>> inflation is going to take a longer time than people think. >> transitory never went away. >> services inflation is not rolling over, and the sticky services inflation is not rolling over. >> the tightness is going to continue. >> there are risks to our recession next year. >> this is bloomberg surveillance with tom keene, jonathan ferro at lisa abramowicz. jonathan: live from new york city worldwide, good morning. it is bloomberg surveillance on tv and radio for our worldwide audience, i think it is uber tv.

tom: that was my telemundo. jonathan: there is some football we can talk about later but we have to talk about chairman powell coming up this afternoon. tom: this is symbolic more than anything, not a normal speech and because of where it is happening, at the brookings institution which the good david russell at the wall street journal has completely rebuilt with people like bernanke, yellen, and on and on it is a place that studies inflation. jonathan: one question if you are in this market right now, will you push back against some of the easy conditions over the last month? lisa: everybody else has, and they sick yeah, keep going, goodbye. that is the been best has been the theme over the past couple of weeks. how much does this support inflation and give examples of it and give evidence of why it could be so important, but could

be market moving. tom: they have reaffirmed to past few days not three or 4% which made headlines years ago, but he says 3% is with the public starts to adjust mentally to inflation. has essay was the essay of the month. jonathan: some data from a little later, premo -- bramo will run you through that, including the data and try overnight. disappointing. .2 on the s&p 500, a month gains on the s&p and just about on the nasdaq as well. the dollar this month, down 4.5% in november, the worst month going back to 2010. tom: i take your point that currency matters, it is a litmus for the system. joining us here with decades of perspective in a moment, i look at 12 months trailing of the equity market and i'm confused.

nasdaq down 29% and a doubt almost even, spx is down a little, am i right that november was like a jumble, like we did not have to show up? jonathan: equal weight s&p was the story. they beat out -- strip out big tech, the muscle of big tech, on the s&p 500 and you've got a different picture. we have to ask the equity market if it is time to become those tech notes. battling this year. tom: a rigid debate. you treated out earlier from bank of america, we can go into that but there are like 29 flavors. jonathan: futures up 2.9% -- .2%. lisa: that speaks to where we are. we are watching a bunch of fed speak, michelle bowman, lisa cook the opening act before jerome powell takes the stage at brookings institution at 1:30

p.m.. curious to see what he has to say about the 2% inflation goal, if you doubled down on that and says it is ok if we go into a recession, because it is crucial to price stability in the economy, watch for some movement. we will also hear from janet yellen, the amazon ceo, larry fink and mark zuckerberg. curious to see what janet yellen has to say about the u.s. and european alliance especially around the inflation protection act and how the joint effort is to counter some of the china preeminence. we get a host of data at 10:00 p.m.. i will be looking at the beige book through 2:00 p.m. because nobody else will. i think it will be interesting to hear the commentary. joel stated one of the most important data points of the week. how much do we see this contract, the stealth tightening

-- loosening in the labor market? we see that or an ongoing increase in the openings because it is not as a market for tech as it is for retail, services? jonathan: i'm not even pretending. 2:00 p.m.. tom: we can talk about this because it has captured the imaginary. what does the significance of the ratings up so much now me to the u.s. hosting the world cup in four years? jonathan: i would like to see team usa progress and lay a solid foundation. tom: and the third youngest team, i literally said tele mundo. i have to watch it. they are serious about it, like the british. jonathan: sure. we will pick up on that later. joining us, cii -- how we are so

not done. the monetary year for 2023, that is your call. can you describe what a model three year looks like? >> i think it has periods of ecstasy and drops. 3900 on the upside. the overall market is going to be rocky as we tried to get the economy. -- people are waiting for the fed to pivot. we have all been trained in these. last three years it has been nothing but these of the economy, the stock market in oann 09, the european crisis. the next thing is employment. they are trying to play for that

and we think that is not likely this time around. they will play in the 70's. they are going to keep rates tight. we've got earnings over over the market lower year. we are in a $200 consensus has come down to 236, it was a bit higher at the beginning of this year. much of that pressure is going to come in the stocks. there was a lot of pull forward their and as those earnings expectations come down, there is a risk that even the multiples come lower. as tempting as these tech stocks are, they are down big this year as you guys were just talking about. we just don't think it is to pile in. we are sticking with our conservative dividend

strategies. tom: that is where wanted to go. we were on railroad stocks and fundamental analysis. if i need to do analysis, and read that great book, second edition, what is the analysis you and your team are doing in this jumble? stephen: number one we are looking at balance sheets. we want strong balance sheets. want companies that have solid cash flows in boring, stable businesses that are less suspect to big changes in the economic cycle. they have a stable platform of business, some pricing power so they can pass through some of this inflation. and they can maintain margins and are committed to paying a healthy dividend stream. our dividend portfolio has 4% gross yield on it. you can make money doing that,

especially in an environment where the overall market is going to be kind of bouncy. jonathan: help me with the banks. jp morgan down by 14%. goldman pretty flat, the names are all over the place today. are you picking up the pieces here at all? stephen: we are actually a little light on the banks but we are edging into them. one reason the banks are down is the v-shaped believers are waiting for a credit cycle double take them down and that has not happened. we think that is not likely. maybe a little degeneration in credit, but the underlying economy, the consumers in good shape. balance sheets and the banks are solid. two or three times what they were in 08, 09. jp morgan is trading and, the

earnings and the 3% dividend on it. the banks are probably oversold here and are a good place to hide out in a rocky environment. if you think we are not heading into a financial crisis, which we don't think we are. jonathan: wonderful to catch up with you, from federated's hermes. things have been all over the place this year, lisa. we have talked about the tech names, amazon down, facebook, apple down 20. it is all just one big group of names, they are very different stories. lisa: with the banks, higher rates should be a good thing because they get more income. but the act -- but the negative yield curve, the inversion means they cannot take money or capture the differential and lending long, having short-term capital and borrowing short.

it is hard to see whether the inversion can really do you invert and we have been talking about that for a while. jonathan: what is going to drive it? one of two things. the federal reserve is committed to keeping things where they are at the front end. lisa: bank of america saying you can see that curve normalize if the fed starts to cut rates or move away. the threshold to do that seems further away than the market perhaps is putting it. tom: bond market come out let's freeman, down 18% from 2018. we have only bounced does much, -- lisa: if you are a pessimist like you, you say oh, you have had bad returns, don't go into it. if you are an optimist, you say you have bad returns like me. they might be a good time. jonathan: several reversal.

lisa: welcome back. tom: we have another guest in the next hour, live from new york city, this is bloomberg. lisa: keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. inflation in the eurozone has slowed down for the first time in 1.5 years. the reading for november was 10% less than the estimate. that offers a glimmer of hope to european central bank in the struggle to curb the worst inflation and consumer price shock in a generation. jerome powell may submit expectations for a slower pace of interest rate hikes in the u.s. today. he speaks at an event in washington and may echo former fed officials and signaling a half-point raise in the final meeting of the year. a major change on the way british banks as part of the brexit big bang. the u.k. will relax the fencing

of banks as part of an effort to dig -- deregulate the industry. ring fencing requires them to separate from their investment and international banking activities. the u.s. senate has enshrined a bill that will protect same-sex and interracial marriages. 12 republicans joined the democratic majority. there been concerns of the supreme court could overturn a reeling -- ruling. former chinese president jiang zemin died. he oversaw a period of economic growth after tiananmen square. the economy at double when he was in power, but he also resisted political form. he was 96. global news 24 hours a day --

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 are looking at the oil pan in europe and the price cap announced. >> i don't think there is a resistance on establishing it.

