>> from the world of politics to the world of business, balance of power gives you insight from the politics power players. weekdays on bloomberg. ♪ >> i think 2023 is opening the door for a recession. >> we expect slow growth or a mild session. >> we are at a reflection point in the growth and recession. >> we are waiting for the chop. >> you have to concentrate on surviving a difficult start your next year. >> this is bloomberg surveillance. jonathan: 26 is not cold. that's negative three centigrade. tom: that's not cold. jonathan: from new york city, a freezing new york city.

tom: it's not freezing. jonathan: good morning, it's cpi tuesday. tom: this is not normal. this is a nuanced report at 8:30 a.m. jonathan: the week ahead is pretty big. tom: this is more interesting than the fed meeting. jonathan: it's going to set the tone for that news conference. tom: it's serious. jp morgan had the publication of an equity pop if you get under 7%. jonathan: a downside surprise on cpi, that report is later this morning. lisa: it's cpi tuesday. we will enjoy it. services inflation versus goods inflation and how the gasoline price ways in given that gas prices are the lowest since october of 2021. tom: i'm on with my stable when

people. is it still stable? it's still stable. jonathan: do you want to talk about the arrest? tom: i want to move the story forward. jonathan: we still got a hearing that will come today. tom: i am looking forward to that. i'm learning aboutbinance as much as i can. we are at the point where it's the legal dash. jonathan: why are you focused on that this morning? tom: because this is the next thing to fall and it's way bigger and more international. this was one guy. lisa: we will get the indictment unveiled today. we will understand what the allegations are and have brought it will be. it's on the treatment of him and where the allegations of malfeasance really are and that will color the whole discussion for the broader industry. tom: i moving on to binance.

there is an important article about a department of justice divided about what to do with bianance. the idea of stablecoin was like a money market fund years ago. do you break the value of a stablecoin? jonathan: you mentioned the reuters story about the criminal charges over breaking money laundering charges? tom: and there is a debate within the the department of justice but things are getting sped up. jonathan: let's go to the price action -- equity futures are positive by 0.40% and cpi data will come in in a couple of hours. yields are a little lower on the bond market. a whole lot lower since the pop.

tom: a correlation with real yield that's where it is, in version didn't too much, but equity markets moved and the move again on 0.4%. a smart note this morning and it's clear that service sector inflation will be tough to tackle. jonathan: maybe that will breathe life back into the inflation story. euro-dollar is basically unchanged. lisa: 8:30 a.m. is the key data point of the day. cpi year-over-year and if it comes in at 6.9%, you can see a 10% pop in the s&p 500. that was the jp morgan prognostication. your point about services side inflation is the key. how much do you see that continuing to percolate up and offset some of the goods disinflation we see?

the fed says they've been looking at this and we will be awaiting the 10:00 a.m. hearing in the house of representatives. sam bankman-fried will not be attending because he is currently being held in a bahama court and will be indicted in the u.s. federal prosecutors came out -- come out with adam but test that indictment later this morning and he will be extradited to the u.s. what do we get in terms of what the problems are and how did they cast this? at 1 p.m., the u.s. treasury will sell $18 billion of 30 year notes. yesterday's 10 year auction was terrible. it was the worst since 2009. the rally has left a lot of people wondering whether there is still value. people demanded yields that were the -- that were relative pre-auction going back to 2009 and a breeze is russians about whether this rally has gone --

and it raises questions about whether this rally has gone too fast and too far. tom: we have a massively negative inflation-adjusted 10 year yield. jonathan: tomorrow, we will get a dot plot from the federal reserve and it could show a terminal rate climbing as high as 525. do we have rate cuts in our future? that's ultimately what you are doing. and you are making the call that maybe yields go lower from here. tom: based -- the market to me was two parts -- it was before 2 p.m. yesterday and after an yesterdays lift in the market was to get out front of 8:30 a.m. this morning. jonathan: it's not good to have a sloppy auction going into

event risk. the global head of fx analysis at citigroup is with us now. can you run us through what you and the team are looking for? >> great to be with you and we think this is an interesting cpi report and will determine the narrative. we had a lower or less month but this year, we never got to soft reading zero. the consensus expectation is .3% in cpi, then i think this idea that inflation is peaking and is more or less on track for the fed will gain more traction and that will weigh on the heels and the dollar and probably support broader risk cap asides -- appa -- broader risk appetite. it's in line with the consensus forecast of 0.3% but i think it's between that and four or five. that's mostly because we did get some very large and probably noisy declines last month.

there might be some retracement. tom: after the fun of 2022, are you enthusiastically positioning for big figure moves next year? are you trying to get to january 31 as a working number? >> i have a lot of sympathy with getting to january 1 and maybe beyond the first month. we are looking at next year as a big transition year particular for the dollar. we think we are transitioning from the most dollar supported regime with save haven demand and the u.s. was outperforming to probably something closer to the opposite. maybe late in the year, bottoming low growth and bottoming equity markets and if yields are peaking, plenty of other safe havens. where that transition takes place during the year i think is hard all. as lisa said earlier, we have sympathy with the idea that the

rally in fixed income over the last two months of -- has gone a little bit too far. we see upside risk into the dollar early in the year but that will not as durable as it was last year. lisa: can you lean against the narrative if this comes in has a softer cpi? can you say the underlying factors are still there to cause inflation to be persistent than the market is currently pricing in? >> over the last couple of months, we have learned you have to take each trading day as it is. you cannot stand in the way or ignore them so if the number comes in low, we are confident the market action will be significant but not as significant as last month because the second soft number and we have the fomc tomorrow. nevertheless, if the number is low, we would not be buying dollars on the day and we would be cash -- cautious going into tomorrow and the rest of the year.

you have to be tactical. the price action yesterday showed us that investors are generally speaking thinking about selling dollar rallies and maybe buying other assets of x income. -- of fixed income. lisa: how much are you looking at the fixed variables? >> we think housing is a big topic. we think over all it underscores the idea that we are drifting into global recession. we have fairly synchronized housing market weakness coming in. we do have significant deterioration and differentiation because many economies have much larger housing vulnerabilities. mortgages are higher and house prices have risen and us higherd canada and new zealand and norway but perhaps the u.k.

versus the u.s. we think there is differentiation that will be reflected in relative value in exchange rates. the big elephant in the room for next year is what happens to china and what happens to the real estate market. if that has signs of life that's a major topic for markets but it's also a major topic for the dollar is stronger chinese growth generally speaking is associated with a much weaker dollar. we think housing is a big story for next year across markets. jonathan: wonderful to catch up with you and you are not alone inking that. -- thinking that. the latest from the sec -- reading just just reading this one through -- charging samuel bankman-fried with defrauding investors. lisa: we expect to hear from the u.s. that are prosecutors in the

southern district of new york to come out later today with their indictment unveiling how this raises questions about the broader implications. he is saying he promoted ftx as a safe, responsible crypto asset trading platform especially touting its sophisticated automating -- automated risk measures protecting customers. tom: a house of cards. jonathan: the sec today charged samuel bankman-fried with orchestrating a scheme to defraud customers. he was the ceo and cofounder of ftx and investigations as to other sick 30's and into other entities and persons related to the misconduct are ongoing. live from new york, this is bloomberg. ♪

lisa: keeping you up-to-date with news from around the world. disgraced ftx cofounder sam bankman-fried is -- has been arrested in the bahamas after criminal charges were filed in the u.s. he is being held pending extradition process. that's weeks -- after weeks of speculation that ftx client funds were misused before the crypto exchange collapsed. investors are waiting u.s. inflation data that could shape the outlook for fed interest rate hikes into next year. the price index is out it a 30 a.m. new york time in a subdued number would justify the fedex interest rate hike wednesday. china is delaying be closely watched economic i'll see meeting next week because of a surgeon covid infections in beijing. no word when that meeting will be rescheduled. china has warned it faces a big jump in the number of covid cases after scrapping testing

and isolation of infected patient. spacex is offering to sell insider shares at a price that would raise the company's valuation to about $140 billion. the shares are being presented for $77 apiece. spacex was valued at $127 billion in july. no word on whether the company will look to raise capital in the primary funding round. 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. ♪ 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.

