>> the economy is not responding to the fed tightening, so they have a lot more work to do. >> after this much tightening from the fed. >> you could get to a terminal rate that is closer to six or seven if inflation does not abate. >> we have not seen the fed raise rates so rapidly before. we haven't had the coronavirus economy and we haven't had inflation like this for 40 years. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: good morning good morning. this is bloomberg surveillance.

alongside tom keene and lisa abramowicz, i'm jonathan ferro. amazing that election central is here in new york. we have the president campaigning in new york, saying he won by more than 20 points in 2020. jonathan: -- tom: all of the tensions of this election are what we cover every day and i'm going to go right to joe biden's worst nightmare. do you see $100 brent crude in the vicinity of tomorrow or wednesday? jonathan: did he say no more drilling yesterday evening? tom: i missed that. jonathan: on the one hand he wants to tell progressives know more drilling but he also wants to tell them the oil and gas prices are where they are because the oil companies won't drill. make that happen for me. lisa: there's been story after story about how joe biden's gaffes really directed where he

is and the spratt -- and the spats he created with joe manchin about coal production. it is a conflict at moma at a time when natural gas and crude products are also very much the focus despite the goal for longer-term neutrality. jonathan: you know what he talked about last week? cop in egypt. lisa: right now, how do you connect the idea of meeting fossil fuels now with the idea of removing some of the fossil fuel emissions later on? it is impossible to square that with any kind of blunt message and right now we know nuance does not sell. jonathan: big rally to close out the week last week. can the bear market rally continue? mike wilson of morgan stanley has a ton to say about that. tom: we have to go right to cpi and the question i have, are we looking at rents sticky, a

reaffirmation of oil? i'm on the bright $100 watch. that is a gallon of gas. jonathan: do you want the results from the election or cpi upfront? if i could give it to you right now. tom: i would take the cpi statistic upfront, but it will be an eventful election and based on the punditry i see in many of these guests in washington, to me the basic idea is how much -- four years international relations at -- jonathan: are you still upset by the game over the weekend? tom: i'm not upset. in hockey, there are people who go directly to the net. that first goal was textbook. jonathan: bramo, save him. he is very upset. lisa: before we get into the how

muchedness, we are seeing because of cpi and inflation, the idea of less fiscal spending being positive for stocks. people are expecting a rally because of the prospect of less fiscal spending. at 9:00 we will get the european view of this issue. how do you spend into an inflationary outlook? i and its ministers are meeting in brussels to talk about a deteriorating economy and what they could do to support that. the cpi climbs to 10.7% in the euro zone. we will get further reads around the world like this week in terms of -- around the world later this week in terms of cpi and how far these central banks have to go and how little fiscal spending can be put into place. the boston fed president is going to join at 3:00 p.m. at a

panel discussion. the richmond fed president will be talking at 6:00 p.m. what can they say at a time when they are not making any progress? -- was talking in singapore about how they have not made any progress on the employment front. we are talking about earnings, lift earnings, the latest an a slew of tech companies that has announced layoffs and i'm curious about how this plays out. whether this is a broader kind of cutback. lyft cutting jobs, meta-overnight saying that will cut thousands of jobs. isn't this just a specific area that built up over the pandemic having to now reset expectations? jonathan: that is where the excess was and where we need to unwind some of the excess. apple down 10 eighths of 1%. the lockdowns in china continue.

we came out with an additional story as well saying these cuts aren't just about available production. this is about demand. tom: what i noticed, and i bought two of these in the last five days, i would point out is the polarity between the fancy expensive phones and the cheaper phones aren't moving. jonathan: what did you buy? tom: i bought a purple more fancy one. lisa: this is ridiculous. tom: i was thunderstruck at the quality of the photos. jonathan: is the camera almost as good as the samsung camera? tom: i don't know. jonathan: i've heard the samsung camera is really good. lisa: he is just trying to trick people this morning. tom: this ecosystem they have,

as dan ives -- the bottom line is you have to wait weeks or months to get the fancy iphone. jonathan: then labeler joins us now, global market strategist. let's call it a bear market rally. i don't know if you agree with that terminology but where does the catalyst come from? ben: this is sort of our fifth bear market rally by my count. what starts the next bear market is the fed started to cut interest rates. this process has sort of begun. the necessary first step is starting to hike earnings and we are getting closer to that. sentiment is very depressed and we are moving into the -- and there are a bunch of wildcards

