>> 2023 could be challenging for stocks. >> you don't have to go out 10 years. >> i think china's reopening is not going to go as smoothly as people think. >> we are going to start the year with a coupon. >> wages are likely to rise more quickly than prices. >> this is bloomberg surveillance this is bloomberg surveillance with jonathan ferro, alongside tom keene and lisa abramowitz >> it broke down halfway. >> good morning, happy new year. >> good morning to you.

features up right now about 9/10 of 1%. i will try to remember how to do this for the next three or four hours. a big question for 2023 it's about china reopening and what we can expect in the future of the decisions made. >> that's also because the data we are getting is our brenda's. it is a prediction of a contraction fourth-quarter for chinese economy that said, look at the subway activity. >> i saw the same thing. >> we were looking at that in the aftermath of the pandemic and that tells a different story. >> where is the demand going to show up? is it where people expected to show up? to may be blunt the impact in the months to come.

the supply question is more interesting to me. are we going to get relief? we will discuss that in a couple minutes time. into places where we didn't see stockpiling? >> it's a great question. it's very complicated. you are already seeing some easing in the supply line. at what point do we start to see that come through the crude market, come through the natural gas market? >> if you would like the guide for the next week or so we have payroll on friday and looking ahead to next week you have cpi data and the 13th we get jp morgan analytics as well. so you get the data and the earnings. the kitchen sink for the guidance for the your head. >> can they give the kitchen seek approach if we have no clue? honestly this feels like a black to me.

i don't seem to think it's a whipsaw, and other people say just by bonds. honestly. >> we figure that out. futures right now up about 1% on the s&p 500. i was surprised to see this, just this big coming into treasury. you'll down by 13 basis. >> and how much is this based on what we saw in germany? we also see bigger than expected decline in some of the inflation read. maybe it's just that everyone said buy bonds. honestly, today everyone is getting back to the office in the u.s. and getting their feet under them. we get u.s. jobs opening data as well as fed meeting units. the data is going to be interesting. how much does it continue to come down? on thursday we have adp employment.

jobless claims at 8:30 do we see an uptick in jobless claims? if you look at the longer-term track record it looks like somebody died and was put on one of those heart monitors. you have to expect to see that. >> only you can say something like that. >> it's a good thing, right? >> it's depressing. look, i'm with you. we have 1.7 jobs open for everyone looking for one. we can talk about if the data is worth looking at in that way. different screen, animate disaster. -- eminent disaster. >> we get ism services index for december at 10:00 but the hourly earnings do you start to see it come down and terms of how much they're going up? that might be a more telling indicator than the overall numbers of people getting hired

because that consistence of how much real pressure there is in the market. >> i was told it was down. we will be doing a top risk then. ck just abandoning us on the first day of 2023. >> yet, he ian bremmer out for the first top of the year. that certainly what i have heard the last number. an annual tradition for surveillance to join dr. bremmer in celebration of the 25th year the top risk are a must read. of course the war in ukraine, bill dudley will join us with dr. bremmer and very much so we will lead with china looking forward to talking about bremmer as you and lisa mentioned. >> about 25 minutes. i've missed you, tom.

i'm not sure if that sentiment is shared. >> i think he does i think he was about to say but there is a delay. >> that's what i like to think anyway. >> managing director for portfolio strategy. happy new year let's look ahead to the year ahead can you tell me how big it is priced in this market? >> i think not much happened over the christmas period which leaves us with the same problem, risk very low and i think risks are high we are going to shift a bit from the inflation risk size to the growth risk side. you mentioned china, there is still a lot of uncertainty on the growth picture globally. i think we are in the same spot are we see equities down in the near term possibly recovering

towards the end of the year. i think that the key challenges, equity, credit spreads, it just doesn't leave us with a good start for the year. >> you said things haven't changed but one thing did change it was warm over the last couple of weeks. it has really allowed there to be an easing for some of the energy infrastructure does that give you a more positive tone that some of the worst case scenarios haven't come to pass? it's been better than is expected across the board. >> i think that's fair. i think certainly the kind of warm winter is something that has wide relief. we see that in the currency market. the euro has been strong over the holiday period and the dollar has been weak. a weaker dollar is a risk. i feel it is a positive. i'm not sure if i would extrapolate that the big

challenge you always have is markets are priced where it already. it does feel like the currency markets have reflected that a little bit. volatility is low. so i like the idea of mixing asymmetry and i think micro momentum has been supportive but the asymmetry to chase the momentum right now doesn't look particularly good. >> ants, christian, you're not alone in that. if you go into some of the havens it is better but as john pointed out we are seeing that haven bid today. we are seeing people pour into the dollar at what point do you say, ok, it's already priced in? what are some of the triggers to know this trait is up? >> yields have gone up in the last two or three weeks. and that means to me to some

extent the fixed income opportunity is still there. i think at the margin we are leaning to open quality type credit so we are not necessarily saying we chase down the line riskier credits but at this juncture, investment type yields we think it's so attractive so there the valuation is less of a concern but you're right. i think this kind of has shown a bit of consensus with regard to fixed income. the other thing that does kind of give me a bit of comfort is the flows. i don't think we have seen a major rotation into bonds. it's been reasonably snow -- slow. jonathan: start with demand. where do we expect that demand to show up? where is the chinese capital going to be deployed? how is it going to get spent

abroad? >> it's a really good question i think we have been leaning towards the slightly more bearish story with regard to the global economy in the sense we have relatively tight commodity markets and if china reopens fault -- fast you can see commodity inflation we have coming into this year over last year. so to some extent we are a bit more worried that it could reignite the commodity strength which then has the effects on inflation but the travel balance -- bands that have been put into place. exposure to travel services is a bit more limited. so the economy itself is likely to see a decent recovery but it could be very focused.

not easy to invest. jonathan: i think the supply side is making it a more complex question to answer right now. do you see this is something that will develop into supply chain leave? >> u.s. economists they expect inflation to turn negative this year so i think on the good side and with regard to supply chain there's going to be significant relief and there's got to be less inflationary risk coming from goods it seems and with china reopening you could argue this even more relief on that front so still the services sector where there is a source of inflation and the commodities parts and from that perspective that is where we are looking. labor market in the u.s. is still critical and anything related to commodities, if it's

the energy crisis in europe or if it's china reopening crowding commodity markets we are watching this on the supply-side. jonathan: fantastic to kick off 2023 with you. it's going to be a massive debate. lisa: especially because it is so bifurcated. does that mean you get to this sort of rebound boomerang inflation later on? jonathan: did you hear that? slowing down simultaneously. lisa: that's a great question. the slowing down, yes. jonathan: looking forward to catherine kaminski. we will catch up with them in about 28 minutes. live from new york city, happy to be back. this is bloomberg.

♪ >> keeping you up-to-date with news from around the world. i'm lisa mateo. business and consumer spending plunge in december and more disruption as likely in the coming months as covid infections surge across the country. activity in china services sector felt in almost three years. ukraine struck a russian military facility killing at least 63 troops. it's one of the deadliest losses acknowledged by moscow russia says the facility was hit by four u.s.-made rockets. the u.s. is in talks with south korea to keep kim jong-un's regime from using weapons. south korea is seeking a greater role in managing atomic weapons on the korean peninsula but president biden says he is not discussing joint nuclear exercises with south korea.

the national football league tamara hamlin suffered cardiac arrest he is in critical condition. teammates surrounded him while he was being treated by doctors and paramedics. the game was postponed. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo, this is bloomberg. ♪

>> working relationship with kevin mccarthy, yes. >> do you think he's going to get the votes to be speaker? >> i would be surprised if he didn't. he would be able to get the votes together to be the leader of the party and he will be tested as to whether or not he can lead. but, you know, he's worked pretty hard at it and it looks to me like he will be the speaker. jonathan: if he gets 218 votes. live from new york city this morning, good morning to you. new equity market positive. s&p 500 up after a punishing 2022. lisa: devastating.

19% on the s&p. the nasdaq was more significant. jonathan: that set office will. as we reset coming into a new year i think that's why it relies on fixed income. the correlation, the one we used to reset itself. lisa: you are seeing that play out. the bonds we have in actual valuation bid for individuals were as stocks perhaps not so much, how long does that last? we don't necessarily see at surface. jonathan: i want to talk about china reopening as well. did you see what the spokeswoman said about restrictions being put up for chinese travelers out of china into places like europe, the united states? some countries target china like scientific pieces and excessive measures are unacceptable. that's kind of dripping with

irony for all a lot of people read that. lisa: i think a lot of people say this is pretty rich considering other people have accused china's measures is not scientific and not necessarily rooted in anything else but it is notable to me aside from the irony and the richness here. there is an aspect of what kind of tit for tat do you end up with as they try to communicate very convoluted message. jonathan: look at the data out of china i think it's more important to look about what the data is going to be six months from now. do we get that ugly phase of data? likely out of europe or social mobility starts to turn down. get people calling out, have all the scans of issues and then slowly, slowly in the months still to come they start to rebound. and they rebound pretty quickly. lisa: the people ahead of that looking at the data, a member

they were the ones who were ahead of lot of the increase in economic data so can you have the same in china when there is a different economic act up as all? it's not just covid. jonathan: how much weakness do we need to look there? we will pick up on that a little bit later. tk is going to join us in a few minutes time. i understand he's going to lead with a lot of questions on china. right here in new york we looked on to d.c.. fantastic to catch up with you let's start with the speaker vote showdown for kevin mccarthy a little bit later. will he get 219? >> we just don't know yet, jonathan and that's is what is scary going into this vote. this is the first order of business for the new congress even before new members are sworn in. washington went to bed not knowing if he was able to quench the votes needed. it's 218 if every member is present. it could just be a majority,

that happened in the past. the issue mccarthy has is that this is infighting of the republican party even if he is able to clench the speakership today or potentially the next few days because this will just continue until there is a speaker, unless they adjourn congress. then this just paves the way, it doesn't really exude a lot of confidence to the republican party because he's already having to make concessions. lisa: what is the consensus of this where the fissures are in the republican party? >> it shows how much hold you have of these heart rate representatives. really the freedom caucus. you have five coming out, these are the no, never kevin's. you have those who support kevin mccarthy with pins and saying ok like ok were going for kevin. so the always kevin's and the never kevin's. but these individuals you have five that are seeing we are not going to vote for him and then

