>> consumers are still spending and on top of that you're getting relief on the pricing side. >> if they continue to spend and add to their debt levels that could slow things down. >> inflation should start to gradually decline. >> that resilience grows. i do not think the recessionary threat is immediate. >> i do not think this economy is in any immediate threat of anything really bad happening. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa

abramowicz. jonathan: good morning. this is bloomberg surveillance live on tv and radio. your equity market on the s&p 500 slightly negative for another day of gains on the s&p 500, just squeezed one out yesterday after the biggest day of gains since april. we begin on the west coast playing happy families in san francisco, california. tom: and then comments late in the press conference. pretty much on script. photo op, photo op. i thought it was in the movie mank, i thought oh it is the set of mank. jonathan: happy families reach for the thermostat and turn the heat down. china will send the pandas back to american zoos. then he is a dictator. president of the united states spoiling the party a little bit. lisa: someone asked him if he

stand by his comments that xi jinping is a dictator and biden says he is a dictator in the sense he is a guy that runs a country that is a communist country based on a form of government totally different from ours. here is the question. does china run with this or do they ignore it? that will set the tone for how much they want to have this be a success. jonathan: the bar is so low for this relationship that it would not take much to jump over the bar and help us get a little bit of a jump yesterday evening. tom: i would suggest it was all given back. i do not know how the president addressed the dreaded d-word, but i do not know how offended the chinese can be. americans might say we do not care if they are offended but

they are offended. jonathan: we can tell you who was at president xi's table, apple ceo, blackstone stephen schwarzman. a big table. about 20 names on it. do you think there is anything the chinese leader could say to these guys today that would make them invest more tomorrow? lisa: i gave so much thought to this last night. do you take promises, do you take tone, do you take the pandas coming back to u.s. zoos or do you say we have seen what we have seen and we cannot be dependent on any kind of policy stability, we will continue shifting away from this country? it is nice to see and be seen but unless they have to do business hard to get conference. tom: headline from reuters as icbc -- maybe secretary fink leaned across the hors d'oeuvres and said how about that icbc? jonathan: elon musk had his own

separate small gathering with president xi. he did not go to the big event. there was a smaller meeting. lisa: i love it. if you're a gold member you get to go to the xi jinping special one. he has had a cozier relationship with xi jinping. tom: you have to make a distinction between finance and capitalism and manufacturing something in china. cook manufacturers in china. i believe musk is not even indirect, it is a direct tesla manufacturing in shanghai. jonathan: lots of retailers reporting this morning. let's start with the equity market on the s&p 500. equity futures shaping up as follows. equity futures totally unchanged. squeezed out a day of gains yesterday on the s&p 500.

yields are lower. you might have some stability. 4.5% on the 10 year. tom: in the yield space maybe that is where we are. i looked at levels. dow 45,000. 16000 and nasdaq 100. i think it is key we held up off of this shock and awe of a couple days ago. jonathan: it is a quiet morning. the euro just about unchanged. it gets busier as the morning grows older. lisa: i think retail earnings matter more than ever. we did get bath and body and we saw a bit of a miss on the full-year forecast. we get macy's coming up at 6:55. after the bell ross stores and gap. macy's shares are down 37%, the

second year of double-digit losses. walmart shares are up 21%. how much do we learn about specific companies versus overall trends of a consumer? age: 30 we get u.s. initial jobless claims as well as housing market data. initial jobless claims have ticked up. the unemployment rate has ticked up. if we see a surprise i'm curious about the market reaction. let's go through the fed speak. we have michael bar, loretta mester, new york fed president john williams, chris waller, as well as fed governor lisa cook. there is a treasury market conference hosted by the new york fed today. jonathan: that sounds fun. lisa: right now people would say this counts as fun. jonathan: mary daly in the financial times yesterday. tom: i saw that.

jonathan: too early to declare victory. tom: she is my favorite fed president. i think she has a huge understanding of the fabric of america. what i love about bath and body works, the beard and scruff cream is the best. jonathan: that is what you go to buy? thank you for sharing with us. let's check out burberry quickly. that is down 9.4% in london. the outlook is not looking bright. 1580 in london. joining us is the lead equity analyst at landau. let's go straight to burberry. does this signal the end of the post-pandemic boom? what are we returning to? what do you think we are going back to? sophie: this is obviously the

big read this morning. burberry quite disappointing. we cannot conflate the entire luxury side of things to these results. burberry has a specific set of challenges and within that opportunities as well. for burberry we will be coming back to a lower base than pre-pandemic. within that, it has done a huge amount of work on its creative turnaround, repositioning itself at the higher end of that value chain. when you look at products, the breakdown of the demographics they are going after, there are a lot more challenges for them to clear at that is why think the runway does look more problematic. tom: how does your outlook look for next year if we understand each and every stock has a narrative like burberry.

everybody has an individual story. how do you coalesce those stories into a market call? sophie: it is certainly a challenge. i cannot think of a time when there has been quite this much divergence. it is certainly a dynamic time. if we keep it within luxury it is going back to those old-school tactics of understanding the best in class offerings and breaking that down because things have become so segregated, so polarized in a lot of situations, we're just saying this sector looks reasonably ok or this sector looks reasonably challenged. it is looking at best in class propositions and always coming back to that valuation and remembering the price is what you pay and value is what you get. that is something that cannot be forgotten into next year which will be quite a bumpy ride no

matter how you look in the market. lisa: is there any conclusion we can draw about which buyers are pulling back on the consumer space affecting specific retailers but not so much other ones? sophie: a particularly squeezed area will be retailers in the middle of the value chain. i mean those that are not super high end and those not offering consumer discounts and extra good value. that non-essential and discretionary spending will be quite challenging. in the short term there are bright spots. i do not want to be all doom and gloom. when we look at holiday spending we know we are looking at holiday spending pullback in mid-single digit percentages. within that e-commerce growth is expected to come through the line and are retailers. amazon's particular well-placed to capitalize on that in the

short term. broadly speaking those companies , you're talking about macy's earlier. those large-scale physical retailers that are offering mid to higher mid-value options for consumers have a hard job on their hand to convince people to spend with them in a big way. lisa: how much has already been priced in? sophie: i think a lot of it. the possibility of sharp falls is never a definite no but they are probably less likely. we could see in creep downward in those names and in some situations, i am not entirely sure how sustainable targets recent rally is given they're leaning towards the non-essential spend and we could see corrective moves. for me it could be a creep

downwards. jonathan: over the last couple of days all we have heard is happy talk regarding the year end rally. what do you like inequities right now? sophie: i also need some more coffee. there are definitely opportunities. i think a corners of luxury do remain compelling up looking at less exciting names, i think the telecoms, the big names in europe have interesting propositions. they are not the most exciting stocks but that is why some of those are interesting. there are barriers to entry and the reliability of demand are all very exciting things to me. i think some of the big aerospace defense players also were looking at a lot of chatter around energy transition,

particularly in nuclear. you look at rolls-royce and the opportunities there. it comes down to those wide economic notes for me is where we need to be looking. jonathan: always enjoyed catching up at you. sophie lund-yates. it has been absently brutal. remember this year was meant to be china coming back. lvmh off to the moon and then rolling over aggressively. tom: others will be a separation out. i am not sure were lvmh fits into that separation out. my issue with it from a burberry family a million years ago is simple. most of luxury, including burberry, when i walk in the store, nothing fits. trench coats, you think they would have a trenchcoat that fits me.

jonathan: are you describing personal problems? tom: steve at saks fifth avenue and now at mastercard says this is the biggest product miss at luxury is they do not do 000 for smaller females and they do not to the large things. i looked at the website and had a trenchcoat picked out. jonathan: this is the answer for burberry stock. they need to make trench coats for men who are seven foot. tom: you loved how i looked at jackson hole two years ago in my burberry trenchcoat. lisa: that was -- what was that again? tom: that was colombo. jonathan: from new y city, good morning. ♪

