>> we are expecting a mild recession, slightly more likely than a soft landing. >> we are confident is not far off. >> the fed will likely be 50 to 75. >> we think the last fed hike is in january. >> what happens between now and a is highly uncertain.

-- between now and then is highly uncertain. lisa: good morning. tom and john are both off, just happened to be on when england is plane the u.s. and the cup. i am glad damien sassower is joining us. you always bring a host of knowledge. are you watching the world cup? damien: what a kick. this: i could watch this. damien: tom keene has to be home. we are seeing the markets close and it seemed a reset. what has been the main theme you have felt from the outlook you have been seeing? damien: everyone is calling for

the fed. . the market is accustomed to the fact that the u.s. will be in a recession next year, the u.s., not so much. it is chairman powell holding onto the hawkish rhetoric. we have payrolls week and a lot of data coming through. lisa: a lot of people were hoping the optimism would be fueled by the sense that china would be reopening. i was reading about the shutdowns in beijing and the case numbers. all the optimism around emerging markets, global growth, supply chaise normalizing. -- supply chains, lies in. -- supply chains reopening. damien: we are going to see fourth-quarter gdp on something

of the order of 3.94% and it is the pboc rate cut. they are injecting liquidity but it is not going to be enough to offset the decline. lisa: we are going to talk about that with a host of guests. we have so many great guests. before we go through markets and the brief at 2:00 p.m., what were the hot topic that your thanksgiving dinner? damien: it had to be the jets. i am kidding. i think the ticket was dry and

the stuffing was a little overcooked. -- i think the turkey was dry and the stuffing was a little overcooked. lisa: do you like tricky? -- turkey? we were having that conversation. i will say right now in markets, we are looking meandering between gains and losses, the s&p up put 1%. nothing is happening. 10 year yields are up. crude is marginally higher. perhaps not as bright joining us

is the chief x x -- fx strategist. >> it is a day when i am not sure there is that much optimism but it is the sense that even in the u.s., a slowing economy across europe and how do you look for cheap prices to buy things when you are worried about energy costs and mortgage payments. the global economy is clearly slowing shocker is how much yields have fallen and how much the market has priced since jay powell gave the press conference and said rates will be higher than the prices were marketing

so we are giving birth to the central bank collectively. lisa: and those meeting minutes, fed officials essentially said they asked recession almost as likely as the base case. this is as close to capitulation for central bank that yesterday going to be downturn and we are going to keep rates high to curtail information -- inflation. anything that has gotten enough attention? kit: here is the difficulty with the cycle. in most major economies, we are going into a downturn at full employment. this is different all over again differently. i can't remember a time you have full employment, so the battle is between central bankers and

how much they think they need to tighten and for how long to cool the labor market at the same time as they seek economies weakening significantly. the central bankers are looking at slower data looking at the labor market and thinking, how do i get to grips with inflation without getting a higher unemployment rate. damien: it is a sleepy friday for here in november. you think about cross currency swaps, they have behaved rather well given all of the liquidity. are you surprised by any of this? kit: they were behaving so badly that everyone got their selves into a state about them. and i worry they will come at and run my life.

that is what the arcade to do is worry about things like that. and the foreign exchange market, fed hiking, the energy crisis, never had that before in an energy crisis in modern times. let's close up and shut everything down and quiet it down and get ready for christmas. damien: we are seeing tentative signs as we approach year-end. has the dollar peaked? kit: it is going to be jagged peaks because the other elephant in the room, the crisis in ukraine, we are all down playing

kale list for that and that can come back in a flash. we have things we can get concerned about. the dollar is going to be significantly weaker by the end of next year. there is a real chance we may see the dollar quite a lot weaker this month and stronger in january, because positions come off. lisa: i have to say when i was reading your note i felt that it was gloomy and i wonder what your pushback is and i get accused of being gloomy all the time. must you bite into that there is so much gloom you can't be gloomy or and stocks have to rally? kit: i hear that from our equity people and credits people and in

the season of outlooks, if the first one i saw from anyone saw that next year was the year of yield, the view we would have is credit spreads look as if they are better able to cope with the kind of downturn we will get than equities that the equity problem is more in small companies than big ones that can't cope with the volatility we have had in events that effect them. -- that affects them. in the foreign exchange market, when people look at a soft landing and say growth is going to slow, they sell the dollar because we get to the ideal point where the ecb is raising rates and the fed is all priced in. i still worry the bigger problem

could be later. i don't think we will get a recession in the united states until 2020 four. danger with the labor market and the fed hiking, if the labor market is so tight it is going into a recession, a hammer you need to break the not of inflation may have to be hit really hard and you may get later harder landings then earlier softer ones. you may have to rethink it. for now, everybody is believing you can soft land the global economy despite this unique, nation of zero unemployment. lisa: thank you so much for joining us. i hope you enjoy the sunshine despite the gloom outside.

have you ever seen less conviction in your head forecasts then this year? damien: last year. i'm just kidding. damien: -- lisa: got a lot going in markets. there is a little bit of euro weakness and dollar strength, actually it is flat. this is bloomberg. ♪ ritika: with the first word, i'm lisa mateo. high inflation and sagging consumer sentiment are hurting americans demand for material goods. seasonal sales are likely to fall after adjusting for inflation. that would be the first decline since 2009.

the central bank has taken another step to boost the economy in china, it has cut the amount that banks must hold in reserve for the second time this year. it takes effect december 5 and will inject $70 billion of liquidity into the economy. in ukraine, half of the city capital is without power. president volodymyr zelenskyy says the situation with power is difficult across the whole country. in the u.k., nurses plan to have their first nationwide strike, defiance and a dispute over pay. the british government have said that calls for 5% above inflation are not affordable. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo.

this is bloomberg. ♪

>> you can think about 2022 as really being an environment in which the second largest economy in the world, the largest commodity consumer in the world was hibernating. lisa: that was jeff curry talking about what we see in china when it comes back online, a big question. it looks further away than closer. we have been looking at the

potential and realogy of beijing, the main city being locked down with cases surging to record highs. tom mackenzie joins us. in terms of the social response of one the biggest cities in the world getting locked down after a time when the pandemic and other places is over. tom: beijing has never been in lockdown throughout this whole period. compound by compound, things are being closed down. i have been in contact with those on the ground saying there is visceral anger lining up for an hour or an hour plus to get tested for what they have to have to get into almost everywhere. there are challenges to getting food in your home. it is a deep challenge for officials.

they are facing record levels of infection. it is not just in beijing. it is also in other cities where there are lockdowns. this is in major cities around china, it closed loop for manufacturers is also playing out. how officials respond to this emerging dynamic will be consequential. the reality on the ground is it is only getting worse. lisa: how are they going to deal with this in a way that is new and different in the past two years with a different tone? tom: i saw images on social media who posted, people have been taken to quarantines centers where there overflowing

toilets and not enough beds and dirt on the floor and there is anger. authorities will respond where they rapid clamp down on the sharing of this information. and that will be taken down. there will be protests and further unrest. they have control around the surveillance state they have built up in the major cities. the number one priority is social stability and you are seeing that starting to fray at the engines. damien: overnight there was a fire in a city and 10 people passed away because the firefighters were slow to react as of the containment measures. social media is up in arms about it. i want to talk about the pboc and the rate cut and white people were looking at it. is it enough? tom: probably not.