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♪ jonathan: breaking just moments ago, the sec with this quotation -- we allege that sam bank read had a house of cards and a foundation of deception while telling investors it was one of the safest billings in crypto. a stronger quote later in the statement that says ftx operated behind a veneer of legitimacy as sam bankman-fried created touting its best in class controls and doing a proprietary risk engine and ftx adherence to

specific protection principles and terms of services. as we allege, that veneer wasn't just then, it was fraudulent in the sec just moments ago. tom: it's typical sec but i go to paragraph two, item three which is the heart of the matter forward for the industry including binance. risk stemming from ftx exposure to sam bankman-fried's significant holdings over valued illiquid assets such as ftx affiliated tokens step to me, that's the heart of the matter. it's the discussion of tokens and i go back to vanke of international sentiments in geneva -- into bank of international sentiments in geneva. who are these tokens? i don't think we know. jonathan: people are asking where are the authorities.

he admitted fraud straight out of the gate. they are putting a case together and the headline just came through in the last couple of minutes. samuel bankman-fried charged with defrauding investors by the sec. lisa: what took so long? there was a lot of questions as he paraded around with a series of interviews and public relations and talking about how he messed up but he had good intentions. the ftx collapse highlights the real risk that unregistered crip though asset trading platforms can pose for customers and that goes to your point. tom: this will be through the morning as we look at them laois and into ours but also these events. we will have more at 10:00 a.m. on this. we go to washington now. this statement is widely expected but there is always a surprise. what is the surprise and mr.

gensler's statement? sonali: we are looking at what the sec is doing and we have a charge on a scheme to defraud investors. we are expecting the southern district of new york to also unseal an indictment later today. according to the new york times, that will include charges of wire fraud, securities fraud, conspiracy of both and money laundering. the scope of which this scheme had unraveled relative to what we know sam bankman-fried has said himself which is that he didn't knowingly commit fraud or didn't knowingly co-mingle assets, there is a lot of detail. it shows that he was responsible for what happened at alameda and the u.s. authorities weeks later are taking note. tom: things are moving so quickly with the reuters report last night and discussion at the department of justice. how is the rest of the industry

going to watch these hearings today and the news flow out of the bahamas and legal authorities in the united states? sonali: one is the simple discussion about how the sec treats tokens. do they treat them as securities? there is anxiety here in the venture world about this because there has been so much fundraising through tokenization recent years. there is also the issue of how these assets are promoted step there is a house hearing today but there is also the senate hearing tomorrow regarding ftx and one of the speakers will be kevin o'leary who is paid by ftx as a sponsor. the other thing is these investigations have been going on a long time. over the last 24 hours,binance has endured outflows as well as facing issues regarding the withdrawal of stablecoins. we don't know what kind of alarm there is in that scenario yet

it's something to deep your eye on as the industry really faces pressure and you have the head of binance saying these are one-to-one conversions with no leverage and they are trying to establish solid channels in the future but feel free to withdraw any other stablecoins it's unclear what kind of pressure there is on the industry but that's the situation to your point all stop lisa: it's not only because of the hearings but in this sec complaint, there are allegations that sam bankman-fried co-mingled ftx funds to make undisclosed venture investments of real estate investments and political investments. he's been a huge donor politically so how does that color some of the hearings we will see today and tomorrow in washington, d.c.? annmarie: we know he would open

up with a blanket statement that he messed up, using a more expletive word for that. when it comes to how washington has treated this individual, he has talked about this saying maybe if i gave more money to lawmakers, they would be more quick to's -- to pick up the phone and speak to me. when it came to the midterm election in 2022, for the democrats, he was donor number two after george soros. this was millions of dollars to the democratic party. a few individual said that's not fair, he gave to republicans as well. there was millions to democrats and thousands to republicans. we've talked about this on this show, whether it's the media or celebrities or whether it was lawmakers, there was a little bit more of put the gloves on

approach to this person. everyone wanted him to succeed and it raises questions about who will be a mega dinner in the next election cycle? lisa: how much focus is their on trying to crack down and compensate on the lack of focus perhaps in the lack of protection over the past recent months? annmarie: when i looked through the sec statement this morning, one thing that stands out is that ftx collapse highlights the risk it can pose for investors. maybe they will get more serious and double down on some of these trading. . senator chester from montana said over the weekend on nbc on nbc he says i cannot find anybody who's been able to explain what's there other than synthetics which means nothing.

the problem is, if we regulate it, it may give it the ability of people to think it's real. people in washington don't think it should be regulated because they don't want to send the message to investors that you should be in this space. jonathan: what do you make of the timing of this? this is all taking place in the authorities are stepping in before congresswoman maxine waters has a big day of testimony on capitol hill. annmarie: i took a quick look at all the people on this committee. sonali: they took money from sbf. you wonder if they will give that money back all stop to their point, whether you are a lawmaker or regulator, you have to wonder how this happened under their watch especially with the closeness the lawmakers had to the industry. maxine waters herself said it's time that sam bankman-fried

faced the process for justice but the american public also deserves to hear from him directly under oath. jonathan: to the both of you, thank you. coincidence that this is taking place now? tom: the question was dead on. i think it's a catalyst to get to it because they must know things we don't know. i will do a victory lap for lisa and jonathan and myself. we mailed this over the last three years. i will not mince words. every day, we took the surveillance pencil and put it in her mouth so we would grit our teeth. jonathan: futures are positive this morning and more in this raking story still ahead. ♪

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jonathan: two hours away from inflation data in america and 24 hours from the fed with equity futures shaping up as follows -- futures are positive. the move on the s&p 500 was the biggest daily move of the month so far3 in the bond. , just a little bit lower on the 10 year. down by 0.3% on the 30 year.

euro-dollar looks a little something like this. that's the price action so let's get you the breaking news, the sec charging samuel bankman-fried with defrauding investors. they say he orchestrated a years long fraud to conceal from the ftx investor, the undisclosed diversion of ftx customer funds to alameda research. special treatment on the ftx platform including providing alameda with a virtually unlimited line of credit funded by the platforms customers and exempting alameda from several sec mitigation measures. undisclosed risk from the ftx exposure to alameda significant holdings of overvalued illiquid assets such as ftx affiliated tokens. they further allege sam bankman-fried used ftx customer

funds to make undisclosed venture investments, lavish real estate purchases and large political donations. tom: that goes to the events this morning at 10:00 a.m. and the politicians are rewriting the script. the token discussion goes to the heart of the research of the bank of international settlements. bis is usually suspect about sable -- stablecoin and its supposed stability in an audited market. jonathan: you went straight to the quote from gary gensler so let me share that. in a statement, we allege that sam bankman-fried l to house of cards and a foundation of deception and telling investors it was one of the safest investments in crypto. lisa: there is also this hint

about broader investigations, broader potential malfeasance within the crypto space. it's interesting that if you look at etherium and bitcoin, they are both up for the day. you wonder why there is not wholesale skepticism. tom: it will unwind through the morning. i'm watching the binance news yesterday. some of it is pretty sketchy to be fair. we will have to see how that on flow -- that unfolds. reporting almost two hours on inflation, the cpi report is the focus of almost everyone. we speak with the chief economist at jp morgan. your shop made a splash overnight with a 10% lift in equities if we get under 7% inflation. 6.9% -- translate that for your

strategist and our audience this morning. how do we get to 6.9%? >> it's hard for me to see that. we are looking for a number that's 7.3 so you would have to get that with a big surprise to the downside on energy prices and the core number with surprise. from the point of view of the fed and the market going forward, what matters is the fed's reaction and how it looks at the or. -- at the core. we believe we are seeing a fairly sharp slide in inflation but one that is incomplete and getting us into the 3-4% rate on core inflation which is good news in terms of where we come from but it's not enough to stop the fed. it holds the risk that we get stuck here as we go through next year and that requires more action than the market is expecting currently. tom: your friday weekly

prospects are world-class. what is the housing dynamic we should look for in these inflation reports in two hours? >> what you are seeing in the housing market is that the rental prices on the martian are coming off but when you look at what's measured -- the rental prices on the margin are coming off. but we are looking at a 0.7% rise. goods prices are being pushed down by fading supply chains and rising dollar and weakness in goods demand globally with particular weakness in china and the continued stickiness and service prices. that shelters the big part of it in the cpi but the larger story is services outside of shelter have not showed any signs of moderating. as chair powell has said, it's more closely tied to what's happening in labor markets.

lisa: this is why people are looking at the pool of savings that people have. jamie dimon said it could be eaten up by the midyear next year. how do you look at the ability of the consumer to keep spending and the sticky services side inflation? >> we have a multiple of forces working on the consumer now. one is we've used up a lot of that cushion and probably will use it up entirely over next year. that is not a deficit, it means you have less of a cushion. the dynamic of government policy has been taking away transfer payments through the first part of 2022 so next year we will get big coal adjustments. the key is where labor markets are. if you don't hit that hard, if you don't hit business hiring and spending, the consumer will

be fined. . lisa: i've been looking at the china reopening and trying to gauge how it will affect inflation next year. how much credit reopening happen sooner than expected and spur inflation into the commodity sector that has seen disinflation and cause another bout later next year? >> first of all, when china reopens, it's not white ready yet in terms of dishes not quite ready yet in terms of immunization so there is uncertainty about how much lift you will get in the immediate sense. one thing we will see this week is the november data in china and it will be ugly. i think there is a big reopening to come in china but i don't think it's happening now and i don't we will have it hit markets in the next two or three months. when it does happen, i think you will see a very strong lift in

growth and china has been seriously depressed by the covid problems and it will continue to be so for a little while. i think it will boost commodity prices but inflation in the u.s. will not be driven primarily by commodity prices. it will be driven by the combination of tight labor markets, inflation psychology and what the fed is doing as far as demand. tom: there is talk about the shift from supply-side analysis to a demand-side analysis. in that, service sector will be more persistent and have trouble coming down. do we risk the fed fixing service inflation and getting itself into trouble? >> the fed has a difficult job, let's make that clear. we are seeing the supply chain problems, the commodity price pressures come off.