you have nine signing this letter saying we saw some of the rule changes he wants to make, one of the biggest concessions is making it easier to have a no-confidence vote but they are saying there isn't enough concessions and a lot of them aren't specific so they want to see more proof for he even takes the vote to be speaker of the house. but what this really shows is down the line it is going to be much easier for these individuals to have a hold on the party because they have such a slim majority. lisa: what is this mean for policy? there is a lot of different issues coming up, does this inform what the republican power is going to be even as the majority in house? >> i think what you can see in terms of policy down the line and really september is going to be key, right? they have to sign off on to another spending package or you're going to have a government shutdown. it's going to push for more hard

conservative policies in terms of taxes. they want to make sure the trump era tax cuts which in a few years will be go slighted they want to make sure they continue. they want to drive a hard bargain when it comes to the fact that if the democrats want to raise the debt ceiling and obviously that's going to have to happen for the nation to conduct daily and normal financial practices. they want to make sure there are concessions for the democrats when it comes to spending. it's going to be one of the key areas to watch. jonathan: just quickly before you run secretary buttigieg get to celebrate christmas after the last week or not? i imagine the department of transportation was incredibly dizzy over the last couple of weeks. >> i think it's fair to say his phone was blowing up given the fact that so many individuals were stranded in airports not able to get home this christmas. that is one that he is still

going to be dealing with this january 3. jonathan: i see the consequence of this. i had some people talking about consolidation between jetblue and spread it is that going to get pushback now? >> or not if they can have better technological systems in place. honestly you can have either argument. i think the bigger questions are dividend payments with her some of the airline companies can pay dividends without investing in better technological systems and contracts for their workers and then there's the question of what kind of responsibility for compensation to people for stranded in places? not just for this but like for example in atlanta. jonathan: are you talking about last year? lisa: whatever. jonathan: i didn't forget it. carry on. lisa: i actually went to denver and i was not flying on southwest.

it was horrible. i can imagine. jonathan: i went through the numbers this morning and thanks to the team for putting it together. 15,700 flights southwest canceled worthen 15,700 flights. almost 51% of total flights canceled december 22 through december 29. that is brutal. lisa: i was in the airport and this person who is a very experienced member of the flight world said it's kinda fascinating to watch how badly this all went. it was a cascade of horror. one terrible thing after another. they couldn't get it up and running because of the point-to-point system, just highlighted how ridiculous it was. they were passing around pieces of paper to tell people where they were going to be flying. jonathan: would you trust them with their holiday travel next her? we will see. lisa: for what price first of all and how many free drink

vouchers. jonathan: you think that's what it takes? [laughter] to put my holidays at risk? lisa: i just wonder what perks they can offer. jonathan: what is it with drinking and airports? i'm not sure there are social rules that apply. lisa: absolutely. the -- because it is always 5:00 somewhere. jonathan: this is bloomberg from new york. ♪

jonathan: live from new york city, good morning to you. equities with the lift i don't know if many of you want to see a lot more of this. on the nasdaq 100 up by less call it one percent higher. in the bond market looks like this and i said it earlier i was surprised to see it. you'll to the front and don't buy seven basis points. 375 20 yield by more than 12 basis point. maybe look to europe. cpi out of germany look at the regional cpi and then you get the headline for the whole country in about an hour and 30 minutes. that has come in across the board so maybe that's contributed to the bond market.

euro-dollar pulling back by 1.3%. lisa: i'm not sure how it actually moves over to do strengthen the dollar you might think the ecb might have to go far if you are seeing some truth to this inflation but you are seeing here, this goes to your question earlier, is the benefit of a bit of reopening in china. not in terms of abandoning covid zero but the upside after the covid spikes in the same you -- in some of the cities like beijing. jonathan: the geopolitics of this as well between the foreign ministry over travel restrictions. lisa: you just want to keep going after that. it's a little bit rich. jonathan: just a little bit. tom keene, good morning, tom. tom: always good morning to you. it's what we do at the beginning of the year, we start strong

with the top risk of eurasia group. our two optimistic this year on compared strength joining us with a brief surveillance this morning ian bremmer. bill dudley will join us on a divided america. right now, not a divided china. xi is at maximum power >> good to be with you, tom. it's always good to be kicking this off with you. there is no question that both for china as the second-largest largest economy in the world but also with xi jinping having so much power and using it in ways that are capricious and are not in any way to transparent. the global economy has never experienced anything like that, the level of uncertainty in the persona of one human being. we've seen it with the decision

to do a complete 180 degree with the pandemic and zero covid we have seen it with a trillion dollars because is decided he was going to squeeze it. that level as china reopens their economy this year with no level of data we used to get 5, 10 years ago from the chinese is an in mostly concerning issue. tom: this goes to your colleague , literally years ago don't under estimate has power have we seen the maximum? do we see himweaken off the covid disaster? >> we see china weaken a little bit on the global stage. now that they have seen the united states and nato and ukraine, the lessons they are taking from concerns about american economic strength,vis a

vi china. and the fact that the chinese have sat on their hands xi jinping is not in the same political position he was in before the pandemic started but politically inside china, he is only strong. and that is the nature of the risk for 2023. tom: top 10 risks, how does china permeate out to all the other thinkings of the top risk this year? they seem to dominate every conversation. >> it's something very specific. at a time when the united states democracy and economy is actually coming out more resilient and stronger than any went out there would have a managed 1, 2, 3 years ago we are seeing around the world a significant number of super empowered individuals who aren't getting great inputs from experts, who are able to act

with impunity and are not getting what they went on a various ways on the global stage. putin is one,xi's another and tech centered billionaires are a fourth. those individuals are driving a commence or an amount of global risk in the marketplace right now. tom: g20, g7, g8 g0 are much more important for americans, us versus them is the basic drum out there. how do we prosecute in 2023 a foreign policy? how do we prosecute a foreign policy with china they get something done 12 months from now? >> two different ways. you lean into american strength which turns out to be national

security broadly defined. the same way germans have made mistakes for decades in letting too much of their energy security green on russia americans have led to much of our technology national security lien on taiwan 100 miles away from the mainland. what we are now trying to do, not just the united states but with allies as well essay we are going to address that. we're going to address it because of national security so you the japanese, you the eu, you the u.k., you the canadians you are going to be with us for anything the chinese could use that would threaten our national security directly and that's a policy that will align the g7 more broadly on china. but at the same time, biden does not want to be in a cold war with china. he doesn't want the impact of competition on national security to bleed out into the broader

economic interdependence. tom: i haven't gotten it from secretary blinken i don't think i've gotten it from the biden administration, let's go back to something like the military-industrial complex. this is back went tulane had terrible football. >> what, a year ago? tom: the shock of tulane football i'm looking for a shock in the world. in the top risk split is one thing our viewers and listeners how to look for sixpence and 12 months from now? >> the shock that comes from a chinese leader that is making policies at the end of zero covid a lot of people thought it was going to be incremental after he secured power in that unprecedented third term. he didn't move away from it at all. it shocked everyone. no one was expecting this even three or two months ago. why? sudden demonstrations the information go to him and he as

an individual dictator on the second largest economy of the world made that decision. we are going to see more uncertainty of that kind from the most powerful individual on planet earth in 2023. putin is in a quarter. tom: when we talk to bill dudley later, and of course focus, focus, focus on europe. fine. but is the chemistry of china changed? the history is cities like shanghai and hong kong versus a federal beijing. is that traditional calculus so in place? >> haven't seen it since now, at the time of now the enormous amount of uncertainty didn't matter to the global economy. they weren't interconnected to it. we today have the same level of concentration of power you had during some of the worst episodes, chapters of chinese

history. tom: that concentration, the autocratic power. >> with confidence but also with strategic patients. ce take shots when you know they are important. that is contained but in other areas of the economy they allow that to dictate what they're doing. tom: back to john and lisa on the markets, do you see rekindling for what i call world war ii macarthur isolation? >> not at all. it's not that they don't want it, it's that everyone that throws money around in the united states strongly wants to ensure that doesn't happen for the more -- furthermore no american allies not the japanese not the europeans. tom: 30 seconds. you nailed merkel in germany.

did merkel fill in germany? is the reason where we are in europe, is it because that merkel failed? >> merkel failed on energy policy and they are paying the price for that. the european union is starker today in part because of what michael did. tom: these delivery the 25th anniversary, very importantly the top 10 risks and jon the top 10 is somehow find an offense. jonathan: analysis from eurasia group. what is the measure of you? tom: the metro view is kick the ball from far out. jonathan: looking forward to the conference this morning. tk, fantastic work as always. more still to come from your asia -- euro asia we will catch

up with bill dudley a good friend of this program. looking forward to all of that, bremmer. china and was going to happen. we mentioned the federal reserve for those of you interested. first meeting of the year stress the end of this month, decision the first of next month. lisa: i think there are a lot of people that are happy it took us is like to mention the federal reserve. it is going to take a backseat in some respects simply because the real economy has to take over. if they stop hiking and we stop obsessing over their every move and we just are focusing on -- tom: the terminal rate could hit five and i think a lot of people were still laughing at the time but here we are talking about a terminal rate likely to hit five at the federal reserve this year. lisa: i think a lot of people are expecting it to stop there. i suspect that we will. a shift away from the town would have to shoot to over 5.5% and

i'm curious what bill has to say on that. jonathan: we will see. before we get to all that good stuff, you got payroll coming up this friday. equity futures right now update tense of 1% on the s&p 500. yields down 12 basis points. ♪ >> keeping you up-to-date with news around the world with the first word on lisa mateo. kevin mccarthy's chances of becoming speaker of the house remained in doubt as republicans repair to take control of the chamber. the gop will only hold a slender majority when congress reconvenes today. mccarthy can't afford to lose more than four republican votes.

managing director expect a third of the world economy to be in a recession this year. she told cbs news that's because the three big economies are slowing down at the same time. if the resilience of the u.s. labor market holds, that would help the world get through a difficult year. march troubles for u.k. prime minister british rail workers will walk off the job much of the week. they will strike for five days starting wednesday. nurses and ambulance drivers plan to strike later in the month. unions are demanding bigger pay hikes to deal with record inflation. in china, the largest iphone plant is that 90% peak capacity. that suggests that apple's biggest production partner has enough workers despite a covid outbreak and a staff upheaval. in november thousands of workers either left or staged protests against extreme covid restrictions.

