in america yesterday and they moved in the other direction. lisa: a lot of people say maybe you are not seeing the unemployment rate rise but you are seeing soft hiring, not hiring. tom: soft what? is that how i got hired? lisa: the theory is companies

will find ways to pare back the number of people they add rather than wholesale firing. that was thrown out yesterday with the job openings actually increasing stuff they are expected to come down from historic levels so what does this mean about the resilience of business activity at a time we should be slowing? tom: this is transitory nominal gdp. this is the animal spirit of the united states. 11% down to 10% then 9%, we have a long way to go. the experts say we are on the edge of normal. jonathan: we see little signs of it in the ism orders. new orders come in again and you see another sign of contraction. we are just about at that line around 50. i think we will have a different conversation in the next couple of months. lisa: all the industries are

facing different outcomes. a 2-4% decline in total shipping activity. the international trade picture is dimming so how does that represent what's going on domestically? people are still traveling and gambling and you have the likes of the jet loop ceo saying they are seeing no cracks in the consumer at all? tom: they do that in britain, deb -- a double-barreled name. he's so large he doesn't have a first name. lisa: you are offending the person in the control room. tom: we watched three seasons of

pull dark -- poldark front to end. jonathan: equities look like this going into the fed decision. the day before the fed last met, the s&p 500 was where? it was at 5856 and closed at 58 36 yesterday so no change whatsoever on the s&p 500. tom: i didn't do equities because of that but the vix is 26.14. i would look at the real yield over the last three meetings. it has done what jay powell wants, it has come in and that's fine and we will see where we are in december. this meeting is about december into january. jonathan: yields are unchanged and the euro-dollar is slightly weaker dollar. we are positive about a third of

1%. lisa: the lack of change is really telling because we have not seen a material tightening of financial conditions as the fed tries to get that to happen stuff how does the fed signal they want to see further tightening and they want to see bond yields stay up and they want to see the ongoing pressure on the global economy. 815 a.m., adp employment data. the friday jobs report has less of a correlation to that. following yesterday's jolt data, we saw an increase which was unexpected and the number of openings that employers were offering or advertising signals a lack of tightness, lack of loosening in the labor market at a time when it's really what the fed would like to see. the fomc rate decision is at 2:00 p.m. and jay powell will speak at 2:30 p.m. we will do a fed decides program and we bring that to you on fed days.

a stellar lineup today including richard clara., diane swonk and scott minard, how do you talk about not loosening financial conditions while signaling perhaps the fed is getting closer to where they want to because they are expected to end up at 4% by the end of today. after the bell, earnings continue with qualcomm among others including zillow, ebay and robinhood. how much do we see the chip pressure on going especially if you see more disruption to manufacturing especially in china. did you see what's going on at foxconn? that entire region of china shut down due to covid raising questions about the production of iphone 14. this is the factory that produces 80% of the iphone14 for apple. jonathan: lockdowns in china again but there is this

committee being formed to assess whether we should drop covid zero. should we keep china keep rallying off of the back of that? tom: much like here, the damage has been so bad from the summer that you cannot say china equities have broken out to some form of a new trend. the weakness in the renminbi is somewhere around .28. they are micromanaging a virus, how do you do that? jonathan: the fed decision is just around the corner and we have the cohead of u.s. equities. on the december meeting, not the november meeting, what are you looking for in that news conference? >> a signaling of pivot in today's meeting would be moment

-- monetary policy malpractice. today is not the day to send signals. december 14 is when the fed would have an updated to give a preliminary view on 2023 monetary policy. between now and then, you've got two more inflation reports, two more jobs words, a lot more data for the fed to see if the tightening conditions is having the effect they would like it to have on the economy. tom: my team briefed me on your appearance and i said ron temple is on and we have to ask about revenues. nominal gdp 10%, 9%, where we are now and maybe we go to 8% or seven. do you assume revenues come down on equities as we get the economy in a direction jay powell likes? >> you have to assume as nominal gdp growth decelerates, you will see revenue growth decelerate with that. you should also see expense growth decelerate with that. what you've seen so far in this

season is this asynchronous element of expenses going up faster than revenue in some cases in the tech sector where companies have been hiring and making plans and frankly, the turnover started to change and maybe they hired too many people to early before expenses went up and revenues were declining. as we look forward, the fed really started hitting the brakes hard 4.5 months ago. this is not had time to show up in the broader u.s. economy and i think the earlier comments, we are seeing in the good sector, a deceleration of demand and in the last inflation report, goods inflation, food and energy was zero. all of the inflation last month was in services in the service economy is firing on all cylinders and consumers are spending money and transitioning toward services i don't think the fed should signal up at it until they see that deceleration in service inflation. lisa: you think we will settle

at 3.5% inflation over the next five years? will we go back to two years over the next decade and if we end up in this 3.5% inflation regime, how does that change what you want to be invested in? >> i think many of us have gotten used to an incredibly benign environment around inflation. if you look at the decade into 2019 before the pandemic, inflation on the core bases compounded 1.7%. i don't think we are going back to that. deglobalization is a reason and the other is climate change. if i look at globalization from 2000-20 19, inflation for goods excluding food and energy was zero. we had no inflation for tradable goods in large part because of nafta and china coming into wto and we got the globalization benefit. i don't think we are moving those jobs back to the u.s. but i think the globalization dividend is behind us.

that's one piece in the second is we will spend trillions of dollars on climate change over the next decade. we will have more climate volatility that causes volatility in food prices, difficulties in transportation supply networks and that will require more redundancy. if you put that together from an asset allocation perspective, 3.5% inflation means lower multiples on equities and we will have sustained higher bond yields, probably means higher spreads on credit. i think it's a tougher environment for private equity which relies on a lot of leverage. i don't think private equity will be a bad investment but i think the manager selection will be more important. it's probably an environment with more dispersion and should be good for more hedge fund oriented investments and you should expect infrastructure assets and other real assets to do quite well. jonathan: thank you so much. good news just crossing the

bloomberg comes from the turkish leader saying that the ukraine corridor will resume operations, seeing agriculture commodities respond to that moments ago. lisa: people are thinking we won't get a fisher - fissure and that major wheat route. jonathan: this is bloomberg. lisa: the federal reserve is set to deliver a fourth straight supersized interest rate increase today. policymakers expected to raise rates by another 75 basis points. the fed chair jerome powell is likely to repeat his unwavering message on inflation without pivoting yet. in israel, the fifth election for years appears ready to return benjamin netanyahu to power. exit polls show his strategy of forming an alliance with the nations far right has succeeded.

the pro lock appears to have just enough seats to flip the majority in parliament. in brazil, bolsonaro has promised to follow the constitution and start the transition to the incoming leader lula. he stopped short of conceding defeat 48 hours after the election but the remarks are seen as a gesture that he will honor the results of the voting. cbs, walgreens and walmart have tentatively agreed to pay more than $12 billion to resolve thousands of state and local government cases involving opioids. the lawsuits accuse them of mishandling the painkillers which are blamed for half a million deaths in the u.s. over two decades. states, counties and cities have to sign off on that settlement. the shipping company mers can is cutting its shipping this year.

they say another contraction is possible next year. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> folks, this is not your

parents republican party, look at the facts. when i took office, the economy was in ruins, this is not because of me, it's because of what i inherited. jonathan: president biden on the campaign trail, live from new york city on this bed decision day, equity futures up 1/10 yields are higher by a little bit. slightly stronger euro, up a quarter of 1% and we should get the ap -- adp report a little bit later. lisa: they just change the criteria. we will try our best. we will find out. jonathan: i news conference is coming up later. tom: you look at the jobs day and i've got a working number of

196,000. that's still a buoyant statistic. jonathan: was that the president blaming the former administration for the economy and didn't mention the pandemic? tom: anne-marie hordern briefs us from washington. i want you to speak to our international audience -- the republicans are supposed to win, it's a midterm election, what is the quality of the panic of democrats? anne-marie: the panic right now with the democratic party's about their messaging and how they focus a lot of their messaging following the roe v. wade decision and they were going to focus and were able to campaign making money and donations and fundraising on abortion rights. when you came into the fall, they started to realize that wasn't exactly sticking so they are pivoting and having a message about the economy but

they are just not able to nail it in a concise way the way the republicans have over the course of the election campaign and the course of the biden administration. republicans have constantly said are you paying too much for groceries, for rent, for energy and do you feel safer? one thing we should know for the midterms is the house and the political projections have raised the likelihood of the report -- of the report gives you take seat but they are unsure about the senate. tom: where is the vice president? anne-marie: she is in her office i imagine this morning but she will be later today visiting massachusetts and they have a push this morning about energy and heating in your home. tom: we are days from an election so why are we worried about heating pumps? anne-marie: they are worried about higher energy prices especially in the northeast.