as they come off, is giving us a relatively sharp drop in inflation. we got up to about 9% and we will get below 4%. as that stuff is coming off, the tightness and labor markets, the pressures they, the underlying continued support for demand in the service sector and i think psychology are all factors. you can call that demand but i think it's a mix of things we want to understand is driving it. it's moving in a way that's limiting and probably will not allow inflation to get back down to the level the fed is comfortable with. even if the source of those was a supply driven pandemic dynamic and the russian invasion, the fed still has to deal with the consequences of that in the way they deal with it is to weigh on demand and hit labor markets. jonathan: wonderful to get your thoughts as always. you mentioned reopening in china

and covid is ripping through that country right now. we've got a story out this morning -- the currency volumes have been falling in china. traders are calling in sick. lisa: that's what bruce's talking about, they might try to reopen but they don't have the infrastructure and that's what we see with the numbers climbing even as they move away dramatically. it's shocking how much it has dropped in a wholesale way. jonathan: expectations of global growth are building a little bit over this china story. lisa: how much is the view driving the action? you don't have the infrastructure in place just yet. maybe it's a story for next year. jonathan: we will pick up on that story later. if you are just tuning in, the headline about 20 minutes ago from the sec charging samuel bankman-fried with defrauding

investors. pretty bruising quotes in this statement. ftx operated behind a veneer of legitimacy and mr. bankman-fried created tempting best in class controls including a proprietary risk engine and adherence to customer principles and services. as we allege, that wasn't just then, it was fraudulent. tom: this goes to what we've seen from many experts. when the sec speaks, there is a certain tone that's different than the court and different than prosecutors. it's very line by line. this press release has that line by line feel to it. lisa: they are trying to send a message to a broader industry that potentially there are other risks. the ftx collapse highlights the real risks in asset trading

platforms. how broad is this? how many individuals? what types? tom: bitcoin, flat, 17,400 office news. i would not have expected that. jonathan: there is a distinction to be made that this is a failed platform. many people still have a ton of faith in it. lisa: if people start withdrawing their money, how much is this people hiding out in the best case scenario? how much does this diminish the customer interest? tom: one group says it's not accurate and the other group is taking the kool-aid. jonathan: that's the conversation we will have a for a long time i suspect.

futures right now are posited by half of 1% on the aft -- on the s&p 500 and cpi data is 8:30 a.m. eastern time. ♪ lisa: keeping you up-to-date with news around the world, the disgraced founder of crypto exchange ftx is now in custody in the bahamas. sam bankman-fried arrested after the u.s. government filed criminal charges. he will await extradition and ftx declared bankruptcy last month after it ran out of cash. there is speculation that client funds were misused before the firm's collapse. the securities and separate charges against him saying he defrauded investors of $1.8 billion. in ukraine, the ukrainian presence set a lull in russian attacks won't last. he says the break and aerial strikes is likely a sign that moscow is preparing another wave of attacks. he also suggested russia start withdrawing troops from ukraine around christmas as a good faith gesture.

hong kong is scrapping some of its last remaining covid restrictions. that follows china's rapid shift away from its zero-tolerance approach. the government will lift a ban on international arrivals going to bars or restaurants. it will also stop requiring people to scan a qr code on their phones for menus. this has hobbled the hong kong economy. the white house calls a tax by twitter owner elon musk -- calls attacks against anthony fauci but elon musk disgusting. he mocked the use of gender printers called for legal action against anthony fauci. global news, 24 hours a day and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. ♪

>> there is a lot of minefields to navigate in the first half

pointing toward an economic contraction and therefore, that is i think the overhang on the market right now. it's less about supply and more about wendling demand for the new year -- about wendling demand for the new year -- dwindling demand for the new year. jonathan: inflation data is coming out a little later this morning and equities are up about half of 1%. we shift our equity allocation to a moderate underweight from overweight. what do you make of that? after all the losses -- in 2022, speak your mind. tom: we have a great humility here for people that nail it and i think mr. wilson this year and others that people that maybe

miss it on the axis but they stay where they are and stay out there somewhere. i will pick on the wonderful john stolfus at oppenheimer who has been bullish and has stayed that way and is looking pretty good after what we've seen then you've got these people who can be correct here but it is an odd and late swing to say the least. jonathan: will this be a result of central bank over timing? the issue that people have is the view of many other people as they been raffling with story for the last nine months. tom: i have great respect for these strategists and it's always brutal. jonathan: it's tremendously difficult. tom: what i like is when they are clear.

jonathan: look at the forecast to start the we are just to start the year. tom: do we have any news on bankman-fried in the last 10 minutes? jonathan: i don't think so. we will have to wait, the testimony we thought we would get earlier or later this morning, he said i would like to start is that i have had enough. tom: that's appropriate for radio. we will continue to follow this story. we have inflation in two hours and part of inflation has been your gallon of gas.

is oil dis-inflating or is it becoming a true deflationary item within the report at 8:30 a.m.? >> in the near term, it's been deflationary. this has very little to do with fundamentals. there were good fundamental reasons why we were expecting a rally that didn't materialize given the chinese lockdowns and more factors. we should have an in the low 90's and late 80's but not collapsing down to where we are. this has been a massive year end event. it's been deflationary in the near term but i don't think this will last. tom: it will not last but what will make it go? is it pacific rim demand or global demand or supply adjustment? >> i think it will be demand and

i think it will be china being the biggest driver of world markets next year. they are giving indications of reopening and so far we've been cautious and expecting april onwards but yesterday, we raised our chinese demand because are the very first concrete steps they have taken and i think this is meaningful. it doesn't mean overnight that china will be open. it will be a slow reopening but it's been three years, february that china would have had covid. we've seen the pent-up demand and the west when the west opened up and you were talking about over one billion plus people in the pent-up demand will be huge. it's the multiplier effect the impact it will have and the rest of the region with korean s -- exports and tourism. i think that's where the big

demand will come from. lisa: why is that not being priced into markets? >> i have a feeling we need to see it to believe it. we've had a couple of false starts even earlier this year. people in shanghai were expecting loosening of restrictions and that didn't materialize and they are still not buying crude in the market because they bought a lot of crude in november and both of those things need to coincide. people have squared off in order to put on positions now. if you look at the curve right now, it looks extremely attractive for next year and you don't need majors of lie to tighten this market, just the end of the spr and china reopening provides a huge case

for next year. lisa: how much has the price been influenced? >> gets huge, if you take a step back this year, what has happened is that we haven't lost much from the russian invasion. the embargo has only kicked in stuff since the invasion, we have had 270 million barrels of global spr released and maybe half a million arrows per day of russian losses. commercial inventories have built but only by about 150 million barrels. had it not been for the spf come i would have run out of oil in several places. jonathan: not the year-end to crude as people were expecting. if you just tuning in, at 10 a.m. eastern time, we expect

testimony from sam bankman-fried to the house financial services committee led by maxine waters. in the last hour from the sec, bankman-fried charged with defrauding investors. tom: the charge of defrauding doesn't capture it and you were great about reading out the testimony. i have seen charges from the sec and they are never fun. this is line by line going after him. there is no padding in this statement. jonathan: the defense of this individual, what did you make of his media tour of the last month? lisa: it it was incompetent, just being clumsy and naive. i messed up, my intention was to make everyone whole, i am so sorry, i feel like i failed, it's my miss doing, i didn't

necessarily have any engagement with alameda if you look at the statement he prepared. he says i was no longer in charge of alameda that the sec accuses of being his private trip to hedge fund. he said he had no knowledge of what was going on there so this is partly a plea of ignorance and incompetence. tom: this guy has physics mathematics so this drives me mental. this kid was a sterling high school student. jonathan: i don't think that's a character assessment of lisa. tom: i'm not talking about lisa. i'm tired of the media covering woe is me. we are getting accolades worldwide. tom: lisa: bitcoin has been holding. tom: $29,000-$17,000?

lisa: we don't know how thin the line is. we will find out over the next couple of months who else will be indicted. how broadly within the crypto sphere are the bad actors? you speak -- to speak with people in the industry and they say we welcome this and they want to weed out the bad actors so they can get back to what they do. we will see if that story sticks. tom: what do they do? lisa: who is they? tom: the industry, what they do besides promised people? there is a banner in the world cup. they promise you a percent. jonathan: it's about the capital they been attracting over the last several years. he talked about being clumsy and naive and the sec saying it the systematic and suggesting it was deliberate and accusing ackman

freed of defrauding investors -- sam of defrauding investors. live from new york, this is bloomberg. ♪

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>> i think 2023 is opening the door for a recession. >> we expect eve verse slow growth or mild recession. >> there are more signs of a clear inflection point. >> we are still waiting for the chop. >> we are concentrating on surviving a difficult start to next year. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: cpi is 90 minutes away

, inflation data in america and tomorrow, the fed decides in this morning, the sec charging samuel bankman-fried with defrauding investors. tom: the news flow is extraordinary. you wonder if this comes up with chairman powell in the press conference tomorrow. i don't know where to start. i think got to go to this breaking news and note that bit coin is removed from these headlines. jonathan: in 10 minutes time, we will catch up with washington, d.c. to get the latest. the hearing is expected to take place at 10:00 a.m. eastern time and the tone of the hearing has perhaps changed. lisa: he was going to plead ignorance and incompetence and how he dealt with the situation but perhaps the tone it -- has changed since he is in custody in the bahamas and later this

morning, we will get the indictment unsealed from the southern district of new york to get more detail of the criminal charges. jonathan: people are asking what took so long. white now? -- why now? lisa: i'm not going to pretend to have an answer. we don't know what the coincident factor is. there was some mystery as to how he would get back to the united states. i wonder if this expedited the proceedings on the criminal side because of the logistics of coming to the u.s. for those hearings. jonathan: we had a statement from the sec chair gary gensler. he said he built a house of cards. tom: they make careful note of the validity of tokens. i'm not qualified to opine on

that but i would lean on mr. gensler which is the bank of international settlements in geneva in a body of literature was put together over the last four years and the heart of that is mining this idiot thermodynamic electric stuff but also looking at the token validity. jonathan: a house of cards on a foundation of deception. let's get straight into the price action. equities have been rallying, the biggest one-day pop yesterday and a lift again today. futures are elevated again this morning with yields a little lower by a couple of bases points. euro-dollar is not doing much. tom: the data is there and it's moving. oil is another story. i don't know where to look on the data this morning off of cpa

other than equities gave us a boost. jonathan: we opened up yesterday at 3789 in september. we opened at 3852 and close yesterday at 3990. a lot of chop in between? lisa: underneath the index level there's been a re-rating and that has been a massive shift. we will get a better sense of the areas in the economy that are chugging along with the eighth 30 a.m. report on cpi. jp morgan's a softer than expected read could trigger a 10% rally in equities. which side will that be driven by? will big tech it a boost from massive disinflation? we will look at the services

sector inflation carefully. we will also be reading the indictment that will be unsealed by the southern district of new york as federal prosecutors are charging samuel bankman-fried who is in custody in the bahamas as the house of representatives prepares for a hearing. he will have prepared testimony. now we do with the politicians and how they deal with this and try to discuss perhaps some of the donations he made to a number of different campaigns. $18 billion of 30 year notes are being auctioned off at 1:00 p.m. it was a really messy auction yesterday. jonathan: going into cpi today in the fed tomorrow, we got lucky. julian manuel joins us now. >> good morning. jonathan: we haven't had the cathartic moment according to you. this is not the bare low of this market?