we are trying to understand and work with our colleagues across the world and in europe to make sure we are with the eu and they are taking the lead set the price. it reflects a price that restricts putin's revenues, his profits. jonathan: always good to hear from him, u.s. energy security advisor. counting down to chairman howell this afternoon, follow-ups on the s&p 500. down by .1%. yields are lower on the 10 year, 3.72, down by a basis or two. the two year in november has done nothing, unchanged from the beginning of the month to the end. the 10 year yield is down about 30 basis points, and that is why you got a twos tends yield curve that has gone from -44 basis points to -74. tom: 50 seconds, mark cabana out

of bank of america saying this will change next year. he says the two-year will move like a rocket. jonathan: if we start to live come up the federal reserve will change. i don't think chairman powell is looking to get that lesson this afternoon. tom: no, we've got to time this because annmarie hordern is with us for the jobs report. i can't say enough about the importance of this week. annmarie hordern joins us, our bloomberg washington correspondent. you're making the rounds inside the beltway parties, what is the difference between a republican christmas event and a democratic party christmas event? annmarie: i guess it depends which side i'm going to in terms of the parties, the center or the republican -- the centrist -- the progressives or the

centrist on the democrats, or the right wing for the republicans. it is potentially eyes on this country and that is what the white house is focused on as well as leadership on both sides of the aisle. tom: decades ago i looked at the 4, 5, 6 unions. even when they said they do not want to strike, bait got only 54% of the vote. why is leadership going against the rank-and-file? annmarie: this comes down to sick leave. they want medical time off and paid sick leave and what you will see in the house is they are trying to get this tentative agreement to become legislation. this is what the white house is looking for and marty walsh struck that deal with labor unions and companies in september. but the fact that you have not had all unions agree on this, they want congress to act. potentially what you can see in the house is an amendment to

this basically that would include sick leave. gently when it goes to the senate, when they get on board with this, would it be a procedural yes or no vote coming down or would it come down to a debate? time is of the essence right now and you already see some of these companies having to divert cargo away from railroads because they are concerned it is getting too close to the time and there could be harmful material on some of these tracks. lisa: this is a specific issue and it has to do with potential losses of $2 billion a day of lost activity if the strike does go through. but there is a broader point. are we seeing a shift in the power dynamic with respect to labor, employers, based on inflation, the concerns of an economy that is going to get hit not only by inflation but by higher rates? emirate: you're getting to the heart that this is a--

emirate: you're getting -- annmarie: you're getting to the heart of this, president biden has said he is the most prounion leadership in a long time but he is not going to sacrifice the economy, the inflation and the holiday season, which is why he is acting -- asking congress to react. this issue is that there are progressives that say they cannot vote for this if sick leave is not part of it and publicans like marco rubio from florida saying i'm not going to vote for this if the rail workers are themselves not voting for this. congress should not be part of this and he is using this moment, some republicans like rubio, to put blame on the biden administration which were the ones that were hailing and celebrating in the rose garden. i was there in september, that they were able to strike the deal.

after the midterm elections, people-- lisa: after the midterm elections, people were hailing a shift to the center. is that true? annmarie? -- annmarie:, if congress avoids this rail strike it would be a signal that congress has shifted to the center. it would mean this is bipartisan, you have enough republicans and democrats to get on board to try to avoid with this would be an devastation to the u.s. economy. i'm not saying that is right or the wrong way to approach this but that would be a move to the center. this is the morning after the senate also voted for a same-sex marriage bill last night that will go to the house. that is something many would view as a signal to the center so it depends on the issue. jonathan: thank you, annmarie bringing up senator rubio between last night, yesterday morning read as follows, railway

workers should go back and negotiate a deal not only the workers but the union will accept. but if congress does not do it, i will not vote to impose a deal does not support the rail workers. marco rubio. tom: am there is a memory going back to another time and place when they were studying the strikes in school and you were talking what the violence as well. it is not a monopoly but it is usually concentrated particularly in the freight side among four or five players among feis including warren buffett in the west. there is a huge attention away from the workers. jonathan: tom, if this boils over, do we see negotiations break down elsewhere? lisa: this is my problem with rubio's comment. what should happen, yes. what will happen if they don't come to an agreement, if they

can't, could be bad for the economy. do you play chicken? jonathan: friday, some key conversation among this theme. tom: and who knows where we will be in the news on friday, but you also have to look at him with number session and that is what we are going to see on friday. jonathan: serving 200 k, a moving target, an estimated 200,000 from a previous read of 261. live from new york, this is bloomberg.. ♪

jonathan: big day today, chairman powell later, job openings data coming up winter this morning as well. of going into that, the equity market shaping up as follows on the s&p 500. the futures up on the nasdaq, up by .25%. 10 yields lower, much lower, driving a deeper inversion of the yield curve and using more that this morning. down a basis point on the 10-year to 3.73.

in the fx market, this is where the move has been in november. a monster move in the euro. month to date, euro-dollar is a positive 0.8%. that would be the biggest move. tom: off a lot of gloom. jonathan: i agree with you. since 2010. tom: in this jumble, it is inflation. inflation may be fractionally better than europe, explained 12.4 percent food inflation in the united kingdom. you got to be kidding me. jonathan: if you look at core of europe it is still a problem. it will mean another rate hike and the ecb on december 15. whether it is 50 or 75 we won't get into that. but it is not just inflation, it is growth. tom: i will go with the

stagflation on steroids. double digits, politicians behave differently. we don't have that in america. that is all there is to it. let's go to someone who can piece together your november and tried to stagger into 2023. they do that at deutsche bank led by david folkers landau and he has as chief, ellen ruskin who has been -- alan ruskin who has been such a supporter. the bloomberg financial index, which i think i was told is 11 ratios, the fact would be it is more accommodative. we move a negative one standard deviation, almost back to -.50 standard deviation. we are more accommodative. how does that change jay powell speech today and the fed moving -- fed meeting moving forward?

>> it is a great question. on the one hand, chairman powell will look to what the fed fund futures are pricing in and looking for a peak in fed funds around 5%. that would seem reasonable to him. then you look at what has happened since the last fomc meeting and as you remarked, every component, every major component of the financial conditions index has eased substantially. the bond market particularly has been driving things. some of this is very much related to cpi. but you also have tangential markets, things like the oil price it best price that has come down. the fomc was tracking around $90 a barrel and now wti is now $80 a barrel. everything is pointing in a constructive way. i don't think that is a terrible thing from the standpoint. it is something he would want to monitor. but i think it takes away to some extent the fears of a

particularly sharp slowdown in growth. tom: i thought draghi was good, and an economist. the way our viewers look at this is think about that x axis, the chart you made in school. what matters on the x-axis right now as you go out in the next year and in 2024? where is the when you are focused on? alan: people ask questions related to weight will he have a recession? in the main recession indicator people have been looking at that we have all focused on is the yield curve. that a suggestion of a recession. i would suggest the second half of 2023 is the when on that question. we look at other leading

indicators. you are seeing something which is on a path toward a recession but is not saying a recession is baked in the cake. the 1.i would say, that i would emphasize, we are all looking at the same thing. the yield curve could give some misleading signals given the supply-side shock. edit is a favorable supply-side shock we are under the moment. that could certainly lead to more flattening of the yield curve than you would otherwise think. i don't think it is quite as recessionary. where a stronger midsession signal as it would otherwise be. and tom: can we have a victory lap for a colleague of mr. ruskin? he is nailed it so far. lisa: and a lot of people are on

board. i question is the supply-side issues, which we don't understand in terms of when they come back online, whether you get those production delays that are eradicated especially with covid zero. what is your base case in terms of supply chain disruptions and lack of supplies, and whether that eases enough next year to reduce inflationary pressure? alan: i think it has eased enormously. if you look at the supplies in particular, and most indicators, they have normalized and back into the range from pre-covid. when you look at prices paid, those numbers are typically in the zone of what we saw pre-covid as well. there are reasons for optimism on the supply-side. like everybody, the biggest concern is that inflation has been around for long enough that it has become entrenched in the labor market. that is where the residual inflation pressures still reside , which is going to create angst

amongst the fed. if we see employment cost index not come down over indicators, they do not come down. tom:--nine -- lisa: which is why we see this come down come out with reports of the housing market. they were saying the housing market may be the biggest distinguishing feature between the winners and the losers internationally. the ones with the worst housing markets may suffer the biggest weakening and their currencies. do you see that as a correct roadmap? alan: it is an important roadmap and in most cycles it tends to be dominant. i would say in the u.s. at least the concerns on housing are probably a little exaggerated. it starts is one of the housing stocks, one of the best indicators, permits one of the

best indicators. but you can have inflation come off quite substantially without it being too problematic with consumption in part because inflation was so strong to begin with. on the international side, the countries i would worry about most, and my colleagues in london have talked about this, r sweden and canada. those are the countries where debt and disposable income is most problematic. the financing is most problematic. you need to watch the canadian dollar. those are the vulnerable currencies. tom: let's think about christmas and the pharaoh family. -- andy ferr -- and the ferro family. they had their tree up way before christmas. -- what is the best way to plan? alan: the dollar has almost