we are seeing inventories are incredibly low when it comes to some types of fuels in some areas of the northeast and that could mean a big spike in prices, not just gasoline but home heating prices which is why they will talk about this initiative today. jonathan: the vice president always seems to at the questionable gigs. she's going to talk about piping and heating? i'm more interested in the day after the midterms and whether this president turns around and commits to running again for a second term. do you expect that soon after? anne-marie: there is speculation when that would happen and potentially who his rival would be. yesterday you saw that and it was because the president was in florida campaigning for the democratic candidates for governor and for the senate and he said that ron desantis is a

donald trump incarnate. those were his words. he is obviously not just talking about ron desantis as the florida governor who is also running for another term to hold that position, but that this could potentially be the individual he faces off within 2024. lisa: there is an issue of who the democrats are grooming to be president biden's successor if he doesn't run again given his approval ratings and his age. anne-marie: the president will be 80 this month. there is lots of questions from democrats and many of them have been vocalized in the public about their potentially needs to be new leadership within the party. the big question for many people is who is on the bench? the vice president obviously and many were hoping that she would take the helm and others are a little bit unsure of that stuff there is a question of who would

take on that role. the former president donald trump in the republican polls is number one, if he runs again, there is a likely chance that joe biden will run against him again because he thinks he's the only person who can beat him step jonathan: thank you and we will catch up with you later. a confirmation on the russian side about the resumption of the grain deal. the resumption looks like it is going ahead. we talked to out that it was a real risk that things might go in the other direction. that is good news in the last five or 10 minutes. lisa: it's tremendous news at a time when there is feud insecurity problems and concerns around the world about what could happen step how much does this indicate that russia will take us off the table in terms of not providing a safe corridor or providing a safe corridor for wheat versus simply a temporary reprieve? jonathan: tell me we don't have

to deal with this issue again? tom: it's there and i would look at tunisia first and bring it over to the challenges in egypt. on the bloomberg terminal, the egyptian pound and with the devaluation, it's out to 24 which is a 20% devaluation. i am on it every day. we make jokes about it but i'm sorry, it's a fixed price in egypt and their economy is teetering. there are many more egypt's out there. jonathan: it feels like an episode of the soap opera. tom: is there a vice president in england? jonathan: we have a presidential system. we haven't talked about it before. tom: is there a vice president? jonathan: there is a deputy

prime minister. we hide them. tom: the deputy prime minister. lisa: i was thinking about being a rookie journalist and covering ve and ite feels ap jonathan: happens when you cover those things. lisa: we don't have to get into that. jonathan: morgan stanley is coming up shortly, this is bloomberg. ♪.

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jonathan: the fed on the s&p 500, futures are basically unchanged, up a little bit on the nasdaq 100. basically dead flat on the s&p 500 since the fed last met.

your tenant year and two-year year are about 50 basis points higher before the fed last decided interest rates in the two-year is 451.78. if you want some price action, it's in the commodity market. wheat is rolling over aggressively after we get this headline in the last 10 or 15 minutes that the ukraine bring quarter will resume operations according to the turkish leader. it's a big move. lisa: it takes out a lot of the gains you saw in the last couple of days after fears you will get a massive disruption. how much this means to softening on the russian stance? jonathan: some talked about the potential political fallout if we have the kind of crisis we are trying to avoid. tom: i would say this is front and center for the imf.

we don't understand in america that food is maybe 8% tops of the american food and some of these countries are 70% of the income. that starts in tunisia and they have their own problems. jonathan: let's continue with the fed look. what's important to know his upon teaching at william and mary, he was five days a week at paul's daily -- deli. forget about the fancy people and morgan stanley, what does this fed meeting and the for afterwards mean for the people in paul's deli in williamsburg? >> i think the hardest part for people away from wall street, people are confronting inflation and it's a big problem for the average person.

you talked about food prices earlier and it is really salient. the price that people notice and pay attention to. will the fed do enough to bring inflation down over the next few years? that's their plan for three years to -- for inflation to come back down or will they push the economy into recession and that's a double bind for the average people stuck between needing to keep their jobs on the one hand but seeing inflation eat away at their purchasing power. tom: let's go down to georgia and i think of the great richard timberlake and his gospel was the fed is exposed. can the fed get out in front of an inflation vector they presume to see? is that a delusion or is that possible? >> i think it's possible but it

will take some effort. they are trying to slow the economy a lot but not so much a goes into recession. it will take some lock, what chair powell refers to as being nimble which means they will have to read the data and ask if things are slowing down enough that we can sit back and just leave it and let things glide? i think it's possible but i don't think anyone wants to of it as a certainty. jonathan: a single mandate central bank, senator warren and friends wrote a letter to chair powell to close out october a series of questions off a series of statements from current fed officials and former fed officials. would you describe this central bank as a single mandate central bank at the moment and how do you think the chairman will deal with these questions at the news conference? >> i don't think so come is not a single mandate central bank at

all. chair powell has been trying to walk a fine balancing act by saying if you want full employment over the long-term and you want to have inflation that is stable, you have to slow the economy down now to put it back on a more sustainable track. i think the fed is really trying to balance its mandates. the last set of projections have been bring down inflation not next year. this is not 1979, they are trying to bring inflation down over three years and by doing it over a long time, try to insulate the real side of the economy. lisa: it's a difficult communication strategy to execute given that bernie sanders and elizabeth warren are the tip of the iceberg of congress members who are getting concerned about torpedoing the u.s. economy to bring down inflation as many people say

it's necessary. given your 15 years of the federal reserve, how are these criticisms being addressed in a communication strategy? >> i think the criticism is being taken very seriously. all the news reports you see out of washington on chair powell is a regular feature on capitol hill. he's been talking to members of congress. as much criticism as you hear about the concern of what will happen with jobs, you hear plenty of criticism about inflation being too high. at a time of political divisiveness, anti-inflation sentiment is pretty bipartisan. the real challenge is finding out what is the least painful way of addressing inflation now. lisa: do you have a sense of how much pain would be required and how has your view evolved as we get these data points that show ongoing resilience despite the fact that we are close to 4% fed

funds rate after today? >> very hard to be certain about how much pain is necessary. job growth, the last jobs reproach was 236,000 and we will get another jobs report friday. i think jobs have to come down much slower than what we've been seeing over the past year or so for there to be a reduction in aggregate demand. inflation has been much more stubborn and much more resilient than we would have been expecting a year ago. tom: we are doing a scientific study to see how many of our guests have a copy of ben bernanke behind them. you are a trophy winner like our other guests. how is ben bernanke helping guide jerome powell? >> another congratulations to

him for the nobel prize which is well-deserved and i had him as my dissertation advisor in graduate school. when you are chair of the fed coming basically have your pick of anyone who's willing to talk to the chair of the fed but the challenging for jerome powell now is to try to synthesize all of the advice he's getting from all corners. the vice chair of the fed is there and she is an experienced policymaker and her advice is always valuable to chair powell but any academic economist or wall street economist would take the call and try to give jerome powell advice. jonathan: what was he like as an advisor to you? >> fantastic, he is amazingly humble and it's amazing combination of being humble and brilliant at the same time. i gave an chapters of my dissertation and he would come to me the next they with

comments and was generous with his time. jonathan: he shredded the chapters, you are humble and brilliant as well. thank you a lot. a lot of people in federal reserve believed that a failure to restore price stability would be far greater pain. hopefully, he will do a better job of communicating in this press conference. tom: we will ask dr. clara about a single or dual mandate that some would say there are three mandates. the idea for me is exposed. i see no evidence that they can get out in front of the debate. it's a parlor game for us but they are slaves to those reports to the december meeting. jonathan: i would like a fresh assessment on the balance of risk. a group of officials leave the

risk of doing too little is greater than doing too much. i wonder the weather that has changed much between the last meeting on this one. lisa: we've heard the other view that even on the federal reserve itself, there is dissent. how do they represent that without leading the market away from that. this is the one major issue the fed has, how do they keep signaling there is a single mandate federal reserve even as they are not longer-term. jonathan: you have to question the motive behind the letter. it's a pretty decent letter. it's how i would prep for an interview with a fed official. you try to identify contradictions and look for clarity in my think they are questions worth being asked and there is a motive there. it's within a week of the

midterms. lisa: you could go into politics. jonathan: i don't think anyone wants that. lisa: when there was a question about the prime minister, we got questions about jonathan being off because maybe you are thinking of running for prime minister. jonathan: who would have me if i wanted to be a senator? lisa: it's important for the fed to be able to answer these questions but are they speaking to the market or politicians? can they speak to both consistently? jonathan: the politicians are speaking to the electorate right now and the federal reserve shares trying to to the -- to do e thing at a different way. many people are not convinced that higher unemployment is a price worth paying to get lower inflation. tom: i see no evidence of that whatsoever. it's november and in transitory

was ancient. that was evaporated in february or march. inflation has not come down and that's the sum of where we are. jonathan: we were in transitory up until 12 months ago. lisa: there are a number of economists still flirting with it. jonathan: we will pick up on that later. from new york, this is bloomberg. ♪ lisa: keeping you up-to-date with news from around the world, its decision day at the federal reserve and policymakers are expected to raise interest rates by a supersized 75 basis point to the highest level since 2008. fed chair jerome powell is likely to stick to his message that the highest inflation and 40 years must be tamed. the ceo of hsbc sees a tough 1.5

years for the u.k.. we spoke to him in hong kong. >> i think the changes helped markets understand future policy. i think there is still a lot of work to do. i think the economy will go through challenging year and there will be a recession but we don't know how deep step is better today than it was two weeks ago. lisa: he said that china will rebound from the impact of covid and the economy will reopen at some point step the u.s. and saudi arabia have shared information indicating that iran may attack the kingdom or other regions soon which is leading washington and riyadh to adjust the military posture. they say the attacks would be an effort to distract from the recent nationwide protests in iran. credit suisse long-term rating has been cut to one level above junk rating. they have challenges effort

outlined a radical restructuring last week stopped it was cut from triple b to triple b-with a stable outlook. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> will they pull out of covid zero? that will have an impact on market expectations on growth in china and the value of the renminbi. the chinese growth this year is really disappointing. a weaker economy means a weaker exchange rate. jonathan: the quotation of the day on china came from the ups chairman who said -- global bankers are very pro-china. we are not reading in the american press, we by the giant this -- the china story.

