the multitrillion dollar industry. there's a lot of ground to cover. commodity has gotten absolutely crushed. we'll show you what's happening in etfs like no one else. bloomberg getty q monday on bloomberg. there's a sense that there is something out there that that hasn't worked itself out yet. the fed still feels like they still have to go higher on rates to kill inflation. in reality, we're going to see certain factors and elements of inflation remain stickier for longer. inflation is going to be it's it's less about the peak. it's how quickly it's going to decline. i don't think the peak inflation peak fed narrative ever really went away. this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowitz. the rally resumes live from new

>> starting tuesday by about a bull market in hong kong and a bull market in germany. that's not where i thought we would be in november. lisa: the idea of china with some of the zero covid and anti-international feel as well as germany with german confidence coming up better-than-expected as you see the build of inventory of natural gas fueling this for companies and factories to remain online. jonathan: another move on euro-dollar. on cable, sterling, 103 .50. going back decades and decades for these kind of lows. table this morning pushing 119. lisa: you said the conviction there is going to be parity on the pounds not the euro. also parity below for the euro. which is the lowest the u.s. was

passed peak inflation. the fed will start moving our kobe have retail numbers dropping. within that window you can dream. home depot out now later. beating the estimate by 3.2%. the estimate for the full year. that is below the estimate of 3.2%.

worse than expected future expectations. it's hard to feel havoc home goods store you have this feeling people won't be buying it as much. >> right now of 1.9%. let's with through the price action. where we shape up as follows on treasuries. on a two-year basis point looking at the 30 year. yields in a couple of basis points there. lisa: as far as the day aheadlisa: were expecting these.

we just got home depot earnings. how much are we seeing and consolidation among the biggest. those that have earnings power and negotiation power. with other types of workers and contractors. ppi for the month of october, the latest read on inflation in the u.s.. to beget some sort of reality check on the cpi printed that was softer than expected. do we get a sense of services inflation perhaps a shift. we get a host of fed speak because it's another day in the calendar of 2022. patrick harker and lisa cook speaking independently at different events. testimony from fed vice chair from the senate banking committee, how much he talks about bitcoin but also the fragility and a market were so many are waiting for the next shoe to drop. jonathan: vice chair brainard says we have a additional work to do.

that seems to be the theme. we already priced in what the fed has to do. look at the terminal rate. what's the consequence for companies. with the consequence of holding. when you get to a year or two years. jonathan: it will be painful when growth starts to get here and is not moving. which is the overwhelming -- lisa: which is what they put out. jonathan: jonathan: jonathan: if you've got a consensus that large, that big going into 2023. lisa: how do you trade against stagflation. perhaps you get inflation that comes down. jonathan: maybe growth remains

resilient. lisa: how about this, how much are stocks already trading as the counterargument the overwhelming consensus on paper? are they -- jonathan: joining us now is senior equity strategist federated earners. do you want to chase this rally? -- federated hermes. do you want to chase this rally? linda: we've been bouncing up and down all your jaw -- all year long. and what we saw last week was a great day on thursday. we saw money flowing into tech stocks to an outsized degree so there's a lot of money out of their looking for where to invest. i travel all the time in my job. the most common question was what should i buy now. as much as 100% of people thought were going to have a

recession next year maybe 100% thought we need to buy into this rally. jonathan: we've seen a lot of cuts from big tech. mehta, 11,000, twitter, perhaps half the workforce set to go. a cost-cutting review under andy jassy at amazon. does that bring you confidence about them making required cuts removing the excess they've built up? linda: that's where the big increases were during the covid shuts down. hundreds of thousands added on to amazon. of course they will cuts. is -- of course they will cut. we think layoffs will increase next year. what i expect is a slow-motion realization that we are going into a recession and earnings are going to come off and is much as we are talking in these last couple of weeks about lots of issues, there's not a lot of talk about what is likely to

happen to earnings estimates coming down into next year. lisa: which sector of the market do you think it's overpriced based on the information you put out there of downgrades to earnings estimates next year? >> the most expensive sector right now is utilities. people poured into utilities and that is not because people are getting earnings wrong, it is because people massively going into the offensive sector. the tech sector, the most expensive sector all year long and pockets still are not as much, was really brought down to earth so people don't feel comfortable getting back in. it is a motion moving back and forth right now. it is that one sector of utilities really overbought that

is coming back down now. in general, those high quality dividend sectors -- that is where we are focused on earnings. lisa: that is where you are focused to buy or focused to sell? do you look at that area of stagflation? linda: we are looking to buy. when you go into recession, cyclical historically underperform by 22%. so far only 7% earnings estimates, only down 4% from june from this entire market and it is likely to go down 10%. we are staying defensive and we are selling what looks expensive in this rally. that is some tech for sure. jon: linda, always great to hear

from you. leading the investment institute over they that over there, the consensus earnings growth 2023 down about 10% from 2022. we expect zero growth. that is the call from blackrock. they go on to say we need to see stocks fall more, or more easing inflation to turn positive on equities. the bottom line, they are not there yet over at blackrock. lisa: morgan stanley is not there yet you -- is not there yet either. they are talking about yield is king. government bonds and corporate bonds but not necessarily equity. there are some pockets that could do really well in the equity market and others could potentially do very badly. jon: there are some pockets in the equity market that could do

very well, lisa abramowicz, that just happened. can you run through which equity markets could do really well? lisa: it would be ridiculous to say nothing is going to go well next year. if we get towards some sort of equilibrium in the equity market where you have a turn in leadership, if people continue to think tech could lose value, where is? leadership going to come from? ? it is going to come from other areas. some of the consumer discretionary, i understand the story come second half of next year. it is going to be a buyer for repeated market. jon: sure. the rally we have seen in germany, on the dax. lisa: that is objectively true.

jon: we have industry shut down. it looks like for now, at least. futures up .75%. seema shah joins us at about 7:00 a.m.. this is bloomberg. ♪ lisa: the u.s. and indonesia have announced a climate finance deal for $20 billion to help indonesia privet away from coal power. the u.s. calls it the largest single transaction climate deal. trump announcement will come tonight at his mar-a-lago club in florida. griffin called president a

three-time loser. griffin spoke at the news economy forum in singapore. in arizona democrat katie hobbs has turned back a prominent election denier to be elected governor. hobbs the fetid kari lake when trump's baseless claims of fraud in the 2020 election, -- a new report for job associates. those in underwriting are likely to serve the largest drop. credit suisse has agreed to sell product to apollo global management. that will help reduce the size

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? >> there is no reason for the tensions over taiwan to come to blows. there is no reason for this and we want to see the tensions to resolve peacefully. jon: the flavor of the price action this tuesday morning. the equity shaping up positive of .7%. yields down five basis points. the euro-dollar positive .9%. lisa: it doesn't feel just like a technical move. a great degree of optimism around air -- around europe and the energy sector.

deutsche bank reporting it is going to be next year as well. jon: when it comes to china and the united states, no news is good news. yesterday, no news whatsoever. lisa: a lot of people took this to be positive in that it was a conciliatory meeting. it was not amplifying tensions. a lack of amplification of tension is a victory in and of itself. jon: annmarie hordern, our washington correspondent in bali. it is no news good news? annmarie: when it comes to china, at least the past is looking warmer is good news. for financial markets and american allies around the world whether japan or those in europe. something i would like to note about china, what we might see at the end of this, what we are

hearing is that it will be a g20 meeting. that is because the language will talk about a war in ukraine. not russia's war in ukraine great many members are taking aim at what russia is doing. russia may sign on to this. they may be embarrassed the fact china would not sign with them. one take away from this summit, china seems unnerved about president putin's invasion of ukraine. china has not come out and criticized it and condemned this war but at the same time it was a really big deal at the u.s. read out the president biden was able to say him and xi jinping both discourage and do not want to cede nuclear force used. that has been a reoccurring theme of xi jinping's bilateral at the forum. jon: he left america feeling

good, does he come back to america feeling better? annmarie: i think he does. he has not just retained control of the senate but is able to flip a seat. we will have to wait to see what happens in the georgia runoff. he is seeing a lot of this momentum. there is a lot of margin in these polls whether there's going to be a ripple, wave or tsunami, it clearly was a ripple. his challenger, the bearer of the republican party, former president trump is going to announce likely this evening, this has been tea up, that he wants to make a comeback for the presidency. at the bloomberg economic forum in singapore, you have -- saying the former president is a three-time loser. they want him to get out of the way and make way for a new leader. president biden not only having a successful g20 summit at the moment, a number of things able to get done, not just the china meeting but bloomberg scooped there's going to be an extension

of the russian grain deal, also the fact there is a lot of talk in the republican party that they want to do away with the former challenger. lisa: in the democratic party, who would be the secondary leader who would emerge after biden should biden decide not to run? should it be clear perhaps former president trump isn't going to be allowed to run by his party? annmarie: let's first say the president has said to reporters last week and i was in the room with him, that he has the intent. his intention is to run. and he will make that announcement at some point in the coming months. president biden, especially after admiral kirby says, he has came in with the wind in his sales, it wasn't a red wave, he has the intent to run it 2024. the question about who is up next, it is a wide range. many will point to the obvious individual be the vice

