>> we are switching from recession fears to inflation fears. >> i think more deceleration is to come next year, unfortunately. >> we are going to look at a fairly substantial amount of downgrades. >> it's not a question of if, it's a question of when. >> if u.s. fund rates go to 6% or 7%, that could become a problem here. jonathon: a pretty gloomy opening there. lisa is our video editor as well as our coanchor. lisa: [laughter]

jonathon: tom keene is going to come back in a couple of days. no big change on the s&p 500, up about 0.1%. a five-day losing streak. routine used to eat -- pretty muted losses over the past couple of days. lisa: this hasn't because -- this hasn't been because of expect a fed tightening, it's because stocks have gone nowhere. jonathon: the bonds are rallying . we have taken out the gain to the front end, yields after payrolls. what the make of that? lisa: people are looking at the fact that fed chair jay powell did not talk about pushing back against the rally. that was a green light to people that he is getting more concerned on the balance of risks and over-tightening than

under-tightening. you look at components like rent and goods pricing and they say it is disinflationary and this is going be feeding into the data more clearly in the first quarter of next year. jonathon: else up a couple of basis points this morning. i'm sure you are very familiar with this. we expected the lows we have seen this year in equity markets will likely be retested in the s&p 500 early next year and we see an ongoing trend of pulling back assets. ultimately, a second-half recovery trade. we have got this odd story. first half down, second-half up. that's the consensus across the whole of wall street. lisa: we are making fun of it because it is so comically specific. people have different reasons for why they think these will be the events as they transpire. but when will it happen? will it be june 23? [laughter]

what will be the segway into good, golden times? if it is going to be so good, why sell now? jonathon: the target is 4200. this dropped this morning. we believe the s&p will trade as low as 3410. again, it is that story of moving lower, retesting, but ultimate recovery to get back to basically where we are right now on the s&p. i raised this question in an interview yesterday. ultimately, 4000 is the year-end price target in 2023. it's a bumpy road to nowhere. one of my doing here? she said the risk going into 2023 is under running equities. why do they hate tech, but like the cyclicality you get? far more nuanced than i have

heard from people on the street. lisa: people have gotten so conditioned to tech rallying that they are overweight. the biggest pain trade i think people are facing is if the economy doesn't slow down quickly enough, if you end up having a pretty good next year and the fed raises and you don't see a recession, that could be the biggest pain trade. jonathon: trying to erase some of the losses over the last couple of days. five-day losing streak on the s&p 500. this is the longest losing streak since tober. yields higher by two or three basis points. euro-dollar going nowhere. let's call it 1.05. lisa: going nowhere, but the strength we have seen over the past couple of weeks has been amazing, below parity. could we get to 109 or 110? we will get christine lagarde. she is talking at a systemic annual risk conference.

what she will say about the balance of risk, does she start to push back against some of the easing of financial conditions perhaps more aggressively than the united states, will be interesting. we are not seeing the weakness. that's the one spot that keeps coming back. disinflation in other areas, wages, the need to hire, the ability to hire. that is still a very tight labor market that puts a bit of a floor under how low inflation can go. jonathon: payrolls on friday. wages up, pay low growth in a week -- payroll group -- growth weakening. lisa: what's going to cool it off, given it is a big component of the cpi index? i have been so interested in the retailer index. these companies have had different faces. lululemon is down 4% or 5%. do you where their suits?

jonathon: not a chance. how dare you. lisa: they have men wear. jonathon: i understand this has become part of the midtown uniform. you where those pants with a long shirt. i hate that. but what has costco got to do with that? lisa: they are reporting earnings after the bill, too. jonathon: a lulu suit? lisa: why are you just shutting it down? jonathon: are they making suits? what are you talking about? i want to get straight to the fx market. you think the dollar weakness we have seen in the easing of financial conditions is likely unsustainable. can you walk me through why? >>

i think it goes back to some of the same discussion you have been having. we think financial conditions are easing as he have seen so far is unsustainable, given the needs to slow the economy down to bring inflation lower. we think there has to be a pushback against that, and that's probably what is going to give the dollar a second wind. there have been some developments or changes. china is reopening faster than expected, europe's stage has not been as bad as most people feared. i get why the dollar has weakened as it has and the euro has strengthened somewhat, but from these levels, i still think the need to push financial conditions to a tighter place again is going to dominate and that's going to push the dollar stronger again. lisa: you said something there, that china is reopening faster than you thought. is that really the case? is that shifting your views on