the forecast as been downgraded for their forecast to 4% year. it is relatively weak when many expect the measures to have eased by 2020 -- 2023. it is building on efforts by officials and will release 70 billion into the banking and the question is can they shift the funds into businesses and can they get the funding into the real economy. it is the second time they have cut reserves. the cut the benchmark lending twice this year and unveiled a package to support the beleaguered property sector as well as step-by-step plans to have a more targeted approach. they are trying to get more liquidity into the system. whether the banks are willing to

lend it out and the businesses will take on the liquidity is the question. damien: talk to me about measures and how it will impact the property sector in china. talk to us about that. can we expect that to change in the months and years ahead? tom: the property sector makes up 20% of china's gdp, they have come out with this package of measures to support the property sector. they will be focused on developers they think ultimately can go through and survive. they still don't want excessive borrowing within the real estate sector. the key concern is making sure properties and developments get finished and those who put

deposits down get into the properties and it doesn't trigger further unrest. in terms of excesses in the buildup of liquidity in the real estate system, they want to see that avoided. it is very difficult balance but most people think the package should be enough to put a floor under the property sector. lisa: tom mackenzie, thank you for the reporting throughout the day. why are people so bullish on china if this is what we are looking at on the ground? damien: chinese equities are up 25% and what we have learned is a lot of people aren't buying what china is selling. the when you have a low liquidity environment like this, it doesn't take much to move the needle by 25% if you miss that as a fund manager, it is something to be mindful of. lisa: i get how this could be short-term reach as they look to the end the salvage performance. when you look at the outlooks,

that is one of the consensus calls is that china will outperform here as we look at the real tension around lockdowns and it is hard to see how we get there. damien: on a relative basis, if you look at the growth concerns and recession risk, you are not going to bite u.s. equities and that environment. you may have to turn to emerging markets, which are effectively china. china has proving and i understanding bearish but to ignore china and have zero exposure is not the right move. lisa: this is one of the question marks and dealing with the lack of demand from china. if you believe china will come back online, you can see how people have remained bullish on

oil. if you believe lockdowns we have seen is truly the case, we have seen an incredible selloff in oil prices and this is one of the pivotal underpinnings. damien: i think goldman sachs going by at hundred $15 by next year. they can go to 115 or 140 but it will be where will they be sticky and what will the average price be. lisa: do people talk about inflation at the thanksgiving table? damien: a little bit. an expensive turkey. lisa: how expensive? damien: i can't tell you. it is embarrassing. i think we overpaid. lisa: we will talk about damien's turkey that he doesn't want to talk about. coming up, claudia sahm. this is bloomberg. ♪

so let us focus on the how. just tell us - what's your why?

lisa: this is "bloomberg surveillance." tom and jonathan are off suspiciously when england is playing the u.s. in the soccer

cup. i can tell you all of the good deals you could get on turkey. damien: i love to baked ham. lisa: looking at markets, not a lot of action. the story of the week has been how much yields have come in and this feeling of a fed pivot and terminal rate will be lower than people thought a week ago and somehow a rebuttal of everything jay powell said. damien: the asymmetry in fixed income has improved in a week we were long come for a rally in fixed income and i think you will see it in 2023. lisa: a lot of people think

that. we are headed into changes. a lot of people will not shop. how much do you see the resilience of a consumer as a bad thing or do you see it diminishing. damien: this is the first time and a few years that you will be seeing people actually going into stores. our people getting out of bed and going to the store and touching and feeling and buying? the verdict is still out for me. i am pessimistic on how the holiday period will be. lisa: let's see if people are shopping. kriti gupta is there. are there a lot of people out there shopping or is it sleepy? ritika: there were a lot of people shopping. we had an amazing line and they all flooded into macy's and now

you have an empty herald square. people are not shopping in a person but there was a good turnout. they are looking for an in person experience and a lot of people specifically will be trying to look at perfume and try clothing on and that is what they want head of the holiday season. but this is becoming a litmus test for the retailers and can they get rid of inventory fast enough at the higher markdowns while in able to maintain their bottom line? this will be a crucial moment for these retailers. damien: yuan the west side in the 30's. people are obviously trading down to other brands. what are you seeing in that area. is it just macy's or are people crowding to other places? what is the bible? ritika: i am a few blocks from

times square. you do have macy's but next door is an h&m but that is not in the same category as macy's. you will not seeing the same lines. i wonder how much of this will be a story of the divergent you are seeing in different income brackets. the ideas that macy's said that we are ok with higher inflationary pressures because we have a higher end client that can absorb that. that is not what a lot of other brands are saying. you saw it at target and nordstrom as you see the diversions between detailers -- retailers. look at abercrombie & fitch and anthropology and the bid from the teenage shoppers is not as prevalent as it was a couple years ago. damien: the theme has been clearing excess inventory.

talk to me about skinny ties. are there inventory on the rocks? jonathan is looking for them. ritika: he actually sent me a message on the colors he wanted. this is the real achilles heel. from a stock price perspective, they are getting rewarded if they can clear inventories. looking at a balance sheet point of view, if you have higher markdowns and promotions, at the end of the day you're not making as much on the per item. if they are rewarded for getting rid of that, it will be a crucial balance. lisa: thank you so much. we are looking for seasonal sales potentially falling 1.2%,

which would be the first decline since 2009 after you adjust for inflation. joining us is someone who has parsed through this. claudia sahm , thank you for being with us. how much are you looking to the holiday shopping season as a gauge for consumer spending? claudia: i am optimistic. we have had a very steady pace in terms of overall spending and the labor market is great. i worked at the fed for a decade focusing on consumer spending and forecast and analysis. when people have income, they spend it. americans have income. some of the spending will be at the higher end, but those are the people working at macy's who need to keep their paychecks and need people to come in and spend. we have everything for another

good holiday season, even after inflation-adjusted. i see a really good path forward and i am not worried about some of these big businesses taking less profit. have to look big picture. lisa: on the flipside, you could say that resilience and spending is exactly what is causing the problem for the fed because that is the reason there is momentum and patient and last longer than some of the lower income families can stand it. what is the idea that the fed should be careful and keep going from a sledgehammer? claudia: the fed needs to back off. a lot of that is coming from disruptions on the supply side, disruptions from covid and disruptions from the war in ukraine. we have seen a lot of encouraging signs, even in the last consumer price index

numbers that things are turning over. we are seeing things work themselves out. it will take time to show up in consumer prices for whatever reason, even though we see it in producer prices coming import prices. we have all the signs that relief is coming to consumers. if the fed does too much, they will undo that and overdo it. damien: the sahm rule, my colleagues are calling for 100% probability of a recession in the u.s. what do you think about that? claudia: respectfully, i disagree with them. as the data are coming in on the inflation side, i am more and more encouraged that we could skirt the recession. if we see one, it is absolutely going to be of the mild variety,

given what we know right now. the forecast could change but there are a lot of encouraging signs. the labor market is good. the role is based on the unpleasant rate rising and it is really not. things look good. and we are getting back to a more normal, sustainable pace. less and less i am seeing it but i have been wrong multiple times as the economy is upside down and we keep having bad luck. damien: you have written on economies during wartime. we just saw roughly 17% -- 70% of the power knocked out in ukraine. how should the fed handle that?

claudia: congress should be stepping in. they are going to vote the letter of the law in wartime. you look back to world war ii, that was a time when the fed worked closely with congress and treasury it told them, you are going to keep interest rates low so financing the war doesn't cost american taxpayers more than it has to. the independence of the fed is not god-given. it is a big step forward and we have been talking about it putting independence temporarily. i just don't get why the federal reserve is pushing so hard and i certainly don't understand the european central bank and the bank of england. it is making a very bad a situation in europe worse. thank you -- lisa: thank you for being with us.

