>> looking forward, the jury is out on inflation whether the reflection -- recession risk mains. >> there's a resilience of inflation which is more tension in the europe -- in europe and the u.s.. >> consumers are behaving like there is a recession in any form come around the corner. >> there is a risk about a wage price spiral. announcer: this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: $95 crude. live from london for our audience worldwide, good morning, this is bloomberg surveillance on tv and radio alongside tom keene and lisa boyne words, i'm jonathan ferro. -- lisa abramowicz, i'm jonathan

ferro. in the equity market, posited by 0.1%. we go to the commodity market, brent 94--- $94.93. tom: i take your point, oil is game changer here and it is not $95, it is how we got here. can you imagine 97? why can't you extrapolated out on the edge of $100? right now we are at $100 per barrel. jonathan: what is it influence, what does it change? we have to ask a question from the federal reserve into tomorrow. does this change anything for policy and for forecast next year? lisa: ellen's that never says no at morgan stanley and another at moody say it could be game changer. saying anything over $100 for any length of time and we are going to be very sick. on one hand, you have to think about what this might do with a diff -- disinflationary way but also good prices as mohamed el-erian was changing. >> game changing for inflation or growth?

lisa: it's a great question. we don't really understand. i don't really understand what the major driver is. is the demand-side or supplied cuts. if you have demand holding up, then this is an issue for inflation if you have this is this really be in driven by saudi arabia and supplied cuts, which they reaffirmed yesterday, then you can see it really take a hit to growth. tom: two research notes this morning and you mentioned one of them, morgan stanley is out with a gap down on presumed u.s. gdp. down 50 basis points, half a percentage point to almost what is called a full stick down henri g -- real gdp. that's a drop and the lisa's observation, dominic at mizuho, how far we be on the pandemic supply economic shock towards traditional demand economics? jonathan: the federal reserve decision tomorrow, through to

friday, a new deadline, let's talk about the deadline read noon eastern friday, from the uaw president. he wants serious progress by then. he had this to say, these are the big three getting down to business and work with us to get a deal or more locals will be called to stand up and go out on strike. are we inching toward a bigger and more prolonged strike? lisa: it's unclear what negotiations have been going on so far. yesterday we were talking about $21 from stan lantus and now comes out that awkward before the strike was waged. there has been no progress made or new offers from the auto manufacturers according to the uaw rate unclear what the threshold is to be serious progress at these times of negotiations. tom: it's an original path and a simile don't get it. what is the auto response? can we say we are in early days of what could be weeks or months? i don't know. jonathan: it feels that way. just dazed and confused. tom: we mentioned nhs and

doctors in the united kingdom, times in london, are they going to order the junior doctors, interns, and residents, back? i'm not sure with the story is in america. jonathan: it's a different labor market. lisa will go through the day ahead to give you a snapshot of the price action currently. equity market elevated by 0.1% on the s&p 500. still in the four 30's on a 10 year yield up i think basis point, 43166. crude and wti $92.63, up i 1.26%. lisa: the big mover is everything else in stasis ahead of the fed meeting. today, president biden is heading to clog up traffic in new york city and speaking reportedly this morning at some point. curious to see how he tries to imbue this event with relevance as a lot of major leaders of other nations did not show up. at 1:00 p.m. eastern, we get u.s. auctioning off $13 billion of twenty-year notes. these tend to be messy auctions. very curious to see what this does to longer-term bond yields at a time where you already see

it creeping towards some of the cycle highs. meeting and conferences on the sides of the yuan general assembly. there are all these -- yes exactly. would you like to have a bilateral me? jonathan: none regular bilateral. tom: the yuan this afternoon, it is a newcastle ac milan. i got ago to the garden side, boys from arsenal. lisa: you can go to janet yellen's room because she is holding a bilateral. she is speaking at the finance action form. there are other speakers including european commission president ursula von der leyen. the hs pco -- hsbc ceo noah quinn. you have the germans buddhist bang coming out yesterday and saying it is china and the cause of our problems, our dependency on china and janet yellen yesterday said there is no way the u.s. and china can decouple.

you put these ideas together side-by-side to make for interesting tensions. jonathan: something tells me they will not come out and say the problem is china or hsbc. that's a safe bet. the complaint about traffic in new york yesterday, text after text, just an absolute mess. tom: it was a mess before and now it is worse. jonathan: matt miller was supposed to be covering the open for me in new york city and forgot the yuan general simile was on, drove his osha into manhattan for the yuan general assembly and almost missed the top of the show. isn't that classic matt miller? lisa: yes. also the porsche, really? jonathan: classic mat. a problem. the chief global economist at capital economics joins us at the table. good to see you in person. $95 crude is not lovely. how much of a problem is that for these three central banks to make decisions this week? jennifer: it is a problem but you are right to point out there's a problem for inflation and growth.

which one do you worry about where think about? jonathan: which one do you? jennifer: inflation at the moment, particularly from the fed's perspective. we got a major issue with the economy at the moment, the economy -- economy has been resilient and the real concern is this fees into inflation expectations and starts back off the wage price spiral that we hoped was gone in the u.s., was fading. for now, it is not a major issue or game changer but it is certainly something will have their eye on. tom: we see paris come out with a global readjust and we will speak with them later. let's get out front, you people right trenchant notes, 60,000 footnotes. i want you to talk to our audiences in america about the worry of an outright global slowdown. how far are we -- years ago i was told we percent gdp or lower is a global recession. are we there? jennifer: we are certainly in a period of global economic weakness. we know the eurozone has been

stagnant for a while, germany is in recession, u.k. has had a falling gdp. the u.s. i think is a relatively unusual example of resilience. china too is soft. i don't think we are in a recession but we are in a bang -- tom: so what's the strategy? it is sort of new territory, granted we are in a new world, but in this new territory, what is the combining strategy to get out of it besides facetime and the u.n.? jennifer: it is extremely difficult. i think a lot of our economic models are not working now. the pandemic has thrown them into disarray. we don't really know where the economy stands with any of the major economies stand relative to their potential for how much inflation pressures being generated. which makes it very difficult for the central banks try think is why they are data-dependent at the moment, watching to see how hard the tightening they have already implemented is heading their economies and whether inflation pressures are

fading. lisa: which is the most important central bank meeting we will get the next four days? we will get the federal reserve tomorrow, bank of england thursday, and a host of others. then the bank of japan on friday. jennifer: the bank of japan is interesting suddenly again but i think bank of england will be more interesting. it is facing a different situation to the u.s. wage growth. on employment rate is coming up but that does not really seem to be tempering wage growth yet. core inflation still very high, we are looking for tomorrow to see where the current inflation fell down. if that does not down, if we see another rise in core inflation in the u.k., inflation data tomorrow, we could be looking at a 50 basis point hike. we are penciling in 25 but i think that is where the risk lies. lisa: what would the response be to a 50 basis point rate hike? jennifer: it will come as a surprise but not a complete shock. it is pretty clear there is major inflation problem in the

u.k. but that is tempered by the fact gdp fell in the latest data. i think the bank of england is going to try to look or word and assume this will start to bring inflationary pressures down but with oil prices so high as well, wage growth hi, it would be not surprising if it decided to err on the side of caution. tom: dominique from missouri talks about a vast and unique cut once the fed goes. do you agree the glide pass of monetary accommodation, there's a history of this in the recent decades, can it be fast and deep on the central banks blinken go? jennifer: i think in the u.s. case they probably will be next year. tom: what about in the euro? on a nominal gdp basis, where the euro and ecb is, it is extraordinary. can they cut fast and deep? jennifer: i think it is less likely for the ecb. wage growth has been sticky historically, sticky previously but i think now that it is

increased -- tom: this is not a small manager. jonathan: the bank of france governor said we had the right does but we have to take the medicine for a sufficiently long time and we will see the deceleration of inflation. when they say we have to take the medicine, if it is not a recession in germany, what does that look like in europe? jennifer: unfortunately it is longer, i own this for longer to bring down these inflationary pressures. the ecb, this is familiar rhetoric from the ecb recently that it seems they are at the peak. we think they are probably done hiking but it will be a relatively long period at that higher rate. the eurozone is really not accustomed to it area it will be interesting to see, difficult to tell. jonathan: deutsche bank call this a low conviction pause. when i say low conviction pause, i don't mean cuts are about to come, maybe more hikes are. jennifer: i think that's probably right. we are not expecting more hikes but if you see core inflation rise in the eurozone, if there's any evidence high over price is

starting to feed through into wage negotiations, then absolutely you could see another hike. jonathan: we say this every morning, what a difficult moment for the europeans, for the ecb given this backdrop. tom: the fancy talk at ucl that jennifer would know is they don't have the degrees of freedom the united states does. the united states has a because of innovation, technology, some a demographic and somewhat immigration. over here they just don't have those impulses. jonathan: thank you. jennifer mckeown of capital economics. we have to build on this, new forecast from the oecd, growth will use to 2.7% in 2024 from an already subpar global growth expansion of 3% this year. the oecd had this to say while high inflation continues to unwind, the world economy remains in a difficult place. we are confronting the double challenges of inflation and low growth. we will checkup with oecd chief economist in five minutes time. lisa: this raises the question

we were talking about with jennifer, what is the role of central banks? what is the role of rate hikes at a time of speculation? how hard he rate hikes have to go if they are not -- but i'm certain point, how effective are they have some of the inflationary pressures are being driven by things other than the flow of money? that, to me, is a conundrum that the ecb is facing. tom: it varies country to country but i would suggest oecd was out front with the imf, looking like a genius this morning for that a whole economic outlook where they really struck people onto 2020 a. i find fascinating is he had 2026. is it the same growth model or non-growth donald? jonathan: have you seen the call from bernstein? 2.5% on the u.s. tenure. we spoke with a rep for mogen stanley, bema, morgan stanley. lisa: and ellen zentner thinks

the next move for the federal reserve will be a cut in march 20 24. if we start talking about potential for rapid deceleration, that means the lag effects have not taken effect and you will see them. tom: we will have to revisit that at the fed show tomorrow but there is a set of additio -- disinflanistas. lisa: i'm trying to be nice. jonathan: coming up on the oecd forecast, the chief economist on their interim economic outlook. good morning. ♪

