>> there is just a lot more momentum in the u.s. economy. >> the fed speakers are going to be focused on the lag effect between policy tightening and actual economic impact. >> four economies are fighting inflation, a weak currency is a problem. >> it is confusing. not only for markets for globally and for other central banks. >> this is bloomberg surveillance with tom, jonathan ferro and lisa abramowicz. >> from new york city, good morning. this is "bloomberg surveillance" on tv and radio, alongside tom

keene and lisa abramowicz. i am jonathan ferro. features on the s&p 500 just about positive. the number we are looking for 195,000. >> these last three days have been as bizarre as everything i have seen between the fed press conference, andrew bailey's interview with francine lacqua. i love what michael mckee told me this morning. in the tech austerity we have seen, we are seeing freezing, not layoffs. maybe that is the distinction. >> we are seeing freezing at amazon but layoffs elsewhere. i think we are all asking that question. we can see as we look around but we are not seeing in any data. same with inflation. what is the lag time? >> one of those -- that the foul has at the fed, they have to be watching the news flow we see in the press this morning.

>> this morning -60. >> if you believe this is a yield curve that foretells the potential recession ahead, it is flashing serious red signals. how much can we see this going back to early 1980 and getting steeper and steeper in inversion in a way we have not seen so are. what does this mean about the depth? >> you can do this off the bloomberg terminal. i took a conventional moving average and here's what i can say. the twos, conversion with the twos coming up is now greater than losing average of the paul volcker double recession era. i never thought i would say that. >> let us start with the two-year. how much for that to go much higher from year -- from here? i think the most hawkish baked

on the street right now is looking for the fed to go to 5.75. how much have we priced in already? >> jay powell does not know the answer to that end is concerned that they will go further than current markets are expecting. at least that is the signal. can talk about him trying to play a risky front and back with the market but right now the market is seeing 0.02%. do we get that higher? we will see this on the cpi report which will arguably be the most important cpi report until the next one. >> is not a promo for the data. [laughter] equity futures. the s&p 500 was down more than 4.5% previously on the week. the nasdaq 100 down more than 70% -- 7% so far. >> it is the way it is down.

there is like down and then there is ugly down. >> the u.s. 10 year yield 4.1332. >> this is something that seems like a moving target but is not because it is always between 99 and 97. at least it has been for the past two weeks or so. honestly, this will be important but it is hard to know whether it is headline number. much more interested in what is underneath this. how much to average hourly earnings .2 whether people are getting more part-time jobs versus more full-time well-paying jobs? looking underneath may give a better sense of what is going on than just continuing to see 200,000 jobs being created every month. at 9:30 a.m. eastern, labor

secretary marty walsh should be joining jonathan ferro. how much they will talk about this being a good thing versus a bad thing. it is a perverse moment when job creation is letting people feel more comfortable with where we are in terms of how high the fed will go and what the fed will do. twitter is laying off about 3700 employees, half the company's workforce. this comes as you hear the anecdotal reports in tech companies of pretty significant layoffs. how drink -- how do we get a sense of how this is bleeding out the data? we did not see this yesterday and will probably not see this in the jobs report today. -- at an event hosted by brookings, exactly to your question about what we are doing right now, we are seeing the potential for how high we can go. what is the balance of risks? when do they understand perhaps

what we can hold in terms of how high the rates go? >> can we take a look at the commodity screen this morning? renewed hopes that china is about to reopen. the whole of the commodity screen on the bloomberg this morning is great. wti is close to 91. >> you can see that will migrate towards $100 a barrel, the brent crude price, not the american price. but i 100% agree. this is about pacific rim. >> we have been waiting about 10 months for this to happen. the crude is rallying. the chief economist at citibank joins us right now. what are you looking for? >> we are looking for continued

gains in employment over the rest of the year. it is a deceleration. i think there is a lot of misunderstanding about what happens. employment since the beginning of 2020 has grown 0.5% but had 50 million springs -- minus and plus. this is the coming down portion now. what really matters is businesses are cash up with demand over the past year. they were building inventories and raising production. they need employment for that. the problem is demand is slowing. as we head into the coming year, we are expecting all this policy tightening to hit and we expect to have 2 million job losses over 2023. that will not be revealed here in 2022. >> what is the trend on payrolls if you are going to have a $2 million -- a 2 million job loss.