what you expect that to do to your outlook? kamakshya: i think you are seeing the employee from the most intense covert restrictions that have been in place for the past two years. i think how exactly that translates into mobility and activity is a different matter. these things tend to be bumpy. markets tend to look ahead of that. i think the fact that they are on a path where the signposts are being laid out, i think markets are sort of front running that to some extent. i think that's relevant. fx at the end of the day is a relative gain. you need growth to look better. the fact that china may not be as far below potential in the past couple of years is important. lisa: it is becoming increasingly consensus to go into the developing markets and currencies that were less loved this year, particularly in

southeast asia. kamakshya: i think there's a bit of that fee. one of the things i keep telling investors is that developing and emerging markets are no longer just the kind of high play that they used to be in the old days. there's a lot of differentiation. a handful of currencies have depreciated versus the dollar this year have been in e.m.. they have not been in the gm world. you have the complexity of a potential dollar turn with g nine. that's with parts of sterling and euro, your conventional currencies. but those that are more sensitive to the reopening view, i think there could certainly be more upside there. jonathon: can i draw down what

it means for g10? do you think the biggest driver will be, the reopening in china or what happens with fed policy in 2023? kamakshya: i still think fed policy will dominate. the balance we have seen, i think from this point onward, the fact that you have a resilient you s -- u.s. economy -- our view is that the u.s. will not go into a recession in 2023. that means the dollar will get a second wind and that will put renewed pressure on some of the g9 currencies. i think there will be an eventual turn in the dollar and other currencies, but you need the fed to peak. jonathon: i have people lining up to tell me we will retest the lows in the market. can we retest the peaks this year? euro-dollar, what was that, 95.36? can we retest those kinds of levels?

kamakshya: i think you are right. the peak in cable, that sort of level i think came about in a particular context under particularly stressed circumstances. i think the more important point is if we see a sustained turn, not just these ups and downs driven by short-term positioning, but can we see the sustained weaker dollar or sustained stronger in the euro area or european currencies more broadly? we think we are some way away from that. we think rate hikes have delivered, having more impact on the housing markets in the u.k., scandinavia, other parts of europe. i think the u.s. economy is going to prove to be more resilient than that. i think the dollar would still be strongly favored against the g10 space. jonathon: great as always. kamakshya trivedi there.

we just want to bring you the latest on tesla. allow me to share that with you. tesla was short on production shifts at a shanghai factory as soon as monday and has delayed the onboarding of some new hires, people familiar with the situation lack of demand for the company cars in china. more on there in just a moment. i will build that story out for you in a couple minutes time. the stock is lower by a little more than 1%. next hour, anastasia amoroso. can we get away from this consensus of stocks down, in the first half stocks up? we will debate that in the second half. lisa m: keeping you up-to-date with news from around the world. vladimir putin acknowledges that the war in ukraine is taking longer than expected. at russian leader says that when

moscow calls a special the terry operation has succeeded in seizing new territory. he also said that russia's nuclear arsenal is deterring escalation of the conflict. in china, a senior health advisor warns that a vast majority of the population may eventually contract covid. the government is now taking steps reversing its zero-tolerance and living with higher case results. 60% of the population could get infected in the first wave. several u.s. senators are willing to subpoena ftx founder sam bankman-fried if he does not voluntarily choose to answer questions. senator brown and others have asked engman freed to testify. brown wrote that bankman-fried must answer for the failures of ftx. elon musk bankers are considering providing that alien air with new loans backed by tesla stock. the move is one of several

options the morgan stanley-led group may take to soften the blow of the $13 billion of debt must cook on to buy twitter. the company could face about $1.2 billion in costs under the current debt structure. the chief operating often serve -- the coo of theranos has been sentenced. he ran the lead testing start up alongside the ceo elizabeth holmes. last month, holmes was sentenced to 11.5 years in prison. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. hi am lisa mateo. this is bloomberg. ♪ from one company committed to building a world that works, to three that will focus on a future that does too.

this is ge healthcare, creating a world where healthcare has no limits. this is ge vernova, helping generate and move the energy that our world needs. this is ge aerospace, advancing flight for future generations. this is the next generation of ge.

