>> is 100% of people saw the recession next year. maybe 100% of people thought we need to buy into this rally. >> the fed might throw cold water on the rally. >> you are expecting a hot landing, but the recession has to follow through. >> the question is how quickly we can get closer to the targets of the central banks pursuing this. >> inflation can come back down quite quickly. history suggests that that is an outlier. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. >> did you do your work a

bracket? >> i did. i'm reading the athletic. good morning to the athletic. i'm reading every word of it. >> and proud of you. >> i put down italy and i realized that wasn't really the right way to go. >>'s start to the program. >> live near city, good morning. equity futures on the s&p 500 are pausing. time to talk about. retail sales later on. we've got to start your. an attack killed two people about four miles from the frontier with ukraine. >> listen. i've been collating all of our government reporting on this. i believe she is in singapore. any effort. roslyn says it is still uncertain. the theory is a defense by the ukrainians against a russian missile, and it deflected into poland, but this is important. we don't know. >> one theory. there are many theories. one theory suggests the air

defense system knocked down a projectile of course. still not clear who launch that. or where launched from. things have settled down a little bit compared yes afternoon. >> you see that on the tape as well. it combines an equity of lesser inflation, and then there is a gloom that hits off of the unknown of poland. i think we are in a better position. can i note the standard & poor's 500. >> sure you can. the rally is phenomenal. quick simon cash. the numbers from walmart and target later this morning. >> we need to pick up on the cpi. inflation, is brutal. not just year-over-year, but want to vermont. >> 11.1%. just the number itself is pretty stunning. that with the 10.9% expectation. hot is expected on the heels of energy, and his, carrying back to the missile in poland.

it ties back to a tenuous situation of what were looking at with respect to energy, and how that could shift an entire region, and how fragile it is. if there is a misstep, the ethics -- explanation could result met. >> a great op-ed by javier, next or on hydrocarbons, and he makes clear, underlying food inflation doesn't be that bad. but the overlay in the energy expense, the labor expense, and you have a 16% statistic. i look to fish and chips. >> lester. >> what did you look? >> the times editor -- i don't know what it is. >> is this a proper newspaper? >> takeaways in the united kingdom. it is caught up 75%. >> 2% food and beverage over the month. it is the energy issue and the u.k. that is front and center. inflation, according to the office national statistic, it is

13.8% in the u.k.. as been introduced in the energy price guarantee. that could be so much worse. >> sterling 11924. stronger sterling. >> were talking about fx later. let's talk about futures. positive on the s&p 500. a little bit of a lift again. going into the up and about, a few yards away, equity futures are higher, but just little higher as well. a basis point on the 10-year. fx, muscular teeth into this. 10 413. think about where we are on the euro-dollar. that is the lower of the year. a couple months ago. a real move, and it is leveling out here. it's going to be fascinating to see what the bets are. on january. or even out beyond that. it is down from a 112 level. that's how i would frame it. >> low of the year on september. yesterday it was 120.

and it comes off the politics and what mr. sunak is doing. >> we talk brent crude. were positive by 4/10 of 1%. >> is really a push for the recession that so many are except -- expecting, and an idea of what were expecting in china. possibly a reopening, and that does seem to be all of the feeling in markets. >> as far as what i'm looking at today, the new york fed resident, the vice chair michael barr joining the house, and the senate. and chris waller, how are they going to indicate recession. they are getting closer and closer. yesterday front the senate, it was talked about a painful downturn. how much of it is getting closer to actually injecting a recession. 8:30 a.m., we get retail sales from october. they are expecting to be already -- artificial lehigh because of those that were destroyed in a recent storm in florida, how much, we look under the hood are

people pulling back on expenditures, and how much are they shifting down to cheaper ones, that brings down to the earnings yesterday. walmart, home depot, the earnings today. we are getting lows, target, all before the market, and nvidia aftermarket. how much are people retrenching as they look at their shrinking buying power, and that is one of the big mysteries. how much have people actually spent for the savings of the pandemic. >> how resilient is the economy and what is the gap between all of this timing, and the economic damage still to come. >> there is economic damage to come, but it is tea leaves. tea leaf by tea leaf, it's been a calming influence, which gets you to spx 4000, and when was last time we talked about capacity utilization. that is a statistic from my youth, and it is elevated above this oddity of thanks we have out there. it is a pretty good recession. >> you think it is coming back a little bit?

>> i think my take is that it is a supply-side dynamic, and is much harder to judge them then is to look at the demand-side analysis. >> let's get into this with a portfolio manager for the allocation fund. that cash position has been heavy for you guys all your. and he trimmed it, and if you have, what are you doing with that money. >> we have trimmed the position. it is still larger than it was, and two years ago, it was down. we put some work into a couple of areas. we brought equity allocation back towards neutral, and i think that is something might remember. we are running fairly underweight stocks. beta-2 benchmark. close to flat. another thing we are doing is we've been adding carrie and income into the portfolio. that is mostly taking the form of ig and yield. the theory is simple. we think the market is going to continue to heal. for going to have more volatile environment.

when you think about where you are likely to get risk-adjusted returns, over the last 12 -- next 12 months, were seen for the first time in years, a lot of opportunity in parts of the fixed income market. >> i have eight ways to go here. where in going to go's 1975. i'm in might use, just out of my school, and i the clearest memory of no one believing the lift coming out of 73. we had to wait for 92 to really get the lift going. the exclusive now is short covering. what happens after short covering? >> that's a good question. the broader fact is that people aided risk in the last month or two. so yes. the violence of the move, the magnitude of the rally, a lot of those short coverings, you see that not only in the statistics, but you also see that in names that have been bought it there is a huge shift out of momentum names, which is in staples.

in health care. a little bit and energy. into some of the more speculative names that have hammered all your. having said that, even with a short covering end, we have an environment where we have a mild recession, and we avoided. or we start to see financial conditions are going to plateau, i think that is an environment where stocks will go higher next year, and it is meant to keep in mind that there is a lot of money on the sideline. people understandably have been under risk, and there has been a fundamental stabilization. money can go back into the market. >> a lot of this is hard to understand what is sustainable and what is not. there short covering, and there has been a parking to enter the market. do you believe that the dollar discussion is sustainable. do you think we will see more dollar weakness just because there is a shift in tone and europe, and the worst case scenario has been avoided. >> we think it is much more to a market for the dollar. we are overweight on the dollar for much of the year, that

reflected a couple of things. you had an interest rate differential in the fed being much more aggressive, but also, it reflected the fact that the dollar was the only reliable hedge for much of the year. the source of risk was not slow growth. it was too much inflation. going forward, you have a two-way marking of the dollar. we have been paring back some of our dollar exposure. we are in an environment where it is in early stay for a prolonged dollar bear market. >> wonderful to catch up with you. black. looking ahead to 2023. maybe even beyond. which a bank doing the same thing. the outlook drop yesterday. the latest forecast is a test to initial bumpy ride as the dollar is marked down for the first half of 2023 before accelerating afterwards. the point that they make at deutsche bank, and this is an important one, the dollar story this year, you have about five different stories. the u.k., the policy flip flop. europe, the energy story, china, covid zero.

take your pick, yet for cap the currency, and that has been straightforward because of the dollar strength, but let's see how plays out next year because of the dispersion. >> this is critical. if you overlay the check over mike wilson's stock chat, there is not much difference. all of these people are looking for pivot somewhere along the path of 2023. that is something that is new. we used to just say where we're going to be, now or in this pivot in may or august. >> i think they really got this conversation going last week. >> you are next to me. the sequencing is important. you see signs of inflation roll over before you see signs of the economy get hammered. that window, it is optimistic for the meantime, and morgan stanley is essentially saying that window will shut in january. when you get the earnings, the q4, and he thinks they are not going to be too great.

>> i think the analysis and pivoting in 2023 is complex, to say the least. >> agree. getting headlines out of poland. nothing suggests a missile hit worse than -- was an intentional attack. it was likely ukrainian air defense. no indication that the missile was launched from russia. the pickup on the headlines, coming right up. live from your, this is bloomberg. >> keep you up-to-date with news from around the world with the first word. i'm lisa mateo. president biden has told allies that the explosion in poland was caused by ukrainian air defense. it was sparked by a russian missile barrage on ukraine. the explosion killed two people and a village about four miles from the polish ukrainian border. donald trump says he wants to make america great and glorious again. the former president declared tuesday night at his resort in florida that he will run for the

white house a third time. >> this is a movement. this is not for any one individual. this is a job for tens of millions of proud people working together from all across the land and from all walks of life, young and old, black and white, hispanic and asian, many of whom we have brought together for the very first time. >> the announcement comes at a time when many republicans blame the president for his lackluster showing in last weekend's elections. there hasn't been inflation height since 1995. the consumer price index rose more than expected to 11.1%. soaring energy bills were the big reason. new data adds to the pressure on the british government and the bank of england. >> is the most powerful rock in 50 years. it went into space carrying an unproved capsule on a 25 day mission to orbit the moon. it will return safely to earth.

the flight takes off a multi-expedition artemis mission which is focused on sending astronauts back to the moon's surface by as soon as 2025. bloomberg quicktake is powered by more than 2700 journalists and analysts. i'm lisa mateo. this is bloomberg. this is bloomberg. ♪♪ aes has been leading energy transitions for decades... and is partnering with the worlds leading companies to decarbonize industries... cities, and nations. even the internet. is it possible? can we reliably power the things we love and green the planet at the same time? yes... aes.