>> i think negative statistics are next year. this is very unfortunate but policy likes the way it works. the simplest way is to think about the housing sector where i can give you the simplest way of looking at. if you think about what has happened with total construction or unfinished housing, sales have fallen 35%. it takes 6-12 months to plan a construction project and deliver. what is being deliberate is coming from a time when we had a much lower mortgage rate and higher sales pace. next year, the people working on building the houses do not have a new house to build and will have job losses and this will be extended not just in housing but marketing sales. so many things have happened with the $150 billion tilde --

buildup. you are taking a look at the economy where the production side is coming up with the demand side is getting lower because of policy. the fed recognized this in their statement that we have to realize that higher unemployment is u.s. public policy. >> we are talking about basically being up at the 30,000 foot level and we know we have to land but do not know how hard the landing will be. when it does go negative, it is the most negative since the early 1980's. does that have any correlation with the death of the downturn you expect? >> it will have some correlation. it is the rate that they will sustain. what will the federal reserve do when we have self reinforcing job declines? they are not looking at that right now. the rate of inflation is too high. the problem is the most stable

parts of inflation that they focus on, course surfaces, are a member of the index of lacking economic indicators. end up with a procyclical monetary policy that is tightening -- tightening into a recession. you take a look to what is happening with money growth going from 27% now to 2%. in the coming year, it will be negative. the fed is going to reverse the policy tightening but they are going to wait until there is a good loss in the economy. in effect, i think this job loss may lower the inflation -- the inflation rate by more than half. >> city global wealth management. it is easy to pettit when

unemployment is at 8% and inflation is at 3%. it is much harder to pivot when inflation is at 8% is unemployment is at 3%. stephen is saying when that it gets to complicated, then they will back away. the fight is not decaying they will back away at all. >> the taller. i know that you are looking in manhattan for housing this weekend. the bank rate is at a 30-year new high. usually it is seven point -- 7.x percent. >> this is part of the problem because that goes into the cpi and people's household balance sheets of what they can buy and how the pain is being felt. >> simple math.

how many bedrooms, figure out the rent and it is unimaginable what's a bed costs. >> the futures right now positive 0.6% on the s&p. trying to bounce back. payrolls coming up soon. this is bloomberg. >> keep you up-to-date with news from around the world. i am lisa mateo. the monthly jobs report is out today and the question is whether the labor market is cooling and for the fed. bloomberg says that -- added 105 thousand jobs in october and sees the job rate rising slightly to 3.6%. sober go -- growth would support that the fed can downshift month. donald trump has sent the strongest signal yet that he plans to run again in 2024. the former said that he will very probably another bid for

the white house. trump is backing in -- elon musk is suing twitter over his -- workers are suing elon musk over his twitter job cuts. they will amount to about half of twitter's workforce. germany hans in the u.k. is considering cutting the tax dividend income. this is just one of the options that rishi sunak and more are looking for. a big sell for airbus china. it has agreed to buy 140 of the european union -- of the european jets. most of these planes are a320 single i aircrafts. global news, 24 hours a day,

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

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pres. biden: this is a choice between, everybody talks about a

referendum but it is not a referendum. this is a choice between two fundamentally different versions of america. >> the president on the campaign trail yesterday evening. someone else was there as well, the former president donald trump. this is what he had to say in a rally last night. "in order to make my country safe and glorious, i would very probably do it again". that is because that's closest he has come -- that is the closest he has come to announcing he will run again. >> we will be in washington for the election. it is going to be interesting. >> tuesday and wednesday. pregame and postgame. not that it is a game. it is serious stuff. >> i want to get out front, 9:00 a.m. wednesday. we are heading out for reagan to come back north, great.