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i've been meeting with president xi since both of us were vice president. we have made important progress. >> would you still refer to president xi as a dictator? pres. biden: he is. he is a dictator in the sense that he is a guy who runs a country the face of a government totally different than ours. jonathan: the president of the united states after several hours of meeting with president xi jinping. you can imagine secretary's face from rome. it is hard to argue against what he is saying. isn't it as close to a statement of fact as you can possibly get? tom: i would go back to 1949. september 29, 1949 is when you established an understanding of a form of government in china. we have seen that word used. i do not think we have seen it used over fancy china and

silverware at a get together. jonathan: you have a leader in china that is serving a life term. tom: and in russia as well. jonathan: what is that by definition? tom: i take your point. i think you have to. these niceties. if you look at a holiday gathering at the bramo house, there are just things that are not said. jonathan: other than that it was the warm embrace we all expected. we were looking for a charm offensive from the chinese leader and that is what we got. lisa: some of the most underplayed development are the resumption of military communications because this could avoid an accident that some people were worried about in the south china sea that could ignite a bigger conflagration. tom: years ago at the metropolitan museum of art in their fantastic collection of clothing you would walk down the stairs into the basement and

there was one of the very few fully asked and uniforms of the chinese cultural revolution. 1968. all that went on and the politics and tragedy of china. wendy is expert at china at brown university and joins us. as far as i am concerned, and ike -- and i cannot say i saw madame shane kai-shek speak to the house of representatives. we are living with the ghost of memories of what china was. is china now what we think it was once? wendy: i think it is schizophrenic. the great hope of giving china most favored nation status permanently more than 20 years ago was that it would open up political freedom and become a

more stable and more predictable partner to the united states economically and reduce the threat politically from china. we have not seen that kind of political freedom in china and it became a gigantic competitor and some would say purveyor of american technology stop we are grappling with what we thought would happen. the democrats and republicans join together to make this happen under bill clinton, and what has actually happened in that country. there is great disappointment there has not been a hamiltonian progression. tom: well said. alexander hamilton is not showing up for the debate. how much is xi like mao. he wants to be like mao. i don't know who vladimir putin

wants to be like, maybe peter the great. how much do you see mao and that dictatorship in the present china? wendy: this is about not letting global changes, particularly informational changes, disrupt the firm political order. he has allowed far more freedom in life itself in china and development. you do not have to wear the same clothes as everyone else. this seem small but it is not small. allowing people to think they are living life as they want to live it socially gives him more leeway to tighten the reins on political power. lisa: did the meeting we saw transpire between president biden and xi jinping help or hurt president biden's reelection campaign? wendy: we are all counting down to the election that is a year away. i thought he looked pretty good and spoke not too bideny in

terms of gaps and it was essential to get on stable footing with china in terms of communication, economic, the trade war cost us money, and trying to curb intellectual theft. russia is still russia and now we have the middle east unstable. we do not need china's backup in addition to that. you mentioned the south china sea, taiwan. calming things down, that is the image the president conveys. lisa: "not too bideny" is a fantastic phrase. countering this idea of biden as the obvious incumbent nbc asked joe manchin if he would consider running for president and he said i would do anything to help my country. he did go on to say he did not want to see former president trump reelected. how much of a liability of is a

joe manchin run to a joe biden second term? wendy: any third party candidate that gets on the ballot in enough states, particularly swing states, will siphon votes from biden and trump. the question is how many votes from either candidate. the trump base is small but very loyal. come in republicans will come along with that base if it is biden. biden -- mansion could take a fair amount of votes from people who do not want to vote for trump and one someone in the middle. it is all about getting on the ballot, not just making the announcement you are running for president. tom: we have to go back to 1972 and senator muskie's tears in new hampshire. will we see tears in new hampshire? the granite state front runs the democratic party. wendy: we do not even know if

that will count towards the general tally. new hampshire tends to go blue. picking a fight with new hampshire does not seem to make sense. we know how crucial south carolina was to biden's win in the primary in 2020. he faded a little bit in the polls for african-american voters who tend to be loyal to the democratic party. it is one thing to be loyal, it is another to turn out the vote. getting that enthusiasm back up among african-american voters in south carolina is more important. whether it is costly to biden in a tight presidential race, we will find out. jonathan: thank you. are you feeling bideny this morning? tom: it is fascinating to me. suddenly january 23 is honest. it is seriously around the corner.

when you take out the holidays and the travel. seven active weeks away from standing out? i was doing a live hit from concorde in the street and this fire engine went by, sirens and all of that, and they said what is that and i said that is the loan hillary voter in celebration. a long time ago. lisa: will not be on the primary in new hampshire but that might be because he is considered too bideny, that highlight some of the concerns. you could argue nothing he said was untrue. nonetheless he could just punt and not really raise the temperature. these are the questions of whether it was the right venue. jonathan: was at the right venue for that question? i heard you say it, i'm with you. what you expect him to say?

if he does not say it, i would be the first to say it, why does he not just say it? state a fact. we know what it is. he is serving a life term. there are no term limits by any real definition. lisa: i agree with you. it is being baited and everybody responded to the bait. tom: with that have happened to rishi sunak? jonathan: without a doubt. the press loves this. classic moronic d.c. politics. do you still think he is a dictator? it is just by definition he is. tom: john is waiting our team political coverage. our classic moronic political coverage. jonathan: let's talk bonds next. this is bloomberg. ♪

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jonathan: equities on the s&p 500 just about unchanged, squeezing out against on the s&p 500. right now, going absolutely nowhere. on the nasdaq, negative by 0.14%. the scores look like this for treasuries, 4.4941, yields about four basis points on the 10-year. dan iversen of pimco speaking to bloomberg, legendary investor over in newport beach. inflation problem is far from

being solved, moving in the right direction is different than getting to the central bank target of 2%, give or take. we are moving in the right direction but arriving at 2% is a different story. tom: we have to identify calls made 18 months ago, and pimco had a great house call, saying we will see the word rate regime, and maybe this is where it clicks. that is a house call they have. i look at the real yield and call it from 2.50 to 2.16, back to 2.23, and off the off walmart today, which i think is suddenly a huge deal. nvidia next week i think will be a real bellwether. i don't know why, but these kind of earnings, well, what is going to keep this thing going? those are the kind of events. jonathan: we get walmart in the next 30 minutes.

then you will hear from macy's. let's finish on foreign exchange. plenty of things to say about the gap, in the fx market right now, the euro is 1.0 857. -- the logistics, user experience side of the gap is so awkward and clumsy. awful. tom: like out of the pandemic, some of the airlines. there was this strange word of execution. of the magnificent seven, which one is not going to execute? jonathan: you have to make your friction must. i remember we talked about the number of clicks it would take to book flights, and they did a great job of making it easy. amazon, swept, done. tom: bramo can get business class with a couple of clicks. lisa: how do you plan around

people using the mail system as their personal dressing room? it becomes a big challenge, and things are moving faster than countries can adapt to. jonathan: when you go and get overnight delivery, next day delivery, and you pay for that, but it is a from when they are ready to deliver it. tom: about a year and a half. jonathan: they will be like, have not sent them out yet, and i said, i said next day delivery. and they will send it friday, next day. what is retail playing at? tom: that they cannot make money on next day delivery, so they have finessed this the last 18 months. i would defer to our retail powers, but it does not work. jonathan: under surveillance this morning is our top story, president biden hitting progress with xi jinping after meeting in san francisco yesterday. it resulted in agreements to restore high-level military

conversations, issues on fentanyl, and they referred to xi as a dictator, a comment that the foreign minister called actually wrong. it is distracting, largely because of the way the media responded, she said, and then she said, focus on the substance. lisa: the substance carried through, even with the statement from the chinese ministry, the foreign ministry spokesperson of china saying, yes, it is extremely wrong in political manipulation, but went on to say that it should be pointed out that there will always be some with ulterior motives will try to damage china-u.s. relations and they are doomed to fail. it seemed clear that china would not take this bait to go against the progress that was made during the meeting. tom: was speaker pelosi there? i don't think so. jonathan: where are you taking this? tom: i think to taiwan, this is

