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tv   Bloomberg Surveillance  Bloomberg  November 17, 2022 6:00am-9:00am EST

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>> this could be somewhat of a shallow recession but more for a log. gged period of downturn. >> it will be a long-term environment. >> you have to go all the way to two for the fed to truly step off the brakes and allow for a neutral policy. >> we are all trying to figure out when the point is correct for the fed to slow down with tightening. >> this is bloomberg surveillance with tom keene,
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jonathan ferro and lisa abramowicz. tom: good morning, jonathan ferro, lisa abramowicz and tom keene, thank you for joining us. it is boring out there, claims, some housing data, forget about it. our number one story today, curving version. you nailed it yesterday on a tweet, we go back 40 years for the unusual mess of this moment. lisa: one of the contours will be shortened shallow, deep and short. how much pain do we have to yet see? then we have a lot of people saying the earnings have not been so backed you get sometimes a surprise rally. tom: this is the wheelhouse of the unknown bbramo years ago, this is what she does best. ira jersey will join us later,
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ian lyngen will join us later for what you need to know about 63 basis points of inversion. how does it filter out in investment grade credit, high-yield credit. does it filter out into the real world? lisa: if you look at it this, people are getting paid more to earn short-term debt, they are earning more than if they are going out in lending for 10 years. what does this say about prospects longer-term and where people will put their money? they will hide it. it will not necessarily be conviction. tom: 20 years with folks, it leads into the auction yesterday of the 20 year which mattered. it is time for auction talk. explain to me are mortals like me why the 20 year auction yesterday folds into the shock of massive conversion. lisa: the consensus we can. from guest after guest is buy --
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regardless of what is happening, the fed, they are committed to whatever it takes even if there is significant downturn. tom: in the land of fixed income it is a huge day, ira jersey again looking at volker for what is possible. there's also a chance it will move the market in london and pursing into bloomberg, i will round up 1.19. guy johnson says this is a speech. lisa: we are all looking for austerity from the united kingdom in the face of the latest cpi read. how much of a have to cut down spending, how much do they have
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to respond to something liz truss could not respond to and what is the response? if they cause a deeper recession is a positive or negative? tom: we will jump to this at 6:30, all of the headlines and guy johnson will translate from london. what i find fascinating is the austerity. but we have never had austerity with the full employment we have written a, or at least what we see in november. lisa: how quickly is it moving, and how significant are the effects? how much are we going to feel the burn of what the fed and central banks are going to do? talking about how we don't have a sense of how we are going to end up, we don't know what the effects are going to be or how dramatic. tom: john williams of the new
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york times with some important comments along with a doctor. futures at -20, the data is there, -64 basis points. 10 year yield .73 23.6 nine yesterday showing price up, yield down going for that long-term duration. oil does not give you a story, $92 on brent. and foreign exchange with one big story, darling as we go to jeremy hunt, at 6.36. 186. -- lisa: -- charlie evans having a
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retirement party from the fed. it is not going to be anything substantial in terms of monetary policy. we appreciate you charlie, thank you for being with us as of your exit of the chicago fed. the system of the markets more than anything else. tom: on radio we are bringing up all of the faces of the speak-a-thon at the fed. john williams not linking it to monetary exercise. michelle bowman, beretta mr. -- loretta mester, philip jefferson and the aerospace engineer from minneapolis. everyone has a different story. lisa: and we are all listening because it has been moving data. housing permits and initial jobless claims, then 10:00 a.m. we get home sales and watching
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that data. the housing market to me is one of the biggest financial risks. i also want to mention we are getting retail earnings, macy's at six .55, cap at 4.5 -- 6.55, gap at 4.55. tom: wasn't in? capturing the moment. i want to do this right now, the brief. best week yesterday, jason furman teaching at harvard and says there are two core inflations. a court inflation of 5.8% based on existing leases and the new spot market lease core inflation is stunningly low, 2.8%. that is an important for housing. get to it, the silliest year narcos -- vasileios gkionakis
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joining us. we have austerity. tell us about the new austerity you see and what that will mean for the dollar. vasileios: as far as the u.k.'s concerned, it was from one side. we had the many budget that was to be for a large extent irresponsible in creating the currency prices, confidence crisis as i called it. right now, obviously to appease markets and restore part of this, potentially we're moving toward the other end. i think what is important, the number of points that are actually important in the budget announcement, will it go deep enough and far enough in terms
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of the actual austerity measures? and everything we are reading and all of the headlines are suggesting it will. in that respect, it will actually be a fiscal practice that will aim to a certain extent to basically fight inflation. in a sense you're going to have monetary policy and fiscal policy moving together which brings me to the second point, that this alleviates part of the pressure in -- for the bank of england to be aggressive on interest rate hikes. i have been saying this for some time, i don't think the bank of england has the willingness. it is very aware of the impending correction in the housing market. that has been the case and ultimately his downturns in the u.k.. the u.k. mortgage market is idiosyncratic in its nature.
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-- i think bottom on the message sterling is going to get, which i think has been leaning toward a euphoric environment, is we are heading toward a recession. ultimately that will be bad for sterling. lisa: which really raises this question, i wasn't sure where you are going in terms of is this good or bad for sterling, if you end up curbing inflation. at what point does austerity kill the momentum of a currency and at what point does it support because it is helping kill off the inflation so many people have been worried about? vasileios: these things work in cycles. as i said before, i think austerity is likely to restore part of the credibility. but there will be a long and recession staring sterling in
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the face. the recovery in the u.k., it will potentially lag other countries which means you will have a reshuffling. at the initial stage of austerity it will be a bad thing for the currency. as this progresses and you see some of the benefits of that, a lower debt to gdp ratio, that potentially starts providing and setting the stage up for a recovery in the currency. but again, i will mention this one more time. aside from all of these things, the u.k. is facing a structural problem which is deeply rooted in brexit. tom: we will have to leave it there because of time, we've got to get to 6:30 and the chancellor.
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thank you, particularly on sterling. in about 15 minutes, guy johnson will follow with analysis, the pound sterling up significantly. sterling strength off the depths of what we saw as rishi sunak became prime minister. this is bloomberg. good morning. lisa: keeping you up-to-date with news from around the world with first word, i'm a lisa mateo. more than a week after the elections, republicans have a narrow majority in the house that gives them the ability to undermine president biden's agenda, still it was slimmer than they thought. in the u.k., jimmy hunt delivers his budget message today. the last budget through markets into a tailspin because of the tax cuts. they will aim for tax hikes and
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stabilizing measures. sam bankman-fried is telling his side of the company collapse through a series of tweets. he admits that ftx got confident and careless and said he would do his best to save customers cash. he says -- ftx says basement does not speak on their behalf. zelenskyy says a cease-fire will not be enough in ukraine. he also says the return of territory taken by russia will allow an end to a war and he spoke from bloomberg new economy forum in singapore. cisco systems says it is cutting jobs to quote rebalance organization and reducing office space to align with the hybrid system. the biggest maker of machines that run computer networks and the internet says sales will run for .5% to 6.5% higher than expected.
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global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i'm lisa mateo. this is bloomberg. ♪
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>> still very much gridlock in washington and i got to say, that is a fine story for the markets. the markets can live with us because any progressive legislation makes it out of the senate and goes to the house will die the house. tom: brilliant yesterday on the
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election that continues, no question about that. his note this morning speaks about speaker pelosi and perhaps we will see news on the future today. we get a brief on that and tied into international relations with every -- g20 meanings wrapping up, our washington correspondent in arusha -- in donesia. i want to talk about this conversation in ukraine with mr. zelenskyy. it goes right over to the republican house. do we actually think the united states will hold back aid to a nation at war? >> a big question given yesterday we have the news the republicans have control of the house now and set to be speaker, most likely, if you can get
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those in january, kevin mccarthy has said it will not be a blank check for ukraine. he is also backtracked, saying he just wants a little bit more scrutiny. but he is going to have to deal with a divided party. individuals like marjorie taylor greene from georgia is saying no more money should go to ukraine. that is one issue. when the editor-in-chief sat down with president zelenskyy, he is talking about the fact that nobody can be 100% sure this was a ukrainian defense rocket in poland. he wants to send officials to poland and the president, he was asked about the claims from zelenskyy and said the evidence does not show that. tom: i need to talk about the event of today, perhaps on to kristin -- christmas, about the retirement of speaker pelosi. com is touted by some taking
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over as the new minority leader for the democrats. explain the symbolism of a polo see retirement and the generational shift for democrats. >> -- polo see retirement and the generational shift for democrats. >> this would be huge, we don't know what she will be announcing this afternoon in washington, d.c. we just know she is set to make an announcement and it is widely anticipated she is going to say she will not run for the leadership anymore. that would pass on to to a new generation as you mentioned. this is something she has discussed with democrats and there was even this handshake deal that would happen, but you never know. speaker pelosi has been a tactician and making sure
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getting the vote out, democrats did very well, everyone was saying it was going to be a red wave, and the dollars she brings it for the party. she was also the first female speaker of the house. she has decades of legislative work under her belt. it would be a huge shift for the democrats in the house, but we should wait to hear what she has to say first. i should note though, she did say recently that what happened to her husband at the end of october when he was attacked in his home, she said that would play into her decision so maybe she wants to take a moment and spend more time with her family. lisa: we are about eight minutes away from a statement over the united kingdom, expected to be austerity and cuts across the board with the statement from rishi sunak. as we do have republicans claiming the majority, albeit a slim majority in the house, how much are we looking at something not quite similar in the u.s. but more of a shift to austerity
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and a lack of spending? annmarie: republicans will want to put the brakes on any of those agenda items president biden wanted to get through. you think of closing corporate loophole taxes, raising corporate taxes or raising taxes on the very wealthy in america, that is something republicans are not going to vote on board four. but what markets are going to be focused on is the debt ceiling drama. we deal with this every so often but republicans have said in the campaign and the midterm elections they would potentially use the debt ceiling the immediate future. this is something the markets need to focus on. what kind of deal can the republicans and democrats do to make sure we're not at that so-called fiscal cliff? how much of that really is president biden coming back from the g20 in an even stronger position versus a somewhat muddied one, especially when it comes to china and what he'd like to see congress do in terms of setting certain parameters for businesses in the u.s..