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>> it's also in many areas a win-win relationship in the sense that our trade and investment flows produce gains for china and gains for the united states. much of it is uncontroversial,

should thrive, and it would really be disastrous to try to decouple from china. jonathan: it's not decoupling, it's not de-risking anymore, it is diversifying. the treasury secretary speaking at a fireside chat at the clinton global initiative with the former secretary of state, hillary clinton. we diversify, not decoupling. the administration -- has the ministration said it enough time to believe? lisa: i don't understand what it is to believe. it's unclear with the marching orders of diversification are. jonathan: decoupling. lisa: it's a very confusing time for policy between the u.s. and china at a time where you can just make a sudden fissure and you don't want to start a war but you have to somehow deal with the fact that there is a rising amount of geopolitical risk. the buddhist bank today. jonathan: let's pick an industry, ev's, are we decoupling? can we decouple the supply chains? lisa: if tesla were speaking about this, and elon musk had to

say anything, no way. this is instrumental to his business. lisa: the u.s. right now, can we have some contract negotiation with uaw because it feels like no one is at the table anymore? the detroit three has a new deadline, on friday. the uaw president wants to see serious progress by midday on friday and if we do not, this may be going on for vigor and longer. tom: there's a chart of increased strikes in america and he goes back decades. i don't think we realize -- it is not that this is original but we have not seen it for 25 years. jonathan: i'm not just thinking about people and unions, i'm thinking beyond that, the effect you get beyond this. a 24 set -- 20% offer over four years and at the moment there is pushback after pushback from this union. what is the single effect you get from that? away from union membership to an everyday worker who is going to sit down with her manager at the end of the year?

what does it do for those negotiations? lisa: jeff you said it well yesterday, he said the union is gambling, the labor market is tight. that is their question. if the rank-and-file outside of unions feels the same, that their job is crucial to their business and cannot be replaced, they will go in there and look at what the -- say you look at what the uaw is getting and we would appease. jonathan: tk is taking those for his year-end evaluation. equity future 0.16% positive. hopefully a quiet start on tuesday as well as monday. 431, 46, 10 year yields a by a single basis point. early on today, $95 crude. at the moment, crude is $92. some fresh forecast this morning from the oecd forecasting global growth will ease to 2.7% in 2024, marking the weakest annual

expansion by the covid hit 2020 since the global financial crisis. the oecd writing this, after a stronger-than-expected start to 2023, held by lower energy prices and the reopening of china, global growth is expected to moderate the impact of tighter monetary policy becoming increasingly visible. this is an consumer confidence have turned down and rebound in china has faded. the tailwind at the start of the year has turned into a headwind at the end of the year. crude and china, two of the aspect of the call. tom: these global institutions in paris, oecd and imf in washington have been out front of this. they have done a bang up job of being cautious about a global post-pandemic boom. joining us now, highly qualified is clare lombardelli, oecd chief economist, who has done her work in the crucible of united kingdom economics, the worst up on the planet. we welcome her this morning. claire, i am fascinated -- clare

, i'm fascinated if you can extend your caution into 2026 and 2027. pierre olivier at imf was able to go out to 2028. can the oecd get halfway there and move into 2026 with a global caution on growth? clare: thanks. we're not going to give you forecast numbers for those years but what i can tell you is what we are seeing in the moment is weak growth, we see it this year, expecting a next year, and without policy change, we do not expect levels of growth to pick up. -- pick up rapidly in terms of what we need to see and medium-term to get economies growing again. tom: we have scheduled later this week david folkers landau of deutsche bank and he has made clear fiscal stimulus and they reach beyond austerity is important.

you have lived it in the united kingdom. are we being too austere? do we need a global fiscal stimulus at this moment? clare: no, we don't think that is what the global economy needs at all read in fact, the important fiscal policy works in collaboration with monetary policy and certainly aligns with it and does not conflict with it. what economies need to get growth going's structural reform. it is changes to things like trading patterns. trades should be driving global growth and we are just now seeing that -- not seeing that at the moment. we need countries to take actions to get more of their people into work, need to re--- the re-vigor eating across economies. lisa: what the oecd is describing today in the report is basically stagnation. it is something that is concerning at a time where people are wondering how do we get out and whether monetary policy is the effective tool to do so if it has not been as

effective as people expected to this point. do you think monetary policy has the same effect on inflation and they -- the stagflationary environment where prices are being driven by things outside simple he the flow of money. -- money? clare: we are not predicting stagflation. we have got low growth, but there is high inflation. we are seeing monetary policy is working. it is working its way through economies and we are beginning to see the tide turning on inflation. headline inflation is coming down in some countries, also core inflation. there's a lot of uncertainty around monetary policy at the moment. how powerful it is but how long those legs will be. as you might expect given a long period of very low rates, and low inflation, now we see monetary policy, it is hard to judge how powerful that is and how far needs to go area -- go. lisa: on a fiscal policy level, how important is it to your

forecast to see some sort of let's use the biden administration's word, diversification of supply chains on what we see from the boon yesterday saying one of the main risks to the german economy is its interconnectedness with china. how much is that your base case in diversification or decoupling with the western world and china? clare: we are not forecasting decoupling as you call it. what we are worried about is the amount of trade we are seeing and trade intensity which has stopped growing in particular -- rowing. in goods, we have seen slow on increases in trade and that is a warrior. we would caution governments from going further. of course there are issues around security concerns and it is right to think about that but the vast majority of trade we should be seeing greater trade integration. there is lots more scopes of services trade. those can promote growth and promote prosperity and that is what we would encourage. jonathan: appreciate the update,

clare lombardelli there of the oecd. this call on monetary policy is an interesting one. limited score for any rate cuts well into 2024 as the call from them. well into 2024. all these calls about q1-q2 of next year, they are pushing it up to the end of next year. lisa: which is what we heard from the french central bank early this morning. i don't know if that is applicable in the united states. we heard it from jennifer mckeown, red that in allen's know where she expects the next cut or move to be a cut in march. is it different? is the disinflation somehow more powerful in the u.s.? i don't know if we will see a change because of oil prices and where they are. jonathan: i don't think and i don't think we think records are created equally -- rate cuts are created equally. they want to maintain restrictive levels by people that have the real rate or two growth collapses and they have the space to cut more aggressively which is what tom indicated. when you get the rate could call

for next year from various banks, why is it? not all rate cuts are equal. lisa: if you have it because growth is collapsing, as you get to 25%. this is what we're looking at was some people gaming that out. jonathan: hsbc around this table, they got it right this year. big time. bullish, constructive on the outlook. has the outlook changed? max from hsbc's around the corner. s&p futures positive by 0.1%. a live from london, this is "bloomberg surveillance." ♪ ♪♪ we're not writers, but we help you shape your financial story. ♪♪ we're not an airline, but our network connects global businesses across nearly 160 markets. ♪♪ we're not a startup, but our innovation labs use new technologies to help keep your information secure. ♪♪ we're not architects, but we help build stronger communities. ♪♪ we're not just any bank. we are citi.

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jonathan: let's take a sneak peek get the price action briefly, equity futures on the s&p 500 positive by .1%. a little lift. i will keep this bread -- brief, a fantastic cast around the table. the nasdaq up as well. in the bond market, two-year, 10 year, 30 year, shaping up as follows. to your kadant within a basis point on a cycle high. 4.3126, up a single basis point. the euro short of 10 seven this morning, 10695, positive 0.04%. i want to get straight to it. under surveillance as this one, in the commodity market, crude, extending this rally with renta touching $95 for darrell -- per barrel.

crude surging 25% the past three months on the back of supply cuts from opec-plus leading to a flurry of predictions that the global benchmark could hit $100 per barrel this year, one prediction around this table just yesterday and anne-marie of energy aspects saying triple digit crude by halloween. tom: it'stom: a different hundred dollars than last time we were there. this is based on post-pandemic pickup. i know the focus is on sodi and supply dynamics -- saudi and supply dynamics. i will go with this time is different and everyone has to adjust. the world is not going to end. lisa: what i find interesting is when you read the commentary, there is a belief sort of the way there was about inflation being transitory. there is the same belief in the oil community about energy prices. saying this is only for the november contract but if you look out further, you can see they come down because this is driven by saudi arabia. if it is proven it is being driven by something more demand driven the way you are talking about, there might be a

different, more sustained response in the markets on a microeconomic basis, high prices solve itself. you get five dollar gallon gas, nine dollar a gallon petrol in the united kingdom, that will solve the problem with demand comes in. what about a post-covid asia? jonathan: you are far better at this than i am but energy demand is fairly elastic, isn't it? tom: yes. particularly in the distillates. jonathan: is there trade elsewhere? tom: it is hugely elastic in every sentiment and those with so you have to get away from the financial media and focus on the fixed and -- on w ti brent and look at the short world. jonathan: diesel prices are shooting higher in a much bigger way. chevron interview, guy johnson comofest -- fantastic yesterday. can we live with triple digit crude? want to get to this story, uaw imposing another deadline on labor talks with the big three

automakers saying it will expand strikes noon friday if "serious progress is not made in negotiations." hey union rep said no new offers have come in since the may proposals -- since it made proposal september. they are seeking a 36% pay raise, still is offering 21% and ford and gm offering 20%. you wouldn't want to define what progress is? lisa: not particularly. any other questions? we have no idea what that means and don't exactly understand what is going on with respect to the negotiations whether there have been new offers from ford, gm and still in test. at this point, is this basically carte blanche to expand something and prolong something that some people are trying to gain? i would just keep talking. the people are trying to see. will this have an effect on inflation as well as potentially on growth? jonathan: it is an odd skill. [laughter] just to keep talk. lisa: just go. jonathan: when tom's interrupting.