>> if you look at past bear markets, there is that moment that even in the strange ones like the fourth quarter of 2018 when we were in three-month bear market, still had a cathartic moment where people said it me out. that kind of selling pressure really creates the buying opportunity. when you look at this year, volatility has remained elevated and we have many things going on this week but you have not had that moment. there's been very little emotion in this. tom: what's the fixed level you need to see? >> it ultimately will be 40. tom: everybody wants to know when you sit at that little table with a black pen, how you link the emma world. he alludes back to the 40's and how does this inflation alludes

back to those troubled times? >> ed is very clear on this, this is not the 1970's. the metastasizing effect of inflation that we have for an entire decade is not there. clearly, we had these problems and now we are on the other cited this in the readings are starting to come in but the other aspect thinking about the 19 30's and 1940's and 1970 itself is this decline in money supply and going negative. that's a risk that the fed might have to step back and reassess just how fast. tom: you are taking it back to cj lawrence. >> that thursday afternoon release of the money supply was cruel stuff. lisa: what will leave the equity index lower, given that tech has

already sold off disproportionately? >> we think that story has more to be written. value versus growth, the extremes are certainly less extreme after the year we have had of growth underperformance. there is still an embedded passion forfang amongst a part of the public's equity holdings remain near all-time highs as a percentage of household net worth and we think that will be worked off in the first six month or so. jonathan: let's talk about consensus. if you waited and published later in the year and it sounds like what we have her already which is next year dip and we end the year at 4150. that's the call from evercore. how do you feel when everyone is saying the same thing about the year ahead? >> very uncomfortable. the most bullish thing about the

set up right now is the fact that my competition on the strategy side, the average price target is 4000. i am not a raging bull. jonathan: how can you forecast in a flat market year end? >> i don't know there's any precedent for this whatsoever. that along with the fact that this recession is the most anticipated recession of our entire lifetimes really gives you pause for the potential for upside. lisa: where could the consensus and you be wrong? >> if the recession doesn't come. we all know it's happening and we know what the components of it are but think about it, would we have ever thought we would have seen two negative quarters of gdp like we saw in the beginning of this year? can that not be labeled a recession? if we skate through, zero growth

, 0% gdp, that implies a mild recession but if it doesn't happen, there is upside to 4600. jonathan: do you remember when you were charged with talking about bitcoin? >> from our point of view in thinking about crip to, when we talked about this constantly, is that there is an aspect of the technology, the blockchain most people would agree there is validity to the technology, the same way there was validity to the transcontinental railroad system in the 1870's to get the entire industry went bankrupt during the decade of the 1870's. jonathan: the space attracted a lot of capital and a lot of coverage and you covered it in your shop and i wonder -- how

difficult would it be to convince your people this is something we should cover at the firm? will this be hands-off for the doubters for a long time to come? >> if you think about the price action, it's telling you some thing, the fact that since the scandal was uncovered, the price of it really hasn't moved materially lower after the initial tribulations. it tells you that there is a fundamental belief in the technology but as is typical for most markets, once there is the feeling of discussed, you will have a year or so of sideways price action to where only the true believers remain in the industry. likely, you will have your next bout of progress. jonathan: tom was talking about exactly that. tom: i go with the railroad analogy but i think this is

something else and i go back to ken rogoff in his book, the curse of cash. this is about non-regulation, far more international than ftx. it's the idea -- not that this was a scam but it was wrapped around on regulated activity from day one and this morning, the regulators, the adults showed up this morning. jonathan: the sec charging samuel bankman-fried for defrauding investors. can we do this on a monthly basis, maybe every two weeks. just come into the studio. victoria fernandes is coming up for the next hour and we get cpi inflation data in american one hour and 18 minutes. ♪ lisa: keeping you up-to-date

with nusra around the world with the first word, u.s. regulators are adding to the problems facing disgraced ftx cofounder sam bankman-fried. they accuse bankman-fried of carrying out a multiyear scheme to defraud investors .global he is also accused of concealing risks and using co-mingled customer funds. he was arrested monday in the bahamas on separate u.s. criminal charges. he is under fire and two fronts. he was arrested in the bahamas monday after prosecutors filed charges. investors are awaiting u.s. inflation data that could shape the outlook for fed interest rate hikes into next year. the cpi is out at 8:30 a.m. new york time. a subdued cpi number would justify the federal reserve projected half-point interest rate hike wednesday. china is delaying a closely watched economic policy meeting this week because of a surgeon

covid infections in beijing. no word when the meeting will be rescheduled and china says it faces a big jump in covid cases. in the u.k., the government warns of significant disruption in the national health service. nurses and ambulance drivers are preparing to go on strike in the run-up to christmas. some 600 members of britain's armed services are being trained to drive ambulances and private-sector workers are demanding pay hikes that keep price -- keep ace with inflation. 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. ♪

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>> the reason the fed is so focused on continuing to raise rates, is not necessarily at 75 basis points we saw earlier, but 50 basis points and more work to go down the road is because inflation is still elevated. jonathan: that was the chief economist and i did not expect the fed decision to be buried in the news flow. we are one hour and 13 minutes away from inflation data in america. equity futures are up about half a percent. yields come in a couple of basis points.

messy on the 10 year ahead of cpi this morning and the federal reserve tomorrow. euro-dollar's not doing much and new york to -- and new york crude is 73.36. samuel bankman-fried is scheduled to testify before the house financial services but he is arrested in the bahamas in awaiting charges from the federal to -- indictment in new york. the sec announced these charges writing tom: it goes on. that's the perfect quotation but it's line by line ground they

will stand on as they move forward. how did they link into the court system that is also looking at these events separately? lisa: it's clear the investigations were related and dependent on each other. they go through different court systems and we will get the district of new york coming up with their indictment today but also the cftc is expected to go after him. the tentacles of this are some of the biggest questions people are looking for. tom: we are scrupulous about it when we are wrong. i mentioned the sponsor of the world cup and i said weeks ago they had 8% you could make doing whatever these things too but that's not there anymore. what's there as you can get up to 5% back on the richter,co --

on the crypto.com visa card. jonathan: it's still out there. tom: we will get an update on this. what have you learned in the last 60 minutes? sonali: we had the ftx ceo testifying today in front of the house saying ftx commingled funds and in that sec complaint, you also see them talking about the co-mingled ftx customer funds used for undisclosed venture investments, lavish real estate purchases and large political donations. we will talk more about the political donations but i have to mention this venture investment portion of this. we talk a lot about how venture investors had ignored the red flags and they invested into ftx. the se says -- the sec says they were misled but people who took the money from samuel bankman-fried and ftx ventures,

we heard later many anecdotes of people who have said they thought they were taking money from ftx and they got a term sheet that said alameda was investing. there were red flags and little by little and now it's a big question of how people invest but also who people take money from. tom: the senator from new york got money from mr. bankman-fried and will give it back. is that what we will here today with a line of people who didn't see this coming and they will say they will give the money back or donated to jonathan ferro? annmarie: it's already been happening. you seen a number of lawmakers that have taken money from sam bankman-fried since the collapse of this in early november donating the money back to a number of charitable organizations whether it's $2000

or $12,000, they want to make sure that they say their hands are nina didn't realize this was potentially fraudulent. they want to give the money back. sonali and i have been talking about the other side of this, his deputy, number two, he was giving a ton of money to the other side, to republican so you will have republicans come out that took him his number two who is not getting all the headlines right now and they will probably give that money back. altogether, these two individuals gave more than $16 million. lisa: the larger question is about whether the touch has been overly light when it comes to the space weather is political donations or whether to not stifle innovation in the face of money sloshing around the system.

how much criticism our congress members coming under for a lack of a harsh approach to these players? sonali: they probably will come under more when we get more news out especially looking through the sec statement which calls what he was doing a house of cards. annmarie: there will be a lot of grenades thrown at politicians about how they would not step up. there has been talk on the hill throughout the summer, in september, about a cryptocurrency regulation legislation. the issue this legislation has that many believe that potentially, it would have been at least more welcoming to the crypto industry than they would like to see. it would have given the cftc more oversight and they say this should come under the purview of the sec. what will happen now is legislation is going to have to move because there will be a ton of questions that people will say that lawmakers need to get a handle on it.

