matt: welcome. quick check of the markets. once again, stocks are gaining. if we finished today in the green, it will be the seventh consecutive day of gains for the s&p 500. investors buying stocks and bonds. correlation still holds. 4378 on the s&p 500. 10 year yield, 4.893. bloomberg dollar index up a bit but still at 12.63.

nymex crude at $77.88, a big drop. howard marks told bloomberg in hong kong about his thoughts on the economy and markets. howard: rates may go a little higher but not terribly much, or not. there is substantial progress being made against inflation and that is what matters. the economy is producing mixed signals but inflation is down from the peak. things are performing well. i would say maybe a little higher or not, but for the next decade, the fed funds rate is more likely to be between two and four 90 invesco. i --

i only say that to indicate my belief that ultra rate that ultra low rates are over. matt: it has been a wild ride. the one thing i have noticed is i keep thinking that lower rates will mean higher stocks and vice versa but we have this correlation, either by everything or sell everything. why? jamie: the correlation is wild, as our rates movements. we have seen a nearly 50 basis point move in november. sounds huge but we are only on the fifth trading day of the month. do not know if you can draw a ton of correlations from -- or conclusions from the correlations now. we have seen a runoff and treasuries mostly because of softer economic data. the u.s. treasury refunding

announcement indicated a degree of flexibility that we think is a big deal. it represents a feedback loop from market conditions in treasury issuance which should counteract the narrative that there is too much supply. then we have the fed meeting, relatively dovish. the key change in the statement was financial conditions, also perceived as dovish. tighter financial conditions imply a need for less rate hikes another feedback loop into policy rates, treasury issuance. that is why you are seeing risk assets react differently matt:. matt:almost feels like treasury and the fed have been talking to each other. right before we do this refunding, jay powell gets rates to drop, but that will not help them at all. if inflation is back, they will need to hike again. jamie: absolutely. we heard that from powell during

his press conference. he does not know if they have achieved a sufficiently restrictive stance to bring inflation to 2% since state of the. the beginning we were talking about the feds praise and volcker, how he would call it required reading and in stark contrast to conventional wisdom which casts arthur burns is not being strong or courageous enough to fight inflation, we know that his bias is that he wants inflation to come down so he will keep rates in our opinion too high, but very high for a long time and focus on inflation at the risk of making a policy mistake and causing in the -- causing a larger downturn. matt: i want to bring in ira jersey.

and what to expect from auctions tomorrow and the next day? ira: tomorrow and thursday will be more meaningful in order to gauge demand for treasury issuance. today's auction was boring. better than the last couple, we had weak ones in september and october. this time it went fine. the stop on the yield was where the market was thinking, within a 10th of a basis point. use us margaret demand from individuals. i think tomorrow might be weaker. we still have people who think we might see more volatility in rates, certainly the rally has made interest rate less attractive than the last time we had a 10 year option. i still think there will be more caution going into the next two auctions, where there is more market risk and the three year

today. matt: what are the tenors that we are watching for tomorrow and thursday? ira: the 10 year tomorrow, if you see indirect bidders higher than last month, that will be a good sign that demand is at least being maintained if not increasing a little bit. we have buying today. that is a sign that investors are certainly looking to get some risk but at new issue auctions, you get a slightly different buyer base. it will be interesting to see if the indirect bidders, the end users, from in any major way, given that they showed up today at the three year but three year yields are higher than 10 year yields. people are taking risk adjusted returns as opposed to just going out right along the market.

matt: thanks to our rates strategist with a intelligence. we are getting back out to jamie patton. we had what ira described as an incredibly boring auction. 16.3% went to primary dealers, 19.1% to direct bidders, 64 .6% to indirect bidders. boring, obviously, but do you expect more action down the road? jamie: definitely more action down the road. a boring three year option is right in line with this market rising. it is pricing perfection, the pertinent lending scenario or a no landing scenario, an analogy that i think is nonsensical. but that is what the market is priced for. we have three to four fed cuts

priced in for next year, another two in 2025. that gets the fed to a 4% in the policy rate, still restrictive. if that is not praising in in landing scenario, i do not know what is. as ridiculous as we think that analogy is, and as impossible as it is -- airplanes and -- run out of gas -- we understand why market participants who are generally impatient are increasingly willing to give into this view. nothing has gone awry yet but it is still early. we are not even 20 months in from the first rate hike. historically, the majority of recessions have taken place at least two years after the start of the fed hike cycle. our view is that legs today or even longer. we are very early, considering that today's lags are longer.