story of little last 24 hours, search teams fighting records of the missing at 35 fighter jet, that mysterious -- mysterious lee vanished sunday. the jet disappeared after its pilot ejected from the aircraft during a training mission in south carolina leaving -- leading to an extensive search that involved teams from the marines, navy, and local law enforcement. the debris was found around 80 miles northeast of joint base charleston. we have questions. one is how on earth did this happen to begin with and how to they lose track of it? tom: engineering, they lost traffic -- track of it, the transponder when out. then they found it a couple days later. i have to admit it is odd but what is more disconcerting is the grounding of jets and i'm not informed on this but there has been a series of accidents with $80 million pieces of hardware. that is what i would focus on. lisa: $80 million, that is what i would focus on. some of these aircrafts are $180 million. if you look at the f-35 program

or this particular plane, it is like insane, like $450 billion contract the u.s. has to develop these planes. have an accident, who see, i think i just blew $200 million. tom: i look at the aircraft and goes the truth are out there but so are lies. jonathan: i'm sorry. what are you suggesting happened here? tom: scully knows, molder doesn't know. [laughter] joining us now is someone that makes you lean forward in his multi-asset strategy but mostly he is senior vice president, encouraged to stay in the market in hong kong and shanghai banking corporation. what is your new outlook? what is the nuance of the last few weeks as you look forward to 2024? max: some of the nuance as you guys were talking about already is oil prices, energy prices, perhaps that changes little of the narrative but perhaps inflation does pick up a bit

more in the u.s. toward q4, so that is not particularly great news for a goldilocks scenario. i think the nuance is also going into q4. what can destroy the goldilocks picture? we are talking about all of these horrible things, things i student loan repayments and are we hitting recession and all these things and we look at high-yield spreads and they are going towards 350. and happy days for everyone. i think the nuance is china -- nuances on china, potentially what could break this? what could break that goldilocks scenario? jonathan: is $95 crude? max: i don't think so. it is one nuance. i think it is one of those where, to be fair, if i was the fed, ecb, or bank of england, which lucky for everyone i am not, if i were, i would be saying what should i do about that? what can i do about that? i'm not an oil producers so i can't really do anything and i can use it saying this is energy

prices, it is something transitory, it will be going away out of the calculation window and a couple months. don't worry. excluding fitting component from the preferred inflation. that everything looks fine. i think that is the worry i have, if we start looking at these inflation baskets that exclude everything that we need for the everyday life, that they are starting to pick up again. to be fair, if we look at things like super court inflation, the action components, the broad-based nature, has not changed the last 12 to 18 months. so that is perhaps something towards q4 but perhaps inflation does pick up beyond just energy prices, not a new inflation rate but basically an interruption from the ok inflation has gone dine -- gone down in one straight line to now we are getting this bumpy road ahead on inflation where we have to play those turning points. jonathan: are we still in the

window where equities can do well? max: 100%. jonathan: how big is the window? max: to be honest, if we think about it, i know it sounds stupid but imagine if yields go up, imagine if the tenure goes to 4.5. what is the reality? that it will probably do it because growth is beta and because growth expectations turn out to be too pessimistic. if you look at q4, u.s. growth expectations, it is q1 next year. the bar to be this -- beat is relatively low. if yields go down, probably rates go down and you buy the nasdaq. to be fair, great die would just buy equities. lisa: can big tech still lead? we have seen a weakening in the tech file and underperformance there. people are saying this is the beginning of the end of the time trade area are you on that train? max: we heard that for i think 15 to 16 years so it has been a

lot of beginnings of the end. i don't want to be too cynical but -- jonathan: last year was pretty brutal for the tens, to be clear. max: to be honest, i think tax still has a bit of room to go in the next couple weeks. there's probably a window around q4 where i would be moving towards the value side of things. tactically. we get the bump in inflation, particularly in the u.s. a little higher. you will be want to per than for couple months things like energy overtake. for now, i think energy has a way to go. lisa: you mentioned the dark because including people repaying their debts and this question around a government shutdown which seems like an increasing inevitability in the u.s. amid this backdrop of strikes and a question of general -- just satisfaction -- just dissatisfaction. what kind of things do you care most about, could have the most impact on your call? max: i think the government shutdown not really because we got's to every other quarter

from an equity perspective. i know it sounds depressing but if we were honest, it was a shock 12 years ago and it's not particularly a shock anymore. from an equity perspective, a risk as have perspective, that is not the main worry. the student loan repayments also not particularly worried about it because you can make a positive spin out of it. you can say from the end of july up until now, repayments have shot higher because economic agents, normal people like us, are acting rationally. they see this is starting to kick in so instead of starting to her having to start to pay interest on it again, i'm going to repaid only and i have the money so let me repay as much as i can. you can make a positive spin out of it and say people apparently still have the money to do that, they have sufficient money to do these pretty chunky repayments early. all of that does not really keep

me that much. tom: spx 5000, i gotta make news today. can you give me 5000 spx? max: if we think about next year , it is not an awful lot of weight. it is 10% to 12% away. if we are thinking -- if we are still in a fairly highest inflation environment and earnings growth is relatively fine, why not. tom: they're doing something with the united nations, they listen to max cap mayor. hsbc is a presentation like no one else. i witnessed it across the hong kong trolley in asia. how dealing china trauma and particularly domestic trauma into the toxic room of gloom and the west? how do you link hong kong and shanghai over to london and new york? max: i think what is clear with regard to europe and china and now a little bit less in the u.s. is like you've said there

is all this doom and gloom, all of these are stations around do -- doom and gloom, i don't think you have had guests on for weeks that's a 2023 has been better than expected and we were a bit wrong on europe and the u.s. for 2024 is going to be even better, right? so i genuinely can't see how we will get starting to think about when he 24 and how we will see 20 24 where people say china is going to do great, europe is going to be better, and u.s. is going to shoot the lights out. i cannot see anyone doing that. jonathan: do you want to take the other side of that? max: i want to take that side. the thing is -- jonathan: so you are giving us a 24 call right now? max: the one thing i'm not asked at all for months is what could actually go right. jonathan: let's do it. max: what can go right next six to 12 months? what is one thing where we could be saying maybe --

lisa: so what's the answer? max: as long as we still have these really grow -- really low growth expectations you keep rolling goldilocks and goldilocks, it's great. jonathan: goldilocks forever into 2024? max: yeah. tom: i think it is a lonely call. [laughter] jonathan: it's not for me to say it's the wrong call. it's lovely. tom: max kettner at hsbc. there's a couple others out there. jonathan: max has been ripe i think you put that out there. you have been right all year and let's see about 2024. max kettner there of hsbc. the annual outlooks will come through in about a month. tom: they are, they will be exciting. lisa: goldilocks forever. tom: we gotta go to the news that matters. the guy with newcastle's walking into san siro tonight for the first time ever. what is it like to walk into san siro in milan? jonathan: amazing. tom: this is a big deal, folks.

jonathan: it is just a cauldron of noise. tom: it's a different culture. jonathan: three tiers hanging over the top of the field, 80,000 to 90,000 fans, the roar is unique era i get emotional in that stadium. lisa: a cauldron of noise. tom: you are so damn emotional he is extending his trip next week. jonathan: i got messages last night saying why do you want to play -- why aren't you on a plane? because i want to talk to will kennedy about $95 brent next on bloomberg tv and radio. [laughter] ♪ to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™.

>> an average of $92 per barrel to go to 100, we put another piece in asia today which is calling for $100 by halloween for brent. and again, this is a trajectory. at this point, of course it is a short-term thing. i'm not saying it will average about $100 but couldn't go to

$100 for a bit? yes. jonathan: triple digit crude by halloween. that is the founder and director of research at energy aspects. 95 on brent, right now wti $92.62. the price action elsewhere, muted, unchanged on the tenure in america, 4.386. 1070 five, reclaiming 107 in the last five to 10 minutes or so. equity futures are elevated, doing ok. it is a quiet start to the week inside of crude into the federal reserve tomorrow. tom: three central-bank meetings is tomorrow, a live meeting here, are we doing definitive coverage for a den meeting? [laughter] jonathan: if the decision is dead, the forecasts are live. does that make sense? no one is expecting a right height changes to the datsun forecast, and they should growth this year, and perhaps next year. tom: on carte blanche it is like . medium. jonathan: does the medium come down for. 2023?

what about that longer-term dot. tom: in london, all with our usual guests, we will do the quality show not only to get you to september but november tomorrow as well. this is a joy and i will take a little moment to do this. founder of bloomberg news a few years ago, matt winkler, said what can we own? he went to a guy named stuart wallace, a really odd guy. he is a different guy and said stewart, build it up. stuart wallace constructed, through airline terminals and the rest, a hydrocarbon team that is definitive in the world. stuart was exhausted and said [indiscernible] joining us now, will kennedy. how many people were involved in bloomberg news looking oil and gas? will: probably 60 to 70 worldwide. tom: alex has the thing you are focused on, away from what is west texas intermediate, is all

of the different grades of oil not in my back yard refineries and that, what is the observation or audience needs to know about what alex long is working on? will: i think the thing to see is where looking at futures tighter here and clearly that is the price that matters but when you look at the underlying parts of the oil market, for alex and those guys reporting on every day, you see a tight market. you are seeing a lot of demand for middle eastern crude and china and the rest of asia, a lot of demand for u.s. crude. you see oil today is worth considerably more than oil in the future. that spread is elevated -- is as elevated as it has been any year. you see demand is looking really strong. that means the margin between crude and fuels is also wide, so people are paying for what they use. you are seeing an oil system which looks tight. tom: lisa brought up earlier the

elasticity or responsiveness of the demand side of oil, all of that covered by post-covid asia. our asia team, what do they say about the elasticity of asian demand? [laughter] will: it has bounced back. i think people were worried about chinese demand in particular over the summer months but one of the things that is driving this market higher is people see china demand, despite the property sector and worries about parts of the economy, it is fairly strong, that it is bouncing back and that reflects good demand in china where people are traveling a lot and it also reflects that increasingly the world is reliant on china oral refineries. lisa: i want to go back to the point where you are talking about a lot of the higher prices are long-term. this is high oil is transitory and that is playing out in the commodity sector through the pricing. what has to change for it to

have stickier feel to it in some of the futures pricing? will: i think the market now is looking for where that point is clearly saudi arabia and its allies and opec have sought to take a grip on the market, coming into this 90 -- $90 to $100 range. if we touch 100, i think the question becomes does opec let it go higher than that? and at what point does it start to dent demand? i think that really has not -- we saw that in the -- when oil didn't have an impact on demand but we have to find the spot between where opec is happy and where it starts to impact the model. i'm not sure in the current economy people know where that is. lisa: we also don't understand whether this is supply or demand driven. at this at a point where people are pointing to the saudi arabia production cuts but there was an incredible amount of demand before that and inventories had come down dramatically.

how underplayed is the demand side of the story as we talk about it? will: when you look at the bounce back on asia, look more broadly around the world, demand has probably been stronger than people expected and really has been buoyant. we are well past probably recovered highs, we cede oil demand day in and day out and that bounce back has come through a certain uncertainty about the state of the economy but it does reflect an economy strong -- a, connie strong, and b, that it runs on oil. jonathan: saudi and russia have a monthly review, they cut back or they said those cuts are to be discussed monthly. do you know where the line in the sand is to maybe they say we should change? will: i don't. i think that is one of the key questions people will be looking from here on out. i think they will be live for demand for their crude. right now i think they feel demand for crude a strong, able to charge healthy fees for it. don't forget last week, the

saudis are getting well over $100 per barrel for their crude. which is something people don't -- jonathan: let's get into that. the saudi premium, are they in a great spot to charge whatever they want because there are certain places that can only get crude from them and the other places? will: i'm not sure whatever they want but they are in a good spot where crude is in demand and they are going to asia, that premium has risen over the last few years and i think that does reflect the pricing power saudi arabia and opec has in the market. lisa: is russia still on the same page saudi arabia? will: yes, i think they are. one thing, rhetorically, they really are. there has made an effort to communicate and show that political alliances strong, to show the leaders of those countries, vladimir putin and mohammed bin salman, talk about the oil market regularly and it is true to say russia curbed its exports. a russian target is not like a saudi one.