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well, it's going to be interesting, as you mention, china, because also we do have xi jinping to enact spending cuts from the democrats. in the immediate future, this is something that markets need to focus on, what kind of deal can republicans and democrats do to make sure they are not at the fiscal cliff? lisa: how much is president biden back in this position versus china, in terms of setting certain parameters in the u.s.? annmarie: it will be interesting as you mention china because we do also have xi jinping continuing on this tour even though he has not traveled outside of china since the pandemic. he had choice words about making sure there is not this power balance dynamic fight within the asia-pacific as he is in bangkok with the vice president, kamala harris will also be there for the impact. what i think of china right now in the united states, what you see is there is a bipartisan support. but there is one issue we have seen. democrats have taken issue with the white house and that is the taiwan policy act. this has potentially a lot of are meant to him, speaker of the house kevin mccarthy when speaker pelosi went to taiwan he said he would like to lead at the best delegation. -- a delegation.
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they are coming off this meeting in bali which everyone said was a path to a potential warm relationship. potentially that would cause a bit more fiery rhetoric. tom: annmarie hordern, thank you. my terminal lit up, where is jonathan ferro? recovering from an autumnal speech with the chancellor. jonathan ferro yesterday, an autumnal christmas tree, we have to think his family for sending this image. it is too emotional. decked out in u.s. forest service grain but choosing the right push to put in the living room. lisa: how many levels can you troll him? you put the dow into a picture of where you mock him for getting a christmas tree so early. tom: i do not mock him.
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clearly on the internet yesterday, thank you for your support, 99.28% of people said you've got to be getting a. lisa: my desk kidding a. --- -- canning a. -- kidding me. lisa: we are getting a whole host of retail earnings, the tension is tangible. and it affects the fast-moving effects. tom: i'm really fascinated how it rolls over into online at amazon as well. lisa: it has not been doing so well. tom: 64 basis points of inversion, and five minutes jeremy hunt of the united kingdom. kingdom.
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tom: bloomberg surveillance, jonathan ferro, sub from lloyd's and tom keene. mr. pharaoh off today. -- ferro. vicks stasis 24.65 with important housing coming up --
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data coming up, 10 year yield up to 3.73 and the curve inversion signaling a lot of tension. en lang and and ira jersey here to give you -- ian lyngen and ira jersey here to give perspective. you have to frame this as the originality of the checker. these are people that go through the political process but very few can say i had the best olympics ever and many people consider the 2012 london olympics to be the best ever. this is the guy that ran. lisa: he will need to have the headache -- the marathon indoors because this is not a -- you are looking at a scenario, i was saying i can't believe the pound is as strong as it is, 119, 1.20 versus the dollar. 11.1% inflation.
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this is not a positive scenario based on where we were yet people have faith this is the person who can read things back and get a price that is stability, not necessarily winning or strength, but at least stability and that is the goal today. tom: he has not had the curtains trimmed yet for his office, you have to remind yourselves. guy johnson knows better than me, cameron, may, boris and liz truss. for a who sleep -- a hugely anticipated speech, here's the chancellor. >> many are worried about the future so today we deliver a plan to tackle the cost-of-living crisis and rebuild our economy. our priorities are stability, growth and public services. we also protect the vulnerable. because to be british is to be compassionate and this is a
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compassionate conservative government. we are not alone in facing these problems but today we respond to an international crisis with british values. we are honest about the challenges and we are fair in our solutions. we take difficult decisions to tackle inflation and keep mortgage rates down, but our plan also needs to shower downturns, higher growth and a stronger nhs and education system. three priorities than today. stability, growth and public services. i start with stability. high inflation is the enemy of stability. it means higher mortgage rates, more expensive food and fuel bills, business failing and
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unemployment's rising. industrial unrest and cuts funding for services. it hurts the poorest of the most and weeks -- sheets away at the trust upon which a society is built. the office of budget responsibility confirms global factors of a primary cause. most countries are still dealing with the fallout from a once in a century pandemic. the vaccine rollout and the response of the nhs did our country proud. but they all have to be paid for. the lasting impact on supply chains has made goods more expensive and fueled inflation, this is being worsened by a made in russia energy crisis. putin's war in ukraine has
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caused wholesale gas and electricity prices to rise to eight times their historic average. inflation is high here but higher in germany, the netherlands and italy. interest rates have risen here but faster in the u.s., canada and new zealand. growth forecasts have fallen here but fallen further in germany. the international monetary fund expects one third of the world economy to be in a recession this year or next. so the bank, which has done an outstanding job since independence, has my wholehearted support in its mission to defeat inflation and we will not change this. but we have fiscal and monetary policy working together and that means the government and the bank working in lockstep. it means in particular even the world confidence in our ability to pay our debts.
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british families must live every day their means and so must the government because the united kingdom will always pay its way. i understand the motivation of my predecessors many budget and he was correct -- many budget -- mini budget. but unfunded tax cuts are as risky as on funding -- unfunded spending. government borrowing has fallen, the pound has strengthened and the opr says today that lower interest rates generated by the government's actions are already benefiting our economy and public finances. but mr. speaker, credibility cannot be taken for granted. with today's inflation figures, it shows we must continue a relentless fight to bring it
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down, including a rocksolid commitment to rebuild our public finances. his team at the opr lays out starkly the impact of headwinds on the u.k. economy and i'm grateful to him and his team for their thorough work. the british economy is supposed to be 7.4% next year. they confirm that our actions cause inflation to full sharply from the middle of next year. they also judge that the u.k. like other countries is a recession. but the economy is still forecast to grow. gdp falls in 2023 by 1.4% before rising by 1.3%, 2.7% in the following three years. the obr says higher prices
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explain the majority of this since march. they also say a rise in unemployment from 3.6% today to 4.9% in 2024 before falling to another level. tom: jeremy hunt, the chancellor with a forecast that is widely anticipated and very much different from the bank of england. i did not hear this they are in the optimism of the checker. we welcome all of you on television worldwide and across america. the claim before we go to guy johnson, this was a statement of international ramifications toward the united kingdom. lisa: america is saying it is not just us, it is everybody and
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we are managing it better than everyone else. 11.1% is idiosyncratic to the united kingdom based on the energy crisis but it is being felt around the world of the emphasis on bringing down inflation is important. tom: i want to frame this for the american audience, two statistics, headlined headline is that 2023 guesstimate of their economy. 1.3% -- it becomes a positive 1.4%. a gallon of petrol is different within the united kingdom. a stunning seven dollars 30 some cents per gallon versus $3.70 that we see in the united states. in the other we can't forget, and guy johnson knows this, is the size of their economy. it is absolutely stunning how much smaller it is than the united kingdom. guy johnson joins us now in london.
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it is a more optimistic construction than we heard from the bank of england and governor bailey. who is correct on the view forward and economic growth? guy: when the governor of the bank of england talked about the two-year session, he was saying if current market pricing on where rates go is realized, we will have that length of a recession. however, we don't anticipate rates will get that high and by extension we don't think the downturn will be as severe as that extreme forecasts would suggest. i don't think they are quite as unaligned as they look at first blush in terms of what the headlines look like. we will get everything from the obr today, suggesting that u.k.'s already in a recession and will remain for quite some time. the issue now is how we manage inflation through that process, how high rates are going to go and how severe the contraction
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is going to be. we are witnessing a massive u-turn. from $45 billion in tax cuts to circa $20 million in tax rises, plus a significant event in terms of contraction and government spending. a massive u-turn in the u.k.. tom: this is so important and becomes an international story as we heard from the chancellor of the exchequer. most people are not going to buy the idea that this is international in any way. why is he selling an international event affecting the united kingdom? guy: this is the politics. he is trying to shift the blame. this is something that all countries are experiencing at the moment. there is some truth in that, there are idiosyncratic factors that are affecting the u.k.. brexit springs to mind and that is having an effect on the economy. there are international factors as well, the cost of energy is
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significantly higher here, not just at the petrol pump in terms of energy prices, electricity prices we are all having to pay. there is an element of truth there but there are idiosyncratic brexit burnish related issues affecting this economy. lisa: given the fact that they expect the u.k. gdp forecast to shrink, just 4% next year from 1.8% of a gain before, it seems like he would end up having a bigger reaction to the pound than we were having. 118, not that far off from where it was. how do you explain that? guy: a lot of people are scratching their heads, but think about where we were. markets, but pendulum often swings too far and maybe that is what we are experiencing now. we've gone from a massive $45 billion of unfunded tax cuts to
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tax rises and fiscal consolidation. you're going from a government, a chancellor, fast and loose to a chancellor that feels more technocratic and appears to have a grip on the situation. that is what the markets are ultimately looking for. it may have swung too far. but the other way, jeremy hunt is being the exact opposite. we will see where it stabilizes but it has been a big bounce back. tom: we will look into the austerity and moving forward. mr. johnson with more follow-through on this later in the united states morning as well. it is stunning to see the level of inflation versus what we have here. lisa: although there is an acknowledgment of what it takes and globally there is a field, that priority right now is to
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bring it down regardless of what it takes. tom: futures deteriorating, a soggy few days in search of information as retail earnings coming up as well, claims here in less than two hours. stay with us in new york, this is bloomberg.