>> we are not giving in to russia's manipulation. we need to stay form -- stay

firm, stay the course, and continue to put pressure on the aggressive country russia. jonathon: that is the european commission executive vice president. good morning to you all. a sneak peek at the price action for you this thursday money. equities positive by two points on the s&p, up not even 0.1%. yields higher, 3.44 on a 10-year. euro-dollar doing absolutely nothing. tesla is negative by 2%. the latest reporting firm here at bloomberg. tesla was short production shifts at a shanghai factory as early as yesterday. the factory will work 29.5 hour shifts, down from 11.5 hour shifts. the scheduled change is to take

place next week. according to a production schedule seen by us here at bloomberg news. lisa: to be fair, a tesla rep said that this was not true. this is one of a number of companies using lack of demand, not just the potential curbs with zero covid policy being eliminated. jonathon: is this specific to tesla or is that a broader story? lisa: we don't know. they have been selectively moving certain people over to texas from shanghai. this is something we are hearing on the margins from a lot of companies, not just tesla. jonathon: let's bring in anne-marie. the meeting that i don't think it's a ton of attention this week and probably needs more attention is president xi lands in saudi arabia.

>> you syria has been filled with chinese flags. he will meet arab leaders and they have inked about 30 or 35 deals. these have actually expanded beyond what you would normally thing, which is the bedrock of their relationship with oil. saudi arabia is the biggest expert of oil and their talks -- their top customer is china. they wanted either diversified in times of energy space. there are also other pillars to this relationship. information technology, the cloud. all of this is incredibly important to xi jinping as he wants to expand in the middle east. this is something president biden warned about this summer. he did not want to create a vacuum for china or russia to fill. what you see now is she keeping making his visit at a critically important time for china. what happens with these two

countries is so important to the oil market, given the fact that that is the top exporter and customer, and we know that china has really kept a lid on demand and whether or not or how quickly they open up. lisa: this comes at a time where back in the u.s., they're watching this and the house is about to pass possibly today a bill that actually supplies more arms to taiwan. it does potentially increase some of the restrictions around using chips in government operations that could potentially be from china. what does this do in terms of u.s.-china relations, especially after some of the softening and -- softening in ties we have seen recently. annmarie: this definitely has the rebuke of beijing early this morning, when they are looking through and reading the press about this bill that is going to be passed. there are two things we should know. one, yes, they want more arms going to taiwan. we also have the secretary of defense talking with his australian counterparts, that

they want to boost military presence from the united states. this is because of a more aggressive china because of taiwan. but one thing regarding taiwan that the language was doll back was the fact of whether or not they were going to make taiwan a major non-nato ally. that came at the bidding of the biden administration to commerce. you can see that they want to make sure they do have a path of foreign-policy and working with china, especially off the heels of this meeting, which really broke the glass in terms of allowing some conversation between beijing and washington. we were talking about the fact that this relationship was one of the worst it has been in months or years after speaker pelosi's visit to taiwan. the second thing, just quickly as well, what you see in the u.s. in the technology space is making sure their chips are not going to china. china military and technology cannot access some of the most high technical, advanced technology from the united states.

now, the u.s. military and other aspects cannot use china chips. you see a twofold approach here. lisa: meanwhile, the question is what europe will do with the rising tensions between u.s. and china, and the fact that china reopening could give a boost to a region. how are they dovetailing those two considerations? >> there's two things going on. there's the inflation reduction act, but some of the mood we hear behind is that tensions are cooling. you know there was a very important meeting this week. the trade and technology council between the united states and european union. the europeans walked out of that meeting believing or at least hoping that the biden administration will take into consideration the many issues they have with the inflation reduction act. that could ease some of the tensions there. when it comes to china, we see a continent that is now rethinking their foreign policy.

at one point, remember, the idea was the more you trade, the better relationships you will have. if russia, the entire playbook went out the window. that is now being reconsidered and when it comes to china. jonathon: in europe, this is the only story that matters now. this lead paragraph as may be the most bizarre thing i have read all year. quote german police rounded up dozens of people, including a south star prince, a retired paratrooper, and a former judge on wednesday, accusing them of trying to overthrow the government, unclear how concrete the plans were. -- work." what is happening in germany? maria: this has been an embarrassment and shock for the country. it has nothing to do with the german government. you do see there is still perhaps a generational clash. this story almost seems absurd. everyone i spoke to a germany says there is a sense of embarrassment with what is going on. very difficult to answer that question.