can block has died in a snowmobiling accident near his home in utah. later he began driving rally cars and revolutionized motorsports filmmaking. he was 55. global news 24 hours a day on air and on bloomgerg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo this is , bloomberg.

on bloomberg television and radio. >> we expect one third of the world economy to be in recession. tougher than the year we believe behind. why? because the three big economies u.s., eu, china are all slowing down simultaneously.

jonathan: equity futures right now rolling over with positive but we apply that 1% on the s&p. up by 4/10 of 1%. there is the line on china slowing down. lisa, sure but for how long and how quickly are we going to bounce back later this year? lisa: releasing the worst of it and what does that give to emerging markets? a lot of market investors are betting against it. ok your dripping. jonathan: with ian bremmer, and special guest. tom: this is the lead of the top risk this year. it is on mr. putin and russia. with this dr. bremmer and joining us as well someone with the european and russian perspective the former prime

minister of sweden they are very much in the news but also other public service to his continental europe. i want to brief you in here before we get to carl, there is an understanding of finland and sweden on down to turkey this quarter which you've talked about that eurasia group for years. whatever you want to call it, what is that view looking like from a world state? >> it looks a lot worse if you are a rogue state. if you find the present global order unacceptable and if you find that you are being humiliated by acts of your own entering to get yourself into a better position. what it means is nato is seen as aggressive. it is expanding. it is more forward deployed and ukraine, a non-nato country increasingly has the best supply, best deployed, best trained, best intelligent of any

military on the ground in europe. it could not have gone worse for former president putin and that border only looks more problematic when you as russia do not have any military strategy in 2023. tom: the former prime minister of sweden, thank you so much for joining us bloomberg surveillance today. how alone is vladimir putin? >> i think he's increasingly alone. i think we should understand the decision he took last year to launch this or was a decision was he was fully aware of his intentions. it was that decision that got accepted by a lot of the moscow police however you phrase that in the belief he would actually succeed. but what has been happening is he has failed filled with one

part of the strategy and that means in my opinion without active opposition but a lot surrounds him. tom: mr. putin enjoys and likes saying personified in your sweden and turkey the distance from sweden to turkey has been noted throughout this war. how do the alleys -- allies coalesce around one voice? >> i think the last year has been, and i think it is very impressive in terms of european action, solidarity and more. i'm certain mr. putin had not counted on that. he counted on americans not being too engaged.

he counted on the europeans being divided which sometimes happens and he counted on ukrainians not being so independent. he was fundamentally wrong. now he's paying the price. tom: what do you need from president biden, from secretary of state blinken particularly with the american politics that is new under a presidential campaign what do you need from america to stay for a long war? >> we need continued american support. the european and american support is roughly equal put on the military side the political leadership that has been given by the president has been important. we sincerely hope that that will

continue to be the case during this important year that is ahead of us. tom: ian bremmer still on the pragmatic reality i want to put that with the movie coming out all quite on the western front. how can america assist europe if a large part of america really doesn't want to be involved in europe like we didn't want to be involved in 1913. >> the united states is doing an enormous amount there five for the biggest military supporters of ukraine. american technology companies are the most important national security supporters of ukraine in digital space, cyberspace, digital space. you put all of that together the risk in 2023 is not that it

falls apart. it's not going to fall apart this year. the risk is that prudent increasingly losing on the ground from a national security perspective. with no friends, becomes like a global iran. he is the most dangerous, most powerful rogue actor that the planet has seen in our lifetimes in his willingness to go after nato to use asymmetric attack when nothing on the ground or air works against the well defended ukraine. that is the risk for 2023. tom: to get out front of this by questioning nato and their commitment to investment was donald trump ahead on this? >> he helped putin believe that there would not be a united response. trump's america first helped lead to macron's more

strategical autonomy for france. if you are vladimir putin after four years of trump, increasingly believe her reasons that carl mentioned that the united states and europe wouldn't be united. tom: think you for joining us. we would like to get you on surveillance i saw the news over the weekend really overnight almost on ukraine's attacks in russia and again this for may be off the radar. jonathan: remember nine months ago we were talking about it lasting a couple of months and here we are staring down the barrel of another year of it. we will catch up with you i think in about 30 minutes time. surprising lester for you, crude up only up by about eight dollars a barrel after everything we saw take place.

lisa: everybody was a will accept citigroup. what is that mean? are people really traveling that much less? if you go on the roads or airports does it feel like people are less mobile? it doesn't feel like that to me at all. jonathan: do you want the forecast for this year on crude? q4 forecast is $77 based on our service. you can find that on cpsc on the bloomberg terminal if you are a subscriber. basically what we say on these forecasts is that crude is going to end the year basically where it is right now. lisa: do you believe that? jonathan: i want to find out what happens with china. you have china on the supply side it's a conversation we had because of the demand or the supply chain relief if you look to apple. on the demand side where it the dementia up? have they stopped hard enough

commodities when demand was softer to avoid the big kick higher in prices this year when china really gets going? lisa: once upon a time we were talking about how weather would actually matter a lot. and it has mattered a lot. i feel like we are not talking about it enough and how much is it the reason why gasoline prices or oil prices or natural gas prices are where they are? we are seeing a big punch. how could that reverse if that changes? where is the demand? china comes back online, a little bit of cold weather, how quickly does that rebound? jonathan: that conversation is going to continue. rollover just a little bit with positive for tents 1%. --4/10 of 1%. ♪ inside, outside, big or small,

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>> 2023 could continue to be pretty challenging for stocks. >> you would have to go out 10 years. >> it will be lumpy and bumpy and i think china's reopening is not going to go as smoothly as people think. >> as we move into 23 people start the year with a coupon. >> wages are likely to rise faster than prices in 2023 so i think the purchasing power is going to be there for consumers. >> this is bloomberg surveillance with jonathan ferro, alongside tom keene and lisa abramowicz. jonathan: this is bloomberg

surveillance. i'm jonathan ferro equity features positive about4/10 of 1%. really, warm fuzzy stuff is in it for the year ahead and you heard again and again in the opening sequence bonds are back. lisa: i know this is counter intuitive but you have to think if everybody is expecting armageddon and you aren't seeing some of the worst case scenarios does it mean you can link against that for a couple of months? jonathan: why does mama bear sound so bullish on the first trading day of the year? lisa: look on looking at all of this and you see better than expected outcomes when it comes to a warmer than expected winter, the reopening of china, you start to see the mobility data change. how does that counter some of the real bearish especially when

the consumers are still spending and you see wages going up how much does it really create a complicated narrative that goes against the consensus? jonathan: some of the data through this week, a ton of it and you get payroll on friday then onto next week guide into the rest of the year i guess. we get cpi next week, jp morgan kicking things off on the 13th. then you get the first fed decision at the end of this month. lisa: i'm curious to know the balance of risks when we get the cpi report to markets respond more violently to a downside surprise or a downside surprise -- upside surprise? if it's coming down quickly what does the fed do with that? we are not expecting rate hikes but do we start talking about potentially eight lower terminal rate? jonathan: let's ask the right questions and you are going in that direction. we had the conversation about

how high the federal reserve the conversation shifts how long do we stay there once we get to 5% if we get close to that level? how long do we stay there because when it comes to inflation come down to what? five and stay there for how long ? how sticky is the story going to be? 23 started, i'm done with looking at inflation i'm going to look at growth. lisa: i'm going to be a little bit counterintuitive here and say how much is it pinned on oil prices? people mispriced and that faded into 2023 or does it not? especially with china's reopening. jonathan: equity features positive by 1%. we were much higher than this an hour ago. equity features might be positive now but they have been rolling over. lisa: you have to wonder what liquidity is doing. equities have gotten with the bond story which is the bid into

ponds. i guess people are doing the feeding. it is the first trading day of the year. u.s. job opening data i'm curious to see how quickly the number of openings for each employee in the united states keeps coming down. we know it has been incredibly inflated. it is a sign of early loosening? thursday we get adp employment data. we have seen very little increase in the people filing for jobless benefits. is there something indio syncretic about the employees laid off? they are getting some sort of leave or is this again a market with far too few workers for the jobs that are needed to be done? friday we get the real read on the employment picture in the united states. how much do we see average hourly earnings continue to expand? do we see deceleration in the

pace of that? what does that tell us? how do we interpret that data at a time of really convoluted messaging to the services side? jonathan: jobless claims. over five years the pandemic broke the chart. the chart is useless now. lisa: it's not useless, i disagree. jonathan: why is it useful? lisa: it just shows jonathan: -- divine jonathan: claims exploded during the pandemic. it's going to look like that. lisa: i'm going to take it into consideration. jonathan: is going to look flat. lisa: it's ok. jonathan:, looking forward to the conversation in about 25 minutes. tom: was that the first domestic of 2023? jonathan: that was the first

one. tom: were going to have to see. we are celebrating the work of eurasia group. the 25th then over surrey. we are going to go what ian bremmer calls a divided america, a divided look on our economy, a divided look on the federal reserve you two 2024. we do that with william dudley of course former new york fed president kevin rudd. the former prime minister will speak to that specific room. none of these -- i'm not even going to have a domestic with ian bremmer. she seems a bit tense. jonathan: bullish, tom. i'm not used to it. lisa: see if you cave. jonathan: looking forward to the

conversation a little bit later. i think we are on the same page about a lot of things. lisa: i will take into consideration paired i will give it a lot of thought. jonathan: please do. lisa: we will have a dinner conversation about it. i missed you. jonathan: sure. lisa: i have. jonathan: this jumped off the page for me. short bond signals remain. katie, we have the whole street lining up to say buy bonds. you say it's short signals why is that? >> what's been interesting as last year we had a ton of shorts. the only one seeming to be somewhat resistant is short bonds. it is a signal that something few people want or feel that confident with so that is where the technicals and the fundamentals and people's opinion seem to be very different. lisa: and this speaks to the