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tom: looking forward to the fomc december meeting, the past few weeks have made a more comfortable, considering stepping down to a 15 basis points hike. tom: from st. louis, lucifer waller, huge respect on economics professionals. i federal reserve governor as well speaking yesterday and a slow day for fed speakers. just 14 speakers today. maybe jeremy hunt will want to give a speaker on fed policy. lisa: i think it would be
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interesting. tom: liz ann saunders -- sonders joins us, what about the stock market and the rally? i saw somebody looking at spx, up 18%. you are too young to remember 75 or 82, how do you figure out a bull market? liz ann: i actually think the retest and to move beyond mid-june lows in october looks at a better sentiment. you have an underpinning and as of wednesday last week you have seen behavioral measures of sentiment like the ratio get to the same amount of washout, pessimism, whatever you want to call it as the other measures.
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and you had a positive divergence develop where the breath was improved relative to what we saw in june. i would say you can check some boxes. however from a more macro asked -- perspective, what is ahead of us is more forward earnings, more stability both in yields and the dollar. i think we need to see stability in housing and pmi. i don't think you can check those boxes yet even if you have got some better sentiment and technical underpinnings. tom: these are unusual times to say the least. want to talk to you on your research note. you link the upset and bitcoin over to traditional equity investment. are you suggesting that the damage in bitcoin from 20,000 to 16,000, the uproar, the scandal, the innuendo can actually affect someone's 401(k)?
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liz ann: depend on what they hold, any of our investors certainly don't hold a lot of crypto but it considered in other parts of their overall network and anybody that has been a holder of anything crypto related has suffered and when you saw the collapse of ftx you did get a sense of some margin calls kicking in, in areas where there is more liquidity, there was a spike in that ratio. and put on in the options market that may have been tied to crypto. trying to figure out from here the ripple effects and counterparty risks i heard on your network an interview with somebody from the cftc, the job is to focus on the crypto world which is not what i do and her response was the same. we just don't know yet.
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there has been weakness in something like bitcoin but i don't think the story has yet been fully told. i think there are still chapters left in this crypto story. lisa: there's a larger story -- question that has to do with has the bubble popped? meta-shares down, we talk about the big andw he serrated, how do we know of the bubble has popped? liz ann: there have been many what i have been calling micro bubbles that have popped in spectacular fashion, even beyond 70% or so. it's the problem is even if you see a bubble pop and you got drawdowns of the 70, 80, 90 plus percent range, it does not mean you may not see elisa short-term three inflation and some of those. i think that was the knee-jerk
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reaction on thursday and friday. the buying went back into those down the quality spectrum prior speculation driven areas of the market. i think back to is it a bottom or not, you want to fade any sharp rally down the quality spectrum. i don't think that is where you want to be in the environment right now. but i would say those bubbles have popped. that does not mean they can't come back to life at least for the short term as we have seen recently. lisa: i think about what fed president john williams and said yesterday, when he talked about financial risks and general well-being a driver of monetary policy. it basically was we are not going to cut because you guys are seeing losses. at what point do you see this rhetoric, believe them, do not believe in any rate cuts and go into longer duration and height there? liz ann: it's funny you say that
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because market strength has brought lives financial conditions. this not only are they distinguishing between market weakness and market volatility and financial system stability which is the rating to distinguish, they are now going to step in because the market is -- if they are not going to step in simply because the market is weak, it aids them in their quest to see financial conditions. we may be experiencing since august when powell made his first comments at jackson hole, almost a call where fed speakers, the federal open mouth committee as we call it has a pushback against loser connection -- financial conditions and any narrative starting to brew around a pause is imminent. you have to see them do that because i think this narrative
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of now pivot to pause is one that is just not backed by the fed. tom: thank you, with charles schwab and the equity market and the linkage to bitcoin, i am fascinated where we are in the equity market and the shock and the silence of the cash crew and the bears. it is an intriguing moment, i see it due today. the moves that we've seen. are you saying that they silence. lisa: are you saying they are humbled? tom: no. this is a one-year change. the dow is out of correction stage, spx is mid center between correction and bear market. -16%. lisa: we have heard from the bears, the people who think there will be further losses next year.
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they are nuanced because there is still money sloshing around. right now is a nuanced moment. financial system. how do you play that? and that's why you're hearing people talk about short term rally long term. the good news. macy's is not charging macy's with a first look here at their earnings up in a nice lift to the stock up about a dollar as well. margins move. most comp stores were better than the gloom that was out there. macy's is holding up retail. there's a thanksgiving parade before you cut your christmas tree. this is bloomberg. good morning. kenny. stand on its own once. he's all on his own. this is financial security and lincoln financial solutions will help you get there as you plan. protect and retire.
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>> this could be a shallow recession but for a long period of downturn. >> it is going to continue to heal over the next year but you will still have a volatile environment. >> we have the disinflationary forces. >> at has to go all the way to two for the fed to truly step off the brakes and allow for a neutral policy. >> we are all trying to figure
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out when the point is correct for the fed to slow down, when the tightening is going to slow down. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: good morning, jonathan ferro, lisa abramowicz and tom keene on numbers radio and television, speaking about austerity minutes ago, chancellor exchequer. not anybody talking about claims anymore. lisa: it is so noisy, unless we getting massive spike in claims -- ongoing strength in the labor market, which is not -- cautious out, macy's really with a remarkable performance and it shows they said yesterday to us, every story matters. lisa: how much they have
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retrenched, shifted inventories and how much they are dealing with their real estate footprint. we will dig into the details and we will get into the others as we speak, not seeing third quarter comparative sales down to 7.2%, versus the estimate of 6.8%. sending a motley picture of a different -- difficult holiday season for people making difficult choices. tom: we will sell it to you right now. modeling out inflation, moving rapidly to a better spot sunday -- summer of next year, and later, ira jersey. ian lyngen of capital markets with true expertise in the bond market. this is your wheelhouse. we have gone from -60 32 negative 65 basis points of inversion. every pro is riveted to the statistic. lisa: it usually means 12 months
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after that you get some possession. a lot of economists are pricing in about 60%. this is basically the world. the market deciding what do we see going forward? right now it is more profitable to invest in short-term instruments because that is how much this government has to pay you to lend to them over the short term, longer-term they've got confidence things will right itself. this is unusual and pretense pain. tom: the moving parts in the dynamic, the heart of the matter is longer maturity bonds are priced up and there yield comes and enforces the inversion. lisa: exactly. which is the reason the results are so confusing. macy's doing well, shares popping 5%. shares plunging, more than 4%. the bifurcated picture, it is -- it is hard to get a sense of where are we knowing where we headed? what is the correct forward look when you got execution and
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consolidation among the strongest players? tom: moving off the exchequer speech, what they're going to do about the inflation in england. futures deteriorate, -24, dow futures down 190, oil not part of the game today. javier bloss has been on fire. lisa: he has and writing about the needs on diesel as inventories go down and prices are down to record highs. we are getting james bullard, neel kashkari all -- fed chair jay powell, new york fed mary daly of san francisco, but they're not going to be giving central policy statements. the message has been clear.
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they see downturns and they need to see that, i focus on inflation and willing to raise rates. between 4.5% and 5.4% -- 5.24%. the economic data, how quickly is this making its way to the economy? october housing starts and building permits, it is grim and changing at a rapid speed that is not necessarily going to filter into some of the inflation data for some time but in the meantime people are feeling it in real time and sales or marketing done. and when people can't afford to buy. tom: jason said in the last one for hours when you look at spot rents, the actual inflation statistics are coming down, this inflating much more rapidly. lisa: and you get the october sales figures, and the earning set up and coming out we did get from macy's and kohl's, it is a
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tale of two different stores. macy's doing well, more than 7% in premarket trading at kohl's plunging. it is distinct customer basis. who is macy's targeting versus was kohl's targeting and how is that pulling apart? kohl's typically caters to a more middle income and lower income households of how much are you going to see ongoing retrenchment among stores and consolidation? tom: futures this morning, wonderful gas to drive the conversation. ryan leavitt can do that at invesco, but far more buried in the snow is to model out the path to 3.2% inflation by the summer of next year. many would say that is a world turned upside down.
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what happens to our investment portfolios, investments in bonds? >> the last four months, you can to new best continue to do that. right now it is a market trading on whether inflation is coming a better or worse relative to expectation. we need it to be good, better to relative to expectations. as that happens, we are likely to see the fed pause, like those old coca-cola commercials, the pause that refreshes. that is what markets are responding to. maybe they get ahead of themselves in the short term. but as inflation comes down, it should set the stage for a recovery. tom: do i want to be widely diversified, or is it active alpha generating stock and bond or sector selection that will matter? brian: it should be an
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environment more for active management particularly if you cap it into indices. the bigger industries are still concentrated into some of the larger names, where the technicals looked broken. if you start to think about more of a recovery trade, value-oriented parts of the market tend to do well, cyclicals, smaller capitalization. that suggests you either want a active manager or different waiting. whether that is equal, lower capitalization or even something that is dynamic that shifts across different parts of the different factors in the market throughout different cycles. weeds are: when we look out and people try to get optimistic, others come in like the former chair of ubs as he spoke and
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said this. i would not be surprised if we had further estimates in the market, we need a pocket of weakness in financial markets because of leveraged strategies getting cold. how much are you waiting for the next shoe to drop as so many are? brian: we have volatility in these markets until there is policy clarity. we have been dealing with policy uncertainty since the fall so that is a long time to be grappling, particularly when the economy is deteriorating, usually you see the fed step in and ease things. there are some challenges. we have not seen a big blowout event, we have not seen the vic's to 40. it is not say there is not typical challenge here. but with intermediate investors, they are already down 26% in the u.s. market. that's about average for a
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recession and you start to think about what that recovery looks like. they will be driven by inflation going down rapidly which is also what the breakeven markets are suggesting. lisa: just tech reassert itself when they market does recover? brian: it takes you out of it as well. valuations on a lot of tech names are looking more attractive. what happens when you move from a contractionary room -- contractionary environment to a recovery, the markets tend to outperform and you have to consider structurally what rate and inflation environment are we going to end in? are we going back to a 1.5% environment or a 2.5% environment? if it is it two point 5% environment it is likely to be more in the value leadership than what was it significant leadership, a weak growth in the last cycle.