president, coppola harris, but if not her, who could it be --, love harris. lisa: it seems like president biden came into the g2 summit with more power. how is he using that? annmarie: he used to that in his meeting with xi jinping in terms of getting that line in about nuclear force and the use of nuclear force. you do see a tip of a balance. maybe it is china putting its, on that balance. president biden is looking stronger at this international meeting when his other main adversary, moscow's russia vladimir putin is looking much weaker in terms of sending -- the russians withdrawal. you are seeing and more diminished russia on a global

stage and a more emboldened biden. jon: annmarie hordern as g2 summit kicks off. talking about the comments from ken griffin on the former president donald trump. here is the quote, "i would like to think the republican party would like to move on from somebody who has been for this party a three-time loser." the georgia runoff back in 2021 and these midterms. he goes on to say about desantis who griffin has financed. hearing more from republican backers about who they want to be their guide going into the next race. lisa: this is not subtle. people are coming out saying remember when we didn't like former president trump before he came after us? we still don't like him and now he doesn't have that popularity. at what point do they grapple

with the fact the former president still has a lot of support among key constituency of the republican party? how do they bring them into a new fold, what does that look like? it seems like republicans are going to get the house. who are they going to elect? is it going to be kevin mccarthy, mitch mcconnell? who is going to be the republican leadership representing what their goals are going to be? jon: live from new york city. coming up very shortly, a better europe over the last couple of months. equity futures up .7%. on radio and seen on tv for our work -- for our audience worldwide, this is bloomberg. ♪

jon: inflation in america and everyone's in the world completely changes. positive .7% on the nasdaq up about 1%. friday and thursday the biggest two-day gain.

since 2008. down by 1% on the nasdaq. we bounced back straightaway in today's session. the bond market as well. by five basis points on the 10 year at a380. two-year, 4.3466. the biggest hike on the two-year. in the fx market big turnaround in foreign exchange as well. the euro-dollar the lowest of the year, right now 1.0 427. a 1% move on the euro-dollar. a 9% move from the end of september until today. a massive turnaround for foreign exchange. lisa: hints at the lack of liquidity. massive moves in benchmark currencies that people use. i wonder how much has shifted. people are firing -- people are throwing in china, europe, at

what point does it get better. people don't understand how quickly it will come down. they have been upended again and again. that is what we continue to see. jon: stagflation is so hard right now. -- is so hot right now. lisa: 92%. everyone thinks we are going to get persistently high inflation and that is going to lead to low growth. we are there. how long can that last? that is the question. jon: gilles moec comes to new

york. great to catch up. i would love a reality check from you, how much better is europe than what we have seen later in the summer? gilles: not much better. things have not changed materially. german military -- germany is the biggest potential victim of gas supply. the position is better than we could have feared six months ago. nothing has changed. the fact that we are sliding into recession, all the data flow we had still goes in the same direction. you look at european commission surveys, for the bank of england survey for instance, it is

consistent with sliding into recession in the next two to six months. what has changed, there was this one lower-than-expected print in stagflation in the u.s.. markets scrambled, d pricing on the fed. they expect differential in the fed shrinks. i would not read much more into that. it is a differential place, that is it. jon: how you think this bleeds into 2023? gilles: two or three months ago it was unpopular to use the word transitory.

but it is what we were expecting that we would see inflation towards the end of 2023 -- towards the end of 2022 and into 2023. how closely we get to targets banks are pursuing. it is probably already starting. in the u.s. it is a labor market issue. our contention is that we will see a slowdown in wages and that will help take core inflation down by the second half of 2023. the first month is going to be tough. traditional, usual very intense labor market to go down. in europe it is much more complicated.

a fair significant share of our inflation is completely driven by external factors, depreciation in europe we have had recently and gas prices remain extraordinarily high. we expect a slowdown in inflation next year in europe based on mechanical behaviors. data affects should play in the right direction in 2023. but it is not farther to assess because it is not the usual behavior. lisa: just to put that altogether, are you saying you are willing to push against the

stagflation case in the united states but europe looks in stagflation environment for a longer period of time? gilles: the u.s. and europe, to some extent, the europe -- the u.s., the fed is -- to control the situation. if the economy tanks in 2023, with the market is currently expecting, the fed can slow down . there is a measure of control on the state of the economy in the u.s.. in europe we don't have that level of control because it is not in our hands. for all the act activities, the thought -- on 2023 in europe.

we have more risks in europe than the u.s.. to get us out of a recession in 2020 three, that remains reflected. we have this knee-jerk reaction to this october inflation print in the u.s.. we have had accidents in the past before. lisa: when you are doing your euro -- it makes me wonder when you're doing your euro outlook, you have meteorologists showing what the trends are going to be for el niño and el niño, you are saying there isn't much europe can do. is there anything europe is looking for? god more control so that there

is not just desperate gilles: gilles: energy import is the key. you have energy import capacities. you don't have it in germany. they have the terminal coming out into 2023. at that needs to come out. we need to have this energy capacity to make sure 2023, 20 24 is not what we are going through right now. the other part which is less discussed, the capacity of the french nuclear power generation to really reach its potential in 2023. that adds to difficulties we have right now. the loss of nuclear power

stations in france which have not restarted, there is a plan to restart them gradually over the next few months. we need to see that plan by the end of this winter. jon: wonderful to hear from you. a reality story around european of axa investment managers. it is going to come down to the weather. i have never seen or read headlines on the weather. in some places the market is moving on it. lisa: there might be redheads for the u.s. winter as well particularly with diesel prices. this is going to be one of the biggest stories of the winter.

the diesel stop files are the lowest levels going back -- the lowest levels going back to the 1980's. you have shipping, trunks and heating and that is going to be a major issue. jon: getting colder in new york. have you felt that chill? lisa: for a week. jon: it is freezing. when it gets cold, it gets cold. tom does this in new york. when i was a kid and all that stuff. if it is cold, it is cold. lisa: it is getting colder, people are turning on the heater. jon: that is not good for climate change. equity futures up .6%.

yields are up and then back down again by .5% on the 10 year. from new york, this is bloomberg. ♪ lisa: keep you up-to-date from news from around the world with the axa investment managers "first word" "first word" -- with the. a compromise designed to get as many g20 member leaders signed on as possible. first prime minister -- prime minister rishi sunak promise he will protect from inflation. he has a track record protecting pensioners. he is facing pressure to stick

to the triple payment, meaning prices rise every year. sanctions on russian exports take effect. that is according to the international energy agency's national report. diesel fuels are "exceptionally tight." it remains that 90 dollars a barrel. senate to start a bill to protect same-sex marriage. the legislation drew out a concern that the cook -- that the supreme court could overturn an earlier ruling that established the right for same-sex couples to marry. there is a sign that warren buffett thinks the world's leading chipmaker has bought it out. it has taken a stake of about $5 billion in taiwan semi

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>> president biden made clear the united states will continue to vigorously compete with china including by making investments at home. you have seen the inflation reduction act and by aligning with allies and partners where we have shared interest. jon: that was the bloomberg trade economist in singapore in the last 24 hours. the morning. more on that conversation in a moment. equity futures on the s&p 500 pushing higher up by .7%. the dollar weakness returns.

euro-dollar .8%. back to 104 -- back to 1.04 for the euro-dollar. super bullish on the. i want to return to the comments from kathryn tai. the body language from the leaders standing together. she went on to say that is a powerful signal to the world. it is interesting this administration seized power from the ability to manage this relationship when others might see power from the ability to confront china, taking a combative stance with them. the way they view the optics from this administration very different to the former leadership in the white house. lisa: it is polar opposite. rather than trying to come out and look strong and look like you're going to fight, it is coming out and looking

collegiate and we can accept there are some strong differences but everybody agrees they don't want a war. they don't want it to become something that harms everybody. there is discussion that is more kind. jon: the g2 summit in bali, annmarie hordern is going to break this down. i have got a really good friend and they have got a great skill, they say to me what they do, they turn up for the drinks and they go into the hall and they remove their name tag from the table and then they go home. lisa: ghost the g20? jon: you turn up for the drinks and if you don't want to go in for the dinner, you remove your name tag and no one knows you are missing. lisa: g20, how did it go?

jon: enda curran does this. bloomberg editor, correspondent. >> a big term in sentiment. that meeting went much better than expected. expectations were pretty low. listening to conversations everybody was saying guardrails are put in place. you heard henry kissinger's remarks, people saying russia has -- tension. that message has permeated through much of the day here. that has flown through markets. at the same time we had somebody pivot, on covid zero and on leadership. the three things coming together

in the past few days. we are talking about headlines. all the structural things, they are not ready to roll back on tariffs. china's housing and real estate market, those having gone away either. all of these problems we keep talking about having gone away. jon: where is there mistrust in this administration in the united states when it comes to china? >> look at the three things going on at the moment, clearly there is a lot of uncertainty over china's ambitions over some hot button topics in the region. the most obvious one being taiwan. how will that play out? no one is quite sure yet. it shows where the trust factor is there. that remains uncertain. how well this china deliver on this promise of ongoing engagement with the u.s.. also covid zero.