and they become new chairman, french till, a republican from arkansas becomes chairman of the financial services committee, how do their lives change? how do leading republicans lives change wednesday morning? >> they do not -- we do not know immediately. we do not know every -- we will not know every single state or county's final tally by wednesday morning. in that part, we should note that we might not have the full picture of what next year's congress will look like. the second part is nothing is going to change until next year. what you will see is a lame-duck session until the end of the year. we heard bernie sanders, the senator from vermont, talk about this yesterday. there are some items that democrats want to push through like potentially raising the

debt ceiling. this is something that the planned a slowdown with. >> that is what it has been since truman was president. it is like a religious experience. we argue about it over and over. why are we arguing about the debt ceiling? they always raise it. >> they do always raise it. it is like a perennial debate. you are right. the reason we are talking about this is because republicans are talking about they are going to use this as leverage to get entitlement cuts and the democrats are campaigning on that. >> john just whispered to me, would you ask about trump? what is it like if the former president will take another shot of being president? >> what he said last night was "very, very, very probably". those are three verys but we

also had kellyanne conway speaking at an event and said he could announce a comeback bid "soon". also was he really in iowa campaigning for grassley or was he putting it out there. putting it out there that he plans to make this announcement after the midterms? >> i love the rhetorical question. i am sure everyone is wondering and scratching their heads. this this unwittingly give the democrats a boost or the republicans something of a boost in terms of turnout and enthusiasm heading into next tuesday? >> i think the democrats are going to you -- the republicans are going to you -- use this as he is in these states. we do see midterm elections where there are election deniers on the ballot. think of kari lake who is

leading to be governor. you will see democrats point to these individuals. as biden will say, there is a critical moment in the selection. at the same time, for republicans, and lots of them will use trump's superstar celebrity status. he has a number of rallies he plans to continue doing but others want to distance themselves. it depends on who you ask. i think this puts ron desantis, most notably, in the most typical decision. >> i think he is the most unhappiest man in the states this morning. what is going on in china? >> not just chancellor shows but look at who he is bringing. the wasf and a number of heavyweight companies.

he is only there for a one-day trip. the most important thing that has come out of this meeting is g champagne says he does not -- president xi says he does not want to see nuclear warfare. i think that is a line for him to signal to president putin to not go there. >> all these conversations around china potentially reopening. look at the equity markets in china. it is absolutely a frenzy. >> i see nuance here and i think steven major was smart the other day on the urge to get it open. i go to monitoring the air travel and it appears to be loosening. >> that is fueling the fire today. it has not been confirmed as to whether the country has put together a committee to obsess

-- to assess whether they should drop "covid zero". china will penalize airports that bring virus into the country. this fuels the hopes that the rumors are true that this will happen. >> especially in tandem going back to what you said about olaf scholz going to china. in saying that china will make -- available. there seems to be a shift in reopening. these are the first meetings that president xi is having with heads of states including the one upcoming with president biden. i am not understanding the sort of paradox of saying that we recognize there are tensions and we want to move supply chains away from you. we do not want to be as reliant on you but also olaf scholz saying we do not want to coupling. i cannot square that. >> germany is the weak link in

this every time. whether russia or china, germany is the epicenter. >> germany is not alone. also not to get off the hook but every western nation might be speaking a hard line and people are wondering whether president biden is sticking a much harder line than he can follow through. certainly businesses because they are still going over there and courting president xi. >> equity futures up. of 0.7% on the s&p 500. a big day ahead. that decision is at the mercy of what happens in the labor market. the data is coming in about two hours time. this is bloomberg. ♪

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>> two hours away from the payrolls port -- report in america. you're looking at something like 195,000 for the jobs report. futures now of zero point the s&p. on the nasdaq up 0.8%.