reason why perhaps i'm going to get hammered for seeming as pessimistic this morning perhaps by some people because it seems like everybody is saying buy bonds. it will be a tough picture for earnings but that is not being ratified by the data which is coming out stronger than expected which might actually move against bonds and or equities is that what you are saying? >> exactly. and we are seeing positive correlation between stocks and bonds and i think people are ready to call this bond over already and i think we still have some time if we have to keep fighting inflation and such a high level. i know we are past peak inflation but we are still not at the target. i think that is where people's hope and sort of where the market may have to go this year may be different. we are still somewhat much more positive than we were last year. but the bond is the one that remains. lisa: and there is an issue here with not conflating optimism in the short-term and optimism over the long-term. i know it's a technical trading

strategy but is this something where we are going to avoid the worst of a downturn or were just not going to get it yet? is it a timing issue or is a paradigm issue? >> that's a good question because we sort of think about the markets more from a technical perspective and what we have seen is a massive consolidation and risk construction. at risk has been constricting and people have been taking less risk off the table. what we are seeing now is the market is really not decided what the next trends are going to be with the exception of short on signals still being relatively strong. so from that perspective it seems like we need to navigate the difference between the longer-term narratives, how do we get over the higher inflation numbers versus things are looking better. we are past peak inflation. china is reopening. it really is sort of mixed right now. jonathan: how are you thinking about the china reopening story? not just from the demand-side but also from the supply side as

well. >> china reopening story should be directly linked with oil prices but you haven't really seen that yet. and that is where i agree with something it's going to take a longer time. there is a lot of complexities in terms of how supply and demand dynamics have changed post 2020. i think it is going to be a positive thing but it may not happen as quickly as some people expect. thus, oil prices may go up again at some point it doesn't seem to be indications of that yet. jonathan: so my question would be, as we start to get data out of china do you ignore that? do you look through that in the hope the expectation that at some point further down the road in 23 it bounces back? >> i mean i think the impact of these measures and the impact of any sort of slowdown or constraints takes a lot longer to see and that's the same

narrative we are thinking about for the u.s. this year is what is the impact of raising rates, what is the impact of all these of inflation and general? it's not something that is very clear it's much more opaque and it takes time to measure and that data is so important and people are so fixated on it. you can't ignore the shorter-term data. you have to take it all into account. jonathan: great to hear from you. congratulations for that. katie kaminski. looking ahead to the euro ahead and look a potentially for inflation to be a little sticky here. maybe not jumping on the band wagon. lisa: there are a lot of other voices behind that view paired it's going to be important to watch wages. if people are getting paid i saw vegas occupancy is back to pre-pandemic levels. jonathan: read the bloomberg opinion this morning. 350 year and is the average

forecast right now 377. that strikes us as unlikely. decline or increase friction keeps consumer prices and on yields rising. kind of three things piece by piece. futures up by a quarter of 1% on the s&p. on the nasdaq 100 up 4/10 of 1%. how long should you say happy new year? one day back? lisa: it's two days. jonathan: what if you haven't seen people you look for a couple of days. january 10? do you say happy new year? what if they say to you? lisa: then you tell them that you thought there chart was scrap and you tell them they should really reassess it. jonathan: you should apologize to people that might be offended by filling which are used seconds ago. lisa: happy new year. jonathan: from bloomberg, this

is -- from new york this is bloomberg. >> i'm lisa mateo. disgraced crypto founder plans to plead not guilty to fraud charges today. he is set to appear in federal court after being charged with orchestrating a years long scam at crypto exchange ftx. two of his associates have pleaded guilty to fraud and are cooperating with the government. in china the economy in a major slump. business and consumer spending plunged in december. more disruptions likely as covid searches across the country. ukraine struck a russian military facility in an occupied town killing at least 63 troops. it is one of the deadliest losses acknowledged by moscow. russia says the facility was hit by four u.s.-made rockets. the fellow bills player damar hamlin suffered cardiac arrest

during a game with the cincinnati bengals. he is any article condition. teammate surrounded him while he was being treated by doctors and paramedics. the game was postponed. axial report said a gofundme page for hamlin's charity raised $3 million in a matter of hours. global news 24 hours a day, on air and on bloomgerg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo, this is bloomberg.

>> i do not believe that donald trump should be the next president of the united states. i think he had his opportunity there. i think january 6 really disqualifies him for the future, but i want to see everything i can do to make sure there is the alternative and that donald trump is not the nominee of the party. jonathan: that's kevin hutchinson their of arkansas. from new york city this morning, good morning come happy new year. here's some of the price action for you on the s&p 500. we are elevated positive. tuned into 2023 and apparently is bullish for now. lisa: hold on, hold on. it's going to be nuanced. it's not altogether bullish it's just the balance of risks right

now based on where people are is that there is an overconfidence that bond yields are going to go lower and that stocks are going to go lower. jonathan: short-term constructive on short-term constructive on equities and what on bonds? lisa: i just don't know that yields are going to go don't as far as people think. there are calls for 2.5%, 2.8% by the end of this year and i'm just wondering if that actually is, if that matches with everything else. jonathan: year end lisa:. lisa:i haven't sent him a note but we will have a conversation. jonathan: yields are down by 10 basis points this morning. over in germany, most of it came in softer than the previous month and we are anticipating maybe in 42 minutes, lisa, we get this off the print from germany. lisa: that's got to be part of it. it has to be everyone has gotten back and the consensus is to go buy bonds.

the data has come in softer that the reopening of china, so far has eased supply chains. it hasn't caused gasoline or oil prices to rise all that much so at some point it seems like a good disinflation story it is overwhelming some of the different aspects even though unemployment is very tight. jonathan: we talked about apple a few times this morning. they are at 90% capacity. lisa: they are right back where they were. jonathan: that is the relief. you get the surging demand like we did out of the west. into an economy that can provide the goods to we get inflation in few months time? lisa: january 21 is the lunar new year where you start to see some of the travel patterns. if you start to see those pick back up, is that your signal that you're going to start to see crude demands pickup? natural gas demand will be something more significant on the other side of the break we. jonathan: i have been deeply

impressed by so many hard-working friendly and talented american people that i have met, he had made many friends in a tweet would you make of that? lisa: it's a very different tone. and it's gone from we are competitive, and something more combative to we love each other. jonathan: i don't know if it's going to go that far. [laughter] lisa: it is a notable difference. jonathan: let's get to annemarie. it's a change in tone. is it a change in policy a change in approach? >> there is one notable change and that is climate talks have stopped after speaker pelosi visited taiwan last year. obviously you had also in november, biden sitting down with xi jinping. it said most countries were against the war in ukraine but at the moment, nothing has actually concretely changed on

one of the biggest tensions right now between these two countries which is of course the fact that the armies are not communicating but also the fact that china has not condemned the war on ukraine and they continue to support russia economically by buying their fossil fuels. it is notable that china has picked as their top foreign-policy voice, who was there top envoy in the united states and he says he wants to continue building on that relationship. that does seem that is a bit of a warmer tie and early this year we are said to have secretary blinken head over to china. that could be another window potentially to boost these ties which really hit a low point over the summer when speaker plosive visited taiwan. lisa: there is a question about leverage and whether the balance has shifted in favor for perhaps hoping for more economic support then just worry about some of these nationalistic kinds of goals that xi jinping previously had. how much of our washington

officials are saying this marks a greater emphasis on economy and easing in the relations on that front because of the focus for china? >> for china the economy is front and center, obviously. that's been the case not just because what they are suffering in terms of the covid-19 lockdown and supply chain havoc but trump era tariffs are still in place. these are things they want to be lifted. they want access to the u.s. capital market. there is concern in washington about these issues. the fact that china has access to the u.s. financial system, the fact that tiktok is becoming a primary source of news for the younger generation and that a chinese -- the parent company is a chinese based company. making sure they have this strategic partnership with the united states. want terrorist lifted but the

u.s. is nowhere near there. so i think jon's question, are there a 10 of changes, not exactly. jonathan: do you do tiktok? lisa: do you? jonathan: absolutely not. lisa: is not that it gets banned, it has organizational power which gen z can create headaches for some of the elected officials. jonathan: here in the united states or china? lisa: everywhere. they can buy for -- making life harder for multinationals everywhere. jonathan: i find the tiktok thing nuts. congress can't get its act together on it. the former president try to make a drive there and going nowhere. lisa: you lose the support of an entire generation and i will say this, lt as charged in terms of my progeny but having them say we don't want to do it. there is a disbelief that they,

that people could be manipulated through tiktok. jonathan: using about the dangers of communism, we talked about this briefly. in murray, good to see you don't in washington, d.c.. -- are we going to have that conversation more? i don't think gen z cares about what is behind that platform. not one bit. lisa: this is the conversation we had. jonathan: what are they saying? lisa: i care less about communism versus capitalism. i issue is do you have an understanding of what type of manipulations could be coming at you through the images and through the news that you get? is there a sense of how you could be informed? it goes not just for tiktok but more broadly. if you don't have a consistent method of where you get the information.

i know it's which for me to be saying this but i do think this is something that is really important when so many young people are getting their information through some of the social media companies especially one that could be dominated and manipulated through radically by a foreign power. jonathan: why do you think social media companies can't get any traction in china? can get china to open the doors and let them in? lisa: this is a rhetorical question. jonathan: know it's not a rhetorical question. why are they? why can't u.s. companies get access and if not going to play by the same rules then why are we so open to allowing this to continue? i don't understand that. lisa: you can say china restrict the information that the residents can see. and the u.s. does it want to play by that rule. they want to allow people to have say and have the freedom to go out there and really view what they want to view. they want to have the same kind of censorship. so how do you not have censorship but also give some discussions to people.

understand the potential influences and map relation. jonathan: i want to talk a little bit about tiktok this morning. lisa: i've given a lot of thought to this. the reason why is also interesting. jonathan: fascinating. everyone wants companies as long as they can lead it. lisa: do you want to be the leader of a communist nation? jonathan: i'll do it better. after it went disastrous. ♪ dinosaur? we just got an order from a dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. godaddy. tools and support for every small business first.