reducing international quarantine, changing testing on the ground, these are changes, no doubt about it, but they still have a very aggressive system in place in china with deep infrastructure in place dealing with covid. even if they are on a trajectory, it is going to take many months for that to happen. all of the recent years -- spectating and once borrowed successfully, that is not going to change overnight. it is about stabilizing things. none of these broader problems have been resolved or gone away yet. lisa: there is a shift in emphasis. about more of a decision towards the economy rather than not just national security, but with respect to covid, is there any credence to this idea that china truly has shifted back towards supporting its economy

especially as they get another slew of disappointing economic data overnight? >> you are right, lisa. the officials come out over -- come out every other day that they will do what they can to support the economy. retail contracting in china in the month of october. we raved about china's american consumer task. it puts sectors under pressure because shipments are coming out. it is mostly government spending. it has been no buying in private sector. there is no doubt the officials are showing a degree of urgency now in trying to turn things around. this is where it is open to interpretation. we know it is going to take a long time to unwind this covid zero apparatus. it is a huge concern for them and the world.

and of course the housing issues . and how will geopolitics play out? jon: are you the kind of guy that skips at dinner? >> i like your tip about lifting the name badge. i will have to remember that in the future. jon: there you go. people love this. no one likes the dinner. fact. lisa: because of the food, because of the service, because you have to make small talk? jon: people you don't want to sit next to. they mix people up. i hate that. the mixing people up, hate it. lisa: maybe president biden will take your advice. jon: in the next hour we catch up with seema shah with principal asset management. we can discuss the data in just a moment. policy but also always take

priority, privacy in markets over real life mistakes. you want to dream about the data off the back of the policy changes now. that is what is happening in china at the moment. lisa: when things get so bad you get a republic pushback that there is a shift in tone to supporting the real estate sector in respect to opening up an international sense after years of not doing that, it gives a sense they are a really -- they are concerned. jon: so many messages on this. lisa: people like to avoid dinners. jon: they are talking about weddings. how to skip the dinner. lisa: reach out to jon ferro, he will tell you. jon: equity futures up .7% on the s&p. from new york, this is bloomberg. ♪ ♪

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>> there is a since there is something out there that hasn't worked itself out yet. >> the fed still feels they have to go higher on rates to curb inflation. >> owners of inflation remained stickier for longer. >> it is less about the peak, it is how quickly it is going to decline. >> i don't think that narrative ever really went away. >> this is bloomberg surveillance with john pharaoh

-- with tom keene, jonathan ferro and lisa abramowicz. jon: i am jonathan ferro. s&p 500 bouncing back by .75%. lisa: after we got home depot, better than expected at least in terms of prior experience. perhaps the forward look a little bit more pessimistic. i am curious how much we see consolidation in some of the biggest retail names simply because they can negotiate better and get better contracts with employees. jon: the midland hike of consumers starting to shift warmer. we will be seeing more of that. more interesting the retail numbers this morning with other sets of earnings over the last couple of weeks. lisa: how many people are going from whole foods or whole paychecks as tom keene like to call it and going to walmart because they see how much

inflation has gone up and pushed up their grocery bill and are shifting as a result? if walmart does well, is that a good sign or a bad sign? jon: i don't think that is a good sign going into the holidays at all. losing your job going to the holidays is brutal. seeing those headlines is absolutely brutal. i always struggle when we read these headlines, 10,000 people here, 20,000 people here, that is bad news going into the holidays. going into a busy -- going into a very busy period, that is a problem. lisa: a lot of people thought the low hiring numbers at some of these retailers were putting out in terms of seasonal employees were a result of them having so many employees already they want to keep on a regular basis. and then amazon reporting to the new york times saying they are going to cut 2000 workers, highlights that even in the key excelling season it is not going to be that good. we saw that from half -- we saw

that from apple giving a discount to small businesses on certain products. jon: when do you see that from apple? lisa: even their mac sales are really low. jon: we get the numbers from walmart, lisa is going to break them down. here is a price intersection this tuesday. futures higher, yields are lower. the fed pushback didn't last long in this bond market. yields are lower again by five basis points on the 10 year at 380. the two-year lower as well after having a look at for 40 in yesterday's session. went back to were 35. yields down by four basis points. you can see the move in the fx, dollar market, 184. lisa: the real yield on 10 year treasury going down the lowest since october. we will break down those walmart numbers when we get them. we have got home depot. they did beat comparative sales

on a gay number of 3%. therefore look wasn't as positive. ppi for october, november, how much do we get a sense it was a one off or not we saw cpi come in softer than expected? a good downside surprise last week. do we get a confirmation of that? with the idea that services inflation continues to be very robust more than expected to. today we get a host of fed speaking including patrick harker, lisa cook, speaking at 9:00. federal reserve vice chair michael barth will be speaking at 10:00 a.m.. a lot of people looking for discussion on crypto assets. i want to know what he sees in terms of the bank's ability to withstand losses. that might be the biggest risk with respect to what some of the banks are dealing with with some of the bridge loans and other

assets. jon: seema shah, principal asset management joining us. how much work have we got to do to discount that when it goes to earnings? seema: looking across the market, we see consensus forming. a general view the fed is -- but there is more to go. what is the implication of the fed hikes today? is there going to be a recession, how bad the recession and how bad is the earnings recession going to be? that is where you get a bit of disparity risk going on. fed it to go from a technical side but how much can we fall from this point.

from our perspective we are expecting a recession to come through in q2. -- in q3. we think there will be a significant drop in earnings. with the implication is, we may be a bit of a run through. you get these renewed forces. jon: this is what blackrock thinks, for consensus are earning next year they are seeing growth just over 4% in 2023. they say we expect zero. we have come down a lot from the start of the year to just 4% earnings growth expectation for 2023. they expect zero earnings growth next year. do you share that level of skepticism of what earnings can do next year? seema: we are on a similar level. it seems you expect a heart lounging -- expect a hard landing. q3 earnings season, started to

see some really bad numbers. it wasn't that bad. energy did hold up the space. overall you didn't get a picture of oil companies really struggling. we are still expecting that to come through. some people are saying earnings a little bit is priced in. we don't think it is fully priced in. lisa: there is a consensus right now we were talking about earlier with speculation and another consensus on the heels of that which is go long treasuries. we are seeing that increasingly baked into what a lot of people are saying. do you think that is the one reliable trade to go into long duration, develop market government bonds, particularly the u.s. and hold into a really messy 2023? seema: absolutely. we had discussions yesterday if there are any changes we want to make, the one thing we can all clearly agree on that it is time for duration.

that should put further down pressure on treasury yields, single duration. this is a time to think about quality. long-duration treasury bonds, high quality is the place sticking in for the time being. until 20's -- will we talk 2023. lisa: seeing the downturn and we are heading into some sort of downturn and there is a huge dispersion between people like pimco that see this being a prolonged slow grind, perhaps shallow but lasts a long time. this is something that feels more severe, a shakeout but asserts a trend we have seen in the past. it sounds you see the latter if you do see longer-term yields coming in substantially, is that right? seema: if it goes in for three quarters, it sounds sure. we are not expecting that to be

too much pain. that should be enough to push down treasury yields a bit. not the kind of levels we have been used to. for a long time we were expecting this to be more of an inflationary era. not going significantly below the 2.5% level. jon: walmart adjusted epa, the adjustment 132. they approved a share buyback operation. raised amounts for q3. is it good when walmart does this well or is that bad? seema: that is the debate. you see the prices out there and you're going to be shifting towards lower cost purchases. think through to a positive picture for walmart but it

suggests consumers are starting to struggle. when you throw in the increasing mortgage rates, we are expecting places like walmart that perform as well, it is going to be walmart, target. jon: walmart up 5%. 14590. their stock has outperformed. today it down. she the numbers come in at 150 for the third quarter. the estimate was 132. a20 billion dollars share of re-buyback authorization in there as well. because of the strong results for q3 they have raised the outlook on those strong results. significantly improve the inventory for q3. it is a big story when it comes to goods disinflation in america. this goes well beyond walmart. a decent read for the name. is that a decent read for the economy? lisa: is this people

downshifting? the grocery sector, seeing -- how much this is speak to what you're talking about? people in the middle and upper income brackets going to walmart to shop rather than hall -- rather than whole foods. jon: walmart booming its fight. the economy is speeding up. u.s. consumption has grown 4% in real terms. if everyone prepares for recession is it less likely or more likely? he says there is no element of surprise. lisa: that is perhaps what other people are saying by saying it is baked in. they see a full year adjusted eps 7% versus 9% to 11%. this speaks to his point. if it is baked in, doesn't make it less likely to have the same kind of umph when it comes to

fee ration? -- when it comes to fruition? jon: from new york, this is bloomberg. ♪ lisa: keep you up-to-date from news from around the world with the "first word" i am lisa mateo. former president trump set to announce he is running for the white house again. the announcement will come tonight at his mar-a-lago club in florida. ken griffin thinks republicans should look elsewhere. >> he lost in 2020. we lost georgia because of his behavior in the senate race in 2020. that is the second loss. this year it republicans lost the senate because the trump backed candidates in the senate

were rejected by american voters. that is a three-time loser. the republican is ready to move on further -- from somebody who has been for this party a three-time loser. lisa: ron desantis spoke at the bloomberg economy forum in singapore. a prominent election denier to a be elected governor. kari lake who abased trump's baseless claims of fraud in the 2020 election. hobbs has more than 20,000 vote lead. the u.s. and indonesia have announced a climate finance deal providing $20 billion to help indonesia pivot away from coal power. the calls it the largest single climate financed transaction deal ever. it will be outlined at the g20 summit in bali. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo.