an elephant in the room. the speaker felt like a lot of americans, let's go, and the president has been backpedaling from that. jonathan: i think president xi said he did not want a war with any country. does china considers taiwan a country, if you would like to read between the lines? lisa: it is clear nobody wanted to fight. there were conciliatory comments from china, saying they are looking for closer political ties with taiwan. taiwan is electing a member to the government that has more china friendly feelings, so maybe that temperature is going down. also, at the same time, congress is holding a hearing with apple about why they canceled john's stewart's show because he had controversial comments about china. what is the self-censorship of some companies? removing the same direction in all parts of government? jonathan: no. tom: [laughter] jonathan: take your pick. these are subjects they are

nervous talking about because they think they will lose business in mainland china. tom: we were not allowed to show "barbie" because they do not show the south china sea correctly or whatever. jonathan: is that true? tom: yet, there was a map in "barbie," -- i have only seen it five times -- and the chinese were very upset about the map of the south china sea up to taiwan. jonathan: i don't know if we have that particular example, but we have seen that in many movies out of hollywood. struggling to get access into mainland china because that box office has become such a big deal to the business of some of the companies. let's turn to better news in washington, the u.s. senate voted to approve the house's temporary funding bill to avoid a government shutdown. this delays a clash over federal spending into the new year. not included, emergency aid to ukraine in israel, with chuck schumer saying that would be the chamber's next priority. president biden is expected to

sign before friday's deadline. good news, we will not be talking about this tomorrow. bad news, we will be doing this in a bigger way in a new year. lisa: january is a chunk of the toy percent of funding that will come up for renewal. that where he is going to be 80% of the chunk of funding. how much are we cannibalizing the process later on ticketed through now? and what it is going to mean as a bigger fight and more of these discussions, which we love. jonathan: i cannot wait. let's finish on this. in london trading, burberry getting absolutely hammered, and saying this year's revenue target may be out of reach. barely growing the recent quarter and shares falling 11% in the steepest intraday decline in more than three years. it comes as consumers are balky not high prices for luxury brands, signaling that inflation is sitting across all income. they are down by 10.6%. luxury is having a moment at the problem.

and then you have burberry. burberry was having a difficult time in the 1990's. the designer, who eventually went on to become the ceo, and ever since they left about 10 years ago, for me, this friend has gone in the wrong direction. jonathan aykroyd now runs the business. to turn this around, it will be difficult. compare burberry, down about 20%, put it against her favorite brand, which is up 20%. the maker of orange bowties. a massive difference. tom: i never look at the thai when i pick it out. -- the tie when i pick it out. this is pink. this is seven lagarde meetings ago. the answer is, burberry is there, they have loaded up, and the closest analog is gucci. and they had a five-year gift in

gucci to rebuild it. i don't wear gucci or burberry, what are we going to do? currencies, commodities, jenny montgomery -- thank you for joining today. -- guy lebas of jenny montgomery scott. is this yield attractive to capture right now? guy: we are seeing an increase now from our retail wealth management network into the fixed income markets. a lot of it is relatively short term. big demand with money market type instruments, and it trails off as you go a little bit further, so i think there is caution after 2.5 years of round numbers and declines in bond market values, so some caution. lisa: at this point, how we see the bulk of the carnage, where

we are core listing around stability of 13 basis points yesterday in 10-year yields? are leasing 4.50 as the new level does your that will stick for some time? guy: we had big declines in yields around the fomc meeting and the u.s. treasury funding, and i think those announcements speculate cap deals for 2023, just about 30 basis points above current levels. i am concerned that the turn from fed rate that are currently priced in back to neutral policy or even rate hikes could spur a little bit of a reverse, particularly in the five-year area of the yield curve. lisa: this is something mary daly of the san francisco fed went over in that article, about how the start-stop policy of the federal reserve is something important to avoid for them to be on hold or cut and then have to hike again, and there is a

concern that people do not understand how much economic heft there is right now in the u.s. do you agree with that view that right now people are overly optimistic about rate cuts and that it becomes more dangerous as we do take a look at some really solid fundamentals? guy: absolutely. on the first point, i think the fed is going over there kremlinology, if you will come as information we need to go over. one of the key things that was viewed as a mistake of the 1970's was declaring victory on inflation. we saw that easy response to avoid that happening again. the easy response to keep that from happening again is not to declare victory, and in that world, which is hesitant that if there is victory over inflation, it is hard to imagine rate cuts coming unless there is a downside, which you don't put a better than a 50-50 chance for 24. tom: what do you see for 2024 on

total return, coupon, plus again, versus just clip the coupon? how does that work out for you? guy: our concern is higher term rates correlated with a period of unusually strong economic growth. so very low returns on the long end of the curve, we have not counseled -- canceled our outlook which is a few weeks away. tom: stop. i went for december 27 for that. slide into that. i look at it as an impossible task. what does retail do here? people do not want to be in stocks. i am not buying amazon or walmart. they need yield. is a laddered approach the only way to go now? guy: we have advocated as a strategy group for portfolios.

and a little more on the seven to 10 year yield curve area. advisors don't go much further than 10 years. this allows for the case that economic growth remains unusually strong for a set time, and it allows dry powder on the front-end of the yield curves. they will be able to deploy a little further out if we do get that extended economic growth. jonathan: looking forward to the outlook for 2024. kylie wa -- guy lebas of janney montgomery scott. we had a move of almost 20 basis points lower than yesterday, 10 basis points higher. this morning, we are four basis points lower again. what is normal in the bond market now? lisa: basically, the fact we are going up and down on different days is more normal than having one moonshot up.

that is what normal people are hoping for. how much is this due to a lack of the quiddity and positioning and ended dynamics -- not end of market. jonathan: you called for end of days. lisa: i have seen people putting me in "the simpsons" was that end of days coming here, definitely. jonathan: a week ago this morning, the 10-year yield opened at about 4.48. given everything the last week or so, the 10-year right now is four point quarter nine -- 4.49. it is not feel like that. from new york city this morning, good morning. ♪

>> united states will continue to compete vigorously with the prc, but we will manage that

competition responsibly so it is not veer into accidental conflict, and where it is possible, we are not going to just coincide but work together on fentanyl. jonathan: the president of the u.s. speaking to the press after meeting with president xi jinping after several hours. we are in a competitive relationship and it is about managing the relationship going forward. just reaching for the thermostat and taking down the heat. that is what this was about, on top of the charm offensive coming from the chinese leader with corporate america. tom: you mentioned the commercial nature of this. i cannot say enough about it. we always do surveillance corrections, i bombed out this morning and conflated china and vietnam. china propaganda with emails in early from hollywood, thank you for listening. really appreciate you watching "bloomberg surveillance."