matt: what do you think about the inflation picture right now? that has been a focus of goolsby, ash kerry. both are talking about inflation as if it is a dragon that has not been slayed, but if you take out the housing, rent equivalent costs, it is kind of strange how they calculate it, inflation looks good, 2%. jamie: yeah. if you take out enough components to inflation, you will get to a small number but the fed's target is to percent. that is on pce. we are not there yet. the question is will they get to a point where they are comfortable cutting rates before they are -- before they have 2% inflation sustainably insight. that is what we heard from

powell last week. they are focused on that. he mentioned that they are allegedly not talking about rate cards until they are confident that they have achieved a monetary policy stance that will get inflation to 2% sustainably. i do not necessarily believe that they are not talking about rate cuts, but i think his point was we are focused on inflation. we are not going to be too easy on it. combine that with the fact that there inflation indicators are some of the most lagging pieces of economic data. they are using lagging indicators and focused on getting inflation to 2%. easy to see how i policy mistake could be in their future. matt: jamie patton of tcw, cohead of global rates, talking about how the situation right now is volatile. next, neel kashkari on the state

of the u.s. consumer and his take on the latest inflation data. this is bloomberg. ♪ (adventurous music) ♪

♪ ♪ be ready for any market with a liquid etf. get in and out with dia. matt: this is bloomberg markets.

neel kashkari says policymakers have yet to win the fight against inflation and they will consider more tightening if needed. pres. kashkari: everybody is

committed that 2% is our target. we have to get inflation back to 2% over a reasonable period of time. the economy will tell us how much is needed to get there. i do not know. >> at what point would you leave you have tightened enough? pres. kashkari: some good news is that core pce on a three month basis is running at 2.5%, lower than the six month and one year data. that suggests that disinflation is real. if we continue to see numbers of that range, that would tell me we are now on a path back to 2% inflation but three months data is only three months data. if we see that take up again, our job is not and. lisa: do you think jay powell has outlined some sort of guiding philosophy on where the bar is to cut rates or raise

them further? pres. kashkari: he has articulated that we are back -- committed to getting back to 2% inflation. some economists have been saying we should raise the inflation target but he has said we will not do that. we will let the data guide us and have made a lot of progress on the ship. -- on inflation. we are not done yet. lisa: do you think that the bar to cut is still just as high as it was? pres. kashkari: there is no discussion about when to cut rates. the only thing that has been talked about is that at some point, when inflation is on his way back down, if we did not back off a bit, the real rates would be getting tighter and tighter. lisa: is there enough weakness in the economy to give you that sense at this point? pres. kashkari: look at the last gdp print. for the last 12 months, gdp has been strong.

the labor market continues to be robust. the unemployment rate has ticked up to 3.9%. we have also seen a huge surge of labor supply. i am looking at this, my airplane that i came here on was 100 percent full yesterday. i am not seeing evidence that the economy is weakening. mike: how long do you think you will be at 5.5 into 2024? pres. kashkari: it will depend. if we continue to see inflation prints similar to the last two months and we end up with a year-over-year at 2.5% for inflation and it continues to trend down, that would give me evidence to look at backing off so real policy is not getting tighter and tighter. we are clearly on our way up to 2% but i do not want to point to just one data series. we will be looking in a suite of data to try to get a read of