we didn't have to go -- a lot of time to go into it but if congress doesn't act, the fed has to counteract inflation and make that the number one mandate. damien: claudia is not calling for a recession but why should the fed go in and get support and pump the brakes if inflation is an issue? i guess that is the question of whether it will be that way in the future. lisa: i wonder as we talk about congress, this is my third rail and i am going to be honest. the big failure is that congress did not pass certain bills and a lot of the power and policymaking was relinquished to a federal reserve with a stopgap knee-jerk reaction with a hammer and that is basically what got us into this situation in terms of an unsustainable monetary policy with the very uncomfortable reality on the flipside.

damien: same thing we are seeing in europe and the u.k. lisa: we will get a lot of speeches next week and we will go through it. now, retail results and joe feldman will be joining us, director of research over at telsey. this is bloomberg. ♪ lisa: shoppers may have more elbowroom as inflation weighs on the budget and those who are willing to spend are looking for bargains and turning to less expensive stores. consumers will dip into savings and rely more on by now, pay later services. european diplomats have not been able to solve differences over a price cap on russian oil.

poland has rejected the price of $65 a barrel, saying it is too soft on moscow. talks may resume today. china's daily covid infections have gone above 30,000. officials are struggling to contain outbreaks that have led to restrictions and some of the largest cities. the government wants to shift away from citywide lockdowns that effort the economy but some officials are again reverting back to the covid zero policies. a new report predicts the world economy will be as weak next year as it was in 2009 after the financial crisis. the study, if forecasting it will slow, will be largely because of the conflict in ukraine and the risk of it becoming an "forever war." global news 24 hours a day, online and at quicktake on bloomberg, powered by more than

2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

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>> the idea that inflation comes in down and will it come down in 2023, inflation was hard to forecast in 2022 and we struggled with it. there are a lot of good reasons why inflation comes down in 2023. lisa: perhaps that is what we are seeing with the discounts in the retail universe. this really has been the theme,

the cuts. i keep wondering, are we witnessing the end of the post thanksgiving mob in shopping malls. damien: i don't think so. we had a travesty earlier in virginia. i wonder if that is weighing on the minds and souls. are they willing to it into a walmart with that hanging over people's heads, probably not. lisa: let's see what is going on with joe feldman in his car going store to store. where are you right now? what are you seeing? joe: i am in westchester, new york near white plains and going through a best buy. so far it is fairly quiet. i do not think there is the massive rush. lisa:, which is this that we are

seeing the end of the you get in at 4:30 and you get the goods and how much are we seeing that we are over that? joe: you are seeing the end of the early morning rush. i was talking to an associate and they said there was no major rush enterprises are the same you could have had this past week online or even walking into the store earlier this week. i think the push to get you in has maybe waned but i am curious to see how traffic is this afternoon because i do think people will come out and they want to get social and they haven't had a true black friday a couple of years. damien: you are 15 minutes from my home. how indicative and representative is that best buy and central avenue on what is going on across the nation?

joe: i think it is fairly representative. it is a solid community, upper-middle-class community. people are going to buy in their is -- it is a good retail area in westchester. i find it has been fairly indicative. when i speak to people on my team in the tri-state area, we have people in other cities, and we emailed this morning and everybody is saying the same thing, it is fairly quiet. damien: is it going to be electronics, big goods, durables? where do we see a lot of the sales in deals and promotions taking place? joe: i think we will see a lot of promotions in electronics. we are seeing televisions, headphones and other gift of all items, a special occasion where has been hot and that will

continue. we have seen beauty and even jewelry has been decent. people want to feel good and buy things for themselves. that is areas where we may see interest. toys are a big driver for the holiday season. i think it will be much more focused on value and the value you can get in a gift for members of your family or friends. lisa: value means it is discounted. we are looking at steep discounts at a time when there are huge inventories at stores, particularly those that overstocked, target, a host of others. how much are you seeing the optimism in stock market outweigh what you are seeing on the ground with all of the discounts that retailers are having to offer, plus the fact that they are trying to remain fully staffed and not lose people they want to be able to rehire it?

joe: there is a lot going on in the retail market. there is heavy inventory and the need to discount. what we have noticed is the discounts are not that steep, in the sense that 30% to 50% is fairly common this time of year. we are not seeing the very broad, deep 40% to 60% discounts . the retailers are definitely facing cost pressures and spending but they need to to keep the labor force satisfied and i think we will continue to see that and we hear that from others. the big question everyone has is heading into next year, how much pressure we will see on the consumer and will we tip into a mild recession or a recession at all. as long as the labor market is in good shape, we are hopeful things will not be so bad and hold up spending levels and there is room for optimism, certainly into 2023 deeper when

you look at comparisons. lisa: you are talking about general numbers. how much are you seeing a bifurcation that stores that coder -- cater to the lower end and those at the higher end is still going strong? joe: the bifurcation is very clear, where you are seeing the more affluent consumer continuing to spend and those stores that cater to them are doing fairly well. at the other end of it, there is a lot of focus on value, food, consumables and basics, which is why companies like walmart and the dollar stores and even target are doing very well on the basic side of things. it is the discretionary side at the low end is the big pressure point and that is where you can see continued pressure this holiday season and into next week. lisa: joe feldman will be joining us throughout the day.

i wonder how much will state falls into this, and i say this because, if you don't own your home, you are dealing with rent that is skyhigh and if you do own your home and just by now, don't have anything left. i wonder how much that will underpin what is happening with the consumer. damien: home affordability is at its lowest in 40 years. i am looking for this because tom likes red meat and they have a side burner and you could kern -- cook stuff on the side for jonathan. i need to know if my wife has to get online and shop. lisa: i am wondering, are you doing shopping this year on black friday? damien: for the man who has

everything, what would i need to shop for? lisa: have you ever done the waking up at four clock a.m. to do the shopping? damien: i have never gotten early -- gotten up early to shop ever. lisa: the online sales have actually disappointed. it is because what joe feldman was talking about, people want to go out and had the experience of shopping and socializing. i can't really blame them. we are the at markets quae essence on a day -- quae essence -- quiescent. coming up, we have luke kawa. this is bloomberg. ♪

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>> we are expecting a mild recession, just slightly more nightly than a soft landing. >> we are confident the peak isn't far off the u.s. >> the fed will likely do 50 to 75 in december.

>> we think the last fed hike is in january. >> what happens between now and next spring, that path is highly uncertain area -- uncertain. lisa: from new york city for our audience worldwide, good morning. this is "bloomberg surveillance." tom and jonathan are off suspiciously with the england and u.s. facing off today. damien, you can talk intelligently about the cup and i have been banned. damien: we need to see if harry is him today. i'm optimistic the u.s. will show up today and hopefully keep it competitive, because england looked awesome. lisa: i did say this is a sleepy

consumer and it feels like that is the tone, whether from kriti gupta or joe feldman that there isn't the rush to the store. are we going to see that resilience sustained at a time when a lot of people are seeing tea leaves? damien: it is good that we have gina martin adams coming on to guide us through. lisa: we see the next leg of the cycle coming back and that possibly ever they will get good and it is like we are fast forwarding through the bad and they get to the good to sing the fed will do its thing and then undoing think the fed is trying to signal to markets. damien: i personally don't think equities will have a great year

but it is shaping up very similar as it did in 2022, a tale of two halves. my thinking is earnings will come up but not as much as expected. lisa: you think the narrative allows for more than a month? damien: no. lisa: the consensus is bonds will rally next year and the dollar will weaken. damien: europe is in recession. lisa: china stocks and bonds. damien: emerging markets. lisa: do you think it will last a month? damien: one thing is sure that we have seen the convexity selling does not work. it is going to be very jumpy and volatile, at least to the first few months of 2023, include because there is no paradigm to latch onto. the market will have difficulty with that. lisa: i was writing the year

ahead encapsulated and it seems like every year is a turning point. last year clint was the rage. i was thinking about inflation and how much people are talking about how expensive the turkey is. do you want to weigh in on that? damien: i will tell you this about crypto. my niece, somebody she is dating in san francisco and it is just amazing that this kid convinced the most sophisticated investors in the world to invest all of that money in him. it reeks of made off to me. lisa: that is what people are talking about.