jonathan: tom is wrong, and we all have to sink with you. tom: it was my fault. so iran or vietnam was offended by the map of the tennessee -- of the tennessee. lisa: neither of you have seen that movie. jonathan: i have seen "barbecue echo lisa: i think it is -- i have seen "barbie." lisa: i think it is really interesting. tom: that is the headline. jonathan: equities at the moment on the s&p 500, slightly negative. not true, down about .1%. down about four basis points on the four year, 4.4921 and absolutely nothing on the euro, 1.0849. tom: we are watching walmart's

earnings today. we are making jokes about it. come on, this is important. echo her son -- michael hirson joins us this morning. what was expected that you saw last night besides a dictator faux pas? what was unexpected of the meeting? michael: nothing to unexpected, frankly, which i think is good. maybe the chinese readout was a bit more positive than i was expecting. that really reflects what has been a recalibration in china's official tone towards the u.s. over the last few weeks. other than that, no big surprises. tom: great. what is next? when is the next meeting? does the president travel to china to make it two? michael: i think that is a

really important point because this is basically the last high-profile meeting that the two leaders have before the next u.s. presidential election. this kind of sets the parameters for the next year, and those parameters really are trying to find stability, not alone in a crisis, and then just making progress on key issues of the relationship. if you think about it, the closer we get to the u.s.-presidential election, the harder it will be for biden to do anything that is seen as soft on china and why would xi jinping make concessions to the u.s. when he does not know who the next president will be? i think that is why this was an important window for the leaders to meet. lisa: did the dictator, to mean anything to you? michael: not really. i do not want to dismiss it entirely. i think it was perhaps not the positive tone to go out on, but

in the grand scheme, given how much work both sides did to try to make this meeting happen, i don't think it will color too much on the china side. lisa: what did you make of the meetings that xi jinping had with u.s. executives, tim cook, and others? and then a private meeting with elon musk? what is your take away of how different the business view on china is from the u.s. government's view on the country? michael: i think there are a few permanent u.s. firms that this special position in china, and that will put apple in tesla as the two bellwethers in that category. they have managed discs tidal between the u.s. and china. it is not an easy straddle on either side, with they are in a special category. if you look at the broader sedative u.s. firms in china, it is really mixed between those who feel like they have a decent market in china, and then

those who are upset about china's policies. i would put tesla and apple in this special category and it is no surprise that they got special attention from xi jinping. lisa: do you have a sense of who needs more, if weather tesla and apple need china more than china needs them in the jobs they provide? michael: i would say for the companies, they need china more. if we are talking about apple and tesla, they are important bellwethers for how the business community looks at the plainfield and china. i just the u.s. business community, that is europeans, japanese, global companies in china, which is why i think they need to tread carefully with things, for example, potential retaliation against apple, so the companies in china work, but it is important that xi jinping looks to try to revive confidence in chinese

environment and economy. tom: is hong kong going to evolve into something that we do not see right now? is there ahirson hong kong out there that is going to be different? michael: i think hong kong, i was there last week, is in this somewhat gradual transition from a global hub to really more of a peer capital gateway to china and increasingly becoming more of a chinese city. that is still an interesting position for to play, and a number of china watchers have made the point that they think hong kong is going to remain an interesting city as the political environment in china stays tight and tightens further. hong kong losing its status as a global center, but still important in the context of china. tom: what is the alternative for

people wining and dining with mr. xi last night? what city did they go to? michael: if we talk about the financial sector, a number of places. singapore has gained a stat. even tokyo. if we are talking about the multinationals, it is wherever they can get capacity and get the logistics right. in many cases, you mentioned vietnam earlier. it is also mexico. jonathan: thank you for being with us, michael hirson, thank you. these changes are already happening. it comes from both sides. it is not just about what the u.s. is responsible for. the lack of visibility on critical policy, to china the last years has been difficult. i will re-word some things i said, if you make an investment today in china, can you be sure the rules will be same tomorrow?

that is the difficulty that leaders of corporate america have got right now with investing in the country. lisa: which is a reason you saw part of foreign direct investment fell negative in the most recent data in china for the first time since 1998. what michael said was fascinating about why china is so determined to maintain a relationship with apple and tesla. not because they need them more in the jobs, because they set the tone for global corporations. as a way global companies can do business in china. in this stance, what does that mean and what does it evolve to and how much can it serve as a template for other companies that are forming their business in different ways without manufacturing? tom: they are the hearts of the goods, the unit manufacturer psychology of china, which has been there decades. what do we do in finance? what does blackrock do to china? jonathan:jonathan: blackstone. tom: right.

jonathan: bridgewater was also around the table. tom: he probably gave xi a copy of his book "principles." jonathan: does he distribute books everywhere he goes at dinners like that? tom: another "surveillance" correction, are you going to las vegas? jonathan: we will talk about prices the next hour. to attend and to state in las vegas this weekend and those prices have been crushed. surveillance correction warmer in las vegas for jonathan ferro, 47 degrees. eight degrees celsius. we convert that. we convert that. jonathan: a stellar week of games, really all about tuesday, just demonstrative gangs off of a small prize on cpi. equity features unchanged. from new york, good morning.

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thanks consumers are still spending, and you are getting some relief on the pricing side. >> if they continue to spend and add to their levels, it could be strong. plus they will gradually decline over the coming months. >> i do not think a recessionary threat is immediate.

>> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: good morning. this is bloomberg surveillance. your equity mic on the s&p 500. all about the retail. walmart is about to drop at any second. entering the holiday and a healthy inventory position. tom: i'm looking at 70, five, and now it is back of to 12. he to be different types. people are nailing it and people are really challenged. jonathan: lisa can give you the

outlook for revenue in the quarter. same thing on eps. lisa: all these slight beats. expected to be $6.40. they previously saw six stars 37. basically, this is not much of a difference. this stock has been up so much more. jonathan: look at the target. we need to go through some of the details, but ultimately, you do not see the drastic slowdown that people are worried about.

lisa: you are seeing some of these slight beats actually punished in the market. tom: single-digit, but they systat right away to 4.3%. the answer is, you have a single digit revenue growth with market leverage and it is trading. i will let you explain it's me because i do not get it. jonathan: following a massive day of gains. let's turn to the broader price action. just about changed on the s&p. let's face it, the bond market has been all over the place.

tuesday, we had a 20 basis points lower. let's call it 450. lisa: maybe we do not have such a clear narrative after all. we did get the retailers we were talking about, omar and macy's. how much do we see this reaction and markets? how much do you see that punish? i think it is interesting to signal where it is. jobless claims are a key indicator as to whether the softness continues. the trend matters. fed speakers will come out and say they will not declare victory. they are lined up to give us that insight.

a time of great uncertainty. jonathan: we sit here and say, why did they do that? and then we will sit here and complain. lisa: if you have something to say, talk. is it just becoming noise? we get to talk about it everyday and i get to -- and i get to put it in my look ahead for the day. tom: e-commerce is up. jonathan: there was a sharper falloff in october. that is important.

what is in store? the joe -- the global chief investment officer over at blackrock. as the economic slowdown next? >> what we have seen is bringing inflation down, but growth is coming out of the hold. really, normalization is growth going to slow down? i think so because we had the fastest rate hike with a little bit of a lag, but we will see a bowling growth slowdown and different parts of the economy that will aggregate. you're looking at 0.5%, but we

are not talking about deep recession. they find one trillion additional dollars on their balance sheet, propping up sentiment. as we compare that, this is the beginning of the year. a case can be made about putting some of the cash to work. jonathan: we are more cautious on the consumer than we were. more cautious on the consumer than we were. thinking about putting money to work, is it towards discretionary act of >> it depends on what is being priced and by the market. 17% for the s&p 500. they account for close to 90% of that performance. it is still flat on the year.

if you look at multiples, 72% of the market, trading and multiples are lower. there is a huge amount of dispersion. buying into the broader markets, just because of growth. lisa: this is giving voice to the fact that macy's is rallying today and walmart is selling off. macy's has priced it in. >> we are focusing on companies that grow their revenue and are able to keep up their margin even in the slowdown. lisa: where is the balance of risk in terms of market

participants? is it that the economy accelerates or is it the opposite, that we get a significant slowdown. it might be that people are more concerned about over acceleration rather than recession. >> i think at this juncture, maybe that is true, but it is crazy how much they are shifting. it is incredible how they are reacting. at this juncture, maybe. it can shift very quickly. i think it is really focused and boiling down to what is in the price. not being carried away with the noise of what is the narrative of the day or the hour?