where the economy is headed. matt: neel kashkari speaking to the bloomberg surveillance crew. mike mckee joins us. thanks for coming on site after talking to neel kashkari. feels like the fed are fighting against the u.s. consumer concerns about inflation. the biden administration and the fed both want us to know the economy is great, but u.s. consumers do not feel that way. mike: the fed wants you to think that the economy is good, but they make a big deal out of inflation. they continually say it is bad for everybody and for the economy and that their primary goal is to bring down inflation, so they will raise rates, which no administration would like going into an election. the question is do you need to raise rates to get tighter to

bring down inflation, or do you just need more time as people come around to wanting to buy a car, a house, to invest in something and go out and borrow and find the borrowing rates of gotten too high to justify doing that that is what in theory slows the economy. the lags are longer now because people became more price insensitive to interest rates because they were able to get them so low for so long. matt: stuff is too expensive to begin with and i cannot borrow money to buy it because rates are too high. that is with the consumer feels like, but we have 4.9% gdp. we have consumer spending at 4% even if you take out inflation. net worth is up 37% from 2019 to 2022. mike: and a 3.9% jobless rate.

hard to break down with the political aspect is and white people feel lousy -- and why people feel lousy. we have not had inflation in a long time. pretty much most of the people working today and complaining about inflation at the grocery store had not experienced when it was even higher. you go now and you think matt miller told me it is 2.5 percent work 3.5 percent inflation, which sounds good, but i am paying for this hamburger or chicken and it has not been cheaper. how come? there may be this lagged affected matt: everything is seemingly unaffordable but the economy is firing on all cylinders. we have had rate come down.

october 19, we had 5% on the 10 year. when paolo started talking last week, financial conditions eased a bit. is that going to make it more difficult for the fed to fight inflation? mike: if this stays where it is right now. the markets helped on the margin. it was not that long that rates were that high that they would have had a major impact. the fed did not anticipate they would stay that high for a long period of time. right now, they are approximately fair value. they may stay that way until we get to some pivot point that will change the markets' mind about whether they should be going higher or lower in terms of rates. that is what neil was saying today. that is hard to divine when does that happen. you watch for two or three months. do you get this feeling inflation is moving down?

or do you need to go longer and reach to be reassured it will not pop back up again? matt: it has got to be a reasonable period of time. mike: and will define that differently. matt: still ahead, rivian reports results with profitability and production targets in focus. this is bloomberg. ♪

matt: this is bloomberg markets. ev maker rivian set to reported earnings after the bell. one numbers investors will be focused on is the cash burn. the company likely has more than $8 billion in cash on hand.

this is a company i have always been watching closely because i think it is a cool design, the vehicle, also its massive horsepower. if you get the quad motor version, it is 850 horsepower equivalent but stock has tanked. >> that is right. they will have earnings coming out. one thing they did that investors did not like was a convertible debt offering. they raised some money but to spend some cash burn, they will probably have to raise more. how do you get stale selling 52,000 electric vehicles a year? that is the part of the market that is struggling right now, those expensive ev's. gm will come out with a $35,000 chevy equinox that get three --

get stranded 20 miles. elon musk said our vehicles have to get more affordable. if you are rivian and you are trying to get to scale, trying to lower your cost, but your vehicle costs $72,000, that is tough. analysts are going to want to hear something that says there is a path to cash feel positive. matt: was rj dealt a bad hand in terms of the timing, the pandemic, supply chain problems? the ceo seemed like he was planning for so long. he came out with a vehicle that people pretty much universally liked, but it is expensive and they cannot make as many as they needed to at first. david: he has been at this nine years, tesla 20. tesla has got this advantage. everybody is fence along getting

this up and running, building charging networks, rivian does not have that behind them. rivian does have a cool product in the sense that they have a midsized suv that no one on the market has. these are consumer-oriented. a real truck like sub, not like a crossover. there is appeal to the product but they are expensive. the difficulty of getting where they are without this big internal combustion business attached generates a lot of cash. they are just the cash burn part of form mgm, where is ford and gm still have a legacy business printing money. matt: they will need to raise capital if he does not tighten his belt. thank you for joining us, talking about rivian. those earnings after the bell. coming up, we work files for

bankruptcy, $19 billion in debt. the details next. this is bloomberg. ♪

all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. jon: welcome.