>> we agreed to support poland's investigation into the explosion in rural poland near the ukraine border. then come we are going to determine our next step as we investigate and proceed. i was told unanimity among the

folks at the table. >> the president of the united states in last 24 hours is following an attack that killed two people in a village about four miles from the frontier of ukraine. what matters is the origin and intent, and what we've heard from the poland leader. no indication the missile was launched from russia. nothing suggests the missile hit was an intentional attack. due to an alteration, the missile was likely air defense. it is calming down. a much more profound way. >> let's get on a map, we do this in valley. in indonesia at the g 20 meetings. and of course on duty with maria in brussels. the map is in belarus, straight down to the polish border of ukraine, and something in the vicinity of 220 miles from warsaw, but very near live. do we know where it was going before it was presumably

different -- inflected? >> for going to find out, and i can tell you that everyone i know, every diplomat i speak to empresa represents a european union, and it is glued to their phone, and there tv's, because they want to hear from the nato secretary-general in about 15 minutes, but we have indications from the government, and this changes everything. they say they have no early indications that this was directly aimed at poland. from russia. they do not see an intention from russia, to hit poland. that is confirmed by nato. it changes everything, but i would say, today, there is relief because in the words of the president, and i'm sure we will go into detail about that, there is no intent, but for a lot of europeans, waking up again, what an eye-opener. this is very active, and it is happening right here in europe. the risk of a geographical spillover, it is very we'll.

>> i would suggest that the president learn lessons with the exit of afghanistan, and it has invented the intelligence method where it is very forthcoming in intelligence, and it used to be secret. is that what we are seeing here with his comments on this missile? >>'s comments are directly to the press. it was unclear in the preliminary data that he was shown that this came from russia, and bloomberg news reported that this is what he briefed the g7 and nato leaders on the fringes of this g20. it is likely from a ukrainian defense missile. so, potentially some of the debris will go into poland, but one thing we should make note, this is been echoed not just by president biden but by all of schultz and others. the fact of the matter is that this will start because of russia's invasion of ukraine. two individuals are dead in poland.

we have a rocket falling in poland. that is because of the missile strikes that are coming from russia. that is at the heart of the matter, and as maria said, these concerns have been growing since february 24. about how to make sure this is contained within ukraine. not nato. being drawn into a wider geopolitical conflict. >> to that point, how much is this raising a concern about what vladimir putin's next steps are as he is on a back foot with respect to his war and you in. does this indicate a bit more of an extreme view where he is willing to take risks and invoke some serious fire because of the fear of world war three and the west's reluctance to engage in conflicts to get us there. >> yes. of course, if you are looking at the from online, you follow the russian narrative, on tv come what they say is that ultimately, this will come down

to world war iii or victory. a settlement for russia, and officials will tell you that is their take on things, and things can change, and a stand by ukraine, and they hope that it is ukraine that takes victory here. they always talk about and negotiate peace, and at some point, the two sides will have to sit at the table, but on the battlefield, they will get better terms. but going back to what was said, for a number of european officials, including the prime minister, they are repeating this yesterday. the magnitude and impact, just how bad russia pounded ukraine yesterday, with massive strikes. it also, we talk about a spillover, we look at moldova, and there was a neighbor to ukraine. they had blackouts as a result of the hit on ukrainian infrastructure. the game plan for the russians when they come to that is very clear. they want ukrainians to literally freeze this winter. >> great to catch up. they you for this down. alongside amory.

wrapping up the trip for the president. what a long week for him. >> a long week, and from egypt to here, and some other festivities, and back to washington, think about washington when he comes back. they go abroad for any given president, and they come back to domestic challenges. >> you want to talk with the right now? >> there are few domestic challenges. >> a former president is not a domestic challenge. >> i don't know what to make of it. i watched a lot of the feed last night on it. the personal nature of baby some of his kids are not involved, you can take the political nature of it, you can take the republicans. we can talk all day about it. we can be pond and sun's. >> it was a brutal quote in politico. off of kari lake's failure to become governor of arizona. >> it is a quote. >> she has an energetic and articulate dynamic. she cannot win arizona against a candidate who barely campaign. >> i pointed this out, and we

been living this new york state. this goes to buffalo. we done this before. we had a president who had to turns -- terms split, and i call them grover cleveland. 1800s. >> 1880 to 1890. his maybe the first modern democrat machine. i don't want to pretend to be an expert on this, but there is precedent for what president is suggesting. >> i think you can pretend to be an expert at anything. >> i could pretend to be. let's talk about the world cup. >> he said stuff and it rode into me. is that true? >> you're like we don't know. >> i think there is an end zone and football now. >> there is, just not necessarily the football we talk but every day. i want to say, just because fighting comes back to domestic issues that included former president, the former president is more of an issue for the republicans then for president biden. i think that is really the issue. he's coming back to a good position for him. it is really the bigger issue

for the republicans. >> can you imagine the primaries? >> i don't think any of us can imagine it. it was original. he got into the race late in 2016. now he is getting an early, but again, i would mention this again. the legal baggage she carries now is radically different. >> going back to resident biting, he is going back to a democratic senate. a house that has a slim majority for republicans. do we talk about the non-gridlock of december? to talk about markets? >> this is a new regime. >> the washington solution is simple. spend money per it will talk about that later. >> will have to see if they can do that. the futures are on the s&p 500. from new york, this is bloomberg.

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>> price action on wednesday. equity futures are doing ok. up and doing better on the equity market over the last couple weeks. in november, we are up 8% on the s&p. from the lows of the november nasdaq, we are up 13%, you are making jokes about it, but

seriously, this is a time to look at the standard and poor 500. there is enough disk joint -- disjoint in the nasdaq, and huge disjoint in quality in the dynamic, that i think you have to look at some form of balance index to see where you are. >> you want to see some disappointment? >> 154, the estimate is 215, and here comes the cost cuts. how do we talk about this? we talk about big tech, and all because they are making. there seeking $3 million in cost cuts. topline, bottom-line expectations, just across the board. not a great read. >> one of the most interesting things is that they have been beating door sales, but they have missed on online sales. how much are we going to see this as a heats up, and how much are going to come back to stores, but not necessarily the online purpose tech infrastructure has built out. how much will that struggle as people take a look at really the demand on that side. >> the stock has been hammered

pretty we are down by 11%. target has had a tough year around earnings. >> it has not been pretty. >> what is great as they do a wonderful set of headlines, and every other country has been articulate like they are when they launched headlines. what i see is a massive uncertainty. it is in planning layoffs as part of an efficiency push, and the senator has made a low single drug. initiative to simplify and gain efficiencies. i guess that's technology to the rescue because they don't know what the outlook is. >> when they came out in may, i was looking at the numbers, for the stock was down 25%. they had this big inventory problem, that as we start to think about disinflation in the months accompanied we started to see that evolve on retail. now we are talking about cost cuts. this is starting to build and it will go across a range of

sectors, not just technology or retail >> you raise a good point about execution. how much is this a mix of goods. with overstock, we cleared out. walmart has cleared out and warmer is in. customer transactions were up versus the estimate of 12.9 percent year-over-year. basically, how much are people buying on eight dollars percentage basis simply because of inflation, but they are not transacting as much. how do other companies deal with the fact that consumers are being much more cautious with a respect to what we purchase. >> this is recent. this is an uncertainty you see in the headlines, signifying that this is a recent two week, three week, four week uncertainty with how to get to q1. >> receives at home depot. the average ticket was 9% higher. transaction has declined. >> that has been make shifting as well. >> 168 on the close. down to 155.

that gets towards the near low. maybe the less -- last summer support level, to breach 145. that would be of big deal, but certainly, we made it back in a heartbeat. >> 13% in the market, not putting numbers on them, and it leads into the american economy. it links into consumers. 70% of the economy with retail sales, and they are expert on this. a chief economist. how are sales? cut to the chase. how have they slowed? >> they have slowed precipitously after a 3% increase at the start of the year. really, boasting confidence. the resilience of the consumer. we have seen weakness continue, but also intensified. for the past three months, we have seen the base stay flat. consumers are pulling back. in some cases, they are cutting back on the nominal amount they are purchasing.

in some cases, they are reducing the quality of the goods. from brand name to walgreens brand, and for some, we're seeing a phenomenon that we've deemed to binge spending. we are cutting back to the bare minimum of 1, 2, or three months, in order to buy a larger ticket more expensively in month four. regardless of the form it is taking, it is dramatically shifting the goods and services in the basket. that is something we do as shoppers when we are increasingly concerned about the financial footing. >> is the real gdp analysis pinched on consumer dynamics, or do you have to look for an example in investment dynamics or trade dynamics. is it all about the retail market? >> it all plays into our forecast. of course. the consumer is 70% of the economy. if the consumer is not happy or healthy in the marketplace, it doesn't matter how much businesses are investing or a temporary boost inventories, or net exports. we have to see the consumer in a

healthy position. we need individuals and households under industry amount of pressure, facing income growth, and still elevated prices. we have come off of peak levels of inflation, but we are talking about multi-decade highs. that is going to be a sizable burden for consumers particularly as we see holiday shopping seasons, key shopping seasons upon us. >> weiss is not enough? >> why is not 350 basis points enough? >> why is the pain were already seen, this retrenchment in real wages lagging behind inflation, why is that not enough? at this point, given the margin compression and the company's talking about weakening, why is that not bringing down inflation faster, and why won't it share? >> consumers are still spending. we have seen a slowdown. it is a derivative decline. it is a slower pace of positive

expenditures. consumers have slowed from an 8% average pace last year to a 2%, but we are still see money flow into the marketplace. there needs to be an additional pain felt to really bring down price pressures back in line with what the fed is looking for in terms of a 2% target. we are looking at steps in the right direction, but you have to remember that the household balance sheet was incredibly in healthy shape after covid. many individuals pay down debt, and later on, the trillions in savings, or the accumulation wealth question. consumers had factors supporting them, artificially. independent of this negative income growth, it would continue and will continue to support -- support them for several more months. going forward, before we really see the true full impact of higher borrowing costs filtering into the economy. of the federal reserve, we've basically been talking to the wall street journal, and the federal reserve president has