when i got home to my parents last night for thanksgiving with the family. i data comes up to me and says, what other improprieties could be -- could we be funneling our money into? i wonder if that is getting into the mood or if that is my situation at home. we are going to have incredible conversations this morning. right now, the one and only tina martin adams, chief equity manager. how closely are you watching this black friday? tina: i am watching it closely for the sense of the consumer sector outlook. it is not as important from a water perspective as online sales have become important for

this year and they are at rock-bottom levels. i am watching it and it matters a lot for the consumer sectors. the consumer sectors are expected to bounce back. consumer discretionary expected to be the fastest grower in terms of eps trends are that is not because there is an expectation for recovery in sales but this is an important point to make. it is more about margins and inflation pressures easing and some of the inventories getting cleared off of the shelves. what we want to watch is are the inventories getting cleared out and can the company right size those relative to sales expectations because that will be consequential to creating margin low and the turnaround next year.

lisa: the problem i have with that is that you are seeing companies reluctant to lay off workers and the need to pay people at a time when everyone is very aware of inflation. at what point do you see deal hunting on one side and fully staffed stores that can't exercise the layoff lever, how much does that eat into margins more than people are expecting? gina: it is a risk but less than it has been in past cycles because the dynamics have been so unique. we have only had a two-year cycle and companies have not been able to lever up the way they usually would throughout and -- in economic cycle. in 2020 it was about online sales and attaining growth. 2022 has been about inflation. there has been a lot of volatility and companies have been cautious in terms of the

overall planning, they got caught in 2022 much inventory. the broader employment dynamic is consequential and especially for retailers who have very high levels of employment in comparison to many other segments. it is something you want to watch as a general issue for these companies, but you can have such a magnificent shift in it due to inventory management that companies can mask over a lot of inherent costs due to employment conditions with the shift in inventory and the deceleration in inflation. we are coming off of multi-decade levels of inflation and price. companies have been able to pass on some of the inflation and if they can retain the higher prices were import costs are going lower, that is a big boost of margin in 2023.

it is something we want to watch for sure, but i think that it can be overcome by other components of the income statement. damien: dollar strength has been the feature of the current regime, if the dollar is speaking, what does that mean for u.s. equity earnings going forward? gina: it is a very sector by sector industry by industry, retailers get very little sales overseas. dollar strength has been a very big plus for the retail sector and it has helped with inflationary pressures that emerged over the last year. your multinationals in the industrial space that have had a tremendous headwind from the dollar over the course of 2022 and that could reverse into

2023. i think currency is overstated as a component of overall earnings conditions, particularly in an conditions situation. slower growth in europe will overwhelm anything that happens with the currency most likely. i think economic conditions are first page definitely want to watch both conditions overseas for the multinational sales lines. behind that, i do think the currency can matter. lisa: thank you for being with us and good luck with a shopping you are going to be doing. i will defer to you as much as i would like to offer information.

it is an interesting world cup of underdogs. damien: it is unbelievable. these underdogs are unbelievable. my brackets are getting crushed. i never knew that in a bracket you could pick a draw. but that is an option and that makes it challenging. lisa: last-minute injury time goals, did you see the japanese team, how they left the locker room? i thought this was amazing. damien: fans in the stadiums cleaning up. lisa: they made it immaculate and it was a statement of respect and this is how we treat our things and i completely respect that.

we -- coming up at :00 a.m., a conversation with jordan ride chester at nomura come up to talk about the ideal place and a smile. i feel like that should be a song. this is bloomberg. ♪ lisa: with the first word, i'm lisa mateo. pricing for a slower than normal black friday. sagging consumer sentiment are hurting demands for material goods. according to global market intelligence, seasonal sales likely to fall 1.2% after adjusting for inflation, the first decline since 2009. in china, the central bank has taken another step to boost the

economy, lowering the amount of money banks have to hold in reserve of the second time this year. it takes effect december 5 and will inject $70 billion of liquidity into the chinese economy. in ukraine, half of the residents are without power after a barrage of missiles. limits on electricity will continue. the president vladimir zelinski -- volodymyr zelenskyy said the power is difficult. elon musk said it will relaunch the verified service next week. twitter verified trying to distinguish between different classes of users and drumming up revenue. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪

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>> the ecb has not been hiking and there will be a lag before the financial conditions come through. i think we are still heading into an recession. lisa: that was the chief global economist at capital economics. we take a look into a difficult winter over in europe, even though we have stockpiles one than expected.

damien sassower is joining me. this kick was wonderful to see. our bloomberg european correspondent is covering this at are. what have you been watching, other than go, spain. it has been the takeaway? >> real takeaway for me is, i am biased. but the initial match two days ago, i am still shaken from that. the real takeaway is we have a very good team, very young that have had the time to bond. the coach is in the right mental state but i think spain will go very far in this conversation.

i want to be diplomatic but the game i am looking forward to is germany versus spain. i have a prediction and i don't want to jinx it but that is a game i will keep an eye on. lisa: you basically have been paid off to come on. i do want to get some of the serious stuff here you have an interview coming up with the european commissioner of trade and this is a very fraught moment for trade between the u.s. and europe. how is the inflation reduction act affecting the eu? maria: could this be an existential question and crisis and that is essentially what officials and diplomats are thinking and debating and many do feel at this point they have been hit by a perfect storm we had the energy crisis and that

means energy costs are going up across europe. had the united states coming in strongly with the inflation reduction act that even with some european companies could be better to relocate and you have china with an aggressive policy for many european governments that do feel they are getting a bad deal in every possible way and the space they have to compete and state attractive is becoming narrower. this is a big issue. damien: talk to us about the proposed gas and oil caps. poland says 65 is too low. is there any way we can come to terms across the different countries and needs and have different caps for different countries? just how fluid can we get? maria: i was here yesterday and

the same spot for 12 hours waiting and in the end we went home empty-handed. i want to clarify for the international audience that in brussels there are two debates, one is on the gas cap, a benchmark. the european commission has decided they will trigger a cap and limit medical what hours for two weeks -- limit medical hours for two weeks. they want to see the threshold being changed. when you look at the oil cap for russia, the debate is the price point, $65 a barrel was floated and others suggested 70. the problem is the countries that are hawkish say $65 a barrel is too generous to russia and there is also the overall criticism from some in the market that suggests the caps

won't make a difference and could lead to serious issues on the supply side of things in a market that is very tight and there is fierce competition. damien: on a really serious note, is he really 18 years old? has to be 19 years old and he is playing out of his mind for spain. maria: i have to be careful because he is way too young for me but this is the crush of everyone in his spain because he did such an incredible game and the entire team is young but he was m.v.p. in that game, where the youngest to score in a world cup match. you have to go back to the times of pele to see that. i am very pumped up about my team. lisa: you were just trying to wind her up tomorrow you. damien: she said welcome to the club, so do i.