matt: let's get a quick check of the markets. they continue to gain. stocks of a third of a percent today. s&p 500 trading at 3.80 as yields come down. this is the seventh day and a row for the gain in stocks, seven consecutive sessions is more than we have seen in over a year. bloomberg dollar index holding steady. crude coming down. jon: that weakness in oil has

hurt the canadian markets. in terms of individual movers, staying with technology outperformance in new york, you have stocks like uber shining through in the quarter even though the revenue was impacted. tripadvisor up more than 11% after quarterly results. an important time to figure out where housing goes from here. when the homebuilder d.r. horton came out with their quarterly results, the guidance seemed to be strong enough to justify investors feeling ok about the stock outlook. those shares are up 3% today. then you have planet fitness. they can start to think about things like raising prices. meanwhile, we move from a lot of green to red, we work filing for bankruptcy.

at one point, it was valued at more than $47 million. you think to that--about them coming to market in 2021. but the lack of profitability, maybe that was always going to be assigned, but they had sold a pretty bullish story. that stock chart tells you all you need to know. matt: not a surprise that we work filed for bankruptcy. amelia, you are our bankruptcy reporter. you see these things all the time but this is one you could have seen from a mile away. you probably knew we work was going to go bankrupt and you are just when you were in high school. amelia: i did not think that is quite right but we knew a couple of weeks ago it would likely file this month. the big reason is these expensive leases read the only way to get out of them in big chunks was to file for bankruptcy. they have been trying to

renegotiate with landlords in the last couple at times, it was said they were threatening bankruptcy. sometimes that is just a tactic but it seemed like a self-fulfilling prophecy here. jon: for a company that was once the biggest private office tenant in manhattan, and you walk us through how this has impacted the new york landscape? amelia: that is still to be seen but this morning we saw in a filing that they are immediately looking to get 40 different office leases in new york city alone. that is making up the majority of the nearly 70 leases they are looking at in north america. that is just the first wave. usually with bankruptcies and retailers, we see these leases come in rolling waves but there is a lot of isaiah new york. it is headquartered in the city and was a big champion of playing we work: working spaces

here first. matt: how this this effect the rest of the market that you cover? it just feels like one more piece of bad news for an industry in recession. >> absolutely. i talked to our traders and we all talk about the great financial crisis and have said this is the great financial office crisis. we work was 1% or 2% of all offices in san francisco, new york, d.c. there are a bunch of leases they are looking to get out of. in a market like new york, where vacancy is at 25%, it puts more pressure on incentives and

essentially be bought to run growth again. typically in manhattan when vacancies below 10%, you have racing power but now we are at 25 and i think with we work we will put a lot more impression. jon: in light of the fact that we have been wondering about the health of the commercial real estate market itself, how are you characterizing that area right now? what is your best assessment of what is happening behind the scenes? vikram: office is symptomatic but there has been a party for the last 15 years. rates have been low, fundamentals -- but broadly across commercial doomsday, multi family, -- commercial real estate, multifamily, excedrin, fundamentals have been good. entering into covid, new york was sitting at 8% vacancy. now we are sitting 20%.

the challenge for the lot of landlords is as fundamentals softened, perhaps as the economy gets used to it, we will see what type of soft landing situation where it that during the next three years is the real storm for a lot of public and private landowners. jon: speaking of public, it took a long time for this company to get to public markets in the first place, but they weather that spac process and even when they got to the finish line, they were still selling the story the way companies do and they come to market they talked about profitability in the distance and promises of being cash for positive. why was that message able to get them to the finish line if you are a couple of years later talking about bankruptcy? vikram: truth be told, the prior management team or the ceo did

do a good job of bringing down costs. this was not as early a revenue problem. it was a cost problem. they were on the right path but it has coincided with the fed tightening. that led to a lot of their tech tenants also tightening. on the way up, it was good to have catered to small tenants, startups, but also enterprise tenants like amazon and google. in this environment where you are tightening, it is much easier to get out of a two to three year lease of a seven year lease. that loss is what caused them to accelerate, combined with the leverage, those two things combined is what i think caused it to accelerate, a much higher cash for than anticipated is what is causing this to happen. they can they business plan

