>> the fed doesn't want to grasp the nettle and tighten financial conditions. >> we will do another 25 in march. >> we think we will see a fed next year that will continue to tighten. >> the risk is to under tighten. >> stagflation problems we have seen will not go any -- go away anytime soon. . >> this is bloomberg surveillance. jonathan: why is your bracket so good?

how is your bracket that good? tom: we do it for march madness as well stop kaylee tells me she only goes by netherlands and the others who have orange in their jerseys. jonathan: that is absolutely ridiculous. we are told it's all about tom: inflation. we will also be there wednesday. it's important to see if jay powell can keep the ball in control and not put it over the crossbar. i think he will be very contained and very careful and i'm looking far more at the inflation data. jonathan: what about morgan

stanley? they know how to make a headline. they say the final chapter of this their market is all about estimates which he says are far too high. tom: they were really busy this weekend. he has to be the number one strategist. they have grace and dignity and they have humility and they know that this year. jonathan: do you believe we get a tip and then a rip next year? will we retest the lows of last year? tom: everybody wrote important notes this week. i agree with you on the consensus.

mikedarda said chairman powell ought to play top golf stuff there were three branches in the washington area most of it's a fancy driving range and they have to get on the same page. jonathan: do you want to try that? have you ever played all? tom: they used to ask me to leave the field. jonathan: up zero point 20% on the s&p -- up 0.20% on the s&p. last week on crude, we went down 11% on crude. even with the china reopening

story. tom: edward morris at citigroup says it's a tectonic shift in the next year. he nailed the lower price outcome and he looks for it to bounce around but he talks about sustained commodity weight due to gdp. he is going bullish on gold which we haven't heard much of. jonathan: citigroup cut their rent forecast by 8% so they are coming in again even for next year step tom: how many people look for $69? jonathan: morocco-france is competing with chairman powell. tom: i didn't know that. jonathan: do you want morocco-france? tom: i will have two screens.

jonathan: maybe we should swap. lori calasini joins us now. they say the final chapter to the bear market is all about estimates which we think are far too high s are y. >> i don't exactly agree with him. i think it's more complicated step we are at 190 nine for next year. i think the need to pull those forecast jim will create additional volatility testing of the low. i'm not so sure it has to make a new low. the buy side one certainty around multiple so they can come in and buying we can have a sustainable rally. the by ciders have known since june that next year's numbers are too high. most of the cuts are invite

april and if you look on a single stock basis, you watch for it to turn positive again you watch for the shift from negative territory back to positive and stocks typically bottom with the s&p 500 price, 3-5 months for single stocks going down stop that means get all the cuts out of the way like march. then october should be the low but that doesn't mean we won't turn around but i don't necessarily we have to break to a new low because of the earnings issue step jonathan: what do you think people do between now and march? >> i think you have to back up and say what have people already done and where are they? most of the defensive sectors are relative to the s&p 500 and people have been loading into staples all year long but i don't think people have enough recovery trade for when we put

that final bottom in and start to recover so we tell people to look at financials and tech and things like small caps. it typically outperform when you're coming out of a recession when you make the final bottom and small caps are already starting to outperform. they put in their relative profits. i wouldn't necessarily double your defensive shares right now but i would start thinking ahead to the recovery trade, not just the final turn. 0 it was explained to me years ago that small and mid cap turn every 1-8 years and you are really looking for the pup to be this year. if we have a great zombie rollout which is beginning to percolate because money cost something, how to small caps react to the fact we now have a risk free domain and zombie companies that have to do something? >> i think you want to be in

line with the higher polity small caps, the more liquid names. where the typical small and mid cap portfolio manager likes to invest. we think there is plenty of valuation appeal in the upper echelon of small-cap now which is one of the things that makes it so interesting. we haven't had that for a long time stop tom: are small caps correlated to the weaker dollar? do you cross correlate those two categories? >> i think the dollar is complicated for small caps. they have been benefiting from an earnings perspective by dollar strength stop if you match of the relative cycle, you just want to pull your hair out. tom: be careful. >> recently, they've been in a fitting from an earnings perspective because they don't have those pressures.

right now, european equity investors are perplexed by the expensive valuations we have in s&p 500 companies and you don't have that same valuation pressure in small-cap right now. when you cross borders, you have the better valuation story and that will be feeling regardless of some of the current prices. tom: there is say maybe 3000 small caps so what are the other 2700 going to do? >> what do you mean by roll up? tom: mergers, acquisitions, microsoft taking out a bit of the london stock exchange? that kind of stuff. >> i think you will get that in certain sectors where you have more valuation appeal. industrials, even though is not

cheapest, is an area where we see the roll up stories and that can further that. ultimately, the roll ups and m&a cycles ways on the other cited this recovery. growth is scarce and sluggish gdp environment. it might bring you back to some of the higher quality more liquid type things. tom: jonathan: you talked about leadership in the recovery. is it too early to draw conclusions where that leadership comes from? when is the right time to have that conversation? >> when these bottoms happen and people are convinced, they sort of take off what you don't have time but you have to do your homework early. last week, we had a lot of discussions out the new leadership and typically in a sluggish economic growth

backdrop, growth stocks outperform but is it the old or new growth and that's why a sector like industrials are starting to get a bit overvalued. we are neutral there and don't like the valuations. we've been talking about how that might be the best long-term growth story and one of the reasons why you are seeing these valuations lift. people are looking at the old economy and saying what's old my potentially the new again and that might be where you get the better growth profile going forward. jonathan: don't be a stranger, come back soon. we just had a 10 minute conversation on the market. tom: i think it's a good conversation and it's important. in a five-page note, they said you can do all the fed navelgazing and they say it's about markets and they will surprise and to better than the

economy in general. jonathan: did you read the piece on the federal reserve over the weekend? fantastic. the average hold at a peak rate is 11 months over the last five cycles, 11 months and this market is pricing that in. that's after we hit the terminal rate, pretty interesting. tom: we will try to avoid the parlor game. jonathan: we won't avoid this line from china. the medical advisor in the countries of the risk from omicron has the same fatality rate as the louvre most that china is something, real change. from new york, this is bloomberg. ♪

lisa: keeping you up-to-date with the first word. a man in charge of the lockerbie bombing that killed 270 bombing is in u.s. custody. he's been i'd and to fight is a former libyan intelligence officer. he was because the suspect there conspirator in the attack saying he helped tilde bomb that destroyed pan am flight 103 over scotland. germany's chancellor will host a virtual meeting with the group of seven leaders to discuss ukraine's immediate needs following russian missile attacks on the energy infrastructure. president biden spoke to the ukraine president. the white house as the president affirmed the u.s. commitment to keep providing military and economic aid. in the u.k., the government is planning for military staff and civil service to cover for striking rail, health and postal workers. strikes are planned for almost every date for the rest of the month. workers are demanding pay hikes they keep up with inflation.

if the biggest wave of industrial strife in the u.k. since the 1980's. the federal reserve looked at this week to downshift in interest rate hikes after four straight 75 basis point moves to curb inflation. the central bank is likely to increase its benchmark rate by half a percentage point and traders are pricing in fed rate cuts in the second half of 2023. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪

>> i believe inflation will be lower. i am very hopeful that the labor market will remain quite healthy so that people can feel good about their finances and their personal economic situation. jonathan: the u.s. on 60 minutes over the weekend. live from new york city, we will talk about that later. tom: it was right after the

england game. jonathan: you should have heard the language used in my household over the weekend. futures right now are up 0.30% on the nasdaq. -- on the s&p 500. futures are trying to down specked by a quarter of 1% on the snp. there was a rally in the bond market. i believe that's about 80 basis points off the peak for the year. a lot of people lined up to say buy bonds into next year. tom: that's the basic theme and you have a her inversion at negative 80 basis points with the curve that shifting up and down versus moving around. these are people with free cash flow out of dublin and it's real scientists with immunology.

we will have more on the amgen buyout. we are affected by this twitter thing. twitter is a shell of a company compared to this. this is real medicine and real finance and away they go at horizon therapeutics which is what china needs except they don't have horizon therapeutics or efficacious medicine. china has hope and prayer. usually on economics, we've got to go to the society of all. how long was the weekend in beijing and shanghai and hong kong? >> events are moving at a rapid pace across china even through november, there was no hint of a pivot when it came to covid zero. december has been a different story. the messaging out of beijing is

that omicron is no worse than the seasonal flu and people who have symptoms should stay-at-home a don't trouble the hospital pop -- hospital hotlines. the messaging is being rolled out across the country in a fairly sharp pivot and trickling into hong kong as well most of goldman sachs at the changes are going faster than expected. it's been a pretty sharp pivot but i don't think anybody knows where or how this will play out over the next 3-6 months. tom: an amateur like me had the great advantage of people worldwide, we learned the adults watch the hospitals. tell about the hospitals -- tell us about the hospitals in china. am i to believe that china is

under hospitaled for this virus? >> it has world-class medical facilities but a lot of the buildup was making the point that it doesn't have enough icu coverage like japan. the weakness in the hospitals will be a concern when you have a net outbreak. there was a similar story in hong kong when they were trying to manage covid zero. the low vaccination rate among the elderly and whether hospital workers can do with an outbreak on a big scale. jonathan: what do you think they believe is the lesson from the west from the previous two

years? >> it's tough to know because a lot of experts say they will go through the same exit wave and this is in evitable. some of the official messaging is saying there vaccination rates are reasonably high. they say the vaccination rates are higher than hong kong. nobody is quite sure if it's a public health crisis or they can mitigate it. regardless, people are wondering on the others what happens. it's clear that china is reopening faster than expected. if mainland china gets through all of this, economists are saying maybe a faster growing