been talking about how much we've seen similar to that. the consumer is very strong, and for this reason, tiptoeing around the world recession, but there might need to be a severe recession. what is the contour of the down tour from your view. is it short and shallow or long. it is steep or short? how are you seeing it? >> will depend on the fed's pathway to higher interest rates. if they slow play this, if they slow the pace of rate increases and draw this out, it could be a shallow recession, but for a long. of downturn. if the fed keeps her eye on the ball, and they remain resilient in their commitment to reinstate price stability, keeping larger rate hikes in place, i think we will see somewhat of a sizable drop on a quarterly basis, but we are talking about coming out of this downturn much sooner than the former scenario. >> if we have a price unit, and business is slow, price comes

down, how does retail target the rest of them. how does that change your inflation call. is it inconsequential? what is the dynamic. >> we have to be careful. what we are seeing is disinflation and less desirable goods. remember, businesses were hoarding. it was enough product on the shelf or a presumed resurgence of the consumer, but consumers are dramatically shifting what they're purchasing, and how much they are purchasing. many businesses like target and walgreens are sitting on inventories that are maybe less desirable for consumers, so some goods are going to see some downward price pressure as businesses try to eat through the existing stockpile. but broadly speaking, i don't think that segment of repricing is going to impact the broader level of prices in the economy. >> how much is the fact that the hiring committee has a lot of

savings, and lower ones do not. they keep the inflation picture longer than certain swallows of the population can handle? >> i think you are right. savings component is skewed to the upper -- to the middle and upper income earners. but on the lower end of the spectrum, we saw a sizable wealth question as we saw a state and local stimulus, and a moratorium on rents and on student debt payments. the enhanced child tax credit leading to an additional check, and many other people's mailboxes. a nominal way in which we shifted how we were, how we live, how we commute. that leads to a sizable amount of wealth, even at the lower end of the spectrum. all of which is continuing to provide at least temporary artificial support to the consumer. up and down the spending are. >> wonderful to hear from you. the chief economist. i want to return to a quote. just from a moment ago.

of target. in the latter weeks of the quarter, sales and profits have softened meaningfully with inflation, rising interest rates, and economic uncertainty. this resulted in a third quarter profit performance well below expectations. to the point, just how quickly is the story moving? how quickly as this week and is starting to show up with some of the numbers, or do we have an execution problem over target. >> that is retail, but i dovetail to the housing market. we are talking about teachers a target, or whatever is in aisle 14, but you dovetail it into a shelter as well. two movable forces here. we are reacting to a slowdown. >> lisa, stocks are down 13%. >> is this a target story or is this a broader retail story? >> clearly, this speaks to walmart executing well. target has been performing, but

not as well. really, the sense that something broader. >> coming up, we will catch up with elliott, the former white house fellow and u.s. marine corps veteran. we will talk about that as we await a news conference with the secretary-general of nato. when that begins, we will bring you headlines. from your, this is bloomberg area --. >> keeping you up-to-date with news from around the world pre-i'm lisa mateo. president biden told allies that it was the ukrainian air defense that caused an explosion in poland. still, he says a massive rawson -- russian missile attack was ultimately to blame. the poland president calls it an unfortunate incident, and that the explosion killed two people in a polish village. donald trump will make a third run for the white house. the former president made the announcement from its resort and for the. that comes after a number of candidates he endorsed lost in

the midterm election. meanwhile, many republicans are looking for another representative for the party. >> the video up tiktok is investing heavily to address concerns about data security. the companies partnering with oracle to isolate sensitive data from their mere can -- from their american users. >> were going to move the data we store in virginia and singapore in 20 oracle's infrastructure. as a partner. oracle will look after this. we are going to have new and improved data access protocols. such that only an entity of the u.s. residence that are in the u.s. but access to u.s. protected data. >> for national officials believe data has been exposed and china. >> global news, on air and on global quicktake powered by more than 2700 journalists and analysts more than 120 countries. i'm lisa mateo. this is bloomberg.

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investigation into this instance is ongoing. we need to await its outcome. but to have no indication that this was the result of a deliberate attack. we have no indication that russia is preparing an offensive military action against nato. our preliminary analysis suggests that the insulin -- incident was caused by a premium and defense missile. he was fired to defend ukrainian territory against russian cruise missile attacks. let me be clear. this is not ukraine's fault. russia bears ultimate responsibility as it continues

its illegal war against ukraine. in a meeting today, nato allies offered the deepest condolences on the tragic loss of life. they express strong solidarity with our allies. it is made clear that we will continue to support ukraine and the right to self-defense. russia must stop this senseless war. last night, i spoke with the polish president and with u.s. president. we agreed that we need to stay vigilant, calm, and closely coordinate. we will continue to consult and monitor the situation very closely. nato stands united and we will always do what is necessary to

protect and defend all allies. with that, i am ray to take your questions. >> polis radio at the back. >> secretary-general saying the investigation is ongoing. there is no indication this was deliberate. the preliminary analysis is that the incident was likely caused by ukrainian air defense. he went out of his way to stress that he does not believe this is ukraine's fault. russia bears the ultimate responsibility. we wrap it up at the end by saying we need to remain in vigilant, calm and corny. >> we've seen that any number of times, and that will continue to monitor the story with her team in brussels, including maria. right now, and perfectly timed, and we did not know of a rocket attack, but ellie ackerman joins us to say about former white house fellows and bring core veterans, missing the point of my book of the summer, a number of summers ago, the book is

2034, a novel of the next world. except the next world is coming ever closer. thank you so much for joining us. let me start with the basic reconnaissance issues of a missile attack. do we have as the west or his nato, do we have intelligence from space or from ground that no where various and sundry missiles move? >> we do. what we have is called counter battery rate. you can, with basic math, figure out the trajectory of these missiles, the direction of impact, and where they have come from. that is basically we -- how we see data. a missile lands in poland, and it was launch in ukraine. >> the dystopian nature of your book, 2030 four, without giving the plot away, when adversaries come together, the biggest

problem is mistakes. the biggest problem is risks. as you perceive ukraine and russia, in the winter, is that the problem we are worn out, exhausted, systems are failing, and they're just close, so like your book, things fall apart rapidly? >> you hit the nail right on the head. war is escalatory by nature. once you enter an escalatory cycle, it just picks up and picks up, and each incident becomes increasingly dangerous. that is why we see the secretary-general of nato cautioned and call him, because all sides don't want to see the war in ukraine spill outside of the warder -- borders of ukraine. that would be disastrous. >> the calm wasn't there yesterday. this tweet was 14 hours ago. i want to read this out because it is important. russia promoted a conspiracy theory that it was allegedly a ukrainian ministry of defense.

it was amplified by a message. hasn't that been totally contradicted by the nato secretary-general just moments ago? >> it has. it is an important reminder that although russia is waiting -- waging an illegal war in ukraine, and the west and nato are supporting the ukrainian people, it obviously has to be within a rational context read we cannot fly off the handle each time there is an incident, or the war spills over in an unfortunate way. i think nato is doing the right thing, and i don't necessarily -- i would necessarily say the ukrainians are doing the wrong thing, but you can expect that they are in a crisis situation, and the reality is that they've been living it since february of 2021, an existential war fought on their land, and we need to be good partners in helping them manage that war and hopefully bring it to a successful

conclusion. >> does it bother you that russia has more leverage because they are backed into a corner, and it is vladimir putin's pride, and he could act in a more rash way because he doesn't care what the -- of the west does to them because of simply their reluctance to conflict. >> sure. that is obviously a point that we need to wait. russia is backed into a corner. it would seem that it doesn't have much left to lose. if you want to look at the nation that has nothing left to lose, it is ukraine. it is fighting for its very existence, it is very life. the thing that concerns me the most is that we, as a collective , we have been in the last decade or two of warfare, we have gotten into a psychology where wars are fought over 5, 10, maybe 20 years. the war is a different type of war. it is a throwback.

we are not going to cover the war with a razor bomb shelters. it feels like a 20th century war. it is a war that needs to be resolved in the next year or two. if it bleeds over into 3, 4, 5, 10 years, that only advantages the russians. >> wonderful to hear from you. on the strike to hit poland yesterday. what we understand from the nato secretary-general, there is investigation ongoing come but no indication that it was deliberate, we've seen no indication russia is in to attack, but it is less likely to cause an errant ukrainian defense. >> more on this. i can't say enough. 2034 is coming. >> live, as seen on tv, this is bloomberg.

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>> is much as 100% of people think we're going to have it recession nature. you need to buy into this rally. the fed might start to throw cold water on to this rally. we are expecting a hot landing, but the recession requires follow-through. the question is if were going to get closer to the kind of targets that the central bank is pursuing. it can come back down quite quickly.

history suggests that as an outlier. >> that is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. >> an executive decision on the christmas tree going up friday. just so you know. were going up early again. >> were making it happen. did you call me tacky. >> you don't do christmas. you don't to two months. help be here. with futures. >> s&p 500. from new york city, good morning. equities are unchanged on the target. earnings from target from 30 mitts ago, and it is fair to say, it was a disappointment >> the christmas trees will be on sale. little wheel spinning around. life once cutting in with transport. >> are suggesting i've a fake one. >> exactly. everything's going to be on sale. they have a movie, but this is not about finance.

is not about ratios. it is about the emotion we heard from the executive offices. >> is about a consumer. chairman and ceo. sales and profits are trending suffered. increasingly impacted by inflation, rising interest rates, and economic uncertainty. >> it comes down to which companies have the best negotiating powers. it has to do with execution, it has to do with consolidations of the biggest companies. a real dispersion among the weaker players and the strongest ones that are able to withstand a rocky. . >> i'm going to the partial zombies or whatever, and those could be done with costs, they are not laying off. how do they execute? >> retail sales are 90 minutes away. we need to talk about poland. the blast that took the lives of two individuals. the frontier. this is from the secretary-general. 10 minutes ago. likely caused by an errant

ukraine air defense system. three go. >> ellie ackerman was on with us for 2030 four, making very clear, this what happens when you get to the exhaustion of february of 2021. the worst -- the wars getting longer, and into the cold. >> this is a preliminary analysis, but the line contradicts what we heard from the ukraine foreign minister late yesterday. there are some people concerned about the ukraine. there is misinformation, but also moving too quickly, and it may be causing this at the wrong time. >> this is not something stage. this is what happens. this is what happens, and on both sides, you wonder what the russian reaction will be did this come as well. >> is highlights a situation. reaction markets because we've seen desperate nations. we seen ukraine desperately trying to preserve its ability to be a country, you've russia

with valerie pruden, trying to maintain a sense of the world stage of not losing, so if you have two desperate nations, they want to bring the rest of the world in, how does that leave us in terms of feeling calm, ending -- heading into the winter? >> price action briefly. one of rally we've seen on the equity market on the nasdaq and s&p. we take a pause ahead of retail sales later on this morning. you also see the 10 year. but this was a full 30 something. not so long ago. i can tell you the two-year was pushing for 80. we have been down about 50 basis points across the board. >> i would blended in, and i think you have to do this across equities, bonds, currencies, commodities. if it is good enough or the imf, is good enough for us, and the fact is we have been more accommodative and getting away from restrictive with the dynamics of the last few weeks. >> amazing to see this in the fx markets.

