>> my base case has the u.s. economy slowing with the recession. >> we think at a minimum fed funds get to 5%. >> we can decelerate from 50 to 25. >> there is no fed member that wants to go down in history as using the fight on inflation. >> we might have a scenario where we could have a soft landing because we are seeing inflation beginning to come down. jonathan: here we go again. live from new york city, for our

audience worldwide, good morning, good morning. this is "bloomberg surveillance, live on tv and radio. i am jonathan ferro alongside this abramowitz. happening now, a meeting between the president of the united states and president xi jinping. lisa: is this a xi jinping that is more conciliatory to creating a better relationship with u.s. overnight? jonathan: looking for a news conference that should commence it -- at 8:30. the outlook for 2023 is so difficult to publish anything right now. lisa: andrew scheer said it is the year of yields and he was the brave one who pushed the button. i took off and the rally marketed.

how much are we talking about peak dollar? we also saw that from deutsche bank talking about peak dollar in ongoing yield and the search for yield and people going into some of the bonds most beaten up this year. jonathan: 3900 is basically where we are right now and looking for a huge downside in the first quarter for the year ahead and to rally aggressively into year end. from point-to-point, year end 2020 32 year end we are now is looking for a flat mark on the s&p. lisa: what does that mean with tech leadership, small caps? how much do small caps keep getting a boost? how much do you see a rotation into energy given how much outperformance to date? these are the? that is the calm of a stasis. jonathan: a bear market rally, can it continue. the market down .4%, coming off

the biggest gains on the s&p since june. the nasdaq 100, the biggest week of gains going back to november 2020. yields higher by seven basis points. the 10 year 3.8818. lisa: i am sure you read the same note i did about peak dollar. how much do you actually think there was credence behind the moves, given the bond market was closed on friday and lack of liquidity in markets that there has been so much chop? do you buy this idea that we saw some peeking and there is anything substantive around the weakening? jonathan: it comes down to cpi. downside surprise is what sparked it. you ask yourself, do we still following -- to bestow fall? how much damage do we do in the

economy? those of the questions you have to ask to come to any conclusions. i don't have the answers. we booked the good guests for that. lisa: a lot of people have not come with outlooks and perhaps no one has that cristobal except for mike wilson. -- crystal ball except for mike wilson. how much do we get a sense of what the red lines are with how much xi jinping is trying to lure american business back. there was an article over the weekend how banks were retrenching from china quietly and also seeing how much blackrock is closing. we are talking to peggy collins for a discussion what we heard from chris waller. tonight, the fed president john williams having a discussion at

the near economic club. this evening, the bloomberg new economy forum picking -- kicking off in singapore. harry kissinger and catherine tai the first speakers. jonathan: mike wolf talking about the volatile path after testing something like three k in the first quarter. can you walk us through where you see the earning risk in the corporate economy for america and where you expect it to land? lori: i think the ultimate low in october because three to six more you get the final earnings is where it typically bottoms and challenge periods. we are at 2.08.

we have moderate inflation bake in and it doesn't help margins. margins are more a function of wages and productivity and pricing. we really have a ratcheting down of earnings and flattish to down and we saw last year on the s&p 500. i think -- honestly i don't think we have a good understanding of how much moderating inflation will hurt earnings because of the revenues. lisa: how much will we see the leadership change in a sustainable way over the next year? lori: this is probably one of the bigger challenges to figure out for next year. typically when you are in a sluggish economic growth

backdrop, growth stocks outperform and that would point you to technology, consumer discretionary, communications. economists have been talking about when you get out of the short shell of eight recession, we will see sluggish gdp for a while. i would be very selective in looking at some of those parts of the market. we like tech but we don't like the others. if you think about value oriented sectors, some people are making a case for energy and industrials and seeing outperformance in sectors like that over the past month or so. energy has been doing great but now we are seeing that broaden out. state balanced, have growth and have value exposure that will work better in the near term. try to be more selective as opposed to leaning into one big bucket for the longer-term. lisa: you brought up how you are leading into big tech

potentially and this is one of the big questions with the tremendous rally. does it have legs? are you in the camp that it can? lori: i would say i probably share wilson's view that we are going to be volatile for a while. 2022 are trading on the 2002 path. if you look at what happened back then, we had a january peak, a summer low, a big october low and rally back fiercely in thanksgiving and turned around and gave it back in march. i see the potential for the rally to continue in the longer-term. on things like the election it is already baked in. there are a lot of people who think the fed moves have been exaggerated. i do think we will shop around. whether or not using think the rally can continue, it can continue in the short term tremendous risk we give a lot of it back in the first quarter.