just a remarkable quote. tom: hsbc has a delicate balance with the heritage of the firm. this is a huge swiss bank doing what every body else is doing. it's an oscillation we have seen for years and right now, they are oscillating with a vengeance back toward china. jonathan:jonathan: we've talked about this many times in the past. think about the multinationals operating in the united states that cater to an increasingly progressive consumer base particularly on the younger side and when they go abroad, they are pandering to dictatorships. i have asked this question over the years whether that can continue but it is continuing. tom: it's not just ubs but goldman sachs is at the

conference and the omission of talking about the anti-international business policy from xi jinping that they don't want to focus on this. tom: ubs had -- has outstanding research on asia and china led by jonathan anderson who was iconic 10 years ago. let's advance the story forward and to give us the back-and-forth of what western banks are doing in hong kong, i said it's an out of body experience, out of out of body is the springs were western banks in hong kong right now? >> the fact that these western banks, the ceos are in hong kong tells you how important the asian market is for them.

these banks are here because they know it's a gateway to china. they were skirting the big political issues in the issues in hong kong itself. john lee addressed the crowd whose the chief executive hong kong and that was put to the side and was all about doing this in his and making money. we talk about fragmentation and decoupling and good intentions, the one channel that is scared us has been the services channel that continues to grow in china. it's still big business in china. that side of it is still there. tom: are the big chinese banks more state-owned enterprises now than they were five years ago? >> they have always been owned by the government, as you know.

that's the way the banking system in china operates. there is no indication they have taken on any more in recent years. it's probably the opposite that the party is in control of everything. i think those are extensions of the government. they serve chinese interest globally so they are an extension of the government. lisa: did gee jinping signal a less global looking business view or is it the opposite? all of the noise around the shutdowns and the reopening and what's going on with the iphone and some rhetoric at of the global bankers leaves the confusing model of whether this is an economy that is still open for business internationally or whether it's closing its doors. >> it is confusing, sometimes

the rhetoric is about reopening in welcoming foreign investment step we heard some of those lines during the congress but as you said, they've got the apple supplier under lock down. things are so negative toward production in china. we hear talk of expansion and talk of chemical companies expanding in china and the german delegation is on the way to beijing at the moment and that includes some of germany's biggest companies to talk about ongoing expansion. it's a confusing story. the best way to think about it is sentiment toward investing in china is negative but when it comes to the data and big factories and companies pulling out of china, we are not there yet. it's happening around the margins but not yet on the mass exit scale. lisa: that perhaps explains the

rhetoric at the executives of big banks globally and how they were kissing the ring, saying they believe in this area and we are not necessarily buying into the negativity outside china about what's going on. how much is that a prerequisite to do business in china now? >> doing business in china always has its own rules. you've technically got to be a joint venture. you have to work around the local party rules but the banks have probably been having a better run than some other sectors. they've been allowed to take over their operations. that's been a big thing for them in the equity market has been opening up in china in recent years. it has a normal's potential and that story has turned around. the message from hong kong today from these bankers in hong kong is come here and do business and

do business with china and they don't plan to change that story anytime soon. jonathan: wonderful reporting out of hong kong. we were discussing rumors about reopening and things are interesting. do people think reopening in this economy is positive or negative for financial markets to get inflation down? tom: reopening into what? not only the financial part and the economic part but the new political and cultural part of a new punk on. these, -- of a new hong kong. lord patton had to stand there and give it away with prince charles. when you hear the path from lord patton and the giving up of hong kong to where we are now, we have no clue what hong kong looked like 10 years ago. jonathan: this is not what hong kong would have looked like 25

years ago. tom: i don't hear it from steve major who is our major contact to hong kong. mr. major has some of whose he hasn't for them coming out of this. jonathan: isn't he awesome? tom: he wanted to talk about west ham. lisa: he called me out. he said we started talking about futbol and he said i couldn't look more less -- i couldn't look less interested on air. tom: how about those phillies? ♪

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>> i think we are going to have some momentum here with the technicals telling you the market should continue to do well. >> monetary policy is biting into economic activity. >> the glide path will moderate but can margins be maintained? >> we still think there is pain in front of us. >> we will have a higher inflation target. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz.

jonathan: let me get this straight, people are hoping the november meeting is the december meeting and they tell us what they will do next month? lisa: and it will be less than they are doing. jonathan: that's ridiculous, new york city, good morning, this is bloomberg surveillance. futures are unchanged on the s&p 500. it's all about tom: tom: the step down. what are the calibrations to use as we go to the fed show this afternoon? there is a soup of data and it's going in jerome powell's direction over the last three meetings. it was worse earlier. it's less restrictive in the last couple of days but he has it trend working for him. jonathan: this is what he wants.

is there is scope for rate heil -- a higher terminal rate? is this to surprise the market? people were talking about rate cuts in 2023. tom: cpi is november 10? is that more important than the fed meeting today? the former vice chairman is with us and he says it's a single mandate idea. jonathan: he said the next meeting is at the mercy of the next two cpi reports. lisa: it's unclear whether they can talk about the step down. you should hold a torch to your face. tom: step down is calculus for a

liberal arts major from university of chicago. jonathan: is he taking digs at your education? tom: i'm not, it's anti-calculus. lisa: i love calculus. i want to talk about the interpretation of the data so far heading into this meeting this afternoon. citigroup put out something about job openings saying this will not let the fed let up from their hawkish message. any signal of a slowdown for a step 10 will be paired with a hawkish commitment to lean against inflation so how is the offset signal that maybe they will go to 50 basis points but they will stay at 5% or 5.25% for more than a year. jonathan: someone said that jay powell's best performance of the year was jackson hole. in the freezing cold.

tom: that was at the pioneer grill. jonathan: i still have to do my expenses for that trip. i have to work out that breakfast you had that went on my card. futures are unchanged on the s&p going into this fed decision. just about holding onto 99 on euro-dollar. i stronger euro and slightly weaker dollar. we talk about the rumors of china coming back online. can you imagine where crude might be? tom: this is the number one story, the smart people have been dead on about oil. how do you get above $100? jonathan: brent crude is 94.97. lisa: does china reopening and it being a good or bad thing for in economy be set by nation

given that would be an inflationary impulse? at 815 a.m., we get adp data. it is relevant and it's relevant ahead of the jobs report friday. it follows yesterday's jolts data. how much does this increase in job openings highlight the problem the fed is facing? people are still going out to eat and flying around and still doing these things that we wire services and you are seeing people need to continue staffing up despite the desire for perhaps a loosening labor market. the fomc rate decision is at 2 p.m. followed by jay powell's press conference at 2:30 p.m. and we will walk you through all of it with amazing guests. the former fed vice chair and

others will join us and will walk through what is going to happen at one of the most tenuous points for central bank facing an incredibly difficult moment. we will get qualcomm earnings after the close including zillow and ebay and robinhood and qualcomm is interesting given some of the chip shortages and the glut and the fact that we are seeing a real deterioration in the outlook by a number of chip makers. at what point does this impact apple and the highlight the tension in the broader economy or is this a moment for an industry that benefited during the pandemic and now is facing the other side? jonathan: let's get into the earnings with peter oppenheimer. everyone is talking about the step down for the federal reserve from maybe 75. to 50 what is the step down you were expecting in earnings from 21 to

22 to 23? >> absolutely, i think this will be a crucial factor that investors will have to take into account. we've seen the optimism building up again about the prospect for the rate rises to start to moderate but on the others, we are seeing a deterioration. it's not a disastrous burning season but not as strong as we have seen previously and the key thing that is happening is that margins are starting to come under pressure as a result of these higher costs. that means the forward-looking earnings is also deteriorating with revision starting to come down. i think it's premature for markets to be really pricing peak interest rates without taking into account the lower earnings and growth coming on the other cited that. tom: the seismic change for next year is we have a risk free rate.

