>> were welcome now our bnn and bloomberg audience. temperatures are expected to plummet from below freezing from britain to the nordic region this week. it will test their ability to withstand a cold winter. temperatures are likely to go as low as -10 degrees celsius by the end the week in the u.k. the main office reported that on monday and also issued a yellow weather warning for snow on thursday in scotland. in south africa, lawyers for the president are preparing a court challenge against an advisory panel report that said there may be grounds for his impeachment. that issue is the way rim oppose

a handled the theft of at least $580,000 at his farm. he will not quit and seeks a second term. the u.s. military reportedly tweaked rocket launchers it gave to ukraine to prevent rockets from being launched into rock in -- into russia. the percussion is necessary to reduce the risk of a wider war. the white house is not commenting and neither is ukraine. like founders of u.s. startups raised one third as much venture capital to comparable businesses. research suggests that investors initially reverse their biases as they learn more about black on trip and your capabilities. in north carolina, 40,000 homes were still without power today after an attack on two electoral substations. there were damaged by gunfire.

federal officials have been growing concerned the nation's power grid is vulnerable to terrorism. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am john hyland. this is bloomberg. ♪ >> welcome to bloomberg markets. matt: i am matt miller, in for kriti gupta today. we are trading at session lows on the s&p right now. you can cs down at 4006 right now. the u.s. 10-year yield up more than 10 basis points right now, at 3.5883. we are seeing a little more strength in the dollar. those two are headwinds for risk assets. as they move higher, if they

increase from your, expect to see more pain in equities. almost 3% down for crude. a drop in crude, even as, at least this morning, we were looking at more openings in china. it should have been risk on, and it looks like it is going the other direction. jon: let's take a deeper look at some individual movers. you are right that the general tone at this hour has been largely negative most sectors impacted by that. there are some other reality checks. within the retail sector weakness today from viad corp as they once again are warning about their outlook in the ceo is announcing his retirement. the other issue out there is valuations. you have deutsche bank with cautious comments today on starbucks because of its valuation. those shares have been under some pressure. what's interesting to watch as the couple of names still in the green but have come off their

best levels. you have united airlines, which is getting a boost today. morgan stanley with some upbeat views on air travel heading into next year. it is still holding some gains, but it has pulled aback -- it has pulled back a little bit. alibaba has also pulled back, along with other chinese was to companies in new york. it was one of the early advantages of the morning, but now more cautiousness across the board. matt: there's a look at some of the movers in these markets. u.s. ism services data came out and we caught up with someone from edward jones, who says to spec market volatility overhead. >> we have had a strong run since that september 30 period. yes, we are headed toward a seasonally strong part of the year, but perhaps some of that was frontloaded already. bit of volatility, and keep in mind that when there is a lot of tax loss harvesting, december can be a rally.

that, in our view, can be strong, especially if investors are positioning for the year ahead. jon: let's talk a little bit more about the year ahead. stephen parker, the head of jp morgan private bank. we are at the point now where investors have to consider where the economy is going with those higher rates, even thinking about the recessionary outlook. is it also worth asking the question of what kind of recession we might be staring at right now? >> clearly, what we are seeing now and some of the selloff today is strong economic data, higher rates, were good economic news is being viewed as bad for markets, because it could keep the fed up more active than expected. we, and our base case for next year, think we are likely headed for a recession here in the u.s.

we think it is likely to be a mild recession, not a deep recession. ultimately, we think a lot of that pain is already priced in, as long as we do get that mild recession outlook. what's important to remember is that typically, equity markets bottom six months to nine months ahead of recession. now is the time you want to start thinking about the outlook for the year ahead. matt: did you hear larry summers with david westin last week? he was complaining that she was comparing the fed getting to a terminal rate with an airplane that is late. you were supposed to be there at 8:30, they said 9:30, 10:30, you don't expect it to leave until noon. i think that's a great analogy. that said, what kind of terminal rate are you working with? 5%? 5.5%? we are almost there now. stephen: we are in the 5% camp as a base case. maybe it skews a little bit to the upside, if some of the strength and labor markets remain as persistent as it seems to be. matt: how does that turn around,

slowly or instantly? stephen: i think it will be slow, but you're seeing signs from a lot of headlines around layoffs. i think that is going to lead to a more challenging sentiment, which could lead to some of the reliefs in pressure in labor markets. ultimately, i think there's enough signs from the fed that they are not going to have to over tighten. but when you look at the reaction we saw on friday, which is tighter labor markets from jobs data, that makes the fed's job a little bit harder. that's what i think markets are worried about today. jon: one of the other considerations, with different asset classes, and you're talking about layoffs and we were talking about the nasdaq. tech has been an easy target there'll this uncertainty. investors seeking safety have gravitated toward the u.s. dollar for months. what are some of the trends you are mapping and for 2023? stephen: we are traditional encore fixed income.