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tom: brian levitt, thank you. this is not an economist model of inflation into next year but what is the what if it happens? you move on and you get a new set of statistics as well. by massive acclaim of our giant international audience it is time for world cup chat. lisa: two americans faking that they know anything about soccer. tom: thank you for the athletic, we have to do this for jon, we miss him so much. they are sending two people from england, one who has hardly played since october and one who played part of a game last week and they have convinced the coach to go to qatar. calvin phillips and a guy named walker i don't even know. the guys are all injured as jonathan:. tom: our--
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-- a jon aya. -- as he says. tom: you and i have to find an argentinian bar in new york. that is your world cup chat for today. stay with us if you can. lisa: keeping you up-to-date with news from around the world with the birth word, i'm lisa mateo. ukraine president for the zelenskyy has laid out additions for peace -- conditions for peace. he says only the return of territory taken by russia will allow an end to the war, including crimea. >> crimea is the heart of ukraine, it is not just a state within a state. it is part of our country and part of our sovereignty. therefore indeed, the occupation of crimea in the donbass will
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bring the end to the war. lisa: he spoke to the bloomberg new economy forum in singapore. the u.k., chancellor hunt planning on tax hikes to get this under control. expanding the windfall talks in the oil and gas sector, he says this will total $65 billion in new revenue and savings. republicans have won a narrow majority of the house that gives and the power to hold president biden push this agenda. slim margin is a letdown. they have counted on decisive election results as a springboard for the 2024 presidential race. sam bankman-fried telling his side of the company collapse through a series of collapse. he admitted ftx got overconfident and careless and said he would do his best to save the customers cash. his new management said
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bankman-fried does not speak on the company's behalf. 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. ♪ ♪ we all have a purpose in life - a “why.” no matter your purpose, at pnc private bank we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why?
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>> using monetary policy to mitigate financial stability vulnerabilities will lead to unfavorable outcomes for the economy and monetary policy should not try to be back of all trades master of none. tom: the comment of yesterday, know if, and or but about it.
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the gentleman from san francisco new york, john williams there, a blistering two sentences. lisa abramowicz, academics were saying what everybody stop dovetailing financial stability into monetary policy responsibility. he did not mince words. lisa: we cannot be a jack of all trades and a master of none, in other words we are not going to try to solve market problems without tackling inflation. it is a preeminent concern and they are going against that. tom: i can't wait to see how it plays off that, i have such respect for dr. mester at cleveland, the mathematics and mumbo-jumbo. what will we hear from john williams? lisa: they all agree question is the foremost concern. i keep going back to what she said that the imf, raising concerns about the collective
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causes or consequence of old the rate hikes around the world. then she said people have to stay the course because we cannot have another 1970's. tom: return to washington, annmarie hordern in bali, indonesia. the president's home, they always come home and with immense respect for the lady of baltimore and her san francisco speaker pelosi. there is no other way about it. freeing this for our international audience, does speaker pelosi go and see the president today? anne-marie: it is a great question. -- annmarie: that is a good question. clearly they had a conversation they're going to talk and look at her future plans today.
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part of her decision-making on whether or not she passes on the leadership post and does not want to continue on that and retires, it is the fact that also what happened to her husband at the end of october when he was attacked with a hammer, someone breaking into their home. she obviously is consulting with her family as well. for the international audience, and the domestic audience speaker pelosi has been in the limelight for decades as a politician and really being the driver behind the democrats in the house. the first woman to lead the chamber and today we will hear what she has to say. you look at what greg has to say, it is not just speaker pelosi. he is talking about a huge original shift. because many in the democratic party want to move away from octogenarians, not just her but clybourn as well. tom: hoyer of maryland is 83
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years old. is it the same tendency in the republican party? i believe they have a 76-year-old running for president again. are the republicans looking for this as well? anne-marie -- annmarie: i think they are looking for something different, not necessarily youth but many are vying for that top spot. we look at the repuutalked aboul week, ken griffin, steve schwarzman, these individuals. you heard from mike pence, the former vice president saying he thinks there are other options and people want to move away. publicans want to move away from former president trump, there leader right now. then you look at what mccarthy is dealing with as he is likely to become speaker of the house. he needs 218 to vote for him,
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ironclad in january to make sure he can get that gap and what he is dealing with is the fact that he also has a number of individuals on the very rate of his party that he is going to have to acquiesce to make sure he gets there vote to become speaker. -- gets the vote to become speaker. say trump is long gone would not be correct but obviously at the top levels of the party they want fresh blood. lisa: they do not have -- now have a republican majority in the house. they just squeaked through, not the red wave many expected. as we parse through the results of why there is not a red wave, what is the word looking like? and mari -- emory -- annmarie: what to the republicans knock it out the message that they wanted, which
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is it was the biden administration or the democrats fault for things that all the constituents across america feel, higher inflation. how are republicans not able to attend the message around and say our plan was better? potentially the fact that they were saying they want to make some cuts to issues like social security and medicare, did that not help them at the end of the campaigning because the democrats hardest that? the second in the postmortem is you have to look at deep move new york. republicans were able to squeeze through because they flipped a number of democratic needs. just a handful, but enough in this state that always goes below. two postmortems for both sides. the gop and the democrats following midterms. tom: thank you, annmarie hordern with great reporting from the meeting with the president of china and the united states.
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you have to look at if washington is a bipartisan effort to put china in its place. lisa: and the need for collaborative effort. it was looking at different companies and it's it's all over the place in terms of whether they are saying internet, prioritizing it, getting out. the banking industry still seeing this as it is the second biggest economy. tom: that 3.69 10 year becomes a 3.7 to 10 year. of two year yield we had the chance, 4.7% shows a stunning shift we have seen in the nascent bull market. the real yield, we had a 1.60, 1.61, what if we get to 2%? 10 year yield, 1.4%, and has not been discussed.
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lisa: and the more people have started to pile into long-term debt, the more they are looking at it was a real yield. this is what they are pushing against and rhetoric that is increasingly hawkish even as they talk about shifting to a 50 point basis mark next month. tom: mi off the mark that it is a zombie rollout 2023? the energy is out there, there's a cost of money. lisa: people are looking for that in the private markets. that is the area that has not perhaps seen the fallout. tom: for those of you on radio, to see it on tv is stunning. the two tens spread, the inversion, -65 basis points. ian lyngen of the capital market, ira jersey and sarah next. ♪
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tom: good morning. jonathan ferro, lisa abramowicz, tom keene. mr. pharaoh is off on assignment. we will see if we see him tomorrow. levels under 4000 on spx 3942. dow is 33 thousand 300.
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i will call it may be 23 to 24. it is a turn looking for fed information. let's get right to it right now. we will dude london and aust -- we will do london and austere names. lisa with a stock report. lisa: let's talk about the two names that reported earnings this morning. it is a differentiation of the haves and have-nots. macy's reported better than expected earnings. those are popping more than 8% now. we look through some of the results, they are managing inventories well. this is one of the key points. how much stuff to they have to stop desha sell at a discount? we always talk about blockchain being useful for some of these companies. it makes them better able to manage this.