jonathan: you can't talk about the fed and not talk about it now. this is what governor waller had to say. things have gone way out in front. we are going to need to see a continued run of this behavior before we think about taking our foot off of the break. his the fed still in charge of where this market goes and how far it can go to the upside? lori: we said we liked what we saw in the cpi print but we knew the fed would caution it with harsh rhetoric and that is what we got. i think to some extent maybe they are losing a little bit of control. they are trying their best to clamp down on the enthusiasm. i don't think the peak narrative ever rent -- ever went away those people got quiet and got tired of having their heads ripped off. jonathan: they are loud now.

lori: when we saw that cpi, there was massive uncoiling of enthusiasm. i sympathize with those who say the market went too far but having talked to a lot of investors on the at components of inflation coming down, i understand the release that happened and the valve that occurred. jonathan: what do you think about what is happening in crypto and what is happening for them in that class? lori: i don't cover it. we leave that for others at the firm. we talk about the extent to which the average retail investor is involved. i saw a poll recently that said those that they surveyed, -- percent owned it. as i have talked to some of my friends in the wealth

management, i speak to institutions but when i talked to those i have heard things like my clients are involved in crypto. the kids and grandkids have tried to get them involved and they said no. i think this is a contained implosion and we have to watch it. there is a tremendous correlation between the s&p and coin and we do view bitcoin as a barometer -- and bitcoin and we do view bitcoin as a barometer. jonathan: let's talk before year-end. do think the thanksgiving conversations will be different around the crypto story? do you think it is the grandparents telling the kids what's what. lisa: i expect it won't be brought up much or it will be brought up with a tongue-in-cheek and at what point will we be talking about this if it weren't for free money that would have pumped it up. jonathan: waller has advice,

take a deep breath and calm down and we have a ways to go. coming up, the head of global strategy at td securities. equity futures down .4%. live from new york, with lisa, tom keene away, i'm jonathan ferro. lisa: president biden and xi jinping are having their first ever in percent meeting. they shook hands before sitting down at a hotel in bali, indonesia. the president told them the to have a responsibility to show that china and the u.s. can prevent competition from turning into conflict. in turkey, kurdish militant group and u.s.-backed affiliates are behind a deadly bomb attack the explosion killed at least six people and wounded 81 in the terrorist district.

the suspect has been captured and identified her as a syrian national. in the u.k., jeremy hunt expected to delay much of the 65 billion spending cuts and tax heights until after the next election. that would protect the economy and shore up support for the conservative party as the country heads into recession. bloomberg has learned the bulk would be delivered in the final years of the five-year forecast. russia has a long-awaited -- roche's alzheimer's drug failed in early trials. it is another disappointment in the research field that has been marred with failures. softbank shares have plunged. they failed to announce a buyback and the core fund jose $7.2 billion lost in july through september. valuations have forced the biggest technology investor to

go into defensive mode and virtually halt investments. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

jonathan: equity futures down .4% on the s&p 500. pushback coming from governor waller as we get the trading underway. governor wallace saying, take a deep breath. he feels like this is a risk of july all over again, premature easing on downside to price of cpi. lisa: this comes back to the question how much will the federal reserve allow it to rally? is that basically what the fed governor chris weiler is saying? we are going to keep raising rates until you stop. jonathan: it was pretty informal and direct. the fed doesn't want a signal they will back away soon. if you are in the market now, it is what they are going to do and where inflation is owing to land

and they believe that is a trend toward trajectory. lisa: to dig into the data and see the health care price crash that people were looking at? there are reasons why people might say it is perhaps overly stating with deceleration and the fed is worried about getting over the skis and saying let's go to a weakening trajectory and then go back to the 1970's. jonathan: that is the fed conversation. on the sidelines at the g20, president biden and president xi jinping shaking hands. this is what the president had to say, we share a responsibility to show china and the united states can't manage our differences. what is top of mind as this is going on and set to happen at