do you assume more transactions and more combinations as corporations confront a reality from decades ago? >> absolutely, this is an overwhelming shift. in the beginning of last year, the markets are pricing one or two rate rises this year and nothing in europe until next year. we see now a whole range of significant rain increases debt rate increases with more to come. over a year ago, government debt had a negative yield and people were paying for the privilege of lending to governments and now you're getting around 4% for u.s. 10 year treasury so this is a big shift and it requires valuations of financial assets to moderate. we've seen some of that but probably not enough given the scale of the shift on the cost of capital and that's why we think there is more downside in the near term on valuations and

market pricing. lisa: i was looking at afang+ index that's down from its recent peak. have we seen the bulk of the pain in some of the high flyers and some of the tech names or is it still broad based, a more general kind of repricing that still needs to take place? >> what you have seen is the rise in interest rates hitting the longest duration assets most aggressively to begin with. things like unprofitable tech which had its route earlier in the year. profitable tech companies that generate cash had held up reasonably well but they are now coming under pressure because they are impacted by the gravity of rising rates and some slowdown in their earnings as well. i think it's about the broad

index adjusting valuations to levels which are consistent to a new normal in terms of interest rates. having said all that, what we have seen is a reason verso of the 10 or 12 year trend -- is a reversal of the 10 or 12 year trend. it's supported by record low rates and phenomenally strong earnings in the growth sectors. this year has been a year predominantly value outperformance and that probably has further to go. the aggregate valuations are starting to adjust demers but we are seeing a shift in the mix and it's pretty extraordinary that despite the hit to some of the big tech stocks through this earnings season, the broader dow and i think that's a reflection of this shift in leadership within the markets. jonathan: i'm happy that tom

wasn't listening at the end there. never mind. even if a soft landing is achieved, we expect the s&p five hundred to grow 3% and 8% in 2022. this is the step down the peter oppenheimer and the team and goldman were talking about. lisa: but they are still making earnings so is basically how much valuations have to come in based on the fact that earnings are coming down and real rates are higher and based on the fact that some people are expecting re-widen into next year. jonathan: why don't we start our world cup coverage? tom: i'm waiting for a cue from you. jonathan: i'm waiting for the bracket to go live. you will do it, too. lisa: i will and it will be so

joyful stuff tom: tottenham -- liverpool? i got a great invitation moments ago. jonathan: so we go to london to watch it in a pub? then we can watch the game. tom: it's genius. thank you andrew barnes. jonathan: futures are unchanged on the s&p 500, from new york, this is bloomberg. lisa: keeping you up-to-date with news around the world's -- the federal reserve is set to deliver a fourth straight supersized interest rate increase today and policymakers expect to raise rates by another 75 basis points. jerome powell is almost certain to repeat his unwavering message on inflation without necessarily pivoting yet. in israel, the fifth election in

four years appears ready to return benjamin not in yahoo! to power. exit polls -- benjamin netanyahu to power. his alliance with the far right has exceeded and his probe lock has enough seats to form a slim majority in parliament. in brazil, the president has promised to follow the constitution and order the government to start the transition to the incoming leader. bolsonaro stop short of conceding defeat 48 hours after the election but it seen as a sign that he will honor the results of the voting. the s&p 500 has cut the credit suisse credit rating to one level above junk status. that underscores their challenges after it outlined a radical restructuring last week. credit suisse was cut from triple be to triple be-with a stable outlook. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120

countries. i am lisa mateo this is , bloomberg. ♪

>> history is littered, including the previous administration with president who took a different position and got in the fed's grill any

time raise rates. the president has endorsed their pivot and argued they are the first and foremost inflation fighter and that's where it will stay. jonathan: he's a member of the council of economic advisers, split perhaps between the white house and certain members of congress. the democrats have been writing letters to chairman powell in the last couple of days. lisa: basically saying are you worried about the fact that you are trying to get people to be laid off and raising serious questions at a time when most economists think that will -- there will be a downturn in order to bring inflation down? tom: 10 paragraphs, seven questions as you mentioned earlier stop it's a love note to chairman powell. from the congress of united states, we will talk to annmarie

about this. explain this letter. is chairman powell forced to respond to this? anne-marie: he doesn't have to actually respond but we know that chairman powell has good relationships on the hill step at some point, he will be briefing these lawmakers but this is not the first letter because there is been a growing concern about how to clean fed is moving and potentially the fact that the medicine to cure inflation may not be worth it. they are looking at what it means for next year. a lot of the time, these senators including senator warren and bernie sanders, their concern is that it is going incredibly hard for the fed to fight inflation that's driven by other issues happening around like the war in ukraine.

these are the concerns they have stuff they are questioning the disturbing warning to american families that they should expect pain over the coming months. what will this mean for every day americans who are already struggling? jonathan: that comes from the fed chair talking in jackson hole about the pain we will experience. this white house has blamed the oil majors for what is happening with crude. the democrats are blaming the federal reserve for the prospect of a recession around the corner. how is this playing out in the electorate? anne-marie: they keep trying these different message step the president this week called for a windfall tax which no one thinks has any momentum or viability to pass in congress.

most people point to the carter administration where it didn't work. it didn't boost production and that's with the president is after. a lot of this is not sticking and when you talk out the fact that the administration is blaming price gouging and every day, they checked the aaa average. those are highs we saw over the summer but the issue they have had is they are trying to get any point to cross for anyone going out and about gas prices because you saw his approval rating ebb and flow. gas prices go up and bidens approval rating was very low. lisa: is this a single mandate fed or a single mandate

electorate focused on inflation or are there already rising concerns about the potential for a recession and the potential for layoffs? is there wind behind inflation? anne-marie: i think it's a mix of both. the polls talk about splitting inflation and the economy concerns but when you talk about the economy, people are talking about their 401(k) and they are worried about inflation what that would mean for unemployment and they view those as separate to inflation. the wall street journal poll had doubled digits in terms of what the electorate cares of doubt. they think the republicans have a stronger message and will have a better handle on the economy. there are two other big issues in this election and one is crime and you guys are seeing that front and center every single day. the front page of the new york

post had encumbered governor kathy hogle and she's getting hammered and the other is abortion. we've seen a litmus test for abortion over the past few months with one in kansas and one in new york and that could potentially get more voters out for this election. jonathan: one of the best, down in d.c., thank you. let's get to the fuller quote from chairman powell. softer market conditions will bring down businesses and he went on to say but a failure to restore price stability would mean for greater pain. is the line at the end of that paragraph that i think this fed chairman needs to a better job of explaining for people and not for the market or for wall street or expect patients about rates, just to help people understand.

if you tell someone that higher unemployment, someone losing their job is a price worth paying to get inflation lower, people struggle with that idea. lisa: he needs to communicate that it's not either/or. in order to get a stable labor market, we need to kill inflation and in order to preserve jobs in the long run, we need to kill inflation so how do they communicate this with studies and rhetoric at a time of such highly polarized political discussion in the united states? jonathan: it's difficult to do. daylight savings ends on sunday? lisa: i hate daylight savings. jonathan: so do i. lisa: 4:46 p.m. will be sunset on sunday and i'm not happy. i think it's terrible, don't

support daylight savings. you lose an hour of sleep and it's hard enough jonathan:. jonathan:what do we have in store monday morning? lisa: it will be a disaster. jonathan: coming up, greg peters with fixed income. are you with us? tom: a pound of hamburger is up 32%. jonathan: you are a solid three minutes behind today. tom: it's up to 32%. jonathan: we are live on air so three minutes kind of matters.