jonathan: we should continue this conversation we were having in the commercial break. the christmas tree graveyard across manhattan when people just throw out their trees onto the street, i find that deeply depressing. it is too soon. december 28 or 29th people just throw them out. lisa: are you the person saying happy new year at the end of january? jonathan: no but i just heard larry david says january 7. the on happy new year is january 7. lisa: the end of happiness. jonathan: here is the price action. the end of happiness. deeply depressing way to start a

morning show. the risk in eurasia, the end of happiness. futures up .4% on the s&p, on the nasdaq up .6%. in the bond market talked about the cpi data out of germany. you have a bid into the bond market, yields are lower by 10 or 11 basis points, baby fewer ecb -- maybe fewer ecb rate hikes. i don't know. euro-dollar -1.0 540. lisa: i don't know how this plays into bigger than expected deceleration in germany. hard to get a sense of what is going on other than people getting back. tesla, this i found very interesting. fewer than expected vehicles last quarter despite incentives they were offering and they only

increased their deliveries by 40% versus 50% over the past few years. given the fact elon musk has made such a big push back against the discussion about the slow down in their deliveries, it raises questions. is this a tesla issue or broader automobile issue or is this going to be alleviated with supply chain issues and china reopening and workers getting back? there shares down more than 4%? do you have any thoughts on that? jonathan: i have no thoughts whatsoever. lisa: we also have alibaba. jonathan: we closed out the show last year to go away for the holidays and i often say this and i mean it, we have the sharpest and smartest audience on the planet and they always keep me in check and they are keeping me in check over this. here is the tweet, this is from january 4, 2022. how is jon ferro get his

christmas tree five decades in advance only to then put a moratorium on happy new year. this is the tweet. you cannot flip-flop year to year like this. as of the first session of the year or is it january 7? lisa: get with the program. be consistent. jonathan: i am going larry david. january 7. if someone has happy new year to you after that, you can just blank them. lisa: of course you like larry david etiquette. jonathan: tom keene on the top risks at eurasia group. tom: we will have a good conversation. we can pick this up tomorrow when we are all in the studio. the shock of the last number of days was spanish disinflation. it was a stunning trajectory. i wonder if that is just one tea leaf of the disinflation pushing

against where bill dudley has been for years. jonathan: you see it in spain, you see it in germany. lisa and i have been talking about that all morning. i think the same story applies to europe as it does to united states. we are coming off the peak, down to watch? how long are we going to stay there? how much work does the fed and the ecb have to do in the year ahead? tom: we will take international relations, the world of ian bremmer at eurasia group and their top risks for 2023 and folded into the stunning accuracy of william dudley's 2022. he absolutely nailed the trajectory away from transitory. here is the former new york federal reserve president. we will dovetail these worlds. the stunning optimism from ian bremmer as united states almost

to not make your top 10 risks. that election changed your dialogue and the study of dr. dunkley. -- dr. dudley. ian: there was a tail risk, even if the u.s. was headed towards a constitutional crisis. you would have an election in 2020 four that was fundamentally delegitimized, the trump was likely to be the republican nominee, you have people in positions of power that were support a a steel, that were supporting the delegitimization of the national transfer. that is all gone it has nothing to do with republicans taking the house, it has to do with the fact that the system responded to people who were clearly incapable of holding office and willing to break the system and the resilience of american democracy brings the u.s. to

only number eight in the top risk. tom: william dudley, formerly with the new york fed and writing for bloomberg opinion. you focused on the fiscal part of the challenge is not so much a monetary impulse, but a fiscal impulse. how will that change the fed's work? william: monetary policy will be tricky. how far you go for how long? i think the physical is a big list. we will indeed this business cycle -- we will end this business cycle at a budget deficit of gdp before we get all of the costs associated with higher interest rates and the costs associated with social security and medicare. i think the fiscal situation in the u.s. has deteriorated sharply. up until now markets have been

extremely tolerant about this. tom: bill dudley, i want to go back to a top 10 risk of media, the bloom the world will end, we will have the recession to end all recessions. take us back to your study of recession history at berkeley years ago. can we guess a recession in 2023? william: recession is likely because of what the fed has to do. the fed has to drive up the unemployment rate to slow down the economy and generate slack. what is different is if we have recession it will be a fed induced recession and the fed can end recession by easing monetary policy. i do not think there is a big risk of financial instability and cataclysm that pushes the economy into a deep recession. it is a recession where the feds have the controls, they can do

so. the challenge for them, it is too soon. tom: time for one question and i want to bring over ian bremmer study at eurasia group about our risk and our division. is republican or democrat monetary policy, are they all that much different? ian: at the end of the date is about how you treat the independence of the fed. you criticize the fed or leave it alone. the democrats, starting with bill clinton, have been pretty hands off on the fed. republicans were much more competitive in terms of instructing what the fed should do. i think the democratic approach is better because it keeps markets more calm and allows the fed to be more effective in translating its actions in terms of tightening financial conditions to control the growth rate of the economy.

there is a difference between the parties and how independent they treat the fed. tom: too short of a visit. bill dudley, thank you for joining us. ian bremmer, where is silent majority in america? i was watching the new spielberg movie, the fablemans. where is the silent majority? ian: the silent majority is in the middle of the bell curve. he sought on abortion, for 50 years you had the opinion it would be safe, legal, and rare. supreme court justices decided they would undo that at the population rebelled. they said we do not want to beat everyone gets an abortion and they do not want to be everyone finds it illegal. we will force you back to where we are as a country. no matter how much antiestablishment sentiment, it turns out most americans are in the middle. tom: this is really important.

with eurasia group the pecking order of their top 10 risks is key. at the top, russia and china. you have to go along way down to see america. we will continue this discussion from the offices of eurasia group. jonathan: looking forward to those discussions. tom keene with ian bremmer and bill dudley. they'll be catching up with the former prime minister of australia in just a moment. obviously at the center is what is happening in china. lisa: that has to do with the growth of other nation and the scarcity of different objects, from oil to grades and to water which is something the eurasia group points to. how much do we start talking about that later in the year? tom: when does the demand -- jonathan: went does the demand show up and where does it show up? do we get the revenge spin from the chinese consumer we got from the u.s. consumer and the european?

do they spread -- did they spend abroad or at home and how you want to play the story? i do not think it is as obvious as it looks at first blush when you start the in deeper. lisa: you think about all the people in china leaving to do revenge shopping at lvmh and a host of luxury good stores. you start to see a rebound. copper has been one area people have been watching. copper prices rising significantly. that might be the first indicator. jonathan: i was speaking to someone who knows more about this that i do. china's reopening, is a different china, it is much more nationalistic. you get the knee-jerk reaction into european luxury the may you -- the way you might expect a couple years ago or does the money go somewhere else? look at the travel restrictions and the cone out the foreign ministry spokesperson about this

travel restrictions who been put up across all the west as they reopen. does that shape things further and make sure they spend their money in china? i wonder how much commodities they have stockpiled over the last 12 months? lisa: these are great questions. the nature of china will be different. people who had their adolescents obliterated by years of covid restrictions. jonathan: revenge spend on what is my question into 2023. the former prime minister of australia is coming up next. lisa m.: keeping up-to-date with news from around the world with first word, i am lisa mateo. kevin mccarthy's chances of becoming speaker of the house remained in doubt as republicans prepare to take control the chamber. the gop will hold only a slender majority when the new congress convenes. mccarthy cannot afford to lose

more than four republican votes and he is opposed by a of hard-line conservatives. china's new foreign minister praised americans after stepping down as ambassador to the u.s.. it is the signed ties between the nations appeared to be improving despite tensions over taiwan. he tweeted he was so impressed with so many hard-working americans and pledge to build a stronger relationship with the u.s.. the imf managing director expects one third of the world economy to be in a recession this year. she told cbs news that is because the three big economies are slowing down at the same time. she says if the resilience of the u.s. labor market holds, that would help the world get through a difficult year. more troubles for u.k. prime minister rishi sunak. british rail workers will walk off the job for much of the week and strike for five days starting wednesday. nurses and aimless drivers plan to strike later in the month.

unions are demanding bigger pay hikes to deal with record inflation. end of the year discounts were not enough for tesla. the electric car maker fewer vehicles than expected. still, tesla headed over a record 405,000 cars. the company slashed prices in the u.s. and china, it's two biggest markets. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪

>> the chinese economy is doing quite poorly. zero covid is a major contributor. the war is part of it. he has to move to shore up the economy. jonathan: china reopening into a very different world.

that was the former u.s. ambassador to china. good morning and happy new year to you all. every futures up .5%. into the bond market yields are a lot lower. lisa has gone through the data. job openings tomorrow and payrolls on friday. yields down by 11 basis points. from eurasia group hq, let's get back to tom keene for more. tom: thank you so much. really looking forward to the three of us tomorrow in the studio as we drive into the jobs report on friday and the critical inflation report january 12. with us, ian bremmer, we celebrate at eurasia group the top 10 risks for this year, beyond qualified to speak of the pacific rim and australia and china is a gentleman fluent in mandarin, phd and oxford on his studies of china, and he is the

new ambassador of australia today i did states, the former prime minister of the nation -- ambassador of australia to the united states. the former prime minister vostro yeah -- the former prime minister of australia, kevin rudd. what is the power of xi, the capacity ian bremmer talks about of china. what is your knowledge or perspective of the power of resident she? -- of president xi. dr. rudd: i'm not yet the australian ambassador to the united states. the bottom line in terms of seeking payments is as follows. he is number one, number two, and number three in the chinese political system. if you want information of that you look at the party congress

where anyone who did not come from his group and the party was given an exit pass and instead we have four people elevated to the politburo who are lifelong career colleagues of xi jinping. his authority is growing. this policy you turn on zero covid, which was executed on december 7 will raise a series of questions chinese political circles about the fallibility of fusion paying's -- the fallibility of xi jinping's political judgments and that creates a dent in the armor for long-term. tom: turning into a pumpkin in march as part of the issue. you can speak freely. we have an allied response in europe. i do not perceive an allied response from australia to japan and the pacific rim against china. does it exist? ian: it exists but nobody is

happy about it politically. every ally understands you do not want china to fail. every ally understands they are not happy with china's political and economic system and maximum xi, and also every ally understands we need to keep doing business with china even though we are concerned about what our present level of interdependence and coupling implies. we know we cannot suddenly rip it up. that underlying reality, which does aligned united states with the g7, is very different from the political statements that need to be made from various leaders because scoring points off of china is easy to do. between those who have defined the policy where our you hit the chinese in ways essential to your national security without upsetting the relationship. tom: this is so important. kevin rudd, i look at the united

states and the republican and democratic coalition against china. how should the united states advocate to the broader pacific rim if we are all on the same page in our distrust of beijing? dr. rudd: i will challenge your premise before to say there is not solidarity between u.s. allies in asia, australia, japan, the republic of korea, and partners such as india. let's call it the broad thrust of administration china strategy. frankly blinken has done a good job in herding the cats, both in asia but also in europe so far. what is the missing element in u.s. grand strategy? it is called the economy, stupid.