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inventories of only 4% in the third quarter. that's amazing. tom: way better than target yesterday. lisa: way better in a differentiation between the haves and have-nots. kohl's lost its ceo unexpectedly and is looking at inventories that have been incredibly high. how much is this an execution story at this point? what you decide to buy, how you decide to sell it, how quickly you discount, when i talk about an execution story, it has been all year. kohl's down almost 40%. this continues after earnings that confirm that. tom: part of this as a broad statement is what portion of america is in a recession now. i don't like this idea that we are all in it or not. there is a huge body of america really struggling, as represented by kohl's. lisa: which is why what you buy
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and what you sell may make a difference to the winners and losers. you are seeing the number of purchases come down, with ticket items of big purchases, the headline figure is going up. people are spending more in bulk on one item, then it retrenching in other areas. tom: in britain, the united kingdom as well, the budget for auspice response -- the office for budget response building confirms stagflation. the ramifications for the united states as well, with standard chartered, sarah yuan -- sarah hewin is joining us. what is the level of austerity in the united kingdom? >> it is 55 billion pounds worth over the next five years, so that will be austerity through real freeze and public sector spending, and creeping tax
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increases. there's a big hole in public finances that needs to be filled. the chancellors announced the measures that we had expected really to fill that gap. tom: i want you to talk about scale and magnitude. i have to remind my self of this every day. we create u.s.-u.k. analysis. the nominal gdp of the united states is 23 trillion dollars. the united kingdom is 14% as large. it is much, much smaller for the economy. sarah hewin, do they have the scale, the magnitude, the freedom to solve this conundrum? >> yes, they do, but it is a tough asked because at the same time we are going three what is looking to be a prolonged recession. the office of budget responsibility is forecasting 1.4% next year and then a mild
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uptick, then up way above the bank of england target. it is tough to try to find savings and stabilize the gdp. the expectation is the gdp will continue to rise up in the high 90's as a percent for the next for years before then starting to edge lower. lisa: did you hear the chancellor really blame the u.s. for the inflation you came is feeling? -- the u.k. is feeling? >> it is clearly been this feeling, and the invasion of ukraine has been hard on commodity prices. what he glossed over was the impact we are feeling from the weakness of sterling, which has raised import costs more than otherwise would be the case. there's quite a focus on external problems that have
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caused the recession here in the u.k., but not too much focus on what is self generated. lisa: how much do you see this budget as sustainable, how much their bringing down, given the 11.1% cpi? >> it is sustainable to the extent that it had to be realistic. markets responded very, very poorly to what was a completely unrealistic budget just a couple of months ago. one of the primary drivers for today's budget was to ensure that markets were not upset. in fact, we have seen very little movement in gilt yields and very little movement in the pound. sustainability when we are going through a recession, having had very severe public sector cuts over the past decade, that is going to be quite tough for those living in the u.k. tom: the headline i'm going to
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say is an amateur launch, and may be why churchill was shown the door after world war ii, the united kingdom office of budget responsibility sees record fall in household disposable income. that goes back to at least henry viii i am, i am. that is huge indication of the pain out there. do they have to reverse brexit, reverse selects -- select brexit policies to help jumpstart the economy? >> i think there's very little appetite at the moment for government or outside government to reverse brexit. indeed, the chancellor was doubling down on some of -- on removing some of the eu regulations that are apparently holding back the u.k. that's not necessarily going to
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be kickstarting growth anytime soon. you are right about the big collapse unit real incomes. wages are just rising way behind inflation, savings are being squeezed. we are already seeing signs of a recession. the economy contracted in the third quarter and i think there is worse to come. i think the environment where we are tightening fiscal policy ending continuing to raise rates. tom: why has sterling gone from 103 to 118? lisa: because there is stability for the first time. policy predictability locally, in terms of interest rates, with central bankers raising rates for tea consistently, this tightening cycle. we talk about the leg effect. you talk about the crimping of household budgets. when do we know what the lag effect is of all of this tightening? how long will it take before we see pete payne an effect on inflation? -- peak pain and effect on
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inflation? >> i think we're looking in the second half of next year for the full effect of the banks tightening next year to fully be felt. in the u.k., we are likely to see energy bills rising again in april, which will further slow the decline in inflation. we are in it for the long haul. 2023 is still going to be a high inflation and recessionary environment for the u.k. tom: sarah hewin, thank you so much for the brief. as david blanchflower says, politics are involved, then you get to stagflation coming up and down, but it is not coming down. i don't hear that model from anybody in the united kingdom. lisa: you talk about brexit and how much the scenario has changed. there was a story in ireland about how they bet really big on big tech, because they were trying to lure in a lot of policies -- a lot of companies.
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now, they are struggling disproportionally on layoffs. it just shows a myriad of problems facing all of the different nations that have also had a massive structural shift. tom: on thursday, let's sell the data coming forward. we have underplayed this today. i think the charts have been great with the complete collapse of housing collating. survey permits, down. maybe we will see what the revisions are. we have claims on housing, but one indicator there that has been pretty fully employed. lisa: you pointed me to this dallas fed report put out this week. tom: martinez garcia, outstanding. lisa: it was great. i appreciate you passing it along. tom: i have three more behind it. lisa: [laughter]
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that highlights the level of froth built into historic measures by the pandemic. what does that mean for household wealth? tom: should we tell a dirty little secret here on "surveillance?" we don't do this research ourselves, folks. we will steal from anyone. lisa: [laughter] tom: the enormous institution coming out in 1951 of the regional feds with young phd's that are eager to do brilliant work, like dr. martinez garcia at the dallas fed, he is out of spain. i cannot remember where else. my brain freezes. but there are eight pages of brilliance. lisa: a real effect on the broader economy if you do have a housing downturn and the fear of spiraling. but this is what people keep pushing back against. there isn't leverage in the system or housing market. tom: housing market at 830 this
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morning. coming up, ian lyngen on curve inversion, ira jersey on curb inflation. stay with us on "surveillance." sonali: --lisa m: jeremy hunt unveiled his plan to fill a gap with tax hikes and spending cuts. the government will increase the windfall tax on oil and gas companies. it will also lower the threshold for those who pay the top 45% individual tax rate. there will be an almost real term stands still in spending on public services at a time when demand for them is growing. it is a power shift in washington, although note -- although not as big as republicans had hoped for. there is a narrow majority in the house, giving them the ability to block president
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biden's agenda. kevin mccarthy tweeted that americans are ready for a new direction and republicans are ready to deliver. democrats have controlled the house the last four years. there was a surprising public confrontation at the g 20 in indonesia. china's president xi jinping accused the canadian president of leaking details of a meeting between the two. trudeau said canadians believe in free, open, frank dialogue. starbucks seeking union contracts will stage a daylong strike today at more than 100 stores. they say that management is not bargaining on good faith. starbucks workers united has mobilized several chains. starbucks says it will respect the workers rights to protest lawfully. in europe, auto sales rose for the third month in a row. still, there is concern that
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deteriorating economic conditions are starting to put off buyers. new-car registrations gone 14% last month. europe's energy crisis is driving up costs. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am lucy matteo. this is bloomberg. ♪ 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;
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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. ♪ ♪ we all have a purpose in life - a “why.” maybe it'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. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why? ♪♪ what will you do? will you make something better? create something new? our dell technologies advisors can provide you with the tools and expertise you need to bring out the innovator in you.
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♪♪ this... is the planning effect. this is how it feels to know you have a wealth plan that covers everything that's important to you. this is what it's like to have a dedicated fidelity advisor looking at your full financial picture. making sure you have the right balance of risk and reward. and helping you plan for future generations. this is "the planning effect" from fidelity.
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>> we are all certainly trying figure out when the point is correct for the fed to slow down, when the tightening is going to slow down, and it really does come back to a middle-class-driven inflation at this point. the fed ultimately needs to go very aggressively, as they have already, to just start to get a crack in the real economy. tom: the state street macro analyst was piecing together the jumble we are living in now. in 45 minutes, claims out and some important housing data. i don't know what is more
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important, claims or housing. you lisa: make the call. lisa:housing. i just made the call. [laughter] tom: we have never seen the rates of change in housing that we are seeing now. futures deteriorate. -25 has become -46. there is a real weight to the tape. for those watching bitcoin, it is remarkably stable, 16,500. in the bond market, curve inversion 66 basis points is truly historic. ira jersey is scheduled to be with us later. right now, we are thrilled to bring you ian lyngen, at the mott capital markets. i called jerzy and said i am only talking to people who have read a certain book cover to cover. you have a frank suppose he textbook of some 900 pages,
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$132, and only ian lyngen has read this cover to cover as well. is this from the classic text? >> frank was not looking for a curve inversion of this depth. i think more importantly, what frank would've said is that this is a mispricing that needs to be rectified in short order. we are taking the other side of that trade. we think there is more inversion to be realized. the most important inversion, inverted curve, is fed funds versus 10-year yields. tom: so, you went from the vanilla spread out to the many spreads you look at, going from very short-term up to 10. the dynamic of two different yields moving around, which pros are encyclopedic on, is about focusing on the tenure dynamic or the two year or the fed fund dynamic. which is more important? >> at this stage, i would say the two year yield reflects
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monetary policy expectations in the short term. the tenure rates shows with the market is moving onto, which is a significant slowdown. it is simply a tale of two different curves. lisa: it prevents -- it presents a massive trouble for the fed. it is this really difficult situation, a paradox for the federal reserve. at what point do they break something? at what point do they have to break something with rate hikes to get the market to say that even if you have lower rates, it is not good for risk assets? >> i think what ultimately happens is the fed is watching real rates as much as anything else. real rates are remaining high by the standard of the last decade or so. we will see a significant pullback. i have personally been surprised that the s&p 500 is 10% off the
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lows. that also contributes to easier financial conditions. the more quickly the market is willing to price and a pivot, the more the fed will ultimately need to do. tom: you say that in the bloomberg financials conditions index has rallied back more accommodative to -.82 deviations. lisa: you hear john williams basically saying if we break something, we are going to keep things where they are. people in the market say, are you? we don't really believe it. if something breaks, what does that even mean for the fed to get some sort of response? is the market right? >> i think there's an argument that the fed is going to break something and allow it to be broken for something long -- for some time longer than it has in prior cycles. does the s&p go down 25% from here? maybe. the fed will need to respond in one way, shape, or form.