could be on course for the worse we going all the way back to the start of the year. yields moving the other way praying higher by about 30 basis points on the front end of the two-year. up another three to 4.7423. katie greifeld is going to fill in later. >> i think that has been undersold this week. from roughly 161 to 174. >> still -60. >> iesco to go back in there has been dip one, dig two. is a greater inversion and we are back to the paul volcker years in the 1980's. on jobs day, an odd job -- an odd jobs day, we were briefed by

the chief u.s. economist of economics. i want to dovetail your sound market economics with what nick turner, our tech division, because the new tech austerity. explain jobs friday with the tech austerity we are seeing in different shades from lift app -- clickbank -- lyft, amaxon and the rest. >> we are expecting to see a shift in the labor market. we are looking at jobs data. some shifts in the economy. what we are really seeing is just not a broad-based weakening of conditions. the labor market is still very tight. demand for markets is still very tight. if you look at the job openings and the unemployed signals, they

are still very strong in terms of underlying strength of the labor market. we have seen rising claims over the last three weeks. we are watching for signals of a ship right -- a shift but right now there is nothing to suggest. deceleration is very robust into the unemployment rate is not coming off of a 50 year low. >> were economics notes always rips apart the 10 year yield and the yield curves and slopes we see. take a -61 basis point 210 spread and bring that to our job economy. how do you link those together? >> that is difficult. the signal from the yield curve is one of recession and has been a very strong signal but historically very accurate. you are not seeing the singles in the economy that we would need to see.

look at production and unemployment and income. we are not keeping up with inflation. we wrestle rising an an -- at an elevated place. the signals that we would expect to see after this much of a tightening from the fed is not there right now. that does not mean it will not happen. recession is not part of the base case right now. we do think the economy consumer has positive momentum. deceleration is the name of the game so that is going to happen but we are not sure that will tip into negative. >> we just got through about 87% of the -- for the marketplace basis. have you seen some companies pull back on investments at a time when investors are certainly pulling back on material risk-taking since they are earning more right now in benchmark two-year yield's then they are with risky earnings

assets with the earnings yields basically flat or close to it? >> that is where there is a disconnect. everything we would expect to see in terms of profits and where investment is going to go is also not appearing. we saw business investment improve in the third quarter. a lot of uncertainty surrounding this going forward. we would expect there would be an adjustment. there are a lot of crosscurrents but there is really no clear -- if you look at company guidance, you do see that there are some -- a lot of headwinds going forward. i do think we are going to see an adjustment over the next few months and may going into 2023. >> says this data matter or is it so backward looking -- does

this data matter or is it so backward looking that it cannot telecine? >> the data batters but we do want to -- the data does matter it cannot tells what we are looking for. the data matters because the fed is taking action and want to see softening that is really not happening. you are right that if we look historically, you can go from positive to negative. as you move into a recession, the positive numbers to negative very quickly. there is no sign right now that it will happen. >> long ago and far away we hunger every week on the challenger statistics. are they still valid? is that something you and carl still look at? >> every bit of information is valid. we do look at what we are getting in terms of data from every avenue. it is just there has been a

disconnect. we hear about certain sectors and like you brought up earlier, you talk about tech sector layoffs that has not translated into a broad-based weakening of the labor market. we are still looking. there are -- the fundamentals are still very positive. there is still positive momentum in the labor market. demand is for -- is still very strong. it is very hard to say where is this going to turn negative? we just do not see that happening right now. probably in 2023, that is when we are going to see the adjustment. reducing the unemployment rate going up and we think it will top out at 5%. again, no indication right now that this adjustment is happening. what's one final question -- >> one final question.