8:30? annmarie: waiting for it to wrap up in what the president has to say about this meeting to reporters. there really are no deliverables for announcements these two countries will make. we have heard from officials that they want to set the floor on how they deal with aging and set the guard rails. three of the biggest issues that will likely come up in the most contentious will be put in's war and invasion of ukraine. we know that xi jinping's only alley and they met. the second would be what is going on in the technology and chip sector. we have the commerce department with sweeping curves that china really needs this technology. this has drawn the air of beijing. the most contentious will be the

tie wayne -- the taiwan strait. after nancy pelosi made the visit, military drills will conducted. this is a redline for xi jinping. as you know, there have been a number of occasions where he said the u.s. would defend taiwan. jonathan: some might say this is the appetizer for the g20 but i say it is the main event. can we get a communique of the g20? annmarie: it is a great question. we are just off the heels of a multinational summit in cambodia and there was no g20 communique because russia said they could not sign their name into something with this kind of knowledge and something they say the united states was pressuring others to sign. it would be regarding the war in ukraine, calling it prudence

invasion of -- putin's invasion of ukraine. they continue to say it is a special military operation. you can see the departments -- the divergence of different countries. you want to maintain good relations with russia, even though a u.s. official said it to us, there is probably some embarrassment in beijing about what is going on in terms of putin's invasion of ukraine. coming -- lisa: coming into the meeting, he actually gained his senate back amid the rumors that it would be turned republican. what is he going to do with that? annmarie: biden said in cambodia he feels strong going into the summit because of the fact the democrats were able to maintain control of the senate.

tina fordham said it last week, she thinks biden will walk into the xi jinping meeting with a bit of swag in his step and the fact that it wasn't a red wave. it gives he and his team more power with policy. when it comes to china in washington, there is bipartisan support to take a more hawkish approach and you are seeing that with this administration. over the weekend, they were shoring up what the allies think of what is going on in china. most notably, australia, japan, south korea. they wanted, it seemed, for president biden to bring to the table in terms of north korea and it seems that the united states will say to xi jinping, rein in north korea or get a broader presence in that area. jonathan: do you think any of

those will swagger? thank you, wonderful as always. certainly both leaders emboldened by domestic events, one democratic and the other not so much. that is the story of the last couple weeks. lisa: how much is xi jinping emboldened by a an equine me flat on its back -- and economy flat on its back? did you see a lot of shoals -- olaf scholz coming out saying the time is to diversify away from china? jonathan: based on his recent visit to beijing with corporate germany, can you make sense of this? lisa: i can't. avoiding overreliance on china, in particular in certain areas, including raw materials,

critical technologies where he wanted to see a scaling back of risky, one-sided dependencies, trying to avoid what happened in russia. how does that compare with the meeting they had in china? jonathan: do you think it is a message for german companies or american leadership? lisa: it is interesting this is coming at the same time that president biden meets with xi jinping. how much is that paying lip service to at the u.s. is trying to do and how much our business moving away? jonathan: so much swagger at the g20. lisa: defined swagger? jonathan: handshakes and fist bumps, is that swagger? equity futures down .4%. from new york, this is bloomberg. ♪ special place that you want to keep in the family or passing down the family business or giving back to the places that inspire you.

no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why?