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when we look at what is being priced in at market, there's 50 basis point rate cuts priced in for 2023. that's either one hunter percent confidence of 50 or 25% confidence of 200. lisa: what does that mean for something to break that would cause a fed response? >> a stronger dollar leads to emerging markets and countries defending their currencies. i think what will ultimately break will be in the real economy on the household level, and it will be spending. we will be faced with a traditional economic slowdown that the fed is content to allowed to play out for a while. tom: i have 14 questions. let me go with the autumn statement today saying that there are so many problems for the united kingdom. is that is were downing on other
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nations? >> i think it is in part a function of the fact that the fed has pushed back against becoming the defective central bank to the world and has been focused primarily on the u.s. that has come at the expense of other economies. tom: what does inversion meet for our banks and financial stability? what does it mean for jp morgan, bank of america, the super regionals, and smaller banks out there doing business with business? >> traditionally, and inverted yield curve is bad for the financial sector because a steep curve implies the ability to create money via kerry. the reality is higher rates are generally better for banks than lower rates. if we are in a higher rate environment, we will find the financial sector not responding the way it typically has two inverted yield curve. tom: what are you going to do here? what is the change in strategy for the next week or so? >> i think the market is getting
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poised for a break out even more inverted from here. tom: give me numbers. >> negative's -- -75 basis points. tom: we are on the edge of 79 or 80 inversion? >> i would say we can get as deep as -100 basis points by the end of the year? tom: 45 years, i have never heard this. what does it do to us? >> i think it really leaves us in an anxious position where we don't know how far the fed is ultimately going to need to push things because they are coming out with more hawkish rhetoric. as lisa points out, that will lead to a lessening of easing financial conditions. tom: did he just say there's going to be extra special more fed speak? lisa: it's a fed reality show and we are all watching. we cling to every word. as much as we say, does it matter if they keep talking, yeah, the markets move every time they do.
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tom: our team that puts this together called ian lyngen and begged. thank you for being here. right now, we have to shift to bitcoin with some headlines out here. lisa, i will let you translate. katie is not here to translate for me, so you are in charge. lisa: ftx and cropsey lawyers are not happy with their client. they are saying they're tweeting has been complicating the case with direct messages. it is really quite notable. tom: like a rock, bitcoin 16,500. nick bennenbroek --ian lyngen's inverted curve, -75 basis points. ♪
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>> the fed ultimately needs to go very aggressively, to just start to get a crack in the real
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economy. >> there needs to be additional pain felt to really bring down price pressures back in line with what the fed is looking for. >> the risk is for higher rates, especially in light of an economy that is still resilient. >> the thing to keep in mind is there is a lot of money on the sideline. >> a year from now, we might be in a world where it is not 5% or 4%, it is maybe 3%. announcer: this is bloomberg surveillance with jonathan ferro, tom keene, and lisa abramowicz. lisa: it is the fed parade. jonathan ferro off for a well-deserved day off. one message with jim bullard coming out. we are not yet at restrictive levels. tom: you see in the markets, let's get right to the data check. you open spx negative one, down -1%, these are markets moving on fed speak.
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lisa: the st. lucie of that's the st. louis fed president is coming out right now, saying is not officially restrictive levels and hikes of only had limited levels. this is the leg effect, but it will not stop them. rates need to be raised further to curb inflation. this really is the key. they are going to keep raising until they see some progress. right now, whether it is retail sales or other economic indicators, we are not seeing it. tom: 10 year yields up 3.7%. to me, what is so, so important here is there is a crew out there saying they are beginning to see substantial tea leaves showing a lesser inflation. an incredibly important what yesterday on housing. we get more housing data here at 8:30. lisa: the tea leaves aren't enough. this is telling. fed officials cannot just stop it. tom: jim bullard was a professor
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at indiana university, it will be a very different jim bullard. this is an institutional responsibility to be ultra-cautious. lisa: they don't have the luxury of being academic. this is where the gains come into play, where they say we are going to go hard into this and then cap the s&p level. for all intents and purposes, that is essentially what they are saying. we don't want to see things rallying that have risk. the market say, we don't buy it, we think you will cave. tom: an incredibly important set of guests here. we will do all the rest of this at 8:45. katie is happily darkening the door. what do i call it? the blockchain? bit chain? the chain space. i am already getting hate mail on this. it is not fair. -41 on spx, futures a full 1%, dow down negative seven.
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24 point eight yield, up seven basis points, 3.76% on the 10 year yield. i do believe it is off the basis points. truly back to the time of volker. oil, we have barely mentioned this morning. oil is down a little bit, may be an economic slowdown. i don't know what to do with foreign-exchange today. sterling a little weaker and a little bit of dollar strength. lisa: you did great. but we are seeing now a market continually surprised by the same message sent by the fed over and over again. why is the market surprised? beata kirr, why is the market surprised with the fed getting more and more hawkish?
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>> i don't think they are surprised, they are turned to find their footing. it is a macro lead market. we are focused on earnings and differentiation in companies, but there is no doubt about it. inflation is the key to market direction. lisa: what is the sense of consumer spending? you have fed officials saying we are not seeing signs of slowing, it is not trickling in as quickly as we would like. we see coles having a really hard time. we see yesterday from some others having a really hard time. target is not doing well. how do you parse out the winners from the losers in some sort of narrative that gives you a sense of where things are heading? >> there are two different narratives, as well as earnings from the companies. first of all, look at the macro picture and ask what that means about what the consumer has less to spend -- left to spend and who is getting most affected. there is no doubt about it that the low-end consumer is being
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squeezed more. that's not surprising. that is what we have historically seen when you see food and gas prices up over time. that's what's happening. walmart, we note that they noted over 100,000 consumers are spending more on groceries at walmart. but then you start to differentiate between these retailers and you look at a franchise like costco. membership based, huge loyalty, an excellent job not just on supply chain, but on labor. it makes a big difference. when it comes to the micro, the time now is for stock selection and company differentiation. companies are different on how they manage the chain. tom: i love your research note and something that is gospel in my house. midterms up 16%. residential year, up 8%. the history of these midterms we just had inflicted upon us is double-digit spx return? >> we have to be careful to say history always repeats itself.
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it would be awesome to see at 16% recovery post midterms. that is the history and that is what we have published. but you have to get back to fundamentals and stay balanced. lisa's point earlier about surprise, you don't want to be playing the game of trying to switch asset classes and sectors in a fast way here because there is so much surprise possible in the market. i think the midterms, there some element of surprise as well. i think you have to be humble and balanced. tom: you have to be balanced, but do you bike how aldi -- by quality? give us a differentiation of sectors that create the active alpha you are predicting? >> you must have read or no. tom: i had my people read the note. i never read notes. >> we like the large cap space, small caps are interesting as well, but we could be entering a recessionary period.
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lisa wants to jump in here -- tom: lisa wants to jump in here, but this is prickle. we see a big usage of cash by those big names? >> i think they have strength and balance sheets and can maintain quality, and labor as well. obviously, you are seeing cuts, but there is still quality names like microsoft, visa, that we find. lisa: i know exactly where you're heading. i do wonder, just to build on that, because it is an important point, this question of what's going to lead to the catharsis where you get capitulation by companies to be purchased at a discount from other companies. at what point do you get some sort of washout? what are you looking for to signal? i understand company specific, but on a broad level, are we there yet? >> in terms of company risk-taking? lisa: the appetite of investors. >> i don't think we are at total
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capitulation. we may have seen the bottom. we think we are in the 3600 to 4000 in the next six to 12 months on the s&p. our base case is that earnings have declined that we have not yet seen factored into the market. those bottom up earnings forecasts are just turning to come down. you are starting to see 20 to come down, four come down. 23 hasn't yet been touched and that's because visibility is so murky. everyone is struggling with the ultimate fed question. but you are starting to see companies play out on margins. that is bad news for people. it is unfortunately good news for the market and earning. tom: what is fundamental is we now have a risk-free rate paired we have financed back to somewhat what we are weaned on. i think zombies of all flavors will be rolled up in 2023. the black books of bernstein's heritage is just studying that. do you see combinations and transactions on fire next year? >> i don't think we have put out
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a forecast for m&a volume. tom: nobody is watching. come on, help me. >> we are continuing to see m&a volume being robust. risk-taking has gone up recently. i don't see a real change to that. i think companies are continuing to innovate and invest for the future. if they can do that with roll up's and mergers, then why not? i think it will be opportunistic. tom: beata kirr, thank you so much. there's a wild headline if i've ever seen one. lisa: tony blinken says president biden asked him to travel to china early next year. we expected that tony blinken will head over to china, but what will they talk about? are they going to talk about the chip sector, taiwan, how they deal with russia? how do you sort of rancor
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priorities in a time of serious redlines? tom: but by "early next year," we will have a much better framework of the slowdown down over china, the stability, or the economic recovery. lisa: or the reopening. tom: well, there's a lot of debates out there about china. to me, it is the uncertainty in the next year. lisa: there is something that happen overnight. the pboc warned that if there was some sort of reopening, it could cause an inflationary push that they weren't expecting. it is going to affect easing and how much they are willing to ease. it speaks to preparation, gaming out what this looks like as china clearly needs to reopen to the rest of the world. tom: it's going to be fascinating. the secretary of commerce has always said this is more fragile. more than it looks. teachers deteriorate -1.2%.
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the vix breaks out over 25. important economic data we will see at 8:30. look at ftx at 8:40 five. stay with us on television and radio. this is bloomberg. ♪ lisa m: keeping up-to-date with news from around the world. with the first word, i and lisa mateo. in the u.k., chancellor jeremy hunt unveiled his plan to fill a fiscal gap with task hikes and spending cuts. they will increase the windfall tax on oil and gas companies. there will be higher taxes on wages and dividends for the wealthy. there will be an almost real terms dance still in spending on public services at a time when demand for them is growing. ukraine's president has laid out his conditions for peace. zelenskyy says only the return of territory taken by russia will allow an end to the war, and that includes crimea, which was annexed in 2014. >> crimea is part of ukraine.
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this is not just a state within a state, it is part of our country and part of our sovereignty. therefore, indeed, the occupation of crimea and donbas will bring the end to the war. lisa m: he spoke to the new economy form in singapore. republicans have won the narrow majority in the house, which gives them the power to hold president biden's agenda. still, the slim margin is a let down. the party had counted on decisive election results as a springboard for the 2024 presidential race. macy's reported third-quarter earnings that beat estimates. the department store retailer also raised its full guidance. that is a sign that it has succeeded in consumers, despite shifting weight from discretionary spending. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries.