jonathan: they move from volume to price. what was behind that? in terms of the russians and what they wanted for rude, when thanks for his much as they could and that has changed? will: they are still exporting but they have not pair their exports like saudi arabia has paired exports. saudi arabia is doing more of the work but i think they thought it was worth doing some work to cement that aligns with saudi arabia, which on oil market bases looks pretty strong right now. tom: if i was to get into a bentley and drive to bath, what is the price for a leader of petro? on a gallon basis, we are four dollars per gallon and five dollars per gallon is a national crisis in america. where's the tip point on a gallon of petrol? is it a dollars per gallon? is it nine dollars? will: we are still european enough where we think in leaders and i think the point where people start to feel it is two pounds per leader. which is where was.

lisa: that means nothing to him. [laughter] will: i think it is well over eight dollars per gallon. jonathan: it is brutal. psychologically the cost of living, forget 7% a percent weight increases. will: two pounds per leader as you're spending more than 100 pounds to fill up your car. that is when people feel it is when they feel -- fill the car and it's 100 quid. jonathan: are they saying ev's are too expensive like they are in some places? will: i'm sure you seen on the visit that there were a lot of ev's in london. it is happening in london. i think when you get out to the rest of the country where you don't have the charging points, it's happening more slowly. jonathan: tom likes the electric london caps. will: built by chinese company. tom: and near coventry? jonathan: is that right? nice. will: it starts with naa -- an a. jonathan: you want to squeeze in

some tots? will: they are rocking it. tom: farrow is working this thing. he is to any 47 on this thing. jonathan: try to figure out this weekend. tom: seven people trying to stretch the trip. jonathan: arsenal, right? our connections with arsenal are not as great as others. tom: this a car places, all the time. jonathan: we have kit on this week? tom: i don't know. lisa: now we do. tom: are you standing our trip? jonathan: you can if you want. our next guest is coming up, edward yardeni. equity futures on the s&p 500 positive by 0.13%. live from london, good morning. ♪

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>> looking forward, recession remains significant. >> it may take longer for inflation to get back to target. >> consumers are not behaving like there is a recession in any form coming around the corner. >> there is a spiral that will not go away anytime soon. >> this is bloomberg surveillance with jonathan ferro, tom keene and lisa braun wits -- lisa.

jonathan: good morning. i am jonathan ferro alongside my colleagues. price action .1% up on the s&p 500. the fed reserve, the boj, and the big one is the federal reserve tomorrow afternoon. tom: and you ask yourself is he having a ham sandwich or a peanut butter and jelly sandwich. we will see if we follow the suitcase and see what is going on. i do not know what to make of it other than there is no other story. we talked to our guest this morning as well as the encyclopedia will kennedy. we are here. jonathan: we are here. what does it mean for the fed reserve tomorrow afternoon?

lisa: the supply constraint by -- will cast a hawkish shadow on the meeting. and they talk about an idea of hire for longer with the pricing for markets. when you look at that funds futures they are moving up to the highest we have seen for next year. jonathan: a hawkish pause, right? lisa: yes. jonathan: they are looking for another hike in november. we may see some movement in 2023. or whether they think they are done for this year. how much can you push back the idea that we will get any this time soon? tom: i heard a band called hawkish pause and it was really great. lisa: [laughter]

tom: it is awesome. inflation is for the public but most of us are flat on our back period. jonathan: crude 95 right here right now supply story. let's build on this strike. there is a new deadline. uaw president would like to see progress over the next 2-3 days and if we do not see progress the strikes will be prolonged. does that mean anything to the federal reserve? can they make a call based on what is happening with uaw and three out of makers -- three automakers? lisa: sound like a broken record but what they are betting on is a tight labor market. is it because this is a tight labor market and there are not many alternatives?

especially some seeing this as a signal and demanding higher wage increases. this is at a time where jobless claims come in below expectations week after week. jonathan: we will touch on that and the latest from the u.n. general assembly. we will have all of that in just a moment but the price action up by .1% on the s&p 500. up by one basis point on the 10 year. you will love that we had to say on bloomberg news on this story it dropped $.50 on the dollar in yesterday's session. the price story there. it was painful for anybody who picked up that long bond for yields. tom: mario looking at me? lisa: there is a lot of pain to get here.

president biden will add to this there is the address of the u.s. assembly this morning. i'm curious to see what he has to say about china, global cooperation, and the relevance of the human at this point. whether there is -- at the you un this morning. they look at yields going back to the highest since 2011. i'm focused on this afternoon where janet yellen will be speaking. there will also be ursula von der leyen and noel quinn of hsbc ceo. tom: i heard from max as

well. jonathan: i want to talk about ev. is the transition about climate or industrial policy. and european and u.s. manufacturers, are they open to this? lisa: the answer to that is they want the tariffs. this is not the open market, but many are horrified at the progress that chinese manufacturers have made. jonathan: it is wonderful to have you with us on the show, we had a guest in the past saying we need to focus on what could go right in 2020 or but are you more focused on what can go right or wrong? --ed: the third quarter is

turning out to be remarkably strong. all and all we get through these challenges and 2024 should be a better year for earnings with the market doing better as well. tom: you have been way in front of this on the october rally. we talked about the second leg of the bull market. the arch pullback of this is the great moderation over, it is the great moderation over -- does that mean you cannot make money in stocks? i been debating -- ed: i've been debating in my commentaries of whether it will be the inflation of the 1970's or it will be the

roaring 20 20's. i believe on a long-term basis we will see the 20 20's will be a period of tremendous progress and productivity. i was making that point before the pandemic and the pandemic sort of gotten the way because it messed up the productivity story because people quit left and right but i think we are making a comeback. in 2015, in terms of growth rate, it was only 0.5% and i think it is going up to 4% by the end of the decade. that sounds delusional i will admit that those of the peaks we have had in previous growth cycles and productivity. tom: does a real rate and some would say a higher real rate, does that impinge on your enthusiasm? ed: not really.

i think we are going back to normal. the new abnormal was the period between the great financial crisis -- and interest rates were at record lows back then. the think we are going back to prior of the financial crisis britt was around 2% for the 10 year. 4.5% is where the bond should be in returning to the old. i think that is what we are doing. i think the economy and the stock market have already demonstrated they can live with these levels of interest rates. lisa: you and max seem to be on the same page. he came on the show earlier saying it is my job to worry -- no one should worry about this but it is my job to worry. i worried about your vantage

point. what is your view with oil raising 30% since june? ed: i think the widespread perception was that the saudi's would cut production but europe is weak and china is weak and the u.s. is muddling along and so they have not gone up and that is the new variable i had to incorporate in my thinking. in the past few days i demonstrate that i am realistic and looking at the world as it is, not as i would like for it to be. i do raise my look for a recession risk from 15% to 25%. there's a certain sense of déjà vu over again. we had two oil spikes back in the 1970's. the first has not caused a recession or anything near what we had in the 70's and i do not

think this would be a major oils spike either, but we find the demand response quickly to the price hikes as it slows down and oil prices come back down -- at least they stop going up. lisa: what is the breaking point when prices of high oil create a risk of recession? ed: they've already started to impact demand. is getting visibility in the press and price of gasoline is the most visible rice in the home -- price in the home. we all see the price of oil and gasoline going up there medically. it does -- going up dramatically. it shows -- for gasoline and other energy products that it could bring price back down. i do not think it could cause a

recession, but if we see the price of oil sustainably at $100 a barrel or more for 4.5-5 dollars a gallon that could risk a greater slowdown. that's what i've been thinking. jonathan: thank you. ed yardeni of yardeni research , thank you. if you are just tuning in welcome to the program. we are at 0.1% on the s&p 500. coming up in the next hour of the new been -- alicia levine joining us.

we will get into a hawkish paws with her later this morning. max was on the program with us 20 minutes ago. and what he had to say on goldilocks i feel bad because i said that forever but max agreed that all the locks means 2024 or longer. lisa: did you see the typing for the headline for this one goldilocks forever. exactly. nailed it. there is a question of whether people are pulling up their previous forecast for the same a book as they had in the meeting of this year. now they rolled them out for 2024. max has said stop being so gloomy. you're not getting it. tom: i think about my grandmother sitting on the couch after a third scotch telling us about the pandemic and then they

had the roaring 20's. how many people are in agreement with them? very few. tom: if you would have asked me that a couple weeks ago jonathan: -- if you would have asked me that a couple weeks ago i would have said right of you. but many have moved away from that call. s&p 500 up .1%. -- from london, good morning. -- from london, good morning.