out there with the risk on the upside. china is the obvious one. put all that together and there is enough to say that we are building a bottom here. the next big move is up. i think we will bounce around a bit before we have that definitive sustainable beginning of the next bull market. tom: there is certain volatility and acceleration, but looking into 2023 using the greek letters alpha and beta, is this going to be an individual stockpicking market or is it an index fund market? ben: alpha for the first half beta for the second half. the closer we get to the top of the fed cycle, the more we start looking forward to rates being cut and that takes pressure off valuations. it is very much going to be the opposite of this year where

earnings held up and valuations actually crushed. i think earnings are going to stay under pressure. we are going to see the benefits of diversification a lot more. i think bonds and equities get crushed together. i think it is all changed and this year was very different and next year is going to be very different again so investors will have to stay on their feet. lisa: are you basically saying that the next year or so, we go back to what we knew over the past decade or so, a low inflation rate cutting environment that is a tailwind for all assets? ben: yes-ish. the last decade was extreme both in the level of forces and interest rates. i don't think we are potentially ever going back to the degrees we saw over the last decade or

so. growth is going to get a bid, tech is going to get a bid but for the first half it remains very much about value and defensive assets. jonathan: wonderful to hear from you, ben laidler of etoro. tk markets under pressure. let's talk about how they are adapting. tom: that is the first path and we will see much more. gina martin adams is heated. every cfo is going to lean owner -- lean over to the ceo and say this is the shortest path to stability. jonathan: i think it is the chip industry. think about how quickly that story has moved. it has flipped from we can't get enough of the stuff to we need to start cutting. that is quite a change.

for a lot of people looking at the economy, they are thinking about how much more quickly can inflation come down. things can flip pretty quickly. lisa: and it is also the retail sector more broadly when they have produced a lot of clothes but it is the same story with cutting costs. at what point do you still see services continue to accelerate, people paying more for that in this bifurcated market where you see pockets of inflation still accelerating. jonathan: seven handle is what we are looking for. lisa: is that a good thing? if we end the year at 7.8%, is that a victory considering where we thought we would be? tom: i wrote a banner and did not use it. 7.9% is very different from 8.1%. they're looking at inflation is coming down, don't tell rents. jonathan: we will catch up with

the man from market built asset management. futures higher. this is bloomberg. lisa: keeping you up-to-date with news from around the world, i am lisa mateo. according to the wall street journal, a peace settlement wasn't a goal of the discussions. the biden administration was said to have warned the kremlin against using nuclear weapons. in egypt, dented nations climate change talks got underway with a deal discussing reparations. the idea is that rich nations can help pay for damages caused by global warming elsewhere. industrialized nations have continually blocked that. china exports unexpected lee fell for the first time in more than two years. overseas consumers bought less

while demand in china was hurt by covid zero controls and a housing slump. brazilian exports had been a major component of china's recovery. twitter is asking dozens of employees they laid off last week to please come back. elon musk cut close to 3700 employees last week to cut costs. bloomberg has learned some were laid off by mistake. others were let go before management realized they could build new features that must once. apples cutback is dupre merrily to soccer demand for the iphone 14 and 14 plus. apple and its suppliers aim to make 87 million devices or fewer. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg. ♪

>> democracy is literally on the ballot. i've been making the case since i ran. more than 300 republican candidates for state, local and federal office who are alexion

deniers. these deniers are not only trying to deny your right to vote, they are trying to deny your right to have your vote counted. jonathan: the president of the united states, a busy weekend campaigning for him. good morning to you all. price action to kick off a busy trading week. equity futures look like this, up a half of 1%, adding to gains from friday. we are positive 2/10 of 1%. crude going nowhere but back in the 90's. tom: brent crude, $90. not the highs of friday. we will go to the person we will lean on tomorrow in washington and wednesday morning as we pick up the debris and that is annmarie hordern.