>> you are leading a working group on china. your thoughts on what we have observed. particularly, your thoughts on the bipartisan distress for chinese leadership. >> it is putting a tentative floor and reestablishing some channels. i think that has been much needed. i would also say it is a tactical post in terms of the geopolitical focus. if you think about the upside, what has come out is dovish around ai risk, fentanyl and the broader channel, but what

matters for the economy is a broader kind of engagement. tom: i do not want you to speak for him but what are your thoughts on the meeting of commercial america with president xi jinping for dinner last night? >> i think commercial america are involved in the conversation , in order to stay informed on issues that they can then really represent and conduct on behalf of their clients, the same way we are doing it on behalf of our clients as well. we need to stay on top of the issues. the broader picture is stabilizing in response to incremental easing.

it is still really negative. you speak to investors and strategists. it's still quite a negative market. it takes a lot for consumers to embrace the opening in a way that we have seen in the u.s. jonathan: coming into 2023, talking about u.s. recession and it has been the other way around. if you are joining as, welcome to the program. equity markets are pulling back just a touch. that is the equity story. walmart in the premarket looks like this. down by more than 4% to 162 .75. but, the tone on the outlook,

just the tone on it, in an interview, saying the following. saying this, we are more cautious on the consumer than we were 90 days ago. this is the fear with equities. you have had the disinflation. is the slowdown next? i think that is the ultimate fear. it is the cry for a recession. it is surprising when you start to hear it from corporate america. tom: you have disinflation and what does the real economy do? if you get both of those coming

down in different ways but coming down, you get a dampened nominal gdp and it goes right to the revenue line. this is huge, for them to go to that is game changing. lisa: if the gains came from shoppers, the lower ahead of the holiday, is that a good signal? jonathan: equity futures are doing ok. down by 0.2%. coming up, we will catch up with him in the next hour. this is bloomberg. ♪ one wheel crafting) ♪

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>> the underlying health of the private sector remains quite strong.

i think we will slow, but i do not this is an economy in danger of anything bad happening. i think this is a victory, and i do not think we will gave them room. jonathan: this market is itching to -- we saw that from mary daly. she almost said it. we do not want to declare victory. on the slowdown, let's look at two retailers. the difference between these, macy's is beating on profits. the stock is up to close to 6%. the numbers were not terrible,

but it was not too bad. the commentary from the cfo, have to say that it is kind of dreadful, talking about a sharper fault. i keep going back to this line. lisa: that is what stood out to me. i think that is key. are we getting that slowdown in a new way? they are referring to that. jonathan: we are down about 0.2%. the picture looks like this. let's call it for 50 on a 10 year. who we have this warning from the former president saying u.s. authorities need to act before the safe haven of the treasury market becomes a source of instability. ideally, the government would do

its part by getting the fiscal policy in order. they do not seem like they will do that anytime soon unless they can compel a response. you have heard that morning from the fed president dudley. >> it does not look like congress is going to do anything. it shows the expected path of debt that she has on the chart. we are at a point by reverter last in the 1940's and from here, it is almost a hockey stick up. what bill dudley is talking about is somebody has to buy all the day that we are going to sell. it is hard to absorb, given the

primary dealers some ways around the restrictions to have them be agents and make the fed's repo system all work for everybody, rather than the primary dealers. tom: bill, you have a unique perspective on the flows. what is the confidence or trust deterioration that you have observed? >> i think there is complete trust.

the fed basically understands the financial system and understands what needs to be done to make sure it works, always. one area of vulnerability is the trading market itself. borrowing has gone up dramatically. the power to take on that burden has diminished because of all the leverage. there do need to be significant changes to the market to make it strong and resilient. they all go through counterparts. it allows you to net a lot of risk in person. increasing the leverage a little bit so that they do not need to be increased during times of stress.

the last thing that mike was talking about is opening up the fed's repo facility more broadly. if they know that, they do not have to sell the treasuries in anticipation of a problem. they can wait until they need the cash. jonathan: do you think that compromises the qt program coming out of the fed? >> if the market performed reasonably well, only if we had a market. if the market is not working right, the last thing they want to do -- lisa: what is at stake if there is not a fix for this proposal.

i we sing with the new normal looks like from day-to-day versus something more significant that creates a real crisis in the deepest and most liquid market? >> i think that the volatility is people trying to figure out what is the short-term rate? there have been a lot of changes in view as the economic data came out. there is not enough capacity on that side. obviously, it needs a catalyst, and it is hard to determine what that catalyst could be. lisa: what do you expect to happen if there is a catalyst?

>> they just provide liquidity for a second. a move that security off to somebody else. when things get scary, the market has to go into the community. they have not allocated capital. there is no one to provide balance sheet. you can turn it into cash without having to sell them. the fed is the only one with a balance sheet that will last, so why not make it clear? tom: how does our data dependency look?

is the nature or character of the fed's data dependency different now? >> i think they are more confident now. they are working to bring down inflation, but we do not really know how tight monetary policy is where how long it will take to get inflation down. it is a lot less today. still a lot of uncertainty about what the fed has done. jonathan: wonderful to catch up with you. an interesting and thought-provoking piece on the future of this treasury market. it is warmer with session lows. a cautious outlook.

lisa: it should be noted that walmart shares were near record highs. the larger macro question that we are getting hints of is that the consumers are not recklessly spending. it is a new form of spending. jonathan: we might get comments on some of the moves we are seeing from retailers in america. good morning. ♪ ly. that's because cdw designed and built a solution with cisco security. end to end protection, defends against attacks

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jonathan: your equity market pulling down. walmart session lows, the numbers from them were not bad, but the commentary about a deceleration in sales has, everyone's i. this is great. walmart's q3 was strong, but sales fell off in october because the consumer must be doing really bad. if you are following, it is bad.

tom: it is a major pet peeve that i had. we conflate that the macy's day parade is as different as what is going on. walmart, half $1 trillion. target, under $100 billion. macy's is minuscule. nobody talks about this except for bloomberg surveillance. i think it is terrible. we conflate all these names together. but in the same breath, we are like the eggs giving parade and balloons. remember you could go right up

to the balloons and take your four-year-old to touch the balloons? you could go right up to them. you have a beverage in your hand . jonathan: i remember, we did the prayed together when we used to spend thanksgiving together. it was a beautiful thing, when we all liked each other. some women came up to us instead it is so nice to meet you. we carried on talking and they said, we are so pleased to see you together. because we thought you hated each other. tom: we did separate selfies. jonathan: president joe biden defending the decision to send forces into the hospital. saying it constituted a war

crime. condemning the raid. they found weapons and other military equipment showing that it was used as a beast by hamas. lisa: first of all, the u.s. backing what israel is saying. there was some acknowledgment of hamas using hospitals as military bases, back in the day. there are allegations of war crimes and for going into a hospital. the big takeaway for me, zooming out of a emotional conversation, the pressure is building and there is only so long it can go on without some kind of resolution. i am watching discussions about that standpoint. jonathan: what we achieved, away from all of this, we have

managed to avoid a government shutdown. the fight that is about to take place over spending cuts after some of the warnings we had, over providing aid to ukraine. providing aid to israel, where a french of the democratic party is getting bigger, opposing their effort as well. this will be really messy in the new year. lisa: the pentagon has delivered a number of weapons without having an increase but this will get increasingly messy and political. it just amps up the pressure to come to some kind of resolution or a better space.

jonathan: playing happy families. speaking to some of the top executives. tim kirk, to -- schwarzman -- some of the names are granted a place near him. china does not see fear of influence and will not fight a war with anyone. lisa: we felt like there was some kind of progress. how far this goes remains to be seen. it just goes to the divide. jonathan: the pandas are coming back. tom: the pandas are coming back and all of that is tangential. robert kaplan in my book of the year is on the greater

mediterranean and it is not on china at this time, but it is all the same. the u.s. has a human rights led politics. is anyone listening? is china listening? our commercial tightening listening? jonathan: so many of these meetings are for public consumption. they want to put pressure on china to do something about pollution and this is something that china is wanting to work with them on. let's be really realistic about this. that is how this plays out. they are almost laughing to themselves because they know how this works what happens domestically? they produce solar panels and who wins?