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♪ ♪ well would you look at that? ♪ ♪ jerry, you've got to see this. seen it. trust me, after 15 walks it gets a little old. i really should be retired by now. wish i'd invested when i had the chance... to the moon! [golf ball bounces off rover] unbelievable. ugh. [ding]

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>> i believe there need not be a cold war. there is no imminent attempt on china to invade taiwan. i have made it clear our policy in taiwan has not changed at all. jon: no news is good news in bali at the g20 summit. the president and his meeting with president xi jinping in china. walmart is up by 7% in the premarket. yields lower 387. the dollar is weaker. euro-dollar 1040 three. positive by .75%. we had a conversation here about whether you should be skipping dinner. on twitter, i am 100% with you on skipping dinner. boring speeches, no thanks.

are you on board with skipping the dinner? lisa: i would go. i like people. i think it will be fascinating conversations. jon: i like people i am friends with. lisa: i would go. jon: ok. annmarie hordern joins us now. anne-marie, walk us through why the president is skipping the dinner at the g20 summit. annmarie: i wish i was taking the president's pastry i would love to go to the g20 meeting with all the leaders. he had a huge night last night sitting down with xi jinping the first time as president of the united states, he sat across from xi jinping. he is going to be working with his team to deal with some nonurgent domestic issues. this is a very long journey from the united states. the president is just off the

midterm elections. he was in cambodia over the weekend. now he is in bali. maybe he is a little bit tired. he turns 80 on sunday. it is not covid related. there was this scare. the cambodian prime minister came out today on facebook. the president spent a lengthy amount of time with him over the weekend. he came out saying he tested positive. the president this morning tested negative for covid. jon: how was the meeting between the two leaders xi jinping and president biden playing out in bali? annmarie: everyone is really receptive to the fact there is going to be continued negotiations. a continued conversation, a dialogue they are going to see from washington and beijing. american allies like japan, south korea, australia, those in europe, they want to see communications between these two countries. over the summer, these communications really failed to zero.

absolute deterioration in the relationship after speaker pelosi's visit to taiwan. on the dialogue when it comes to climate change but also the fact we saw china had these very provocative military drills in the taiwan --. that has all cooled down and that has been welcome. china is starting to put their thumb on the scale when it comes to putting pressure on vladimir putin. it is very obvious to me and others at this g20 that russia is increasingly isolated. china has a lot to do with that. the fact that china was able to sign on to the u.s. read out, i am sure they had a say in that, that they do not want to see nuclear force, we heard this from xi jinping, they don't want to see nuclear use in europe. we are also likely to see a g20 munich eight with all of them signing up. it won't say it russia's war but it will say russia and ukraine.

russia would not like to be the lone wolf if they wanted to get china onto that communique. lisa: what does this have to do with semi conductors? we thought that was one of the biggest issues coming into this. do we get any insight into the policy there? annmarie: the policy is status quo. the united states maintains they are going to continue to have these curves on semi conductors that have this u.s. technology to china. china wants this to advance their technology space here to also crucial to advance their military capabilities. right now the u.s. is not backtracking on this policy that came out from the commerce department which is something that has drawn a lot of concern and has been an annoyance for beijing. the other big thread about semi conductors is the fact whether it is semi conductors or also president biden's, the administrations inflation

reduction act, there is a growing force from allies, south korea, the netherlands, whether it is a manual con who made his bateman's, unfriendly, aimed at the united states behind the scenes. does that mean they cannot ship to china? will that cut them off as well? and the same with the inflation reduction act, what you hear behind the scenes, they feel the united states is not fair to their companies if the u.s. is going to give subsidies to american companies. overall there has been a lot of unity amongst the west at this g20 summit. lisa: we are going to hear from a bilateral with the italian prime minister today, tomorrow and wednesday we are going to expect to hear something from u.k. prime minister rishi sunak. have a new u.k. prime minister. which one are you watching most closely at the next few meetings biting -- the next meetings

biden has? annmarie: biden already had his meeting with giorgia meloni. it was the first time he sat down with him. those were going to be energy discussion. relying on energy and natural gas. we saw them really take this solid tone when it comes to putting -- the biden administration wants to make sure that tone continues to giorgia meloni who has developed this far right government. the next meeting is more interesting with u.k. prime minister rishi sunak for a number of reasons. this is president biden's third u.k. prime minister in his entire administration. that is almost two years. he is dealing with his third u.k. prime minister. the u.s. and the u.k. like to call it special. this one the u.s. wants to make sure it goes well.

jon: on twitter, tell pharaoh if he stops skipping meetings maybe he can get --. what is it about the insecure american man in a swimsuit -- in slim suit? lisa: you see the advertisers that are pulling back. jon: let's see what happens. lisa: he is cutting contractors. jon: super early days. coming up, collin j martin, from charles schwab & co.. from new york, this is bloomberg. ♪ ♪ 202 pounds on golo.'ve lost

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>> this equity market rally, their market rally, after the biggest two a path on the nasdaq since 2008. 115%. futures positive 1%. heard a lot of people tell me

this market just wants to go higher right now. i think this story speaks to that. we have additional work to do and -- is lower again still in the face of that pushback from the fed. down by five basis point. yields lower, the dollar weaker. 8/10 of 1%, some real dollar weakness out there this morning. lisa: i'm still stuck on "the market wants to go higher." people getting some sort of emotional reality to the market, i have to wonder what they are looking at. jonathan: sometimes you can understand something by the way the market responds to economic information. the fact that the equity market is higher in bond yields are lower this morning, even with the fed pushback i think speaks to something. i want lower yields, i want a

weaker dollar, and i want decent earnings, and i had all three. >> and there have been whispers around some of the stories, so people are kind of leaning into that. some of the earnings that they got today, hitting a different picture in terms of the gain and losers. home depot reported, those shares lower by about 1%. interesting because the headline numbers came out better than expected. looking underneath, inventories were building. how much of this is an inventory story? also, traffic is falling. how much our results simply of inflation? jonathan: you can't help yourself. you had to go through those earnings to find something negative about them. lisa: they are down. so people could come back at me with hate mail for home depot, but it seems like the market feels. there's absolutely nothing bad about walmart.

perhaps bad about the broader economy, if you want to go there because perhaps people are going to walmart rather than other grocery stores because they are able to discount things i thought it was really interesting that they are actually gaining market share in grocery types of products. also interesting that that cleared out their inventory issues so this is also an execution story as much as it is simply a demographic story. jonathan: hopefully it is not. a lot of people downgrading from those high-end franchises if you want to call them that. lisa: and i also was looking at some of the chip sector. chip companies are doing so well. this massive rally, and on what? what are they getting right now this meeting? jonathan: i think what is interesting is how quickly the story has changed with that industry. it has gone from under-supplied, too much demand, to over-supplied, not enough demand very quickly. to see cuts at places like

intel, not what you would expect. lisa: which makes it even more interesting that the semiconductor index is up, and this goes to your point about the action we are seeing in markets, where the market wants to go. how much is this simply because people don't really have a handle on basic things like economic cycles, business cycles, and ration? these are all mysteries. jonathan: you hate that line, don't you? "the market wants to go higher." tom: i don't hate it. does the market where a hat when it's cold? jonathan: do bond yields want to go lower? >> i think they do. when you look at the movement lately with the report, we are seeing them trickle down. part of that has to do with one really good report and the fact

that maybe it allows the fed to slow down. i think you can look at specifically for both the hawks and the doves but i think what people really focus on was using the term downshift and the expectations 50 basis points versus 75 basis points. going back to last week's cpi release, we just hope that we do see that trend continue. i think the fed wants to slow down its pace. for now, it looks like we are not done yet. behind the scenes, i think a lot of officials are hoping it will translate to the upcoming pce report and inflation prints down the road. jonathan: there was a real pushback. that was a number of weeks ago, maybe even a number of months ago.