i look at my reading over the weekend and the thundering silence i noted was not distrust in the polls but just what is the value of the polls? you've talked to experts on both sides of the aisle. do the polls speak the truth? annmarie: they are confusing because when you look at the polls in terms of issues, top of the issue is inflation and economy and that is what people are going out to vote on but at the same time when you ask them who do you trust the economy and things like crime or in the hands of, it is republicans but over the weekend there is an abc washington post poll that says it is pretty much in. an nbc poll says democrats are now catching up to republicans in terms of enthusiasm of voters wanting to go out but if voters are focusing on the economy and

inflation, other polls show they should be leaning republican so they are quite confusing. i think by and large, everyone is expecting a red ripple or wave for the house. it is going to come down to the senate to see how this shakes out for next year. tom: how do we determine turnout election day or do we just have to wait until wednesday morning? annmarie: we already know what some of the turnout is. 40 billion people have already voted. in georgia you are seeing record voter turnout. i was looking at this data looking at pennsylvania which already beat the last midterms for ages 18-29. this is a key group the democrats are trying to harness, to make sure these individuals, a lot of them are young and likely lean progressive. look at the president last night in new york. and pennsylvania these individuals are overly going out and voting. lisa: we were talking about new

york earlier and jon brought up what does it say in new york when you have president biden campaigning when you have such an overwhelming democratic field in this state. how much is this a single issue election? in new york, perhaps crime and in other areas, georgia and rosary, perhaps abortion? annmarie: you have to look at locally what is driving people. in new york it has been crime and not just president biden. you had former president bill clinton and kamala harris. that has not -- she has not been a lot of campaigning with individuals, also out on the stage with governor hogle. this speaks volumes that the sunday evening before the midterm elections the president of the united states is in bronxville, trying to make sure they can hold on to the

governorship in new york. this is not going to change the calculus of this administration in washington, d.c. or congress but what kind of tone does this set for the democratic party going into 2024? i'm also looking the mayoral race in los angeles. mr. caruso is gaining a little bit of advantage. what kind of tone is that setting? that is what people are most interested in. lisa: it is kind of amazing that we are not talking about the midterms at all. we are talking about whatever happens in 2024. former president trump saying he will probably announce in the next week or so. people wondering what will joe biden do? what is your sense on that? annmarie: the former president, trump said at a rally this weekend, stay tuned for his rally this evening in ohio. maybe even -- maybe he will hint even more at his 2024 bid. the biting camp says they are

running. -- the biden camp says they are running. their are lots of questions about whether or not he will end up doing the next four years but many maintain that if president biden will run, if president trump ends up being the nominee, a lot can happen in the next two years. look at what some of the big wall street money is going, ron desantis. ken griffin pouring money into that campaign. jonathan: thank you, annmarie. looking forward to that coverage. it comes down to whether we have a outcome that loosens or tightens the pursestrings. in the near term if you get one that tightens the pursestrings, i think people see that a somewhat lush. is declan to be bearish 12 months from now -- is that going to be bearish 12 months from now? lisa: it gives you a sense of

how much full-circle we have come. that less fiscal support is bullish for markets even though for the past, more fiscal support was bare were -- was bullish. this is currently an inflation game and that is going to dictate gains into your point, for how long and wind is the game plan change. jonathan: breaking news about two minutes ago? tom: i'm talking to travel right now. jonathan: knockout stages in the middle of february because the world cup is disrupting the whole thing. my club against tom's in the middle of february. tom: for the first time in 12 years. jonathan: it has been a while. tom: this is not premier league. this is the all european league. ac milan is on their game this year. jonathan: better than they were

five years ago. tom: i just want to be in milan. we have an intern over here. can you go be sure we can get the american airlines to milan? you will go through london if we have to. lisa: he is going to be eating pie with a fork and knife. jonathan: they are not doing pies in milan. lisa: maybe when he gets to london. jonathan: we will make this happen. this is bloomberg. ♪

jonathan: let's get the trading week started. equity futures up on the s&p. the nasdaq up by 6/10 of 1%. the russell positive by 7/10 of 1%. the range on the two-year last week, the high was close to 480. below was close to 440. right now, somewhere in between. 4.6818 on the two-year.