104 on the dollar, one 20 on u.k., but the dollars weaker. >>, which is that a theme heading into 2023 that we will get a peek in the dollar. we are looking at a host of fed speak, including sean williams. michael bard has filed in front of the house. vice chair for supervision, and chris wallace later tonight. the fed governors talk about what to expect going forward. wall street journal talking about the expectation of something that sounds a lot like recession. in terms of just how hot the economy was, and how much they would like to see cloth, but here's the latest read on the consumer u.s. retail sales for the month of october. we are expecting to come in artificially hot because of car sales. they expected bigger than expected because of the storms of florida. people replacing cars, and that will be interesting to see the underlying momentum, and the earnings we have seen, low on target. mix pictures with lou doing better. a whole lot worse after the disappointment, and really a

sense that things are not going well, even as walmart outperforms, and they will be reporting in a couple of hours, and aftermarket, it will be interesting, given the chip situation and what we seen an apple. we have heard them shipped there chip supplied arizona. we have been giving deals, unlike recent history in order to get some of their imax moving. a lot of questions around some of the tech sector, and how much they can continue to deliver these incredible results >> great as always. as far as apple is returned -- concerned, these factory shutdowns have called folks to china. there's been an estimated impact of a billion dollars in revenue. one sentiment eps per week. a billion dollars in revenue for a week of lockdown. >> the scale is important, but as you have mentioned, this is not about the making of phones in china. it is about the selling of phones in china.

i think most americans don't realize the success of the company in greater detail. >> it is huge. we've been talking about. christmas and beyond. equity derivative strategy with capital markets. amy, can we call this a melter? what do you make of this rally we've seen from the nasdaq to the s&p. >> i think that is an accurate way to describe it. it feels like a lifetime ago, but when week ago, we got that cpi number. options were a culprit outside of fundamental information about one third of the all s&p operations trading that day. for expiration on wednesday. it is certainly exacerbated by the moves we've seen. now, we got to a point in terms of positioning where essentially, investors are selling calls, and basically just watching a writer. they were very worried about participating in the upside, but we haven't seen initiation of new levels from here, so from

the options perspective, again, it is a melt up another report. >> i'm going to your research where you mentioned bitcoin in your study of the bitcoin moves in all of the uproar that has ensued read i want to go to quantitative finance, and a concept of drift, moving tick by tick and a time series. does bitcoin trade like apple? does a trade like a given bond or a foreign-exchange pair? what does drift look like for bitcoin? >> for something like bitcoin and crypto in general, there is obviously something that is not as long as other assets, but the way trades, when you look at realize correlations, it is just another risk asset. certainly, given the information that came out about ftx and everything that's going on, people want to know what direction it is going, and i will say, it is similar to all the risk assets, but on the downside, it tends to be more

correlated, so we see strong correlations as the market had sold off, and it is strong, but it does not, on the upside, it is not diverging more than the downside. it tends to go to one when things are selling off very hard. >> we're talking about how and credible this has been, but you point to the other side that it has been resilient, but just in the crypto space in general, the entire collapse overnight of an entire firm. i wonder if there is a broader message about the market and just how resilient and how invested a lot of institutions are, not only in the crypto space, but more broadly, and to entrench in a meaningful way. >> it is a great question, and look. a few months ago, we spoke with both on the freedom of prayer harrison who is a president of fts. i think one thing that was underappreciated was not only on the crypto site, but huge implications just for market structure.

for normal markets and for derivatives. the other thing i would say is given where the proposals likely are, it is probably not going to pass, and regulators are going to look at things differently, but the resilience seems to speak of institutional adoption the did happen because there was a lot of interest at the time, and we will see how the changes, but the institutions, that is a theme we have talked about a lot with institutions continuing to investigate, and i don't know that would change even with fts now. >> wonderful to hear from you. futures are turning lower. we are down a little more than 1/10 of 1%. >> i noticed that she is a former strategists at seminal's. she might know what she's talking about. >> i don't know. she all right said bitcoin gets bitcoin south, but she makes it very clear that if you choose to

bet bitcoin south, one way to do that is with a correlation to buy the vix calls where you are predicting fix goes 24 to 26 to 28 in that tension. >> i don't know how many people will be suggesting allocation to year-end. >> it is part of a 60 to 40 split. >> investing some of these platforms now. it is huge. >> we've had an outpouring of both visible and less visible on bloomberg surveillance. i can only say we try to be responsible from the very first conversations i've had on bitcoin, years and years and years ago. i will not mince words. my go to on this is rafael of the bank of international settlements. he published two days ago. >> you see him on this. he did. to borrow a phrase of yours. >> we are in the news business. mr. a beanie is in this magnificent new book business.

you and diane lisa, we need to be collectively careful at this moment. >> you think? >> i was suggested. >> i'm going to call it bit dog, but that could be north or south. >> futures are down. retail sales in america are coming up a little later. from your, this is bloomberg. >> keeping you up-to-date with news from around the world, i am lisa mateo. >> nato says there is a ukrainian air defense. that blast killed two people. several miles from the ukraine border, the secretary-general says that the blast was probably caused by ukrainian missile fire to defend against russian cruise missile attacks. donald trump has made it official. he will make a third run for the white house. the former president made an announcement on tuesday night at his resort in florida. that comes a week after a number of candidates lost in a midterm election. many republicans are looking for another representative

authority. the european warns that record inflation spells trouble for everyone from households to governments. the ecb said its assessment is at risk to a financial stability having increased. >> we are going to see growth. we have not seen it with a technical conversation, with high inflation. a monetary policy response to high inflation. i tightening of financial conditions. i think this is the main factor, and sometimes we have to try to look beyond or look through our shorter movements in the markets. >> the u.k. said inflation in october reached a 41 your height, and 11.1%. shares of target are plunging. the retailers third quarter earnings came up short once it cut its quarter expectations for sales and profit. target is looking to cut $3 billion in costs. global news, 24 hours a day, on

air and on quicktake, powered by 2700 journalists and analysts more than 120 countries. i'm lisa mateo. this is bloomberg.

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>> with investigation into this incident, it is ongoing. we need to await its outcome.

but to have no indication that this was the assault of a deliberate attack, i have no indication that russia is preparing offensive military actions against nato. >> the nato secretary-general went on to say that it was likely caused by an errant you pain -- ukraine defense missile. this conference took place tournament to go. some news here i want to share with you. this is really important. a blackstone, it is a statement to axios saying the following. america does better when its leaders are rooted in today and tomorrow. it is time for the republican party to turn to a new generation of leaders, and i intend to support one of them in a presidential primary. >> this is interesting to see, and it is overlaid, and this is mike gallen writing this.

it is this is kushner, ivanka trump with a heartfelt statement yesterday. and the same idea with mr. griffin, but i would suggest that blackstone carries more weight than ken griffith. >> defecting from donald trump, to your point on ken griffin. a strong word to say. >> when it comes to ron desantis, i think we refer to the president is a three-time loser. >> pulling away, with voters on board. a lot of voters still support the former president. perhaps not enough to get the winds they like, but there are a lot of people who support them. what do they do? how did they bring him into the fold? >> to that point, there are more votes than in 2016. he lost, but nevertheless. >> these primaries will be something. that is for sure.

>> they will be on both sides. it will be interesting to hear from the president. maria is in brussels looking at what is going on with poland, and for that matter in brussels as well. we are also in volley with the president. there is a g20 meeting of many stories, but i have to go domestic red the donors are speaking of the former president. is the money of politics so great that it will change in any way the path to donald trump. >> potentially. these are not big endorsements. first is ken griffith, in terms of election losses, and with candidates. we are not able to flip or maintained republican held seats. then you have steve schwarzman looking for a new path, and his own daughter saying they want to focus on family and young children.

they don't want to stay in politics, so it seems like a big wall street money, and backers. trump is losing. it is not just the money. there is also an individual they are losing. you would think that the former vice president would get behind him. that is not happening. mike pence is charting his old -- own path. he is insinuating his own mark for president. there is the former secretary of state. he is insinuating the same. and of course, an individual in florida has elevated four years ago that could really crush the midterms, and that is ron desantis. that is with a smart palm beach money. it is not just money, it is the individuals, and lisa brings up a good point. will this be enough for the fact that he does have almost a cultlike base that follows him around to these rallies. will they come into the fold and support to the more mainstream republicans decide to go for. >> domestic politics.

we must look at the war that intrudes on all of us. maria is in brussels. what has changed since the speech, the comments, the press conference of mr. stoltenberg. >> i think there's a lot of really. the head of nato says that for the time being, there is an investigation that shows there was no direct intent from russia to attack a country like poland on purpose. that means there is a lot of relief, not just in brussels, but across the alliance. at some point, there were concerns that we could see a bigger conflict read that has been the risk that this will not be easy to contained in ukraine. this is happening in the heart of your. there is relief after the time being, this is been contained, but for a lot of europeans, and this i want to stress, it has been an eye-opener.