jonathan: coming of the of the biggest week of gains in the s&p 500 since june, equity futures are negative and have been throughout most of the morning, down .4%. on the nasdaq 100, down .7%. nasdaq s we, biggest gain since

november 2020. -- the nasdaq, the biggest gain since november 2020. yields a bit higher, up five basis points of of governor wallace's comments in australia, basically take a deep breath. we've got a long way to go. the bond market and foreign exchange, huge moves in fx. euro-dollar had the best day going back two years, sterling the same. dollar-yen was -5%, the biggest weekly move going back to october 2008, except october 2008 was risk off and last week was risk on. it makes sense how the end has behaved so far. lisa: looking for dollar weakening for some sort of reprieve. how long this will last and you have opens of notes from people on both sides of the story. how much does this give reprieve

to a highly unprecedented move in china. jonathan: the number one question in the commercial breaks when we speak to guests, what is the 2023 outlook coming out? we are all reflecting on that. morgan stanley did it overnight. but 2023 is a difficult year to forecast. lisa: how much can we say, can we just put our head under a pillow and just wake up until it is flat. jonathan: it takes three months to work out what you were wrong about and that is when it comes. lisa: if next year's like this year, april or may is when they revise it and basically it has been a year every month or so. jonathan: george goncalves

, before we get to the outlook, let's talk about the move last week. does that resonate wake me -- we moved -- does that resonate the way we moved last week? george: i think this is reflective of 2022 where it liquidity works on both sides. we had a set up of negative sentiment and exhaustion of investors on both sides. you had positioning also, in rates and equities as well. it is the perfect set up for overshoot in the same direction, moves we haven't seen in months if not ever in such a storm -- short timeframe. we should be consolidated. not ripping it and giving it all back. that is not healthy. we are in a period or people don't have conviction.

jonathan: when governor wallace's calm down, what do you think he means? george: those two days along -- allowed the tightening they did. fed needs financial conditions to stay tight and don't want to be loosening when they are trying to get their arms around inflation. we just don't know what the trajectory looks like and how long it will get. calling down is we are not done yet and you are getting ahead of us. lisa: i was reading from deutsche bank talking about how friday was a big day and the peak in the dollar was behind us and that was the title. not just with respect with the cpi but china has made noise but opening up more and seen a bit of retreat from russia from ukraine. how much do you give credence to the geopolitical moves as having a sustainable effect on u.s. markets? george: i think they help on the margin but the q motive effect

of fed tightening lies ahead. we have the equivalent of two or three hikes in the next quarter or two. i think the fed policy outweighs that and the hewlett to affect will be felt into next year. i just don't think we have felt the massive tightening. it is good to see the news we are seeing out of the russia-ukraine situation in china potentially reopening slowly. i don't think it will be the equivalent we were anticipating, like in 2008 when they lead the charge. tiptoeing will not be the same effect. lisa: it is not been fun on the year ahead outlooks. he said you will see in outperformance in certain credit instruments that are not done as well this year, higher-rated once. you will not see the same returns for stocks and you will see dollar weakness. do you agree broadly with that kind of outlook headed into a

year we can see yields that we have it seen going into a year for many decades? george: i do and we were joking about it initially as well. most of us when we are creating views, we had the benefit of recent history and we try to look forward and have a view on the macro and market pricing. that has been hard this year. most of the trade you think will happen in the following year, there has been decent enough yield pickup and the safer parts of credit make sense. you can start to weigh in an average into credit but if we will truly have a slowdown, i don't think we have seen the delinquencies or defaults pickup to compensate. i am not fully on board. jonathan: what you think is more

important for 2023, the path for growth or inflation? george: the intersection of the two. we will see the growth slowdown and maybe pivots into december because we have a lot of data ahead of us. we are in the point of peaking, pivoting and we will move towards growth being a larger concern. i don't think you catch it fast enough until the second half of the year. inflation will still be at 4% if not higher until the middle of the summer. i think it will be a combination of the two but pivoting towards growth. jonathan: we had a conversation at the end of last week, do you think inflation is rolling over before growth and how important is it for the call going into next year? george: growth has been volatile and q4 is on the weaker side.