earlier this year asking for occupancy as we look to go up into the low that high 80's. to us, that was the tipping point, when we downgraded the stock. there was a disconnect between the fundamentals of the reality of this plan coming to fruition. matt: amelia, how many of the bankruptcies that you cover are in office or commercial real estate? amelia: commercial real estate is interesting. we are seeing so much debt coming due in the next two years but it is unique companies that have this exposure in the way we work does, where because of the pressure on this leases being forced into bankruptcies but by all metrics, it seems like real estate will be a big industry in the coming year for bankruptcies. matt: amelia covers bankruptcies for us.

vikram, thank you for talking to us. coming up, disney earnings as it the company takes a bigger stake in hulu and taps a new ceo from pepsico. this is bloomberg. ♪ the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

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time for our stock of the hour, keeping tabs on disney ahead of tomorrow's earnings. long list of things to watch for, shift to streaming, the deal to acquire the rest of hulu, how does the economy

impact their parks business? the actors strike and a management update, hugh johnson coming on board and cfo during his time at pepsico, he navigated nelson pelz who is now putting pressure on bob iger. matt: and the succession, the initial attempt and failure. it will be interesting to see how iger and johnson deal with that going forward. citi research analyst jason joins us now. he has a buy rating on disney, $110 price target. what do you make of it johnson going to disney. seems like an interesting move. jason: it is an interesting live. i have not spoken to any institutional investor who is not pleased with johnston coming on board. it is unusual in that disney

does not have a long track record of bringing in external c-suite talent. but investors like the move. jon: given this long list of issues, not just succession, but the teacher of the business overall, should we be drilling into a couple of key things to watch for in the quarter, or are we looking for bigger things of what is to come? jason: there is so many moving parts. i had one institutional investor tell me he has never seen a company with so many plates spinning at the same time. there is a question around assets. we do not know which assets disney wants to hang onto, abc, hulu, espn? there is a question around strategy. disney is unclear about its ambitions when it comes to streaming. visit want to be the nich -- a

niche app or a mass-market tv substitute like netflix? unclear. then there is the financials. 10 disney make money and streaming? -- can this be make money in streaming? jon: and how do we juggle that with what an investor like nelson peltz might want and having hugh johnston comes on board, given his past history in navigating activist investor concerns. what will you be watching for on that front? jason: it is interesting. one piece of backdrop -- when peltz showed up the last go around, it was interesting to me. we were not getting a disclaimer from the buy-side of deep dissatisfaction with disney. it felt a bit off in the first go around and get still does. what we are talking about is all traditional media companies

struggling with the transition to streaming. this is not disease specific. it is not -- not disney- specific. it is not completely obvious that there are steps to unlock value at disney. it will take time. that is why they brought bob iger back through 2026. it will probably take a year or two but what i sense from investors is they are looking at disney in the low to mid 80's. they are intrigued at these levels. most investors feel like it is too early to get super animated, but they feel like there could be a line of sight if they could turn the corner on streaming and make it profitable while the macro backdrop does not fall apart. matt: laura martin has said apple should buy disney. do you think there is any chance that one of these behemoths vies maybe not the whole company but a giant chunk of it capital -- chunk of it? jason: i would say no.

if i was a big tech company, you can go out and buy sports rights, as they all have, and pay more and stared up a sports business without buying in the near terminal. that is exactly what libby -- mr. iger is concerned about. he was to insulate them from entering into a bidding war. matt: what about the parks? they have done so well. everybody overlooks the parks business but that is where people are spending so much money. jason: so true. i have covered disney long enough to remember when investors used to the men the parks business because they are capital-intensive. now you look at the legs of the enterprise value. the vast majority is parks. disney plans on doubling their capital investment in parks over 10 years. that was rewarded by the street.