i am looking at the inverted real wage. the inter-grand, the duration and extent of the negative real wage is tangible. we have an election coming up tuesday. is that really what the whole inflation is about -- whole election is about? after inflation, everybody is flat on their back? >> we have been talking about this for a wild. consumers are suffering, especially people at the lower end of the wage spectrum. we have the dynamics and disposable income is turning positive. we still have fair research showing there is a lot of savings on household machines. yes, people are paying more for rent and food and energy. but at the end of the day, i do not think consumers are really seeing the type of stress that will lead the economy into

recession right now. but in terms of elections, of course that matters and will probably be a big factor. >> let's to build a couple of these themes and pick out one. we can see the pain in tech right now. amazon freezing. lyft with layoffs. we have to ask ourselves is this a tech problem because that is where the excess has been for years? is that going to stay narrow? >> we do not know. everybody has an opinion but the answer of what jay powell would say is we have to wait for the data. >> that is because most people assume we have not had long enough time in this recovery because they count two years, the last 10 years before the pandemic to build up the excess and lead to a deep, prolonged

recession. that is the argument at the moment. >> and this has to deal with -- in the housing sector. it is not the same 2007 feel. i was just reading a story about the housing market and how quickly it is decelerating. if you start to get a much slower pace of home purchases, what is that due to the broader economy? is one of the key jobs for building, home goods and all these things that have been strong players in the post-pandemic era. how many sectors have been grown into a bigger state and will have to shrink? >> we are not seeing this show up in a major way yet. the fed is emboldened by these major indicators. >> what we saw from bailey yesterday was stunning. we are forgetting a bigger weekend. i was on the edge there.

ours downward. the rowdy crowd at the tots into the end zone -- >> you call it the end zone. [laughter] >> explain how tight the tots is before the end so. >> cannot engage my chara? i have to do this every day. the end zone. the former micromanager used to complain that the fans in the stadium were just sitting there eating sandwiches. the problem with the new stadiums and modern-day football in england as they have priced out the traditional fan. it is so expensive now. i was speaking to bahama the other day about the qpi --

mohammed the other day about the qpi. thousands and thousands. can you imagine trying to take your kid there where they cannot see the game? >> i think what he is saying is be need to go see real soccer. how about the three of us go? >> that would be an experience. the day after christmas, boxing day, i remember going to watch westbrook versus castle united. freezing cold. but the newcastle fans had shirts off. shirts off. [laughter] futures up 0.8%. a jobs report around the corner. ♪ >> keep you up-to-date with news from around the world. with the first word, i am lisa mateo. the u.s. job report is expected

to show the labor market is still tight. a bloomberg survey shows that employers added 195,000 jobs in october. the jobless rate has been estimated to increase 0.3%. oprah endorsed john fetterman in the tight senate race. mehmet oz, his opponent, was one of oprah's death in china -- one of over his colleagues. in china, they are possibly stopping their covid zero policy. right now, carriers are banned for specific routes into china for up to two weeks depending on how many covid positive passengers they carry. global news, 24 hours a day, on-air and on "bloomberg quicktake", powered by more than 2700 different journalists and analysts in over 120 countries.

i am lisa mateo. this is bloomberg. ♪

>> from the u.s.'s point of view, it is about tightening conditions in the u.s. economy is so doing well. they will still be repeating the pivot rate. >> one of the very best. the market looks like this going into payrolls. we are higher by zero point 8% on the s&p 500. the jobs report is around the corner. it :00 a.m. eastern time. yields are lower by not even a basis point on a 10 year. 90 -- 0.97 89.

up 0.4%. the reopening of china news continues to rally. tons of engagement a moment ago. a correction. it was the former united captain who coined the term the prawn sandwich brigade. they were less concerned with your end zone comment and more concerned with the fact i got that wrong. >> that is because they know smart, adult, pro football means soccer idiot. that is how it works. >> they are like libraries sometimes at those stadiums. >> same with hockey. what we are going to do is what "bloomberg surveillance" does let -- does best. love to talk to people who have done wrong because we can study why they have gone wrong.