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jonathan: special coverage coming up on bloomberg you later this afternoon. the morgan stanley former fed vice chair joining us once again, looking forward to it. equities as followed, unchanged on the s&p. the nasdaq firmer. the bond market, it looks like this. on the 10 year, about 50 basis

points higher than where we were the last time the fed met. tom, right now. tom: we've got to get to greg after lisa, but as we are spinning our wheels in the bond market, i am not that sophisticated, but in the last week or two in the bond market -- jonathan: two fridays ago, we cut on to his -- twos on a tenure. last week was a big weekly move lower. weaker than the last couple of days. this bond market has been all over the place. going to wrap it up in the commodity market for you. you've got a big move in wheat. the good news, the russian defense ministry confirming it is resuming participation in the black sea grain export deal, so getting those exports of grains out of ukraine into the black sea and out of the rest of the world. tom: it is a big deal.

this goes back to what we've all learned since february 24, the place of ukraine in grain agriculture. it is dominant. jonathan: you mentioned the likes of egypt, and a lot of countries that are very reliant on that foodstuff. tom: i listened to eric martin of bloomberg news who has got this nailed and it is tangible and real. no question about that. we going to do equities here? jonathan: hopefully. unless you have things to say. tom: i don't, i'm waiting for equities because i think it is part of the story. jonathan: peter oppenheimer mentioned it. lisa: he was talking about the dow. let's talk about some of this. looking at some of them single name stocks, airbnb extremely

disappointed after the bell yesterday with the outlook in the quarter. tom: wait, is airbnb done as a thing? help me. lisa: i don't know how much of the disappointing outlook for the fourth quarter is due to a lack of people traveling domestically to places outside of big cities and more going to big cities and international or traveling for how much is because people are going back to the office and they are not able to work from home? i'm just suggesting. jonathan: i wish i had done that. lisa: i wish i had, too. jonathan: set up a tv studio on the beach. i regret it. tom: you know who did that, cooperman. lisa: he did do that. that was a zoom backdrop that his son had done, i swear. let's move on. jonathan: i thought that was an actual beach. lisa: he said his kid put it on

and he didn't know how to take it off. missed estimates, also falling after disappointing earnings. actually, they are up now. it is because of kfc. they disappointed dramatically. their returns did not work. but pizza hut did well. you guys are not interested at all. tom: you got that right. lisa: we gained an hour, so i was branching for the wrong reasons. -- ranting for the wrong reasons. cutting the outlook on the economy, yes, also because china. it really highlights the uncertainty you see in a number of companies in china, one of the major markets. tom: very good. greg peters joins us now. this is the conversation of the day in fixed income. greg peters, i've got a bigger

question and i know we've got to do the fed stuff as well. in the bond losses, you and i have never lived that we've seen this yields way up, price way down. has a changed how pension plans forward? have the bond losses addressed the losses forward? greg: the bad news, some of the losses clearly are really eye-popping. numbers that i didn't think i would see. but the yields are higher. you look back to a world where we are at a 50 point basis point, negative rates in europe, that was a far more bleak outlook for investors.

repricing is historic, dramatic, painful. but it is a much, much better place to be. jonathan:-talking to a lot of people about this and in still waiting for a good answer. we've just blown up 10 years of qe, zero interest rates. i just struggle to believe, and i think many other people do, that this is it. that this is the extent of the carnage you get off the back of doing that. does that resonate with you? greg: the numbers are really quite extreme. but i think what you're getting at, is this short burst of pain over? and i don't think so. i think there is a secular readjustment here. it is not the same type of volatility in the same type of losses, i am not suggesting that.

but you have to expect the opposite and equal reaction after qe with qt. and i think we are moving into this phase where central-bank dominance is no longer the driving financial markets. honestly, i think that is a good thing. i think he was see more rational price action. i think you will see investors not being so forced out of the risk curve. i think we are in a much better place than we were. lisa: that might be the case but just to follow on to the point that they were both referencing about the pain, whether it is been commensurate to the regime change receipt with higher interest rates. how significant will it be when the private credit markets reprice? when the maturity wall starts to really get up closer, and you start to see companies that enjoy 4% or 5% benchmark rates

suddenly have to pay 9%, 10%, 11%? greg: i think you are onto something on the private credit side. what you see during this qe era with zero interest rate is that investors got deals or extra spread any way that they could get. the interesting artifacts that privates is that they don't get mark to market. you don't see the same kind of volatility. so once you start to see those losses coming through, if indeed you do see those losses come through, a lot more volatility. once again, i don't think there's going to be the same need for pension funds and others to go out and risk as i think the quiddity sourced to

rule the day. lisa: are you saying you think that entire swaths of the private asset markets -- i don't want to say "we'll get eliminated," but will get decimated and won't necessarily recover because of the new income found in public markets that are more trends errant and more liquid -- more transparent and more liquid? greg: i would not say it is that dramatic that the demand side, the demand over the past 10 years, the past seven years has just been dramatic. that is where the growth has been. if you look at the high-yield market, you seem kind of the next step, very blurred between the two. but i think the jeat -- meat for investors to get that spread is

not what it once was. and what happened in the u.k. is lots of these pension funds, we can't have such a large proportion of our portfolios. jonathan: i'm not accusing you of anything, but do you think that we are blinded by hope here? that we hope this is a new regime we are moving to as opposed to "it will be a new regime"? greg: i think investors are hoping for the good old days. you look at how investors have been kicking and screaming the entire time around higher rates during this inflation, all these types of narratives that were quite troubling in the past 10 years. maybe i'm overly hopeful because i am an active fixed income manager -- jonathan: precisely. greg: but i do know this.

higher yields, all else equal, are better than lower yields and negative yields. from that simple premise, i think we are in a much better place. jonathan: you won't find opposition to that here. it is just a divide that i've recognized over the last several months. you speak for a lot of people in the equity market at the moment. they want to get back to the good old days. people in fixed income, they are hoping this is the new normal because this is beneficial for a lot of people in fixed income. lisa: this low yield environment of zero rates, a lack of rationality. it would be hypocritical not to be somewhat excited. jonathan: when high-yield is actually high. tom: i agree the yield is there, i agree cash has value now.

certainly, i'm living that. but i kid you not, it is about the bond losses. thank you for bringing up daylight savings time. franklin, 1784. we need to conserve candles. jonathan: it is franklin's full? tom: franklin is the first one who wrote about this. lisa: should we change it back because we need to conserve electricity? tom: this comes from purdue university in west lafayette. they don't care about the clock. a lot of research on this. they don't care about daylight savings time. thanks for that, from purdue. jonathan: people believe some kind of pdf on the internet. tom: thank you for bringing that up. jonathan: shirley. isn't that what they say?

this is bloomberg. >> keeping up-to-date with the newsom around the world, it is decision day at the federal reserve and policymakers are expected to raise interest rates by a supersized 75 basis points to the highest level since 2008. meanwhile, jerome powell is likely to stick to his message that the highest and laois and in four years must be tamed. the ceo of hsbc sees a tough year and a half or so for the u.k.. the global financial investment summit in hong kong. >> helping the markets understand the future policy. the u.k. economy is going to go through a challenging year. there is going to be a recession, we don't know yet, but it is better today than it was two weeks ago. lisa: he also said that china

will re-impact and it's a cap -- reopen -- rebound from the impact of coven and its economy will reopen at some point. 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. this is bloomberg.

>> they are basically fumbling around in the dark without a flashlight. when it comes to have to be more effective with energy in a geopolitical sense, this whole price cap on russian oil, globally, is really sending a lot of confusing messages. jonathan: i still don't understand that price cap. i still don't get it. it is fed decision day, is the equity market. equity futures shipping up as follows. not much movement, not much price action. elsewhere in the bond market, the yields going nowhere.

euro-dollar just about going somewhere. was at 99 briefly. i guess you could call that 99. the euro by about 2/10 of 1%. the dollar really hasn't pulled back. think about the range we've had. jonathan: below, $1.14. we've taken a lot of hits out of that game in the last couple of weeks. tom: right now, lean forward, because this is global head of commodities research at citigroup. with the real yield, there have been other calls and they nailed oil, no question about it. he said no, maybe not, and here we are, under $100 a barrel.

to cut to the chase, if china reopens, many say that will be the demand to get oil back above 100 per barrel. do you agree? >> actually, we don't agree. the only way to get oil back to 110 or 120 is through a bunch of disruptions from places like libya, nigeria, and maybe even iran and iraq. it is a supply-side phenomenon to get above. they say they can work with that a little bit, but that will have an impact on the market. we are in a world where demand is sloshing, whether you are looking at the u.s. or europe. the third biggest economy in the world. look at what they did in the last few months. they are of 2 million barrels per day.

a sideways little dance, it is not going anywhere. i think this supply on the market. jonathan: does that make sense to you? >> we are in what fiona hill calls world war iii. the economic instruments, the price cap that we were just discussing, some of them i think are a bit biased. if we look at the world today, we've had an inventory built that has accelerated and now the inventory bill as we measure it is your than the spr. there were times when we had a

reaction to russia and ukraine with embargoes imposed on with a price of bread as a result. we have another potential round of that coming up by december 5, which is associated with a price cap. we are already seeing it moving out. we have, so far in the world community, to the degree we can measure it, and inventory build with 112 billion barrels. actually, the build has been 273 million barrels year to date. but if we look at the last two months of the spr, from

september to the middle of october, demand has risen by 30 million barrels. a lot of that is coming from the u.s. last week's data, an astonishing 11.2 million barrels per day, the highest on record. and we've been playing with 10 million barrels per day for the last three months. the u.s. has really been supplying the world in taking the edge off of what would have been a difficult distortion. lisa: with the conflict that we saw with respect to russia invading ukraine. given that backdrop, do you think we are ever going to get down to that $72 a barrel kind of levels of the u.s. administration has said they would really start buying barrels to refill? are we going to get there in the next year, for example? >> i think we could get there,

it depends on the nation of the recession. we have to remember that this is a world with a lot less open interest then we had before. volatility levels are very high. 10, $15 minimums have become normal. i would not exclude the $70. i would also note that the administration does not have a particular number, they are giving you a range. and the thing of this is that we have a u.s. government range that averages $70, and we have opec, 85, 90 five dollar range. china also has a range with a bottom and a top.

or they sell strategic stocks by freezing prices at home. we have sensitivity now to not go back to negative pricing, $20 pricing to the production side, and it is kind of a new world when you have the largest economies along with opec-plus on the producer side and, by the way, the largest oil-producing company in the u.s. jonathan: one of the very best. thank you, sir, as always. about 1/10 of 1%. up a tent or so, about $.50. the range of views on crude is shocking to me. tom: this is what is going to

happen. what a bunch of baloney. you've got ed morse disagreeing with jp morgan. i'm serious. they disagree with each other. this is the way the real market is. jeff curry generally disagrees with ed morris. the white house, they are micromanaging oil down to five dollars per barrel 12 months out. lisa: it is a tricky market. tom: that is what they are doing. where is the world bracket? jonathan: i am trying to figure out when that is going to go live. just a moment. i am engaged again.