chinese economy next year than expected. jonathan: we really underestimated the potential for inflation to build quick lee. what's different about china as it reopens. what is the -- ways that potential lowered? >> there is an argument out there that china could put up floor on inflation year. if it reopens, there will be two stories in china. they could have the lowest import of china since 1990. chinese businesspeople and students all traveling again. they are looking for real estate and expected to spill over to

global trading. people say there's a near term story which will be bumpy but if mainland china fully reopens, the china -- the home chinese economy would at inflation pressures to the rest of the world. tom: what should we look for this week? it's a moving story. where we into the weekend on the holidays? >> every day, they are taking down the defense they had against covid either through messaging or safety tracking app so keep an eye and what further barriers they will continue to take down. that would indicate the speed at which they are dismantling the covid zero apparatus. we are barreling toward china this year and that will be a pivotal transfer, how willing the chinese authorities are willing to live with covid. jonathan: thank you, what a

change that has happened so quickly. i go back to the comments from the top chinese medical of bowser -- advisor, downplaying the effective covid and comparing it to the flu. tom: is there only one authority in china? i take the point it's a massive shift but a shift to what. if they don't have the medicine, they don't have a program of vaccination and maybe they will develop one within its totality -- totalitarian regime. jonathan: making a prediction on china is really difficult step if you get a clean reopening, maybe you can make a call but right now it's whether we get a repeat of what happened in the west which was a stop/start. tom: they don't care about inflation. jonathan: where are you taking this? tom: at the university of

cambridge, it's 20 above zero fahrenheit. jonathan: what would you like me to say? tom: this came from a sophisticate. why didn't england go down the field more? jonathan: i think they did and the initial tactics were spot on. they turned the french left side into a weakness. ultimately, there were substitutions that i couldn't make sense of. are we going to keep doing this? give the u.k. a break. ♪

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jonathan: coming off the biggest lost week on the s&p 500 since september. that was really cruel for, futures on the s&p look like this. positive zero point 30 of 1%. we are doing ok as we kick off the trading week. the 10 year yield was just a little bit higher. the same on the two-year and the curve shifted up a little that and i was right back down again.

tom: we are back to 24.21 as we go into the fed meeting. jonathan: if we had the cathartic spike -- tom: everybody's got an opinion on this but there is some tension. jonathan: the 10 year, 352 and the two-year 252. we are down 0.75 sent -- 3.75% on crude. we just had the biggest lost since april. tom: a busy week ahead for markets. later in the week, retail seal -- sales and then pmi and cpi and seven that just central bank

decisions coming up. all of that clearing the path for investors to look ahead toward the new year. >> if you look at where we are in the u.s. economy in the eurozone economy next year, there is a chance of recession but probably a mild one in both areas. jonathan: jeff yu looking ahead to next year and we have the potential for a recession and it's not in the data yet. it's in the market but you don't see it in the labor market. tom: there is a part of america right now that is in recession. many people will argue with me on that. there is a lot of pain out there while there is a buoyant employed america. i can't tell if they are booming. jonathan: i think even last year, gdp data was better and consumer sentiment was pretty

soft given everything we have seen with gas prices and inflation. we've made this point made -- many times, there is a massive difference about what people feel about the recovery and what the data tells you. tom: that's with the market will do but that can be separate to the data. i don't want to get into the silliness of the pivots, where are we right now? what is your real gdp call for this ending q4? >> i think there is enough ongoing resilience in the consumer that will always this that we will see a second area positive activity. the bigger question is can we maintain that going into next year? i don't see that resilience thing able to be maintained as we continue to see some of these variables increasingly weigh on

the consumers like elevated prices and negative income growth and a housing sector that's under pressure. you can check the recessionary box for nearly every sector of the economy except for the labor market. even there, we are starting to see cracks and signs of emerging weakness. why we maintain the positive trajectory through december, i think 2023 is opening the door for recession. tom: can you split your analysis between domestic final sales in real gdp? can you pair off trait dynamics? are they part of getting through a recession? >> absolutely, when we parse through the trade and inventory data, that's what complicates the earlier weakness we saw and

why it's likely we don't see a technical recession in hindsight for the first six months of next year. when you strip out the volatility from trade and inventory, we see we had positive momentum from december into the first quarter of the year. this is very much complicating the picture and it will continue to complicated going forward. -- complicate it going forward. one of the largest contributed to the increase was trade, contribute nearly 3% but a lot of that was reflected of the weakness on the import side and that reflects a declining demand on the consumer. it highlights the fact that consumers are on increasingly fragile footing as we turn the calendar page. jonathan: some people listening to this or listening to another recession call for 2023 and wondering why the federal reserve's hiking interest rates

50 on wednesday and will do more after that. how do you reconcile those two things? >> the fed is trying to slow the economies of the fact that we are seeing increasing calls for recession in 2023 means the fed's early policy initiatives are already having the intended effect of tamping down investment and consumption and resulting in a significant slowdown in the economy. the reason the fed is so focused on continuing to raise rates but not 75 basis points but 50 basis points and more work to come down the road is because inflation is still elevated. with the labor market still arguably on modest footing, the fed is hyper focused on bringing down inflation, reinstating price stability which the chairman has said is the bedrock of the economy. jonathan: how much more damage will another 100 basis points higher do? >> depending on the behavior of

inflation, depending on what we see in terms of international factors, that will determine the depth and duration of the downturn. from the fed's perspective, it's not about whether we see activity but whether we can get in funny -- inflation on a downward trajectory back toward the committee's desire and target range. tom: what's your projection on getting back to 2% when the u.k. gets back to winning in futbol? >> the fed trajectory is optimistic that the that we will see it to handle by the end of next year. i think the reality of the data suggest that committee members have been calling for this meaningful improvement in inflation for the better part of the last two years and we simply have not seen that come to fruition. the market and the fed continues to under appreciate the

complicated nature of the inflation equation and that's why along with 50 basis points this week, we expect the fed to meaningfully revise their expectations higher for policy and inflation going forward all . tom: david malpass was great on this years ago, we will get a legitimate disinflation or deflation but services will not get there. what do you see as a sustained services inflation above 3%? >> i think that's reasonable but we will see this bifurcation between goods and services and we are seeing it in the data outside of inflation. manufacturing is turning back into contraction while we look at the ism services index and that is still arguably on solid footing. this highlights the difficult nature the fed will face in trying to tackle broader inflation pressures, particularly as we see this

wage/price spiral accelerate. tom: we survived this before. if we only come down with services elevated to four or 5%, life goes on. people adapt, right? >> absolutely and we will come out of this but the trajectory of how we come out of this depends on the fed's resolve to reinstate price stability. if they start to get cold feet and pulled back prematurely, we could see inflation become entrenched in the economy, meaning we don't see the improvement back to the feds 2% argot. if they stay the course, it will be more painful in the near term but we could see the economy emerge faster and with more gusto as we begin to get back to a potential level after the 2% target is reinstated. jonathan: thank you so much. we are having conversations about maybe shifting the

inflation target from 2% out to three. was this adam posen who started this? tom: dr. pozen has been such a big supporter. you remember jackson hole. the heritage of this is the courage of olivia blanchard. in 2009, they said let's frame out 4% inflation and people went mental over this. adam is clear to say he is on a 3% path but it's different than what is colleague says. my answer is 3% or 2.7%, how far is that from a john 2%?

we are splitting hairs here. jonathan: you start questioning the inflation target at a time when inflation is too high and people question your ability to predict 3%. should they just push it out another 25 basis? jonathan: what did sterling do? is this punishment for 10 years of trolling the red sox? tom: don't go there. i'm not moving to san diego. jonathan: the big worry and they did a great job down the sideline. that was meant to be the strength of france down that left side. they turned that site into a weakness. they were terrorizing that defense. why was he taken out? tom: i was there with the

beverage of my choice. they kicked the ball from farther out. jonathan: is that your analysis? tom: kick the ball. jonathan: how do you feel about harry coming back to the spurs? can you miss a penalty with the stakes that high? it's a lot of pressure. who would you have picked to take that penalty? tom: you told me you would have picked anybody else. all i know is that argentina wears a blue jersey. jonathan: that's why you wiped the floor with me in your bracket. tom: is the 18th the finals? jonathan: this sunday. we will watch it together. we will talk about that. futures are up 0.30%, this is

bloomberg ♪. lisa: keeping you up-to-date with news from around the world, in china, covid is rapidly spreading through households and offices as the rules were eased. that's led to turmoil improve -- and poorly prepared hospitals as they are struggling to find enough staff and others are suspending non-covid treatments. president biden and treasury secretary janet yellen have reaffirmed u.s. support for ukraine. janet yellen was asked about how long support can continue and she said as long as it takes. the president told your that the ukraine present that they are dedicated to holding russia responsible for the war. scientists in california made a breakthrough in nuclear fusion technology. for the first time, they produced more energy then consumed in a reaction which took place at the energy department lawrence livermore

laboratory near san francisco. it's considered an achievement but it's a long way to creating a viable technology. microsoft has agreed to buy a stake in the london stock exchange group which will get the software company a 4% equity holding which is currently valued at about $2 billion. as part of a long-term agreement to help lseg develop data and cloud infrastructure. the group spend about 2.8 billion dollars and cloud services over the next 10 years. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. 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,

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>> the danger is extraordinary. it can go on for years but this oil and gas thing, it looks like

the europeans will get through it this winter but that problem will go on for years. i have to prepare for getting it -- for it getting worse. jonathan: from new york city this morning, good morning, cpi data is tomorrow morning then onto a federal reserve decision and equities are elevated by just a quarter of 1% on the s&p 500. the nasdaq is up by 0.30% and treasuries are up with the curve shifting lower. just a bit of curve flattening. tom: i will call it a resilient dollar. it's sort of like churning. jonathan: it's a massive turnaround from september for the euro-dollar. tom: is everybody shut down for the year?