on the heart of europe, has been active in brutal. the power went down across ukraine. the neighbors went down, and the fight is intense. with the spillover, it's not just hypothetical. israel. wonderful to catch up with you. alongside amory, the latest investigation then. is ongoing, but what we know is that there is no indication this is a deliver act. no indication that russia is preparing to attack, and the preliminary analysis suggests the incident was caused by the unit -- ukraine aired to missile. >> with all of his experience, he is an officer of the marine corps, and there is a lot of intelligence on this, and i can't member the language, but basically, it is math. they've got intelligence to look at trajectory and vector snow precisely. >> is a war. >> the fog of war. they've been worried about this

for a while. >> there is this that might happen, but what is so important is the former nato supreme commander. there are multiple this is. as we talk, there are 20 out there, and i've always come back to focus on the sea, and the bottom line is the uncertainty about events that could return. >> we are returning to what is happening, and the numbers are getting hammered, going to the opening bell. equity futures are unchanged on the s&p 500. the next stop is retail sales. you have talked about this all morning. >> were already getting a preview with warmer earnings. it is the haves and the have-nots. is a confusing market. it is one pocket by idiosyncrasies. with data coming out, how much

in consumer spending can we make disposable income getting attracted by how much bills are going up. >> not a great start to the christmas penny. the holiday season with amazon. target is saying in the latter weeks, trend softening meaningfully, but there is a distinction. getting a christmas tree out far too early, and then the beginning of a shopping season. you are right. this is the beginning of the shopping season. just so you understand, it's un-american to put the tree out before the macy's day parade is over. >> i like to have it up at thanksgiving. i think it is nice. i think it is nice to have the trio for thanksgiving. >> help me. >> i'm not going to weigh in on this. if u.s. a tree, have a merry thanksgiving. >> i think it's nice. >> precisely.

to support society and businesses have a responsibility to support that

jon: first it was cpi downside surprise, then ppi downside surprise. equities exploding over the week. negative on the s&p futures by .1%. 2's, 10's, 30's look like this.

the highs of the year close to 4.80. pushing yields much higher. i'm backed away since then on the 10-year. back down to 3.77. are we approaching that window when growth starts to get here and yields start to rollover? apollo had an interesting way of framing this. the sequencing is important, and the sequencing in the u.s. right now is different from europe. there is evidence inflation is speaking before it gets hammered. in europe, there is evidence that growth is getting hammered before inflation peaks. euro-dollar, sterling. euro-dollar at 1.17. on the inflation story, problematic in europe. in the u.k., 41-year high on u.k. cpi. tom: maybe you know to adjust

the bank of england. eluding the call a recession by governor bill lee. the equity market bounce, if you do a standard deviation study of standard & poor's 500, we were so gloomy, so down, this vaunted bounce get you back to middle of trend. jon: what did the bulls long? inflation that inflation was decelerating. yields lower, we have had some of that. the dollar weaker, we had had a ton of that. tom: fed adjustment and the language. we may see more of that today. we forget the damage of the last two months. jon: brutal, i agree with you. euro-dollar holding onto 1.04. let's get you some single names with lisa. lisa: we are getting some of the retail earnings. we have gotten target.

it was brutal. very much off the mark, saw sales decline. profits decline more than 50%. they have to discount a lot of items heavily to move it off the racks. as you were talking about earlier, how much is this a story of execution and how much is composition? walmart performed much better. shares were up 6% yesterday. today following 1% perhaps in sympathy with target, but walmart gain share in groceries, the essential items that homeowners need to buy. they are doing better. target not making as many inroads there. over all ticket items coming down. tom: what is fascinating and original, target says no layoffs, but three billions in efficiencies. does walmart have efficiencies? lisa: walmart is doing better

and how it has planned, beating guidance target. they are talking about a quickly moving consumer. t.j. maxx may stand to benefit from some of this. they are reporting in a few hours or show. shares done 1.5% in premarket trading, but how much will they benefit from companies that need to offload their inventories? how much do they give me guidance as to what the holiday season looks like as people look for bargains? are we going to see disappointment? tom: target moving the markets. green on the screen earlier. dow futures down negative three, a reversal off of that target stock. in the bond market, there have been many shocks. michael collins picks up the pieces, senior portfolio manager at pgim. asking someone like you what duration is doing, the length of maturity.

on average, in a bond portfolio. what are you doing with duration given the uncertainties into 2023? michael: in general, we are advising our clients to extend duration here. i know it sounds counterintuitive, when the yield curve is flat or even inverted, the knee-jerk instinct is to move into higher-yielding short maturity bonds. when you do that, you are actually taking on a lot of interest-rate risk. who knows what the world will look like in a year or two. short-term rates could be back to 0, 1, or two, and you would be giving up all of that yield. the right thing to do is actually to extend the duration and a flat curve environment. tom: across the qualities of bonds, full faith and credit, ig quality, lesser quality, even into distressed bonds, dare i even and municipal bonds.

where is the value? michael: it is in high quality liquid bonds. this has not been a critic driven selloff. this has been an interest rate and liquidity-driven selloff. interest rates have jumped. the most liquid higher quality have actually underperformed lower quality bonds on a risk-adjusted basis. in some cases on an absolute basis. old-fashioned agency mortgage backed securities, high quality data u.s. investment grade corporations. even those miscible bonds you mention have been some of the worst performers, hit by interest rates, and a lot of for selling from u.k. pension plans, u.s. mutual fund managers. right now you are not getting paid enough incremental yield to go down in quality, especially given what you are talking about this morning, though slowing economic activity. lisa: we are getting headlines.

we've been getting headlines and earnings from retailers. t.j. maxx beating estimates across the board. home goods sales were down more than expected. how much do you have to parse through these earnings to really understand which companies can survive, which companies can withstand a capital structure that was built in a very different interest-rate structure? michael: absolutely that is critical. when you have these turning points in the economy, looking at the companies that can handle the inventory situation, the ones that are seeing more demand from consumers as they trade down. i know my wife and daughter went to t.j. maxx the other day to go shopping. not that they have to do his yearly trade down, but that is where the value is. you are seeing that brown the across the economy. it will benefit certain businesses and companies and hurt others. that is where the bottom of research really comes in handy.

lisa: you talk about investment grade credit and how much you have liked it. lost 60% year to date, including the 5% rally you have seen since october 20. everyone has been saying go into u.s. investment grade credit. could you see some sort of rebound akin to the declines we saw this year, double-digit returns type of year for this low coupon yielding asset? michael: absolutely there is a scenario that could put you in pretty good position for the next three years. they yields on high quality bonds, and not just investment grade credit. some of it is high quality asset-backed securities, munis, other things. some of these yields are in the sixes and sevens, and a static interest-rate environment. a year from now, we might be in a world where inflation is not five anymore. maybe it is three, which is our

base case. you are looking at year-over-year food prices back to zero. that is what happens when you get these elevated prices on everything. the numbers start to go toward zero and maybe turn negative. you could have a fund rate of 2. you could have a treasury at 2. you could have high single digit returns in relatively short order and these high quality bonds. jon: there is someone out there holding an austrian century bond and they have been hammered with price. you don't sit on it and wait for it to mature. do they let it sit there on the balance sheet, take the losses? what do they do with that stuff? michael: you typically don't sell it. when you get those margin calls, likely saw in the u.k., pension plans, you don't sell.

you sell the home is quality, aaa rated clo's at $.98 a dollar which pushes them down. that is what is happening this year. that is why the most liquid higher-quality bonds have actually underperformed. jon: great stuff as always. you have talked about it, the price losses and some of this debt. tom: i am still seeing it. retail is getting absolutely hammered. we go into all of this mumbo-jumbo, and it doesn't work. it is real simple. somebody is down 8%. general bond portfolio down 15%. lisa: 16% for u.s. investment grade bonds this year including a 5% rally. tom: what do you do in bonds? i love tjx.

i thought you were brilliant on walmart, target. tjx, some people don't know, it is a unique story out of boston. after you put the tree up before thanksgiving, they want you to look at a fresh and enticing giftgiving assortment. there is some nice optimism within the comments at tjx. jon: have you ever been to a tjx? have you ever been? i know that we have, but this guy. there is one on 1st avenue, if you are interested. 58th or something like that? there is a home depot you have never been to downstairs below the building. tom: i went there once. someone wanted an aluminum christmas tree. lisa: is that a shopping segment that we just did? brilliant.

jon: margaret lowe is coming up. does your dog watch this? do you leave the radio or tv on? tom: we do both. lisa: surveillance, for your dogs. tom: do you speak to them? in public, they will say, oh my god. we got a puppy cut yesterday. inflation, killing me. jon: from new york, this is bloomberg. lisa: keeping you up to date with news from around the world, with the first word, i'm lisa mateo. nato says the explosion in poland was likely due to ukrainian air defenses. the blast killed two people and a polish village several miles from the ukrainian border.

the secretary general of nato says the blast was probably caused by ukrainian missiles defending against russian attacks. members club soho house is getting a new ceo. the founder will hand over the day-to-day operations to the current president following a recent diagnosis and successful recovery from prostate cancer. he will focus on designing new houses. the company announced earnings that showed revenue climbing 40% but reduced guidance to reflect cost and currency headwinds. >> i will be doing all of the things, the reason that we set up in the first place. creating great spaces, spending more time with our teams, spending more on member experience, also with our members. i am going back to what i always came into this business to do in the first place, and i love doing that. lisa: global news 24 hours a

day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg. ♪

♪ the holiday season is just around the corner, but economic uncertainty, coupled with rising costs has consumers seeking alternative payment options now more than ever. for more on this trend, we're joined by sara elinson, ey's fintech and payments strategy leader. sarah, what are the big changes you see in the consumer payments landscape? yeah, this is a really dynamic time in the market right now. we're seeing consumers with record low in terms of household savings. we haven't seen this since 2009. we're seeing consumer confidence, though, ticking up, which means people want to spend, but they're going to be looking for alternative payments and methods to do that. we're going to be seeing buy now, pay later continue to be of interest;

other lending at the point of sale. for banks, for merchants, they need to get creative and think about how do they meet that customer demand and provide that type of service. ♪