>> i think there is a lot of skepticism about this. tom: finally. jonathan: i could sense it in your voice. ticket prices for f1, hotel room rates. the cheapest tickets selling for $119. friday, 250 nine. both are less than what they were a month ago. starting to lower expectations. we had a massive effort, but we talked repeatedly to guests who came on the program. the sacrifice of the sport. i'm not a big fan of doing these

things. i'm not going to say it is falling flat on its face, but it is not the big thing that people expected it would be. tom: i'm not going to talk card talk, but i will point at the price chart and say there was a pandemic special. everyone has changed their vision and at some point, that special ebbs away to where the next formula one is. i do not see it. i do not get it. is miami the other one? i thought miami and austin were boring. brazil was going up and down. they were going up and down versus going around. it does not even look safe yet.

jonathan: they are desperate to break america. on the bloomberg terminal, one of the most read stories. people like to follow the spectacle. tom: what a week it has been. already through q4. readjusting to get through to the end of the year. >> i have a pretty good game. but i am decent on rates as well. we have been trying to figure out and draw that conclusion

post cpi, but when you are on the hold, it is challenging. they come down and we see the market collapse in rates and we treated for five minutes. we only had a few transactions go through, so we are trying to establish a range. lisa: is it a good range for you? >> we think linear, but the world operates in a nonlinear fashion. we went through a lot of savings, into credit. now they have to pay it back. lisa: the last 90 days, walmart saw a drop-off off in consumer spending.

is that significant to you for a stock specific type of story or something more? >> i think it is speaking to the idea that we have entered into the end of the year ended has been an intense year. a lot of uncertainty around the consumer. high interest costs are finally sinking in. they are coming and they are here. tom: let's go back. where is the 10 year yield? >> around 4%. tom: that is game changing. what does it do to the work injury?

we start to see that little bit earlier. it is difficult to draw these conclusions. you look at verb very and i can give you lots of reasons why beriberi is having problems with a pushback against high ticket prices. i could say the same thing about formula one. season is over. >> i look at the second-tier data. components, labor market and singles. they were in some kind of slow down. but the underlying of the labor

market has been getting softer. it has fallen off pretty quickly. they bounce around a little bit before we get a breakthrough that we are all splitting hairs. if we know that we are going to get closer, why would the fed keep rates at that rate? jonathan: equity futures are down by about 0.2%. jobless claims are coming up a little bit later. this is the one for me. if you can make excuses for beriberi, you can make excuses. the problem with this is that i have heard from a lot of economists who think that this could be a downturn where people hoard labor, given the

difficulty they had during the pandemic. lisa: it might be a faulty indicator this time around because people will be very reluctant to lay people off. could you see the downturn without signaling anything and is a very late to the game kind of metric? jonathan: the outlook for retailers in america. good morning to you all. this is bloomberg. ♪ ♪

the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

>> your ica consumer that is exploiting different channels of spending, which creates a lot

more opportunities to get products and it creates more need to compete with big moments in time where they offer promotions. i think that will be indicative and it is approaching. jonathan: we have a retailer right now that we need to talk about. walmart is down 8% in the market. the outlook was not bad. it is about the sharp selloff. lisa: how much are people actually looking at the numbers? it was at record highs.

that is the story that is more nuanced and difficult to carry through. jonathan: going into the holiday season, to be of very different stories in early trading. tom: i'm looking at walmart and what is driving their sales. 24 inch spruce artificial christmas tree. this is from walmart and this is popping in. a detracted price. jonathan: i was very impressed by logistics and gaps are very challenging. if you want exchanges with the retailer, i did not get that. tom: he just walks over and

hands it to them. it is a retail experience. the holy cross, the college of the holy cross, the hyper detailed mathematics ratios, the financial analysis of retail and i'm not going to mince words. get his brilliance. how do you outperform on walmart ? why does walmart have a luxury goods pervade her? ? has been executing flawlessly for the past couple of years. there has never been a time in the 20 years i covered walmart where i have an this bullish on

the long-term outlook. clearly, it is interesting. it is a little bit about positioning. he talked about valuation, which is a factor. it is less about the top line and more about the october commentary. i think it is about the margin flow through. u.s. margins were disappointing. when you get a little bit of a disconnect -- i think the stock will come back, but it could be difficult for the stock. tom: can they compete with amazon? can they beat amazon? >> they can definitely compete. i think the assets really provide them and are able to provide for their customers.

can they beat them? probably not, but they can compete. lisa: when are consumers going to start pushing back on price increases? is this an indication that walmart is that the time is now and for them to compete, they have to take a hit on margins? ? covered home depot and target, macy's and they are starting. it is a lower margin product. when you have discretionary sales softer, it is really a mixed factor and it is later in the day.

it seems to be a bit of a mixed factor. lisa: we were talking about which consumers are shopping there. is there any readthrough about whether we are seeing a division between have and have not or if we are seeing any broader trends for how the consumer is evolving? >> look at walmarts numbers. yesterday, down five. it looks pretty uniform. there are pressures across the board. we get more color from nordstrom next week. i think it is pretty uniform across the board. today's numbers and reactions have nothing to do with the top line.

that is pretty much in line where people thought. tom: what is the future of nordstrom? is nordstrom a sleeper for five years out? >> i think it is a great concept. if they can get that fixed, i think -- they do not have a full presence across the country, but i think that is a tremendous asset. i think it is a viable concept. they need to get the mac fixed. low to single digits and you see

it coming down, it has been broken. business has not been good. we are not exactly sure. there have been merchandise issues. nordstrom is viable, for sure. i'm cipher not clarifying earlier. jonathan: have you noticed that it is close to the stores? >> my wife tends to go to the rack more often. the cannibalization factor of that is probably the issue here. maybe they need to close more stories. we are kind of perplexed on some of the strategies for the time being. jonathan: that is hard to do. thank you.

down by about 7%. i was thinking about coles, wasn't i? lisa: there was a question about there being traffic. they actually are connected to the same company. jonathan: i drive past one every morning. it is quite odd. socks off for does the same thing, you know. tom: brooks brothers credit roy shirt jacket, sack -- kind of a different thing. i have never been in a nordstrom rack or a nordstrom. $148 and it is selling at

$27.98. it is a 1% off. i wore that tie last night. they are like fake british. this suit. yeah. this suit is based off of a 1950's oaks brothers. he is not even listening to me now. jonathan: is that what they are? lisa: i like that you are coming to me for suit guidance. i have actually been to a brooks brothers more than other people. tom: it moves the buttons. that is what the taylor said it

moves the buttons. this is based off a 1950's suit. ♪

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>> a quickly does the fed cut or do they?

if they cut, we are off to the races. >> the fed definitely wants to continue qt for as long as they can. >> the high interest rates go back to how the fed is trying to calibrate the economy. >> the worry is the fed will not be cutting rates by may of next year but by the third quarter relater. >> this is bloomberg. tom: good morning. television. jobless claims. is this a big number? jon: the me -- sometimes i feel like you don't listen to me. tom: everyone is going, what?

nvidia earnings next week. jon: these are things that matter. nvidia earnings. tom: applelike. jon: the retail may be more important. walmart in the premarket down 6%. numbers earlier. the commentary on what's happening with the consumer. that will get the conversation going. weakness for walmart. tom: optimistic. haskett on walmart. he says they are dominant. i wonder if that's the theme. the theme for 2024 is the dominance of select companies. lisa: we have been seeing that. that's the reason some of these companies are perhaps better reads on the real-time consumer appetite than the lacking macro

data. to build on your point, the idea that consumers are pushing back. we saw that with compression in the u.s. at walmart. the larger readthrough of they might have a good view in terms of consolidating business. they are seeing a more rapid drop off in consumer appetite. tom: can we fold that into the real gdp for next year? jon: it's tough. tom: i don't have a set of data to -- of data now or forward so i can go in six months, gdp will be 2.3%. >> the best and worst thing about earnings season. you can tell whatever store you like. you can this morning. pick walmart and then talk about even the high-end income story starting to fade. the post-pandemic luxury boom is over.