jonathan: after wednesday, i am out all stop i will take the rest of the year off. we will work it out. i did that last time in the bank of england hiked interest rates. after that, as far as the schedule is concerned, we are done . tom: we will break out the tang mimosas. we will talk about horizon therapeutics in a few minutes. in a story that matters to you, the big shock of oil coming in and a breath of fresh air with refined products. your research note is the it -- is definitive on dynamics. what is our integrity now of our

system if we get a cold like aberdeen, scotland is getting? >> it has to be cold as far as the distal market in the mid-atlantic. we consume seven of the percent of energy and there still -- we consume 70% of energy and there is still a dearth of product. the people who have boots on the ground and have to consume and buy and sell, they are perplexed by the move lower. they cannot find product and yet prices are still moving lower. it's a conundrum for some of my home heating oil people. tom: i look at the surge in english utility costs. do we get the same surge if we

get the same cold? are we managed in a way where distillates and core oil and gasoline and diesel will not see a spike like they see in europe? >> we won't see quite that spike but we will continue to see a spike in demand not only for home heating oil but for our electricity because and natural gas costs. probably the only market -- if you heat with propane, that is the only market here in the low 48 where there is surplus of propane. we are swimming in propane where as in other heating btus, there is potentially no product. tom: that's killing is when we make pizza. jonathan: you've got the kids eating outside.

you are absolutely ridiculous. can you talk about the demand/supply backdrop going into next year? europe managed to refill natural gas but only through nord stream. let me understand the dynamics into next year. can you run us through the warning for next year? >> i agree with jamie dimon that the long-term structural imbalance between supply and demand is not going away. we have dodged a bullet for the moment. we are not addressing the long-term issues of bringing more infrastructure into growing demand. it hasn't shifted to a point where it's moved away from supply which is the bullish driver. now it's a demand picture and wall street banks are saying the

same about economic contraction in the first half. it has rarely been as bearish. when you look at the employment numbers and the job numbers, they seem to be relatively instructive but people who were not working and there is a huge chasm between the household numbers and the establishment numbers. some say jobs are contracting and it melds with what we are seeing in the tech sector there. the habs are starting to see massive layoffs which they haven't seen since the great recession. there is a lot of landmines to navigate in the first half step

that is the overhang on the market right now. it's less about some light and more about dwindling demand. jonathan: is the worry about demand misplaced? >> china can fill the gap and there is demand but they were given a gift by the west. they were negotiating the pricing russia you cannot sell your oil for more than $60 per barrel. there are far better negotiating deals so demand -- as long as demand continues to grow, china will lower their mitigation protocols. they will continue to buy oil at a lower than market value. tom: how is the electric vehicle thing going?

from where you said, how is ev doing? >> they are the biggest drain on the environment that will make 120 years of mining for coal look like they were members of the sierra club. personally, i drive an electric hybrid. it's a 17 gallon tank and i just had to refill my car after not filling it for two months. i drove nearly 1400 miles and combined the hybrid tank and that's the way of the future. we have to work together. tom: thank you so much. jonathan: the international piece of that is important. tom: the certitude each way is baloney. jonathan: i caught up with the

ceo of mercedes on friday and they drop their offering -- their price in the offering in china. i spoke to ed ludlow about shanghai and reduced factory hours and i was trying to work out whether it's a production line upgrade or demand. he said probably more production line up rates than a week or demand picture but we will see. similar issues on the production side over there. tom: horizon therapeutics has -- is being taken out by amgen. it's a legit company and what's great about this for those on radio, the academics of this is heavyweight. these are people that went to all sorts of schools. then they got lots of graduate degrees and ramped it up in science. the best thing about this is tim

walberg was a patient. he was grievously ill in immunology years ago and that's how he got into it. it's a great story and i don't think there is enough said about this, these biotech companies that have academic chops and do the financials they've got -- they put it together and boom. jonathan: it's a $26 billion deal. were you d1 hockey at the time? tom: i was division five. there was a time when the brink - rink was sold out and i was on the ice and a fight breaks out. they made the national news the next night. jonathan: do you want to share

what year this was? tom: you pulled the zamboni. ♪ at booking.com, finding perfect isn't rocket science. kitchen? sorted.

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>> the fed doesn't want to grasp the nettle and tighten conditions. >> 50 in december, 50 in february, another 25 in march. >> we bet next year that we see a fed continuing to tighten. >> it sends such a strong message about needing to get inflation down. >> stagflation problems this

year will not go away anytime soon. >> this is "bloomberg surveillance." jonathan: this was supposed to be a world cup free zone the jubilation. but you are refusing to drop it. tom: i like hanging out like they do in qatar, no shoes. quiet souls. jonathan: i'm not into that, the sports presenter with the suit and sneakers. i have no time for that. from new york city this morning, good morning, good morning. we have got a big week coming up with cpi, federal reserve deciding on wednesday alongside the ecb. tom: what you want is clarity. we got that from lindsay, she was great on the parsing of goods inflation of some form, with services inflation, that is next year.

70% of the economy, what does service inflation do. jonathan: with service shelter, we will be talking a little bit about that. tom: then there is england but that's a different story. jonathan: we are not talking about that, we are talking about the dot plot. tom: the dot plot? jonathan: it comes down to the essence of the decision. tom: total garbage. i don't like -- i told mike mckee. jonathan: when this market trades on projections what will you say? tom: i'm going to say it's euclidean garbage. [french accent] garbage. also france, so it is garbage [french accent] it will be a great press conference. the vice chairman be with us. jonathan: i heard that. tom: i didn't know that. jonathan: i don't know if bill

knows it yet. but its price action, briefly as we keep telling you. a massive week, a defining week for the next couple of months with inflation on deck tomorrow. for those of you that you follow it, it's about the 2023. and how far it will come up. chairman powell has led us to believe it will bump higher. the whole curve, shifting lower. just a bit of flattening for you on the 10 year. the euro-dollar, not doing much. crude, doing a lot over the last seven days, down for a seventh consecutive session. we are just about holding onto 17 with the biggest weekly loss since april and we are doing this as china makes an effort to reopen. we can talk about this later, but the top medical advisor in china comparing omicron to the flu. that's a massive change from

what, a month ago? jonathan: two weeks ago. -- tom: two weeks ago. i would time it to the party congress, now they can take it anti-science. jonathan: you are calling it anti-science? tom: we are showing the acclaim of horizon therapeutics and amgen. are they anti-science? everything at horizon is science. jonathan: joining us from around the studio, the ceo of market fuel asset. we are not talking about england. he's troubled this morning, the consensus view is recession. the consensus view is a dip in the first half off fear of bad earnings and bad earnings materializing. year end we end up somewhere close to where we are right now. what did you make of that cute story? >> sounds easy.

i think that there might -- bear markets end. the thing to remember is that we are still in a bear market that i don't think it its business in october. you have got to concentrate on i think surviving a difficult start to next year. we can worry after that as to whether or not late 2023 looks like a great lace to be. for if you are still dealing with this mess. but i think it is a bear market value that has run its course. the corporate projections when he earnings come in in january are really going to be quite conservative. and you know i think the odds of some form of panic will be high. jonathan: when you look at the character of a low, what makes you think it's not the low. michael: i think the narrative

has changed and people still think of the s&p 500 as the place to be, wandering around with the same things that they owned a year ago. people haven't really given up on technology. they talk as if they have but allocations of -- have not really changed yet. the lows that i've seen or read about are more desperate than what we saw in october. october was a short-term panic that everyone was still grasping for the opportunity to get back in. tom: you have been a student of the income statement. going back to lord desai, he would say it's all about profit. you parse spx versus mdx going forward. is mdx going to be challenged by profit and the game will be over? michael: the challenge over mdx is mega tap -- mega cap text

printing money. being given the kind of valuation you only see in a grateful market. less certain in 2023, that is where the wow is. 80% is a fairly small market cap now, not somewhere i want to be but it doesn't pull the ndx down, it will be the big guys that pull it down. jonathan: where is it with margins? michael: it will be hard to maintain margins. amazon is sort of scared to be a margin story but topline revenue growth projection will be wobbly next year. jonathan: something you talk about is the potential for a lost decade and parts of this equity market and when you talk about the lack of capitulation you have seen when it comes to people who want to buy growth every time we have a growth dip, can you talk us through why you think it's a bull market that

goes for 10 years? michael: a lot of that is the host 17 market where -- post 17 market where a lot of this was expansion. on the terminal there is a function of ge that shows you pe and we used to joke around in the 1990's was that you could see was that all of their price progression was multiple expansion with steady earnings. tech was not as an -- not as egregious as that. genuine earnings with a big expansion of multiples. you did, i think, in many cases, they have overgrown to appoint where it is just extremely difficult to project forward on five years to see the sort of growth that you had in 2018, 2022. it's just kind of how markets work. the indexes have wonderful times

in the s&p since 2008. and then the index constitution sort of becomes where you don't want to be and it takes, it doesn't take five years to fix that. sometimes it's a decade or 15 years. jonathan: well, we had the chico that was passive investing. we thought we had the index. are you saying there is a real challenge now to passive investing on the index value for s&p? michael: absolutely, i don't think spx will be the place to be but maybe it will be another form of passive investing, global perhaps from 2002, over a decade that was all you had to do. i still think a form of passive investing will and five -- survive. tom: this ge function is outstanding, michael shaoul, using the terminal to take apl