in the fx market, a quick look at the euro. people in that move higher on the week, the dollar index did not give me much last week at all. tom: it is an important insight and what is interesting is how yen has strengthened. i do agree with the u.s. yield shift up. we did not see it in further dollar strength. jonathan: a lot of weakness out on friday post payrolls. we are trying to work out what that payroll was all about. tom: it is a time of change as we readjust to the end of the year and after the election. joining us now is somebody with terrific perspective on this, alan ruskin, chief international strategist at deutsche bank. i want to go to the path from ultra accommodative stanley fisher to accommodative to unmeasurable neutrality to what is called super restrictive which is basically disinflation,

even with oil and rent. how close are we to restrictive or super restrictive? alan: great question. i think you can't look at this just in terms of monetary policy. you have to look at fiscal policy as well and the most underrated element is that fiscal policy from 2021 was the most stimulus we've ever had. -- five times what a large stimulus is and that is still reverberating. that is showing up in excess savings and that is buffering the consumer. that is creating the underlying resilience to me that means interest rates can be much higher than they would otherwise be in the interest rates look like they are much tighter than they are. tom: a theme of your colleague

is that there will be fiscal stimulus, clearly in europe to build europe after a horrific -- do you see fiscal leveling, fiscal stimulus or maybe even some form of drop down in fiscal spending? alan: a lot is going to hinge on tuesday and i think the anticipation is that fiscal policy is going to be a lot tighter going forward. the question again is whatever going to see in terms of frontloading, and terms of the debt ceiling and how much that will impose but i think the anticipation will be that we will see tightening but i again want to emphasize the fact that the fiscal stimulus from 2020 and 2021 is still going to act as a buffer for 2023 and 2024, so still going to be substandard

and i am not that worried about the tightening on the fiscal side. lisa: a very strange confluence of bad news is good news and we can put fiscal spending in. it is good when we get less fiscal spending because it means bond yields will go down but at one point does that run out -- at what point does that run out? that is negative broadly for the dollar and for risk assets. alan: when you look at cost patterns whereby we've had a democrat president with a divided congress, you have seen as you might expect that fiscal deficits tend to go down and you see bond yields well supported but you also see equities that tend to underperform and you see underlying economy, the gdp numbers tend to be weaker. it does tend to add to underlying weakness and that good news for the bond market is

only going to filter through to some extent as far as the economy is concerned. i don't think it is going to be sufficient to start a recession by the end of 2023. lisa: we had ben laidler on earlier in the show and he thought there would be a big move up in risk assets because they will not be a cutting of interest rates and we will not go back to the same extent but a similar playbook to one we have become accustomed to. is that something people can count on the next 12 months or even 18 months even if it does not seem like it is on the horizon now? alan: that is very optimistic. we are trying to establish all the things that powell highlighted like where is the peak and what is the shape of the rate cycle and increasingly that seems to drift up at a 5% handle and the skew is still to the top side of that. we are thinking in terms of

shape and people thought that quicker rates would come down and now increasingly there is a feeling that rates won't come down quickly, that is more like an inverted l at the top of the cycle, so to me, none of that is optimistic from a growth cycle standpoint. tom: if we moved to $100 brent again, is it the same? alan: you've always got to assess what the overall backdrop -- the macro backdrop is. it would be upsetting from a stagflation standpoint if we turn it to see oil prices move in a so-called wrong direction from a stagflation standpoint. i think falling on a weakening economy, one would argue there

could be even more negative effects than the prior few quarters. tom: let's call this econ 101, i believe there are 14 core cpi measurements in each country. is there a value to looking at headline inflation or do each of us have to find a core series we are comfortable with? alan: i think or is seen as helpful in terms of telling you what the underlying picture was, where the natural gravitation would be, over a 12 month period when food and energy prices work their way out but if you are asking questions about what is inflation doing for the average man on the street, then skip the core, you have to focus on the total inflation and it would be a travesty to start removing food and energy from those kinds of measures but i think core for

the economists, say 12 months out is still reasonable and you have to search country by country. lisa: when you look country to country, we've been talking a lot about the u.s. and the fiscal spending and how we will see the dollar progress. at what point does europe become attractive considering how much it sold off but also considering it aces a much bleaker picture. alan: you had somewhat optimistic mentions of the u.s. touching base with the russians which is going to egg people to think in terms of some sort of ukraine peace deal eventually, that is obviously an optimistic view of things and that is going to be crucial in terms of how you think about europe going forward. that being said, i think there is some built-in resilience we are sorting to see from the economy.