but of course, this is a shocker and may be precipitated in this context of a war in russia and ukraine, this idea going back to the ties potentially between some in germany and in russia. i think it is very difficult to explain that headline. the german government of condemning this. it is completely unrelated to german officials now in government. jonathon: to the two of you, thank you. the second paragraph in this story, "a german official and lawmakers that investigators may have detected real plotting, drunk and fantasizing, or both. regardless, germany takes any right wing threats seriously. they carried out predawn raids across much of the country." this is both incredibly serious and utterly bizarre the way this has been reported in last couple of days. lisa: what strikes me is how you could say that story happened in the united states and people would say social media and the

extremist kinds of sentiments on different sides, it's not alone. i expect it will get more extreme, particularly if we do get some sort of rising nationalism with been talking about for a while. jonathon: a german parliament spokesperson said that according to what we know so far, they intend to abolish democratic state of law. that seems so out there that you struggle to take it seriously. lisa: you struggle to take january 6 seriously as well because of similar types of rhetoric. i agree with you, but look at what's happening over in peru and argentina, places where there's some sort of greater uprising that you can take seriously. don't necessarily take that all that seriously, but they have to. if people are going after that, this is sort of like what law enforcement has to do all the time and take it seriously, otherwise -- jonathon: it is incredibly serious and utterly bizarre at the same time.

tesla is a story we will stay on top of her now. by 1.7% this morning. tesla will shorten shanghai factory shifts and delay new staff hires. for the broader market, the equity market, really muted price action the past couple of days. up 0.1% on the s&p 500. yields higher by a couple of basis points on the 10-year. euro-dollar not given me much. 1.0499. crude giving us tons of action this year. it might finish the year, 2022, negative. that's unreal. 72.50. this is bloomberg. ♪

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jonathon: live from new york, equities just about positive on the s&p and nasdaq as well. up a little more than 0.1%. up across the board, but just marginally. a five-day losing streak into thursday. the longest losing streak going back to early october. in the bond market, very frustrating. there is the 10-year right now. we .4438. 2% year-end 2024. that's after revising forecasts higher based on what we have seen this year.

harry nelson of wells fargo, we caught up with him earlier this week. 4% is a flaw, may be as high as 475 -- 4.75%. lisa: you would have to see a massive back away from fed on policy. i am actually shifting my view a little bit. there is significant disinflationary pressure coming out in other areas that have been consistently hot until now. i'm kind of understanding people who are pushing back against this idea that inflation is going to stay sticky at this 4% or 5% level for a longer period of time. what's going to cause those 10 year yields for a projected period of time? jonathon: almost -85 basis points. i think that is the most inverted yield curve we have seen in at least 40 years. you have to go back to 1981. we have yield curve inversion, crude getting absolutely battered. here's the thing with crude right now. bti closed today in the low

70's. they will be down on the year by a little more than 3.5%. based on what we have seen this year, would anyone have guessed that crude would have finished the year lower on the year? lisa: i don't understand this either. like i said yesterday, i was flummoxed. we have china reopening. that should be bullish for crude. that should be bullish. you are seeing people continue to travel and fly around, yet you are seeing production increase in the u.s., stockpiles actually build a little bit over the year. this is a little bit of a tricky position. jonathon: in the equity market, too. commodities are down year to date. again last year of close to 50%. exxon coming out with the corporate plan. expanding the share repurchase program up to $50 billion by 2022. lisa: then, a political section -- a political question.

paying some credence to this desire for more production. jonathon: we will talk about this a little later. exxon in the mix, bringing us detail. joining us now is david bailin, cio of city global wealth. we get to talk to about your outlook for 2023. is it any different what we have heard so much of in the last month? david: it's a little different, because it is a tale of two halves. you talked about a lot of these things with lisa. lower oil prices, the 10 year at 3.44. you have the third bear market and then heading down. markets need the economy. what they're telling us is that the first half of next year is going to be a difficult period both in the u.s. and europe. that is almost undeniable.