equity so you can pretend you can find your inner michael shaoul, i would say. you have a paragraph on the buzz right now and it's into spring of next year and it's a collapse on commercial real estate. one of the great services, commercial real estate is down 13% nationwide and you are saying there is little -- real liquidity issue here. discuss that. michael: it's no one's fault, there is no public market for commercial real estate so price discovery doesn't really exist. what you have seen is transactional volume grinding to a halt. the deals that should be done were largely negotiated before interest rate projections changed and in all of the large funds that exist, nothing marks the market. the nav it a lot of the product is mythical. it's not like the buildings have

collapsed in value, in theory they are worth what they were worth but good luck getting someone to buy it for that. jonathan: here's my question when it comes to private markets is that a new layer of risk? is there a believer through from one to the other? -- bleed through from one to the other? michael: yes, people have both and they start to de-risk the public portfolio. i think the link is perhaps more obvious in credit markets than in the direct link in equity markets but i think that if there is a credit story to the fed tightening, it's likely to spill over from commercial capital ending. that was one of the areas of excess where the banks pulled back and the nonbank lenders went to party. jonathan: it's just hard to believe that the price to pay to blow up 10 years of central bank

easing on the s&p, i have found it difficult to get my head around. writing a chapter on this in the economic history books where we had 10 years of 18 money zero rates with massive valance sheets and the price we paid was 20% on the s&p, i struggle with that, i really do. tom: well it is a regime shift and i think everybody watching and listening knows this, we believe it's about money. i call it a dire straits economy. money for nothing and it's over. you see it with every micro thing. jonathan: where does knopfler rank for you? tom: huge. i met with him at the bloomberg cafe in nashville. total class act. jonathan: top five all time? tom: he's a style and a hell of a nice guy. jonathan: michael shaoul, also a hell of a nice guy. futures up. tom: argentina?

[laughter] jonathan: this is bloomberg. lisa: with first word, i'm lisa mateo. a man charged in the bombing of a 77 that killed 270 people is in u.s. custody, identified as a former libyan intelligence officer. the u.s. calls him a third conspirator in the attack saying he helped to build the bomb that destroyed pan am flight 103 over scotland. full off schultz will hold a meeting with the group of seven leaders to discuss immediate needs over russian missile attacks on the energy infrastructure. president biden spoke to volodymyr zelenskyy. the white house as the president affirmed the commitment to keep providing military and economic aid. in the u.k. the government is planning for military staff and civil service to cover workers. strikes are planned for almost every day for the rest of the month with pay hikes to keep up

with inflation, the biggest wave of industrial strife for the u.k. since the 1980's. it's the biggest amgen takeover ever, representing a 48% premium since the developer of autoimmune disease treatments disclose they were in talks with three potential buyers, sanofi and johnson and johnson having dropped out of the running. 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'm lisa mateo, this is bloomberg. ♪

>> they are [blank" people and i wanted people that work for me to take seriously the harm and misery that was being experienced by all too many americans. jonathan: not just a data point, it's the people behind them. that was yellen dropping the f bomb over the weekend. what did you make of janet yellen unleashed? tom: she's been unleashed

academically for 30 years. jonathan: but tom this is coming after we thought janet yellen was leaving the administration and that seemingly is not what happened. tom: she's young compared to the president. why she is in a claim to the modern era, it's the word slack. it's a massive conundrum for the american economy, a level of slack with americans not participating in the modern technology economy area jonathan: you see that rumor about moynahan? that reporting? tom: from france? jonathan: in the mix to be the next treasury secretary. that was in the rounds for the next couple of days, which is odd. tom: yes, but lawrence bank. jonathan: a few times. that rumor, that target, no one wants that. it's shifting around the street. tom: within the politics gets in, do we want someone from manhattan to be running the

ship? this is too important right now, surviving the weekend. it's the heat of the american cup thing at washington, you have to take phrases from the america's cup and what we will say now is that we press on and pulled back with anne-marie right now. after that, is washington riveted by the world cup? annmarie: some are. across america, if you grew up following it for a job. whether you enjoy it. i love it, it's unfortunate for me that it's only ever -- every four years with competitions to look forward to but people were more into it when america was winning. but now, who have they decided?. let's go to john denver in west virginia. joe manchin doesn't want soccer, we know that. is he the next to fall in the

kyrsten sinema independent sweepstakes? that would be a shock to make because he needs to get reelected. annmarie: there were tons of questions about this over the last year, negotiating with the white on bill back better, the smaller version of that for the inflation reduction act and so far for him and his team he has no plans to register as a republican or independent. tom talked about this today, we have the quote right here, could joe manchin consider a switch and scramble the math? we heard he has no interest in leading the democrats even though as you say he does face an important, critical, difficult reelection. jonathan: give us that update on mr. -- tom: give us that update on mr. mccarthy in california, the other update in the holiday season. annmarie: the biggest story on

the hill right now is spending in the next government and right now they have until the end of friday this week to do so. the democrats were supposed to come out with a funding bill today and the republicans said that if you do that, we will not sign up for that but we are hearing that over the weekend they made progress. 26, 20 $7 billion apart. it sounds like a lot when you talk about that much funding, but it's really not. what will likely happen is they will kick the can down the road and extend it, not so unlucky for the journalists and politicians on the hill, until december 23 and we will see whether or not they are able to get a full year of funding or if it gets kicked into the new year. annmarie: what a moment with the treasury secretary on 60 minutes, looking back to 2009 enter time in san francisco on the fed when she used to remind her staff that real people are

going through real issues. i'm hesitant to use the word rehabilitation but there was a belief that by the end of this year, janet yellen would no longer be treasury secretary and she would be on her way out but it feels like over the last couple of week there has been a rehabilitation of janet. can you walk us through what has been going on here? annmarie: she sat down for a lot of interviews and it wasn't just the name brand networks. she sat down with stephen colbert, coming more into american households. she also just had this really important moment for her where she signed, the first females treasury secretary -- female treasury secretary to sign the dollar bill and she said she has no plans on leaving. she is getting out there and talking to the press a lot so it seems that's true, even though there were a lot of rumors sparking that she could be saying goodbye to the post after the midterm elections where the

democrats didn't do as bad and actually did much better in the senate than many were expecting. if you go back to that report from foxbusiness on friday, the newest name potentially going to take on the post was brian moynihan and he has also refuted that saying that he has the best job in the world. jonathan: gina raimondo was also being brought up as a name for that. annmarie: that name was definitely thrown around. commerce secretary, a key voice on integrating in the private sector with the government, with the white house explaining a lot of what the administration is doing when it comes to chips. she has been at the forefront in bringing manufacturing back to the united states, touting the chips act and the money and subsidies it could mean for companies if they make the chips in the united states. she was also touted and many

would like to see her potentially take that next step but no one seems to be pushing janet yellen out. jonathan: do we have vacant -- tom: do we have a constructive housecleaning? jonathan: that phrase that we would use, the periodic cabinet reshuffle. i think it is a bit evasive. the fed is a bit evasive in their conversations over the last week. where is that reshuffle? are we looking for one? annmarie: definitely. there are rumors about brian deese, you ask him directly and he didn't want to answer. these are awkward moments for these individuals where they decide what to do next and there was an axios report that potentially ron klain would be another one to go, especially given where the president is. a time for him to need -- leave the president in good shape.

following gas prices, -- falling gas prices, no red wave. potentially it's his moment to leave. they say that you should leave your job at the peak status and this could be that moment for him. but with biden he really likes to keep his staff with him. it's very difficult for people to leave the biden family. jonathan: but these jobs are exhausting. tell tom never to miss a world cup viewing party at my house ever again. annmarie: ever again, so much fun and you really get the kind of insight of what kind of soccer dad john is going to be. tom: that's scheduled in. annmarie: press on, lads. tom: lads. tom:you mentioned a mission. jonathan: never mind the f bomb janet yellen. the number at my place on saturday. tom: is there going to be an error three shuffle? jonathan: 96.

tom: 25 years ago or whatever. isn't he a success? jonathan: based on recent history, what are we talking about? semifinal last time around. quarterfinal, getting really close to getting past france and he would think that would open up the path to get to the final this time around but in the european championships they lost to italy. on a penalty shootout. a lot of people would like to see south gate stay with the team but it remains to be seen. tom: we will have team coverage from london in january. jonathan: is that what you're trying to say? a snowy u.k. today. futures are up one quarter of 1% on the s&p. this is bloomberg. ♪ 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,

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jonathan: morgan stanley this morning, absolutely early in. focused on cpi, they called it yesterday's news, the final chapter of this bear market young the path of earnings estimates being too high in the opinion of the team at morgan stanley. price action, the equity market is up to tents of 1%, with one quarter of 1% on the nasdaq, slightly firmer in a massive week ahead. the bond market erasing the move from last week, the two-year was up seven points.

then 10. this morning in the bond market, shaping up as follows with yields down on the 10 year. 300-5360 on the 30 year, calling at five basis points. not just 33, a curve flattening in the mix, but on oil it's the longest losing streak on wti potentially since august of 2021 whereafter a seventh session they notched lower. tom: it's a grind down, lower and lower. all the adults tell me where we are going to end up but that 69 handle on west texas intermediate, we have to reframe the festivities for tomorrow. we all talk year-over-year, the adults are talking month over month and it is easy for you, the bloomberg survey is month over month. cpi is 0.3%.