lisa: in the broader venture capital and broader investment space, it's surprising that crypto assets are not selling off in response to this news. a number of crypto brokerages are up if you look at the premarket moves. is there a feeling that the contagion has already happened or will another shoot drop? sonali: you have to keep an eye on binance, a company that has seen 3.6 billion dollars of net outflows in the past week. keep an eye on it but the reason people flock to bitcoin is the idea of decentralization. the on-ramp to this industry will increasingly matter. aside from what's happening with these criminal charges, there are a host of bankruptcies. in the background, you have hordes of companies that have hired wall street anchors and

white shoe law firms who run around wall street to raise money as they look to get past this crypto winter. jonathan: thank you. tom: she's right. i think she's writing a screenplay. jonathan: there is a hearing still to take place today at 10:00 a.m. tom: you've been ahead of me on this. jonathan: what's interesting is we will hear from the new ceo. based on our reporting, last week prosecutors and the fbi and department of justice officials met at the st ny headquarters in downtown manhattan. so maybe it would be premature to should -- it through water over this hearing. it could still be interesting. lisa: the current ceo has not been talking to sam bankman-fried and he complained about that.

he said i can provide you with some information and he complained about that in the statement he prepared for congress. whether we get something substantive, what will be the nature of it? will it be full disclosure of the current ceo of what happened? jonathan: just to change the subject, united has announced 200 new airplanes. weird, they violated the business ruling and you can't make wide-body plane orders when the yield curve is inverted. tom: lufthansa is positive as well. live from new york, this is bloomberg. ♪

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jonathan: the latest inflation data is due 60 minutes from now. the biggest one day top on the s&p. a lift to the equity market this morning up .5%. on that and the nasdaq 100. look at the market, a deep curve inversion over the last few months. a bit more depth to that, we are down three basis points. two-year unchanged at 4.366. tom: what are the ships right

now into inflation and into the fed. i can't see it? jonathan: i keep hearing the bonds are back. i keep hearing the same thing. i am asking how much of the risk/reward has shifted? we had an a.d. basis point move back to about 3.57 on the 10 year. we had a two-year get real close to 4.8 and now we are down to 4.36. lisa: it seems people got a little bit excited about the fed pause. i think that information will be important in 60 minutes time. jonathan: the conversation will shift markedly. they are anticipating a 50 basis point hike and after that it will come down to the projections that you get.

the summary of economic projections, the dot plot for next year. i keep hearing 525. i think that was goldman, citi, bank of america. they are expecting the. plot to shift up. the question i've been asking, where does this go for the hawkish surprise? if it's the dot plot, why are you expecting the shift to a five handle? lisa: a lot of people are projecting that it will only go up to a 4.9%. tom: can i be the outlier here, super restrictive is the language that he used. he used the phrase altar restrictive. that is the risk they have going into this. it's a minority view, let's be clear. jonathan: it's going to look

restrictive quite quickly. lisa: right now, we are still focused on san bankman-fried. a lot of the action you have seen in crypto related companies. they are hinging on the crypto sphere, they are all positive in premarket trading. microstrategy is up near 2%. marathon digital is up 1.78%. we have already gotten that baked in but it raises the question, have we seen the worst of it? it is hard for me to wrap my head around that knowing how much money was going into this space in the bigger players are getting shown to be acting in a fraudulent manner. jonathan: so many people are

saying the same thing, this is an area that attracted so much capital investment over the past several years. there will be career risks attached to those decisions. you have seen certain firms that put money into those ventures, those individuals have left. to have people make those same decisions again, they will need this extra layer of conviction that is absent right now. lisa: what happened to all the retail traders? what about the institution that lost hundreds of millions of dollars? how much does that withdraw some of the capital from even the peripheries? jonathan: i don't think this is like the late 90's were people got up or buy stocks and didn't come back to stocks for a long time. there is something unique about this asset class. the people who believe in it, really, really believe in it.

i don't know if that has changed at all over the past several months. lisa: i have been looking at the trading activity in you are not seeing a whole cell abandonment speaks to your point that perhaps it doesn't change anything. crypto enthusiasts say thank you, let's weed out the bad actors. jonathan: sec is changing -- charging bankman-fried with fraud. lisa: to tops point earlier, what's the difference between the sec and fdny? sec is civil in the fdny is criminal. so what will he be liable to and for how much? tom: we will continued this discussion. we are minutes away from an

economic report. mark mccormick joins us, you nailed that strong and resistant dollar. have you gone to a weak dollar strategy or a less resilient dollar? mark: in terms of tactfully trading. we have to think about how do we trade ideas and how do we forecast them? our premise is that we are bearish on the dollar. if we look at the second half of 2023 are where we are at this point next year. going into 2023 we are bullish on the dollar, we have a high conviction on it. it resolves around the fed in china reopening in the global economy. what we have seen in the last six weeks is that we have not

seen an acceleration in the global economy and the reduction of risk premiums. they are well populated dollar positions have been squeezed out. the fundamentals are supportive for the dollar as we go into q1 2023. tom: is your study or real rate analysis or is it a flow analysis into next year? mark: i would say it's a factor analysis. that is critical because it relates to all the things we have talked about a focused on this year. whether or not those things reverse or whether we have momentum. our overarching theme remains commodities. what are models are telling us is that it has reverse for europe and japan. those things release the pressure and lower real rates that was such a dominant driver of the dollar. at the core of it, it is

real rates. the fed had room to raise nominal rates. to me, we have to think about inflation momentum, we have to think about that in terms of trade. affect markets are pivoting to value. momentum models have done well which is the first time we have seen momentum make a ton of money. i think the critical angle is we are seeing the pivot on the global economy and that is the value trade for the fx which is bearish for the dollar if we can muddle through the global scenarios next year. lisa: we have been talking about sam bankman-fried and once upon a time people were thinking about bitcoin as a currency that would rival other currencies. based on what we are seeing, have you moved away from that idea? do any of your co-strategist

talk about tandem in -- bitcoin in tandem with other currencies? mark: it's related to stocks and other bubbles we have seen. i think this is a real disruption. if you read the underpinnings, a book that came out in the 90's the sovereign individual. it's a concept of disruption in the digital economy that pivots away from the industrial age and information age. that requires new technologies and currencies. at the end of this, this is the first try with the new currency and structure and it had a lot of bad apples in failings behind it. but that concept of disruption in the currency space in the world that we have which is very digital is something that will be important in the core alternative. not to the dollar itself but the

technology, disruption and process will be important as we move through the next 5-10 years. lisa: how much do you pay attention to that when you look at the broader dynamics in the fx markets that are more traditional? mark: early on, we tried to run bitcoin in cryptocurrencies through our models. they did not explain any cryptocurrencies but in the last year or year and a half, there is no simple factor that explains equities, it was clear that the cost of money was a critical driver in the crypto trade. we need real rates to settle. we need volatility to remove itself. that is been inviting more people into emerging markets.

what crypto was in an age of easy money and low cost for disruption, the idea behind it worked very well in the cost of money going up has forced people to rethink where there is actual profit in value which is why technology itself has been disrupted. jonathan: mark, thank you sir. mark mccormick ahead of that cpi report. easy money has ended this year. tom: i sound like a broken record, that easy money is gone. sharp analysis has validity, profit is back in vogue now. active management is back in vogue. jonathan: do you think that's just a sales pitch? tom: how long have i been here, 6-7 years. there was a moment when i had

the honor of a meeting where it was magical to talk about this passive/active debate. here we are, i saw somewhere in the zeitgeist, etf bond investments are now joined enormous compared to everything else. jonathan: that was the best example of how to dodge a question. tom: is because were not talking about the world cup? jonathan: i am still unhappy that chairman powell is going up against the world cup. i need to talk to management about it. perhaps, skip the fed.

lisa: keeping you up today with news from around the world. sam bankman-fried is under fire on two fronts today. he was arrested in the bahamas after u.s. prosecutors filed charges against him. the securities and exchange commission have filed a civil action accusing him of carrying out a multiyear scheme of defrauding investors out of $1.8 billion. there's a controversial plan to cap natural gas prices. the eu says that the talks may be the most difficult yet. >> we have a broad agreement and as we all know, they are still very different views on the table. we need to see if ministers have the willingness to compromise.

lisa: germany, the netherlands and denmark call for a cautious approach, belgium, italy and poland ask for a more aggressive strategy. hong kong is scrapping the last of its covid restriction. the government will lift the ban on international arrivals, going to bars or restaurants and stop requiring people to scan a qr code to enter venues. covid curves have hobbled hong kong's economy. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo, this is bloomberg.