it's impossible for the fed to stop that, especially as they continue to raise rates. i think if you look at all the data, look at the yield curve immersion, that's what it tells you. i think we have to respect that as investors. that's why bonds are back and it's a good idea to own bonds. one year from now, your yields will be even lower than they are today. in the second half of 2023 will be the markets then looking at 2024, looking at a recovery from whatever recession it is that we are going to have. those are great times to be an investor. i think this story of the two halves is really the core part of the outlook for 2023. i don't think investors are taking seriously enough the slowdown we could have and looking through it toward the things that will create profit for them in 2023 and 2024. lisa: how can that be if everyone is saying the same thing? how are people unprepared for exactly that scenario? david: if you take a look at

what they actually own, that's the big thing. they are waiting with a lot of cash right now. number two, they haven't taken an enormous position in intermediate bonds. they have not necessarily reposition themselves for the best growth shares for next year. i think we will see a time you are going to have a snapback in growth. lastly, with the dollar, you look at the euro-dollar trade at 105. this is the third large dollar rally in the last five years. it's not a synchronous thing with the rest of the economy. how much should i having china? very little. non-us markets? an extremely small amount. for the year that we anticipate, by the way, the fact that you mentioned two other firms and their views on interest rates, one being 2.5% and the other being 4% is indicative that there is not consensus.

i don't think there is consensus about that. lisa: we started on oil and i want to build on that a little bit. i have been confused by price action. you see the potential deceleration with global growth, possibly the weakest going back decades next year. on the flipside, china is reopening. on the flipside, people expect a brighter time in the second half of next year. do you take a signal from oil or is that just noise when liquidity is some of the lowest going back to 2015? david: i think oil is indicative of the fact that demand is not going to be there. think about u.s. inventories right now. they have never been higher for goods in both wholesale channels in retail channels. the u.s. borrowed those goods, imported them. when you had to order two dishwashers to get one. now it's happening is imports into the united states are going be crashing and that is ultimately the reason why we are discounting china reopening. china's domestic and regional

market will do extremely well, but exports from china to us and to the west are going to be really diminished this year as a result of the current economic situation. jonathon: what would happen if this recession in america that everyone is forecasting was delayed? how big is the risk that people own their own equities going into the new year? david: that's possible. what we have to look at is whether or not the fed is going to follow through. there are two indications i think it will. one is they said they will raise rates 50 basis points more. lisa has already highlighted that inflation are showing signals. leading indicators are falling. the fed is focusing on lagging indicators, like housing. looking at that data, we know we will have a reduction in employment -- construction employment. so, what does that mean? why would there be less employment in the u.s.?

all the houses started last year will be built. we could lose 2 million jobs next year. what i'm looking at is a situation where only when the fed actually sees unemployment will they begin to pivot and reduce rates. i that time, it will be too late to actually say we will have some type of soft laming. we will already be in a declining implement situation for potentially the next six months to 12 months. to your point, if that's exactly what happens, investors have to be defensively positioned now in equities and offensively positioned in more aggressive things next year. jonathon: if everyone is forecasting the same thing, we are all waiting for this recession to hit, then there will be this great recovery in the second half. why do this now?

david: if people bought now, that will be fine. i would rather people have a fully invested portfolio of stocks and bonds today than taft when he in cash. is no way they can do the right market timing. the critical point and where there is not consensus is what you want to be owning on the others. there's a lot of areas that have beaten down. non-us equities, small caps, high-quality technology shares, lots of places in the market. i will tell you one area i think investors are also overlooking. what if we don't have a terrible credit cycle, but what lisa talked about, a lot of liquidity? there are a lot of bonds trading on the periphery right now with 15% handles because of liquidity, not credit risks. i think the fed will cause an unusual circumstance. i think people have to really respect the market and see what's going to happen before they then rotate from one type of equity investment to another. lisa: we spoke with bank of

america yesterday. they don't think tech will remain a leader in the upcoming cycle, that people are perhaps conditioned by past performance. you disagree and why is that still an area that you should own? david: i could not disagree more with that. but let's take cybersecurity as an example. let's take a look at big banks, who have spent three and a percent more on cybersecurity over the course of the last five years. health care, and unstoppable trend. the cat biotechnology and drug development. same thing. look at energy technology. right now, if europeans just bought heat pumps, they could literally take their dependence on gas down by 36 -- 35%. tech is going to provide us with an enormous amount of growth. it is, at the end of the day, a replacement for capital spending. that's what it is, instead of

buying new equipment or software. instead of boiled in -- instead of building new factories and hiring people, we will fill them with robots. to me, that's unstoppable. we want to get our clients invested in that at much lower prices, which we can right now by identifying which companies are well-positioned and management which is been through one of the most difficult periods in history. now, they are going to go out and demonstrate leadership. to me, we will have a tech is back moment in the spring. jonathon: is that meta? david: no, i'm not talking about certain companies. every couple of years, there's a rotation of leadership. i'm talking about the group of leaders behind them working on cloud-related activity. we have seen some the opportunities for truly transformational tech gains. those companies are readily apparent to us. jonathon: david bailin, great to