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i am lisa mateo. this is bloomberg. ♪
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>> one of the biggest challenges economies around the world are facing is inflation. i think what central banks around the world have clearly recognized is that they need to move in a determined fashion, to directly bring inflation down. tom: the international monetary
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fund not at the spring meeting in america next year. our bloomberg economy form, that was a wonderful panel. you can look at that across all of bloomberg media this morning. i thought it was not a snooze fest, but we slide through thursday. lisa, i was wrong. claims in 12 minutes. housing, which is a mystery. knowing anyone a particularly with means, that is all they are talking about in america. then, we have an import conversation coming up here at 8:45. lisa: the idea that ftx bankruptcy lawyers, this story is sort of delicious for people who like the drama of it, but it is tragic for those people and individuals who are losing their shirts because it went to zero overnight from billion's of dollars. the ftx bankruptcy lawyers
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accusing their client of gum getting -- gunking up the case, these messages with expletives to regulators. tom: the control room is just killing it today. they are not looking at the world cup, they are actually paying attention to the show. unbelievable. 16,700. down now 300,000. these little moves matter right now. lisa: but there's a broader point right now that as the culmination comes out, what does that mean in terms of who is exposed? there was airbnb, when the lights go on at the end of a nightclub at 2 a.m., you sort of see what's left over. that's what it feels like right now. how much more of that is there going to be out there? tom: very good. nick bennenbroek joins us right now. he is an economist at wells
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fargo. more than anyone i know, he nails foreign-exchange on a long-term basis. let's dovetail your work over the years of foreign-exchange into international economics. this study of the dollar is a study of foreign-exchange. is it valuable in gaming out international economics right now? >> actually think the study of international economics is more hopeful in terms of the dollar. we have seen differences in growth. europe is already in a recession. the euro zone is close to being there. the u.s. is holding on pretty well. i think that is going to be sort of more influential than the growth trends helping the dollar for now, but seeing it depreciate later. tom: forget about q4, we are almost through. is the study next year a study of what the u.s. will do or what europe or japan or a beleaguered united kingdom will do? what should we focus on? >> i think there's always a
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focus on the united states, given the largest financial market and economy in the world. as you noted, a comment from federal policymakers, we have seen yields higher in the dollar higher as well. i think that is where the surprises going to be. we believe the federal reserve's monetary policy will go up. i think that will drive the dollar a little higher and keep foreign currencies probably on the defensive. lisa: let's talk about monetary policy, jim bullard talking about how we are not yet restrictive, also saying this. he cites policy rules suggesting rates between 5% and 7%. this is jim bullard of the st. louis fed moments ago, a half-hour, 20 minutes ago. how much are we looking at something that is going to cause the dollar to surge to levels that people are not expecting and cause some sort of fissure here that needs a response? >> those rules or targets are probably a moving point. i think a 5% level -- 7% is a
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long way, but 5% is reasonable when you have inflation numbers. i think in the current context, these very high rates are more than appropriate. from your perspective, with the other part of your question, seeing the dollar surge to levels we haven't seen before. i think we will get back to recent peaks and maybe slightly above. for now, the dollar is moving higher, but the end of the inflation problem is probably insight. we will probably get back to recent highs and not go above them. lisa: what would a federal funds rate of 7% due to an economy like this? tom: i'm sorry she obsesses with this. >> we already think there will be a recession with the housing market being affected by the high interest rates. unfortunately, it would be a deeper recession than what we expect. but again, not the pandemic.
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tom: did you say 7%? lisa: that's what jim bullard of the federal reserve of st. louis said it could get up to. it is possible. he might be an agreement because he was someone who got out front. but my question is, the issue has been this market has been able to tolerate interest rates well beyond what anybody thought previously were expected. now, we are suddenly readjusting to a new normal. tom: nick, you have done so well over the decades gaming the markets, particularly with foreign-exchange. i am absolute fascinated if you think all these fancy people are overcome by events, in that if you get 5% or 6% or 7%, whatever the nation has come at they are overcome by the politics of it, including what we saw in the united kingdom this morning. >> i don't know if they are overcome by it. again, i think that we're going back to levels we haven't seen in a couple of decades.
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we have inflation we haven't seen a couple of decades. it's all a moving target and nobody really knows where the peak is. why we think interest rates don't go to 7%, they get to 5%. while we think the delegates back to its previous peak is we are starting to see the first encouraging signs on the inflation front, the supply and delivery times are down, some shipping costs are down. we think there is still some further dollar strength to go, some interest rate increase, but we are pretty heavily focused on the first quarter, second corder of next year as being the peak and hopefully things will improve from there. tom: nick, thank you so much. nick bennenbroek of wells fargo. we were looking at a huge move in yen. it is just a turn with foreign-exchange. lisa: if the dollar has not peaked, perhaps it is close to
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it. how much is that going to give some sort of bottom to where stocks can go? that has been one of the bad drivers. the dollar weakens, risk is on. how long can we continue that? tom: nasdaq down 1.2%. yields move. no other way to put it. 369 on the 10 year yield. it is a higher yield. 3.76%. on oil, $92 we are off a dollar on brent crude. you heard nick bennenbroek talk of resiliency here for a while. the dollar is stronger today. please stay with us. john ryding of green capital, then it on bitcoin. ♪
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lisa: this is bloomberg "surveillance," just moments away from jobless figures, as well as housing permits to build new construction. right now, a bit of a selloff in markets after comments from jim bullard. some data starting to trickle out. let's head over to michael mckee.
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michael: we are seeing all of the data and it looks like things have gone down just a touch. 220,000 from 225,000. we will see what the previous number was revised to. continuing claims do rise. one million 507,000. some people losing jobs are taking longer to find new ones. that's what that's telling us. 222,000 is still pretty low in terms of layoffs. layoffs are going on in twitter and the tech industry, not really having a major effect on national numbers. housing starts are up for the month. 1,425,000. that is an increase of 4.2% over the revised september estimate. it is 8.8% below what it was a year ago. building permits are little bit lower.
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1,526,000. that is a two-person -- a 2.4% drop, 10% below where they were a year ago. that's not going to surprise anybody. housing numbers have not been good. philadelphia fed puts out its numbers. maybe this is the more interesting number of the day. the philadelphia fed index drops significantly 10 at .4 from -8.7. a significant drop there, suggesting business really, really slowed in the first part of november and end of october. the prices paid index falls to 35 from 36.3. still some progress being made on prices there. employment is way down, 7.1 versus 28 point five. these regional fed indexes don't necessarily tell you national
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trends, but when you get them all out and add them together, it does suggest where we might be going, in terms of things like the ism number, which we will get the first of december. lisa: let's parse through some of the details. you are seeing yields come off just a touch and equities pretty much stay around those lows in futures. what i'm looking at right now is a story that stays pretty much the same. we see housing having issues, definitely deteriorating. the jobs picture still pretty strong. the idea that you are not seeing that pop up in jobless claims you should be expecting, which really raises a question of how far the fed will have to go. tom: jason furman of harbin -- of harvard teaches how runs into the michael mckee analysis. the answer is, you have got a bigger number of core inflation based on older, locked in leases. but when you look at the spot rate market, core inflation
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cascades down to a more gentle 2.8%. discuss that, mike. is that a valid study? michael: definitely a valid study and something a lot of people have been talking about, the way the government computes the cpi. they take not just new rents, but existing rents. those are going to change because there aren't any in place. the zillow numbers, which jason furman was talking about, and also another private one out there, those look at new rents only. if you look at new rents only, then read prices are dropping significantly. rent has been the biggest driver in the cpi. the question becomes for the fed, do you pay attention to what's in the cpi, and to a lesser extent the pce, because you know that those prices are going to go down? it's just a question of time. it is happening now, but it will be reflected in the data for a couple of months. i think that that is looking
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beyond those housing costs and cpi, seeing other private data come in and see that it is suggested that housing inflation is going to go down. lisa: thank you so much for breaking this all down. joining us now, nobody better to speak about what we saw over in the united kingdom, as well as the potential agony dan john ryding, former economic advisor to the bank of england. john, when you take a look at this data, which is not softening quickly enough, and hear the hardline talk from the federal reserve, what is your sense of how far behind we are in term of lag effects and when we will see ramifications? >> as you know, we had many discussions last year where i said that inflation was not transitory, it was going to be a real problem, and it still is. interestingly enough, in the numbers that mike went over, he did not mention the prices
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received data by manufacturing firms in the philadelphia region , which like the new york region, went up to 34 and change from about 31. we are far from having defeated inflation at this point. i would also take a little bit of issue on the rent story for two reasons. one of which is that rents in the cpi are rising roughly in line with the overall cpi. they are neither adding or subtracting to the overall rate of inflation. paying for housing, paying for food, paying for energy really important to meet people's inflation expectations. fact that new rents are declining, when people are paying a higher level of existing rents, i don't think it is inappropriate. this idea that we always take out the bits that are pushing up inflation, excluding that, i find that a bit problematic. policymakers never do the other way. lisa: this is really important
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because there are all these people pushing back and the reason we have lift the markets. people say there are disinflationary elements. you point to the rent story, used cars. he pushed back and say those are completely offset and then some by other indicators. is that right? >> yes. i think fed policymakers are somewhat on top of this. we have had three times this year, three months of 10 months of cpi data, the so-called core, excluding food and energy, only went up zero point 3%. it was followed by inflation picking up again. yes, one report where you have got health care costs, it fell 4% in the cpi. i would love to have that health insurance policy and i'm sure most people out there would love to have that. i don't think anybody's health insurance costs fell by 4%. my point is, inflation is the overall price index. you can pick and choose and take
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this number out and tear that number out. the reality is, inflation both here and locally is a problem. central banks have created or at least made the problem worse by staying too easy for too long after the pandemic. that liquidity and that stimulus has to be soaked up. just for a second, tom, if i may. there is a communication issue going on at the fed. there are three things about policy. how fast are we going to raise rates? they have clearly signaled they will slow the pace of increases in the market has that story rate. how high are we going to raise rates to? and how long are we going to keep them there? i think markets have it right. but i think we are off on how high and how long rates are going to stay there. markets are pricing in barely reaching 5% on the fed funds rate. then, the fed quickly cutting rates thereafter.