>> there needs to be a recession for the fed to actually hit its inflation targets. dark out the fed, in our

opinion, is nowhere near the end of raising rates. dark out the fed is obviously eager for a downshift at some point. >> the challenge of the sawfish landing is so intense because a lot of things have to go right. >> i think it would be a relief around the world. announcer: this is bloomberg surveillance with john keane, jonathan ferro and lisa abramowicz. tom: jonathan ferro, lisa abramowicz and tom keene and we welcome all of you on bloomberg radio and bloomberg television. it is fed day, it is november, and unusual november, to say the least. this is a fed day with a staggering two reflation reports out. jonathan: a lot is going to be said by the next fed meeting. the next decision is at the mercy of those two. we have a big conversation about a step down from 75 to 50. lisa is with me, a very

different conversation. tom: the heart of the matter, and i remember this with the government, he talked about ultra accommodative and we have clearly moved to a accommodative and the debate with richard and others is the idea of what level of mutual are we at now? i think we are distant. jonathan: rather controversial in the last couple of months said it is a single mandate central bank. warren and others have picked up on that. the question we got to ask, when is this dual mandate in conflict? right now for them, it is not. so far, so good. the conversation we are having is hold on. look elsewhere, and you can see cracks all over the place. shouldn't we appreciate the fact that you've done a whole lot and a short amount of time and that tightening is still going to come through? tom: is he going to talk about a pound of hamburger markup, a

barrel of oil? i don't think people get that granular. lisa: if he is talking about a one mandate fed, he will be talking about all these things and how destructive it is for household at a time when their focus for longer-term is employment that is stable, and that requires price stability to a certain point. but at what point are the cracks forming around the world, are they going to emphasize that perhaps there are signs of deceleration around the margins because maybe they are just as wrong with the pace of the disinflationary impulse as they were with pace of the inflationary. tom: how close are we to 75 now and 75 in december? i think we are closer than we think. jonathan: highly dependent. the issue that we have today is that they start to signal a step down. do they trigger easing of financial conditions which would cause them to go higher than they otherwise would have had to?

this is the game right now with financial conditions. it is a game. it is a game right now that they've been trying to get financial conditions all year. tom: we mentioned the last hour. the bloomberg financial conditions index, -.965. we've moved through one standard deviation into a less restrictive environment just in the last week. it is dead flat on the s&p. i think we've done this about five times in 2022 that the fed is going to back down and slow down. tom: lisa, i thought that this with the mover on the election. lisa: i mean, how could they not? but the fact that you are going to have the fed, the cpi report

highlights the uncertainty of portraying what is going to happen in december given what needs to happen before that. tom: you don't need to do the dow. jonathan: down a basis point, 50 basis points higher on a 10 year than where we were last time the fed met. just off the highs of the year. that was a couple of fridays ago. give me a fixed market, back at 99 on euro-dollar. positive one quarter of 1%. up one third of 1% this morning. right now we are going to frame the morning and frame the afternoon with daniel morris, chief market strategist, who can synthesize what powell means for asset allocation. dan morris, can jerome powell

change your asset allocation today? >> if there is one person that can, it would be the chair. at the same time, the benefit doesn't really shock. any big surprise, we are looking at 75. if anything, the message that the fed is going to want to convey, it doesn't want to see the market get ahead of itself. if they start listening to much, we see a big rally in equities. it would probably be an attempt to moderate that perhaps prematurely. we still have a ways to go. jonathan: we were often talking about the fed curve, that price point that this market goes too far for this fed. we got to think about it the other way now still. where do we think about the equity market rallying too much?

is this it? how do you think about that? >> there is a play in that game, one of the fundamentals in the market, what the outlook is which goes back to still seeing a recession in the u.s. next year, and that has got to be reflected in earnings which are still looking for 2023. that is not really a compatible picture. yes, there is the momentum around anticipation of the fed, but we want to take a step back. lisa: are we looking at a 3.5 percent inflation rate to the next 3-5 years? is that basically your base case as you come up with some sort of thesis in a new yield regime? >> i don't think we would see it quite that high. if you look at inflation expectations, getting close to 2, 2 .5 in a year or so, which does go back to continued

credibility of the central banks, which means that the market believes it will induce a recession, stick with a recession, not back down if that is what it takes to get patient back to target. we think that narrative is the right one if that is what it takes, if that is what keeps those inflation expectations. lisa: have you ever been in a circumstance with the bigger parameters of the investment thesis less agreed-upon? >> what do you mean exactly? >> we are talking to people about whether inflation is going to be sticky for longer, whether the fed will be able to go through with inflicting the pain required for inflation to slow. all of these questions that every person on the show comes on and disagrees about in terms of the parameters for coming up with a thesis for their investments. i'm wondering whether you've ever seen this before, where the parameters are so uncertain as to where we are in the missionary regime. >> i guess if you think everything that has happened

since the global financial crisis, are we getting more or less uncertain then we have been for many times over the last 15 years or so? i agree there is some fundamental discussions we are having when we think about the bond market that you had for 50 years, and that has not been particularly pleasant. that is not a surprise, but you are right, these are very fundamental issues that, to be honest, including the central banks, no one has a whole lot of clarity on. jonathan: if you got a conviction anywhere, what is it? >> probably my highest conviction would be europe and u.k. equities. on one hand, we are all aware of the threats that are out there going into the winter. and then you offset that with world-class earnings expectations for this year and next year. there does still seem to be a disconnect between at least one analysts are expecting companies able to produce and what we see

in terms of the reality on the ground, gas prices up eight times more and ecb that is equally as hawkish as the fed. maybe a bit less after the last meeting. that seems to be the biggest disconnect for us. jonathan: wonderful as always. we got a flavor of this from the number two contended carrier. i'm sure you know the company well. basically, coming out of a very soft forecast for global demand, saying that europe is closed for recession and the united states is not far behind. tom: i believe it is shanghaied to the west coast, they plummeted as well. but then it comes back. i don't have a strong belief year other than to say the people like david rosenberg don't get enough face time in

this constructive debate. they are saying it is disinflation, it will be solved, and it will be solved sooner than people think. witness the two inflation reports to the next meeting. just in general, the whole disinflation has been pushed aside. jonathan: it is moving very quickly, and we all agree on that. lisa: that is the reason why i ask. has there ever been a time where the overlay of what reality will be in two years has ever been less certain? the inflationary impulse was underestimated and now the disinflationary for some people is underestimated. others are saying not so fast, the real economy is going to bite. jonathan: we are uncomfortable when everyone agrees. lisa: does this market make you comfortable? jonathan: right now i am not married to a particular view.

lisa: that is why some people are thinking you get some rationality into markets because they are actually expressing different views which we really haven't seen in the past. it is just the market they want. they are excited. they hope this is the market we get to keep. tom: circle the word hope every time you see it. this is my forecast for the next 30 minutes. futures unchanged on the s&p. lisa: the federal reserve looks set to deliver a fourth supersize interest rate increase today. policymakers expected to raise rates by another 75 basis went. jerome powell is almost certain to repeat his unwavering message on inflation without necessarily pivoting. russian military leaders reportedly discussed using tactical nuclear weapons in the

war against ukraine. that is according to the new york times, which attributes the information to senior american officials. they say the conversations showed how frustrated the kremlin has become over setbacks on the battlefield. in israel, the fit election in four years appears ready to return benjamin netanyahu. exit polls show that his strategy of forming an alliance with the nations far right has succeeded. there appeared to be just enough seats to form a slim majority in parliament. cvs, walgreens, boots alliance and walmart have tentatively agreed pay more than $12 billion to resolve thousands of state and local government cases involving opioids. the suits acute the chains of mishandling the painkillers which are blamed for half a million deaths in the u.s. over two decades. states, counties, cities still have to sign off on the settlement. and a shipping company is cutting its forecast for the global container market. the world's largest owner of

container ships system manual shrink as much as 4% this year. another contraction is possible next year. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> we think that the fed will be holding that terminal rate throughout 2023, and great cuts could start in 2024, but don't look for the fed to be the white knight it historically has been. jonathan: i've got breaking news for you, and it is not the adp reports. equity futures on the s&p, negative about 1/10 of 1%. >> no help from jay powell and company. 230 9000 jobs created in the

month of october, according to the payroll process. interestingly, they say it is a mix and the shift of hiring. we saw a big rise in service jobs, particularly in leisure and hospitality, but goods-producers lost 8000 jobs. the other interesting aspect of this from the adp which will be somewhat complicating for the fed is the rate of increase is goes down. people who are switching jobs still are getting double-digit increases, 15.2%, but that is down from 50.7%, and those who are staying in their jobs are getting raises of 7.7%. that is pretty much in line with recent months. softening pay increases, good news for the fed. still strong hiring.

not sure how they are going to take that. tom: it is a new adp methodology. how many reports do we need to see before animals like you trust it? >> that is going to be a good question. we have to see and compare with the payrolls numbers each month. i don't know whether trusted is something adp is looking for because they are making a claim with this new survey that it is not a forecast of what we are going to get. it is simply another data point. on that basis, 239,000 jobs is what adp counts. i guess we stopped there. jonathan: we will touch base with you in about 10 minutes, i think. i don't even know if i'm going to do a market report off the back of this. down 1/10 of 1% on the s&p. not a major move.