you cannot continue to assume there will be collective solidarity on security questions while on the economy the united states is happy to throw some of its allies under the bus. for those reasons united states congress needs to embrace a different strategy which opens at markets more to its allies in asia and europe despite the overriding sentiment of the u.s. congress and political class in general. tom: that comment is so important. why is this such an important statement? dr. rudd: kevin is -- ian: kevin is completely right. it is easy to not have a common economic policy with russia because we are decoupling russia from the entirety of the g7 economy. we are not doing that with the chinese. china is extremely important to the u.s. and other economies but we in the united states do not have a trade policy. as kevin said, unless congress,

democrats and republicans, are prepared to speak coherently about a long-term u.s. economic strategy, the national security policy does not get you there itself. tom: dr. rudd, do you demand a weak dollar to assist the pacific rim? dr. rudd: as a very polite australian we demand nothing. my commentary would be as follows. what we want above all is to ensure the economies of east asia remain market competitive and with greater and greater levels of access to the american market. therein lies the future success or otherwise of u.s. grand strategy. you cannot have a strategy which has one arm tied behind its back . he must have both wings flying, otherwise this bird does not take off. tom: to 17th street northwest in

washington he will travel in march. future ambassador of australia to the knighted states, kevin rudd. -- two the united states. this is the great theme of 2023. jonathan: cannot agree more. great work as always with ian bremmer and the brilliant kevin rudd. i want to take you briefly to apple. stock is up about .5%, earnings from the company january 27. i say much-anticipated because that stock last year down more than 26%, last month down 12%. ugly month for them. the supply issues according to a representative of foxconn, they are back to 90%. the plan was shipping 90% of the peak capacity forecast. maybe things start to ease in the months to come. what does demand look like?

there is a real conversation around that in a way there has not been up -- has not been in a couple of years. lisa: this was highlighted by tesla. they had left over vehicles. how much will that be reflected in what we see from apple? there supply chain issues but it was a demand picture crimping some of the sales and the reason they were giving discounts. tom: the kitchen sink -- jonathan: the kitchen sink for the year ahead. mike wilson talking about the potential for guidance and you have to guide lower, not apple specifically but the broader market. lisa: i do not envy anyone who has to come up with a projection for 2023. it is hard enough to get up to february and understand what risks that happen and where we are in terms of the inflationary cycle. if we do get disinflation does that lead back to 2% or a 4% inflation handle and what does the fed do with that? jonathan: it is amazing how may

people are lining up to say recession in 2023, global growth recession. let's look at the indicators in the labor market. claim still around 200,000. let's see what we get around payrolls on friday. 1.7 job openings for every american looking for a job, supposedly. away from the labor market, go to the market. the yield curve has been inverted for a while. his growth going the other way? lisa: what you are seeing isn't in easing in credit conditions. you're starting to see a lot of bond sales. jonathan: this is the neil dutta argument. you actually get a pickup in growth to start the deal -- to start the year as people line up to say recession is just around the corner. just round the corner is troy gayeski of fx investments. ♪

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>> we are looking at a very shallow recession and very shallow credit contraction. >> will we have a recession, when will it be? >> we are getting back into a more normal zone of consumer price sensitivity. >> a narrow path where inflation

goes down a bit more and is widely expected. >> central banks will need to maintain tight financial conditions through 2023. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: go back to bit -- jonathan: go back to bed and stay there. i just got peter tchir's outlook. one word for his outlook title. pain. this is bloomberg surveillance on tv and radio. peter tchir sank not much help will come from the bond market. he has focused on the wealth effect. he says there is hope for geopolitical respite but the revaluation is not done. that is the take. pain. lisa: a lot of people agree with him on some of this but not necessarily the bond market. a lot of people talk about bonds offsetting some of the pain you see in equities.

peter is not saying that will necessarily be the case and i understand that. it depends on whether you get the negative on that side. jonathan: should we talk about a positive? german cpi for december 9 .6%, the estimate was 10.2%. talked about the region inflation indicating we would get the shift lower. we are still close to double digits. the ecb is ready to go again, and again and again. lisa: it is unclear whether we will get the same kind of pop in equities and the pop in risk assets. we are all expecting we are past peak inflation. the question is how quickly do we go down and what does it require from central banks jonathan: your 10 year down 13 basis points. let's whip through the 2023 price action. i have to get used to sing the

year 2023. i never got used to 2022. lisa: i am with you. we know it is morning. jonathan: up .6% on the s&p. off session highs of about 1% or higher. euro-dollar 1.0 535. it is early in the year. people start to go back to their desks, you see a move like that, you could sit here and say cpi comes in softer, it may be people pulling back on ecb expectations, or you could say people are coming back to work and i will not read into any of this. lisa: for you could say people are coming back to work and deploying their theses that we have not seen peak dollar. if you're going to stick the narrative to it, it could be something like that. jonathan: joining us is troy gayeski, chief market strategist at fs investments. how can you make a call on a

recession people say is just around the corner when credit growth is not contracting it in many places is expanding? can you make sense of that? troy: could think in the short-term recession is still unlikely given the strength of the consumer, as well as the resilience of the labor market. some of the data earlier about 1.7 job openings for an unemployed person is still very low unemployment rate. in the short term you had money supply contracting delivered by the fed's qt ended inverted yield curve, yet you have credit expanding at the banking industry and one of the most rapid rates. we think in the short term, meaning next quarter, we stay in this nominal gdp door fink real gdp environment driven by still elevated inflation, continued inversion between assets, equities and fixed income,

relative to nominal gdp as well as the labor market. if you think of the last 20 years you've had such excessive degrees of financial asset outperformance driven by lower interest rates, more money supply globalization, now these factors continue to go the other way. interest rates is more debatable. we know we are higher at the front end but it is a reasonable debate whether the 10-year has peak. we think there could be another higher high driven by qt as well as elevated inflation prints. it is a reasonable assumption that the back end of the curve has peak in terms of yields. lisa: you have any strong convictions to start the year? troy: we have all sorts of convictions in terms of individual trades. if you think about in general where you want to be at this stage of the market cycle, you still want to be in the northwest quadrant where you're taking less risk and you are accepting 6% or 8%. two examples would be commercial

real estate lending strategies with the headwinds of lower rates and tighter spreads now turned to tailwinds with wider spreads and higher rates. if you look at multi-strategy funds they are starting the year with poor cash flow and carry and there is still ample volatility trading opportunities. if you look at higher-quality exposures, we are still leading into interest only strips hedged with pass-throughs where both sides of the trade have positive carry and with home prices ceasing to appreciate and now declining, if rates drop back down fast, it is much harder to refinance when you have home price depreciation and higher ltv's then when you have a straight up a hockey stick like move in the housing market, like we had for 2021, or historically 2004 and 2005. lisa: a lot of this is moving

away from the macro calls and looking at specific risk-adjusted returns you see as favorable. how much does what we are seeing in china shift any of your assumptions when it comes to real estate, when it comes to rates, when it comes to the cost of commodities based on the reopening of the world second-biggest economy? troy: china, we think most in general have too high of an opinion of their own opinion of how china impacts markets. that is always a very complicated place. people make grandiose calls all the time. it is encouraging to see them move through the covid period and end there covid zero policy. that will have negative ramifications in the immediate short-term. from our perspective there is so much to do in areas of the world , primarily the united states,

where you do not have to be 100% correct to make money. and investing you want to focus on strategies where the probability of success is very high and if you are wrong in one or two of your assumptions you still make a return. if you get all of the assumptions right you could have a higher return. the trajectory will highest -- will impact our strategies. jonathan: with regards to china, how can you avoid that? inflation picking up and away people are not anticipating. a surge of demand. how do you get that call? troy: for instance, if you are at commercial real estate lending, it is really simple. we had a very strong period of appreciation where we had tighter and tighter spreads and lower and lower interest rates and the front end, which basically favored real estate

owner operators in terms of the capital structure. now is the real estate market has turned you are having a wealth transfer from owner operators to lenders and you want to be on the right side of the trade. whether china grows at 4.5% or 5% or faster as covid burns through the country. it will not stop the dynamic of the cnb -- the cbs market being temporarily closed. this is a megatrend. if you look at strips versus pass-throughs or treasuries, ultimately the housing market is like an aircraft carrier. when it is going up it takes a lot to drive it down, and vice versa. what we saw is with the combination of the fastest rising mortgage rates of all time coupled with rapid price appreciation we had

affordability drop down below the previous low of 2005 to 2006. whether china grows at 3.5% or 4%, it will not affect that dynamic over the short term. if home prices dropped by 20% or 25%, refinance activity will have slowed down significantly if rates drop. in the event mortgage rates drop very rapidly, that could change the dynamic of the trade. it is highly unusual for any information in china to change those dynamics. when you're trying to isolate expressions, we want to make sure they are very macro resilient for this macroenvironment. make sure your position for strategies that do well in high nominal gop and can withstand market to market -- and an eventual recession. we think will enter that at some point this year or 2024.

jonathan: you make it sound easy. it never is. great to catch up. happy new year. troy gayeski walking us through a couple trades. the primary market in credit wide open. $40 billion is the number. blue chip firms are expected to raise as much as $40 billion in the investment-grade market. more than four times the volume of december. we expect that busy january. december was quiet. lisa: this is a difficult comparison constraint no one came to market in december. everyone was away and prices were not ideal for the borrower. for the lenders they are waiting to land. jonathan: the fixed income. are you on board with that -- the year of fixed income? are you on board with that? lisa: it depends what you mean by fixed income.