and then also core inflation, the same statistic. jonathan: can we get it for that desegregation year-over-year? tom: to frame it out for me, we are going to do for decision. the inflation decision. jonathan: tomorrow morning, 8:30, the federal reserve decision on wednesday, we mentioned it a few times, the fed had nine bank announcements coming this week with a fed decision and investors weighing in on what to expect from the central bank. >> the fed doesn't want to, doesn't want to actually grasp the nettle and tightening financial conditions to the extent that would be necessary to really kind of guarantee a recession coming through. jonathan: this is the conversation right now, tk, will he lean against what we've seen the last couple of months? hollen horse reporting that they have seen a hawkish risk to the

wednesday meeting despite the slowdown to the pace where they lose the financial conditions on a committee that is likely now more concerned with persistent inflation driven by a rise in labor costs? that was just moments ago. tom: for you it's like english but for us we are like what? rest of the nettle? the property of a plant to inject toxins into the skin of any person. is powell going to grasp the nettle? jonathan: you don't have nettles? you must have nestles here. did you not call them nettles? spiky bushes? tom: i go into central park once a year. jonathan: grasp the nettle, you don't have that phrase here? tom: sort of but it's foreign. jonathan: well, i'm here to translate. tom: you are doing that every day, we are grasping that metal.

what you mention is the dot plot, are they going to move that dialogue? i'm not so sure. jonathan: every time we heard from chairman powell he indicated that it will go higher . how much higher? that's the conversation we will ultimately have. it's that hawkish surprise of everyone expecting it every way going into the meeting. tom: killing me, i don't know, 8, 9, 10 dots in the one., it's a longer maturity of 27 days but it doesn't care about the.. -- eo5. -- dot. deborah cunningham, your world of visibly traded short-term money is somehow linked to a potential blow up in commercial real estate. what should our viewers and listeners look for in the short

term paper world that begins to show tensions within commercial real estate next year? >> first of all, tell jonathan i know what stinging nettles are. i grew up in rural pennsylvania and i understand the term. i have grab the nettle, is painful but it doesn't last long. so, going back to the commercial paper market and how that might be linked to commercial real estate, from a standpoint of asset-backed commercial paper that is probably the clearest link. but you might see the backing asset on commercial paper being a number of different types of assets. they are usually short-term quick turnover types of assets. trade receivables where there are some commercial real estate

receivables, a small amount in asset-backed commercial paper where you start to see liquidity dry up and you start to see some sort of spread lightening, which we have not seen. that is probably the sector and in that sector, the banking sector with real estate commercial real estate portfolios, they also have exposure there and we have not seen that yet. jonathan: this is wonderful -- tom: this is wonderful. importantly, deborah, is it a shadow banking system or shadow asset backed system or is it countable and observable to the industry? deborah: it's very countable and observable. bank portfolios are transparent, working themselves into the loans on the balance sheets. when you look at the banking sector today compared to the 2008 banking sector, the balance

sheet looks a lot healthier. a lot more reserved, a lot fewer formers with better asset quality. on the asset side of the monthly transmission reports, it's the same as comparing that loan portfolio debt paper. so, it is transparent but you have to go out to look for it. tom: with securities looking out two years or beyond, how do you deal day to day with the massive curve inversion on 15 spreads under the convention of your world? is this curve inflation like 79, 71, 82, or is it different this time? deborah: you know, i think that coming from a zero-based makes it different. we have operated for you know most of the last or teen years

in a zero rate environment and to a large degree what was built up from an inflationary perspective, what has built up from a business cycle perspective is a bit different than anything we have had in the past, so i do think that there will be a recession and in either case i think that the important part that is distinctly different in the business cycle and why it may look different from a curve inversion on the market yield perspective is coming from the base of zero that makes it different. jonathan: coming into wednesday, when do you think there is a scope for surprise? deborah: perhaps he will see the fat voters, talking about it when they came on, you will continue to see that go higher. i think that the higher, sooner and for longer, it's missing the sooner right now. the fed is very much on a path that's higher for longer and i

think that you will see that terminal rate and the central rate go increase and i think that any timeframe for which it remains at the higher level will be a longer timeframe. jonathan: coming down to the data, we can talk about the timeframe now. others have been saying that same ballpark but when it comes the longer i want you to guess where the data comes in, help us understand how the fed will respond to that information. how high is the hurdle for the federal reserve to cut interest rates next year? how bad will the data need to be? deborah: you would really need to see inflation, inflation is the key. we have seen it go from 10, 9, 8, any measure you are looking at, to 8, 7, 6. 2% from the annualized perspective taken out of the system with 300 plus basis

points with increased rates in that timeframe and we are on a path towards that, so it should take less of those to get another 200 with another beyond that. getting down to 2% is difficult. i don't think that you get there quickly and i think the fed will have to look at the data and sacrifice to some degree the inflationary side of it. maybe they get to 3% or 4% but i don't think they want to sink the country into a more severe recession and they will more likely have a timeframe where they have to you know sort of way the differences between am i going to have inflation 1% lower or a recession that is maybe 2%, 3%, 4% worse? or is this an ok place to stop? it takes us well into 2024. jonathan: deborah cunningham,

fantastic as always. is the longer increase higher on the longer phrase? the federal reserve is basically saying we will have nothing to do with that and i mentioned this in the previous hour and i mention it again for those just tuning in. on the bloomberg over the weekend with an article, over the last five interest rate cycles, the average hike over 11 months, but going back to the 95 cycle, tom, they held for five months. 6% and they went back to 500 25 and you wonder if we get a reset , tom, and is it a reset of recent memory that goes back down again or is it just a kind of investment -- adjustment down. tom: to the strength of the article, no one has a clue. i, i think what i would say, john, look at consensus and to

be wary of it. consensus has been we come down with rapidity. i'm just like ok, maybe. jonathan: we don't have a crystal ball. we don't. my question isn't how you think the economic data will be is how the fed reacts to that. tom: they will react on the reality as 3.7% as no type of success. hugely. that's the heart of the discussion on wednesday as well. jonathan: i'm told we will be in the studio from hsbc in new york. ♪ lisa: keeping you up to date with news from around the world, i'm lisa mateo. in china, covid rapidly spreading after pandemic rules

were eased, leading to turmoil and poorly prepared hospitals. some have failed to find enough staff and others are suspending non-covid treatments. a sign that china and the u.s. are taking steps to ease tensions, beijing describing steps that included talks on taiwan as in-depth and constructive, meeting outside the chinese capital, a follow-up meeting to the last month in indonesia between president biden and g asian paying, it has led to a reduction of cooperation on several issues. scientists in california making a breakthrough on nuclear technology and for the first time they have used more energy than consumed. it took place at the lawrence livermore national laboratory near san francisco. while the results are considered an achievement it's a long way away from viable technology. a private equity firm toma bravo

, representing a 77% premium on their closing price on november 22 prior to our news report on their potential sale. they outbred -- outbid vista equity partners. microsoft is set to purchase a stake in the london stock exchange group, giving the software company a 4% equity holding currently valued at $2 billion. it's a part of a long-term agreement to help ls e.g. develop data analytics and crowd -- cloud infrastructure. spending 2.8 billion dollars on cloud services over the 10 years. global news 24 hours a day on air and on take, i'm lisa mateo. this is bloomberg. ♪

get refunds.com powered by innovation refunds can help your business get a payroll tax refund, even if you got ppp and it only takes eight minutes to qualify. i went on their website, uploaded everything, and i was blown away by what they could do. getrefunds.com has helped businesses get over a billion dollars and we can help your business too. qualify your business for a big refund in eight minutes. go to getrefunds.com to get started. powered by innovation refunds. >> we are in the disinflation camp. i think that the problem is that

because of the lack that's involved in seeing it through, the market, but i look at the shorter end of the market, we are rated against what the fed is going to do. jonathan: the brilliant kathy jones looking at the fed decision before we get there. coming up on tuesday, morgan stanley saying that yesterday's news is all about the earnings in the first half of 2023 and a lot of people on the equity side might agree. the equity story looks like this out on the s&p and on the nasdaq as well there we are looking at a pay cut of 1%, 11 points. jonathan: it's going to be interesting, the vix hasn't given me any love yet, still a point of tension, 24 point 26. time for global law -- global wall street to lean forward on one of its great calls of the last few years, the persistency and courage of hsbc to say strong -- to a strong and

resilient dollar. they amended that. sort of. it's a discussion we had with the head of research america efforts from paul eckel as well. there is ambivalence to your note. you are not calling for the dollar, right? >> we are calling for dollar correction that amounts to the same but is not a big trend reversal. in other words we don't undo anything we have delivered on dollar strength over the last 18 months or so. tom: talking to the folks in the break, john is doing fx traits here. [laughter] is it a tradable come off the bloom, it's up on there, get it? now that. is it a tradable come off the bloom or is this going to be a messy sludge where no one makes big figures? paul: the thought process was we thought this would be the chop before the flop.

nice phraseology but the wrong way around. we are still kind of waiting for the chop. the reverse that we have had, we changed our dollar view to dollar choppiness and weakness a month ago and in the month we have had one of our biggest monthly declines in the dollar. it's really for a bear like us, or a newfound bear like us, it's been a big old move. i wonder if the choppiness is about to come in, though, for the fomc where i'm into the beginnings of january and everybody thinks they know what the trend is for 2023 and they will be forced to revisit it. jonathan: is there a risk that we are overplaying the one side of the currency pair? the euro-dollar got down where we had that mild weather. when i think about sterling going down on september, that

was the other side of the trade, the sterling side, the euro side that really kicked off the move, cleaning up the policy story in the u.k., avoiding the terrible windsor. are we overplaying the u.s. side of the currency pair? paul: i would say the 2022 showed us the dominant thinking was the dollar. the sterling was the swing factor. there were a couple of factors where the euro was but this week we had an ecb meeting. who knew? i think there is recognition of a reality where you have got to get the dollar right and in a way before you get it right got to get the s&p right. risk appetite has been the core of everything happening in the fx market. jonathan: i'm not trading rating, i'm trading sentiment? paul: risk, all of it. jonathan: choppy dollar weakness, what is that select currency, how do you want to do that? paul: the dollar should be

the high beta currency on the way up and on the way down. it's less so for the canadian dollar, settling on that underperformed after. i would say that the aussie, perhaps, daytrading as you came on air. but you are a braver man, therefore the braver man in this gig. tom: that's harsh. [laughter] daragh: the aussie u.s. dollar has been, too. jonathan: does china reopening enforce the trade? daragh: i think it's been overplayed. transition towards reopening china, perhaps on the tourist angle and what it might mean in terms of flow, it's encouraging. the program stance is encouraging. hsbc has been looking for a rebound in china for two years.