$2.39. if you look at the payrolls on friday, 1.96. tom: and friday is important because friday still looks like a buoyant number. it is just now a number jerome powell is going to be feeling. tom: good news and bad news. he is from the university of james bullard, also known as indiana university and of course the international as well. thank you so much for joining us today. i want to cut to the chase. there is a massive allusion in the american economy jerome powell faces today, and that is

that net exports are holding us up. how poor our domestic final sales? michael: final sales to domestic purchasers which would be trade and inventories grew. it would essentially be the fed soft landing where growth is positive, but still below trend. the interest rates in those sectors of the economy housing, structures were really what wade on activity in the third quarter. i think the inventory rebuilding cycle is also largely behind us. so yes, we got the boost from trade, but underneath that, the economy is coming down. lisa: we've been talking about the lag time, the variable effects that the fed is watching right now. how long would you estimate it takes before the full effect, the dampening effect of the rate hikes take effect?

>> the curative effect, as long as 12-18 months. we see in the initial signs of it may be. financial conditions tightened in march and april, you would expect by the third quarter of the year, it is going to show up, and it is. the cumulative effect is going to matriculate all the way through the rest of the economy. jonathan: how high this on inflation need to go? what kind of damages the fed going to do to achieve the objective of getting back to 2%? >> our forecast is that it will be a little bit higher than the fed things. the fed, as you know, is looking at about a 1% rise. consensus is probably around 5%. somewhere between 4.5 percent, 5% seems to be what we are thinking. the fed, saying we need to

remove imbalances in the labor market to bring inflation down. that is a bit of a euphemism for how the unemployment rate has to rise. better balance, supply and demand. that is the number one question right now. jonathan: your research recited by senator warren, i'm sure you are aware of that. implying a 2% jump in the unemployment rate over the next year and the loss of more than 3 million jobs. the question they are asking chairman powell, is this the price we need to pay? is it worth paying this price to get inflation down? i don't expect you to do his work for him. tom: you can if you want. jonathan: this line that he used in jackson hole, a failure to restore price stability would mean far greater pain. can you elaborate for us to have people understand what would happen if they didn't tackle this? michael: the fed's belief is to think that the economy performs

best over the very long-term when we are not spending a lot and we are talking about where is inflation going? you want to remove that variable off the table. unstable inflation getting the best macro outcomes over the long term. we make the mistake right now when we think the fed is going to over tighten and make a policy error. the fed is saying no, the policy error is not getting inflation down to 2%. now, we don't know if we need a recession to get us there. but if we do, if that is ultimately what is needed, the fed would say we should pay that price now because waiting and paying it later, history says we are going to have to pay a lot more. we don't like to be in the position we are in, but we need to remove imbalances in the labor market. we think we need to get to get that sooner than later. the true policy at stake is not getting inflation down. the mistake is not creating some pain at the labor market to get there. jonathan: chairman powell making

notes in his office right now. asking the question. tom: senator warren did not cite mark cabana. i don't know if that is about. jonathan: it is the stuff on the balance sheet. jonathan: a lot more than just this economic data. a refunding announcement just around the corner. looking forward to it. live from new york, futures essentially unchanged. -0.05% on s&p. heard on radio, seen on tv.

jonathan: 60 minutes away from the opening bell, equity futures down. shall we get to the fed decision? yields unchanged, 4.036%. very erratic today. i'm trying to be calm. tom: it is an odd meeting.

trying to be calm. this meeting is a non-meeting. lisa: i disagree. tom: december, this is where you go with the signal mandate question. lisa: first of all, it is perhaps nondramatic of they are going to raise rates by 75 basis points. it is dramatic to see how they clarify what they can potentially do to offset this prospect of easing by lowering to 50 basis points in december. what else are they going to do to make it a hawkish message? tom: we have to stop the show. jonathan: what have you got, sir? >> they are the biggest and most liquid market out there. $96 billion in new cash in the

fourth quarter. the auction size is unchanged, they are going to have to start raising them in the month of january because the government needs to sell more debt. you get $21 billion in 30 year bonds. the big news out of this, the treasury is actively considering a program of buying back treasury bonds in order to improve market liquidity and to make it easier for them to sell bonds when they need to. it would be the first time since april 2002 when the government had a surplus and they wanted to keep access to the market. this would focus this time on off the run treasuries which is where the treasury 30 issues are right now. that means that the private sector must buy more in terms of

bonds and banks don't really want to because of the supplementary leverage ratio and other reasons why it is harder to warehouse these things on the balance sheets. the idea is you buy some of the stuff back and they will have more money and more capital room to be able to buy the new bonds that treasury needs to issue to pay for the budget deficit, the treasury volume advisory committee out with a statement today saying that in general, it seems like a good idea that will be hard to implement, but we are going to take a look at it. one of the things they want to know, how much do they buy back, and how fast? lisa: this is a technical operation basically geared at the liquidity functioning of the bond market. how much, on a broader level, if this fully highlighting the difficult position right now that the treasury department is in, selling 10 year and 30 year bond at these much higher yields and having to potentially increase the sizes of those going forward? >> it is a difficulty, lisa,

particularly because there is a budget deficit that needs to be funded. at the same time that the fed has been raising interest rates and it is only like three and $80 billion this year -- i'm sorry, about $100 billion this year, $600 billion next year in terms of the additional interest cost that is all the treasury. it is a problem and they do need to do something about the liquidity issue. jonathan: thank you, sir. thank you very much. i had some people calling this qe. did you see that? anyway, i think they probably go forward with this based on what the treasury borrowing advisory committee is saying. it sounds like we probably go forward. tom: i don't know the details. lisa is expert at this. my summary of this is simple. a higher rate regime brings us to bank of america.

how does a higher nominal rate want some form of real rates lifting up change the fed dynamic with treasury? can our central bank or other central banks actually lose money because all of a sudden they have an interest cost? >> technically, the fed loses money because it is paying out more on interest reserves. what it does is it just stopped remitting those profits back to the treasury. but does it lose that money over the long term? no. it will recoup that loss later when it is earning more than it is paying out on interest on reserves. it is what they would call a deferred asset, which is something you are able to do on your portfolio. they just stopped remitting to the treasury for a while. tom: it is like a 23-year-old trying to borrow money from dad. unfortunately, no one asked. we are thinking about a balance

sheet and where that is going. qt has been a big part of the conversation. some might say it hasn't been a big enough part of the conversation. is it something you expect to continue alongside this call for a recession next year? >> we do, but for practical purposes, yes, over the remainder of the year we could start cutting rates and stop quantitative tightening. we think that the fed, in conjunction the treasury can support market functioning enough in order for the balance sheet runoff to continue, so yes, we had a continuing for a little over a year from now. lisa: if this the market functioning that needs to happen to make everything run relatively smoothly through this whole process, given that we are not yet in the heart of the lag effects of raising rates? we are not in the heart of what the consequences really are just yet. >> the fed is not in the business of shutting down markets. obviously, we want the treasury

market the function. if the fed and the treasury need to do some things on the side to give liquidity flowing and treasury operations and the market functioning, that is what they should do. it is a difficult communication because on the one hand, they are trying to smooth functioning which may involve buying bonds. on the other site, they are trying to raise rates, which complicates the communication, no question. but i think they can manage it. lisa: it complicates the issue an international manner as well. this concern about the lack of dollars. at what point will international strains become relevant for the federal reserve that has been laser focused in the u.s. economy on ration? >> typically, after they happen, if you know what i mean by that. the fed is to limit other central banks are doing. when the dollar rallies a lot, historically, stresses have popped up somewhere in financial markets, politically. knowing where those are in