certain he peaked. we are going to have a bumpy year as it were because the fed is still tightening. were going to get to at least a 5% funds rate. if there are risks in terms of the funds rate it is probably still to the top side rather than the downside. so that is going to bolster that case. overall we are just building, the fed could be a based on the euro-dollar. an eventual assault on 110 leader in the year. and 2023, that is. jonathan: alan ruskin of deutsche bank. covid ruined my christmas tree plans, they got delayed as a covid, and i put the tree up the day before thanksgiving. i got covid and you got on assignment the world cup. tom: you made it to divide. jonathan: i can't clear off my

voice. tom: everybody has their own anecdote including lisa. but the one i live by is annmarie hordern used to run from the office in london out to windsor and back. jonathan: i am not sure shoot rent to windsor. tom: that is what she said. jonathan: west london. windsor -- anyway. we will move on. we know that this chairman points to deemphasize the pace as they shift from 75 to 50 and we emphasize the destination. that is higher than they previously thought. the power of the central bank is always about emphasis. i'm wondering whether he leads and against what we have seen so far this month and the financial conditions as they continue to use. tom: they are going away from him and the other pundits. but i'm going to say this.

when the chairman speaks, it is different than either vice-chairman brainerd and the other presidents. even if you are not engaged in this, you lean forward when the chairman speaks. jonathan: they are talking about going longer and higher. the question is whether the market is nick--responded to the fed speak in the same way the last couple of weeks. people would argue it is not. lisa: if the market does not respond to jay powell when he -- reiterates the same message from last time and the same as his colleagues over the last couple of weeks, does this become a credible best credibility issue with the federal reserve who is not able to have the forward thought to be able to say we won't have to cut rates next year? you are wrong, we are right, don't fight the fed. that is the issue. jonathan: it is the data, tom. tom: i am going to be focused on this after north macedonia. jonathan: are you trying to troll italy again?

tom: i miss. alan ruskin says he misses italy. jonathan: i miss italy. tom: good morning, tunisia. we call that a match. i learned it from you. jonathan: yields down a basis point, this is bloomberg.. lisa: keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. in washington, the leader of the right-wing oath keepers group steward rhodes has been convicted of suspicious -- seditious conspiracy for his participation in the january 6 riot in 2021. this is the most serious charge from the riot. rising at the highest rate since 2005, the british retail consortium said stock price inflation accelerated more than 7% in november.

food prices more than 12% higher with meat, eggs and coffee leading the way. china angry about covid restrictions. the top law enforcement body promised to crack down on what it called hostile forces and sabotage. the timing of those remarks suggest they came in response to last weekend's rare demonstrations. boeing could have the green light to certify its final 730 seven models without an expensive redesign. there is a compromise that would allow this to move forward before late december certification deadlines while also requiring an additional sensor system. this is opposed by lawmakers and family members of passengers who died in crashes of the models in 2018 and 2019. 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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>> the fed is going to have to raise rates at least a couple times more. 5% tops, something like that, and then they are going to hold there for a while because it is going to take a long time for these rate increases to redo and use the rushers. jonathan: good morning. coming up we are looking forward to hearing from the fed chair later, some economic data as well. job openings in america later this morning. the equity market shaping up as follows on the s&p 500, slightly positive, up by .2%, yield slightly lower by basis point or two. closing out november with the euro-dollar,, closing on

november with the euro-dollar up by more than 4% in the month of november tom. real weakness. tom: alan ruskin saying this is the real thing for dollar weakness as well. big figures have been made there. some people making money and losing as well. i wonder if em has been underplayed this year, the disappointment that was correlated. they need a weak dollar. jonathan: give me a headline across the bloomberg on state street. determining the deal to buy the brown brothers, tom. owing on to say the deal does not provide the contractual -- it is not in the deal to continue. it happened just moments ago. tom: the backdrop is so important, alliancebernstein did this. people are trying to figure out how to cut expenses and be more

focused given the collapse of active management. this is a huge backdrop and i have been remiss in not starting once again this year the index funds. the flows are unbelievable. jonathan: i should stress, they stressed this is a mutual agreement to end this deal. the headlines lisa: crossing moments ago. lisa:-- the headlines crossing moments ago. lisa: they were indicating perhaps it is more complicated to understand especially as we head into a period of such uncertainty where we don't know what china is going to do. jonathan: maximum uncertainty and 23. tom: people are making it up as they go. this is a challenge and how the intellectual content is moving on in 23. we will look at the intellectual content of the railroad strike with leslie, head of u.s. and americas program at chet amounts

-- at a company and she owned all four railroads in monopoly, we think she's qualified. why is this like that house or different from the past strikes? >> maybe one reason is different is because we have a president in office who is coming off the back of a big success into midterm elections by historical standards. the democratic party used to be the party of the union and we look at a president set to take a hard decision to push, to have those strikes blocked because of the sheer price they will cost u.s. economy if they go forward. this is a defining moment. this is a president who is going to have to push back against a group of americans that donald

trump courted, the republicans have taken over, we have seen some democrats tried to bring back in those voters, those working-class voters and this really will open up the democratic party for attack from union workers, from republicans that will spin this and from workers who will be -- they will have paid sick leave and other things they think are important. lisa: the backdrop of this is inflation and how high it is, a concern of monetary policy makers and politicians around the world. how much is the u.s. effort to reduce inflation with some recent legislation creating tensions that are irreconcilable with europe, which we continue to hear about today in brussels? leslie: a good question. there are all sorts of conflicting pressures on the literature between the united states and europe. inflation is one of them.

there's a real concern about that. there's also real competition concerns that europe has about the subsidy is that the inflation reduction act is giving to the energy sector, hydrogen, the climate energy sector. two semi, chips. there is also its of headline tensions and yet there is that overriding desire to stay on the same page when it comes to ukraine, china. we are seeing biden push hard on europe to take a unified position alongside the united states. we are also seeing phenomenal recording of europe and we will see that over the next few days as the president welcomes the french president for that first state visit. tom: leslie, the history of strikes here is the great strike of 1877 and after world war ii, where america woke up to labor unrest in 1946. and here we are.

compare where america is now with the future of strikes as compared to what we see in europe. i have been taught that itemization is what we have seen in our work -- labor force. is that true or are we going to see more strikes? leslie: this does look like some big the past. it is extraordinary, it is sophisticated. but we also are seeing a president who is to push back. the question will be, then what? what is the next move? it does stand i think in deep contrast to what we are seeing in the united kingdom where we are facing ongoing straits and have been facing strikes in the university sector, transportation sector, that don't look like they will end anytime soon. the government in the united states is taking a very different, much harder line on this. i don't think we will see a return. this is not back to the future

in the united states i don't think. jonathan: wonderful to get your perspective, leslie from chatham house. labor has not had leverage in a long time. we can argue how much that leverage has been eroded over the last six or nine months. but relative to the last 10 years, there is leverage that did not exist. tom: my amateur take as we underestimate the power of labor after 13 years, plus or minus, of management power, management strength. public unions, fine, i get that. what about detroit, other unions? i think as a nation we underplayed the power of labor as we are seeing this morning. lisa: which labor? it seems like the power of labor lies with the real economy and suddenly it matters so much more than tech and some of the appropriate office jobs. that is a take away from the past 10 months.

tom: where powell speaks from brookings, they have done research on the quintiles and deciles. the power of the lower quintile is we leave them so they do not come up maybe in a loan -- nonlabor way. speechless. it was well attended, i did a panel, i was speaking against the president of somebody who should've. jonathan: more coming up. up next from new york, this is bloomberg. ♪