as has the market. it's difficult. every time we think about it there -- tom: that's fair, looking at the hong kong position, hong kong and shanghai, what is the specific brand to play it open? daragh: career it's k rw. against the dollar. i think it's the best way. to your question earlier you have to go back to the dollar view. that's one option. i guess the round is another high beta option you could look like. there are a few out there. tom: mohammed from cairo, cambridge, emailing in. if we get a croatia morocco final, they have all of these obscure currencies. are you long on it?

jonathan: i don't know where to go on this. daragh: i would like to give you the big figure on that cross but i have no idea. we are looking into whether we have moroccan heritage to join in on the celebration. jonathan: a croatia morocco final is what you are looking at now? why not. tom: soccer guys, can i ask you a question with a flavor for the sunday game mark jonathan: that's never break down. -- sunday game? jonathan: that's never the breakdown. daragh: finding the problem is nestles. jonathan: how difficult it is to get tickets? tom: totally with you. jonathan: gas lighting me? i saw thousands of empty seats. they keep calling it a sellout.

daragh: they are all down the pub but that could be a rift. doesn't mean you have to turn out. i think he's watching from hong kong. jonathan: you keep bringing it up, you won't let it go. tom: as a foreigner, i'm fascinated by it. jonathan: let's get to that view, have we set the stage for a great world cup at that time? tom: it's superior to where it was. is it a big deal? it will be a big deal to a new america. there is an older america that i'm focused on for the red sox. it's like he throws only fastballs high in the strike zone.

that's a diminishing older america. you can really embrace it. tell me that telemundo is going to do it. daragh: i was here in 94 the original. it's too late for the u.s. but ireland beta. it was a loss to ireland in new york. i remember that final. jonathan: went over the bar with a miss on the penalty. daragh: but he remembers nothing about markets. [laughter] tom: oof. jonathan: is daragh one of your friends, then? thought he was one of mine. [laughter] tom: taddeo is on leave today and we thank her for her clemency the other day.

courageously giving to a lot of the american audience how people really care about it. i will say with great certitude we don't generally get that. jonathan: that national identity is wrapped up in their football team. particularly companies -- countries like brazil. so for that to go the wrong way? i don't know if daragh this coming back if i'm around the table. daragh: my just be your sports correspondent. jonathan: appreciate that. daragh: happy holidays. jonathan: hsbc tu. futures are up. you have got such a tom bias to your preferences. tom: they are in the finals. jonathan: playing on sunday? [laughter] this is bloomberg. ♪

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>> in 2023, a limbo era where it

is not clear what is going to happen. >> we expect volatility for next year. >> the inverted yield curve to the moving indicators, along list of things. >> going into next year, we think we will continue to see housing weak, goods weak. >> a chance of recession, perhaps a mild one. tom: good morning. bramo is off today. we need to talk to her about that three-day weekend. tomorrow inflation, wednesday, fed day. inflation is a mystery. jonathan: cpi coming up and not a mystery, another 50 basis point hike expected. your favorite piece of this is

how much higher does the 2023 go back to the projections in september? the last food times -- few times chairman powell has spoken, do they think bigger risk after the 50 basis point hike if we get is over tightening or under tightening? do they think the risk of doing too little outweighs doing too much and if that switches to a balanced view, i suspect it will be more dovish? tom: there is a history going back a solid 20 years they always err on an asymmetric basis. if you get back to that decision-making, it would be a shift in trying to figure out forward. back to inflation, you have to look at goods inflation and service inflation and the thing i see is $70 westech's is

intermediate. does that -- west texas intermediate. jonathan: that is a big change. a lot of people were looking for triple digit crude. they are done talking about the federal reserve and want to talk about the consequences of 400 basis points plus in a short amount of time. they want to have a conversation about the weakness and earnings that dominate this sector. tom: i will go there, but on thursday or friday, that negativity persists the call, the more optimism view. the gloom of their is tangible. jonathan: some would say to us, what recession?

look at the economic data. it is resilient. maybe you have to push the conversation further out and what does that mean for how equities will perform through 2023? tom: to me it is a mystery. let's get to the data. i thought darrell meyer was brilliant. jonathan: he made it to one game and said the atmosphere was fantastic and a lovely experience. that was the feedback and for all of the abuse the world cup has taken, he said it was a lovely experience. futures up. big losses and the s&p 500 last week. 10 year, 3.5433.

i think there was a wonderful point made, federal reserve, who is talking about the ecb coming on thursday? we have barely mentioned it. tom: let's go there. you have lagarde has to come out within an horrific war. to me the real history is the bank of england. the chart of the weekend was the electric utility chart, which was truly a moonshot of expense. jonathan: which has arrived. snow is on the ground. the gdp both for your and the united kingdom, the eurozone and the u.k., it gets difficult. the ecb -- did you ever think they would bike -- hike 75 basis points? there was a time i thought we would go through a whole cycle

with the ecb ever hiking interest rates, yet here we are. tom: i go back to the war and it is such a wild card that they have to tread carefully. should americans flight to heathrow now? jonathan: i'm flying into heathrow next week. tom: you can get through averaging. jonathan: i'm told passport control, there will be strikes and ready to draft people in from the army. that is what i heard. we will see if that materializes. tom: later in the hour, nice bond update from bloomberg intelligence. we have will kennedy coming on on hydrocarbons and oil. tony rodriguez joint just come ahead of fixed income strategy at nuveen. what does the demand for municipal bonds signal about the greater bond market?

tony: good morning, tom. good to be with you. the demand we are seeing in the municipal market is reflective of something we think is similar across not only the miscible market but the -- municipal market but the taxable market. investors are becoming comfortable with interest rate risk as we personally expect we have seen at the highs in u.s. long-term rates so far for the cycle. expecting lower rates at the end of 2023, so greater comfort on that front and comfort around the credit strength and credit health of the state and local governments. we think they are in strong condition fundamentally and we think that applies to the u.s. consumer balance sheet and the u.s. corporate balance sheet. so the fundamentals are actually in a fairly good spot despite

the fact that we expect a weaker economic period in 2023 and more likely to see a mild recession. tom: this is something. deborah cunningham and tony rodriguez give constructive. jonathan: i don't hear it talked about enough that these guys have a lot of cash. walk us through how strong the financial period is. tony: through a lot of the fiscal stimulus and direct payments made to state and local governments as well as u.s. consumers helped ease some of the debt burden and liquidity squeeze we might see in a slowdown period. as a result, the need for the consumer or state and local governments to retrench in the face of slowing economic growth and higher prices is a bit reduced. as result of that, we think that we won't necessarily avoid a

slowdown in recession but it will underpin a milder, shorter recession as a result, that fundamental credit and balance sheet strength we see relative to previous periods and drink slowdowns. jonathan: that is the shallow short and shallow. can you help us understand the short piece of it? why do people think if we get a downturn it will be short, not very long, why is that? tony: jonathan, i think the main reasons are when we think about the federal reserve pausing, as we suspect it will be after the final increase in march, that certainly at the latest, one more increase at the meeting. so it is that pause we see -- we expect to see from the fed that allows the economy to reset and digest the higher level of rates , see the slowdown occur in the housing sector, and build the

baseline for a recovery in 2024, which by the way, our forecast would be 1.5% growth. it is certainly not a strong recovery, but a return to really below average growth. tom: with all the heritage of nuveen, we have had an historic drop in bond price, how many years does it take to call back? are you looking at a three year horizon to get back? tony: i think it is more likely to be closer to a two-year horizon. i think we will get a bit of a tailwind from lower rates. despite the fact that in equity markets we have seen maybe a run of the mill bear market around 20%, we have seen the worst air market in bonds in 40 years. a lot of damage has been in higher quality, longer duration assets in this market downturn. jonathan: a final word on the fed wednesday.

where does this go where everyone expects the fed to push 2023 out to a five handle? tony: you make a good point. i don't think it is in the dot plot, but it will be in the press conference and how hawkish chairman powell decides to be, given he was interpreted as being fairly dovish coming out of the brookings interview. i think you'll see a pushback and that could be more hawkish than the market is currently expecting. tom: wonderful to hear from you, tony rodriguez from nuveen. comedy times have we heard short and shallow? if the fed will -- how many times have we heard it and shallow? does it get prolonged? tom: part of watching financial media is to grasp where consensus is. jonathan: i agree. tom: if you are in the game, you

have to know where consensus is an we try to deliver that everyday. beyond transitory it became short and shallow. there is no research whatsoever you can gain a recession, none, zero. jonathan: the consensus for next year is driving you nuts, isn't it? i am with you. it is way too cute. tom: i look at the work of martin feldstein and what was done and the answer is this is complex stuff, and we all speak with certitude, we believe. jonathan: first half equities down, second-half equities up. fitch's positive .3%. -- features positive .3%. lisa: a man charged in the 1988 lockerbie bombing of a plane

that killed u.s. people is in custody he helped build the bomb. the germany chancellor will hold a leader of g7 leaders to discuss ukraine's immediate needs following attacks on the energy infrastructure. president biden spoke to president volodymyr zelenskyy and affirmed the commitment to keep providing military and economic aid. the government and the u.k. planning for military staff and civil servants to strike for rail workers. strikes plan everyday fruit -- through the next month. they are demand and higher wages to keep up with inflation, the biggest strikes since the 1980's. amgen biggest acquisition,

buying horizon, 48% premium since the developer of autoimmune treatments disclosed it was in talks with three potential buyers, johnson & johnson and synovial dropped out. elected fans to be made in europe with mercedes. an agreement signed three months ago. rivian lowered as full year outlook and had to recall almost all of the vehicles built for a minor defect. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. melissa -- i am lisa mateo. this is bloomberg. ♪