it pains me a little bit to say this for my entire career, but i think bonds, particularly higher quality bonds, are really compelling right now. when you think about it from the perspective of an investor, you always want multiple ways to win. when you look at fixed income markets right now, if we get easing of inflation concerns, the fed takes the foot off their bricks a little bit, that should be good for bonds. if we get a slowdown in the economy, concerns about a recession, that should be good for bonds. the scenario that is worst for traditional fixed income is that inflation remains persistent, the fed has to keep going, but the good news is that unlike much of the last decade, rates today give you a much bigger cushion to ride that out. core fixed income high-quality is i -- is a diversifier and something we are really focused on. matt: if we do get a deep recession, may be you start to see failures pickup. stephen: we do. when you are looking at

traditional high-yield markets right now, we are not pricing in as much of that recession risk, that default risk, as you traditionally have seen in prior cycles. we are focused more on high quality. with the re-rating we have seen in yields, you can get really compelling returns without having to take too much risk. jon: just to build on what you are talking about, give us your sins on where gold fits into the picture heading into next year. stephen: gold is a tricky one, depending on the point in the cycle. sometimes it is a dollar play, sometimes it is a geopolitical diversifier. we tend to have an allocation within our portfolio to help diversify, because it is one of those things that tends to be lower correlated, even in markets like this year, where everything seems to be moving down together. one view we do have is the dollar is going to weaken over the next 12 months, but also the longer term. weaker dollar should be supportive of commodity prices in goal. for investors thinking about how to build commodity allocation

within portfolios, we have seen a huge run in energy markets. now is the time you can potentially diversify a little bit into places like gold. matt: very cool. very interesting stuff. stephen parker, head of advisory solutions at j.p. morgan. let's turn out to china, which is seeing stocks climb, as more cities begin to relax their covered restrictions. joining us now is tom of bloomberg economics. telus first about the specifics we have seen, in terms of what is being relaxed and what tells you china is going to continue on that trajectory. tom: expectations heading into 2023, whether china was going to move at a gradual pace toward easing covid zero restrictions, probably with the bulk of the move concentrated after the winter was over and after a key political meeting in march of next year. what has happened in the last few days is that china's policy

makers are responding in part to popular protests and have just moved much more quickly. we have had china's anti-covid czar signaling last week that china was in a new phase in their fight against the virus. then, in the last few days, we have had a wave of cities relaxing controls, saying, you know what, you don't need a covid test to come out in public anymore, you don't need a covid test in order to go about your daily life. there's a big challenge still to come. the experience around the world is that when you relax restrictions, you see cases rising. sadly, when cases rise, the inevitable consequence of that is illness and deaths rise as well. that hasn't happened yet in china. very likely, it will. don't know how beijing will react. the early signs, though, are that china is doing what

economists and the markets want them to do, opening up. we are seeing that reflected in the markets over there. matt: can you give us a sense on the economic side. on the one hand, to your point, the market getting a little more optimistic on the reopening, but at a time when we are talking about markets around the world that are quickly cooling down, how that ends up bouncing things out. tom: china has really been in its own covid cycle, which has been substantially different from that experienced by the rest of the world. the rest of the world -- the united states and europe -- locked down in 2020. i the second half of that year, they were already opening up and are now dealing with a very different set of problems. high inflation, aggressive central tightening. china, by keeping covid zero in place not just in 2020 and 2021, but way into 2022 as well, have

put themselves in a very different situation. so, when we are thinking about the china markets, we really need to think about, primarily, the covid zero story in the end of it. as well as what is happening in as well as what is happening in property and with global demand. -- it's not really a surprise to me -- xi jinping got a third term as the general secretary of the communist party. a bunch of folks who were mainly notable for their personal loyalty to xi jinping got top jobs on the standing committee.