my take away from that discussion is we will not try to tell you what happens on the macro side. just hide as well as you can in different specific instruments on a risk-adjusted return basis. jonathan: i struggle to keep up with troy sometimes. sometimes he totally loses me. lisa: p has a brilliant thesis, but the take away is you cannot game out this macroenvironment. jonathan: super tough. anyone who makes it look easy, it is not easy. futures up on the s&p one third of 1%. the end of happiness in 2023. lisa: i was going to get it. jonathan: from new york, this is bloomberg. lisa m.: with the first word, i am lisa mateo. sam bankman-fried plans to plead not guilty to fraud charges today. he is set to appear in federal court in manhattan after being

charged with orchestrating a years your -- a years long scam at ftx. his closest associates are pleading guilty to fraud and cooperated with the government. germany is open into seizing russian assets to help ukraine rebuild from the war as long as legal issues can be resolved and allies are still on board. not everyone in olaf scholz's government is enthusiastic. the finance minister is concerned confiscated central-bank assets could create a dangerous precedent. in china the economy ended the year in a major slump. business and consumer spending pledged in september -- in december. activity in china services sector fell the most in almost three years. in the national football league, buffalo bills player damar hamlin suffered cardiac arrest and collapsed on the field during a game with the cincinnati bengals.

he is in critical condition in a cincinnati hospital. stunned teammate surrounded him while he was being treated by doctors and paramedics. the game was postponed. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪

william: recession is pretty likely, but what is different is if we have a recession it will be a fed induced recession. the fed can end the recession. jonathan: that was built up late , former new york fed present -- that was bill dudley, former new york fed president. the top risk for many of you is what happens with the federal reserve. can we pick up on that line from mr. dudley? what is different is if we are going to have a recession it will be a fed induced recession. the fed can end the recession by inducing monetary policy. will they do that is a different question. lisa: especially if recession is the preeminent concern.

if that is the concern they will not want to go to the other direction with up-and-down inflation spurts. jonathan: the challenges not to ease too soon. we all great with bill dudley. the challenge -- we all agree with bill dudley -- the challenge might be taking the foot off the brake. lisa: fed fund futures are pricing in .5% of rate cuts by the end of 2023. this is the big argument and the fed has pushed back and a lot of strategists say this will not happen but that is big priced into the market right now. jonathan: we keep going back to this question, i think it is the question to be asking fed officials come is a risk of doing too little greater than the risk of doing too much? when you heard chairman powell answer, i thought the answer started to sound more balanced. the november news conference was emphatic. no balance whatsoever. it shifted into the end of the year.

lisa: lael brainard had a bigger influence on some of the rhetoric. i think back to our conversation with troy gayeski where a lot of the big investors cannot forecast the macro world, neither can the fed. at what point does politics become a more preeminent concern than trying to game out a macro situation that is completely opaque? jonathan: you know what i would be happy to talk about a lot less? the sam bankman-fried story. sonali basak has dropped by. i am so sick of this story. sonali: i spent my new year's day reading all the indictments, so you and i both. there a lot of indictments for him and all of his deputies. we have not seen all of his deputies. the former alameda ceo is nowhere to be heard of or found. today he will be going to a manhattan court and pleading, we

expect, not guilty. that draws this out for another year or so for you. this will take a long time should he plead not guilty to eight criminal counts. jonathan: talk to us about the timeline. sonali: should he plead not guilty there is a process in which you will go to court, it will take a long time. the question is does is plead change anywhere in that timeframe? we at the beginning we were talking about how is this going so slow, why haven't the regulators done anything in the u.s. or abroad. now we are in this place things have moved so quickly since december 13. jonathan: there was a headlight -- lisa: there was a headline crossed that sam bankman-fried has asked a judge to redact the names of the cosigners on the bail agreement. there a questions about the machinations, but who is backing

him and involved with him, who are some of the people other than his parents, who are interesting people given they were stanford professors. sonali: and have worked with interesting people. when you look at the idea you cannot know who the cosigners are, there is a lot of frustration. this is a $250 million bond. he says he has $100,000 in his own bank account. this is secured by his parents home. at the end of the day there's lot of sam's life he has financed through ftx which has been getting all of these allegations about the money coming from customers. lisa: we have been talking about not just this particular case but the ripple effects through the crypto sphere and the political sphere. i am wondering whether you still get the sense in your conversations there is more on that front or have we seen the bulk of it, which seems to be

based on the stability we have seen, it is already past? sonali: it has definitely not passed because there are a lot of bills sitting in congress. at a time when many constituents have lost money from ftx or gemini they are clamoring for regulators and lawmakers to get it together. these lawmakers, many have met with sam bankman-fried, have taken money from sam bankman-fried, some of them have given it back. at the end of the day there's no clarity and fx has lobbied for some of these rules, binance has lobbied for some of the rules. when you look at the range of influence of crypto in washington it gets hard to parse what is the right road ahead. jonathan: what is happening with the rest of the political donations? sonali: one question that has come up is are they subject to bankruptcy claims? how do you get the money back that has been spent on media ads

in some cases? lisa: are using some clinical parties could file for bankruptcy's? sonali: know, the ftx bankruptcy. what you do with money that has potentially been spent? that is a weird question. some has been donated to charity. at the end of the day, whose money is it? a bankruptcy court would argue it is the creditors money. jonathan: if i the most dramatic angle to every story. sonali: it is my nature. tom: the timing -- jonathan: the timing? sonali: 2:00 p.m.. we will have headlines on the terminal. jonathan: sonali basak. looking forward to that later in the afternoon. she is looking forward to it. lisa: you break in the segment saying this is the most awful story, and then i find an angle that is the more dramatic. it is a balancing act.

jonathan: just obsessed with the personal drama. lisa: there is an issue with someone recognized as incredibly cable academically with an established group of parents and community around him who was the star of an entire industry that was highly speculative and pulled into question, and the complete on mooring of his efforts is fascinating. jonathan: everyone has to learn from that. lisa: if it is just straight out fraud, it is straight out fraud. jonathan: know your subject when you're talking to them and interviewing them. there are things you cannot know. i think you have to be careful about putting people on these massive platforms and bowing down to them as if they are some kind of new god in the world of finance. i always find that a bit sickening, i've always found it a bit sickening. lisa: i sympathize with that. jonathan: this is my ultimate

problem with the media and the way the stories are covered, the person who shows the most deference to that individual is the person who gets the most access, and you'll will see across networks, who gets to speak to who. i've always found that hugely problematic. lisa: i would agree with that. the only counterbalance, this is from someone who tends to see things in catastrophic ways, there is a place for celebrating innovation. it is hard to find that balance, especially when you have someone doing new things there's a cohesive set of regulations and oversight. it did not want to stifle innovation, either. how you strike that balance. right now in a way different banks are talking about bitcoin and crypto, you feel the hesitance, not wanting to step on the innovation while condemning outright fraud.

jonathan: is good to be back. happy to be back. lisa: you actually look happy to be back. jonathan: is good to see you. tom will be back tomorrow. happy new year do you. we will do that for six more days? lisa: four more days. jonathan: i've just forgotten how to do basic addition and subtraction. stuart kaiser and subadra rajappa all coming up in the next hour on bloomberg tv. ♪

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lisa: happy new year. welcome back. jon ferro of preparing for the next hour. tom keene on assignment. we are looking at markets trying to lift stocks and bonds to start a new 2023. there is a pessimistic tone, although this morning there is an optimistic tone in markets, at least u.s. markets. .5% gain on the s&p. the dollar regaining strength. euro-dollar 1.0 556. 10 year yields .67%. people getting more optimistic about the idea, people are thinking perhaps we have seen a peak in interest rates and there is inevitable soffer session

that will enable anyone to go into but -- soft recession. steve ricchiuto joins us now with a slightly different take. we are talking about all of the gloom and doom but you say a shakespearean comedy, not a strategy -- not a tragedy. why? steven: the part that is the comedy is we keep going down the same path to discover the data is not justified on the path and the federal reserve is looking at the data and making the presumption the market is going in exactly the wrong direction. this is what drives it. the comedy aspect of this is this is going to be something that will continue throughout 2023 and it will not get the tragedy of credit related recession. we have recession that is a shallow economic contraction. lisa: a lot of people are not laughing after hearing that.

there is an issue in terms of increase in spending the fourth quarter despite people expecting a slow down, it does not seem to be edified in the consumer appetite. will this lead to a stickier inflation, perhaps a rebound despite some of the calls for outright deflation. steven: there are a lot of fundamental issues that will be pulling down inflation. three, what we are seeing in terms of the energy environment. the energy environment is that this piece of the equation. a cold weather could lead to a shaaban -- to a sudden sharp spike, but in general i think we will see inflation come down. the movement from the very high inflation to the 4% area is justified. i would get to 4% to 2% which is the chewed and target.

this is where the chairman made it very clear in his last discussions where 65% of the proponents of inflation are heavily driven by wages and therefore you have to pay close attention to the labor market. this is why the to ease of the labor market to be sure they can get inflation back to 2%. lisa: can they do that. tomorrow the jobs opening data in the u.s. and friday the nonfarm payrolls. what we have seen, not just in the headline numbers, but the underlying proponents of wage gains and other vacancies, it does not seem like is lucas a new orleans much. can fed policy achieve that given the structural -- and the demand for jobs? steven: it came to the extent you're willing to exercise demand management, which is

something the federal reserve has not had to do since 1990 because we have had credit related recessions and different types of business cycle environments. the federal reserve was forced to position of subsidizing the way. we will not have that kind of credit related contraction in the economy and therefore the fed can recognize demand management more than they have since 1994. lisa: do you think the market is getting wrong the potential downturn in the first half of the year or do you think it is right and will be driven by some of the caution in spending by companies, generally a softening that is not shown up for the consumer spending data. steven: i think the recession will be long and shallow and could tap in later than people anticipate. the problem for the market is the market is discounting the peak in the federal funds rate in discounting the pivot from

tightening to using. i think it is later in the recessionary environment than most people are anticipated. stenting 90 resolutions have led this federal reserve to pivot before the recession became manifest in the economic data and that will become manifest. there is no asset liability mismatch dominating the overall environment in liquidity, in the economy. lisa: in this long and shallow recession there are structural changes going on. among them is in on shoring people are expecting, changing up the supply chains. do you buy into that story as china eliminates their zero covid policy and manufacturing gears up over there? do you think companies will redirect some of where they have

produced things to more local areas? steven: the question can be answered very simply. as long as corporate america is paid on shareholder value they have defined the lowest cost producer for any product. that does not mean they will not have some diversification in terms of prices that will allow them to have diversity. at the end of the day they have a good at least cost producer. they have to drive shareholder value to get paid. that is a fundamental position that has not changed. shareholders will not say i will exempt 5% as opposed to 10% so we can have our product produced locally. shareholders will want the 10% return because the reality is in

a 401(k) in a defined retirement program, not a defined benefit retirement program. the worry about their future protection for earnings. lisa: steven ricchiuto of mazzulla securities. earlier tom keene caught up with ian bremmer. ian: recession is pretty likely because of what the fed has to do. if we have recession it will be a fed induced recession and the fed can ease recession by easing monetary policy. the challenge is not to ease too soon. lisa: whether a fed induced recession is one question, whether the fed can end the recession is another one. michael mckee joining us now.