>> inflation is going to take a longer time to corral than people think. >> transitory never what away. >> services if the sticky services inflation is not rolling over. >> the tightness of the labor market can continue and that is going to keep the fed deciding there are elevated risks to our recession next year. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: counting down to chairman powell, live from new

york city, good morning. this is bloomberg surveillance on tv and radio alongside tom keene and lisa abramowicz, i'm jonathan ferro. tk a little bit later this morning. job openings in america, talking to chairman powell. tom: we are making jokes about christmas trees and all that. tons of data, you mentioned ism to stagger to friday. i'm surprised on a 200,000 statistic with it job and that we are living. jonathan: that is the estimate. lisa asked the question at the start of the week and it is an important question to be asking. what is more important, the data or the fed speak? lisa: the data. i think everyone agrees. the fed has been speaking in the market is not listening. they're watching the data. one data print does not

necessarily change the view of the federal reserve but one weaker inflation print plus one was her than expected labor market report, you add them together and you don't get some the different. jonathan: inflation is easing in europe, but still, double-digit cpi. you get this easing but it is still incredibly elevated. tom: i have an offspring in paris right now, her electric bill went $40. jonathan: and you are paying for it. tom: of course. living in europe, the major story is europe does not have the economic statistics of america or even a resilient great britain. jonathan: and explains the massive month we have had with the euro. euro-dollar up by 4%. tom: we are shifting to this pivot thing, i can't believe i'm saying it. a pivot.

lisa: look at the natural gas prices in europe. how much does that track to what we have seen in the euro? it is better than expected data coming out of how warm the winter is going to be. as well as a stockpile of natural gas, it is not the worst case scenario so you get massive dollar weakness. the euro rally. is it sustainable? jonathan: the equity market something like this on the s&p 500, positive but .2%. 30 minutes away. yields a little lower, down two basis points at 3.72 on the 10 year. the story of the month with the bond market has been a deep curve inversion we have seen in treasuries. tom: it has. come back a little and all of that but i'm going to sum it up, into december, we mentioned this with alan ruskin. they ratio is bloomberg financial conditions index has gone against chairman powell. he wants a more restrictive environment and he does not have that with moving from a negative

one standard deviation out to a more accommodative negative .5 center deviation. all you need to know is powell is not happy. jonathan: will you push back later? lisa: we will find out. the warm-up act, lisa bowman and -- michelle bowman and lisa cook. then jerome powell. does he have any interest in how the market responds to what he says than what he says? is there still credibility and weight behind his words? will also hear from janet yellen, amazon ceo andy jassy and ceo sam bankman-fried. he has been quiet since his company went bankrupt ftx. where did the money go? how did he come up with those shortfalls? controversial that he is on the stage. some people pushing back and saying there are still many questions around the nature and disappearance of certain funds. we have a host data, jolt in

particular job openings. do we see an ongoing decline in the number of openings? a company say we are not going to hire so much, or do we see an ongoing need for workers in certain sectors, even big tech, continuing to push back? i will be reading the beige book. tom: do we have any weak labor data? is there any thing besides the type -- tech blowups? jonathan: labor markets were surprised. tom: i don't know what he says today. is not want to talk about labor or pivot. what is he going to talk about? jonathan: i wonder if he's going to reiterate what he said. we'll talk about the journey and your feelings a little later. mona joining us now, senior investment strategist.

you sound a little more constructive going into 2023. where does that view come from? mona: thank you. i think we have it journey to get to that constructive view that the fed is still on this path to raise rates. they have made it clear they are not done and they're probably heading to that level in 2023. the focus is shifting from this inflationary upward pressure to perhaps some stabilization, and of course a shift toward what happens to the economic growth picture which we think does soften in that first half of 2023. but perhaps a silver lining and a constructive view comes from the fact that we were perhaps set up, the stages is then sent for potential recovery from a market perspective. the market cycle and economic cycle are different animals. markets can pour low, but

rebound even as we are in perhaps a downturn or recession. venezuela constructive view comes from and of course the hope in the leading indicators of inflation that are showing that stability ahead. tom: would you explain surveillance 101, at the world does not end if we get a 5% terminal rate? we have been there before. wire we so angst ridden this time? mona: great point. if you look at a 30 year history, a 5% fed's rate is not out of the norm. in a treasury yield of 3.4% is not out of the norm. what is unique the sum around versus the last 10 years, the period after the great financial crisis, that was when the fed was perhaps closer to this. the whole period was marked by an outperformance growth versus value. this is unique in the fact that we probably won't head back to zero.

the fed can go from a 5% rate over time to perhaps a more neutral rate, 2.5. but yields may also remain in that to--2, 3 .5% range. you do have an alternative to equities in play. probably a better mix between bonds and stocks in your portfolio. but also the environment where growth outperformed for close to a decade. between growth and value as well. lisa: what if we avoid a recession next year and it ends up being negative in terms of creating higher rates for longer that bleeds into an over indebted society which a lot of people say is the case? how does that factor into your outlook? mona: we don't necessarily think the path to a soft landing is close either, but we do think it is getting narrower.

a lot of the indicators that we watch including the curve, but also those indicators are pointing toward if not recession, at least a softening trend. we do think that is in the cards. but if we do avoid that recessionary path and hit the soft landing, we think markets will respond favorably to that to some extent. the jobs picture it be in decent condition. we'll have a consumer in healthy shape. and you could get through this, we think the inflationary pressures were largely supply-side driven. and the demand will soften. think inflation could come in as well. we don't think it is necessarily this dire scenario to avoid a recession in the u.s.. but recessionary cycles are part of the business cycle. think at some point the excesses that have accumulated over the past two to three years, that will play itself out to some extent and perhaps we won't see a broader recession, but we could see what we are calling

that rolling recession in certain sectors and perhaps we are starting to see that in the tech sector where a lot of the excesses happens during the pandemic period. your broader point with debt increasing and yields moving higher, perhaps staying higher, we will see a clearing impact on the credit side as well, probably good for investors looking for value. jonathan: can use this -- be super specific where the leadership is going to come from? mona: we think entering a period of potential downward move in the economy. but we think that recovery book is back in play. parts of quality growth will probably takes leadership, but cyclicals, -- think about your balance into 2023. jonathan: thank you.

mona, constructive view on 23. tom: we've got a shout out to people that were resilient and see the world coming to an end, people like deutsche bank and mona. framing out a more optimistic year coming out of where we are. tom: 47.5 on the s&p. --jonathan: 47.5 on the s&p. tom: give them some time -- slack on the timeline. jonathan: you will push it out 18 months and say they were right? tom: six months. where's the holiday spirit? jonathan: you want me to be kinder? tom: i want you to be kinder. there was a june rally, it was terrible. jonathan: the dollar point -- 1.2. just not want to tell you when. lisa: s&p 5000. jonathan: at some point on the

future, not sure when. from new york city, this is bloomberg.. ♪ lisa: keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. inflation in the euro zone has slowed down for the first time in 1.5 years. the reading for november was 10%, plus with the median estimate, that offers a glimmer of hope to the european central bank and its struggle to curb the worst inflation and consumer price shock in a generation. jerome powell may cement expectations for a slower pace of interest rate hikes in the u.s. today. he speaks at an event in washington and may echo former fed officials in signaling a half-point rise in their final meeting of the year. mn well micron -- emmanuel macron is in the white house for the first visit in more than three years. this will celebrate the oldest u.s. alliance, proceeded by

meetings with u.s. lawmakers and at nasa. micron is unhappy with the u.s. over several trade and defense issues. the u.s. enshrines federal protection for same-sex marriages. it was 61.36 -- 61-36 with 12 -- 12 a publican joining the democrat majority. they were worried they could overturn the ruling that establishes this. the measure goes to the house where it form -- where passage is expected. a former chinese president has died. he presided a period of dramatic economic growth following the crackdown on pro-democracy demonstrations in tiananmen square. the chinese economy more than tripled in size in the 13 years he was in power. at the same time though, he resisted political form -- reform. he was 96. global news 24 hours a day on air and on bloomberg quicktake, powered by 100 27 journalists

and analysts in more than 127 countries. this is bloomberg.. ♪ ♪

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>> i don't like going against the ability of the unions to strike. but weighing the equities, we must avoid a strike. jobs will be lost, union jobs

will be lost, water will not be saved, product will not be going to market. we will lose 750 thousand jobs, some of them union jobs. that must be avoided. jonathan: speaker pelosi at the event in washington, d.c.. we'll get back to that. we will be catching up with secretary walsh friday after 9:45 eastern time friday. tom: interested to hear what he says, because he is from another time and place of dorchester in south boston, qualified to speak of does it extend beyond. pelosi sounded just like harry truman 1946. jonathan: do you remember? tom: i don't, wiseguy. jonathan: ut that up. tom: -- you teed that up. tom: micron is coming --