lisa: what she was talking about on a serious note before you took it to the crush was this question was serious and her conversation about how europe deals with the inflation reduction act in the u.s. that could draw an incredible amount to the u.s. and subsidizes renewable energy jobs and what does that do if it really creates an even greater gravitational force away from the european region having a lot of issues? damien: it will create trade tension between the u.s. and the eurozone. hopefully the two governments can work together and come to terms with exactly what this happens. the risk of recession in europe is real. lisa: not to be controversial, but europe got itself into a tight spot affecting the u.s.,

given the fact that it was relying on russia to such a degree and there is a real challenge from a political relations standpoint, how do you deal with the fact that the world is dealing with an energy crisis that in large part stemmed from perhaps faulty relationship drawing something up that was sort of a little bit shortsighted. damien: we can't look backwards and we can't look at a low schulz -- olaf scholz and the previous administrations. i would like to believe the eurozone will work together and get the caps and try to see what the inflation reduction act means. i am pretty positive and i think things will get worked out. lisa: i wonder where the tensions start to accelerate, particularly with china. olaf scholz is dealing with how

do we do with that and we went to china and brought industrial ceos in out there was a story today about how they are facing competition in china from local companies making the same types of products and will get emphasized. at what point do you end up with further tensions? how does it inform what we do for the years ahead? damien: you make a good point about some of the chinese automakers crimping in on vw and others out of europe. i think it is fiscal stimulus in whatever shape or form. lisa: i am not arguing one way or another but it is complicated. coming up, luke kawa, who also can speak better about the world cup than i can because so can pretty much everyone. from new york, this is bloomberg. ♪

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this is bloomberg surveillance, lisa abramowicz and damian sassower. maybe they're trying to prepare for the world cup game.

we are looking at toggles between gains and losses. nothing is happening, people are all home in their turkey based stupors. i can even collect, the dollar is flat at 1.0392. in yields, this is the story of the week. we have seen yields, for the most part, come down pretty dramatically despite hawkish rhetoric and resilience in the economy. it is like the market is saying, we challenge you fed. damien: i am struggling to find the goldilocks scenario for asset prices. what is the pain trade? is it rates going higher or crashing and coming lower? lisa: doesn't that feel like the

base case? people have been going into moderation. they say we don't want rates to keep coming down because that softens financial conditions. damien: i would make a difference between brainerd and powell, it's not the fed. lisa: brainerd has a bit dovish approach with the hawkish powell. we will speak to someone who spent too much time eating turkey. luke kawa director of asset solutions. you may turkey for your dog? luke: yes, this year the dog scott their own turkey. lisa: they have their own dog

table. i love looking forward to your posts on instagram and twitter. as you look out and we talked about rates and the move lower and how that creates a conundrum for the federal reserve that wants to have tighter financial conditions. do you buy into how they have come in despite the tension was central banks? luke: a lot of the story has been when do we get the recession and how bad it is going to be? the story of the year is pushing back on that recession starting. the futures curve was december. rates are going to peek around this time of the year. now that has been pushed back more but you have a lot of hikes priced into june of next year in the year thereafter.

what the economy has somewhat we think the pain trade might be, there is a lot of decay in those positions. as the economy is resilient people have to push back the timing of the recession and the real pivot. that is providing a real income boost. that is getting us to a time where 2022 headwinds will turn into tailwinds for 2023. lisa: i forget what the terminal funds rates, do you see an upside or downside to that level? luke: we see it skewed to the upside for that level and that's a time and call you have to make in terms of how strong can the

u.s. labor market be in for how long? if you look out at the rod or. it is the global labeler market that is holding up still. you have to make the call, is the u.s. labor market going to deteriorate in the next 3, 4, 5 months? if not, europe's industrial base will be in a much better position for reduction and china, we don't expect any terms of a straight line. our recent experience has shown why that is the case. you do expect things to be better rather than wears. if the u.s. labor market doesn't crack in the upcoming. and there's not strong reason to think it should. we get to a point where some of the endogenous strength in the labor market keeps persistent

force under inflation. if those conditions are still in place for, five months out from here. damien: what is that mean for asset prices in the years ahead. luke: it's a more resilient view on the economy. the idea that people will have to become more optimistic by becoming less pessimistic. that's not a great news for the stock rate. that's because the valuations we are trading at. that pressure is still going to increase further from here the idea that we have gotten valuation relief and we will have to give back the economic view is the same. earnings could do a little bit better than expected but the 10 year yield is closer to the highs of where it was for much of this year. in that environment, rick assets don't make too much progress

where we do see a run for more progress's value cyclicals, defense a particular relative to high-growth tax stocks in you will see a lot of growth and continued gains there and that is where you are pricing in the degree of pessimism you see now for 2023 anything that is better than that looks like a good story on the cyclical front. lisa: cyclical has been a real challenge to get our head around. we have been talking about how there are not a lot of people out there yet. we are hearing about discount significant, why are we turning into a downturn, would cyclicals do the best given the consumer is perhaps losing steam. where does that storyline come

together? luke: i would agree on the price action i would push back and say think of how much pent-up demand that was called forward in the tech space as it normalized rather than the recent rally in consumers cyclicals, the valuations of what they are trading at. i don't think we've squeezed all this juice from the bottle especially in an environment where the economy continues to hold up. we don't see at what price did -- people are still very optimistic of the ability of the u.s. to avoid a broad-based downturn. if the frame is a shallow downturn, open yourself up to the possibility of no downturn

is something we have to price in and something does not yet fully in the price. damien: many believe we are in phase one of rate normalization. talk to me about u.s. treasuries, did they look attractive? luke: our view on treasury is that a neutral position is best and that's because the optimism we talk about the global economy points to a higher terminal rate, askew up to the upside. you can't ignore the potency of the inflation peaking narrative and growth slowing narrative. it's good to have a situation where why would you not want to be long-duration? if you're kind of doing your fed checklist, from slowing the price of hiking or passing it

completely, it's a series of readings saying that inflation is heading lower. it's also cooperation via the labor market, those dynamics are something that will take time to develop and as they take time to develop the cuts that have been pushed further down the road get priced out and push down further and that is something in concert with the potential for the terminal rate back to the highest where it is is something that leads us to a more neutral stance. lisa: you think the fed could raise rates to 5% and we could avoid recession next year? luke: one thing we are trying to do, especially after 2022 and all those surprises is to consciously avoid having dead. we want to have a good 3-6 month

forecast. lisa: what a great answer. six-eight months don't talk to me before that. damien: i hear people talk about peak hawkishness. does that mean moving from 75 to 50. lisa: this is something that people are talking about. what does that mean with pivot? does that mean they go down a step? or is it that they start cutting rates or that they hold rates? i have been reading a lot of notes that define it as they cut rates is the real pivot point. damien: the markets will look through that. lisa: you will get this pushback that luke is talking about that is problematic for the fed. damien: how the markets

interpret it is the question. lisa: peacock business is a peak fund rate is above what it should be you feel like you have reached a level, that jim bullard seven point level. damien: you're looking for something to break. lisa: it's a great trading opportunity. damien: i broke a piece of tupperware last night. lisa: up next, christian mueller-glissman golman sachs from this is bloomberg. up-to-date from news from around the world. lisa m: shoppers may have a little more elbowroom as inflation weighs on their budgets and those who are willing to spend, are returning to less-expensive stores. consumers will be dipping into their savings and relying on

more on by now and pay later services. amazon warehouse workers will mark the black market day with protest and walkouts. they are demanding better wages and wages. employees in the u.s., u.k., japan and australia are among those playing part. amazon takes itself seriously in these important matters. china's daily covid infections have got above 30,000. they are struggling to contain outbreaks in china's largest cities. they want to shift away from citywide lockdown set of hurt the economy but some officials want to ship back to the covid zero policies. adidas is shifting-is looking into claims that kanye mistreated employees in germany.

adidas cut ties with the artist known as kanye west after he made a series of anti-semitic remarks. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo, this is bloomberg. ♪