i want to start with the labor market and whether you could end up with a recession that is fed induced that just not include a material softening in a labor market that we get a lot of indicators for that seem to be showing a lot of strength. michael: i think bill explains it well in his column today. the fed is looking at service price inflation which is being driven by a lack of workers. as long as wage pressures stay high that would be the thing to watch for on friday. as long as wage pressures stay high the fed has to keep additions tight. if we see them come down, bill says 3% to 4%, most people are looking to 3% to 3.5% as a level of wage increases. if we get to that point the fed can start to back off. we will see this tug-of-war between average hourly earnings driven by the fact we do not have enough workers, and the fed

trying to slow the labor market. you look at the forecast for this month. i think economists are guessing. everybody is expecting the labor market to loosen and it has not. to say 3.7 percent will began employment rate in december is probably more of an estimate than actual forecast at this point. lisa: is a guessing game and everyone is pretty humble considering how many vagaries there are. john has been asking this question a lot about the balance of risks, whether the fed is worried about going too far or not far enough. clearly there is still concerned about inflation. went to the concerns about a loosening labor market started to take more preeminence in fed deliberation? michael: the political aspect is something they will steer away from publicly. they know they have to be the

bad guys they know unemployment will go up. if you push unemployment up 1%, you are at a lot of jobs lost. there will be a lot of -- if they did not come inflation gets embedded and it gets harder to get rid of it they have to put more people out of work. because we are coming from such a low level, we got to 3.5% unemployment, what is the ultimate unemployment rate that will be consistent with the idea of sustainable labor market wage increases? we don't know at this point. the fed will be flying blind. steve ricchiuto made a great point that we may see the fed react more slowly. it is hard to get a clear look

on the data terms of whether going to happen going forward. lisa: which is now at the market is looking for considering rate cuts are being priced into the market. you are in washington, d.c. we have indicators coming out. what you think will be the most important indicator to start 22 a3 having to do with fed policy. michael: it will be jobs. cpi is probably going to be the market moving number of the month of january. we are expecting it to continue to slow down, especially with energy prices coming down. what is going to happen with housing and underlying inflation issues will be important for wall street. they will react to that. one thing to keep in mind, and i think bill dudley points this

out in his column is this is january. this is when wages reset, when minimum wages go up and when the government social security payments rise and so there'll be a lot of additional fiscal impulse coming into the economy and we'll see how that affects the day. lisa: coming up next, director of international policy at stanford university speaking with tom keene at eurasia group. this is bloomberg. lisa m.: keeping up-to-date with news from around the world with the first word, i am lisa mateo. kevin mccarthy's chances of becoming speaker of the house remained in doubt as republicans prepared to take control of the chamber. the gop will hold only a slender majority when the new congress convenes today. the car afford to lose more than four republican votes as he is

opposed by hard-line conservatives. imf expects the three biggest economies to be in recession because the three biggest economies are slowing down. she says if the resilience of the u.s. labor market holds that would help the world get through a difficult year. china is vowing to hit back at countries who placed covid travel restrictions on its travelers. a foreign ministry spokeswoman says some of the missions lack of forward influence. the u.s. captain and some other countries are requiring from -- the u.s., japan, and other countries are requiring a negative covid test from travelers from china before they enter. a real strike for five days starting wednesday. nurses and a village drivers plan to strike later in the

month. unions are demanding bigger pay hikes. the u.s. tied qatar as the world's largest exporter of liquid natural gas. it is a milestone of the rise of america as the biggest supplier of the fuel. the gas revolution and has millions of investments in the gravitational -- in liquid vacation facilities made the difference. i am lisa mateo. this is bloomberg. ♪

>> i think the last year -- will see a continuation this year -- very impressive in terms of european solidarity. i am fairly certain that vladimir putin had not counted on that. he was fundamentally wrong and

now he is paying the price. lisa: a new year but a lot of the same problems. that was the former prime minister of sweden talking about the war in ukraine as it grinds on. that is one of the main risks facing 2023 according to the eurasia group where tom keene is. is been checking in with a bunch of luminaries to get a sense of where their heads are at. we are seeing a bit of optimism first trading day of the united states with a lift in the s&p. -- a lot of people expecting the 10 to go much lower throughout the year as recession fears creep in. the euro softer versus the dollar, 1.0 567. let's head back over to tom keene it was with the international policy director at stanford university. tom: thanks so much.

i talk about a book of the year or a book of the summer. this is the 27 page brief of the year every year in january for be a rumor. -- four ian bremmer. i cannot say enough about russia, about china, the conversation with kevin rudd, the next ambassador from us trillion to the united states. it is about many other topics you see, including a focus on energy and technology as well -- the exception is iran, which dovetails into what we see in russia and china. in the coming days will give you coverage on this and drill down to some of those top 10 risks that are a bit different. we have a perfect guest. he is at stanford university --

she is at stanford university. that barely describes her efforts on thinking about technology and what it means for your and all of us around the world. professor, thank you so much for joining us this morning. we have seen the use of technology in the war in ukraine , the speed of bid for information and the use of technology for information. after what we witnessed in 2022, is this time different? >> we see an acceleration of the use of technology in almost all aspects of our society. he mentioned the ongoing unjust war in ukraine it waged by russia where technology plays a role used by the ukrainians but also when it comes to efforts to cause harm through cyberattacks

on the russian part which prompt us to ask ourselves went to wars really start? is it when taxable liver physical borders as russia has done -- is it when tanks roll over physical borders, or is it when infrastructure is targeted with cyberattacks, which we have seen much larger -- much longer than february 2022. there have been remarkable events. elon musk coding twitter and using it as his personal playground. breakthroughs in generative ai, some of you may have been playing with that over the holidays, the chatbots that can help generate texts. i know students are trying to have the homework be done for them. all of the von and play with the new applications, i cannot disguise the new risk these ai applications bring for spreading disinformation.

tom: i can tell you from europe there is american tradition to stanford university in palo alto for students to figure out how technology can do their homework. there is a history of that. let me talk about -- this is in 60 seconds what you're doing with ian bremmer in eurasia. what we are seeing with sam bankman-fried and our fear of cyber. do our institutions have control of technology, or is it as under control as we feel. dr. schaake: the question of control is of clinical choice. that is an important thing to keep in mind. in europe the request has been made to invest in regulatory innovations, new ways of having oversight, transparency, and

accountability. in the united states, not as much. i think the whole ftx meltdown but also elon musk on twitter begged the question will follow -- will congress finally step up and act. tom: this is so important. i need to make some headlines on a slow tuesday morning. can europe halt elon musk's experience at twitter. does europe have the regulatory will to say to elon musk that is not acceptable behavior, you cannot do that in europe? dr. schaake: absolutely. the laws that apply in europe will apply to elon musk and all other ceos of tech companies as well. when he decides he would like to allow the spreading of hate speech or other kind of harmful content if it is ahead of e.u. law, you will not be able to get

-- and europe you may face fines and questions about transparency over his algorithm settings. the eu has taken a number of steps. some of the legislation still needing to enter in, others still on the book. elon musk will find out law applies to him as it does to everyone. tom: i want to go to where ian bremmer is, which is the discussion of tiktok. i am certain every american listener and viewer want me to ask one simple question. should we fear tiktok that our kids use or should we look at -- should we fear that as some form of pipeline or conduit to institutions or authorities in china? dr. schaake: yes. we should not be naive about it.

no one should be naive about the harvesting of data as a use social media, whether it is on tiktok or facebook or youtube. for a long time it was american companies that dominated the market elsewhere. as a european we were first floated by his book instagram, youtube, step chapter. the concern about where the data goes and who has access, what kind of profiles can be built about our children come about ourselves. what might these be used for? is not all just fun dancing instead fugitives. incident after incident reveals -- selling of data is leading to all kinds of maligned uses whether it is commercially driven or politically driven or criminally driven.

there is, i hope in 2023, no more room for naivete about how data is used. tom: thank you so much. stanford university and public service european political systems, cannot say enough about that. this is been an extraordinary different top risk of eurasia group. we will focus on this wednesday and thursday. david westin will be with jane harman on friday. what is so different this year is how the u.s. is not on the risk radar, as dr. britt -- as the doctor said. lisa: i want to pick up on what you said with chat gps, the bot system people are using to do their work. my son says so far it is not good enough to write their papers. they are trying theoretically.

tom: i will leave you but all i can say is we are a long way from cliff notes, not that i ever used cliff notes in school. lisa: thank you so much for all of the work and i look forward to seeing you back in the studio tomorrow when we will be reunited to start 2023. coming up on the open, john gray, the blackstone president will be joining after a recent announcement he just put out moments ago. we are seeing a lift to markets on the first trading day of the year, we will probably learn very little about the macroenvironment. will be watching his people pile into bonds. from new york, this is bloomberg. ♪

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jonathon: good and, 2022. good morning, good morning. equities positive zero point 6%. the countdown to the open starts right now. announcer: everything you need to get set for the start of u.s. trading. this is bloomberg "the open," with jonathan ferro. ♪ jonathon: live from new york city, we begin with the big issue. leaving behind the worst year since 2008. china's reopening push injecting a fresh dose of hope, while we lineup to forecast recession. >> in terms of recessionary o