catch up with you, sir. i think people would disagree with what he was talking about, but maybe not that much. yesterday, talking about just taking these out. i keep going back to this. under running equities being a risk, things like wanting to hold on to energy in 2023 when everyone is going around saying recession is just around the corner. lisa: you are asking what happens if it doesn't come as quickly as people think. that's potentially the scenario. jonathon: that's a key question we will ask. ellen wald will join us. i think it's a good time to talk about president xi and re-add, up next. lisa m: keeping up-to-date with news from around the world.

with first word, i am lisa mateo. the eu has unveiled new sanctions on russia. drones, chemicals, and technology for military purposes, the measures were made public hours after vladimir putin warned the threat of nuclear war is rising. bloomberg has learned that the netherlands is planning new controls on exports of chip-making equipment to china that could align with dutch trade rules with u.s. efforts to restrict beijing access to high-end technology. washington has been pushing its allies to join efforts to cut off china. the biden administration taking sides against google in what is seen as a consequential case involving social media. in a supreme court filing, the justice department argued that social media websites should be held liable for promoting harmful speech and, in some cases, it's a family wanting to sue google over a terrorist attack. trying to build a cabinet and

restoring confidence in the economy. dena took over this today after president pedro tried to suspend congress and called for a new constitution. the moves were described as an attempted coup. congress voted to impeach him and he is now being detained. 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 lisa mateo. this is bloomberg. ♪ ♪

from one company committed to building a world that works, to three that will focus on a future that does too. this is ge healthcare, creating a world where healthcare has no limits. this is ge vernova, helping generate and move the energy that our world needs. this is ge aerospace, advancing flight for future generations. this is the next generation of ge.

>> saudi arabia understands that it cannot put its chips on one side or the other. i think although they may meet with xi jinping, the reality is

saudi arabia depends a great deal on weapon systems and support from the united states. that's not going away. jonathon: fascinating how this meeting has come together this week. that is the former u.s. defense secretary. here's a snapshot sneak peak get some of the price action for you on this thursday morning coming into jobless claims in about one hour and 44 minutes. equity futures are positive by 0.2% on the s&p. five-day losing streak, trying to avoid making it six. yields up the couple basis points, 3.4420. the euro-dollar giving me nothing. 1.05. next week, the fed and the ecb. on the 14th -- lisa: i am watching the longer-term bet that we are going to face real disinflation. to me, i find it interesting

amid a sea of muck. jonathon: are you jumping on the disinflation bandwagon? lisa: i'm not jumping on it yet. jonathon: you're having a look at it, thinking about buying a ticket? lisa: [laughter] yes. with how quickly things are softening, like with housing, even the markets show softening around the edges, and i kind of understand where people are coming from. i'm understanding it more. jonathon: can we expect to hear that from chairman powell next week in the news conference? lisa: i hope not. the market does not read nuance. how do we explain this? we don't. jonathon: on the one hand this, on the other hand this. this is blunt. a lead paragraph. "two months after snubbing u.s. president bidens plea for oil, saudi arabia is rolling out the red carpet for xi jinping."

ellen wald joins us now. how significant are these meetings this week? >> i think they are much more significant for saudi arabia than china. they have long had ties. these go all the way back to 1989, when the ceo for remco went to china to try to see what kind of interest there might be for saudi oil there. he did not see all that much, but he has had his eye on china for years. as soon as he saw economic development there, he basically pounced and was able to get some good long-term deals for saudi crude oil there. i think this is partially a way of her mining china that we are you're really good, stable crude suppliers. we have a lot of joint ventures and petrochemicals in china.