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inflationary side of it. maybe they get to 3% or 4% but i don't think they want to sink the country into a severe recession. jonathan: tom just confirming what my christmas present is. it's a book called "big dog". i can't wait for this gift. tom: i figured the glow of the tree. jonathan: he is so unhappy about my tree. tom: it's the kind of tree you put it in the closet. it comes down and i'm sitting there at home with ugly lights from the christmas story changing the bulbs where they burn. jonathan: you are upset by its

perfection? tom: it's a modern statement. on my tree, there is a squirrel in my tree and he peed on it last night. jonathan: i saw that picture. futures are up .6%. tom: on 107th street, that's where the good trees are. jonathan: is that where you bought yours? tom: no, we went out and cut down a tree with the dogs on their leashes. jonathan: headline year after year which ends up on the front page of your newspaper is expected to come down from 7.7 to 7.3. there will be a tremendous focus on month over month core inflation. we are looking for that to come in at 0.3% in line to what we

have seen from last month of 0.3%. i have to say that every bank is tightly packed around 0.3%. without much difference. tom: i agree my radar is up on that as well. i've never seen a monthly statistic matter so much. we have an expert on that right now. with all the distractions of the legal world, we will continue to follow that. but to delve into the impact of the market. kristina campmany joins us from invesco. what will invesco watch in this inflation report? kristina: the market is looking for the detail when we have the october relief. the fed is clearly waiting for

some slow down the elation and we need the labor market to calm. the market has turned so quickly in the narrative of what is actually pricing in markets is so different. tom: everybody is focused on equity market, stock market recovery. what part of the bond market has had the responsivness? kristina: you have seen breakevens a nominal's move. rake events have moved from two 60's all the way to 225. tom: she is loaded with jargon. kristina: nominal rates are treasury rates and real yields in the difference between the two is break evens. as a measure of the inflation we are pricing into the market. the common theme from

economist is maybe we get to 3.5%, 4% by next year. we are pricing 2.5% by june. it is a different dynamic. lisa: what makes sense to you is what markets are saying versus economist? they are expecting a softer than expected read that will lead top lower bond yields and higher equity markets? do you see a selloff and long-term dealt if they use this as a green flag for the federal reserve deposit. kristina: you can survey 15 experts, traders, economist, portfolio managers and you ask him the same question, what do we get for cpi and what is the market response? with .3, we have a 30 point selloff.

there are liquidity issues in the market and people aren't sure what to do with the actual data and what it means for the fed. we have a fed that's going 50 basis points and we rallied nearly 100 basis points. lisa: someone speculated we've only seen a third of the overall tightening. how do you game that out given the calls for applause and what that reads as real rates? kristina: the fed is trying to move towards this downshift and 50 tomorrow and there's chatter in them market that we have gone through this consistency of pricing and more and more. in november 2021, we were talking about seeing 50 basis point hikes in one year. that's supposed to be our slow down? tom: you are a bond nerd, i get that.

talk like a salesperson at invesco. how many years does it take to recover from the -18%, -20% of debt that we have seen in 2022? i get the duration and all the stuff you and lisa are encyclopedic on. how long will it take me to get my principal back to what it was in 2019? kristina: we are transitioning away from a world of mass global central bank support and we don't have that anymore. it will take time to recover and it doesn't happen in one year. we think that fixed income looks more interesting in 2023. the pockets in the last two months have shifted as you had the 600 basis point rally. we are sitting at 360 on tense. it's less compelling. real yields offer some value, fx is probably more interesting. lisa: are we heading for a

longer high inflation regime? kristina: economist across the board, the fed included, we have had a horrible track record of predicting inflation. it's interesting that the numbers have come so close and we made this quick shift to say we will have this rapid deceleration in the market is pricing that in and we can get to 2.5% in june when we have consistently over printed. the risk is on that side. this cycle has been unlike any other. inflation has ramped up so quickly. can a turnaround the other way? the risks are to cited. the market is focused on this and you had this john roberts piece that got a lot of market attention talking about if inflation comes down quickly, maybe the fed policy will be a 1%. that's a very different world

than where we are at now. jonathan: do your point kristina, this market is not focused on the next 100 basis point hikes. this market is focused on the cuts that are and our future may be 12 months away. tom: i have never seen it like this. the new york times had a debt on yesterday. how wrong were we in the last 12 months? how wrong are we right now? nobody knows. jonathan: i think christina is fantastic. tom: i am fired up. lisa: everyone is esoteric. tom: a public servant for 25 years, he's at duke university. john reed stark, he won the

award at the sec for being mr. perfect and all of that. here he is two days ago, out to finance. binance proof of reserve report doesn't address effectiveness of internal financial controls, doesn't express an opinion or assurance conclusion and doesn't vouch for the numbers. i worked at sec enforcement for 18 plus years and this is how i define red flag. jonathan: the people at the s.e.c. you're looking at fx. we are 34 minutes away from inflation data and america. then the focus shifts quickly to the federal reserve decision for tomorrow. victoria fernandez is going to join us next.

kristina campmany this was great, thank you. from new york, this is bloomberg. ♪

>> from the fed's perspective it is not about whether or not we have seen activity, it's whether

or not inflation has a meaningful downward trajectory. >> certainly, at the latest one more increase. >> fomc everybody thinks they know the trends. tom: this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. tom: on radio, on television we have economic inflation here in 29 minutes. we will have a complete report. mike mckee is in washington. we must speak of this historic day for securities law and america. where we prepared? i was not prepared for the specificity and violence by the statement from the s.e.c. on bankman-fried. jonathan: we had found out that

he was arrested in the bahamas. the s.e.c. is charging samuel bankman-fried with the frogmen of investors. he called it a house of cards on a foundation of deception. lisa has talked about it all morning. is not just the s.e.c. we are also waiting from the southern district of new york. tom: we want to get out in front of this inflation report. the distinction is criminal and civil. what will be unveiled further this morning? lisa: we will parse through some of the details. we don't know the extra details. some of the details within the complaint indicate some real deliberation. the intention to create a scenario where alameda the hedge fund had an unlimited line of

credit backed by ftx which is what they highlight. tom: in england, it's so different than here. if this was in the city, if this was in london. would it be the same process there is here? jonathan: why did it take so long to do something like this? to be fair, it takes a while to put together a case to make these kinds of allegations and put charges together. when bernie madoff came out and admitted to it. that was a big difference. we have had maybe one month from bankman-fried, we got some insight into the line of defense ahead of the charges. he is claiming i was naive, i didn't know what i was doing. but none of it was deliberate. lisa: this complaint repudiates that. he personally signed off on

removing restrictions to the line of credit to alameda that allowed these funds to head out of the u.s. on regulated. tom: i am going to say, i don't do a parallel with made off. jonathan: why did this happen back then if it didn't happen this time around? the differences are obvious. tom: we need to get to the data as we get to inflation here. the data is not what you will see in the headlines. is not year-over-year, its month over month. jonathan: you have to strip out food and energy. michael mckee will go so much further than that. equities are up, by .6%. do you remember the gains on

november 10? it was a monster move on the s&p and on the nasdaq as well after the back of the downsides of prize. we have forgotten some of this. we were up 5% off the back of the cpi which gives you an idea of how much this market can move on this data point. earlier on, we talked about the money supply and waited for the data. it was all about payrolls, now it cpi and nothing else. has the attention shifted from inflation to growth. on the growth story, hsbc publish that we are increasingly believing that activity data is surprising to the upside. it is downgraded so much in

recent months it makes further positive surprises likely. lisa: many of the consensus calls leads to a much severe -- much more severe downturn later on. tom: mr. kettner was shockingly cautious. jonathan: he is underweight and equities because he believes a stronger first half will generate all the concerns we had through the summer. lisa: it calls for a more hawkish fed. tom: can we do the data check, my head is spinning. why is the vix added 25 on the 26? jonathan: julian said that cathartic moment is 40.

tom: also surprised by the evidence that someone from houston had migrated through college station to dallas. to cowboy stadium, a habit won a habit one at 26 years. the last time we saw this cacophony and equity markets was 20 years as well. victoria fernandez from crossmark global investments , you guys are in the trenches on this. what do you say to scared people moving into next year? victoria: in doing these symposiums around the country their number one concern is what we do for next year and we tell them you have to take a balanced approach right now. when you look at the economy, we have positive elements going.

the consumer is still strong, the labor market is still strong. you have seasonality in things that are good foundations for the economy. on the flipside, it's all the stuff you been talking about this morning. there are concerns about earning estimates. we have seen eps growth estimates come down by 5.5%. that's double what you typically see. there are concerns of a shallow recession. you have to be tactical and have a balanced portfolio in order to take advantage of what is happening in the market at any particular time. we don't want to be heavily weighted one way or another. jonathan: how many times have you heard that. central banks are unlikely to come to the rescue. we are underweight, nominal, long-term government bonds and a new regime. can you speak to that call from blackrock? victoria: you know that i manage

fixed income portfolios as well as being a market strategist. we have been extending duration. we have been going in to investment grade corporate bonds. look at what the spreads have done in the last month? the 10 year financial, tenure bank spreads have come in 40 basis points. we talked before about getting that duration in because we knew yields would come down. we thought spreads would come in and that is what we have seen. we think they will be widening as we go into next year. i think it is a good place where you can invest because you have steady cash flow and you have a maturity date. fixed income investments have an out. i think you will get some good yield, some good cash flow. when you have a lot of volatility in the equity market it gives you a place to hide. lisa: you add to this position

even though there has been incredible rally? victoria: you have opportunity there but you have to be smart about it. you have to pick the places you want to be in the bond market as well. you can find some areas where you buy positive yield to maturity's. you have sufficient cash flow. that's a good place to have an allocation in your portfolio. jonathan: victoria fernandez fantastic as always. from crossmark global investments. matthew luzzetti deutsche bank securities inc. fromdeutsche bank securities inc. it's coming up. we will get a series, a sequence on the yield curve. matthew lu said he make a security call in 2023 before became fashionable. tom: there recession call they

make clear that it was out there further. it was none of this around the corner stuff. they get out to 23 and 24. lisa: has he push that even further? has he gone on the mat kettner point. what does a prolonged recession do? is that negative or positive for risk assets? longer-term what does that mean about the nature of the recession? jonathan: i think a lot of people are starting to join him. tom: the united airlines is the largest airplane order ever. i don't even know that means? lufthansa is out as well. i'm surprised it was better than we thought. do you think he flies for free ununited? jonathan: do your point, it seems to be unique in that sector right now.