>> it's very likely that five point 25, 5 .5 gets realized. we think the fed is determined to try and avoid a recession. i think it's more the potential of a recession more than anything else. lisa: a note of optimism there among a lot of gloom. damian sassower is with me today

and i am so pleased to say it. right now, i went to go straight to our guest. one of the greatest minds on wall street christian mueller-glissman and i want to start an damien specialty, the developing world. the lockdown in beijing, to me, it's a really significant story that changes the narrative for next year. how do you view that story in might of some of the optimism around the reopening? christian: if you think about the outlook for next year, china was one of those bright spots because of the asymmetry. the economy is on his knees because of asset prices in bearish territory so it felt like there is a story that is emerging that can support next

year and drive growth acceleration. what we are learning and what our economists have been saying as well, it will be incredibly bumpy. the endgame is that china will probably buy the second half of next year accelerate when it comes to growth, but the path to that could be incredibly bumpy. the real reopening will happen around q2, as you see those cases go up, the risk is that it is being pushed further out. lisa: how does this affect the different parameters, is it bullish if they reopen, if that means incredible demand coming online for energy, for commodities, that's one of the major drivers for disinflation right now? christian: you highlight one of the negative cycles there.

oil prices have come down significantly. i think you are dealing with this set up with the buffer but you are right, there is a chance of a replay of headline inflation volatility next year which then feeds into rates and to some extent, can drive her spillover total risk assets. at this juncture, this full reopening, and the near term and highlight something you mentioned risk premium in the last month have come down across the board. on china assets but on global cyclical assets. it feels like there are not many grow stories to go on.

the market has embraced it very quickly that has contributed to a false start in relief on the gross side and it could very quickly progress -- regressive the desert proved to be the case. damien: we saw 22% increase in the chinese index but we are down 27 percent year to date. investors are realizing you can't have zero exposure to emerging markets in china. what is the best way to play the reopening narrative in china? christian: you make a great point because it is been very difficult for international investors from a strategic point of view to get excited about china. there is a concern when it comes to how investors will benefit from chinese economic growth in the coming years. there has been a concern with

zero covid and at the same time, you have this reopening story. the reopening story if you follow the template should be very good for domestic, consumer cyclicals, server -- service sectors. our team generally have become constructive, the whole north asia complex, so you can diversified just being in china, being a bit more in korea, taiwan. if you really want to go directly exposed to the reopening you need to go potentially more specific sectors, specific stocks. our strategy time created a basket for that. lisa: i can talk about this all

day. damien: there has been a lot of talk about recession. they say growth will be slower in the u.s. next year. inflation, while it is expected to come off, and the world of slower growth and inflation remaining elevated, what is the best position? christian: i want to mention this risk premium contraction. you have seen remarkable tightening and credit spreads. it tells me that you need to be up in quality until next year. we feel that next year, you spoke about this earlier, p caucasus and very high rate volatility and extra will be about growth volatility.

you are shifting a bit too solvency risk and shifting towards a tranquil balance sheet. this year, you have had very little cash flow risk and next year, you will probably see more of those which means at this juncture, you move up the risk curve. as opportunity is there, mortgage backed securities, is a relatively low risk asset. we would rather be these places until they get more rebuilds and risk premium which we think will be q1 of next year. lisa: christian mueller-glissman thank you so much.

damien: thus the litmus paper of fixed income. i really would've liked to ask him about, he quoted high grade credit with mortgage backed. if you look at the cuban -- coupon stocks. at this point in the game, is it right to think mortgage-backed offers values but i find that interesting. lisa: are you convinced that we will avoid a house price downturn? this was a huge topic of discussion at my thanksgiving dinner which tells you how amazing thanksgiving dinner was. a heated conversation about house prices. this is bloomberg. ♪

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>> inflation was very hard to forecast and 22. a lot of forecasters struggle with it. >> we see >> >> price pressures easing up. there has been a big dispersion across markets. for investors, you need to exercise patience. this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. lisa: this is bloomberg surveillance, on bloomberg television and radio. damian sassower, very much here i am pleased to say. we are talking about the end of the year and the looking forward

prognostication. people are not betting that inflation will come down quickly. it is notable that we talk about that. all of the discounts are driving all of the sales. damien: i tell you where inflation is not a problem, turkey and china. it is very idiosyncratic in terms of where inflation is. lisa: turkey has an inflation problem, they may not damien: admit it. damien:inflationary pressures are evident in china. if you would hear to the belief that inflation has peaked and what that looks like i think it will remain elevated for some time. we are not really feeling that yet. lisa: i am struggling to understand, heading into retail sales that typically happens

this time of year. how much are we going to see a real fading and the optimism and markets because the more that consumers keep spending, the more the fed has to do? damien: are we talking about the psychiatrist again? lisa: i didn't say that word. damien: the fed is really talking about what is the pain trade? we say it, i believe it will be higher rates. i don't think it's a weaker dollar. for me, it will be a tossup. is it going to be higher dollar, and higher rates? lisa: when you say higher rate it's higher to specify, u.s. long-term interest rates. that is where it has been so

far. you have the rolloff of the balance sheet. that does feel like it's the consensus. damien: let's look at a data check just to be sure. lisa: the s&p hasn't moved in an hour. it's up about .1 percent. we are hearing a bit of a dollar strength 1.03, they have been down pretty steadily which is fascinating considering the fed pushback. does this make sense to you? damien: what does make sense as the markets are moving in you and i are just sitting here. lisa: jordan rochester

we are excited to have you on. and maybe if you want to play some saxophone for us. we were talking about the pain trade heading into next year. do you think it is a stronger dollar? jordan: that would be the case for a short-term positioning. we were looking for the dollar to outperform for most of this year. now, we think we are at an inflection point. we have possibly seen the worst in terms of the growth data for europe. we had extreme moves in energy. that is the sort of trade rehab. then there is the reopening story for china. is it like 20/20 where we had

the vaccines invented in europe and we went into lockdown as they rolled out the vaccines. i think the positioning is a little bit short. if i look at the nature of ctas, there's still a little bit short. i think equity positioning is still short even though we've had this big rally. lisa: what is the main driver of some of the fluctuations? if we don't get a real direct trade, a choppiness on the dollar which seems to be what a lot of people are coming too, what drives that chop? is it growth, rate differentials, is it something else? jordan: growth is the most consistent factor. if you have a leading indicator that points up or down you have to follow that. a lot of people use the china

credit impulse, they bottom up. they are two standard deviations low and we think perhaps he could get worse if we have a cold snap. they should not get as bad as they have been. that's determinate of the overall dominance. it could be a more choppy, it's been dollar log for most of this year. this is been a 5% drawdown. there a dynamic change and i think it could be like 2021. in q1 we had the dollar go up by 5%, q2 down 5%, that's a zigzag. it could be simpler next year. if inflation was to

re-accelerate, let's say china reopens next year, oil prices go up, then we have zigzag. damien: your chief economist has been all over the property sector story. he said that china's vokler moment is over. joseph: near-term, we are expecting china to underperform on the gross side. as hard to avoid the idea of business sentiment dropping in china. we have 690 for our year in forecast. we could go lower than that if we have a beautiful scenario for marcus which the fed doesn't have to raise rates too much more. we get the terminal rate at 5.5

and then they pause. inflation will of peaked we are looking for sub 2% of inflation next year in the u.s.. we could definitely see bigger moves in cnh. damien: if you think about the 21 em crosses, only three are positive. when you look at funding prices, it's a whole different tale. talk about funding currencies us we look at 2023. which g7, g10 currencies books most attractive? jordan: in japan there's the potential for record numbers we've seen in cpi. the potential for yield curve change next year that makes japan less attractive as a