emmanuel macron can you imagine president biden saying you got to stay at arsenal or whatever? the president is telling this guy who is gay -- great for friends has to stay at psg. jonathan: french nationalism. tom: this matters. jonathan: of course. i think there is tension between the president and the french leader. tom: let's do this with annmarie hordern. mr. micron will attend in washington. it is a special relationship. having moved beyond the australian submarine debacle? annemarie: it was this time last year that this was something a huge deal in the relationship. framing the relationship, you saw him call back the ambassador in washington to france because they were so annoyed by this and

the communication that they feel the united states did not bring them in on this when they struck the steel with australia and the u.s.. -- the u.k.. this was a blow for france, they moved beyond that but there is a new issue in this relationship and it is what jonathan was just talking about, trade. micron has called it -- macron has called it trade. and his finance ministers went even further, equating it to what china does. this is clearly going to be brought up even though there's going to be more pomp and circumstance in all of the exciting stuff of a state dinner, there is tension at the heart of this relationship. tom: from de gaulle to pompidou to beyond, they invented state industry. are we ripping out a page from what the french did 30 years ago? annemarie: and the french and

europeans may end up doing this themselves. with this administration likes to talk about is the fact that there is not enough investment in clean energy, in ev anyway. this is why they are doing this. they really don't think there's going to be harm to these european companies. it will be interesting what happens. there is some task force the europeans and the u.s. are working on, how they get out of this, because this is something that behind closed doors and even in the open, european officials are incredibly annoyed about with the biden administration. but we should note there is a diversion in europe about this. you have the germans at the same time who, especially the likes of the german economy minister who comes from the green party, he thinks like this are useful in the industry. they also want to make sure the lines of communication are open and friendly with the biden administration. lisa: to dig into that more, what does and may well micron

want from president biden in order to feel -- emmanuel macron want from president biden? >> he probably wants him to trip up the ira but the congress passed legislation so that's not happening. there is not an end game unless congress was to go back and adopt a new law. that is not happening. this might be the u.s. trying to make the french feel good. lisa: how important is it for the u.s. to make the french feel good when they are trying to get some unity around particularly china, ironic given some of the jawboning recently. annmarie: also ironic because charles michel is en route to china this week. there are protests around the country due to the covid zero policy and emmanuel macron will be heading to china. i think where the u.s. -- what the u.s. is going to convey to

macron as they have with other leaders, is the west needs to remain united when it comes to china. the u.s. has struck a number of legislation when it comes to producing chips at home but also curbing exports to china. this is the era of other europeans like the netherlands who send a lot of chips to china. but the u.s. is trying to go with his multilateral approach to make sure it when they are setting up competition with china, it is not just the u.s. versus china, it is the u.s. alongside allies. jonathan: thank you, annmarie hordern with the latest on the meeting between the president and the french leader. tom: six point 2 million tourists from america visit paris as compared to the united kingdom, 2.7 million. jonathan: where are we going with this? lisa: do you want to know? he thinks paris, and, he thinks

vacation and going to paris. tom: we are centered on london, new york and hong kong. france has given up the financial -- good morning socgen, i'm sorry to insult you, mon dieu. jonathan: [laughter] lisa: baguette. tom: baguette, thank you. what is important, can you imagine paris if they decided to become capitalistic and compete with london? jonathan: fake need more labor laws. a job in paris at a bank is viewed as a job for life. like the flexibility in london and new york. tom: i think we are biased against covering london and new york versus paris. jonathan: do you remember when

they wanted to buy that all that time ago? the french described it as a flower of industry. tom: do you say ren-alt or renault? i say -- jonathan: i say renault. tom: from my childhood we say the other. jonathan: -- on the s&p. mon dieu. the french are incredibly offended this morning. apologies.

jonathan: two hours away from the lfa. on the s&p, of .4%. in the bond market, yields are down on the month. we are lower this morning by two on the two-year. 4.469.

the yield curve inversion has been driven by the drop in the 10 year yield. we will pick up on that a little bit later. starting to price and the slowdown in the economy. in the fx market, it's curious to see the dollar weakness in euro strength has kicked back in. 1.036. tom: from october to september, i think you make a really good point. when we try out the spreads and for those who are not global wall street, there are two numbers, the two-year in the 10 year. the story this month is not in the fed policy taught, the story is it is going to be an economic slowdown which is 10 year price up, yield down. jonathan: that's a story for bank of america, headlined

across the bloomberg months ago. doordash to cut jobs to rain and expenses. we wonder where the excesses have been. investment has gone into projects, operations and businesses. lisa: there is food delivery, technology companies have not been making money that are speculative in nature that are getting beaten down. doordash in the idea of getting your $15 salad delivered to your home during the pandemic is going to become questionable as you start to get increasing price pressures, labor pressures and people start going to the store themselves. jonathan: this is the story of the last 12 months. what has suffered? money has been going into big tech, big growth names.

food delivery, airbnb. where the money hasn't been going, energy. lisa: when you get these bubbles of investment, the real economy suffers and then you see commodity prices come to the fore because there hasn't been that investment. just a couple of names i want to run through. wayfair, the shopping center, the cyber monday. they are more than 7% and they have seen a huge increase in some of those orders. state street up more than 4%. you're seeing a pop there. krach strike holdings, a cybersecurity company down 18% after coming out with a worse than expected projections. our companies pulling back what they buy when it comes to

business services? do you see a crimping on that side? jonathan: any collaborative -- clarity on 2023? tom: i do have confidence, there's so much cash out there. i think apartment at bank of america would hate the idea of being called consensus but consensus is this idea that you hold on for bonds for the first half of 23, move to equities in the second half. tom: we are all trying to guess, why are we doing that? jonathan: it's that time of year. tom: i'm looking at the president which what wei lei, strategist at black rock. she helped us out in london and we are thrilled you joined us in

new york. what has changed here, not the crystal ball but the risk-free rate. we are getting on her iphone, youtube. now that the risk-free rate is back, we have a real money environment. what does that mean for asset allocation? wei: as we enter this new regime, it departs from the great motivation and we are shaved by supply. in our view, it requires a rethink of asset location. we think the new regime requires a new playbook altogether. we talked about the forecast for next year and we believe that even as we enter a recession which is our expectation, inflation could surprise on the upside. it will be lower than what we have seen this year but it could

surprise on the upside because we don't think central banks will go all the way to fight inflation. you talk about consensus, we are not constructive on risk. we are under weight equities. what is more important is when we would become more constructive and we expect to be more constructive in 2023. having that mechanism is important. sizing the damage of the macro and understanding to what extent that damage is in the price will be critical as we think about when to turn positive. as we turn positive, it will not be the prelude of a decades long market that we have seen in the past. we believe it will be a lot more volatile, choppy. jonathan: what's shaping your

view of the shift in the regime? wei: it's very much around her conviction that we are world shaped by multiple factors of supply constraint. energy prices coming down. looking beyond that, we are still facing three structural catalyst for elevated inflation in the long-term. aging demographics over the last 15 years in the u.s.. participation rate went from 68% to 62%. geopolitical fragmentation that represents further supply restraint and a mismatch between demand and supply like during the pandemic. we see this persisting which is

why as inflation goes down, we believe it will subtle higher than pre-pandemic levels. lisa: how much conviction can you have going into long-duration? wei: we want to push back against this notion that as we enter a recession you automatically hide your long-duration bones. this recession will be caused by central banks. they come to the rescue and cut rates, we don't believe the fed is able to cut rates next year. markets are pricing rate cuts, but in the face of this persistent inflation and supply constraint, we believe they will hike and stay at those levels for an extended. of time. tom: this is an important day in china. one of your leaders have died. you did something at cambridge,

you did the mathematic olympiad twice which is unheard of. how do you perceive the leadership change that we have seen. i don't want you to get in trouble with blackrock. the new china, or the next china, what is that look like for you? wei: one take away from the party congress earlier in the quarter is that the focus is going from growth to social coherence, prosperity, national security. what that means over the longer term is that we should expect a lower trend growth for china and in terms of the transmission mechanism from macro to micro will become less efficient. that warrants a higher risk premium for incorporating china. technically we are neutral but strategically we are underweight

china government bonds because of the yield attractiveness becoming left. jonathan: i want to promote some of the research of blackrock. outside of wall street, it's available on the website. it's a great read. i always enjoy it. not everyone can access it. tom: i hear about it all the time. out of the walls of wall street. they have to make a living and blackrock is making those brains accessible. jonathan: they can afford to. lisa: it's a compliment. i do think it's interesting how the knee-jerk response of going into duration is not going to work.