they stay there. what do you think is happening now? why are we ignoring some of the sped speaking the way that we should have may more recently? >> i will just go back to the inflation trend. the fed can talk a tough game, and they need to act tough and talk tough. they need to be sure inflation comes down. they are hedging their bets, saying we need to keep at it until we see inflation consistently move down. i think that is going to take a while. one cpi print is not going to be the be-all end-all but we are seeing signs of it elsewhere. something we can focusing on a lot as the housing market. and we are expecting a lot of other areas of the market to slow down as the tightening

we've experienced works its way through the economy. a lot of it is expectations that we think will happen. but as time progresses and if we get a continued chorus of fed speakers pushing back more and more, i think the narrative changes a little bit. lisa: there has been a shift of how much people respond to how many rate hikes and how quickly the fed is going to raise rates vs. how long the fed is going to hold rates. has this market, have credit markets fully priced in a 5% or 4.75% fed funds rate for the bulk of the year? has that been priced in? >> we don't think it has. when you look at the credit markets, they are really hanging in there, performing well. credit spreads, especially high-yield spreads, aren't pricing and much risk. spreads are closer to the long-term average. they've actually come down

sharply lately. it seems like it is shrugging off the negative impact of this tightening. we do expect spreads to rise. ideally, we don't want them to. but we do think that is the likely outcome here as borrowing costs rise and continue to work through the economy, as consumer spending slows. and to your final point, i think what the markets are under appreciating is the risk we have in rates so high for so long. we've seen periods in the past with volatility, corporations that didn't come to market because they didn't want to lock in those high yields. if we see a fed fund rate of four and three quarters or more for six months, nine months, 12 months, that is a long window for corporations to sit on the sidelines. we think the markets are under appreciating that risk and we

are still a bit cautious right now. lisa: just to go full circle, if anything can the rhetoric that is giving any paws with the assumption of their willingness to hold rates at 5% or even below that for a year? >> they told us they don't want to cut and we are taking them at their word. it seems like markets are kind of balancing around depending on whether it is going to the 5%. we think what is more important is how long they hold it. i think we need to retire that word, but they pushback at the ending that they will start cutting quickly and we think they will get to whatever that peak is and see if it holds for a while, through the end of 2023 or early 2024. jonathan: it is at least the third time.

how many times have we done this? if you times? in the summer, twice. we did get a step down. most people assume we will. we still got one more cpi print before we get there? we can completely reform the conversation. december 2, you get payroll. december 13, you get cpi. december 14 is the federal reserve meeting. lisa: people still believe in the pivot. if you don't believe in the pivot, and we really understood the consequences, which is exactly what the fed is saying. to your point, a slowing economy. it means an even more restrictive monetary policy. jonathan: the good news is that pushing out the week this is not here yet. they think it comes at the start of 2023. resilience of the story of this economy. in the face of rates that have gone up 400 basis points, it is pretty phenomenal.

lisa: which is perhaps people covering areas. jonathan: i think that is really, really important. but if you told me they were going to raise rates for hundred basis points, i would have guessed the data would be somewhere else. but this is where it is right now. lisa: if we priced in stagflation? we saw that survey, and i keep going back to that idea of 92% of all surveyed investors see the likelihood of stagflation being present. at that been priced in? if not, what do people have to see to priced that in at a time when we are going to see inflation like the remaining higher? jonathan: have i ever told you how much i love -- at bank of america? absolutely flying this morning, the stock is up by 6%. equities outcome up the earnings from walmart pretty decent. the dollar is weaker. you woke up this morning and you had a dream last night and

everything you wanted so that you can get stocks higher. kind of getting it this morning at least. the yields down, the dollar weaker. stocks are out. lisa: of course i'm skeptical. 100%. jonathan: it ends the same way, doesn't it? lisa: always. jonathan: from new york, this is bloomberg. lisa: keeping you up-to-date with news from around the world, donald trump is barreling ahead with his plans for his third run for the white house. it's expected to make the announcement at 9:00 p.m. new york time. at the same time, a growing number of republicans have abandoned the former president over last week's dismal showing in midterm elections and even some supporters urged him to hold off on the announcement until after next month's senate runoff in georgia. the european union has formally begun a training mission for you rain. the goal is to educate up to 50,000 ukrainian soldiers in the territory.

the e.u. also approved more than $16 billion to finance the delivery of ammunition and other military equipment to ukraine. skybridge capital founder anthony scaramucci says due diligence that he did wasn't enough. he says he is now trying to buy that the 30% stake in skybridge. >> i am hopeful i will be able to negotiate with the trust for the administrator with a bankruptcy reasonable price for that equity, and we will buy it back. our business has been heard by the association, there is no question about that. but i also think it gives me an opportunity to talk about this very transparently. >> he was interviewed in singapore. shares of walmart are rising today. the retail giant raised its outlook after strong quarterly sales. walmart also announced a new $20 billion repurchase plan. it continues to gain market

share in the u.s. grocery business. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

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>> we think it will probably be appropriate soon move to a slower pace of increases, but i think what is really important to emphasize, we've done a lot, but we have additional work to do both on raising rates and sustaining restraint to bring inflation down. jonathan: fantastic conversation yesterday afternoon as you might expect. from new york city this morning, good morning. futures are higher, about one hour 50 minutes away. one hour 42 minutes away.

the numbers out of walmart, better than expected as well almost across the board. that helps things out. something else helps things out as well. 10 year, 3.80. the euro-dollar, the dollar weaker. lisa: sounds so positive. it is basically a bull market. and it has been good, but how much do you really emphasize that people have conviction on this rally? jonathan: zero. lisa: you even have people saying this could go further, and then we see the pain. that seems to be what we're hearing from most people who come on the show. jonathan: totally agree. we are on the same page, nearly always are. going to head down to washington, d.c.. there's a lot of noise behind the republican from kentucky and ranking member of the house subcommittee on oversight investigations. you and i were joking at the commercial break.

at the chaos of washington returns, i will that you go for sure. you made easy work of kentucky's 16 resident district. other republicans struggle. what went wrong with the party at these midterms? >> i am an optimist, i have a positive attitude, and so however you cut it, and no doubt republicans are disappointed that the red wave did not materialize, but however you cut it, we made material gains in the house and it looks like we are on track to take the majority. we have taken the majority. that was the objective. even not taking the senate, what does that mean? it means that they don't give out small, medium and large-sized gavels, they just get out gavels. by retiring nancy pelosi, i having a new speaker, by having republicans in charge of the gavels and the committees, it means we set the agenda, we have the ability to exercise oversight.

we can put the brakes on the overspending and the threat of higher taxes and you can exercise oversight over the regulatory assault on the freer price system. that is what the market should take encouragement by in this election, is that we do have divided government. lisa: so who would you like to see the leader of the house of representatives, is it kevin mccarthy? who would you like to see the leader of the republican party? is it former president trump? >> no, it is kevin mccarthy. no one has done more for the house republican conference chair kevin mccarthy in terms of raising money, helping candidates, helping members represented districts. an understanding their districts. kevin mccarthy is going to have the votes not only between his leadership election today, but also to become speaker. look, there is competition. the great thing about the republican party both in these leadership elections in congress and in 2024 is there will be

competition. there is no coordination in the republican party. that is the great thing about the republican party. we are a libertarian party. we believe in free enterprise, competition and choice. we don't believe in a top-down, we believe in bottom-up. iron sharpens iron, that is what makes us better leaders. lisa: how important is it to you for former president trump not to run again in order for republicans to kind of reclaim that mantle, given the turnout that recently was the vote in the previous two elections? >> i think we have to do some soul-searching and recognize that certain candidates for congress underperformed other candidates. what were the features of those candidates? again, we are the party of competition and choice, so i am not one to say this candidate should run or the former president shouldn't run. i think it will be a robust competition. i do not believe there will be a coordination for the nomination,

but i want to say this about 2024. we are getting ahead of ourselves a little bit. the crises that are facing us right now have not changed since tuesday. inflation continues to be in massive, 40-year problem for our country. the crime problem is significant, that is why a lot of republicans did well in places where you've got a crime problem. the border crisis is significant, the energy crisis. the attack on american energy independence continues to be a big problem in the president's approval rating continues to be at 40%. even while the american people didn't give a mandate to republicans, they certainly didn't get a mandate of the democrats when they gave republicans control of the house. it is dissatisfaction all the way around and it means that republican they, pratt alike need to do a better job responding to the problems facing the american people. republicans in the majority are going to be laser focused on this inflation crisis and i want

to say this to your audience in particular. no amount of federal reserve tightening is going to solve this inflation crisis. there is a supply-side problem as much as there is a demand-side or excess demand issue in the economy, and we need to produce and supply more american-made energy in this country to fix these eyesight. we need to take off the table the threat of higher taxes and overregulation which impedes business investment, impedes their hair that need to take place in the supply chain. if we don't do that, we are not going to get out of this inflation spiral and you are going to continue to see aggressive tightening that will disrupt the financial markets. jonathan: you said. we've gotten approval rating for the president in the 40's. inflation at a 40 year high and still this is the position the republican party finds itself in. most people think that speaks to the failure of his party not to secure a bigger majority in the house. or any majority whatsoever in the senate. he talked about soul-searching. can you be more specific about

what that actually means? i will go back to the question at the start of the conversation. what went wrong? what needs to change? what does that soul-searching actually involve? >> again, i am an optimist. when you take the majority, what went wrong, you have to get a little bit of credit to the excellent candidates who did win and we did beat incumbent democrats, and look at those candidates. what were the characteristics? they were optimistic, they were patriotic. they believed in free enterprise at the solution, not the problem. they believed they recognized that the government and fiscal policies and policy errors are why we have this inflation crisis. and they have solutions and they offer solutions in the form of the commitment to america to stop the overspending, to produce american energy again. to fund, not defund the police and to secure our southern border. and to say we are a nation of

immigrants but we are also additional laws. i think the candidates that have that positive message were the candidates that one. candidates with a more divisive message and were only about opposition as opposed to policy solutions, those candidates struggled. i believe any republican party that presents a positive message about for enterprise, free and limited government and upward mobility. that is how we are going to win the majority for years to come. jonathan: we are going to have a longer conversation about your role in the next couple of weeks, and i'm looking forward to that conversation. live from new york city, equity futures higher. good morning.