advance is always hard to can down and typically, the fed and others don't respond to them until you see it materialize. tom: i've got to ask you an international question with respect to ethan harris, who is wonderful, and that is with your imf history. how fragile is em right now? do you wake up feeling comfortable about it vs. the joys of the 90's? >> more so than the 90's. in terms of their debt management capabilities, the amount that they are borrowing and foreign-currency currency versus domestic currency, there is a narrative that em has performed better in this tightening cycle than many had expected. tom: if we get persistent dollar strength, how does that change the narrative? >> at some point, it would build. but whether that would show up in emerging markets or more market functioning and development markets, we would have to see. jonathan: final question,

december rate hike call, where is it now? >> 50. jonathan: a step down. good to see you. answering some of your questions for you. tom: again, this is serious for people that are against progressives in congress. this was really written well with footnotes. it was a really strong effort. jonathan: if you park the political motives and look at the substance. i thought they were pretty decent questions to be asking. lisa: i'm still laughing. an adult letter. tom: this letter. lisa: it highlights the moment and there is merit to both sides of this discussion. how much do you have to break the economy to bring inflation down? the fed doesn't know. economists don't know. the consequences of inflation running hot for a very long time

is severe for the economy and because of a surprise to the upside, people are ready for it. jonathan: do you think he is for or against daylight savings? jonathan: that might feed these questions. starting some headlines. tom: teasing western civilization at cambridge? jonathan: maybe he just doesn't like you. tom: we get no love. jonathan: because he doesn't like you. you've never watched his football team. jonathan: tom: i watched once. jonathan: what did you learn? tom: i love their stadium, it is like "ted lasso." jonathan: bob michele, these are

all the people that just don't fancy us. tom: no, they don't. straight through the show, we have some wonderful people. jonathan: are you prepped and ready? tom: i'm so ready. jonathan: we went to the lineup for the fed show, it is phenomenal. we say thanks for making irregular appearance. we made him commit to it last time around, and he has followed through. does he realized? tom: did you see my bowtie today? this is a gift from nat. jonathan:jonathan: straight out the gate, a number of months ago, she called him fanciful. fanciful. scott might have said it was fantasyland.

they will be joining is a limit later. shaping up as follows on the s&p 500. totally unchanged this morning and unchanged since the day before the fed last met. from new york, this is bloomberg. lisa: keeping you up-to-date with newsom around the world, i'm lisa mateo. the man who killed 17 students and staff at a parkland, or a high school will be sentenced to life in prison today. he pleaded guilty to the 2018 attack last year. last month, a jury decided against the death penalty and chose a life sentence without parole. a judge will formally sentencing today. in decision day at the federal reserve and for a fourth straight time, policymakers expected to raise interest rates by a supersized 75 basis points, the highest level since 2008. meanwhile, jerome powell is likely to stick to his message

at the highest inflation in 40 years must be tamed. bloomberg has learned that the u.s. and saudi arabia have shared information indicating that iran may attack the kingdom or other nations in the region soon. that is leading washington to adjust their military posture. people familiar with the matters say the attacks would be an effort to distract from the recent nationwide protests in iran. the state of washington has sued albertsons to stop the grocery chain from paying $4 million for shareholders as a special dividend. albertsons and kroger are being accused of going against antitrust consumer protection laws and their potential merger. the attorney general says a payout before regulars can review the agreement will weaken albertsons ability to compete. and shares of airbnb are falling after the company gave a disappointing outlook for the fourth quarter. that suggests consumers are shifting away from the higher cost rentals that thrive during the pandemic. the muted outlook comes after

airbnb recorded its highest revenue and most profitable quarter yet over the summer. 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. than 120 countries.

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>> we are still losing several hundred people, 300-400 people per day to covid-19. and they tend to be predominately individuals who are not up-to-date on their vaccines. so we still have more work to do, especially with the winter coming. we've seen in the last couple years, an increase in cases during the winter. that is why we want people to be up-to-date on vaccines. >> david rubenstein will speak with the surgeon general of the united states, and he joins david here for a conversation. look for that at 9:00 p.m. tonight.

mr. rubenstein joins us right now on this most unique position. what i love is 20 years ago at yale, he basically invented something called healer's art. he seems to have been a generation ahead of the mental health challenges we have all lived in a pandemic. what did you learn about him, about the persistence of the challenges we face? >> well, he's very concerned about the mental health problems that our country has coming out of covid. he's also concerned about the isolation that many young men have in the mental health problems associated with it. you've seen some about recently, obviously. he has worked hard on that. the surgeon general of the united states is a position not known to a lot of people what it actually is. it is a position where it is designed to talk about health care issues and oversee 6000

health care professionals around the country. he has been the surgeon general under president obama and to his surprise, was reappointed under president biden. the first person to do it twice. he is a very talented person, the son of immigrants from india. grew up in florida. went to harvard, yale medical school. very, very talented person. tom: what does he say about covid? have we delivered ourselves that covid is over under 400 deaths per day? >> yes, you got 300-400 deaths per day. these people are dying because they are unvaccinated or they have not kept up to date with vaccinations. i just came through covid myself and the first time i had it, i am up-to-date on my vaccines, but i probably could have gotten a booster more readily than i probably did the most recent one. his point is that people are not vaccinated at all, they are

really in danger of being one of the 300-400 per week are dying. we are not completely out of the woods here. lisa: david, i'm glad that you're feeling better and a lot of people have been going through it right now. pairing the two ideas that we just have been through a pandemic that caused real fissures in the social fabric that have exacerbated some of these mental health issues, did he talk about back, about how the pandemic has moved the responses? they really did exacerbate the mental health problems in the nation. >> yes. when you stay at home, you think i'm going to be safe. but actually, you are deteriorating your ability to relate to other people and for many people, they become so isolated they have mental health challenges. his biggest concern is the mental health isolation right now in the country. there are a lot of health care problems, obviously. opioid addiction, cancer,

cancer, budget other problems. his particular focus is on mental health, something he has focused on his whole career. lisa: loneliness, and what that does to people as well. and with respect to any kind of response from a government, to additional pandemics or other health problems, if there is this add-on of the mental health component afterwards, which could be just as pernicious if not more so in certain communities and among certain kids, for actually having to re-socialize going back to school. >> yes, they don't really know what the impact is going to be until much later. if you get covid, you can see the impact right away. but if you are isolated, you might not pick that up and you might not get the kind of treat needed. one of the things he points out is that mental health problems don't get reimbursed by insurers or the federal government quite the way that physical health problems do. there is a certain stigma

associated with mental health, always has been. the stigma hasn't gone away and the insurers still don't reimburse you for treatment you might need. tom: is the surgeon general's job, if you will, is it political? do they just try to find somebody or is it a political football from republican to democrat to republican? >> i would not say a political football, but you need to be a health care professional. clearly you are appointed by a president and confirmed by the senate. the first time around when he was appointed by obama, he had a difficult time being confirmed because he said that there was a problem with guns in the country and that was seen as a health care problem. many people didn't want to confirm them for that. i would say nothing in washington is apolitical and there is still somehow a political nature to it. tom: they cue so much, greatly appreciated. the host of the david rubenstein

show. conversation here on medicine, something gripping all of us regardless of our politics, the mental health of the nation. the surgeon general with david rubenstein, look for that tonight. we've got to frame up where we are going to be any number of hours. the point as we heard from bank of america, december is wide open right now. lisa: and how do they signal some sort of set them, which i know you love, while not letting the markets go to town and rally tremendously? this is going to be a tricky meeting. there is some credence to this, the idea that they don't have any visibility into the rest of the world. we don't know, and we go about our merry way. but there is a question of how they try to message a step down while still being hawkish. tom: i think he has got a message also by the market in the sum of the bloomberg

financial index clearly signals and accommodative space. lisa: this is the same point we are talking about. how do you lead to tightening financial conditions while also signaling that they are going to slow the pace of rate hikes because there was only so much you can do before you potentially cause damage that you don't even realize until later? tom: amy says ask her a question about the debt announcements in our ago because it involves auctions. are you going to review what mickey was talking about half an hour ago -- mckee? lisa: it is a technical kind of trying to ease the liquidity. i was actually focused on something else, to be honest. i was looking at something that you were talking about, the egyptian pound. you were talking about the potential for disruptions. egypt came out and said that the russia-ukraine crisis has cost

egypt 20 billion egyptian pounds more, about $840 million with additional costs for the price of bread. tom: i had an extraordinary conversation with lcc in davos a number of years ago. hugely controversial but very unique individual. he has got huge food challenges and a massive devaluation from the stability of the egyptian pound. his plate is full to the end of the year. the vice-chairman of the fed and others. stay with us, it is fed day.

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jonathan: it is fed decision day, live from new york, good morning with your equity markets going nowhere and your countdown to the open starts now. >> everything you need to get set for the start of u.s. trading, this is bloomberg, the open with jonathan ferro. jonathan: live from new york, we begin with november is a bad december. >> november is all about december. >> how much does the