the push back saying if we are in a higher inflationary regime, it may not work. tom: what have spreads done in this month where people are bidding on bonds? lisa: there's been a huge rally. you have seen yields come in dramatically so people are saying let's go. tom: are you getting on your phone like i am, you can make 3%, 2%. for the first time in years people are telling me which you like a cd or cash? jonathan: which bank? tom: i'm not allowed to say on air. lisa: click this link, put your social security number and. jonathan: have you mentioned the disconnect between the pmi's?

the pmi's are going to come back up of the spreads will widen. something has to give. neil dutta is going to join us in just a minute from renaissance marco research llc we will talk about the optimism for next year. jonathan: from new york, this is bloomberg. lisa: keeping you up-to-date from news from around the world. oath keepers leader stewart rhodes has been convicted of seditious conspiracy. one other defendant was convicted of the same charge. it's the first trial and the most serious charge from the riot. nato is being urged to send battle tanks to ukraine.

forces could use them to reverse the military situation while the ground is frozen. this month prices and u.k. shops rose at their highest rate since 2005. the retail consortium said shoppers accelerated from 4%. food prices 12% higher. the return of disney ceo bob iger may not be cheap. the world's largest entertainment company warned changes in management may result in impairment charges. he may alter the management structure. 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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>> the gains belong to the bravery of the ukrainian soldiers. it is so impressive. the equipment that they have received has been critical for their gains. jonathan: the nato secretary-general sat down with bloomberg in bucharest. tell us what you heard from the general there? >> this is one of the stories we try to keep objective. but we are talking about a

change in the war that moves from the battlefield to a goal of making people freeze to death and that is what the situation is now. russia targets the infrastructure. the temperatures are dropping and the question i ask you is how do you fight a war of this nature? . >>putin is trying to make people freeze and that's hard for the civilians. we try to support ukraine with an unprecedented level of support. our allies planned to offer even more support, to help to repair and replace the electricity system and the power grid that has been destroyed.

maria: that was secretary-general stoltenberg speaking, the criticism you hear from you ukrainians is that this help is not coming in fast enough. they fix something, russia breaks that again, it's black out and cold again. this is a new type of warfare. this is no longer the battlefield. is not an army that fights another army. this is about civilians i could die in the cold. tom: is the former prime minister, is europe on the same page? his nato in unison? is brussels on the same page or our their fractures in fishers? maria: europe is on the same page.

we know it is difficult, we see a diplomatic spat over the oil cap. there is this bad about what type of weapon should be sent to the ukraine. what happens if ukraine gets to a point where it can fight over crimea. russia has made it clear that is a redline that would be severe escalation. some member states worry if it does get to that point where ukraine and russia clash over crimea. west side do you want to take? tom: getting to that point of de-escalation, what is the military's biggest need. is it airplanes? air cover? is it more tanks? what are they need now from nato? maria: immediately they need to fence. it prevents the damage from the

sky and prevents damage that is done to the infrastructure when it comes to energy. we have to stress this, people who are in our away from romania who could die in this temperature. going forward, on the military aspect, they say they need tanks that there is a real debate about who is going to train them, oversee them? if you give them a long range weapons is are perceived by russia as an escalation. lisa: as europe grapples with this horrific situation there is an eye towards china in terms of how much of a reliance should they maintain with the nation where there are a number of tensions that continue to build. what did stoltenberg say as emmanuel macron prepares to go to china and olaf scholz is just

returned? maria: i was struck by the number of times he repeated the words china. it's no coincidence, they change their definition which is seen as a systemic challenge to nato. he does worry that some in the west have not learned the lessons from russia which is that trade and security have to be separate. it's better to invest in your security rather than trade. do you worry about taiwan? he tried not to answer that question. he said that nothing good will come out of the situation were china to attack taiwan. jonathan: looking into next year, have to remember how we looked ahead to 2020 to 12 months ago.

there was not a war in ukraine. deutsche bank came out with this quote. with the markets increasingly confident of a terminal rate around 5% and inflation getting back to target, is worth remembering that a year ago today marcus were pricing of fed funds rate of 0.68% and economists were calling for cpi of 2.6%. the world changed and consensus got it a little wrong. tom: the sport in the art of guessing which is the fabric of what we've done for decades and people get it right, people get it wrong. it's how they adjust and adapt along the way. i give great credit that believed in higher rates who were there early instead with that call.

jonathan: the point of these exercises is to identify with the consensus is. then to work out which part of that we should be questioning a little more. the point that deutsche's bank is making, a terminal rate around 5%, should we question it? lisa: what's the biggest pain trade for next year. the biggest pain trade could be that we don't get a recession through the bulk of next year. you end up with rate staying higher and this will blow out the long end of the curve. 10-year, 30 year treasuries, the dollar will not re-strengthen while people are expecting it to weekend. those are some of the paint trays that go against the consensus that we keep hearing. jonathan: sounds like neil dutta

from renaissance marco research llc . tom: is powell going to mention this today? he will say the labor economy looks great. jonathan: looking forward around that conversation around the unions. that's a conversation for friday. chairman powell coming up a little later. futures positive .2%. heard on radio, seen on tv. this is bloomberg.

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>> what the fed wants to do is switch from the state paradigm to a destination paradigm. >> it will be enough to cause meaningful disinflation.

>> everyone is talking about recession, earnings coming down. the surprise is that they hang in there. >> investors should be in there for the longer term. this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: jonathan ferro, lisa abramowicz and tom keene. before the speech between the head of the fed. it's a fed show today. jonathan: the fed is worried about under cooking and stepping away too soon. the labor market takes we are expecting on friday, left the door open for them to maintain their stay. tom: for my sabbatical, the great miss has been the recession gloom all of 2022. we are not there yet. jonathan: we just push that out

to 2023. neil dutta is going to be with us, he's been right on this. can this economy keeps a present to the upside? the way you have seen the upside surprises, it's been in the labor market. it continues to surprise to the upside. surprises and jolts and then we get payrolls on friday. tom: what's wednesday, as a christmas tree wednesday? lisa: there is still strengthen the economy with traces of serious problems. there is a column on bloomberg best morning where he said a big

of stagflation is just what the fed appears to be aiming for. they want stagflation at a time where they need inflation to rolloff. they need the unemployment rate to go up and that will be the reality for a while. tom: this comes from brookings, inflation affects different parts of america. part of america is going what? this is great. lisa: which is why inflation can keep rising for longer than many people can stand it. this will be a huge problem for massive groups of the population even as the wealthiest still have money to spend. tom: i will go to the fed calendar, which meeting february 1, march 22, do we have to go to may 3? jonathan: where disinflation need to land for them to be confident.

they will keep hiking until they are confident that we are on the trajectory back towards 2%. tom: everyone knows my affection -- jonathan: i think they want a handful before they step away from it. when you come to management, they think the risk is doing too much. the bias is to overcook it and not under cook it. tom: i don't even know what i'm going to look at. i will look at the accommodation that the chairman doesn't like. jonathan: we are up on the session by .1% on s&p futures. tenure treasury yields 3.74. the amount of dollar weakness we are seeing, euro-dollar 1.036.

tom: maybe out to january 1, the view forward is a challenge and dr. anwiti bahuguna with columbia management inv advisors llc what is your degree of confidence to get out to june of next year? will you have to recalibrate january 20? anwiti: we will have a couple of inflation prints by then. to the discussion you just had, one month won't give us the confidence. a couple of more prints and all the forward data that i am looking at. that is pointing to some moderation. not at the rate that we want. the direction is right. it is moderating.

tom: i look to january 20 because manchester plays tottenham. jonathan: i think about a regular conversation and is here to watch the markets right now. wei lei says the long bond will not work. what to say back to that? anwiti: i think it's looking attractive to me. we see a month where it is been the hedge to battle surprises on the growth front. we are adding to the lung front. lisa: what about the scenario where you end up with a protracted inflation, they won't be going into recession as quickly and a fed rate that stays high for a lot longer than

people are pricing in. anwiti: the data in this next couple of quarters may be better than the recession fears which is pushed to the second half of the year. in that case, the front end is risky to me. as you've have seen through the last few months now, the curve has been inverting. the long and is saying that even if it is not next year, we are going to see some sort of slowdown in growth which is severe enough for the fed to start cutting at some point. lisa: we were talking about this column by the former fed president, stagflation seems to be the goal in the short term. what does well acid pricewise inside stagflation? anwiti: not much, it's not a great place to be from a multi-asset portfolio standpoint.