>> long-term structural imbalance between supply demand globally is not going away. we have dodged a bullet with the start of winter and the ukraine war but not addressing the long-term issues of how things are structured for growing demand. it has shifted to a point now where it has moved away from supply which has been the driver and now it is a demand picture. jonathan: that was in the last hour on bloomberg surveillance. equity market pushing higher by

.3% on both of those. the bond market, yields lower by three or four basis points. the ecb thursday and the federal reserve on wednesday. euro-dollar 1.0563. crude now positive by .75% on a seven-day losing streak. wti crude at 71.50. we can close to 60's earlier. tom: we are fortunate to have with us will kennedy for any number of reasons. he is covering our hydrocarbon coverage out of london. he made every penalty shot in his youth in joins us. will kennedy, let's go to the society and public of it,

between cold weather and strikes, how frozen is the london and united kingdom economy now? is it something of a crisis or partly december? will: i think people are going to start christmas early and stay-at-home for the next 10 days, obviously work from home and get to the christmas. -- through the christmas period. there will be an economic hit. plan for hibernation, i think. tom: writing today about something i focused on, we have all this fancy newburgh surveillance talk with the war going on. after the war, can we repair a european relationship with russia? will: javier thinks it is likely and thinks that economics and

proximity me the gas will flow eventually. i am a little less sure, perhaps. i think people would point to the political unity to the feeling that, you know, it would be impossible to do business with putin again. i think most peoples'view that as long as he is in would be hard to resurrect the gas ridge. -- gas bridge. a lot of people thought this would be a short-term crisis, but 2023 looks tough on the energy front, so those political pressures hobby are described are not going to go away soon. ritika: could you -- jonathan: could you help us understand how the europeans will achieve last -- next winter when they did this winter? how do they get capacity and storage up to be without nord stream available to them next year? will: it is going to be tough.

clearly, paying top dollar for lng supplies will be a part of the picture and germany will have the ability to import lng in away didn't in 2022 with new terminals opening up in the north of the country, but that will be incredibly expensive and affect the rest of the world. demand destruction is part of the picture. there is focus on storage but one of the reasons why we are getting this winter, albeit at a cost, is we are just using less gas. and slowly, investment and other forms of energy, particularly solar and wind. i know there are problems with intermittency and that will fill the supply gap for electricity. jonathan: when people ask you about china reopening, how are you telling them it could potentially affect the flow around the world? will: what is mystifying about

the action with the prices in crude, is that this end of covid zero should on the face of it be quite bullish for china. it will eventually mean people driving more and flying more, and it is the last piece of pandemic demand to be refilled. it looks like that will happen in early 2023 but it has not happened yet and there are a few reasons. one of which may be that the road to covid zero might be bumpy indeed and it is early when you consider positions at the end of the year to take a position on what it means. jonathan: you are reporting -- tom: so you are reporting that china won't open until the end of the year? will: i don't think that is the point i am making. clearly the end of covid zero is happening, but if many people get ill in the interim, that is not necessarily good for the

immediate prospect for the economy. it could be a bumpy ride before china reaches the point the u.s. and europe has reached towards the end of the pandemic. tom: i look, will, where we are year in and sitting on our desk, we had a lot of people with higher oil prices and demand did not materialize. we look at morris for a call to the 70's. is any framing out under $73 rent crude -- brent crude of west texas intermediate? will: a lot of people are cutting predictions and less bullish than they were. what surprises people is the supply side and the big event to the oil market was the introduction of european sanctions on russian crude earlier this month. one of the things we are seeing

is that do not have the impact on the market many expected. right now, the flow of russian crude is still happening and going to asia, china, india. russian production remains high, and that is one thing a lot of people got wrong about the market. they expected constraints in the flow of russian crude and that has not happened and is perhaps one reason why prices have remained subdued. but one thing we don't know is what the russian response will ultimately be. we have the comments from putin when he teased he might consider cutting production is a retaliation. jonathan: will kennedy, wonderful catching up with you. it has been amazing to see crude gotten lower. the previous six days, lower,

lower, lower. jonathan: -- tom: it is the shock of the year. curve inversion as well. we needed maria with us but is still in treatment for the spain loss. i read the articles in the media and even in bloomberg, on bags of cash, and you have alluded to this over the years. we are trying to be journalistically sponsored. jonathan: let's see how this goes in the next 60 seconds. tom: the european parliament, one of the leaders, and greece, is she visible? jonathan: from seven or eight years ago through the greek crisis. tom: this doesn't mince words, bags of cash. jonathan: an investigation into a bribery and people suspect it is qatar.

they denied misconduct. what has happened is a consequence. understand, this lawmaker, has been suspended by the parliament group. what they found was cash worth about 600,000 euros seized by belgian police in 16 surges in brussels on friday. i don't have the clarity or the details. the story has been pieced together, piece by piece over the last couple of days. we haven't got confirmation. from new york, teachers up -- cheers -- enters -- futures up. this is bloomberg. ♪

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jonathan: 60 minutes away from the opening bell. nasdaq of .3% on the s&p 500. tom: happy monday. jonathan: if there is a turnaround, it has come in the commodity park at four crude because it is lower for a seventh session but now up .7%. tom: i am glad you bring that up. i am looking at red zone-green zone, and going back to september, and you could frankly

talk into july, it has been, down, up, down and bouncing of of the bottom. jonathan: intriguing to see in the low 70's china reopens. tom: are they reopening? . -- jonathan: to hear them compare omicron to the flu is a bit of a turn for the chinese. tom: there is no question about that. we are looking at the inflation report tomorrow, and i think to slice and dice that is tangible. it is not just one report. powell wednesday will include others. jonathan: he said there wasfor nuance at the last news conference and at brookings -- he said there was no nuance at the last news conference and at brookings he used nuance. tom: hope he doesn't kick the

ball over the crossbar. jonathan: nice, is that how you welcome our next guest? welcome to new york. tom: ian shepherdson from pantheon, what is the nuance for tomorrow's report or the reports in the coming days and weeks? ian: we are going to see something that looks like the last one more than the two before that. one good report isn't going to change his mind. we've got to see a sequence. over the couple of years we have had good numbers that got everyone excited in the next month we got blindsided by a rebound that has happened over and over again. we have to see a sequence of decent numbers. no matter what comes out tomorrow, they are going to do 50 basis points at the meeting this week. is what matters over the next two or three reports at the end

of the first quarter maybe sitting on three or four good reports and at that point they are in a very different place. tom: voice sounds like alan greenspan later. is this a weekend effect? ian: it may be affected. there was a lot of shouting. jonathan: my voice lasted. tom: i heard the television was muted. what are we going to see connecting the dots? ian: we are going to see more dots, but they are less important than they used to be. the fed, the markets, the dots will rise and add one or two more hikes for 2023, possibly five handle. if the next two or three pay will reports are weak and core

cpi reports are weak, then it will change. jonathan: through the report you said that by the time we get to september, the slowdown will be so obvious the fed would have to back away. what surprised you about how things turned out? was it the fact that the economy held up by the federal reserve has tolerated the weakness you identified? ian: kevin put as much emphasis on the housing market as i thought they would. they have been resistant into buying in that is symptomatic of weakening. we have seen a more sustained increase in rents which is a big chunk of core cpi. as of now, the last few have been big. the margin expansion that has driven up inflation, although it is clearly beginning to reverse on the improving supply story, has been more persistent i hope it would be. looking forward into next year, very dangerous what we have seen

over the last few months in the next three months there is an inflection point. we have seen a pickup in laos which we haven't seen. . it started in tech and broadening out. we are seeing slower hiring as well. it looks like a lot more softening in the first few months. jonathan: how high do you think the bar is to cut rates? ian: bar to cut rates is about labor market, inflation number in wages. we will not get cuts until all three are materially different than we are now. they can slowdown the rate hikes already do the inflation but they can't market until they see wage growth at 5%. there is no one at the fed that could see the persisting 2% inflation. it will be the last piece to change but made change quicker than markets expect.