at that point, the market sold off and said, this is terrible, this is a massive looming governance failure for china. but if we think about what has happened since then, china has moved earlier than expected to ease covid zero restrictions. to your question on stimulus, they have amped up support for the property sector. and of course, xi jinping and biden sat down in bali and shook hands and smiled, put a bit of a floor under the declining u.s.-china relationships. we will see what happens in terms of stimulus in 2023. we think there will be a bit of rate cuts, but will remain constrained by chinese currency. but on those big policy issues, what to do about covid zero, what to do about property, early signs are following that party congress in october, a bit more

positive than i think people expected. jon: helpful analysis as always, tom. thank you for your time. coming up, credit suisse make it a $500 million cash infusion from its plan investment bank spinoff from saudi arabia. this is bloomberg. ♪

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matt: this is "bloomberg

markets." the saudi arabian crown prince is considering a $500 million investment in the credit suisse investment bank spinoff. joining us now is sonali basak with the details. this is not hugely surprising, considering the fact that the saudi arabian while fund is going to take a 9.9% stake in credit suisse. sonali: there's a lot of elements here, or you are seeing different entities tied to this. you do see the saudi arabian national bank investing into the plan. the interesting thing here is this investment as it pertains to the spin out of the investment bank over time. credit suisse is going to capitalize on that until this is spun out in a larger way. you see that knowing where some of this money comes from is welcome news to investors after a sharp selloff in stock.

you're seeing some gains on the back of this news. jon: for the crown prince, there has been a very big plan to invest money in a lot of different areas around the globe, which is another consideration of this possible deal coming together. sonali: it certainly is. one thing people don't realize about credit suisse bank in particular is that not only does it have a fairly significant u.s. presence when it comes to loans and the private equity industry, but it has a very massive presence in asia. a lot of that was historically tied to the wealth business, as it pertains to credit suisse and the capital raising they do for, for example, chinese ipos. it has not been as robust for many reasons in the last couple of years. they do have the infrastructure there to pick up as it comes up again. it's a pretty rare chance to invest in investment bank from

he has done a lot of work with saudi arabia and the crown prince over many, many years. the ties here go back as far as anybody on wall street. you can argue that he is one of the top anchors as it exists today. jon: just because of the different potential structures of how it gets done, it seems

based on a lot of bloomberg reporting so far that they are still potentially going to need some time to figure this all out. sonali: sometime is almost an understatement. it might take years to absolutely figure this out. they have been pretty clear about that. it is not something you will see tomorrow or next year. they have different capital raising plans. i think it will be really interesting to see how they actually change the business, to prepare this business, especially with the questions about existing links it will have between credit suisse and this investment bank. when it comes to equity markets, it is staying in credit suisse, not going with the investment bank. they will have links moving forward and that will take a while. matt: so, credit suisse looks like it is almost done with the $4 billion capital raise and they are getting more investments like this, at least reportedly. are we passed the existential crisis -- existential question of, does credit suisse survive? sonali: i don't think we are ever out of the woods when we

are heading into what is potentially a recession or a recession in europe. i think it is a situation you have to watch very closely. more significant updates will come into february of next year. jon: as always, we will continue to watch the headlines on that potential deal. coming up, a key part of the canadian yield curve reaching new levels. we will see what it means for a decision on interest rates in canada later this week. this is bloomberg. ♪ which supermarket gives you the most bang for your buck. something else that's good to know? if you have medicare and medicaid, you may be able to get more healthcare benefits through a humana medicare advantage dual eligible special needs plan. call now and speak to a licensed humana sales agent to see if you qualify. depending on the plan you choose, you could have your doctor, hospital, and

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the early 1990's. a possible recession for canada's economy. it is something the bank of canada is likely going to be watching as gets ready for its final interest rate decision of the year. that is coming this week on wednesday. matt: absolutely. these kinds of inversions are being seen around the world. we are looking at, i think 75 basis points between the two-year and 10-year. but 100 is a nice, big, round number. what kind of recession will you see, rather than will you get one at all? jon: for an economy like the canadian economy, they are so deeply tied to housing with each additional interest rate hike, this has become a sensitivity story. do they go 25 basis points as a cautionary move? we are going to find out later this week. as we look at the markets today, we are seeing broader weakness out there on the continued

worries around the interest rates. we will or call 1877866 8555.

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>> it wont have suspended the operations of the morality police. it was blamed for the death of a 22-year-old woman who fell into a after being detained for her entire -- attire. it was officials told the wall street journal the percussion is necessary to reduce the risk of a wider or in the pentagon is not commenting. vladimir putin drove a mercedes across a bridge to occupy crimea