yeah, there's a lot of cheap russian oil on the market, but don't forget about us. at the same time, saudi arabia is definitely trying to see if it can capitalize on this relationship with china and build even more economic ties, more business ties that go beyond oil, which is something saudi arabia really wants to do. whether or not this can extend into the political and diplomatic sphere is really, i think, the big question for these meetings. jonathon: what do you think the message for america is? ellen: i think the message is that china is looking to put itself as a big, important player out there in the political and diplomatic arena. the united states is no longer the biggest or only force in the middle east. i think militarily, china is not looking to supplant the u.s. in any way. at least, china does not have any interest in defending the middle east as the u.s. has put

itself out therefor. i don't think there is really a concern when it comes to that. but there is definitely awareness that the united states is no longer saudi arabia's most important economic relationship. now, they have got a really important economic relationship with china and that is the message here. lisa: is there also i message about china reopening and trying to secure enough crude and fossil fuels that it needs to support its economy? ellen: that's a really important point. i think the fact that this meeting was planned before china had decided to relax its zero covid regulations gives you a sense that perhaps they knew this was coming or perhaps even the saudi's knew that this was coming. the fact that opec hasn't made any major moves says that they definitely see that even with a china reopening, the market for oil is definitely potentially still soft.

i do see this as heralding that movement. lisa: going to pick up on this, that even with china reopening, the demand side of the equation is still softening for crude. can you explain how the current market pricing of oil makes sense to you, given that we are seeing a potential opening in china? is one of our recent guests said, it's much factor -- much faster than expected. ellen: what a lot of people are looking at now in the financial market is how much crude is out there. there is still oil being released from the spr. i think is that winds down, if it does indeed wind down, we will see oil prices pick up again. but this time of year is not a big time of year for oil demand. there is also there -- there is also that to take into account. there's economic issues in europe. we see in general that things are not looking all that strong but i do think that going out farther, we will probably see a pickup in demand, maybe not as

your previous guests said. if we are going to be in a recession for the first half of 2023, we may not see it until after that. but i think opec is playing it safe here. they make no changes, they are waiting to see what happens in the market. i think their decision to cut earlier this year was probably the right one economically and financially, even though the united states was very much displeased. jonathon: the right decision from opec-plus. after all the pushback we heard from a couple of months ago, was it the right decision? lisa: let's see what happens. jonathon: low 70's say maybe it was. lisa: now, let's see the flip side, when they start refilling the spr. are they going to go the opposite direction and people start screaming you are artificially increasing prices? when does the u.s. become the swing provider here? jonathon: but squeeze that in.

wind is the u.s. market come back and start buying again? ellen: how soon can they start buying? can you refill the spr while you are still draining it? that's a great question. i don't think that is happening. i think they will wait until we hit the $70 mark in wti. but then there will also be oil for them to buy. is there u.s. oil produced available for them to buy? that's a good question. are companies going to want to sell to refill the spr when they could be selling for potentially a little more overseas? that's the question. we could potentially even see the u.s. buying some foreign oil for the spr. member, they need to buy heavy oil. they cannot just refill it with light oil from the permian. jonathon: can you talk to me quickly about the politics of

buying foreign crude to refill the spr? how will that play out? ellen: it won't look good. but the truth is, it has to happen because you cannot have the spr full of light crude oil. american refiners, if they have to use it for some kind of national emergency, or say there is a hurricane, you need various different types of crude. but it will not look good. jonathon: ellen wald of the atlantic council. a fantastic conversation. whenever you talk about crude, the palooka conversation is not far away. lisa: it affects what everyone can spend. it also affects industry, especially for an oil-producing nation like the united states, which you have people saying that you want to support u.s. businesses. but then you also the question of reducing fossil fuels. did you sisi -- did you see state street moved away from certain types of filters? jonathon: they're under some

pressure, let's be clear. lisa: they are and they are getting pushback from states thinking this is a political endeavor, and they are penalizing certain funds for this type of behavior. then you have others like the norwegian wealth fund that doubled down and cut ties with certain companies for your not being truly zero admissions enough. jonathon: did you see the latest in the u.k.? they approved the first opening of a coal mine in more than 30 years. lisa: not exactly saving the world. jonathon: that's an about turn, isn't it? lisa: it's about surviving a winter that hasn't been cold yet. jonathon: you say yet, but i tell you what, my family sends me messages every morning. it is freezing in the u.k. at the moment. lisa: can you fork over a little bit more in the heating bill? come on, son. jonathon: you think that's what

i'm like with my family? lisa: no, i know you spoil them. ♪

>> we are switching from inflation fears to recession fears. >> we are in a tough spot right now, but i think more deceleration is to come next year, unfortunately. >> we are going to look at a fairly substantial amount of downgrades. >> the recession is not a question of if, it is a question of when. >> we have these economies growing essentially zero next year. if u.s. fun rates go to 6% or 7%, that can become negative pretty quickly here.