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>> other think we should have a shut down but i agree it is likely. i think joe biden and chuck schumer both believe politically it is in their best interest to have a shutdown. jonathan: that was the latest from senator ted cruz speaking on balance of power. the price action this tuesday morning. equity futures positive by .1%. 431 on the yield for the 10 year. financial markets worldwide when you look cross asset it is in the commodity market. brent crude 95 the first time

this year right now 94.92. tom: west texas gets my attention but the underlying story is the resiliency of the equity market. we've gone nowhere for months. it is like 18 reasons from the stock market to go down and it has been resilient. jonathan: it is getting what the bulls wanted. a better mix of inflation. and then we get the forecast from the fed reserve tomorrow which may have inflation a little lower. tom: we have a credit conference coming up as well. this is timely. for those of you on radio, we are here fixed to a great scene from -- we are talking about too much optimism on the show today. i'm looking over and saying

pause. jonathan: to be clear that was not the conversation but we can go with that. tom: one says my bags full of crumbs. jonathan: ok is there a song? tom: the world stopped when julie andrews -- before vcrs -- for those of you with children, those who have little children on our team mary poppins is the longest is the movie so you can put it on saturday morning and sleep in. jonathan: that is really good. lisa: this is so disturbing. [laughter] tom: the scene by jon ferro

seared into our memories because you had to go to birthday parties and see mary poppins. jonathan: i have no idea why we are doing this i am waiting for this to make sense in 30 seconds. lisa: ok let's see. tom: thank you for joining us on washington. we are speaking with kailey leinz. let me jump to the case. [indiscernible] is this first do no harm or will there be an speech today. kaylee: i think he will make his speech about ukraine. although he did not give specifics about details of what the president will outline today jake sullivan said it will be a significant part of his speech today.

for the president there is an audience of two that he is trying to reach. remember at the g20 they felt like they made an impression with the likes of brazil and india. and they will meet with someone ski which is a critical thing to watch on the sidelines. but at home, the cnn old, it was not just republican voters that had concern about sending for u.s. tax money to ukraine it is -- even though it is the majority, but there is a concern. we've seen the white house ask congress in the house, speaker mccarthy did not include ukraine aid in this set -- resolution to keep the government open past september 30. this would be a big part of the presidents speech today and there is a twofold view to why. jonathan: the german government

is on the same page as president joe biden or an not? -- or not? annmarie: will the chancellor has come out saying he supports president biden in the second term despite asking her if that is appropriate. how she is doing now is to prepare for the potential of trump 2.0. she was in washington dc to meet with republican lawmakers about ukraine aid and she was also in texas a deep red state. had a conversation with governor abbott. you see members and europe are trying to make sure they are shoring up support and dialogue with republicans and they are airing for digital republican administration after the presidential election. what is happening in the united

states is also happening in europe. if you look at german politics right now millennials are shifting toward far right politicians in germany as well. that afd the alternative for the germany party which is a far right party, and they are dealing with concerns about immigration and in nation. -- inflation. but you see this playing out in european politics as well. jonathan: do you get a sense of what the solutions are coming from the conservative side of politics? annmarie: at the moment they do not want to send ukraine more money. they think enough of u.s. taxpayer dollars are going and at the moment there is still a war raging. some of them are potentially pushing for is there any accountability. this is only one part of the republican party.

representative mccall, mitch mcconnell, they want to keep making sure that they are sending more weapons to ukraine and sometimes they bash the biden administration because they say it is moving too slowly. tom: this is important. i can ask an unfair question. in world war ii american troops ran out of ammunition at times, are we being so frugal that the ukrainians are running out of ammunition? annmarie: the message i hear constantly as we need weapons we need them now and now the conversation is we need ammunition and ammunition to continue. there needs to be a consistent supply of ammunition which is why they are asking for more aid and more sophisticated weapons as well. we've seen the u.s. have some can earns about that, but a lot

of this depends on the ammunition they want to see. and they continued ammunition that is happening on the russian side as well. putin met with korea leader because they need ammunition to continue to flow. jonathan: do have a f-35? annmarie: they have not found all of it they found pieces of it. i am asking how do you lose a $100 million jet? it is one of the most sophisticated jet programs in the united states. i spoke with someone who is a pilot on these and he said when these ms. at happen and the plane goes missing, it crashes in marshland and the earth eats it up, that is what -- where the

$100 million is, in the earth. lisa: potentially. tom: a starship lands in the water and seeks -- it sinks in the field. jonathan: i see where we are going now. we have seats in the senate and at the same time we are the losing f-35. this is what happens when you wear a hoodie to work. lisa: that is your thought you lose things. jonathan: you lose things you get scruffy and lose things. we have jane foley joining us head of fx up next. available now in siding colors, styles and textures. curated by joanna gaines.

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jonathan: just experiencing tk without caffeine at the moment. tom: in new england all there is is hot brown water. i tried it and then i did pg tips this morning at breakfast. jonathan: just breathe in and out. you've got this. we will get you the caffeine. it is coming. on the s&p 500 it is positive by .2%. lisa: [laughter] jonathan: needs it directly into his veins. lisa: exactly. inject it. jonathan: the two-year cannot get away from a five handle.

going into the fed reserve tomorrow, this move stands out in the commodity market, $95 brent early this morning. early -- right now at 4.87. wti crude up by almost one full percentage point. what is this change for the fed reserve tomorrow if anything at all? then the boj friday. we have a bank of france governors saying the ecb will raise rates until 4% as long as needed. looking at the situation today we think it is at a good level. we look at how inflation evolves and it is more important that we are patient. dose but we have take -- have to take the medicine for a sufficiently long time and we will see binges celebration of inflation. if it is not 0% growth i'm not

sure how brutal this will be in europe. tom: this is a guy on the edge of bonus bank. i was in a meeting years ago having a cigar by choice in a room and there is bill roy sitting next to me and we talked for a --villeroy sitting next to me and we talked and he said this is old school economics. lisa: it is easy to say this when people can still get jobs. you look at a scenario where people feel frustrated with inflation but otherwise did that change when the medicine starts biting more? we talked about this with the fed and the times never came. out of a handle it if there is something -- tom: you studied it and you were our ecb room order, there was an austere you'll in europe that is

different than the united states. that is how you get into summers modern phrases of stec asian -- stagflation. jonathan: alright we got you a cup of coffee. let's get you some caffeine. there you go. you enjoy yourself. tom: thank you. jonathan: uaw posed another -- they will expand strikes on new and in friday if serious progress is not made. the union rep said no offers were made since september 14. this is what the union want. 36%. the offer is 21%. gm a 20% and ford 20%. lisa: there's been no new offers from the auto manufacturers since they declared strike.

we do not understand with the negotiations are and we do here they are making progress from the auto manufacturers and we hear from uaw they are making no progress and they have to expand the strike. tom: it is just about money i do not buy it for a minute. it is about all the structural things to three firm the unions back to a different time and place. it is vaporized in the last 24 hours. jonathan: and elon musk is considering charging a monthly fee for users of x saying a small service fee could fight off bought operations on the platform. and that brought in a conversation -- at the offices yesterday. this was meant to be about anti-semitism and now it is now about raising the issues with charging everybody. lisa: they said the bot is an a

somatic and they have increased fair presence but -- he said some of what is out there is from thoughts --bots and you will get rid of them if you charge a fee because it is too expensive to have this generation of bots. tom: in all the heritage of israel and the united states, what is the relationship of the prime minister israel to the adl discussion on twitter but jon ferro just mentioned. how do you link new york city adl into the prime minister of israel meeting with the head of twitter? lisa: that they are both jewish. [laughter] i don't know. there has been tracking how much more of the hate speech have -- i have seen it and witnessed it, but there is a question here

going forward of what the cause of this is. is it the increase in bots or the increase of the tone of the platform. i don't know but it seems like a good strategy to get more money. jonathan: if you're in europe with a big user following in the platform would you pay or would you leave? lisa: tbd. my question is what is the alternative? that is what the elon musk is pushing on a string right now. people have left and everybody went back to x he change the name, fired people, and at a certain point you have to wonder if he's going to see how far he can push this? and what it will take to get a revolt? if he doesn't you will have to pay fees and if not you will not have excise -- access. jonathan: what would be the

right amount. $10, $15? lisa: there are all sorts of copycats of that nature. tom: have you seen the toxic brew -- lisa: that is a toxic brew. [laughter] tom: way speak with jane foley at rabobank. the heritage of rabobank is commodities into the foreign exchange. i want to look at three years and five years to the climate change affect. sugar to the moon, coco to the moon, a few other things such as cattle popping up. how will -- how will the world change with climate change and what appears to be surging commodity rises -- prices? jane: it will be tough.

we can all agree over the longer-term you have climate issues and issues that could create inflation surprises in the form of food prices over the next few years. look at the panama canal with the shortage of water and restrictions on shipping that impacts the supply chain. we know supply chain -- we know that climate change can affect us and make interest rates higher. the environment that suggest is not particularly -- tom: of the focus in the financial media has to make a speculative return. but there is a world of hedging commodity transaction. jonathan: interesting question for you climate can lead to inflationary outcomes. can the policy to address climate change also lead to inflationary outcome? is this a lose-lose situation? jane: this is interesting

because we have elections next year. those with the population of 4 billion go into the polls next year with the u.s., eu, india, russia, mexico and various other countries. among the issues that people will talk about is the impact of climate change and the green transition. what we see with people with the cost of energy prices, the impact of evolution are losing patience with the politicians with the push toward a green transition. we've seen support for the germany grain party support for the far right house went up and this is uniform because people are saying we cannot afford to lose our jobs because of his transition. there are supplies in the car manufacturer jobs that would go. they say we cannot afford this transition and that is a real problem.

lisa: how do you price that into a foreign-exchange call? there was the question of who is doing the best job with counteracting the nation aries sources in the swirling through of uncertainty. with what you're dealing with aws. jane: in some cases it is easy and people tend to buy the dollar as the safe haven. i think it is a euro that will feel the impact of the lyrical crisis more relative to the dollar because it is that he currency of a global payments system.. the doll in a way is protected -- the dollar is protected in a way. lisa: many people thought the ecb would do more and the euro would gain against the dollar and be in a better situation next year than the u.s.. how much room do you think the dollar has to run if you see

uncertainty pushing people toward the world currency and easy is stronger than expected outcome in the economy? jane: there's more resilience in the u.s. economy you have germany and the ecb bringing down its forecast for the year last week. and they still look optimistic. you have all of the issues and the eu election in june. you will have to see concessions made toward the far right. there is a different because many of what we would see as far right in europe they may be immigration and nationalistic and it comes to cultural concerns, but they have little left wing tendencies and their policies. and then you have italy and spain rising already through some of the perimeters that the eu would prefer. does that mean there would be a crisis? no. but will people stop wondering about the debt and be concerned

about the debt? yes. there's a lot of economic factors facing the euro zone in the next 12 month. i think the euro will be on the back foot. jonathan: a great piece on the financial budget coming up in the financial times this morning a great read if you can get a hold of it. we have said europe, what a tough spot for the europeans. pretty much every topic we talk about right now. lisa: to me this is a question going forward of how you unify a place with all the verio idiosyncratic's reason italy area tom: what is your euro call? give me a euro call of six months. jane: we need to revise it because the forecast shows we are nearly there. i was a parody year will be talked about. tom: there you go that is

tradable. jonathan: jen foley -- jane foley of the rabobank. we are positive by .7%. and parody chat, the euro rising by six. tom: i got back to the fancy talk the views of freedom that lagarde has our next to nothing. jane: it is difficult for a currency to pick up consistency. jonathan: coming up 8:30 we catch up with chief economist simon french to talk about the central bank this week. we have bank of japan friday. and others. we will catch up with alicia levine

from bny mellon. and look at the calls on this 250 on the u.s., we are at 430 right now. and we speak with iain stealey of jp morgan chase bank we have a coming up. and we also have craig trudell. with the strikes of if they can be deeper or longer if we do not make progress by friday at noon. live from london. good morning.