you are seeing an ability to navigate them of the energy shocks. it is oil pessimism but you will still have to wait for the clinical signal before there is a real buying opportunity. jonathan: alan ruskin of deutsche bank. is -- is china reopening? we had a week of rumors last week. a bit of scenario analysis came from goldman over the weekend as well. if you drop covid zero and deliver a full reopening, they're looking at a move of 20% on chinese equities. china --- tom: dear i say 6%? it is nonlinear and every single point of gdp, they have to look at what makes that equity pop. jonathan: bramo, you and i have

had this conversation. what are you looking for? tom: i'm looking for flights to milan. jonathan: you keep looking and tell me what you find. lisa we are trying to work out whether it is bullish, china reopening. based on just a simple equation. if it reopens the supply side of things, great but it'd jex -- but it injects -- what does nash where does that leave us? lisa: the apple story highlights this. there is not certainty about why they are reducing production. they are saying it is because of covid restrictions, and that they are concerned and feeling that there are some fissures in terms of employment pictures. other people including bloomberg report that the demand-side is cooling. at what point is the supply-side response going to be too late when you already have demand cooling-off? jonathan: i think we are all trying to work that out.

there is this universal consensus in the markets right now that if we get divided government, it is good because it restricts our ability to deliver a big fiscal package to help an economy in a downturn. maybe that is true in the short-term but i don't know about the longer-term. if you end up in a situation we don't have that countercyclical school buffer at a time when the economy is rolling over and the fed is committed to keeping interest rates at 5% or who knows what, will we still view it in the same way? lisa: alan ruskin pointed to the greater issue that the effects are great for fiscal stimulus as well. we will still see those effects for 2023 and 2024. it is after that that the real entrenched pain will happen. jonathan: did you get prices? tom: working on it. the seats are going like hotcakes. jonathan: a yellow card over the

weekend and he scored late in the game and he took his shirt off. when you take your jersey off, you get another yellow card. people believe he deliver early -- he deliberately got himself sent off so he could be fresh for the world cup. tom: that is fun though. he is like the real deal. jonathan: this is bloomberg. lisa: keeping you up-to-date with news from around the world, i am lisa mateo. cranes president wants iran to be punished for helping russia. he says if it wasn't for iran supplying russian weapons, we would quote, be closer to peace. both ukraine and the u.s. say russia is using iranian drones. the head of the international monetary fund says global inflation may its high point. >> it is very possible that we

are peaking. we see central blanks very united -- central banks very united and rightly so. if we don't succeed, it will be anger. lisa: she also said it would be a struggle to bring consumer price gains down. philip morris international will go ahead with a $16 billion takeover of swedish match. the move received support from enough shareholders including the largest one. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg. ♪

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>> this is going to be a wake-up call to president biden and i hope he answers it because what has happened over the last two years has caused a lot of problems in america. i hope president biden sees what americans are going to say to him on tuesday which is we are not happy and we need a different agenda. jonathan: governor glenn youngkin of virginia speaking on abc over the weekend. good morning to you, just up 6/10 of 1% on the s&p 500. yields higher through last week. euro-dollar, 0.9981.

the question is how long will he have to wait to get the results? jonathan: we will be in washington tuesday and wednesday and we will be there through the month if we have any different races. not just one or two races. it is like five or six. jonathan: it depends on how much georgia is going to matter but it looks like it is going to a runoff. tom: axios out with an article on gerrymandering. i believe they call it dumb-mandering, where some of it has not worked out. we begin our coverage with wendy schiller, director of the taubman center for politics at brown university. professor schiller, i want you to address the midterm messaging that has led us in the last 48 hours to indeterminate polling. give us the messaging dynamic,

red and blue versus the polling shock that we are going nowhere. prof. schiller: what is interesting is a very late shift by the democrats to the economy and also attacking republicans on social security and medicare. the problem with that strategy is many people over the age of 65 already voted. that is the biggest bulk of people who vote by mail and also the age of 41 to 65, a lot of that early voting is coming from them. it is a little bit too late i think and they misplayed the abortion issue by overemphasizing nationally and not being strategic. we have a case in rhode island where they put to any democrats in one district and left the other district vulnerable and now we have the potential for a republican to be elected in rhode island. on the one hand, democrats have