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tom: i'm amazed by that conversation. i totally agree with you. i'm amazed by the certitude that they are going to do a pipit or whatever you want to call it. this is a historic day. they stood up and say we have austerity. you read paul johnson, 1987, "the english disease." it was a you to flat say about churchill and the rest coming forward. what is the level of crisis in your united kingdom right now? is it something that is solvable? is it a two-year recession, as bailey talks about, or is it an english disease that is longer? >> i think that's a very difficult question to answer. i think that the finances and the economy going forward are in better shape now than they were prospectively with the budget that was put forward in september that helped spark the whole crisis in the gilt market.
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but the u.k. is still struggling with briggs it. they are struggling with inflation issues. the bank of england, i don't think has raised rates quickly enough or early enough to get on top of that. now we are faced with a very interesting question. can policymakers raise rates enough, tighten policy enough, to get inflation under control without sparking a significant financial crisis? tom: the financial stability john williams talked about yesterday, are these traditional theories operative right now? >> i think the phillips curve hasn't been operative since the late 1950's or 1960's. very interesting that the very flat phillips curve [crosstalking] it comes back is something that is going to cure the inflation
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problem. the main thing about inflation is expectations and having people and companies understand that higher inflation isn't going to be allowed. what we have in this philadelphia fed report here is company cost increases slowing, but the price increases not slowing. yes, the october numbers were a little bit encouraging. probably most in the ppi. but there is a big difference between inflation having peaked in things we're never getting to, and getting to price stability. tom: john from a christmas tree farm north says to ask about the new england and u.s. world cup. >> a u.s. team -- a nemesis team. we lost 1-0. back in 2010, we tied 1-1. the day after thanksgiving, it is going to be a great time. i am going with england, obviously. tom: nick bennenbroek --john
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ryding, thank you. i think jonathan ferro is going with england as well. that means you and i must go with the u.s. lisa: i don't know if he is going with the u.k. tom: after the lions bills, we will be able to watch new -- inland and the u.s. lisa m: keeping up-to-date with news from around the world. with the first word, i am lisa mateo. jeremy hunt has outlined a $65 billion tax heights and speaks -- spending cuts so the government can plug a hole in the budget. the wealthy will be hit with higher wages taxes and dividends. windfall on gas companies has been extended. a power shift in washington, although not as big as were publicans had hoped for. the gop has won a narrow majority of the house that gives them the ability to block president biden's agenda. house leader kevin mccarthy tweeted that americans are ready for a new direction and republicans are ready to
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deliver. democrats have control of the house the last four years. a senior imf official says it will take some time for the full extent of this year's interest rate hikes to become apparent. they also looked at what comes next for the federal reserve. >> they are very likely to raise interest rates and other realms before the end of this year. and then, the question is, what comes next? i think 2023, the question is more about how long are you going to keep these rates at the levels that they have moved them to? lisa m: she spoke at the bloomberg economy forum in singapore. in china, covered restrictions are still impacting consumer sentiment. alibaba reported a surprise loss after quarterly revenue barely grew. meanwhile, the online retail giant announced a $15 billion expansion to its buyback program. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over
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120 countries. i am lisa mateo. this is bloomberg. ♪ ♪ we all have a purpose in life - a “why.” maybe it'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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>> in the area of stablecoins, it will be important for congress to step in and say you are not permitted to offer a stablecoin unless it is done under a strong credential framework, with federal reserve oversight, supervision, regulation, and approval. tom: michael barr, the vice chair for his supervision at the federal reserve, talking about stablecoin use. only one i know is if somebody has a full-time job in the house. vista bar talking about the upset of the moment. welcome to bloomberg surveillance. crypto, we do this with katie greifeld.
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what you need to know is there is a series of lower highs since november 14. it has rolled over ever so slightly in the last hour, down $62, under $16,500. when all of these players look at the price of bitcoin, how does it correlate to their future? how are they linked to the price of bitcoin? katie: dcg. tom: how is that linked to the price of bitcoin? katie: if you go to spf tweets, there is a lot. if you go to his tweets, he has said ftx was over there skis on leverage. maybe that is not such a horrible thing, or less bad when it is going up, but that is amazing. it just shows this grind lower, discontinued step down. now, we are sitting at $16,000 on bitcoin. it is a lot easier to cover up
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brewing ills in a bull market when things are going up. obviously, that is not happening anymore. tom: you and your colleagues published on mr. silver last night. this is important. he is not dashing around, talking to tom brady. all of a sudden, he is called into question. what do you mean that -- what do you mean by that? katie: dcg is the parent company. it is one of the most important empires that is not talked about in mainstream media. unlike spf -- tom: see how she just insulted me calling me mainstream media? katie: [laughter] i've spent too much time on twitter. he controls what is basically a $10 billion crypto empire. they raised that valuation just last year. yesterday is sort of the crown jewel in the empire. it is a crypto lender that has suspended withdrawals. tom: can you expect news from genesis this morning?
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all the media focus is on, is it spk? katie: spf. tom: that is a publishing company out of los angeles. excuse me. all the focus is on the guy going into bankruptcy. are we wrong? should we focus on mr. silbert and the shock of yesterday? katie: i think there's a lot of deserved attention paid on spf. it is important to watch the fallout, watch big lenders such as genesis. if you have asked me two weeks ago if i would've expected the news yesterday, i would have said no. but given how fast everything is moving, it is something to watch for. bloomberg has reported genesis has hired advisors to look at options here. we don't know specifically what those options are, but they have hired people to that effect. tom: unfair question, but it is unfair thursday. fossils like me all say, why hasn't bitcoin gone down before? how do you respond to that?
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it's my question of the day. stay with me on this. why is bitcoin not trading at you name the price? katie: there was a tweet to that question yesterday. why is bitcoin not lower? when you considered the two weeks we have lived through and it is still at $2000, there is this resilience sort of built into the market even today. tom: is it a market? is the key question. see how she looked at me? for radio folks, she looked at me like, what do you mean? it has gone 60,000 to 16,000. how does it get down lower other than one of these elephants just saying, go to cash? katie: that's who's left. it is those elephants, those whales. that's the answer i keep getting when i ask how bitcoin is not falling. everyone who would have sold is already sold. all you are left with are these
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big accumulators, these hard-core believers who are not going to sell at this point. maybe they bought into bitcoin when it was seven dollars, or it is these big institutional players. until you see one of those chips fall, you are pretty much at a floor. tom: rachel from west lafayette emails in. she asked, what about the winklevoss i? they are linked into genesis. katie: they are. that was one of the ripple effects through genesis and into gemini. there are a lot of letters and g names. they had this product on their platform called gemini earn -- tom: oh, come on. this is family television. katie: their big problem was one of the big counterparties was genesis. as far as we know, the site is up and running. tom: not me, folks, but these
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are the critics out there, including nouriel roubini. if you give me your money, we can monetize bitcoin and make 8% or 10%. that's the game, right? katie: yes. tom: how do you regulate that? not me, but others would say scam. those of a certain vintage would say executive life, 14% annuities. what is the difference here? i'm going to make 10%. katie: when you strip it down the way you just did, it sort of exposes it as lending money in a circle. i understand how that is hard to regulate. it gets back to the point i made at the beginning. when the line is going up, that works, to set -- to sort of lead money in a circle. when you are looking at 80% drawdown in just the price of bitcoin, there are other smaller coins that are down much more dramatically than that. that gets harder to do. those returns just aren't there.
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you are hit with liquidity issues we are seeing through the system now. tom: unfair question. 16,000, $470. where in your head is a to point, a dispersion point where this unravels? is it 15, 9, 12? you have a number in your head or our experts have in their heads? katie: i don't have a number. i would say when we get to single digits or below that 10 level, that's where it gets interesting. this market loves big round numbers for better or worse. there seems to be some important stops set up there when i talk to people. we will see. as i said, you would have thought it would be down a lot more. tom: did i do ok there? when you are on i get so much hate mail. you get all these love notes, i get nothing. i get absolutely crushed. are you publishing anything seriously on mr. silbert? katie: my boss would certainly hope so. tom: slighted out to an eight
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hour workday from six hours. katie greifeld there on what is all going on. we will continue to follow this. i want to commend on radio paul sweeney with some solid knowledge on this. for people like me, distant and removed from this, i learn every time they open their mouths. do they get to tuesday on a crypto show? katie: that was tuesday. >> they have another one next tuesday. they should do in everyday the way this is going. the markets have deteriorated through the morning. spx -52. please stay with us. this is bloomberg. good morning. ♪
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>> every time the market tries to rally, the fed speaks -- the countdown to the open source -- starts now. >> everything you need to get set to the start of u.s. trading. this is bloomberg be open, with jonathan ferro -- the open with jonathan ferro. >> we began with the big issue. >>

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