>> route waiting around or messing around. noon on friday, september 22 is a new deadline. we have -- hope that they work with us to make progress and negotiations for more locals to

be called on to standup and go out on strike. jonathan: very media savvy at uaw. and they announce further strikes may come if no progress is made by friday. the clock is ticking once again. an offer of 20% from gm and ford and 21% is insufficient to the uaw president. in the market looks slightly elevated on the s&p 500. yield up by two basis points on the 10 year. that is going into the fed reserve decision tomorrow. tom: we have special coverage tomorrow on london -- in london. the real reason we came to london was craig jarrell driving all of our auto coverage out of london and the global coverage of what we will do in the united

states. the eb revolution. he has been distracted by his michigan's uaw strike, what did the auto companies do? i'm fascinated, is silence their best friend now? craig: i think they are trying to follow the playbook they are used to keeping negotiations of the bargaining table. there are savvy negotiations going on with the union. they are taking the coach of communicating to their members on a day-to-day basis, withing them up. there was an open question of what the heck do you do to ca middle ground -- to see a middleground being reached. tom: one day in the 70's my good

friend patrick flint we were playing music and they said you've got to see this and we went over and the horn blue and out of you ask city came thousands of workers across industrial avenue to the 47 bars lined up. jay's barton grill i believe is the only one left standing. that is romance and what biden one. i do not observe that right now, do i? craig: i think after decades we have seen these companies shrink their presence in places like you are referring to. we will see serious investment as a result of the ira in manufacturing, but it is not re-sauce some of the investment in the midwest. we see factories going in the south. factories were the uaw house for the most -- has for the most part not succeeded and the battery manufacturers that they are partnering with to power the eb going forward.

jonathan: and they are often guilty of making things too simple. they want 36% on the offer can we get into the details of that? is it 21% over a certain period of time. we are at the big lines for you and uaw that they think this is got to happen before we have a real conversation about making congress? -- progress? craig: you're talking about the basis point over the four-year term. that is how companies operate with the union. every four years there is a contract. one of the sticking points of the negotiations is going back to the days of pension and the companies footing the bill for pension that workers hired from 2007 onward have not gotten this as their predecessors did. we talk about retiree benefits that the union took on with their own trust.

that was a big concession on the part of the union. and by the way it has been successful but the companies do not want to take those liabilities back on. how serious the uaw is about getting those things back on top of this big golf in wages we hope serious -- have serious differences and that is not with the companies working with foreign battery manufacturers. lisa: what is the company's excuse for why they have record progress and by they have not pass that on to workers? craig: they will tell you that while yes the workers have not gotten the boost that they would have liked to over the last few years, the companies absolutely

need to have strong profitability to continue to reinvest. were talking about significant amounts of money developing electric vehicles and bringing the battery-powered models to the market. this is absolutely an overhaul of their lineup. if they allow for labor costs which are already higher than, say, and tesla, then it will put them at a disadvantage and be a problem for the workers going forward. they may have to continue to close facilities as they have. lisa: let's build on that ford announcing layoffs in addition to these -- strikes are there other layoffs planned as the strike rolls on? craig: i think that may be a byproduct of if we see the union follow through on this thread of if they do not see substantial negotiations or -- buffer -- by

noon on friday they have taken an interesting approach with strikes with all three companies. they try to narrow the numbers of workers going on strike to make the strike fund last longer. as a result, you see spillover effects of other facilities whether that is on purpose on the part of the companies or a legitimate spillover effect of the factors going down. it remains to be seen and depends on who you ask. tom: that interviewed rick wagoner a lifetime ago and america cannot build small cars. is there a demand for the chevy volt at $20,000? does it sell or will it not sell as well? craig: that's one of the key issues.

the fact that gm did bring a small relatively affordable tv to the market before tesla brought model three but it is smaller and it has not sold well. tom: i think this is key. craig: it's an issue where we see companies bringing ev's to market. very few in this price range that consumers are used to buying them big volumes. the 35,000 dollar range. we see cadillacs going for twice about or hummers or ford mustang maki --mac-e we are talking 60 and $80,000. jonathan: that is where the kush politically is coming from. for manufacturers they would like a labor light high-margin business. wouldn't everyone? they are not going to get it, are they? craig: they will not.

and what is interesting is if we see the union leverage big wins at the bargaining table with the companies and be effective in taking the message to other companies that they've tried to but failed to organize. that is a huge ask. we have seen the union tried to whip on this over the last decade. but if they are able to organize more broadly in the u.s., they will be taking a risk of putting their companies at a disadvantage. jonathan: i played this game with david welch a couple weeks ago we said 20% and we were wrong. any idea what you think is going to get this done? craig: i think i will play the easy route evercore isi is out this morning with 25-30%. they expect the company to settle somewhere around there. i think i go back to some of the liabilities and whether

companies are going to continue to push back. as far as we know they are saying no way and the union is sticking with those. tom: do you really work a 32 hour work week in london? craig: it feels like 32 hours right now. jonathan: you asked the question of why they did not pass on high wages to their workers because they did not have to and they thought they could get away with it. lisa: exactly. and for me with this discussion this is not a big part of their expenses. they could do it and survive but it will be on the -- what they can settle on. jonathan: the viability and sustainability. you don't believe in the questions around that? lisa: i believe that it could be overblown. es.ave change my tune a thousand jonathan: it could change again.

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>> it takes time to feed into the real economy. >> there's also this notion that central banks are going to be sticking to the script. >> they respond to the economy.

>> history would tell you it is very hard to go against inflation. announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. tom: jonathan ferro, lisa abramowicz and tom keene one day before a fed meeting. we are in london, bloomberg radio, bloomberg television across america and worldwide. this hour, we continue the theme of a sustained and rising equity market. brent crude, $95 per barrel. jonathan: inflation potentially longer. highs basically, crude going into a central bank meeting which has a better tone for risk

assets which is growth forecast higher, inflation forecast a little bit lower. beyond 2023, what is in store for 2024? a little bit earlier today on bloomberg tv and radio suggesting perhaps something that sounds like oldie locks for a whole lot longer. tom: the buoyancy of it as well, what is absolutely amazing is you are looking at global slowdown. we talk about two americans, but there's almost two worlds. a world that is prospering, people booming. you think about today, newcastle, ac more. there is like a tourism boom going on, but there isn't. lisa: you could say there are 15 worlds or however many you want to say.

what you are seeing is things are uncomfortably expensive. people don't want to pay that ticket, but they are paying it anyway. and that is the key point. if you look at gasoline prices we are talking about oil and what that does. they are still a far cry below the five dollars a barrel in the u.s. going back to june of 2022. this isn't the same kind of pressure that we've seen even a year ago on the consumer. tom: three islands off the coast of italy, it was a hat trick. the answer to me, do you think that is going to ebb? jonathan: i would say yes. look at the performance of the s&p 500. down about 9%. labor cost is one. fuel costs are going up, that is a problem. and potentially, ticket prices are going down. tom: i want to go to the strike

tension. what we just did was brilliant here. to me, what is wrong about the analysis right now is it is all about wage. and all the other issues are not being discussed. they've got to be front and center. jonathan: do you think they are basically red lines? tom: they are not red lines. but i don't see anybody near amendment or adjustment. lisa: and i see this around some of the discussion about the cost of employees. some people estimate that the cost goes up to $130 ahead on average. that is not the wage. and this isn't of take-home pay. this is the pensions, and that i think is lost, kind of the insurance blanketing that much more expensive.

tom: the overlay and benefits wiped out 10 years ago, 15. let's get to the data here. jonathan: jane foley on with us about 15 minutes ago talking about the prospect of parenting on the euro into the next year given the difficulties for the europeans relative to the upside. whether that spills into next year, i've got no idea. yields higher, fruit higher by 1.28%. futures unchanged on the s&p, just about unchanged this morning. tom: we've got to get somebody on that can really get to the pulse of continental emotion. you see that today, and we need

to go with someone who understands the war like jon ferro. the head of investment strategy and equity advisory solutions. what is it like living the cultural event of milan in that stadium? >> it is alive, and it is alive for two hours and basing for two hours straight. it's fabulous. just fabulous. tom: would you like to come in? jonathan: i'd like to cut those pictures because that did not go well. i can remember walking up to the stadium and the away fans get there early so their aren't fights, clashes. and i just remember the sound bleeding out of the top of the stadium. i was standing with my dad and we get closer and closer and it gets louder and louder and you go inside and the acoustics in that stadium, it is so unique. all the noise just rebounding off every single corner.

the fans that sit, they do not stop. one hour before the game, through the whole game, and you hear them coming out of the stadium. it is like something you will never see, tom. my cousin is in that group of supporters that sits behind the goal and i'm too soft to sit with them. tom: jon ferro glued tonight to the screen here in london. let's stagger to the equity markets as we can. some bullish voices today. are you enthusiastic about the 500? >> we have to get through the next month or so because the kinds of risks you've been talking about which is the uaw strike yields at a cycle high definitely present wildcards to what is a reasonably good-looking fundamental

picture. and of course, these are the things that could really derail the picture. i think that the s&p is typically soft this time of year. why, we can discuss at another time. and yet we have not seen tremors really in the equity market of the kind we seen in past years suggesting to me that we are probably going to muddle through, consolidate here. i do think there is some risk simply because that would be a reasonable way to absorb some of the yield increase that we've seen, and move forward. in the end we are going to finish this quarter close to 3%. very hard to get a recession when you are close to 3%. slow in the fourth quarter. the year ending strong. we assume still 40% chance of recession because in the end, higher for longer means further

tightening. jonathan: i just want to get your thoughts on 2024. max was on the program with us earlier and he said we need to focus more on what could go right because expectations for 2024 are so low. do you agree with that, or would you take the other side? >> i would agree with that. we actually do the same when we do the midyear review because we decided that the focus on the left tail risk had really, really not been fair to what is going on in the economy and in the end, the american can tumor has really held up this economy year in ways that i don't think any of us expected at the beginning of the year. it's very important to look at what the risk can be. in the end, if we have no recession this year, the earnings picture could be closer to 225 by the end of the year and then you go from 2004.

markets can get over 5000, to 5200 which is what we have in print, and that really sets you up for a nice rebound even further from that. a slowdown is not a recession. in the end, even though every time the fed has tightened like this they had a recession, what is different this time is the antecedent. and the antecedent is 12 years near zero rates and as we know, that has cushion households and corporate's coming into this tightening cycle. lisa: everyone was saying that this rally had to broaden out to be sustainable and sort of did for a second and then backed away. is that going to be the dynamic going forward because that is truly the growth area. some of these other areas like airlines and auto manufacturers faced these headwinds. >> in the end, 97% of the energy names in the energy sector are above the 200 day moving average.