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>> the underlying inflation numbers look like they are beginning to peek, which is the good news.

>> we've got these views are on sticky inflation, recession. >> it does feel like the market is moving data point to data point. >> markets are long in terms of the longevity of how long the face can keep rates at these elevated levels. announcer: this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: the audience worldwide, good morning, good morning. this is bloomberg surveillance on tv and radio. i jonathan ferro. equities ripping once again, the rally continues. it resumes and 1% on the s&p 500. the earnings behind us. referred from home depot, heard from walmart. lisa: and this is because they came in less bad than expected. they increased the forecast rather than expected -9%-11%. if you took it just where we are, you've asked this question, the most important one for us.

is this good news or bad news for the economy? it is a way to confuse the issue. jonathan: walmart, good news and it is not bad news. i'm with you, people are asking questions this morning. lisa: also we've had this complete narrative shift that came in less hot than expected as we thought 7.7%. in about a half hour, we get epi, the reducing prices. do we get a sense of confirmation of that print and if we don't, could that the mass of the market-moving type of event if people have to rethink how quickly inflation is decelerating? jonathan: december 2 coming to get payrolls. 13th, cpi. 14, the projections for next year. what is in those projections? we are waiting to see if that is not up again ultimately by how much, and chairman powell told us it would. in the last senate rejections, that went to 4.60.

respecting it now to go from 4.62 five. isn't the market basically already there? aren't they just validating with the market already is? lisa: i keep going back to these basic tenets of the economy that we don't understand. how much is supply had been driven, how much is the man had some say demand is about 60% of the inflation. ok, but how quickly our inflations coming down? how quickly is this a tale of two incomes? some kind of global, overarching thesis. jonathan: looking forward to that conversation in the next segment. we will talk about the g20, also some feedback we are getting. this was a quote from him. recessions work through an element of surprise. what if growth is picking up

because at the moment, consumer spending is running for percent in real terms? that is the pushback this morning. i get a lot of guests who say the same thing, saying exactly the same thing going into next year. lisa: the surprise is that we have not seen inflation like this. the surprise is we don't know what is going to happen with the weather or with natural gas or with europe or with chinese relationships with the u.s. there are many surprises out there. how do you accurately gauge them out? people are very aware of the vulnerabilities. but they are not aware of is how things develop over time in an environment that is, to use tom's word, unique. jonathan: citi, morgan stanley, kaiser talking about the same thing. inflation starts rolling over and further down the road somewhere, growth gets smacked around as well. we are going to trade on lower rates, the weaker dollar, the idea the fed backs away.

somewhere down the road, not just because yields are down, the dollar is weaker, you have to trade on why the yields are lower and that that has backed off. but what i've seen over the last few weeks and months is that this has got closer, inflation has rolling over. this has got further away. just the idea that growth is going to get smashed to pieces. that seems to be down to early 2023. lisa: people are talking about the likelihood of some soft landing. i'm not -- i'm not going to stop people from dreaming but there is the ceiling with some of the options positioning, is recognized as just that, and this deals temporary in nature. jonathan: isn't that what markets are, though? a dream of a better future? isn't that what equities are? lisa: other people would call it

realist. so far, the balance sheet look ok, but credit is what i'm watching for next year. jonathan: it is better in this market this tuesday morning, going into ppi. chief investment strategist, you are talking about this consumer-driven recession. the number one question, how far down the road is it when you start to see signs of a building right now? >> i think we are seeing signs right now. i love lisa's phrase at the top of the hour, that less bad than expected is enough to move markets. consumers may be less good than expected, and i mean that in the sense of the labor market, the housing market has already begun to soften. measures of consumer sentiment are pretty weak and most of the excess savings generated during the pandemic have largely been

spent. i don't know if that shapes up to a recession or a soft landing. whatever it is, i think it is relatively mild. lisa: ok, so where to invest? >> right now, in equities, broadly speaking. we forget sometimes, and we have to remind our clients and our listeners that equity markets are anticipatory mechanisms. if you go back and look at history of recessions in this country going back to the second world war, in 2023, in nine out of 12 of those historic examples, equities are higher following the beginning of the recession, not the end. what you see in their is the classic example of investors not making decisions based on today's headlines, but allocating capital based on today's foundations plus anticipation of what headlines

are likely to be. you mentioned the futures market, and the futures market is pricing in the fed fund peaking at about 5%, if you look after the end of next year, the future market is already pricing any couple interest rate cuts and the tail end of 2023. that would be consistent with a relatively mild recession and investors want to invest ahead of that. lisa: before we get into the idea of a fed pitted or some sort of cuts heading to the end of next year, just on the overall historical corollary, how relevant is it given the shift in the composition? given that big tech is facing somewhat of an existential crisis when you take a look admitted, for example, which is losing popularity, and some of the other name that have really struggled for real reasons that are not necessarily just because of the cycle? >> i think it is still relevant. it is the old mark twain observation that history may not

repeat itself, but it rhymes. if you look back at previous cycles, is always one sector that tends to dominate the market. the risk of employing the old cliche, i do think 2023 will be a stop to gross market. the overall s&p training, let's call it 17 or 18 times earnings. if you look at the individual constituents, close to 100 constituents of the index are trading at single-digit levels. how can that be? obviously, the averages were dragged upward by large cap technology. again, it is a cliche, but a cliche that is applicable in this market. jonathan: thank you, sir. going to talk about that year-round in early 2023 to see if that is actually the case were not in early 2023. we've heard that a lot, haven't

we? we for that over the last 10 years and what happened over the last 10 years is passive investing absolutely dominated. largely because of the weightings, massive toward big tech which has delivered in a massive way. those names have now gotten in some real trouble which validates the story that scott is talking about and why he is not the only one pushing it. lisa: some of these companies do face more substantial problem than others and it doesn't feel like they are going to get turned around i simply a better time for a monetary policy shift. the question is, if the change more significant facing the likes of a meta or really even a netflix given the competition, or is this just a case of valuations reasserting itself next year when people start thinking about rate cuts again? jonathan: it is always about the promise of growth in the future. more and more growth, more and more growth.

long-duration assets, fantastic. the discipline of 4%, the threat of 5%. show me the money, show me the profit. have seen cuts now at companies we have never seen cuts at five years ago. lisa: 10,000 people cut, and this is corporate and tech jobs, not just necessarily jobs type to warehouse workers or seasonal trends. this is people who work on alexa, people who are in some of the areas that were thought of as some of the more promising ones. jonathan: did you get alexa? lisa: i did. jonathan: what do you do to it? lisa: i talked with. true story, my kids like to tell it joke because they tell it jokes and some of them are good, some of them are really bad and we laugh. and you know, the weather, how it is doing. you can ask lots of questions.

jonathan: you have a conversation with a robot? lisa: sometimes. jonathan: amazing. equity futures positive. lisa has got a couple of minutes to pull herself together. we are going to handed over to anne-marie in a just a moment at the g20 with a white house official. looking forward to that conversation. live from new york, this is bloomberg. lisa: alexa actually on my christmas list. with the first word, i lisa mateo. -- the billionaire founder things republicans should look elsewhere. >> you lost in the 2020. lost georgia because of his behavior in the senate race in 2020. that is a second loss. and then this year, republicans lost the senate because the trump-backed candidates in

senate races were rejected by american voters. that is a three-time loser and i'd like to think that the republican is ready to move on from somebody who has been for this party a three-time loser. lisa: ron desantis spoke at the economy for in singapore. democrat katie hobbs has turned back a prominent election denier to be elected governor. she defeated kari lake who embraced donald trump's tasteless claims of fraud in the 2020 election. the associated press called the race with about 90% of the ballots counted. she has more than 20,000 votes lead. shares of walmart arising today. the retail giant raised outlook after strong poorly sales. walmart also announced a new 20 billion share repurchase plan. the company said it has significantly improved its inventory position and continues to gain market share in u.s. grocery business. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

>> this is the tip of the iceberg in terms of the layoffs. what i expect will happen in 2023 is really a slow-motion realization that we are going into a recession and the earnings are going to come off. jonathan: walmart this morning is the one to watch, 7.5%, equity futures up by more than 1% this morning. this market doing nicely. one hour 12 minutes away from the opening veil. we will break that down for you in just a moment. tweet of the morning on twitter,