you can make these different examples, but ultimately, that is what it is. >> and the parsing of earlier this week of morgan stanley and goldman sachs, we all agree it's an unemployment call, a labor call. part of that is the dynamic of claims. that moving average and continuing claims. >> we continue this expansion, we get inflation back towards target without unemployment surging. there's consensus on wall street. there is this belief still that even if there's an economic downturn, there it is. >> that could cushion any kind of downturn because people will not feel that pessimistic if they are in -- they are employed. forgive me for thinking out loud as i often do. i'm thinking to myself, if you

see nonlinear changes in consumer appetite, and walmart signaled they are seeing a nonlinear change, is that coherent with the soft landing that people are talking about? i don't know the answer. this is what is keeping people up at night. are we looking at a change with the long invariable lag? that start to take effect in nonlinear fashion? >> a walk on the wild side. 5400, the end of next year, does that pop a 32 or 33 multiple? do you get a 10% multiple expansion on walmart out to 33? chuck grommets in that camp. >> i love some of the calls. 3700 next year. futures at the moment, -0.1% on the s&p, pulling back a touch.

yields coming in above five basis points. the 10 year at the moment is exactly where it open last thursday. all the volatility in between. the narrative switching from one side to the other. this 10-year is back to where it opened a week ago thursday. >> 10 day chart. people are ignoring this. lisa, euro-yen, 1.64, it's up for big figures over a cup of coffee. the answer is the high 3:00 a.m., 1.6430. untenable. >> there's a question of at which point does the bank of japan quagmire break. >> may it's off the chart but that is what i'm watching.

a wonderful voice of how to frame out the narratives we have been talking about is michael o'rourke. decades as chief market strategist at jones trading. i cannot write an outlook now. how do you frame an outlook out six months? >> that is the key point. we are at an inflection point where people are insurer. larger? i start with what i know and believe we can count on. i believe the fed is done raising rates. that part is complete. i am looking for investments that benefit. that is why i think reits,

utilities are probably safer. the problem is when we get a weak cpi. we still have 4% core cpi. slightly better than expected. it translates. we are going to cut 100 basis points. that's the issue. it's a manic reaction that people have to take a step back. look at the data they feel confident about. 100 basis points, that means we probably have a significant slowdown. you would not want to be aggressively buying stocks. go with what you are sure about and let the noise play out. >> the following question deserves a lot of thought. do easing financial conditions slowly economy -- speed the economy up?

>> probably. the question -- everyone is excited about the treasury rally. this is where we were in september. it was the first time we hit 16 year highs a couple months ago. we are high relative to where we have been for the past 15 years. while financial conditions have eased somewhat on a lot of that rally -- i think a lot of that is noise -- we are still in an attractive bond environment where the 10 year at 4.5% is attractive and significant treasury issuance coming. it's not like a rally in the bomb -- the bond market means the profligate spending in washington has ended. people have to step back from the noise. you have to realize a lot of the

things we are looking at are the same. >> you said look through the noise and go with what you know your -- what you know. what do you have conviction around? >> i have conviction the fed is done. there interest rate hikes are done. what i would not have conviction about is the fact the market believes they will start cutting immediately because they are doing hiking. that is the issue. if you look at the trends of core cpi rates we are still trending above 3%. the fed has to get inflation back to 2%. they say that is their job. chairman powell did himself a disservice by dismissing the rejections -- the projections from the fomc. we need to get that inflation

down and without creating a significant downturn in the economy and when we talk about the slowing down whether it's the earnings or economic data that's a risk. i think powell has been on point that households and businesses borrowed at low rates so they are well-funded for the time being and that is the economy expanding but that is likely next year and to your point about jobless claims i think they are important. if we see jobless claims above 250,000, you start getting concerned, and above 300,000, you get worried. those are things we want to keep an eye on. >> we were talking about the sleeper hoarding dynamic of the recovery. can we get a clean read from these jobless claims? >> i think you are right.

jobless claims will continue to be strong. that is my signal that real weakness will emerge. again, we are at this point where we still don't know if it's a soft landing or downturn. we know that schooling and the economy is decelerating. how quickly remains a concern. i will say we have the highest interest rates we have had in 16 years. the longer we are in this environment, the more likely a slowdown becomes. that is one problem of having this policy for so long and allowing people to build these reserves up with low borrowing. >> we will focus on jobless claims. appreciate your time. futures -0.1% on the s&p. if higher rates did not slow the economy down, will financial

conditions speed it up? that's an interesting question. how asymmetric is that? >> i don't know. we don't understand the vectors of monetary policy and the implication. what do we mean by it monetary easing? the stock market going up? what i have heard from a lot of people is that stocks will keep going up unless there's a recession because ultimately people are still buying stocks. >> the theory would be this titanic four decade fear of becoming unanchored. are we unanchored? that gets back to is it 2.0, 2.5? 3.1%? that's the fear. >> you would expect to see a divergence cross asset. equities selloff. it is one to watch in the coming months if indeed you get some weaker economic numbers.

>> does it come from some fundamental concern about a slowdown? if it does, it will not necessarily lead to true expansionary types of read through this. >> i am looking at all sorts of stuff. this is beneath the radar. after the champagne broke out. you and him out -- you and i know abramowitz is an envoy of friendship. there's the leader of china. >> you are saying i am a panda. >> the pandas will be envoys of friendship. >> you are the panda of bloomberg surveillance. >> an envoy of friendship. ♪ at ameriprise financial, our advice is personalized, based on your goals, whatever they may be. all that planning has paid off.

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>> some of the most constructive and productive discussions we have had.

we have made some progress. >> what? >> yes. he's a guy that runs a country. >> the president of united states speaking to the press after talking to xi jinping. it could have been worse. he could have that started that story about being in the foothills of the himalayas. his favorite story. what's america? what does he say? possibility. it's his favorite story. >> the best part is looking at tony blinken's reaction. >> i have a couple questions.

what if he had said that early in the meetings? >> that is the way you do those press covers the spirit -- those press conferences. walmart down 5.5%. this quote coming from leadership out of walmart. in the u.s., we may be managing through a period of deflation in the months to come. that would put more unit pressure on us but we welcome it because it's better for customers. talk about the end of the post-pandemic pressures out there. we heard it from burberry this morning, who said it's the end of the post-pandemic luxury boom. a signal coming out of walmart. >> margin compression and potential deflation in the u.s. at what point are each of these stories idiosyncratic and at what point are these sending the message that the fed may be done raising rates but what we

experience might not be clean or the strength a lot of people were looking for in the bottom line of companies that have been bolstered by inflation and the fact that revenues have been going up? >> complement each other. futures on the s&p, negative 0.2%, pulling back. yields on the 10 year down. >> mcmillan is a self-made guy who has respect. they put up the text of this deflation comment by the leader of walmart. i can state this with certitude. there's not one economist breathing that will tell you outright deflation is good for an economic system. they don't exist. it's in the textbooks there's a fear. gary shilling codified this at merrill lynch. there's a fear of aggregate some deflation.

your grandparents lived in england. >> consumer pushback that we are starting to see maybe. early days. i would not draw too many conclusions, but we are getting some questions out of walmart. >> that was a huge statement. we will have more on that. look for more on that this afternoon on television and radio. joining us now, annmarie hordern, washington correspondent, from the summit in san francisco. everybody is going to pounce on here. the apparatus of the white house. do they walk back to president's statement? or will they? >> they are focused on the fact that they view this as a success. what we saw out of this meeting is very much small wins only. when you have a big summit like this, all these tiny deliverables are done and set.