only 62% in the tech sector are above the moving average. so it is broadening out and away. i think that tech has to participate. it cannot lag. if tech lags, it is going to be very hard to get the average is ups up -- averages up. we do think this could put a ceiling on some of the multiple expansion, but moving higher overall will support the market. lisa: how bullish are you on a scale of four bu -- full bull to bear? >> we are paid to worry. i would call myself between a six and a seven. i think the fundamentals are very good in the real economy, understanding some softness and parts of the consumer sector and paying some of those fees. but i do think overall, the

cushion that households have in fixed-rate debt as well as the corporate sector, i think that is good. i worry more about a yield-induced issue somewhere, whether it is the corporate real estate market or elsewhere. i think that is the place we have to look to where this rosy story may stumble a little bit. so i feel less on the fundamental side and more sort of what is going on in the sectors that are really very sensitive to yields, still. jonathan: thank you, wonderful to catch up with you. thank you for sharing your vacation with us. absolutely wonderful. does it get any better than that? tom: lisa and i are working all summer. the closest we got was in the island called manhattan.

you are doing a george clooney imitation. jonathan: if you are just tuning in, welcome to the program. the s&p positive by 0.07%. yields higher. simon french of panama gordon joining us in about 15 minutes time. we will talk to him about the bank of england decision on thursday. we will talk to grandma about grandma's new scale which is full bear on one end and full bull on the other. lisa: i feel like we should have one. when they come on the show they have to identify where on the scale they are. tom: it is the kind of market were people are making some real conviction calls. you mentioned outlooks are coming out. off the camera, james foley was really quite good about -- we talked about the scale of politics. remember right now, the delusion

we have with london of the prosperity of london vs. the rest of the united kingdom. mark carney as well. it's not like paris and the rest of france, but there are some real stark differences. jonathan: every country has got a major city and in the u.k. if you take london out of the equation, there are some difficulties. coming up, j.p. morgan asset management. this is bloomberg. this is bloomberg. it's both an electric and a gas car. yeap. quite the paradox. hmmmm? hmmmm? hmm? hmmmm? so jj's for lunch? the first ever lexus rx plug-in hybrid. electric for short trips... gas for long. it really is both.

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>> central banks don't actually set rates, they respond to the economy. the fed are finally caught up with the curve. that doesn't mean they are at the end, but they actually have a chance to pause. so it is a tossup there. the bank of japan is actually potentially changing course. jonathan: the founder of thematic markets. can i just say quick, i referred to him as london's bob michele and bob michele appears around the corner. does bob let you go anywhere without him? lisa: the shadow of bob michele hanging over him. jonathan: a statement has just come through from the uaw president. i want to share it with you.

the former president donald trump would very much like to support. i can tell you based on the statement he is not cutting that. every fiber of our union is being poured into fighting the billionaire class and the economy that enriches people like donald trump at the expense of workers. we can keep electing billionaires and millionaires that don't have any understanding what it is like to live paycheck-to-paycheck and struggle to get by and expecting them to solve the problems of the working class. tom: and this is the charm of the president of the united states. you can argue all you want about money that is coming for joe biden late in his life, but his entire tenure here is i was in scranton, i've been at those kitchen tables and all the other fancy people in washington haven't. jonathan: that's the pitch, is the problem. billionaires and millionaires. i would take that statement is not just pushing back against the former president but perhaps the whole political class in washington, d.c., many of which senators and that senate

currently are millionaires and the president also is one of them as well. tom: the calculation here, and they don't have any wisdom on this, is public-sector and massively diminished private-sector unionization. these are dialogues of another time and place when the numbers are not there like they used to be. lisa: we have seen republicans tried to court through the rust belt and try to pick up some of the discontent, and they have. donald trump is planning to go there on september 27 to michigan to stand in solidarity with the uaw and rival programming to the next republican debate. will he still go if i i line? >> is former president trump going to say i believe in a defined benefit program? those are the issues that we are talking about. are they going to make more than an warehouse worker? jonathan: i can't guess what the uaw president is going to do but if we were to base our assumptions on that statement

alone, that is not a president who wants to go out there and campaign with former president donald trump and if the former president wants the support of uaw -- tom: these executives, these are millionaires and billionaires. maybe not billionaires, but the bottom line to your point on millionaires is that is a statement against the executives as well. jonathan: it of the political class. the political class who have spent a life in politics. and i'm not talking about the former president. but those who spent a life in politics and managed to amass amazing fortunes over that period, and the failure of them to protect the people he is meant to represent who work for these institutions. tom: in the fed coverage tomorrow this will be addressed. it has got to come up in the press conference. right now, even steely with us. he is cio with a global fixed

income currency and commodity at j.p. morgan asset management. why don't you bring him in -- jonathan: i'm not sure he wants to talk to me anymore, but i'll try. ian, fantastic to have you with us on the show. let's get straight into the bond market. this amazing call this morning. you have a team pretty constructive on the bond, the 10 year. how are you thinking about what this offers currently on a 10 year america? ian: you've got to say that is a pretty good valuation. for those people who wanted back into the bond market earlier this year, we have that rally. when i look at what is happening with inflation, we are trending down in core inflation over the last three months. the jobs picture is trending down as well. we know we've got taxing in

california, we know we are coming toward the end of those excess savings. it feels like a pretty good environment to be going back to the bond market. tom: i'll ask you a dumb question. are you clipping the coupon or could you really invest for total return? iain: total return. firstly, you've got the coupon. that is the nicest yield we seen in 15 or so years. and then you have got an environment where if you do start to slow, the fed does start to feel the growth and you are going to get them pretty decent capital returns. if you look at previous hiking cycles, when the fed pauses, the bond market does very well. we lisa: were talking about the call of 2.5% by the end of next year and john asked a good question -- why? is this because of a huge drop-off in growth or just a moderation in inflation? is that what is underpinning a fed that reverts back down to

something lower? what is inter--- underpinning your thesis year? iain: it's a combination of two. we are seeing that moderation in inflation, inflation coming back down toward where the fed would like it to be, and we see the growth weakness. the federal reserve, i do think they believe that they are restrictive, and as the impact of policy, a lot of people are saying how lagged are these impacts? a lot of people invested or borrowed at very low levels, but they will start to come through and i think they are going to take a hit next year. so you are going to see that same growth. lisa: so does this counteract this idea of goldilocks forever that we were hearing? or is this basically pushing back against that and saying this is something a little bit deeper than that, and maybe a little bit more pernicious? iain: we are obviously in this

goldilocks scenario at the moment. growth coming down, slowing from an inflation standpoint but not rolling over just yet. we can't have goldilocks forever. we are going to start to see fighting. what has happened this year's we had a lot of support on the fiscal side. we still had all those payments, let monetary policy, that fiscal policy that came through in the pandemic. i think we are now coming toward the end of that, and this is taking a little bit longer than we thought, but when you look at historical affairs again, there's very few instances where we had that slow down without dipping into recession. but you always feel at this point that it is the goldilocks, it is the best environment until we actually started to over. jonathan: a may 2050 treasury bond. we did this great story about how it is sub 50, the price

damage done to that long bond. within the story they talk about positive convexity. can you talk to us about that as a concept and the opportunities that lie in the longer issue debt, the longer maturity debt after all this price destruction the last couple of years? iain: let's take a look at the u.k. gilt market. that bond is going to pull us away back because ultimately, you get power back at the end of the life of that bond. you get the appreciation on matt, although you are clipping a lower coupon then you would like, but you will get those capital gains coming through at the bond moves act. tom: my austrian bond which has been a disaster, do i have positive convexity in my 97 year tanked austrian peace? iain: you will have a similar situation, it is just going to take a little longer to get

there. tom: 50 years. jonathan: this is great, good to see you. some real price destruction. you've been on top of that, tom, over the last couple of years. tom: the price destruction is there. you look at the bloomberg index, a very valuable, but the fact of the matter is you've got higher yields, you get some real technical breakdown. jonathan: high-yield this morning of three basis points. up next, panama gordon.

tom: housing data due in 20 seconds time. mike mckee will break that down. equity futures on the s&p higher and almost by 0.1%. the nasdaq totally unchanged. to year and the 10 year and thirty-year, the 10-year yield, yields are higher up by three basis points, the 10 year 4.33. >> it looks like another good report for housing starts, down 11.3%. i am being sarcastic. how much of that is weather and how much of that is a drop off in homebuilders' outlooks

towards the industry will be interesting to ask because we did see the national association of homebuilders report lower traffic among customers endocrine in their optimism index earlier this week. building permits were up 6.9%. perhaps it was a weather related thing and perhaps it was a slump because it looks like they're interested in getting business out there. let me see the press relief -- release, i don't know if there is a reaction to this from the fed. if you have something, let me know. jon: it is interesting regardless. yields up by three basis points on the 10 year. 4.3396. to check in on foreign exchange,

the euro 1.07. we were around 1.06. the last data point, setting us up for the federal reserve tomorrow afternoon with the forecast we are expecting from chairman powell and the committee. tom: we will be covering the meetings hear from our studios in london and as important, we followed two other central bank discussions, simon frank, chief economist at panmure gordon has a wonderful -- the news has come down the pipeline since bailey said that. what are the ramifications of higher interest rates in the united kingdom? simon: we think there is about 60% of the 550 basis point

delivered by the bank of england still to crystallize and that lack affect --lag effect. -- that is why i think he has a difficult task on his hands later in the week because all the indicators i am ceiling -- seeing is with that leaving in time, we are seeing rapid slowdown in payroll, wage inflation, a slowdown in core inflation. with the 18 month two year lag, we think we will -- it will peak around q4 2024. he sees the inflation picture come down and he has a lot of markets to guide the expectation's rather than lead them. tom: you are steeped in the economic history, how close is the united kingdom-bailey alec -- and allow to be united states-powell analog -- united

kingdom-bailey analog to the united states-powell analog? simon: it is the management of market expectations here. he have heard some speeches from the mpc from the chief economist in south africa talking about a potential plat trip -- plateau but the market did not believe that an sees likelihood of a 25 basis points around 80%. that is not where the bank wants to be if it wants to carve out a narrative based on the latest data points which is so rapid sharpening of economic data. jon: i'd leading here over the weekend and i read the recent communication from the bank of england and i looked at all the economics, economists expectations and they were saying the height of the bank of england is saying they are not hiking. are you saying the threat needle