for example the great hurtado at deutsche bank. anna wong, chief u.s. economist here at bloomberg out of the chicago shop. she has the economic call of the year. namura is out. >> it is at five .50 to 5.75. anna's going to walk you through this now. >> anna, help us with the 5% terminal rate. does the financial world fall apart? >> financial worlds react to expectations with rates. pretty much 5% is priced in right now in nothing -- now it's nothing is breaking. the mortgage rate is already pricing in that path.

it is clear that housing demand is falling sharply but that is the kind of adjustment that is needed, given how priced it is. i think the population in the lower half of an -- population in the lower half of income for cheering right now. >> in you have two dogs. one is named long and the other variable. everyone is quoting long invariable. forget about that. what are the social consequences on this job stay if we have rates verge and real rates revert back to what i knew in my youth. what happens socially? >> i think socially what's people care about will be revealed in the midterm elections that we will see next week. what we are seeing in america is red versus blue states. in red states, people feel very

passionate about the issue of inflation and that is partly because there is a thing called misery and -- misery and decks which is the sum of the unemployment rate and inflation. that has historically tracked the midterm elections outcome pretty well. that would suggest that the misery increase in red states under the biden administration has been bigger than the blue states. that's kind of underpins while -- why there are so many angry people in the red states. >> there is nothing to angry people quite like losing their jobs and that has not happened to the rate people are predicting. some are arguing that is by terms of design in the rate hikes we are seeing. is there concerns that there will not be as many layoffs as people were seeing because people were burned during the pandemic with not being able to bring people back? >> i think there is so

adjustment in the labor market right now. right now we are not seeing many adjustments to bring inflation down from the fed perspective. the reason why is because firms are hoarding labor and they do not want to go back to a world where they cannot find a person to manned the counter. the fed cannot have it both ways. you cannot have no unemployment and also inflation coming down. that is because when output does slow, we are seeing real gdp growth lingering around zero-0.5% for the next few quarters or so. output declines and you do not lay off people, that means productivity is also falling. if productivity is falling, either the firms have to lay off people which gets you back to

the beginning of that circle or firms have to pass on the higher unit labor costs to final prices so you have inflation. i do not see how you can have both low inflation and no firing happening. >> so far, we have really seen the layoffs isolated somewhat to the tech names in terms of how big they have been. other industries are you watching and you think are potentially vulnerable to these types of announced layoffs in the near term? >> we looked at the sectors which are seeing the most significant declines in job openings. we did see it is isolated to sectors which had hired robustly during the pandemic. in sectors like transportation and warehousing, construction and wall street jobs and tech jobs. if i had to tally them up, i think the sectors that are vulnerable to sharper layoffs

would account for about 11% of total employment. that is not a small number but not a massive number. >> give us an estimate here. if we get in anna wong world, what is the unemployment rate? >> we think ultimately the unemployment will rise to 4.9% in 2024. >> that is a numbers talk. >> that is great. 4.9%. others have gone higher. >> you cannot fire what you could not hire. how many times have we talked about that? >> how long does that last for? at what point does the economy stick with that? >> every time we do not see these kinds of cracks. >> we are talking about the yield curve that relates to this idea of corporate investment. if you are getting the most

yield on a two-year treasury versus a 10-year treasury that you have ever seen, what does that make you want to do with your money? want to stuff it in cash and that is what people are doing. >> i could not agree more. -60. >> historically, that is a huge deal. stuff in in cash. how can you insult that? >> i am not. i am saying everybody is following your trend. you are very avant-garde. >> let's get to someone who nailed it. global news, 24 hours a day, on-air and on "bloomberg quicktake", powered by more than 2700 different journalists and analysts in over 120 countries. -- this is bloomberg. ♪

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>> there was just a lot more momentum in the u.s. economy. >> there is no obligation for the fed. >> the fed is focused on the lag effect between policy tightening and actual economic impact. >> for economies fighting inflation, a weak currency is a problem. >> it is confusing not only for the markets but generally, globally for central banks. announcer: this is "bloomberg surveillance" with