what people are willing to spend on flying this year and into next year. lisa: if people are willing to spend that, what is all this talk about lack of demand with respect to traffic in the oil picture that people are prioritizing travel. jonathan: you talked about a golden. for the airlines into next year. a lot of people are pushing on that sector. certain guys are willing to spend serious amounts of money to sit in business class. lisa: you need to read that big dog book. jonathan: my goodness, the charges to change my last flight. mike frazier, he was my goodness.

i was worried that i'd broken it, but it's ok. matthew luzzetti deutsche bank securities inc. from is coming up shortly. lisa: u.s. regulators are adding to the problems faced by sam bankman-fried. s.e.c. is accusing him of a multiyear scheme to defraud investors. bankman-fried concealed risks and use co-mingle customer funds. he was arrested in the bahamas after they filed several criminal charges. investors are waiting inflation data. consumer price index is out in less than 20 minutes from now. a subdued cpi number would --

hong kong is reopening faster than anticipated. if the majority of people become infected within just a few months there will be a severe strain on the medical system. united airlines is betting on a rebound in long-haul travel. they have agreed to buy 180 dreamliner's. the blockbuster deal also includes dozen of boeing max does. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo, this is bloomberg. ♪

>> ftx is an issue for u.s., crypto doesn't have intrinsic value and people who wish to invest in it, be prepared to lose your money. jonathan: for us, the top story, less than 24 hours before he was expected to testify, sam bankman-fried arrested in the bahamas and facing sec charges for defrauding investors. maxine waters had this to say

yesterday. the public has been awaiting eagerly to get these answers under oath before congress, the timing of this arrest denies the public this opportunity. the politicians are complaining, the republicans as well. they want their moment with this guy on capitol hill. tom: i get that idea but you brought this up earlier. you are always looking at the angle on this. do you think they time this around the committee? they had to have. jonathan: i think the timing of it is curious. we had a hearing scheduled and then he was arrested in the bahamas. lisa: there has to be something about his coming to testify in the united states after being in the bahamas for a longer time. you wonder what those conversations were like when the current coo continues to talk

with congress and the prosecutors. jonathan: there will always be conspiracy theories on why it happened like that. i am not lending any way to either of them. one is that prosecutors didn't want to complicate the case. we have had many public statements, how could you complicate it further? it would be under oath which could make a difference. another one is that democrats didn't want republicans to shine a light on the amount of money that had been going towards them. but we knew the details about this. denying the opportunity for him to be grilled by these guys. let's use that word grilled a little more carefully. when was the last time you saw a grilling on capitol hill? tom: i remember the first time i was in the house of commons years ago. i was stunned at the grilling i observed at the house of

commons. we have to get to our wonderful guest here. my best sick thing is i want to talk about the legal side of things. do i care what a politician who is not educated precisely on the law or in economics or international finance? do i really care what they think? jonathan: the full argument is that a lot of people wanted to see this individual. not of various interviews but under oath and make a public statement. lisa: in contrast to the last grilling i saw which was to jamie dimon after the financial crisis. that is my point, put them against each other and see if there is that same kind of anger in the tone. tom: michael mckee is saying i

have eight minutes, let's go. our bitcoin, binance correspondent. lisa is focused on when we get the documents from the southern district coin of whatever. -- southern district court. sonali: we want to see that unsealed indictment. what will they give about what sam bankman-fried meant done. -- if sam bankman-fried keeps speaking publicly how does that complicate the case or authorities? he has repeatedly said he did not knowingly defraud anybody. the question of intent is a consistent question when it

comes to sam bankman-fried. did he know what he was doing? the cases laid out by the sec that he misled investors and there was a lot of detail that was very intentionally left out. lisa: what will this hearing look like without sam bankman-fried attending? jonathan: we will hear from the current ceo. sonali: democrats took money but his deputies gave very much of the republican party as well. one was giving at the same rate as peter thiel and steve schwarzman. both parties have taken money and intense lobbying efforts. when you look at the bills tied to any potential crypto regulation you do have everybody's hands dirty. on top of that having some more

complicated when you look at where the industries lobbying efforts have gone. there are a lot of complications when it comes to push the ball forward knowing the right thing to do for consumers. jonathan: i am looking forward to catching up with you. we need to focus on one thing, it's 7-8 minutes away. inflation data in america. michael mckee will walk you through what you need to know. mike: what we are looking for is another slow down and inflation, still rising. the .3 percent gain the prior month which drops because of basic facts, year-over-year numbers are down to 7.3% and

6.1% for the quarter. something that is interesting that we have just developed on bloomberg. inflation swaps which are pretty good at projecting inflation. the cleveland fed is another organization now casting out what we think we might get. the inflation swaps are suggesting we could have a downside surprise to seven point two rather than 7.3%. lisa: what's the relationship between the labor market reports that have come in hotter than expected and a cpi that is trending lower? mike: thus the problem according to jay powell. service industry prices are rising while goods prices are deflating.

the service industry costs are labor costs. they are still having to pay up because a lot of those jobs are not the most attractive and is been hard for them to find people. as long as the labor market stay strong sin labor markets anticipates it will still have an inflation problem. tom: they have the casting series which is come down. they also have their cleveland measurement of core which is rolled over. what is the significance of two data points in a row of rollover versus one or four data points? what's the pro math of two data points where we rollover? mike: it will not be pro level, we will say experienced amateurs may be. powell talked about this a week ago, he said that we are not as excited by the october inflation report as wall street because it is just one month.

they will want more than two months. they will want to see three, four months. declining inflation to give them some confidence that it will come down. there are one offs in the state of the surprise people in terms of their rise or fall for the month. jonathan: mike mckee will outline those one offs. will we see a cool down in the inflation data ahead of that federal reserve decision. equities are a .6% on the s&p. ♪ ure that does too. this is ge healthcare, creating a world where healthcare has no limits. this is ge vernova, helping generate and move the energy

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jonathan: november inflation data is moments away. a spike in equities, up .8% in a move on the 10-year by six or seven basis points to 4.34. we are looking for year-over-year to come in. mike: we have a downside surprise with the headline just

.1%. the expectation was 3% -- .3%. on a core basis we are at .2 which is down from .3 and lower than the .3 that was expected. it puts us at 6% which is lower than the 6.3 percent we saw in october. shelter all items increase offset the declines in energy prices. food is up .5%. food at home is up .5%. energy down but food is up. energy down 1.6%. natural gas and gasoline both declining. we have a downside surprise. let's see what kind of market

reaction we get. jonathan: equities are absolutely flying. similar to the moves we saw last month. we are higher by almost 3%. a big shift tire coming out of it. get to the bond market. bring up twos, tens, 30's. the two-year is down to 420. the 10-year is down 17 basis points at 3.43. once you have figured out with the risk in the bond market you can take a stab at the euro-dollar. 106 handle this morning. a move of .9. equities firmer, yields lower. tom: the dollar is moving, not much nuance in the bond market. this is a movement of everything

to a lower yield structure. jonathan: the question you would out this morning off the back of this? does this validate a step down from tightening? does it encourage of adderall reserve to back away the same way chairman powell did in the last couple weeks? tom: you need to revisit the analysis, maybe he move the call to an optimistic call. you mentioned neil dugger another optimist out there. you have to at least revisit their why of what this is happening. disinflation is stochastic. you go up and then it gets fixed. jonathan: real income has

exploded over the month. neil is pushing back hard against the gloom. mike mckee, when numbers like that, you just go go go. can you talk about the nuance? what's happening beneath the headlines that you see? mike: maybe we need to redefine transitory. we don't know if jay powell would. used trucks and cars are down for another month. this is the fifth month in a row for used cars and trucks to be down, they're down 2.9%. motor vehicle insurance is up. airline fares are down 3% on the month. medical care services down .7. this is a methodology changed by the bureau of labor statistics

that was expected to subtract from cpi. we are seeing a return to pre-pandemic kinds of price levels here that are pushing down on cpi fairly quickly. food is still a major issue with food up .5% in food overall up .5%. americans will still be feeling it although gasoline prices are down. tom: are we feeling cumulative this morning? have cumulative do i feel right now? mike: you're feeling better because this is the second month where we have had a downside surprise. now that it is, in a little bit but a lot on the year-over-year pieces. inflation may be fading faster than some people thought. at this point, is starting to look pretty good for the fed. the question is not what they do tomorrow that is ratified, how does that affect, if it does,

the dot plot going forward? and what they think the forecast for inflation is going to be for 2023 that will have markets readjusting tomorrow. lisa: before we let you go, is there anything in this data that suggest that there is this rapid disinflationary trend under the hood regardless of whether consumers keep spending given that they are employed in getting wage gains? mike: there is nothing that jumps out that suggest that we are going to get derailed by anything. as i mentioned, there are always surprises but there are downside prizes this time. it appears that the various categories are doing what analysts thought they would do. the magnitudes may be a little different, but the things that are supposed to be declining or declining in the things that are

holding up her still holding up. as the fed makes its forecast it has a little bit more confidence about where we are. jonathan: michael mckee, we will look for your fed coverage tomorrow. let me run you through the price actions. equities up by 2% on the s&p. we are down 16, 1718 points. we are now down just 10. the magnitude comes off a little bit. the euro-dollar is holding on. overwhelmingly, people still believe this fed hike will be 50 basis points. the question will be asked, i am not asking this question because this is what i think but other people will be asking it. will 25 make an appearance tomorrow?