bots do well, maybe commodities. and then you are looking at relative value trades. value overgrowth, some alternative trend players. nothing in the traditional sense of your standard growth stocks or bonds. tom: the traditional sense has been shattered this year. mastec and bonds in the meat of what columbia does which is 60/40. how do you reallocate? do you get to a traditional model next year or do you wait until 2024, 2025. anwiti: you are seeing inflation start to come down and growth stronger-than-expected. beyond neutral equities -- tom: what is that mean? you either own it or you do not. anwiti: if you are a 60/40, you

own 60. tom: she's talking institutional here. my policy benchmark is i can't retire. jonathan: do you stop listening to the fed speak? do you ignore that now? anwiti: you can afford to ignore it. i will be listening to the brookings presentation. jonathan: does it give what you are expecting for next year? anwiti: you can only gather by listening to all the speakers what they are saying. jonathan: how did they respond to a mild recession? do they not cut interest rates? anwiti: they will respond. jonathan: i think the biggest issue i have with next year. we are pricing in cuts in the

fed is telling you that if we have a short and shallow recession we will not cut rates. this is why wei lei warned us about the bond market. tom: i have never seen this much navelgazing. jonathan: this is the business now, isn't it? tom: does this specter out higher yields and then we will sweep commodities? lisa: our crystal balls are completely broken. thus the reason why there is a lot of speculation and trying to game out the possibilities. do you even pay attention to fed speak if the market is shrugging it off and saying the data is more important than fed officials will focus on the data? what is the trigger to say inflation is coming down fast enough and that we are ok pulling our foot off the brake?

jonathan: clearly november december is too early to do so. you would argue financial conditions leave it open to remain. you should ask chairman powell, stocks are up, what are you? the hawk greatest hits. tom: we will have to go here, my fault, to all of you, can you call market bottom here? jonathan: i still hear people saying 3200. tom: that's what makes it interesting.

lisa: i've heard 5000. jonathan: 5k is you. adp is just around the corner, from new york, this is bloomberg. tom: with news from around the world, with the first word. federal reserve chairman may submit expectations for a slower pace of hikes. powell speaks at an event in washington. he may signal a half-point rise of the final meeting of the year. inflation has slowed down and the euro zone for the first time in 1.5 years. the reading in november was 10% less than the estimate. new york congressman, hakeem jeffries is likely to make history today. house democrats are expected to

elect them their leader. it would make him the first person of color to party. the u.s. senate has passed a bill that enshrines federal protection for same-sex marriages. 12 republicans join the democratic majority. they raise concerns that the supreme court could overgrown a ruling that establishes same-sex marriage. following the 1989 crackdown on pro-democracy protesters. china's economy has tripled. he resisted political reform. he was 96.

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>> we are stressing the longer rather than higher. once we get to my point five, it will sit there and wait for that restrictive policy to slow the economy down. then we will gradually push inflation down. jonathan: that was bill dudley there, just getting some adp jobs data. mike mckee has up for you. mike: if you are waiting for the labor market to cool off, adp gives you backup information on that. not sure what to make of adp but they say employers added 127

thousand jobs in the month of november. that is the slowest in the last 12 months. they break it down by saying we gained 213,000 service industry jobs and lost 86 thousand jobs. 2000 and construction, 100,000 in manufacturing. that's a huge number. it will be interesting to see what happens when we get the ism and payroll reports. adp now includes a pay component. pay growth up by 7.4% during the month. people who stay in their jobs saw an increase of 7.6%. people who changed jobs 15.1% more money. one other stat, in terms of jobs

in the south, west south central, they lost 28,000 jobs. i don't know what their map looks like, but one would expect people to of lost jobs in florida. that may be part of what brings in the slow number. jonathan: no one knows what to do with this report. it's the same every single month. tom: i really pay attention to what the adp says about payroll and paychecks and what we are doing when we get that piece of paper because they are the ones that invented that. other than that, my head is spinning. jonathan: no one knows what to do with it. lisa: neil richardson is brilliant, i'm curious that she said this, our data suggest that

the federal reserve tightening is having an effect on job tightening. fewer people are quitting in the recovery is stabilizing. tom: mickey told me that jolts matter. jonathan: we will talk to neil dutta about how jolts are constructive and just a minute. i could be futures are still positive. mike, great to catch up with you. 127,000, thus the estimate. tom: neil dutta head of research at renaissance marco research llc we are thrilled he could join us on set.

i love in your terse note that you say so what to all of the gdp navelgazing. west the reality of american economic growth. neil: financial conditions have been easing but until a month ago they were tightening for 12 months and now, for all the talk of lags, the economy is now tracking in real terms at four point 5%. consumer spending is tracking at 5%. the fed is telling you that they believe their policy works through financial conditions and they affect interest rates and exchange rates in equity markets. that has effects on different parts of the economy. let's just go down the list. credit card rates are going up, auto rates are going up in consumer spending is tracking

5%. you talk about the dollar going down. the fed is trying to run an aggressive policy relative to its central bank peers and yet the dollar is going down because there is enthusiasm that people in europe will not freeze to death in china is reopening. the trade deficit has been narrowing. if their goal is to slow the economy i don't see that much success. lisa: how do you view adp numbers in this morass? neil: i take a holistic view of the economic data. i look at it, 127,000. mike said 100,000 off on manufacturing. the data is probably real but the news is fake. there is no way that 100,000 people in manufacturing lost their jobs. not with auto production going

up, motor vehicle assemblies need to rise. the dollar is coming off. that will boost exports. their number said 100,000 were often manufacturing, i doubt that's how many people actually lost their jobs. tom: it's too much optimism. jonathan: he's identifying a re-acceleration of the economy. lisa: is that optimistic? tom: 90% disagrees with what he says. neil: the trustee bloomberg terminal. real gdp q4 2022, 0.5%. do you know how much of a declining growth you would need to see in order to achieve that forecast? q1 and q2 respectively 01, i

would take the other side. it is not to say a recession will not happen. i think in many respects the fed may view that as to the solution. what is going to happen over the next 3-6 months. the consensus is, they are underestimating growth at the moment. if that is the case and that's driving a lot of these views about the fed cutting in the back half of next year, that looks off. i think the risk to growth are skewed to the upside. jonathan: the tees for the next segment is are we underestimating the terminal rate. neil dutta will stick with those.

you see it in the data don't you? tom: the uncomfortable feature of dutta is that he has data that is been off the mark and it's a major call. he has really nailed the cone year of waiting for the gloom to happen. jonathan: neil makes a monster affects call on sterling. from new york, this is bloomberg. ♪

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tom: for those of you on radio. mike: the trade balances widening.

99 billion dollars, that is down from worldwide are from 91.9 billion in the month of september. that will be some traction from fourth-quarter growth. this is the first month of trade data. wholesale inventories are up by .8%. a worry that we are importing more stuff. inventories combined will not make a major difference in what peoples fourth-quarter growth forecasts are. 2.9 gdp up from 2.6 is consumer spending rises 1.7 percent compared to 1.4%. the price index one point 3% from 1.1%. at this point, the pce numbers

will be much more important to the fed. it looks like a little bit of slowing for the growth picture in the fourth quarter, but third-quarter revised higher. jonathan: you've looked at the same data, your take on what you are seeing? neil: we had a blowout in retail sales. think about what the inventories to sales looks like in the retail sector, i'm guessing lower. recession works on an element of surprise. what if the process works in reverse? we have been talking about recession since june. companies have been adjusting to some extents. inventories have been pared back, capex has been slowing somewhat.

what if they are surprised the other way? what if growth is accelerating in the recession doesn't happen. jonathan: we are discussing what's wrong about a consensus. it is worth remembering that a year ago markets were pricing of funds rate of 1.2, given the huge forecasting misstep, their question is your question, should we be questioning 5% a whole lot more? neil: the research came to the upside. if chairman powell says he doesn't know what the path for race will be enough, you have to take that as a signal that they are willing to do more rather than less. if economic growth is accelerating, that puts pressure on resource capacity.