the inflation call still matters a lot to make sure we are truly seeing a turn. the overall conditions are in different buckets and suggesting we are heading lower. if growth doesn't accelerate, that will be a bigger problem. lisa: we are looking at a 4.9 terminal rate for the fed. it has clearly shifted downward as a result of the cpi. where do you think markets are wrong? george: markets are wrong in the longevity of how they can keep rates at elevated levels, between 4.5% to 5%, we could go higher if inflation were to pick up again. it is somewhere between 4.5% to 5% that we cannot sustain.

every time the fed finishes a cycle, we end up breaking on something. we struggle in q4 of 2018 when it was at 2.5%. now we have an inflation problem at double the pace. the u.s. economy and leverages system cannot take it. lisa: what do you see in the data that you confidence that the market is wrong? george: i think the actual slowly deceleration of the auto and housing sector taking a big hit and has much further to go. the biggest collateral that backs of the u.s. banking system is the real estate sector and the u.s. bond market, one which got hit hard this year and will be limping into q1 and q2 with massive losses, unrealized for some but a big hit. real estate losses are coming down the road. that will curtail the availability of credit in the

coming year. jonathan: wonderful to hear from you. kind of dodged the question about what is more important for the path inflation or growth. lisa: i was think in the same thing. jonathan: direction, is it secure question mark pace, that is the conversation we have to have. and destination, where we land next year is no clue. lisa: the reason why you saw morgan stanley and jp morgan shifting into top rated credit. just like we heard just from george, the idea that you will see default pick up the growth story and the growth trajectory will highlight itself and the underperformance of certain aspects of the market that have held in more securely. how much have we already seen that, downward revisions and how much more can we see before all of the sudden we think the other

collateral damage from this? it is being said that the fed will raise rates until something breaks. what does that look like in the cycle? jonathan: did you see the outlook on 2020 34 inflation on goldman? down from 5%. the easing in supply chain constraints, a peak in inflation reopening and the unveil sing of the labor market -- the rebalancing of the labor market. what actually do they mean? lisa: they means millions of jobs lost. if you have perhaps more jobs but you also have perhaps more workers or you have fewer jobs and more workers, you have to pay them less, basically. jonathan: breaking news cnn, jeff bezos planning to give most of his money to charity.

there have been questions about his philanthropic efforts over the years. did you see what he gave to dolly parton over the weekend? lisa: what to give? jonathan: $100 million and you get to decide where you give it. you can give it to any organization of her choosing. lisa: there's been a lot of years where he has not been present in the philanthropic seen. interesting he is coming out in this way. jonathan: more on that a little later and we will catch up with jerome schneider of pimco. equity features down .4% on the s&p. this is bloomberg. ♪ lisa: keeping you up-to-date. for the first time, president biden met xi jinping face to face. the meeting took place on the sidelines of the g20 summit. they called for reduced tensions

in the world's largest economies. taiwan has become the biggest flashpoint and president biden has repeatedly promised the u.s. would defend taiwan in the event of a chinese attack. fed governor christopher waller said there is a ways to go before the central bank stops raising interest rates. he told the conference in sydney the rates will stay high for a while until inflation gets down closer to the feds target -- fed's target. house speaker nancy pelosi has signaled that democrats will seek to extend the federal debt ceiling during the lame-duck session of congress. that avoids a potential fight with republicans that pelosi says could write in the u.s.'s credit rating. -- could threaten the u.s.'s credit rating. cryptocurrencies rallied after binance said they will open a recovery fund to reduce negative effects from that bankruptcy of

rival ftx. the ftx explosion wiped out $200 billion of the market value in the past week. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪

>> as leaders of our two nations, we share a responsibility to show that china and the united states can't manage our differences, event competition from becoming anything near conflict, and to find ways to work together on urgent global issues that require our mutual cooperation. jonathan: the meeting between president biden and president xi jinping is underway at the sidelines of g20. we will bring you the latest headlines and you will hear a news conference scheduled for

8:30 eastern time. often the stuff with local leaders -- with global leaders never stressed on time. lisa: they have a lot to get through. jonathan: how is this plan out politically in the united states and how has this played out domestically for this leader going into this meeting in the united states? >> the president has the domestic audience like any other leader. and it was all about portraying china is all-powerful and not taking a step backwards against any foreign powers. there's not been softening heading into this meeting on the chinese side. expectations are fairly managed on both sides.