a lot of losses in the house in 2020, so the damage might be mitigated. it won't necessarily look like 2011 or 1995. tom: where are we on the tipping point where the pre-voting becomes more important than the tuesday voting? prof. schiller: places like pennsylvania, they start counting tuesday morning. you may not have that kind of blue wave, red wave thing going on. it may take a long time. there are 600,000 early votes by mail and they start counting by tuesday. ohio accepts mail-in ballots for another 10 days so if it is really tight in some of these states, it could be a while before we know the answers. midterm elections are about a referendum on the party in power, most of the time that party loses seats. when you have such division, you will switch control of chambers a lot more frequently. 20 or 30 years ago we did not

have as much sweat was harder to flip control but it is typical for the party in the white house to lose seats in the midterm election. lisa: is this a referendum on the administration or a larger effort -- larger referendum? an axios story talked about how eating democrat voices are seeing the party as too extreme and that this is a big clarion call for a re-think in some of the messaging more broadly. is -- do you agree that is the conclusion if democrats face severe losses this week? prof. schiller: it is so much more complicated and i would be cautious of over interpreting the results of this election. people are concerned about inflation. it is still hard to get a new car. there are inflation markups. people feel it every day. this could just be a big example of bad campaigning by the democrat party. they had tons of money. did they not and -- they did not emphasize what they should have emphasized.

if we have -- we already have more early voting than 2018. we don't even know the full extent. if we have really big turnout and you say democracy is dying, that is a conflicting message again. the democrats have to be cautious, everybody has to be cautious about interpreting the results of this election but it is true the democrats did a lot for a lot of the people who are not voting for the democratic party in november. where is that mismatch the most acute and how do they have to localize the messaging? lisa: especially when it comes to crime and i say this living in new york city. we have seen this become a huge campaign issue that makes this highly blue state suddenly on the ballot when it comes to the governor race. what is your interpretation of that? i understand there are single messages but is this just a messaging issue or a policy issue? prof. schiller: in terms of crime, the irony for the democrats is that part of the violent nature of crime is that

more people have guns. it is just easier to get guns and that is due to republicans and nra opposition to gun legislation. democrats lost that message entirely and people want to be safe when they go into a supermarket or a movie theater or the subway or wherever they are and it is typical of republicans taking advantage of that in electoral terms and there is also a racial coded message in focusing on crime in some areas, so the pushback by the democrats against that messaging has not been the right mix of messaging about security versus being cautious on using racist or stereotypical tropes on crime stop the democrats have some work to do on messaging and they also have to figure out who's going to run the party. they have people who are in their 70's and 80's and they have a fairly old bench and republicans have a fairly younger bench with the exception of donald trump. you have the governor of virginia, relatively young guy.

the democrats, who are their spokespeople and what age group are they picking from? that is a big re-think for them and they better do it fast. jonathan: thank you, wendy schiller of brown university. we are talking about consequences, thinking about the fiscal policy consequences. let's talk about foreign policy. the one area of agreement in d.c., china. xi ching paying -- xi jinping is planning a visit to saudi arabia before the end of the year. tom what do you make of that? tom: i think -- it is not a united states in the vacuum and often there are different definitions of isolationism. jonathan: you mentioned the war. we have to think about whether support will be to support ukraine, particularly if we get

a divided government in d.c.. lisa: you have an increasing push to remove support because why are we helping when we need help at home given the price rises, and especially if you do see a softening economy. china heading to saudi arabia is interesting. jonathan: isn't it? lisa: how much is that opening up from covid zero? jonathan: it gets the rumor mill going. lisa: fascinating. jonathan: futures up 6/10 of 1% on the s&p. a big week ahead. this is bloomberg. ♪

>> the economy is not responding to the fed's tightening, so they have got a lot more work to do. >> signals we would expect to see after this much tightening from the fed, they are just not there right now. >> you could get a terminal rate if inflation does not abate. >> reverse policy tightening. >> have not seen the fed raise rates so rapidly before. we have not had coronavirus economy or inflation like this for over 40 year