it is a good business, generates double-digit return on capital. as long as they are prudent, it would be a good move there are macroeconomic concerns. you have to power through those, but disney good -- did a good job on the last downturns to mitigate pressures on profits. jon: helpful contest. a company that actually has roller coasters is going through a roller coaster itself right now. jason, i appreciate it. coming up weep of it to the growing interest in experiences vineyard. -- we pivoted to the growing interest in experiences at a vineyard with david duncan. this is bloomberg. ♪

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strong consumers have been, spending has held up. we have been surprised by gdp growth. when activity continues to run this hot, that makes me question is policy as tight as we currently assume? matt: that was neel kashkari on the surprising strength of the u.s. consumer. data today shows that strength is coming from an increasing reliance on credit cards. household debt increased last quarter. we are also seeing a rise in delinquencies but probably not for consumers of silver oak winds. we have ceo david duncan with us carrying it is interesting to see the bifurcation of the u.s. consumer. probably a lot are tightening their belts because everything has gotten so expensive, but for consumers in the top when kyle,

they are still -- top quintile, they are still spending. david: demand for luxury goods and craft products continues to be strong. that is true for the wine business, restaurants, and for consumer goods as well. matt: we have heard from lower tier restaurants. darden -- they are not selling silver oak at the olive garden -- but consumers are stepping down to cheaper wines. what do you see? david: you see some of that trade down, but people also want quality and an excellent product. i think for a producer like us or many of our brethren, people want that great following of wine. it is a special occasion, maybe not your daily drinking wine. jon: on the subject of

restaurants, we have spoken to some owners who are navigating the current realities. coming out of the pandemic, it was not easy. what would be something we could do for the economy that would be helpful for the restaurant industry? david: that is a complicated question. people are out for experience. that is a big thing that has changed. they want real, authentic experiences with each other. nothing better than going out to dinner to do that. what we are seeing in the industry broadly, especially with the finer restaurants, is the demand for experience, the quality of the food, the one thing that has changed dramatically is that the explosion of interest in the cooking channels and the food network have changed the approach of many people to find dining.

if you are going to have a fine dining, you've got to have a fine bottle of wine is well. jon: we cover the deal landscape and try to make sense of whether or not this kind of economy lens and l2 more or less activity. -- lens itself to more or less activity. how do you feel about possibly grow in the silver oak empire? david: i am fortunate to be second-generation in a family business. he have been at it for more than 50 years, but the activity in the landscape is remarkable. treasury just her chest -- there is a lot of activity that is happening. we got round of in the rumor mill last year. silver oak is a family business. we are happy to be carrying on. we are trying to grow the business. that is something i have been active at four 22 years.

there is a lot potential for us. we just made the 2023 vintage which we will be selling in 2028 . we have a long view of things, thinking about our business and how it works. not really suited to the quarterly earnings report. matt: today, the international organization of vine and wind production will hit the lowest levels since 1961. the problem is the southern hemisphere, australia, south america but wind production will drop globally 7% from last year. how will the 2023 vintage be? david: in napa and sonoma it was excellent. he had normal to heavy crop, which typically make great vintages, if you look at 1997, 2002.

1819, big vintages make high-quality wines. the coffee shop in the -- in the community, we are excited about 2023. ironically, when global wind production is down, that is good for california when we are not part of it. we have had some rough vintages but 2023 will be special. matt: silver oaks cellars ceo david duncan talking about wine production this year and the industry. some people are going to be spending too much money on gas and mortgages to buy wine, but if you are at this level for silver oak, you can still afford a bottle of wine through dinner. jon: let's see how the stock market holds up. that could be a determining factor. s&p on pace for the longest winning streak in two years. we will continue to track market action. this is bloomberg.

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headquarters, this is a special edition of the countdown to the closed. katie: we are in new york romain is in boston. he is covering fintech week. romaine: a lot lot of folks defending on washington, the c4 d.c. fintech week. adrian harris, superintendent of financial services, will be stopping by in a second. we will also hear from the president and ceo of