funder. the trade of the week for most is on the downside based on the price action. on the swiss side, we could see some swiss strength. i would not be too interested in. in the sterling space, that's where we could be looking. the bank of england is the first want to hike and they will probably be the first to signal the end of the hiking cycle. i think they are on the more dovish path. the one problem with that, there is a lot of consensus position in shorts making our lives difficult which is why the pound is outperformed. lisa: you said something i'm trying to wrap my head around. more dovish stands lead to more

currency strength, is that correct? jordan: on the pound sterling side. lisa: the reason why i asked that, damien, we are looking at a scenario where if growth takes a priority, a dovish bank of england, does that lead to stronger or weaker currency? dovish usually leads to a weaker currency because it could lead to more inflation but could it lead to more growth and strength? damien: you are right, it's amazing that we are talking about currency appreciation when you have weaker pmi, weaker growth. weaker growth will translate into a stronger currency for these g10 players. certainly for some i can see that being the case. lisa: if that's not the case it's not the growth being

preeminent drivers. i wellpoint does dovishness of a central bank become bull case for the currency. coming up, we have joe dolman from chelsea. that's coming up. lisa m: bringing you up today from news from around the world. retailers in the u.s. are bracing for a slower than normal black. high inflation and sagging consumer sentiment are hurting demand. seasonal sales are likely to fall 1.2% after ingesting for inflation that will be the first decline since 2009. in china, the central bank has

taken a step to boost the economy. it cut the amount of cash that banks need to hold in reserve. this takes effect december 5. it will inject 70 billion of liquidity into the economy. half of the capitals residents are without power following a russian attack. president zelenskyy says the power situation is difficult across the whole country. shares of credit suisse fell to an all-time low. they are weighing the outflow reported this week. clients withdrew 89 billion. yvonne must says the twitter well relaunch its verified series next friday. twitter verified must attend to

distinguish between different classes of users and drum up some must needed revenue. 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. ♪

>> this has been the least love dollar rally in history. we got tons of pushback on the dollar bullishness. lisa: eric nelson talking about what may become the consensus that there may be dollar weakening. when and how quickly is another story. it is black friday, damian sassower and we have been

talking about the consumer. can i just say that the four a.m. shopping mobster done. damien: what's interesting about many of the malls and going in person to shop at these places is the parking. you have to pay for parking at the mall. they want to draw u.n., they have to give you a little incentive to park your car. lisa: this may be a new york city region issue rather than a national issue. we will talk about your parking issue later on. let's talk to the senior research analyst, joe, where are you now and do you still see the same softness in terms of volume? joseph: i am still in white plains and i was just in target

and it's still pretty quiet out there. we are seeing a little more traffic picking up. talking to some of the store associates around here. they are hoping and expecting things to pick up as the day progresses and i think that will be true. even the mall down the street, it doesn't even open until 9:00. lisa: it tells you that the era of people crowding at the doorbusters are gone. i'm sure not many people are sad about it. it raises the idea of the activity of shopping rather than the mercenary aspects of it. how can we get a read on the holiday season based on foot traffic given that so many people go online to shop online and then they go out as a social event to shop in a physical way? joe: it is really hard to walk

in to spotcheck stores and really get a sense. at this point you need to see what the day looks like through the whole weekend and try to leverage some data we have some access to. i think you are right, people have been shopping. they've been able to get great prices and it is price protected. the consumer has the opportunity to sit on the couch and shop and i do think we are seeing that spending levels will be ok for this holiday season so it's hard to make too much of a read on an early friday morning on the day after thanksgiving. damien: you were surprised by the magnitude of the demand on discretionary items at target. what promotions will be enough

to get margins back on the right and create topline growth? joe: we are hoping that will be the case. the promotions a discount will help drive the traffic and spending levels. there were some good deals on the toy business a target which makes sense. they talked about his slow start in the toys season and for all the traffic that was in the stores, there was quite a few people in the toy department. i did see pretty good signage highlighting the values you could get a target on some of the discretionary items. damien: sporting goods in white plains, you raised your price estimates to 135. what is driving demand for fitness and apparel. joe: dick's sporting goods is

doing a great job. they emphasized the apparel and fashion within sporting goods which is really hot right now. they leaned into it and that helped. when you walk into the store, the dick's look terrific. it is a product that looks comfortable and you can wear to work and you can wear to work out. they have done a very good job and that's attracted more customers. when you look at their footwear department, they are getting the most out of those brands. lisa: we talked about the shooting in walmart and the question of safety and whether that is been an issue for people in these stores.

how have stores responded to that whether it is petty crime in the shoplifting to the more extreme version and the tragedy that we saw just recently? joe: it is a concern and it is something that the industry is talking about nonstop these days is the amount of theft that is happening in the horrible incidents that don't happen too often such as what happened at walmart. retailers are trying to have a little more presence at the front of the store with theirs store associates. as well as a police officer at the front of the stored to create safety. you see a lot more product getting locked up these days. especially some of the more valuable things i can walk away easily. i think retailers are working hard to try and figure this out.

i think they are trying to work with law enforcement to try and prosecute some of the people and make changes in the way that shoplifting laws are situated around the country. lisa: joe feldman of tell c. have you seen that thing where they are locked, does that disturb people from shopping? if you have to flog someone down and have them open it. it's a different experience. damien: i find it notable that they lock up the razor blades. lisa: it is notable to me because it is a deterrent because it creates friction and the whole goal of the retail

experience was to eliminate that friction. if they become more insurmountable, i wonder how that changes the dynamic of which stores get traction and store versus those that cater to the online. damien: at sporting good stores they have a golfing simulator, target has food and beverages. lisa: it is the first black friday so we will see later today when people get out there more en masse. right there in the markets we are just seeing a rip roaring rally. coming up, we will talk to david page head of asset research. ♪

lisa: welcome back, this is bloomberg surveillance on television and radio. we are heading to a day with sluggish trading.

it is a sleepy trading session. 4034 smp. yields are up five basis points. up three point 5%. crude, interesting, a little bit higher. if he think about the lockdowns in china, are people just shrugging it off. damien: you are right some point out china, that's been the driving factor on crude prices and the fact that we are trading below 80 is wild to me. lisa: we are also talking about black friday.

apparently nobody does that anymore. you are talking about the experience in the store and i am wondering can you describe it? ultimately, in person shopping is about the experience. kriti: we went inside macy's and the shoppers are not actually shopping. this idea that they are looking at the products, the perfume, the shoes but they are not actually taking it home. they will go home and buy it online. it's like the pop-up shops you see across new york city. in terms of actual crowds, still not coming up to the levels we have seen in the past year. that is going to be the real litmus test, if they aren't in

person, will they make up more online? damien: talk to me about inventory levels? are you seeing ladies larges, that's what i wear. is there enough stuff out there to get people to reach into their pocket and make a purchase here on black friday. kriti: there are so many items there. i was looking at some racks for my own needs and their are so many things that are not flying off the racks anymore. this is going to be crucial because even though you do see full shelves, there was plenty of inventory online in the price is cheaper in person. i was looking at the pricing on a purse and you saw them in markdown 60% and online it was only 30%. they are making up the margins through e commerce.