-- so bad she goes home and talked to a machine. lisa: how is it going? jonathan: a special guest, hi, anne-marie. anne-marie: the fact that this guest is with me does sound like they are looking hopeful for the joint leaders. i'm joined now by the president's deputy national security adviser mike pyle. thanks for joining me. you are the representative at the table, the sherpa. the fact that you are here before the leaders sign off on it sounds like is hopeful that all 20 leaders will sign this communique. how do you plan to get a on board? >> i don't want to get ahead of our leaders, obviously they will speak collectively coming out of the summit, but i think we are instructed that there is going to be a statement that accomplishes what the president set out as his priorities coming

in. number one, to rally the world speak in strong language around russia's war in ukraine, to condemn russia, to condemn the consequences of russia's behavior in terms of its stresses on the global economy, but also affirmative vision for what an action plan to look like to address those stresses, particularly on countries in the emerging world. >> how crucial was a xi jinping in china to getting this off the finish line? >> what i would say is president biden and his vision was very essential to getting this communique over the finish line. again, coming in and then working hard to rally a broad stretch of the g20 i think we all see in the communique is that most of the g20 came together to strongly condemn russia's war, to strongly condemn those actions and the

consequences it has had for the global economy. what we are also going to see reflected in that, a lot of the priorities the president has articulated. whether it is a need for reform, like the world bank, whether it is the need to stand up in an effort to be more prepared for future pandemics, whether it is an issue like debt relief where, again, like what we saw in october, one country at 20 was isolated while the rest of the 19 stood up and said this is something we need to do to help vulnerable countries, you're going to see those priorities as a reflection of u.s. leadership. >> we are hearing a growing chorus on the margins were out in the front about some action of the united states has taken. one, the inflation reduction act getting subsidies to american companies but also the curb on the chips to china were potentially, a european company like a cut in the crossfire however you been able to deal

with your allies in these two critical issues that are going to help the u.s. domestically and is going to hurt them? >> with respect to the ira, the core point is we have a shared challenge globally around climate change. and we have heard from the rest of the world for years the united states needs to take major action to address that, to address this problem that we all face. >> i would say with respect to what is the core global challenge that we face, this is historic action that will further the u.s.'s achievement of its climate goals and the u.s. achieving climate goals is essential to the world achieving climate goals. the investments that we are making in clean energy, in electric vehicles really are investments that we can make enough of. and we invite other countries to

make investments in their own clean energy sector, in their own secure supply chains. these are things that we think that we can do in a way that is going to serve everyone's interests, and the united states has taken a huge step forward to do that for our economy and for the rest of the world. >> the president obviously came into these meetings all these years with pretty much a think boost in his step in the sense that the democrats are able to remain control of the senate, even with everything going on in georgia, and the red wave really was a red ripple. do you think if that outcome was different, it would have changed have a president was perceived on the ground? >> and the economic sky, not the politics guy. >> for the world right now, the economy and politics are everything when a country is dealing with inflation. >> as i said before, u.s.

leadership, the president's leadership, i think they see u.s. economy in the face of global challenges. they see a president and administration has delivered on their promises in terms of reinvesting in the u.s. economy, in terms of taking historic action on climate change. as a result of that leadership, a lot of the things that i described at the agenda coming into this really met with a lot of open years and open arms from most of the g20. >> thank you summit for joining me. that was president biden stepping national security advisor. in the g20 speak, he is the sherpa, the u.s. interest at the table as they go through every single issue that they are going to sign off on, and the moment, it does look like we're going to get all or the majority of leaders on board. jonathan: great work not just

this morning, but over the last couple days as well. as you and many people know, so much work goes into this. they spend months, weeks and months going over this with other leaders, other representatives of leaders. to put through maybe about three quarters of ultimately what is agreed in the last 25% is the leaders trying to hash out things to get over the finish line. i think we managed to get it communique from this g20 given how low the bar was and how difficult it is to get 20 countries to agree on anything right now. i think that is probably quite the wind. lisa: this is the reason why it was a big headline that xi jinping and president biden shook hands, you get the sort of photo op the main point of this. the bulk of the work is done before that and it is coming together and displaying what that work has yielded and what that has yielded is something that is a little less scary than what some people were imagining. jonathan: would you like to know

what i'm working on the bloomberg terminal? brkt wcup. that is your world cup bracket code for bloomberg terminal subscribers. this is why tom is actually off. he spent the last day doing his bracket. are you going to do when? lisa: i have to. i'm going to really get into it. jonathan: really bad at this. very, very bad at this. i'm pretty sure i lost to tom. lisa: pretty much all you need to know. i will participate, and then i will know what you've been working on in the brakes. jonathan: from new york, this is bloomberg.

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jonathan: cpi last week delivered a downside to supplies. seconds away, going to break that down. equity futures, just about positive, nicely positive. yields lower by three or four basis points. give us the why. >> it looks like we are coming in with a little bit later pbi,

up to tens of 1%. in the core is flat on the month, which is down for the 3/10 again the month before. take food and energy on a year-over-year basis, and you are up 6.7%, a big drop from 7.2%. in the headlight is down from 8.5. so significantly good news which trails. they are not directly comparable. there are middlemen in the middle, that is particularly good news. we also have good news from the empire manufacturing numbers, the first one out of the digitals, and they are up 14 points to 4.5 new orders, down a little. unemployment is up, still seeing strong labor markets. prices made little change. not as good of economic inflation story on the empire

manufacturing, of the ppi comes in, echoing will be saw in the cpi. jonathan: another green light, let's see if this move sticks. just off session highs coming off the back of his number. yields lower. much, much lower. the five-year down 11 basis points, the 10-year down at nine. on a two year, down six points. surprise on ppi. you and i talked about the fed, the philadelphia fed who said inflation was up like a rocket and you said it was down like a feather. how fast could this follow? >> to could fall like a rocket. maybe one of elon musk's rockets. jonathan: that lends itself nicely? >> it went up -- lands itself nicely? >> it could come down much more quickly.

i think what you will get is a love the stuff that was cyclical goes out fairly quickly, and then we start to see a slowdown as we get some secular kinds of inflation. a good question to ask, not that you ever have any guests on tv to talk to. what do people think is going to happen after this? do we go back to the new normal of low inflation, or do we stick with the higher level of inflation which the entire interest rates, and how does that affect everything? lisa: we will definitely keep asking that. service site inflation would continue to come in even if we did see some sort of mitigation in the inflationary impulse in the good side. already seeing that in the details? >> final dimension services of 4/10 after a 3/10 gain in august, but it is not the end of the world here. we are still seeing very small

gains. actually, i had that wrong. first decline since november 2020. lisa: wow. >> i was wrong but when i am wrong, it is good news for the overall economy. margins they'll half of 1% which is basically wholesaler and retailer margins. their ability to maintain these margins going down raced down inflation overall, but if you think about that in terms of what it means for earnings. jonathan: we talked about that, inflation coming back down. s&p 500 futures, the nasdaq up more than 3%. this rally has been phenomenal. the back of a softer than expected ppi number. joining us now to discuss is the chairman of research affiliates. can we start with a story mike and i were discussing? how quickly can inflation come back down toward target?

>> inflation can come back down quite quickly, but history suggests that that is an outlier, that when you get inflation above 8%, we did a study published yesterday looking at 14 developed economies around the world over the last 50 years, and there were 52 instances of inflation rising above 4%, and we asked how quickly does it recede? many of them went on to 6%. over 25 went on to 8%. and when you get to 8% inflation, there's two possibilities. you have hit the high, it rolls over and comes down. how quickly? on average, it takes two years for it to come back down to 4%. that's not bad. not as quickly as people would like, but that is the median, just or percent. 2.5 years to 2%. five years to get back down to

2%. if this is not the high, if you move on to new levels of inflation, 10% or higher, then it takes an average of 10 years to get back down to 4%. so the good news is there is a state possibility we will see inflation moderate fairly quickly. the bad news, there is a distinct possibility, roughly equally likely they could take 10 years. this is the unfortunate reality of inflation. lisa: right now we are seeing markets very excited about the idea of some sort of slowdown in the pace of patient, some sort of disinflationary impulse. do you think that the market stocks are getting a little ahead of themselves in terms of pricing in fed rate cuts late next year and some sort of softer landing type of scenario? >> will of course, that scenario as i said is entirely possible. the market is pricing in as if

it is the midpoint expectation. in the midpoint expectation should include scenarios where does move to new highs and scenarios where a pieces off fairly quickly. but most people think in terms of 4% by middle of next year as a reasonable expectation. that is an outlier. that is the 10% most benign outcomes. the 20% most benign, it takes two years to get down to 4%. the 20% leased benign, it takes 10 years or more. and that scenario deserves some acknowledgment because it could happen. lisa: what would that look like in terms of market readthrough? is that the last decade for u.s. stocks? >> that is exactly right, what we would have is a last decade for stocks and bonds. there is no way that bond yields could stay in the 4% range if inflation takes 10 years to get back down to 4%.