>> consumers now are dramatically shifting what they are purchasing and how much they are purchasing. many businesses like the targets, walgreens are sitting on inventory that are may be less desirable for consumers right now. some goods are going to see some downward price pressure as businesses try to eat through that existing stockpile. jon: target down by 14% in the premarket. right now, from new york city, sneak peek at the market going into the opening bell. one hour, 42 minutes away. unchanged on the s&p 500.

yields going nowhere, 3.76 on the 10 year. tom: we are waiting for retail sales in 45 minutes. jon: that is the next stop for the market, no doubt. tom: watching what is happening in poland. maria tadeo is in brussels this morning. lisa have been brilliant on this this morning, the differential between target and walmart. the culture of managements and company matters. an expert in package sales and research analysis. it is about the culture of a company. which culture in retail will win over the next year? >> in this environment, it's about the flight to value. the retailers in that value

proposition -- we saw walmart yesterday -- is resonating with customers. this is the inherent danger of target's proposition. they love the apparel, kids items, but those are not in demand right now. tom: can price clear inventory? >> if you go low enough, it can. that is what we are seeing with the margins at target. they actually made a comment that people are more reticent to buy anything not on sale. you can get rid of it, but it really comes down to how badly that will affect your results. lisa: you talk about this, you go into the grocery store, everything is on sale. if not, it does not go. jon: you know what the budget is for tk? an italian restaurant in new york that just lost a michelin star. if it doesn't have a star

anymore. i give up. i am going home. lisa: is this an execution issue, or is this something deeper that has to deal with the consumer? you talk about people not wanting to buy something unless it is discounted. is that simply an oversupply of goods and marking up too quickly, or is this something more profound that speaks to a consumer that is flat on its back? >> i think it's a combination of the two, to be honest. first, we haven't oversupply of inventory because people were worried about supply chain issues last year. and people brought in inventory early this year to make sure they had enough for holiday. even though there were a lot of markdowns early in the year, there is still a lot of markdowns. at the same time, the consumer is becoming budget conscious and only seeking value. that is a bad mismatch for a

company like target right now. lisa: what do you make of the online presence? everyone hailed this as the next coming to compete with amazon, but you're seeing those areas underperform perhaps more than any other. what do you make of that? >> when you are online, it is more of a mission type of shopping experience. it is still not a great thing to just browse and find something. right now people are looking for value and inspiration. that is where we are seeing a shift back into stores. we saw positive traffic at walmart, target, where people can go and browse the racks. it is much easier to do in person than in a virtual environment. online, it is harder to execute on that, to do it well. it will be important with holidays especially with black friday and cyber monday coming up, but that will be a spike that we see on the e-commerce side. tom: i want you to take this beyond target.

the stunning headline is they will have efficiencies without job cuts. i have never heard of that. translate that. >> what i think we are talking about is finding ways to optimize their productivity. tom: you sound like a mckinsey consultant here. translate that for mortals. >> what this means is, they are not going to cut jobs, but find cheaper ways to do things. they will try to find cheaper sourcing, reallocate laborers so that you may not have as many people on the floor in the store, saving on labor hours, but without sacrificing jobs. those are things that they will probably look to do, make sure trucks are full, simple things that can make it cheaper to run the company. right now, it is hard to envision how they will do that

without a round of layoffs that we have seen at other companies. we have heard about it at amazon, walmart. we will have to see if they can actually do it. lisa: it is early days, although jon is repetitive cut of his christmas tree early. do we have any view on the holiday season? >> we look at bloomberg's second major transaction data. in october, when a lot of these companies were running early deals, the sales were coming in at the low end of what the industry is forecasting for the holiday season. that may take up in november, but so far the trends have been weaker, indicating it will be a challenging season for a lot of retailers. jon: thank you. you have a go at me every november for the same thing. i am not alone. i know that people do it. lisa: it is joyful. tom: is there a thanksgiving

equivalent in england? is there some big celebration? jon: you know what i would love to see from you? if you could do something like the late great bourdain, go around new york restaurants and bars. i think that would be gold. lisa: trying to get him to change jobs? jon: five-part series. tom: i am cooking for thanksgiving. i am going to benoit. lisa: pause. benoit is casual? jon: we are going to call it slumming it with tom. with tom, it's a very different experience. tom: holiday team coverage. lions-bills or portugal versus ghana?

the world cup is on at the same time? jon: it is brazil on thanksgiving. doesn't england play the united states? lisa: how is the end zone for the world cup? tom: there are some real cultural issues here. do you wish you were there? can we get a vote? lisa: he does not want to be there. jon: you want to send me to qatar? lisa: tom is trying to send jon to qatar. jon: it is what you always wanted anyway.

♪♪

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>> right now, it is about the fed. >> i don't think the fed wants to get as sizing needs to.

>> the good news is there is a distinct possibility we will see inflation moderate fairly quickly. >> still a lot of money out there sloshing about looking to invest. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramovitz. tom: good morning, everybody. thrilled you are with us on a retail wednesday. 30 minutes away from retail sales. i see 17 lines of economic data today. it is not just about retail sales. jon: downside surprise on cpi, downside surprise on ppi. inflation rolling over, can growth hold up? how long before growth starts to crack? retail in focus with respect to that. tom: stunning news out of england. maybe it is discrete to england

and the netherlands, but those inflation numbers in the u.k. are crushing the consumer. jon: it is a european problem. latest figures out of the u.k., 41-year high. the fear in the u.k. and europe is that basically, when you are seeing is growth being hit before inflation peaks. that is an argument you cannot make it america. already seen peak cpi in america . cannot say the same thing for the whole of the continent. tom: lisa, it is really company to company within the aggregate retail sales control group. you pointed that out with walmart and target. lisa: how might you see a real dispersion, how much it paints a picture of consumer looking for a discount, looking for ways to manage through a holiday season. i am a little bit distracted because the news is moving

so fast. looking at this headline. genesis looking to spend some of their business. there is this question of what is the next shoe to drop in markets? is there a sense that there is something going on? i wonder if that is underpinning this fear that people have to become fully invested at a time when things are less bad than expected. tom: amy will silverman correlating bitcoin and its struggles to the markets. bitcoin at 16545. we will see if it finds intraday support. this is removed but it is not. jon: i need to go through this accurately. delete paragraph, crypto growth genesis is suspending new loan

generations after abnormal withdrawal requests after the collapse of ftx. everquest exceeded current liquidity at genesis capital, a lending arm, according to the interim ceo. genesis has hired someone to look at all possible options. the move will only affect the lending business, according to the interim ceo. we have talked about these cascading issues through this universe. here is another one. tom: the cascading issues are there. it has to do with sec, ftc, etf's modeling bitcoin. i agree, we had to go through careful reporting. $140 million equity infusion

last week. genesis. i will suggest it is not what we have seen from ftx, but there it is. linked to it. jon: the s&p 500, unchanged. 25 minutes away from retail sales in america. equities, quite the lift over the last week. bond market, yields unchanged on the 10-year. 3.76. on the two-year, 4.35. tom: we will monitor the genesis story, what it does to bitcoin. marvin loh, senior global macro strategist at state street. the consumption picture makes up 70% of the economy. how does the new tepid retail environment change in american strategy at state street? marvin: it is part of the evolution.

we are all trying to figure out when the point is correct for the fed to slow down when the tightening will slow down. it really comes back to a middle-class driven inflation. all of the savings and wealth created over the last years has capex spending strong. we are seeing supply chains ultimately start to right size, but there is still savings out there. trying to get a sense of, is the environment changing to a point where this middle-class, which has pent-up savings, starting to slow down a little bit? we have seen signs of it. the bottom end was affected first, bleeding into the middle class, but it is a function of how much of that wealth is out there, how much people are willing to spend. jon: resilience is the debate of the moment. making a decision between policy and the time it takes to hit the economy. there are people who are

confident, hopeful, that inflation is rolling over and growth is holding up. how big do you think that window actually is? marvin: i think it is really small. the transmission mechanism certainly is something everyone is focused on. when we think about when rates were low, the average american did not benefit as much. as we raise rates, it is understandable that it is taking a while for those interest rates to make it into the broader economy. i think it is a narrow window because of that transmission rate. the fed ultimately needs to go very aggressively, as they had already, to just get a crack on the real economy. lisa: what about resilience in markets? we see an ongoing barrage of information, have seen some significant losses. it has not been a market fissure. nothing that has caused market dysfunction like in the past but

we have seen policymakers move in. how close are we to some sort of financial accident based on liquidity and some of the risks out there? marvin: it is interesting, the fed and the treasury are taking up this liquidity issue to the forefront. there is a report out from the new york fed. i think the market is handling the volatility fairly well. you do expect wider spreads in our world, when you get this kind of uncertainty, this type of volatility. i think the risk always increases as we get more volatility in the market, get further along in this tightening process, but i think it has actually function fairly well. tom: the target ceo on the irna call right now. planning for rapidly softening demand. same borrowing options for customers are running out. this speaks to what you are talking about. here is the question.

that everything that has rallied in the equity market now, but when to fade based on this? can you tell me whether you think the bond market will rally when we start to see this softer economic data? marvin: i will answer the latter first because i sit in the fixed income world. i do think we will rally in the bond market. i think fixed income, as an investment within your allocation thought process, is an easier type of play. on the equity side of things come everything rallies. defensive growth is something that you want. energy, because supply issues remain an issue. retail is a struggle. when you have this buoyant market that is lifting everything, in a period of still a fairly wide uncertainty, you have to pick which ones you like. jon: wonderful to hear from you. marvin loh of state street. target in the premarket done by

more than 14%. the target ceo on the earnings call right now planning for what he calls rapidly softening demand, saying borrowing options for customers are running out. tom: what i would suggest is this is immediate. the tone i am getting, this is happening in weeks. this is not something that we knew in early october. tom: we were told that in the earnings release. talking about the speed, the weakness that came through on the back end of the quarter and bleeding into the new year. lisa: the target city saying the company is seeing increased theft and organized crime. i don't know if you have been into any of these stores, but they have gated up home goods like shampoo and conditioners because of the organized crime. how does this affect earnings? tom: the standard is 2%, maybe 4%.