lisa: a ladies large. damien: my wife corrected me and said it was a pocket purse and -- pocketbook and not a purse. lisa: we will get into your shopping habits in just a moment. david pages joining us now and the focus on the consumer in the u.s.. david page head of macro research at axa investment managers uk limited how long will that be a driver of sustained support of the global economy and the goods

around the world? david: as a sustained driver of global activity. we are expected to see a relative softening come through for consumer spending for the fourth quarter and that will have a material impact as we move through the first year. certainly, the idea of the u.s. bringing activity from the rest of the world is not going to be the case. what we are seeing still is domestic generated inflation which the federal reserve has to itself with. it's not just supply chain shocks, there has been a tight labor market and that has sustained inflation and we think it will continue to do so. fresher, a domestic inflation issue that the fed is addressing but i don't think it will drive global activity. lisa: the inflation that is

domestically driven in large part because of the consumption we see ongoing, do you think people are underestimating the resolve of the federal reserve to slow that in to raise rates beyond where they previously believed simply because they need to get this under control and there still is this resilience? david: there is a misapprehension coming through. i don't think people misunderstand the fed's resolve. they get that now. i think there is an expectation that we see inflation fallback makes year and that is against a backdrop to of a mild recession. it suggests that the fed will be comfortable enough by the end of next year to begin cutting.

i am not sure that is the case, we see a much lower decline in inflation. we expect to see inflation closer to 4% but that's not enough for the fed to initiate an all clear. let's be fair, the gdp is projecting a 4%, if it does, the 5% peak that we are expecting from the fed might have to be higher still and that is the point we are looking at powell making in the december meeting but probably as he speaks next week. damien: looking ahead to next week, we see core payrolls. my question for you, can we

expect to see some negative payroll presence in the future? david: i think you will have to wait until next year. the key surprise this year is the resilience of the labor market. we have seen two quarters of contraction but we have seen gangbusters rates of growth. even with the slow down in payrolls, is still at a healthy clip. the household survey showed a much weaker picture and that was the case in the second quarter which heralded a slowdown in payrolls. i think there is a slowdown coming through in the fed is acknowledging that and that is part of the reason is talking about moderating the pace of hikes relatively soon. at the moment we have been consistently surprised at how

resilient the labor market has been. we are expecting to see payroll so back. we think you will see a few months where payrolls falls in across the course of next year, unemployment will rise. not massively, we see a relatively pickup and unemployment from 3.6 to about 4.5. it's not a big increase, but nevertheless we should still see one. the fed needs to see that increase in unemployment to ease those pressures. damien: let's take that to asset prices. if what you're saying is true, if we see shallow recession, what does that mean for fixed

income, equities and a 60/40 portfolio? david: what is it mean over the broad term? we are expecting to see a mild recession. we have rate cuts penciled in for 2024 but not 2023. at some point it suggests that u.s. treasuries at this level are about right and inequities will think about recovery phases as we look further out. the question is how smoothly will we get there. what we're suggesting is that you have strong gdp being flattened by the now chuckers of the moment. there is a risk of resilience in the labor market and the fed is not in a mood to take any chances with that. there's this assumption that we have an easier fed coming through and we can look forward to the cuts now.

i think the easing of financial condition since that october cpi print will make the fed uncomfortable. that's where i expect pushback from. lisa: thank you so much for being with us today. i want to bring you this, about the european central bank imposing higher capital requirements on certain lenders. this according to sources that spoke with bloomberg basically saying i am not worried about your stability but lending requirements and the leveraged loan complex being overly aggressive which comes after a. of fraud that's tightened up by the market. damien: european credit has

potential room for compression. will it be an offset to yields here but in a year from now that i could be a different story. lisa: european banks facing a whole slew of different issues. coming up, we will have an bloody, luke kicked more and peter chatwell. lisa m: shoppers may have a little more elbow room as inflation weighs on their budgets and those who are willing to spend are looking for bargains and turning to less expensive stores. consumers will be digging into their savings and relying more on buy now pay later services. amazon workers and 40 countries will make the black friday date

with walkouts. they are demanding better wages and a campaign called make amazon pay. amazon says it takes his role seriously on these important matters. bloomberg's learned the european central bank is imposing higher capital requirements on capital lenders. it argues that banks have ignored warnings to risks. saudi arabia's sports minister said that the government would support private-sector bids for the team as well as liver paul -- liverpool football. 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. ♪

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>> rebounding market will be key, as the rates of gone down, trading down to lower prices. we have seen the downward pressure on prices. people have not been treating their houses like piggy banks. lisa: will we see a downturn and housing pricing.

right now, we are looking at s&p futures have turned down, we are seeing 4030. we are seeing the euro a little bit softer versus the dollar 1.03, 10 years of sightly at 3.74. new york crude with the locked in beijing. at 78 .91. housing to me as one of the big topics for next year. how can we see resiliency and pricing given the mortgage rates? damien: housing affordability is on an all-time low. with mortgage rates 6.88, and volatility weighing in on commercial borrowing and lenders

, where's the regional deviation? where is demand growing? for me, we have a great guest. it is the interview of the morning for me trying to understand what the u.s. housing market is going to do. lisa: jonathan miller president of miller samuel. how much will we avoid a significant pricing down toward or set increasingly inevitable in certain hotspots? >> the lack of supply, inventory has been obliterated. we did the study of all the markets we cover in inventory

compared to pre-pandemic is down 43%. that's a huge drop from past cycles where inventory was piled up after the music stopped. i don't think there is any doubt that we will see modest declines in certain markets. the combination of type credit policy all through the housing boom on top of a record amount of home equity that is been compiled. it is hard to imagine a significant drop in pricing. inventory is just too low. lisa: how do you see this progressing over time? people are not selling, people are not moving because they will have to take a hit or wait a long time and where they going to move to? rent his stabilize. if interest rates don't come down from the 7% where they are right now, what is the future path? is it range bound housing prices

for the next five years? jonathan: i think that is probably the scenario if rates don't come down. the thing is this that consumers are wedded to the race that they purchased during the pre-pandemic housing boom. inventory, because of high equity, people are going to be pushing the boundaries. there is not an urgency to seller to move unlike the housing bubble where people lost their jobs and were unable to sell because they were underwater. this is a different scenario where inventory is the biggest change in condition. when we talk about inventory we have to make sure that we clearly separate existing supply versus new construction.

new construction has more upside risk for more supply then existing pricing which is 90% of supply. damien: elevated interest rate volatility is killing commercial developers. they are being triggered, they are driving up the cost to borrow. a 200 million loan you have to have an extra 5 million due to the interest rate volatility. jonathan: it improves the situation but the problem with commercial, if were talking about commercial office. that will be the last factor, i don't know if it has the ability to recover in the next several years because of remote.

that is not going away. i think the commercial world is in a very difficult spot and it will have to be reimagined. multifamily rental housing, the problem we are seeing in that sector right now beside financing costs, there is a concern about overbuilding. we are seeing in many of the markets that we cover, i think you are looking at our residential recovery further in front of a commercial coverage. lisa: what is that mean for the biggest cities? if office space does not recover, what about housing markets in those regions? jonathan: what we are seeing right now is this disconnect where markets like new york

which are seeing record housing prices and record sale activity up until the fed moves and rent is just starting to come off their peak. at the same time, we are seeing 60% of the stock and used, remote will have a profound impact repurposed sing on the margin to some sort of multifamily residential. i don't see that as a panacea. there is a larger challenge there was zoning. it is a long slog. this is a long, long problem going out that remote has put into place. it is not the pandemic, there's

just no going back. lisa: president, chief example of miller samuel. what is that due to the housing market let alone the office market? damien: he's talking about inventory to home sales. laces like phoenix, denver, boston and chicago which are far more resilient. it is cost to income to housing. at what point is of the third of your income? i think that's a real question. lisa: it is been such a pleasure having you on. happy post-thanksgiving. enjoy watching the world cup because that is what most people will be doing. coming up, peter chatwell, this is bloomberg. ♪

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lisa: right now we are looking at sleepy markets. the kent onto the open starts right now -- the countdown to the open starts right now. ♪ >> every thing you need to get ready for the start of u.s. trading. this is bloomberg the open.