-- is a credibility problem? simon: i am. they are getting criticism in being too slow. they moved earlier than the fed and the ecb. it has been the communication through the cycle and part of it has been cumbersome in terms of getting into the wage bargain, the profit margin -- margin negotiation. central banks, if you see a dislocation between the way the market is pricing your optimal path of monetary aussie for financial conditions, you intervene and it could be close to a polity -- policy meeting. if they have been reactive, not proactive, in terms of managing as rotations for this meeting. jon: even though you don't think they should, do you think they will? simon: it is difficult and i

remember the mind reading of the data and i don't want to pretend i have a better reading than the ninth members of the monetary policy committee but i think the market has allowed itself to get excitations of a rate hike that i think the policy committee probably look at the latest and the most timely and leak -- indicator of core inflation -- with id desk key data points -- with their key data points. you can pause that one out -- parse that one out. you don't want to be a monetary policy outlier in the u.k. lisa: there is a question about the acceleration inflation -- about reit's elevation -- about re-acceleration inflation. we have seen this again and again.

what is to say that there isn't something underpinning those inflation figures that will be accelerate that does warrant what we heard from someone which is a 50 basis point rate hike? simon: we speak to exactly why an extra six weeks is most valuable. it will have the type of impulse that will come through for the higher prices and terms of headline inflation and the potential second-order effects. why would you not give yourself the optionality of an extra six weeks to appraise those indicators but also modeled the impact of those core inputs? lisa: if what you said earlier this -- earlier is true, if this is a central bank that has lost credibility, which you see a pound that will weaken

dramatically? simon: my reading of the way people are trading sterling, it is not based on a spread of central bank policy rates but on credibility. you do a credible pause, you enhance credibility. -- if you deliver a message that says we understand how this economy is evolving and we are in front of the data and we are gotten the markets. rather than being reactive to the pricing. tom: we have those asking questions with jerome powell tomorrow, what question would you ask him? simon: i would be fascinated to see what the fed will come out -- that is the key data point in the summary of economic projections we get, do we they believe in that 3.5 percent range given all the way out to two years we are seeing potential fed funds rate north of five, have we reached a situation where the f -- fomc

have to throw in the towel -- jon: you think they are ready to do that? simon: that is the question. you might be surprised by the propensity to -- romaine: --jon: mike mckee -- williams will go there, the new york fed president, what is the guidance you would take from a man like that on where this might be going? simon: influence so the degree to which a debate -- you are right, jay powell is far too good a operators to get tempted into the debate. the degree to which other members of the fomc could frame the debate and save part of -- we have seen financial conditions reduced depreciable we -- quite the presciently -- the presciently -- quite

depreciably. tom: looking at the bloomberg financial conditions index, it is screaming accommodation. jon: this speaks to a phrase that lisa use, reacceleration. the prospect of reacceleration in the u.s., something we have heard, this current disinflationary trend is transitory. did you go that far? tom: the dangers of using that word. there is no doubt. if we are talking the context of the u.s. economy, the oil price -- the gas prices are more significant which hasn't taken place in -- it has moved up in the same way. what i -- would i, central banks have carved out in the last 6-9 months of focus on core inflation. -- hey focus on core inflation

--a focus on core inflation. it seems like you are moving the target every time the date is -- the data does not conform to your narrative. you have to be consistent through the cycle. jon: if i could put you in a press conference, it would be the next bank of england decision. is it november? the november 1. what will the forecast look like in inflation? simon: this is why it is the opportunity to talk about the relevance of gas wholesale in the u.k. economy. i suspect the expectations for inflation will actually be low of 2024, like what we saw last week. remember what spooked the markets in terms of north of 3% inflation print of the euro is only in 2024. we got -- i think the bank will back into that forecast at 70%

because of the relevance of gas which in the two year curve is about 18% lower than it was in the summer of 2022 when you macro became the front page story. we had janet yellen talking about and larry summers. it was not just the many budget but the dislocation of gas prices and how the impact it has on real incomes on u.k.. tom: we are talking natural gas. simon: i allow you to translate my narrative. lisa: he will start sinking mary poppins to you. -- singing mary poppins to you. tom: there is. $7.57 a gallon. did i spell leader --litre directly there? jon: simon french up panmure gordon -- of pam regarding.

-- of panmure gordon. yost creeping higher little bit more. -- yields are creeping higher a little bit more. the fx market, we are not doing much at all, 1.07 flat with the euro the dollar. here is my question -- ed: here's my question --lisa: here is my question. it goes into good pricing and goods pricing is what people see potentially re-accelerating in the u.s. and the key here is, if people pay higher prices, it is inflationary. that is really that concerned so you cannot strip it out entirely. you cannot be too cute about saying this is not going into the picture. jon: away from the city of

london and wall street, it confuses and angers people when we strip out the things we -- they have to pay for like energy and if there is one thing that takes inflation expectation any america, it is the price of gasoline. we are saying, we can strip that out. things are improving. coming up, peter trubowitz. equity futures are soft and the opening bell is 45 minutes away. live from london, good morning to you all. ♪ the first law of thermodynamics states that energy cannot be created or destroyed. (♪♪) but it can be passed on to the next generation. (♪♪)

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the short-term, it will be somewhat difficult. jon: far more difficult than we thought it would be. that would -- that was david schwartzman speaking earlier on bloomberg brief with dani burger. look forward to the program every single morning. equity futures softer here. negative by 0.04%. 4.3486. in the last day or so, we have come close to the new cycle highs on the 10 year yield. 95.20 on brent. 92.80 on wti. tom: i would take the move on brent crude and say given three

central bank meetings, do we get the u.s. 10 year inflation-adjusted yield nicely through 2%? i don't think that is modeled in the market, the signal of higher real gates -- rates. jon: maybe this is feeling that this $90 price does not last long and you can look through it into next year. lisa: which is the reason why the disruption from higher prices isn't getting framed in the markets in a catastrophic way. it is something to watch rather than the focus. tom: the dataflow here -- there is a deceptive stasis to the market. my operative word is deceptive and something will happen at some point. jon: there is nothing quiet about this. tom: it is bursting right now. jon: 95.50.

lisa: i am looking at stellantis. we have been talking about the strikes. those shares are popping, almost 2% and this comes after the north america chief operating officer was speaking in a interview on television and saying stellantis has the inventory to offset the strike impact. that is some of the communication there. jon: that is an all thing to say. that is a strange thing to tell uaw, that we can cope with the hardest strike. lisa: it is strange to's -- say your fund will run out before we can feel the hurt. tom: they have the inventory of jeep wagoneers and stuff because they weren't selling? lisa: that is another question and we can export that tomorrow. i want to bring other names.

here is my issue. we have heard so many personnel stories about mysterious exits. the latest, block shares are down more than 2% after the company said the head of its square payments unit is stepping down. jack dorsey is taking over. dorsey is back with a beard and interesting instagram posts. [laughter] jon: it is what we were talking about. lisa: cboe, edward tilly has resigned following an investigation that determined that he did not this close personal leadership with colleagues. this is not the first time. jon: it is in the air. --tom: it is in the air. every morning, you pick up the paper and there is more of this stuff. people are handling it well in terms of pr, but it does not go

away, does it? lisa: we want to know the story and we never find out. jon: the gossip pages. lisa: we all do, come on. [laughter] we will move on. tom: we will speak to someone from the faculty of the london school -- the london school of economics. it is peter trubowitz. working with the august chatham house. i have one insight that i will go to and this goes back to your work in texas. you and i are the only two of a certain vintage in london that remember stunning on a sunday night when the president of the united states spoke to the american people and said i am not running again. it was vietnam, a crushed lbj. he was walking away. what will we see from joe biden given all the flurry out there, you are a student of this.

how does a president exit likely -- like sweet --lightly? peter: i am not sheet -- i am not sure we are going to see a bombshell like the lbj bombshell. it is an interesting comparison, lbj now only lost be support of the american people over the war but critically, he lost the support of the party leadership inside the democratic party. i think right now, what you see in joe biden's case, support is down in the polls among democrats and republicans. i don't see movement among be, credit leadership and that is what we have to see first, we have to see some cracking in that support. he has always -- he always has a way out. he can always say he saw himself as a steward.

the concern is who is his replacement and there is concern inside the party that it will be kamala harris. tom: i got this all wrong, i looked up winston churchill's age in -- he was a fossil. how did the u.s. get to the fossil and administration and branch we have? peter: we have two -- too many parents is -- too many presidents who were not curating the next generation. it was true of barack obama and donald trump. you could say that joe biden has made a move in that direction by virtue of who he picked stop tom: -- picked. tom: sunak is a breath of fresh

air. they are younger. jon: what is -- the logic being that if you have a long primary, it shifts the candidates towards the extreme and he does not want the party to go too far to the left so he will make this call. what do you say back? peter: it is possible but the problem is that you don't give someone enough time to get traction. who is the heavyweight? from california, you are going to pick up red states? jon: that is the talk. peter: it has some credibility. if you go to michigan, if we go for a governor? jon: you have someone in mind? peter: you can play this out but if you are not giving someone enough time to generate financial support, buildup a

head of steam, it is true, if you went with a younger candidate matching up against donald trump, there would be a lot. lisa: what do you expect to hear from joe biden today? peter: in that speech, that speech will be principally geared towards countries in the global south. some of it will be about ukraine and there will be a pitch. they have a green opening, putin is not there and xi jinping is not there. this is the time to double down to appealing to the global south. there is movement in that direction and he is doing stuff on the sidelines and this afternoon, he will meet with members from central asia, and that is the purpose of that, is to open -- expand u.s. influence and go back into central asia and build up a new blank. --flank.

he recently tightened relations in india on the south and brokered fee -- between japan and south korea. that is part of what is going on but the main focus in addition to ukraine will be what the united states is doing for developing nations. jon: thank you. i would love a longer conversation on the cv transition. peter trubowitz of the london school of economics. coming up on bloomberg, 11:45 eastern time, the nato secretary general live from the united nations alongside bloomberg's annmarie hordern. coming up, rfid coverage on the fed special. -- are fed coverage on the fed's schedule -- special.

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>> i'm matt miller in for jonathan ferro. we are looking at equity indexes doing a whole lot of nothing as we wait for the fed tomorrow. the countdown to the open starts now. announcer: everything you need to get set for the start of u.s. trading. this is "bloomberg the open" with jonathan ferro. ♪ matt: markets on edge as the fed kicks off the two-policy meeting. oil extending its rally with prices hitting a 10 month high. and the uaw preparing additional strikes unlesso