so please don't misunderstand me as saying that i think it will take 10 years, i'm not saying that. i'm saying we should acknowledge the possibility that he could take multiple years. money can't serve multiple masters. it is an exchange to buy or sell goods or services. either contemporaneously -- they exchange my investment advice for groceries -- indirectly, by way of using money, or intertemporal he. money can't serve multiple masters. central bankers see an array of gold. they hope to achieve monetary policy price stability. low servicing cost for government debt. there market disruption preventing their markets and so forth. when money is asked to serve multiple masters, it doesn't serve any of them particularly well, and that is a simple choice easily overlooked. >> appreciate your>> time this morning, sir.

a softer than expected ppi. here is a recipe on the nasdaq, on the s&p 500, in and around 2%. we got a downsize of price on api. there is a hope that we will get more china reopening. there is a hope for gridlock. put it altogether, stir it into a pot, and what have you got? by equities. lisa: jonathan golub who take -- tivoli is a stock market bowl highlights this incredible move that we've seen. almost 11% since mid october and he talked about how most of it was before the cpi print last week, basically saying that he thinks the market near-term potential is more limited because of how much has already been based in. is that going to be the consensus tavi year? jonathan: he has been leaning into this bear market rally, but ultimately expecting some real lows in the first quarter of next year after some bad numbers going into year end.

lisa: what are we pressing in? how much are we accurately accounting for the risk of something more substantial if we don't have a sense of really how far and how quickly inflation can be coming down? looking forward to that conversation. before we get there, some breaking news on goldman. some of the news has been brought to you by --. he runs through what you've learned we just learn how goldman sachs paid well over 20 million -- $12 million to executives who have complained about -- at the bank. as senior as that industry, extremely rare, to be willing to

-- this experience is rarer still. of course, there were settlements in a nondisclosure agreement, but it does seem like they were willing to settle for a pretty significant amount. to make sure some of these embarrassing details doesn't come out. vulgar, dismissive remarks made by senior managers at this term. even lack of promotion for women, clearly a recipe for something that was not going to look good for goldman sachs and decide to move ahead and bury the complaint. lisa: what is the significance of this coming out now in terms of a culture shift or exposing what has been going on as some live services a to a culture shift? >> that is important, because when this happens, we understand this is two years ago in 2020.

an incident describing the complaint was from 2018 or 2019. this is not from some prehistoric era on wall street. this is all pretty recent. and if we look at some of the complaints, the way that allegations are made here about how women were treated, adjusting fitness regimens, gender research meetings, and you can understand why that is problematic for a firm like goldman sachs. we are going out there, when you have a leadership team that, to their credit, has made diversity a key part, they have been wanting to tout credentials on that front, and therefore we you have something like this, that is a little troubling. is it completely out of whack from what referred on wall street or experienced women on wall street in the industry? they are pretty much use to it on a regular basis, but still, this sentiment gives you a

window into the price for secrecy, what they may be willing to pay to make sure such claims never become public. lisa: thank you so much. and congratulations on the story that really highlights some of the parts of industry and a lot of people who have typically kept pretty secret. just turn the markets, softer than expected inflationary, setting stocks much higher. looking at the nasdaq now, up nearly 3% in premarket trading on top of what we saw over the past month or so, since mid-october. we are seeing yields lower as people take a look at the potential for perhaps a little bit more likelihood of a soft landing. u.s. treasury yields at 3.89%. that is the lowest going back and have a, so we are seeing that also at the beginning of october. seeing the dollar continued to weaken again.

a strong euro. and people expect, perhaps, a bit of a softer riot going forward. coming up, we get to have more conversation about how to position in this environment. this is bloomberg.

>> we have to be rational in terms of how financial conditions can evolve, how we can get to a point that the federal reserve will perhaps entertain supporting growth, but that seems to be included premature at this point. lisa: perhaps premature, however right now in markets, people seem to be cheering the end nation as it had been in terms of how hot it was. we got the second executive downsized prize and good surprise when it comes to softer than expected inflation and ppi coming in they had expected across the board, 8%.

if you strip out food and energy, 6.7% as opposed expectations for 7.2%. the respondent markets, quite clear. s&p up 1.8%. nasdaq out quite a bit more, almost 3%. the yields, lower. the dollar, weaker across the board. joining us now is someone who has a really critical view on the whole issue. i take a look at this and i think about something that you wrote. today, i can sum up the outlook at only 14 words. the fed is solving for 2% inflation. the market is solving for the fed. if this market entirely looking to defend and a day like today is just betting the fed will not have to raise rates as high and keep them there as long? >> i think that is true, and i think the market is feeling more confident, if you will, that it can look past peak fed and onto a more neutral zone that

will presumably come after the peak, which will be early next year and toward 2024. if that neutral zone is 3.5 and you put in the math of where the two year yield is, where 10-year real yields are, you plug that in, you get to the kind of levels that we are now seeing in the markets. the cpi and the ppi reports give the markets some confidence that finally, we can look past this peak in the curve and onto a more normal range of interest rates and meditate you get a 14 or 50 times earnings, which was really kind of the fair value, and onto a tape of multiple. whether we can get beyond that, of course, is the big question. lisa: our markets overly rosy right now? >> i don't think they are overly rosy, but that does not mean they have a lot more room to rally from here because at a 70

multiple which is kind of where we are now, that is assuming that we have already discounted and return to some kind of normalcy in interest rates. so in order to get another leg up from here, i think there would have to be more visibility better earnings are not going to fall in that the market can have some comfort in the denominator. also, the fed might start to throw cold water on this rally because that happens when stocks rally and bonds rally and the dollar goes down. financial conditions loosen, which is the opposite of what the fed wants to see during a tightening campaign because at one financial conditions to tighten. another is that the fed will start throwing cold water on this rally. lisa: how much do you have to look at big tech? it is a significant component of the overall indexes. if there isn't something more structural about how they operate against people

confidence, can we see the s&p end up positive next year vs. where we are today? >> it's possible. but what i call the nifty 50, the big growth stocks, those have been a powerful engine for the markets over the past 10 years or so. they generate a lot of free cash flow. and a lot of that cash flow that was extra was returned back to shareholders. that financial engineering machine has been very, very rewarding for investors because it creates a high payout ratio. more earnings are returned to shareholders directly, but clearly there has been pressure on those. we seen that this year, most of them are down significantly, and they rely on a very low cost of capital to compound the very long-duration stream of cash flows. it is a big open question as to whether that can continue, and the rotation we are now seeing

towards value, toward small caps even, that could have some legs. lisa: how hard was it to come up with the 2023 outlook? >> it is hard because there are so many moving targets because really, it is about the fed. the fed has made it clear that it is not just inflation coming down, they want inflation back to 2%. 2% tends to be on the corner of a look at mostly, so that is about 2.5 on the cpi. dear still at around 8%. that is going to take some time. it might happen fast in terms of getting from eight to four. that part will be relatively easy. but it has to go all the way to two the fed to be able to truly step off the brakes and allow for a neutral policy, and that is a question for the back end of the cycle a year from now, or

six months from now, and it will be the biggest variable for 2023. lisa: if it is all about the fed, what is your biggest conviction? >> the fed has a dual mandate, full employment, price stability, 2% inflation. if inflation goes to only three, while the economy was going into a recession, i said the fed would kind of tolerate above target inflation in order to keep employment at full capacity. from what i'm hearing and seeing and from talking to former officials, the fed is going to sacrifice the economy if it needs to in order to get inflation not just down from where it is, but all the way down. i think a fed that is maybe more hawkish than we've all kind of

come to think over the last few years after all the monetary stimulus we got during covid i think is probably one of the highest convictions out there right now. lisa: what does that mean for markets and market calls? >> earnings are holding up, although that is mostly in nominal terms. there is a money allusion for inflation and when you go back historically, see they shared recessions earnings tend to hold up ok, but it puts a ceiling on how far the pe can go, and whether it is 70 or 80, i don't know. but there is a limit to that. lisa: and we are getting close to that limit. >> i think so. lisa: just to his point about a nominal level you are seeing growth hanging there, home depot, a prime example of this, coming out with results that beat estimates. it looks like there was some traffic declines and people see

that perhaps this is mostly on a nominal term and not necessarily on a fundamental comparative store basis, those shares lower by about 6/10 of 1%. the market ripping higher as a result of the second consecutive weaker than expected, slower than expected missionary print. you are seeing the s&p up 1.8%. the euro climbing. and you can see those yields heading lower. the lowest going back to the beginning of october. the dollar, the lowest going back to august. coming up on bloomberg tv and radio, former u.k. ambassador to the u.s. this is bloomberg.

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jonathan: the equity goals are getting in the way, live from new york, good morning. the equity market is much higher and the countdown to the open starts now. >> everything you need to get set for the start of u.s. trading, this is bloomberg, the open with jonathan ferro. ♪ jonathan: live from new york, we begin with -- how long can investors dream? >>