that puts upward pressure on prices. a lot of things people are talking about, with respect to some of these bullwhip affects in household durable goods, that could prove transitory. i hate to use that word, but that's where i come down on this. people look at what is going on with car prices and prices for household durable's. they are coming down, rents are coming down. aggregate incomes are rising and study pays. savings doesn't really go up, that will drive up the prices for goods and services. lisa: if you are bullish on the economy are you bullish for risk assets for next year? neil: i think we are in for below trend in the equity market. lisa: if we see better-than-expected growth and ongoing resilience that is bad news?

neil: i don't want to fight the fed. so many of the people that have said the fed is just driving up stocks. if you don't want to fight the fed, that means you should be cautious on stocks. tom: i look at the math, we had real gdp 2.9, we finally got a risk-free rate where money is not free anymore. do we adapt? how do we adjust to going back to what we knew decades ago with a substantial gdp, money because something, we'll be fine? neil: i don't know.

my view is that if you are thinking about the next 2, 3 years, we will probably have a. of below trend growth. tom: 103% gdp? jonathan: 0.4 on bloomberg. neil: forecasting out 12, 18 months is difficult. right now, even if you believe that we see some below trend growth for a longer. of time, things are looking a little bit better. that's really the tension. jonathan: when they talk about longer variable links, what you hear when you see that misstatement? can you walk us through how you interpreted the statement. neil: the doves made a great trade. if you're sitting around the

fomc table, you got them to codify that into the statement in exchange for them to say something about equal interest rates and some puffing their chest at the news conference. that's all later. a lot of things can go the doves way. you are trading the certainty of stepping 50 basis points down. in my view, that was a down day for mark is in financial conditions tightening. i think the doves played their hand pretty well. i think that's part of the problem. it's too soon for the doves to be winning this debate. lisa: you think maybe 5% is the ceiling and they could cut rates next year, what gives you confident that the doves will win another trade?

neil: to me, the data will not give them time to make cuts. look at what has already happened? interest rates are down, purchase application going up, mortgaged man rising. the dollar is going down. have you looked at the performance of industrial stocks? what do you think that will mean for u.s. manufacturing? what if companies are done with inventory adjustment? tom: do you not share the housing gloom out there, is tangible. neil: the housing market is where the fed has got a lot of traction but now, interest rates have come down a little bit and that is unlocking some activity. up is ultimately up. the fact that people -- new home

sales are booked when the contract is signed. the fact that they are signing the contract knowing where the rates are as a sign of confidence. if you look at the conference board's survey, they see rates lower in the year ahead and buying conditions for homes go up. if the fed pauses, rates come in. residential investment will not be as much of a drag in q2 of next year as it is at this moment. jonathan: neil data, he says bullish sterling. it's now back up to 1.20. lisa: do you have any fx calls? tom: we are looking at his tie.

lisa: they look like goats. neil: these are dear with wreaths around them. tom: do you have a sweater to go with this? can we get you on before christmas with that sweater. jonathan: are we gonna do christmas letters? lisa: i think we should. jonathan: that's very festive. i'm a very joyful guy. tom: owns the high ground of sweaters. he scarf/sweater combos. jonathan: 2:00 p.m. argentina.

tom: why is australia playing against france? it's not fair. lisa: world cup, it's going to be the new olympics. i do think so because it's collective pride but it's focus. jonathan: where have you been for 50 years? i love americans discovering the world cup. lisa: why is the goal so small? tom: i want them to kick from further out. jonathan: team usa, i was so

happy about that. from new york, this is bloomberg. keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. the leader of the right wing groups stewart rhodes has been convicted of seditious conspiracy for his role for storming the capital. one other defendant was convicted of the same charge. nato is being urged to send battle tanks to ukraine as. let the manias foreman ministers said they could use them to reverse the situation while the ground is frozen. nato foreign ministers are meeting in bucharest. a recent decline that is providing some relief to a weekend housing market.

according to the mortgage bankers association, the rate fell 18 business points to 6.5%. the return of disney ceo bob iger may not be cheap. the world's largest entertainment company warned investment a change of strategy could result in charges. he may alter disney's management structure. the firm is selling $1.65 billion bond. it's the first security. 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. ♪

>> if the labor market is staying tight and there is a bias that the fed has to extend a 25 basis hi, can we get to a terminal rate and that could cause the economy to crack down the road. tom: we will stop now and look at a 10 year plus project a bloomberg which is bloomberg intelligence. if you have a terminal, it's something that you look at and talk about something that global wall street look out but they don't want you to know that they

are looking at the quality of berg intelligence. it's a secret for global market. gina martin adams joins us today. gina martin adams on the bloomberg intelligence on the mpp portfolio. i am blown away by the math of this. what is the dominant back there that leads to the m.v.p. portfolio that include something like marathon? gina: thank you tom, the m.v.p. portfolio is a combination of equal weighted factors. we include technical and fundamental factors. we screen the s&p 100 for the lowest volatility and highest

profitability securities on a quarterly basis. we rebalance at every quarter and it has been a strong risk adjusted return. tom: it is factor based in what our audience needs to know is that folds into the timeline for the terminal rate. is your timeline of study on these companies three weeks, three months, three years or longer out? gina: we have back tested this portfolio 20 years. we have a pretty good sense of what can perform an all weather positions. if you go back to 2006, interest rates were up back then too. if anything, the. of growth constantly are performing suggest that maybe this volumetric doesn't work. when you combine momentum, value

and profitability across all time periods, you tend to find that combination does very well in any form of interest rate regime, these factors tend to outperform. lisa: as you talk to clients trying to figure out how to be more specific with the stocks and sectors they pick, how do you get a sense of a wholesale move away from indexes? gina: i was talking with her head of etf analysis. going forward, investors will struggle, we have had lower cost for multiple products. going into an environment where the stakes may be range bound because of the growth and

inflation changing, your index returns may be suppressed. that does not mean you can't are performed by owning equities. you have to go much deeper into the indices. greater active management tends to perform better. think about 1968/1982, considered a bear market. the inflation dynamic was different. the u.s. economy continued to grow but inflation was much faster. policy was difficult to contend with. you did still see periods of equities performing you just had to actively work on those portfolios. we are going through something similar. lisa: you said worry, this is an interesting comment. to go philosophical, how would business change the landscape

for companies that have benefit from being included in indexes that might not get a knee-jerk allocation? gina: what it does is benefits some of the smaller companies, lower duration stocks that his -- if it fits very well with high interest, and a decline of index investing where the smaller companies tend to perform a little bit better. you have much better active management, where your selection makes a big difference. what you see, we have seen this over the course of the last year, the view of the index is changing. we have had our performance from energy stocks even though the

s&p 500 is the largest. tom: let's go to cheerios. mediocre dividend growth. it has done better recently as well. are you buying value like cheerios or growth like the m.v.p. portfolio? lisa: it's all value. when we think about the factors. tom: why are you against growth? gina: growth in the form of profitability is important to consider. growth is a broad term. i think profitability is a strong factor where performances worked well over the past year and staying focused on profitability at a reasonable price with value, and momentum you could do well.

growth for the sake of growth, focusing on topline revenue, it just doesn't work in an environment like today. i think you have to be careful about thinking about growth. what's the cost of the growth? does a result in profitability? growth for the sake of growth doesn't work in an environment like what we have now. tom: gina martin adams, thank. with the bloomberg intelligence m.v.p. portfolio. we will watch this through 2023. broking institution was here before 2:00. do you think powell will speak for 10 minutes? lisa: we are going to raise rates, it will be painful and we will keep them there. how much does the market get his

message? if he says we see strength you're not seeing. tom: thank you to our guest today, it's interesting on this final day of november. the economic data as we go to jobs day on friday. please stay with us. as we parse this through. much more to talk about this morning. jay powell and his conversation later this afternoon. on radio, on television, this is bloomberg surveillance. ♪

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jonathan: chairman powell just around the corner, good morning, the count down to the open starts now. >> everything you need to get set for the start of u.s. trading, this is bloomberg, the open with jonathan ferro. ♪ jonathan: live from new york, we begin with setting the stage for december and beyond. >> we are waiting for powell. >> what will he say here? >> 50 basis point is well telegraphed and priced in. >> there will be a lot of data. >>