many of these companies may be about that. lisa: this speaks to the social fabric, the theft, the company dealing with it. tom: could i give you a paragraph here? from the genesis website. "lend over 20 five digital assets, stablecoins, other fiat coins to genesis, increase capital efficiency. earn yields up to 10%." that encapsulates everything we are talking about here. katie greifeld, i could not tie her shoes on this. that one paragraph encapsulates the hope that seems to be drifting away. jon: genesis suspended withdraws on its lending arm in a fresh blow to crypto. we will pick up on that in a moment. we will catch up with greg valliere of agf investments. quite the story in florida. the former president announces

he is making a run, and the blackstone chief comes out and tells axios, not supporting that one. tom: no comment from the governor of florida. jon: i wonder if that is who he will be supporting. this is bloomberg. ♪ lisa: keeping you up to date with news from around the world, with the first word, i'm lisa mateo. the leaders of nato and poland say there is no indication a missile that struck polish territory was an intentional russian attack. the blast killed two people in a village a few miles from the border with ukraine. nato says it is likely the explosion was caused by a ukrainian air defense missile fired against russian cruise missiles. donald trump says in order to make america glorious again, he will make his third run for the white house. the former president made it official tuesday night. meanwhile, donor stephen

schwarzman, the billionaire chairman of blackstone, says it is time for republicans returned to a new generation of leaders and he will not be supporting the former president. more fallout from ftx. genesis is suspending redemptions and new loan origination's its lending business after pacing abnormal withdrawal requests, following ftx's collapse. bill winters says it is clear the industry faces more regulation. >> all of that stuff, that ecosystem will come into the regulated institutional environments. it is too risky to be out there with a bunch of cowboys that have managed to build themselves up. lisa: shares of target are plunging. the retail warned in its latest earnings report that american shoppers are pulling back.

that land targets profit and prod to the company to cut its outlook. target is also looking for $3 billion in cost cuts. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg. ♪

>> in order to make america great and glorious again i and tonight announcing my presidency for president of the united states. this is a movement. this is not for anyone individual. this is a job for tens of millions of proud people working together from all across the land.

the former president making it official in florida. making it official as well, stephen schwarzman of blackstone to axios. america's leaders are better when they are rooted in today and tomorrow, not yesterday. it is time for the republican party to turn to a new leader. tom: we saw that from mr. griffin, conversation with bloomberg yesterday. i have to slip this in. the news flow is extraordinary. stay with us for retail sales. joe feldman, gentlemen, crushes target and his pre-press conference research note. operating margin down for basis points. jon: execution, environment, or both? tom: both. but you get the sense that it is execution. retail sales and 11 minutes.

bigger and broader on the politics of the moment. greg valliere joins us now from toronto. thrilled to get his perspective this morning. you suggest last night you saw sleepy donald trump. expand on that. >> i thought that trump last night was boring. i never thought i would use that word associated with trump. i was wondering if somebody would give him a double espresso. he didn't show a lot of energy, seemed very subdued. if that is the best he has got right now, i think a lot of republicans will think about jumping in, not just ron desantis. people like youngkin, nikki haley, we'll see what is happening and decide they will run. tom: the pushback is mr. trump

as the voters that voted for him before. explain to the international audience, the republican party process pre-primary. who has the upper hand? greg: you will probably have eight or 10 candidates running. whoever wins new hampshire could have 32% and we new hampshire. in a big crowd, trump still has his base, but i would argue the defections away from trump in the last several days have been extraordinary. lisa: will mitch mcconnell retain his leadership position over the senate? greg: absolutely. i don't think it will be close. i think kevin mccarthy is still in trouble. they have to vote again in january. he is on very thin ice. mcconnell is in good shape. lisa: on the flipside, does this actually put the democrats in a strong position or a less vulnerable position for right now but still gridlock in washington? greg: still pretty much

gridlock. i have to say, that is a five-story for the markets. the markets can look with this because any progressive legislation that makes it out of the senate and goes to the house will die in the house. tom: the senate majority leader, mr. schumer, reached out yesterday to republicans. i thought that was fascinating. is there any hope of a middle ground given the upset republicans faced last tuesday? greg: not much. maybe with susan collins of maine commitment rodney of utah. by the way, in the next month, there will be an enormous amount of work on spending. they have to get a budget done, he for ukraine, talking about tax breaks for businesses and individuals. this bill will come out on christmas eve, will be huge in terms of spending. tom: i want to talk about the changes in washington.

using gridlock as you see it or is there a new character to the gridlock we see in 2023? greg: i think it is still gridlock in 2023. i have been through the kumbaya stage for decades and it usually doesn't pan out. there are some interesting issues, there might be grounds for a compromise or two, but i don't see any kind of big breakthrough on that front. lisa: a big theme is a lack of fiscal response to a downturn that a lot of people see as increasingly likely. do you think the outcome of the midterms changed that scenario at all? is there more openness to possibly be more targeted and where they deploy money going forward in the case of a downturn? greg: they will spend money like drunken sailors between now and the end of the year to get all of their budget stuff done. it will be a pig out in both houses. next year, i think there will be some restraint on spending,

except the defense. considering everything going around the world today, i think defense spending gets a big boost. jon: we need to talk to greg moore. fantastic. tom: a whole host of people that we have that have real nuances in their politics and economics. inflation watch. we were talking about fish and chips earlier. houston, texas, next april -- t his is from michael mckee. taylor, sexson h, r.o.e. nine, $34,000. the eras tour. jon: daily reminder that ticketmaster is a monopoly. break them up. tom: this is not james taylor. jon: thank you for confirming

that. are these real prices? lisa: i am looking at a story in the guardian talking about prices listed as much as 22,000 dollars with ticketmaster as it crashed. basically, people are saying, i'm a failure as a father as they talk about buying tickets. jon: that is beyond said. -- sad. lisa: it takes more than that to be a good dad. not just buying taylor swift tickets. tom: i don't know why she cannot announce this on bloomberg surveillance. lisa: there is a bigger point here. can we talk about that? people are going back to live events in mass. this is an entire industry. experiences are still seeing

inflation because people are going back. i am not saying $22,000 as an example of a cpi bucket item. tom: she will tell me, i don't care about taylor swift. she wants to see paramore. i'm a failure if i cannot pop $22,000. jon: smallest violin ever playing in the corner of the studio. retail sales. michael mckee will talk about that. kathy bostjancic will join us, chief economist at nationwide. bts and taylor? that would be 50,000. who is bts? 's perfecting that special place that you want to keep in the family or passing down the family business or giving back to the places that inspire you.

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and three times the battery life, so you can get the performance and certainty you need to stay open for business. for resiliency at the edge, trust schneider electric and it orchestration by cdw®. people who get it. well, we fell in love through gaming. and it orchestration by cdw®. but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet. ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up. i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about.

jon: next up for this market, retail sales in america. equity futures down .1% on the s&p 500. the two-year, 4.35. on the 10-year, up a couple basis points. for the data come here is michael mckee. michael: americans are spending

money, we don't know how much is additional because of inflation, but retail sales coming in at 1.3% for the month of october, better than the flat number we got in the month of september, better than the 1% anticipated. takeaway cars, it is still 1.3%. takeaway cars and gas, .9%. the retail control group is what we watch, it strips out the stuff that goes into gdp in other categories. consumer spending up .7% for the month of october in the per luminary reading. that is better than that .6% revise number four september, doubled and the .3% anticipated. looking at the import price numbers, falling .2%. ex-petroleum also down .2%. inflation because of imported goods is going down. maybe a residue of the strong

dollar, maybe also that inflation has peaked. consumer spending is still holding up very strongly at this point. jon: upside surprise. equities down a little bit on the s&p 500. yields up higher by five basis points on the front end. 4.39. tom: it is the dynamics of the market. good morning, priya misra, and others. that is sobering. ira jersey, it is highly unusual. jon: mike, how does the fed read this one? michael: it will be interesting. i will be talking on your show later. i will give you a tease. esther droid from the kansas city fed says we have to have pain in the labor market or we will not get inflation down.

target coming out today saying we are going to do $3 billion worth of restructuring but will not lay anybody off. how does the fed do with all of this? they have a strong economy. you can make the case may be we get a soft landing. then you look at bill dudley's piece today on the bloomberg. he says recession is inevitable. it is hard to know what will happen going forward. tom: it bears repeating, is amazon and the boxes that we get, and these retail statistics? michael: non-store retailers were up 1.2%. that is better than the previous month. but that includes everything, not just amazon. all kinds of people who do business online, also people that go door-to-door. food services and drinking places, the only services category here, up 1.6%. tom helping out there. clothing, flat.

gasoline stations up 1.4%. you had to guess that. grocery, food up 1.4%. the only real decline was in electronics and appliance stores, down .3%. may be connected to a slowdown in housing or just noise. over all resilient consumer still spending. jon: equity futures down a little bit. i wouldn't make much of this, down .1% on the s&p. tom: -60 basis points, two-your elevated versus the 10-year. michael mckee, thank you. vix, 24.3. right now, kathy bostjancic's joins us from nationwide. when you some everything

together, can you say disinflation is upon us? kathy: good morning. good to talk to you. we are seeing some signs in the goods market, with the import price data this morning you are seeing signs of disinflation, which is welcome. hello bit late. i thing many of us were calling for this to come earlier. certainly not seeing it in the services sector, and that's the problem. goods prices running year on year 5% but services running closer to seven. lisa: do you think the resiliency we continue to see in the consumer puts fed credibility at risk? kathy: i'm not sure about the credibility, but it will certainly test them, as you discussed. this is a complicated number in a sense. it is great on the one hand that the consumer is so resilient. but the retail control, which feeds directly into gdp, the cor e reading was not only strong

this month but two upper revisions to prior two months. really paints a stronger picture and more momentum coming into the recorder. how does the fed really slow things down enough to allow inflation? to some degree maybe that soft landing will happen, maybe we have the disinflationary forces, the fed just needs to watch it. but it begs the imagination to see services come down without the fed engineering more restraint. lisa: backward looking, which looks a lot better than forward, and we hear the target ceo saying things are shifting quickly, and it does not look good. how do you pair the messages with the on the ground immediacy, versus the past which was more about resiliency? kathy: it's a great point.