at the very least, china wants to put a floor on the relationship and maybe see if they can get concessions on the economic side of things. i don't think anyone is looking on anything like taiwan and the hot button them and writes issues but maybe concessions on trade -- hot button items and humans rights issues but maybe concessions on trade. the presidentxi has not sold himself as a peacemaker. they will not change the bowl plans for china. lisa: how much if the chip export a redline for china? enda: it is very restrictive for the development of how china wants to create a world-class military and industrial

know-how. they need access to semiconductors and technological know-how. it is a big blow to china's vs economy but the flipside is there are those who argue it is a near term hit. it will look elsewhere if it can. it is definitely a blow to the chinese economy. lisa: how many hits can the chinese economy take before they care about the chinese economy out of other measures that have been talked about. it seems like we saw the beginning of that overnight with an easing, broad easing of the housing and development sector in china. how is it a shifting .4 xi jinping for reemphasizing the

economy in a way that -- how is it a shifting of xi jinping's for we have a sizing the economy? enda: it gives him tailwind heading into the talks with president biden. the economy has improved their and there was a pivot on covid zero last week. and then ensuring developers can get liquidity if they needed to pay back loans or get back a certain portion of their presold homes financing. the mas -- markets are taking this positively. the housing sector is in a agile space -- in a fragile space. the housing sector turnaround has a long way to go. broader sentiment on china has definitely improved in the last

few days. and if the meeting went somewhat well in opal markets, at least putting a floor on the relationship, then it won't do any harm when it comes to chinese assets. jonathan: do people miss read is happening in china? a few weeks ago we were talking about a leader emboldened by securing more power, reinforcing the power he had over the country, and a lot of people thought that meant he would stick with covid zero. did we misread what ultimately took place the ground? enda: i would say misread and will pretend i can explain everything that is happening there, but the point is on the one hand they are pivoting on measures and relaxing some of the restrictions on covid zero, because they know they need to fix the world economy and it is halting things on the ground.

they have not ran away from covid zero but there are still a lot of restrictions on the ground across china. they haven't given up on covid zero but just tweaking and signaling it will be five to six months from now. there wasn't much signaling from congress on what they might do, but they have to put some kind of floor under it. it is kind of what is what specht but the timing surprised people. jonathan: wonderful to catch up with the meeting between president biden and president xi jinping is ongoing. news conference expected by the president of the united states in about one hour and 40 minutes from now. there are reports that a u.s. official said china was uncomfortable with russia's invasion of ukraine. you wonder how much that will feature in this meeting. lisa: how much of the

devastation to russia from the involvement in this as well as the loss. you can read whatever you want and there is conflicting discussion around the retreat they previously claimed, but how much are we basically seeing russia concede on some small measures that they cannot win this war in the way they thought? jonathan: storage levels for gas, capacity, the weather has turned out to be warmer, the fact that you have signs of i don't want to call it a withdrawal but encouraging sign of what we imagined a number of months ago. certainly, we were worried about this already facing rolling blackouts across germany and other places and we are not seeing that in a major way. lisa: you mentioned the two reasons for why it is seeing peak dollar going in and ongoing

dollar weakness because we haven't seen it in europe. i keep going back to the olaf scholz, that now that the geopolitics have come to the floor, i want to hear about president biden from how much is the hardening owing to continue between chiding -- china and the rest of the world? jonathan: it won't be. we will talk about the crypto as well. he said it feels like we are in a nightclub and the nights turned off. you can read between the lines on what that means. lisa: this is the warren buffett coat -- quote, let's leave it there. ♪

well, we fell in love through gaming. but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet. ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up. i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about.

>> my base case has the u.s. economy slowing, flirting with the recession. >> we think fed funds it's to 4.75%, 5%. >> we can decelerate and ultimately pause at some point. >> there is no fed number that wants to go down this street as losing the fight of inflation. >> the invasion beginning