tom: where do we settle if we are not dating to 2% and if that is the reality, what is the level of inflation, where they have to make some really difficult theoretical decisions? ian: this is a difficult debate to have when you are above the target, saying getting back to the target is impossible, but there is a body of opinion and i'm not sure i'm with it, this is structural forces, geopolitics saying return to the 2% or less that we were seeing consistently before covid will be difficult. the fed will have to have a serious conversation about whether the 2% is reasonable. tom: they haven't done that yet. jackson hole was an eight minute speech and that has not reach paired -- not repair the

transitory challenges. ian: it is not their fault, but the way they dressed it up as being transitory, if they had defined it as being 18 months we wouldn't have a problem they didn't. while you're fighting to regain credibility can't hint that you wish the target was higher, but they might have to down the line. jonathan: 12 months ago when they came out with the forecast with the 12 months, we are getting closer to 5%. with that in mind, how much should be pay attention to the projections that come out on wednesday? this is something that frustrates tom a lot and others too. ian: if you trade in fixed income on the day of the meeting, it is all you care about. jonathan: sure. ian: but if you think about

where they will be six or 12 months from now, you have to take your own view. they can say wherever they want and put no matter how many dots in the plot but the decision for this week is baked in. immediately after that, we look to the next decision and between now and then we have cpi, ppi reports and wage data and that can move them away from the dots immediately. the fact is, we don't know. this is why powell says we have to be humble and nimble and data dependent. jonathan: when you think about the dots, and it is hard to get them to be transparent about this, the think this is a signal where they want to tell people to get financial conditions to tighten or is it a best guess of where they think they will be? there is a difference.

ian: depending on what markets are saying, if the markets are where they want them to be becomes a game of psychology. the last thing they want is to find financial conditions ahead of where they want them to be which means they might not be able to do with they think they are going to be able to do. it is a catch-22 for policymakers, because markets are attuned to every little nuance or perceived nuance that the fed can find itself generating outcomes they didn't really want just to the way it communicates. tom: i am wondering this up, the bloomberg financial conditions that's and goldman sachs index are running against powell. i don't know how he can act to save face until he writz a -- until he gets a restriction of financial conditions and we are nowhere near that. ian: the only thing they can control is rates or expectation

of rates and everything else is much more difficult which is why he has continued with the hocking's -- hawkish tone. perhaps we are seeing some factoring in the abuse on the committee. they talk about the legs and cumulative impact and that is a change. it is not necessarily straightforward. ian: i found people -- jonathan: i found some people didn't think there was a shift at brookings but there was. ian: there was. it wasn't a massive shift but it was the fact that there was a shift. jonathan: and the risk of over tightening and i hadn't heard that in the news conference. ian: a straight arrow in the conference. tom: can i ask you a question? what happens to the premier league after this big event? you said this is highly unusual? is it back to normal the next

day? jonathan: i biggest problem is the schedule. we have seen injuries and i don't think it is just by accident we are seeing injuries piling up for big players now. ian: this is why no one wants it in the winter. jonathan: so you're going to come back and have a lot of football to play for the big clubs. tom: which players did so well in the world cup they redo their compensation? ian: for england? tom: other themes too -- other teams too. ian: how it raises the questions, how many clubs can afford him and not many is the answer. jonathan: liverpool is in the mix. tom: he looked like a genius, he

is 45 years old. jonathan: we look after our players. what happens for the world cup? ian: my instant -- my interest is different. tom: for your voice, i recommend tang. jonathan: this was fantastic, as always. rest of -- rest up. futures up by .3%. coming up, dan suzuki and seema shah , all in the next hour. lisa: in china, covid is rapidly

spreading through household and offices after pandemic rules were eased, leading to turmoil in poorly prepared hospitals. some facility struggling to find enough staff and others are suspending non-covid treatments. an investigation into alleged bribery into eu parliament is growing. four people charged with corruption and money laundering. police seized $800,000. two countries were cited. improve, protesters battle police leaving one person dead. the president declared a state of emergency in several areas and plans to ask the general election be held early. peru thrown into chaos when the president was impeached and arrested after trying to dissolve congress. thoma bravo has won a battle to

buy coupa. they out bid the partners. microsoft agreed to buy a stake in the london stock exchange group. the move will give the software company a 4% equity holding, currently at $2 billion. it is part of a plan to increase cloud infrastructure using microsoft products. they will spend $2.8 billion on cloud services over the next 10 years. global news 24 hours a day, online and at quicktake on bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo. this is bloomberg. ♪

♪ volatility resulted in a significant slowdown in m&a activity. many are wondering what's ahead. for more on this, we're joined by sid khosla. sid, what can we expect? look, you're right, it's been a volatile m&a market and also uncertain economic times. so and you know, you got to remember, we're coming off a very, very strong m&a market over the last few years. so we're seeing our clients be, you know, cautiously optimistic about the future. but at the same time, you know, being very thoughtful about the investment decisions they're taking. we are also seeing they're being very focused on core decisions around where a competitive advantage lies for them and then making structural decisions about their business at this time.

you know, i believe in early 2023 is when some of these decisions would start unlocking. and we'd probably see a very dynamic m&a market back for them. ♪ >> these figures confirm this is a very challenging economic situation here and across the world, and it will get worse

before it gets better, we have a plan that will more than half inflation in the next year. if we stay the course we can get back to the strong economic growth we need. tom: the boe meeting coming up later this week, that was jeremy hunt. i believe that was taped and filmed before the loss of england. this is a joy. we will get to the world cup and we do so with the person more committed to american soccer than anyone in my universe, that is the chief strategist at bloomberg intelligence. we have a glorious 10 minutes with you. what people really want to know what you think about the view forward. which duration is your biggest mystery into next year? >> i am worried about the belly

of the curve, what happens with the five-year and seven year. because there is a lot of uncertainty about what the future path of interest rates is, what that means is, you might have two year yield that state and the 4.25% or 4.5% range, but significant questions about when they are going to cut . a lot of us think they will remain on hold in all of 2020 three into 2024, until it is very clear that the very things that need to change to cut interest rates and they may not change until 2024 and beyond. five-year will go up and down along the yield curve based on changing expectations of are they going to cut in 2023 or

until 2025 and that will change the expectations. tom: two questions, one with the curve from two-year out to 10 year, others are looking for truly historic inversion to 100 basis points as well. what are the ramifications for the viewers and listeners beyond the volker curve in version? ira: during volker we got to 200 basis points, what it stayed for nine months between -100 and -150. tom: interesting. ira: our target is now 150 basis point inversion at some point. tom: with the same volker-like duration? ira: durations are significantly longer, but will it stay there for nine months, you mean? tom: yes. ira: inversion will be a fixture

for 2023 and we had the peak around the fed finishing raising rates and then after that we actually start to what we call bull steepen. two year yields go down because we price in cuts at some point in the future. it is the strength of the rally in the front end of the curve that i think is very suspect. our view is that we will wind up with policy rates in the overnight rates staying at 5% for a long time. tom: right. ira: they probably will rally a bit. tom: forget about spreads in the belly of the curve, what does it mean for mere mortals to have a curve in version like late 70's or early 80's, a double recession but it is not the early 1980's, is it? what is it going to mean? ira: it means is hard to make

money and carry and rolldown. when the curve is steep remake money in fixed income is by a 10 year bond that becomes a seven year bond eventually and the price will wind up staying constant or even rise because interest rates fall over time. that is not going to be the case now, it is opposite where you roll up the yield curve, so one of the challenges is that, or one of the good things i should say it is easy to own 10 year bond yields because if you buy now, in the not-too-distant future price of the bond might go up, which is an oddity because of the shape of the curve. generally speaking what it means for the overall economy is good because funding is much different today than it was prior to the global financial crisis.

we have five and 10 year bond yields lower than short term and it will not affect the financial sector in the way it has in the past. tom: you heard the single most important thing you heard this week. ira jersey on why curve in version is "good for the economy," because it is not like the late 1970's, early 1980's. ira: if you buy a car, for example, that is usually a three to five year loan, five-year interest rates vis-a-vis three is not high so you have an inverted curve. if you are a corporation by -- borrowing money, we still have we .5% treasury yields and add another 100 or 150 basis points, talking about 5%, much higher than it was, but i would rather

borrow 5% 10 year yields than i would necessarily 6% two-year. this inversion isn't having as debtor mental of an effect. -- as detrimental of an effect. i think some of the financial indicators and financial indicators don't get that wrong. we are going to be digging in over the next couple of weeks into the financial conditions indexes that we have at bloomberg in order to ascertain, not only what is driving it, because the stock market going up is what is making financial editions easier. but what is going on in the credit markets winds of being on the going forward basis super important. if you see credit spreads

tighten, that creates more of a problem with feds. tom: they are more accommodating. ira: that has made financial conditions easier. tom: metlife stadium, 2026, the finals of the world cup. as jonathan ferro asked, will america brace the world cup? ira: i think so your it i was in england during the cup and coming back from england at the time, all of the sudden people were talking about soccer, which had never happened before in my lifetime. now i think 2026 could be an impetus to grow the sport more in the united states, where it will be on everyone's billboards and in the major metropolitan areas in the country. where we are in new york, new jersey, pennsylvania, it will be great because we have met like

-- metlife and ligon stadium. tom: france-argentina, your wisdom? what is the age group? ira: a coach adult team right now. we had a big win last night to finish the fall season and we go into the spring on a high. who looks more go, france or argentina? ira: argentina, but both teams have depth. they have the man with the greatest hair in soccer, and those two teams are really good. it is amazing the underdog story, this world cup with morocco and croatia in the semifinals, it would be great to see one of them in it. i always refer the underdog in those matches. i will be wearing my red and

white stripes. tom: sunday the 18th is the finals. we will get ira jersey in your with the appropriate wisdom. a crucial tuesday and wednesday. the world stops wednesday at 2:30. futures up and have advanced close to the 4000 level. dow futures up 60 points. the vix goes the wrong way. curve inversion, i'm not used to -80 basis points, substantial inversion. ira jersey saying we can get more inversion along the way. . thank you for being with us, will, from london. strong sterling today. please stay with us to the day on bloomberg radio and bloomberg

television. good morning. ♪

jonathan: the countdown to the opening starts now. >> this is bloomberg, the opening, with jonathan ferro. we begin with the big issue, two items on the canada. >> inf