i guess i had expected some about to show up in the october data. maybe it will come more in the holiday season, november, december, even in january. the key is the labor market has to slow. what you are seeing is aggregate income, which is generated by the number of people working, wage gains, is still strong in nominal terms. some erosion from higher interest rates and inflation. but as long as you have a job, people feel culpable tapping into their savings. that will change if somebody in the house loses a job. tom: retail sales that we saw moments ago, topline inflation reality number. if we are moving into some warm of disinflation, is retail sales of used looking back 30, 60, 90 days? kathy: certainly how inflation plays out will have a big impact

here. you can imagine, if nominee assails maintain a resilient pace when you adjust for lower inflation, that will make the real numbers look better. right now, these numbers are inflated a little bit by inflation. still stronger than expected. the key will be watching the mix of nominal and inflation. if we get disinflation, that boosts real consumer spending and real gdp. lisa: renaissance macro put out a tongue-in-cheek tweet after this retail report saying the fed is doing a bang up job slowing demand. he said this really puts at risk the markets idea of the terminal rate for the federal reserve. does this resiliency shift your believe of how high the fed will have to go and how long they will have to hold it, based on the backward look of consumer spending? kathy: i think that that is at a

point where they need to be more deliberate, calibrate the fed funds rate instead of just catching up. they were so far behind the curve, 75 basis points four meetings in a row. 50 is still on the cards in december. the terminal rate, we think it goes 5, 5 .25, but the key is holding them for a long time and still doing quantitative tightening, as long as liquidity issues don't get into the way of that. the risk is for higher rates especially in light of an economy that is still resilient. jon: kathy, thank you. off the back of these retail sales figures, upside surprise. rambo, you are on the right path, the terminal rate. this rally is built on many things. one of the things it is built on is the idea that there is the not much more upside

potential. the resilience story may be means that story is not over yet. lisa: and the risk is to the upside. is this priced into the marketing anyway? the fed is basically telling us there is going to be a recession. they are using different words, but they are basically telling us that. that will give her the market the believe that they have the conviction to go higher. tom: i am looking at the 2's 10 's and version plunging. wide inversion on that. it is not about the two-your dynamic and the fed parlor game, but the lookout of the 10-year and slowing down. i am looking at a nudgy screen trying to figure out where we are on a wednesday. jon: how big is the window

between inflation rolling over and how long you get before the economy rolls over? right now we have a debate. how wide is that window, one month, two months? marvin loh said to buy bonds off the back of it. others are pushing back from it. lisa: it is a longer window, that means you'll end up with higher rates. if you don't see that slow done in the data, the fed will keep going. that will cause a much bigger downturn, soccer economy. tom: do we have the tools to have that debate? post-pandemic come in an unusual dynamic. we all know that. are we being arrogant and that we can guess the inflation dynamic over to the slowdown in real gdp dynamic? jon: super humble about the next 12 months. tom: i think a lot of people are trying to game this out as a

pivot point. baloney. jon: tweet of the morning. tom those who taylor swift is, but he cannot explain the offside rule in the walkup. priorities are all wrong on this show. solid feedback. thanks for listening. from new york, this is bloomberg. lisa: keeping you up to date with news from around the world, with the first word, i'm lisa mateo. the leaders of the dow and bolin say there is no indication a missile that struck the list territory was an intentional attack from russia. nato claims air defenses in ukraine likely launch the project out to fend off a russian assault. if russia had liberally targeted poland, it would have risked drawn nato into the conflict. donald trump says he wants to make america great and glorious again.

the former president said he will run for the white house a third time. >> this is a movement. this is not for any one individual. this is a job for tens of millions are proud people working together from all across the land and from all walks of life, young and old, black-and-white, hispanic and asian, many of whom we have brought together for the very first time. lisa: mega donor stephen schwarzman will not be back in the former president this time. the ceo of blackstone says it is time for the party to turn to a new generation of leaders. senator rick scott will challenge mitch mcconnell for the top leadership post today. allies have been trading blame for this is a performance in last week's elections. mcconnell says he has the votes to continue as the republican leader. there has not been inflation this high in the u.k. since 1981. october's consumer price index

rose more than expected to 11.1% from a year earlier. soaring energy bills was the big reason. the new data as pressure onto the ritter's government and bank of england to act. global news 24 hours a day, on-air, and on bloomberg quicktake. i'm lisa mateo. this is bloomberg. ♪

>> there is a general view the fed will downshift to 50 but there is further to go. the difference now is where the market is thinking, what is the implication those fed hikes today and maybe more next year, is there going to be a recession? how bad? and how bad will the earnings recession? tom: chief global strategist at principal asset management there with some comments off a retail sales. market gyrations. lisa, let see up of the fed meeting yesterday, curve inversion widens out to a

greater inversion. lisa: we are seeing the steepest inversion, to your yields versus 10-year yield's, going back to the 1980's. 61 basis points. this really speaks to the conviction people have longer-term weaker. go buy duration because the fed has conviction to go far and fast to break an economy that still have momentum. tom: some humor this morning as we talk to mr. pharaoh about when the tree should go up, signals the beginning of the holiday season. i can say unequivocally on the island of manhattan, there is no one more steeped in this then dana telsey from telsey advisory group. 57th and 5th avenue, give us one window into your childhood at bergdorf goodman. dana: i think the moment comes from my grandmother working

there and seeing on the housewares floor, all the different christmas trees and holiday decorations they had. it changes every year, and it is wow.every year tom: coming of a pandemic that your parents could not have imagined. what does the holiday season look like this year? dana: i think the holiday season for the most part will be about gathering. people want to be more together than they have in the past. but it is still a challenge economically. yes, retail sales figures came out but you have a real bifurcation between the high and in the low-end. the high and is still spending but the growth rate is moderating from the past. you need new product. who is delivering new product? you and i talked about the exhibition from louis vuitton on madison avenue. deckers has new uggs platform shoes that are taking. lisa: that is the luxury sector.

these are people with discretionary spending. we saw from the targets of the world, maybe that is not the case for the vast majority of other people. what is your take away in terms of the discretionary spending from the target and walmart earnings? dana: it is cautious. when you think about the inflationary headwinds they had, they don't have the same bending power they did before, especially with food going up. everyone is competing on promotion today, which is different from 365 days ago. you look at tjx's numbers today which were better than expected, they are getting better brands at more valuable prices. is there some share shift going on? lisa: we saw walmart gain share in the grocery store sector which buffered a lot of their sales. people are still buying food. where do you expect to see the big share shift?

how much do you see consolidation among the strongest players, and the losers losing even bigger? dana: thinking about the changes going on, who has the assortment, who has the value? one of the surprises tomorrow could be macy's. i think they been more innovative than they have been in the past. i think we will see some improvement there. the specialty apparel side, there is newness there. the issues at the gap continued to be headwinds. they are shared donors, not gainers in the near term. when we do have all the changes happening, you take a look at urban outfitters, anthropolog ie, free people, people are buying theirteen retailers are having issues because they don't have the buying spend. it is a share shift. let's not forget inventory levels. we have too much inventory. nobody is getting rid of it as

fast as they like. that means a value for the consumer. tom: what is the value on equity? lisa needs a pair of statement sunglasses, very important to have. in a recession, do you go along luxury, which is already richly priced, or do you find value in big box? dana: one of the things that i'm seeing with so many of my stocks at 52-we close, investors are doing their homework, preparing for 2023. the table wind is about freight rates. tom: single best buy right now? dana: i like tjx for what they can get into deliver. other names are interesting also. look at what estee lauder just delivered. if you look at the value names and what can be changed, i think of abercrombie & fitch. tom: i was in there the other day.

dana: what did you think? tom: i am kidding. you think i'm going to go in? lisa: estee lauder buying tom ford, the biggest purchase in its history. there is a theory out there put out by the likes of morgan family, that there will be a tipping point next year, and those a benefit the most. will there be consolidation or bankruptcies that have not yet been experienced? dana: i think you will continue to see some of the acquisition take place in consolidation but also divestitures. some of the company that are not performing as well, want to focus on brands working. look at wolverine worldwide. merrill is there strength. they may not need all the other brands in their portfolio. you may also see a change of in terms of the physical locations becoming more important. i think stores are the new gathering spots. what the pandemic did, it

brought together that people want to socialize. as the pandemic hopefully goes into the rearview, yes, you are seeing people shop at stores. it is one of the changes for holidays 22. tom: china to the rescue. does it work? dana: i am still seeing china be a tough place for a lot of my brands. i think not until 23. tom: dana telsey with the telsey advisory group. lisa, i thought your coverage today on walmart and target was lights out. lisa: what you heard there was interesting, important to highlight this question going forward, as you look at the product mixes, discounts, how you see that consolidation, how you see the haves and have-nots will be interesting to see. the execution part of this coming to the fore. tom: my theme for the year, the zombie roll up.

the zombies of dana telsey's retails, every other sector, it will roll up. lisa: the other thing she said which i thought was compelling, people going to stores and the socialization. you are seeing that with the spec to the online number disappointing and in-store numbers doing well. tom: 2's, 10's cratering, under 60 basis points. that is extraordinary. lisa: we are seeing new curve inversion in terms of the postcrisis era. tom: s&p futures at -11. dow futures at -45. stay with us on radio and television. this is bloomberg. good morning. ♪

jonathan: live from new york this morning. equities down, the content of the open starts right now -- the count down 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: we begin with a big issue, waiting for growth to