tom: bank of england dissent is really intelligent dissent. jonathan: i'm sure the fed will be happy with that characterization. tom: right now, as we do we have a conversation with an expert. he has been fabulous outfront. matthew luzzetti deutsche bank securities inc. fromdeutsche bank securities inc. , how have you recalibrated your session call and after this inflationary report today? matthew: you look at the headline numbers, you look at core that is better than expected. we did not mention it yet, but rent is strong, they rebounded .8%.

the market doesn't look at nuance at this point and rightfully so because it's at a lower print. you have medical services very weak. that will stick with us for the rest of the year. a big question and story over the next year will be, pce will converge a lot and you will see disinflation of both of them. jonathan: how do you think chairman powell never gives us one tomorrow? matthew: they can step down to 50 basis points, i think they want to step down to 25 as soon as they can. the data allows them to do that if we get another data point like this. it allows them to calibrate policy the best way they can.

if there is a soft landing, it helps to optimize that. i think they want to avoid this stop/start tightening cycle. i think they can avoid that the best bias settling to 25 data points. lisa: it gives people more money to spend further. how do you factor that into the bullish case that there is this natural disinflation case? matthew: when anything about chairman powell three components. core disinflation and deflation coming in. rent is 12 months ahead, they will be decelerating. is this third part of the basket that gives uncertainty and wage growth. core services like shelter where

we see health care and these other components looking ahead, we are not seeing demand destruction. we see financial conditions ease, but it makes their job harder on that part of the basket. does that get us from 3% to 2%? jonathan: the big question for chairman powell tomorrow, is the risk of doing too little outweigh the risk of doing too much? how does the answer that tomorrow? matthew: i think he leans towards yes. they want to lean towards over tightening rather than under tightening. the committee is divided on the question. you will have to balance that. the more data we get of this nature, if the risk/balance comes in a better balance, we need to more data points. we have been surprised in the past. i think they will be cautious about pulling the plug. jonathan: in the risk management

question for chairman powell? a couple of months of data, we will get the projections for whatever they are worth. tom: i folded to that another phase, financial stability. it was there big topic at their meeting. jonathan: no one's worried about financial stability apparently. we still move to percent on the s&p. 14, 15 basis points. the euro-dollar at 10634. tom: matthew luzzetti

of deutsche bank, thank you very much. we need to get an equity update as well. jonathan: i thought you wanted to move on? tom: i know you want to talk world cup soccer. jonathan: troy is here to talk football and investments. looking forward to that conversation in the next hour of bloomberg. tom: just deutsche bank stop at 2:00? matthew: yeah. tom: you can go now. jonathan: i can leave as well. does croatia have a chance? the answer is yes, look at what they did to brazil.

tom: that's the final word here. gina, as you well know, they put a co-ratio out of the gloom level. how do you deal with psych guist gloom and the caution that is out there in the idea of an equity market running away from me how do i deal with that emotion right now? gina: i think it's about having a long-term view. i think we get caught up in these data points in the midst of a bear market where you have extreme volatility. it is symptomatic of a continuation of a bear rather than the beginnings of an uptrend. you want to be very careful to draw too many conclusions on volatile days like today. the second thing to consider is what is the appropriate valuation over the long term? how much do you really want to

pay for stocks? we are trading it 17.5 times the earnings. we are trading closer to 17 times of earnings. it's coming down faster than anticipated, he struggled make that argument. keep your eye on the longer term and the appropriate allocation for the macroenvironment and think through where you want to add capital and want to take advantage of the dips. where are the long time -- upturns? lisa: if this gives a little breathing room to the fed and a discussion of a soft landing and we don't get the downward revisions of earnings-per-share on the s&p as so many people are expecting. is that a good thing for the stock market or a bad thing? gina: let's call it as it is.

to say 7.1 cpi is disinflationary is symptomatic of the environment that we have been in. disinflation is an environment where we see much more contained inflationary points. this is not even close to disinflationary. this is still very strong inflation that the fed will have to tackle. we like to see it coming down but it's nowhere near her of comfort. in terms of estimate revision is something we watch very careful. we did see a really strong downdraft and estimate revisions as result of the most recent earnings season. we would like to see that stabilized first. you will most likely see downward expectation but the pace of the downward revision is the most important indicator. tom: united airlines, the biggest boeing order since time

began. what is that signal to you for the spirit of industrial and manufacturing america? gina: is one of our bigger and longer term calls that industrials have popped her sector scorecard for the first time in a long time. one of the reasons to be optimistic about industrials is because of the order cycle. normally we would be heading into recession with too much manufacturing inventory, too much excess that has been built through the cycle and that is not the case this time around. we are starting to see stabilizing long-term demand in certain sectors that should empower recovery. you lay on top of the airline story things like decarbonization creating a wave of infrastructure investment. the supply chain management process creating a window of investment. you can make a case that those will accelerate over the longer-term.

after 20 years of no orders is a fantastic environment for industrials. tom: we have spx of, the vix comes up three points from that 25 number down to 22.12. it is important that we dovetail in here to find the one congressman in america who will root for croatia against argentina and that will be the man from michigan north of kalamazoo. conservative, dutch american and fixated on the new finance of america. bill huizenga , a republican from michigan. i have to talk world cup with you first. after what the netherlands went through with argentina. croatia has a chance today? rep huizenga: i will note that

the dutch beat the united states , that was a little tougher conversation. i know the football talk has gotten me excited about my detroit lions. a little different kind of football. it will be a good day. tom: a legend from detroit. i must ask you about this meeting this morning at 10:00 a.m.. i want you to take the bizarre of bitcoin, blockchain, how do you explain this moment to your conservative constituency? rep huizenga: the constituency and frankly to colleagues as well. all of us on the financial services committee have had colleagues of ours coming up to us, not to mention the constituent saying what is going

on with this? the sad element of this, this situation is creating a conversation which is not helping us go the direction we should go which is maybe we should ban all of this? is too confusing, there are too many opportunities to cheat, lie and steal so how come we just don't ban it? that's not an option. it's about the block chain technology that is transformative for the financial services, health care, you name it. my background is in construction and housing. you look at what you will be able to do in that field with blockchain technology is exciting. this appears to have all the hallmarks of enron and bernie madoff and sam bankman-fried, that puts a very different spin on what the conversation has been here in washington. lisa: the timing of the arrest

given the planned meeting on capitol hill? rep huizenga: i would assume that the revised calendar release had nothing to do with that. i have been talking to a number of my colleagues who were former prosecutors who said if you give a witness or potential mark an opportunity to come in under oath and spent four hours just freewheeling conversation with congress where they might end up perjuring themselves, why would you not give them that opportunity? it has a lot of question marks around the timing of the arrest. i welcome his arrest but why was it not a week ago or a week from now? lisa: what do you want to be accomplished at today's meeting?

rep huizenga: as you know, we are having the new, interim ceo is coming in. i want to hear his answers to the conversation i would've had surrounding ftx.com. the separation between u.s. and international funds. the co-mingling of that or if there were u.s. dollars getting put into international funds like that. i wanted to hear from both of them what their take was and whether there was any evidence of that because i want to protect u.s. consumers and u.s. taxpayers as well. tom: people have been looking for the secretary of treasury, the stretches back a number of years and administrations. you have to believe at some point we decided bitcoin and all of that is an asset, is it

possible, can you audit it in canada provide a tech advantage? are we at that point right now where we need to codify bitcoin to be an irs item? rep huizenga: there is not consensus of that yet. some people argue it's a commodity, others a security. it turns out this is a platypus. it has hallmarks of both. we have not reached that consensus. gensler believes, he did believe that it was commodity. he now seems to think it's a security. we are going to have to wrestle with this one. i should note, we have not seen gary gensler in front of our committee in over a year. i would like to ask, what has

the interaction been with the sec leading up to this point? that's a very important thing. sam bankman-fried was in here and december 21. it's ironic that he has been here more than gary gensler. tom: we do this was all of our politicians, you are steeped in the core industrial process of america in sand, gravel, crushed stone. that's what you do in western michigan. how do we jumpstart investment in those core industrial and housing, construction processes? what is washington need to do to help somebody who was not busy and gravel right now? rep huizenga: we are pretty busy. infrastructure has continued to go on. your last guest was talking about that. those underlying pressures that normally would have had us going in a different direction.

there is a lot of activity but we have to solve the supply chain. part of that in construction is making sure we have domestic oil production up because 30% of a barrel of oil goes into pvc pipes. if we are looking at housing and infrastructure, we have to make sure that the materials and the labor is there and available. tom: thank you so much for your time today. from this second district of michigan. the vix is three big figures. what do you see on the bloomberg terminal? lisa: i am looking at the base moves going back to november. if you look at the nasdaq, of nearly 4% ahead of the open. flying on the prospect of

disinflation coming through and making it easier for the fed to step away from the brakes and reassess policy. tom: how do we attach the core either those of construction america and what we have heard from jim glassman as he talks to people like that every day. things are not that bad. to neal dunn to what we saw from scott kirby at united airlines today. the recession gloom, help me. lisa: max kettner goes against the grain and says we will not see that big downturn, those downward surprises early next year. what is that mean in the terms of the ability to beat inflation because we are coming down from a very high place. tom: we will have the fed meeting for you tomorrow. before that, in one hour with

bill huizenga congressman on capitol hill. good morning. ♪

jonathon: a downtown surprise of inflation on america. equity futures right now up to .8%. the countdown to the open starts right now. announcer: everything you need to get set for the start of u.s. training. this is bloomberg, "the open" with jonathan ferro. ♪ jonathon: live from new york city, we begin with the big issue. inflation cooling down. the fed, coming up next.