the final win is the two men meeting. the point of this was that president biden and xi jinping, after a year of not seeing each other, sat down. one foreign diplomat said this is not about meaningful wins. it's about managing the relationship from getting worse. biden has called xi jinping a dictator before. he explained why. he said that's a different form of government in a democracy -- government than a democracy. >> what will our commercial titans say to the comment as they dined with the leader of china last night? xi jinping -- >> xi jinping had a lot of dovish comments. he wants to assuage the business community's concern about how gina raimondo said this summer that china is an investable. he said he does not want to

unseat the u.s. he does not want a war with anyone. he's trying to set the temperature at a lower level for the business community and i think they will mostly shrug off what president biden said as he walked out of the press conference. >> do we have any intel from those business leaders about how comforted they word that there was a changing tone toward international businesses doing business in china? >> not yet but i think it does not matter what they say. it will be actions. will we see foreign direct investment pickup? we see more business leaders and executives go to china and do business? so i think the next year or so we need to see the actions of whether or not xi jinping was able to placate those concerns but at the moment this felt like xi jinping's moment to address the business community and

because he was so dovish in these comments it felt like he was trying to forge a path forward. we have talked about this. he's dealing with a lot of economic issues and a fragile economic recovery from the pandemic. >> michael hersen was on earlier and was talking about how this is the grace period before the rhetoric starts hardening next year ahead of the election. where are the pressures now both within the democratic party but more generally within the populace about hardening the line with china? >> it's a great point. it is part of the reason why biden did not shy away from calling xi jinping a dictator when he left the press conference. he has been under the gun by republicans and going into an election year that he's not tough enough when it comes to china. this administration is engaging with china. biden has said he wants to make

sure he is managing this relationship so it does not veer into conflict, but at the same time, they kept the tariffs in place and have added more penalties when you look at export controls. it's one of the reasons why biden was not shy about saying he's a dictator but the rhetoric will heat up. you look at congressman gallagher from wisconsin, who leads the china select committee. he was part of a protest over the weekend against xi jinping coming here. he also wrote a letter and was kind of mocking all these ceos. he says they paid $40,000 a ticket to sit at that dinner. >> is that true? i did not know that. they paid to sit around the table? >> this is according to mike gallagher. he wrote a letter to organizers about how why are we selling these tickets? i will come back to you with

prices and what potentially this cost, but according to mike gallagher, this was a $40,000 ticket. this was the hottest ticket in town. >> thank you. anne-marie on the ground in san francisco, california. we would love some clarity on that issue. jobless claims at about five minutes. the estimate is about 220,000. the previous was 217,000. we will see if that goes higher. walmart down about 6% in early trading. the quote you will hear a lot this morning is this one. we may be managing through a period of deflation in the months to come. they have talked about a slow down in october and maybe raising the question of what this will bring into the end of the year. i will asterisk question to mike -- i will ask this question to mike. tony rodriguez of nuveen and

amanda lyman of blackrock. these are questions people want answers to. >> they are perfect to address that. speaking quickly, a three month annualized moving average of negative price changes would be thunder across the american landscape. it's frankly unthinkable. we see it in other nations, particularly during conflict, and coming out of work, supply-side shocks, but it would be stunning. >> how much would you pay for a ticket? >> i am shocked by this. >> the money. who are they paying? >> the organizer? >> that is a question.

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>> a slew of economic data today. we will provide leadership on that. claims, its weekly. it's important. >> especially given the commentary out of retailers about softness. if there is confirmation from jobless claims, do we see a disproportionate reaction in markets? >> as someone would say, import prices are important. claims wonder out in an elevated direction. to michael mckee. >> 230 1000 initial jobless

claims last week -- 230 1000 initial jobless claims last week, up from 217,000. not much changed. it's a significant increase of about 13,000. the continuing claims number is 1,865,000, up from 100 833. i thought we might see they -- see them go down but not the case. if you're looking for a story about the economy getting softer, you might find it in the jobless claims numbers this week. up .6%. petroleum down .2%. so it's hard to separate that out. gas prices -- oil prices coming down.

we will have to look further into that. year-over-year, import prices are down 2%, which is more than had been anticipated in more than the 1.7% last week, and we have the philadelphia fed headline number at -5.9%, up a little bit from -9% and prices paid comes in at 14.8% after 23.1%. so a drop in prices paid for the philadelphia area. >> there's a ton of data coming out this morning. lisa, i go to the 10 year real yield, now testing the low inflation adjusted yields of two days ago, the shock of 2.15%. we are not there yet but the bond market readjusts immediately off this data. >> i am looking at nominal yields and going lower on the heels of some of this across the curve, not only did 10-year but

the two-year, the labor market starting to give way on margins. i wonder, especially with the two year yield at 4.84% fluctuating, are we looking at cuts, a slowdown, normalization? especially with retail sales, that will be the key question. >> i did not realize the two year yield testing those lows we saw two days ago. i have a low of four digits, 4.8065, rounded to 4.81, four basis points away from that moment. >> to give us a little bit more color, do we have a sense of how broad-based claims are about how funky they are or if this is highlighting the weakness that seems to be applied in markets, albeit on the margins, not cratering, but maybe normalizing? >> we don't have any idea that there's anything wrong with these numbers.

it does look like at this point that we are seeing a few more people who are not getting jobs. those who are not getting jobs are taking longer to find new ones. it's not a huge sign of an apocalypse and labor market but it does suggest that maybe normalization continues, which is what the fed wants to see. >> more data today. what matters next across november 16 data? >> we still have got industrial production coming out. it's expected to decline because of the uaw strike. so you have to throw that out unfortunately. fed speak today but really not on monetary policy. so i would not expect much to change the market outlook based on what i do. >> michael mckee with us. we will continue through the morning with him. we are thrilled to have her for big events. it's always a big event when she

joins us. alan, on claims, i go to the four week moving average. how do you interpret claims with this 231,000 statistic? can you say there's a vector in place of higher claims, more pain? >> so i hope there's a higher vector in place. i disagree that higher claims would mean more pain. we are coming off extraordinarily low levels. as you said, we look at the four week moving average, and it has been lifting, but it's still very low, so what does that tell me? something mike and lisa alluded to. slowing and normalization. that is what we have been needing. i don't see this accelerating at an extreme pace. i have been on the road the last few days meeting with corporate clients. they are finally seeing some relief in terms of how tight the labor market has been in terms

of the availability of the kinds of employees they need. we are seeing noxious claims arising here. i focus on continuing claims. people who have been losing their jobs are staying employed for longer. that's been rising since october so it's more difficult to get reemployed right away. this is the kind of softness in the labor market we have needed. of course it takes pressure off the fed to raise rates, again, going on extended hold. >> what is the distance between normalization and an outright downturn? >> normalization is you have got more supply coming into the labor market, so you see participation rising, which we have. that puts upward pressure on the unemployment rate. we have been seeing that. and if people are taking longer to be able to get reemployed that should produce further upward pressure on unemployment but that takes pressure off the labor market, businesses,

margins. you see wages grow more slowly and confidence billed among policymakers that they have done enough here. i don't think we are anywhere near getting to negative job gains. negative jobs would mean companies have stopped hiring. what i hear is they are doing selective hiring. they stop hiring and start firing. that would mean firing broadly and that is not what we are seeing. but i am ever watchful to see if that's something that is around the corner. >> we were talking about walmart. i understand there are idiosyncrasies here but they talk about potentially seeing outright deflation over the next year with consumers clearly pushing back. you see margin pressure, a market deterioration in consumer appetite over -- a marked deterioration in consumer

appetite over the last 30 days. what does that say about nonlinearity of where things could be? >> we put out a survey every two weeks. one of the biggest areas of trade down households have been doing is within stores themselves, going from a high price brandy good to the generic good within the store. that means those retailers will see some deflation. we have been hearing from businesses that input costs are falling but prices they are charging are falling faster. it's important because we all started to think -- the economics community at large although not myself started to think household have unlimited price tolerance and that is not the case. finances start to slow. run through excess savings and he will start to trade down. the lower income groups that walmart serves are the groups that have been withstanding the greatest pressure. look at delinquency rates for the lowest income groups on

credit cards and auto loans. that points to stress. >> molly smith and alice atkins for bloomberg made a splash the other day using your research. the key distinction is a 4.3% unemployment rate. i hear that statistic. how do we get to a 4.3% unemployment rate that radically shifts fed policy? >> so i don't -- i'm not expecting radicalism from the fed. the unemployment rate at 4.3%, we think, is a soft landing on a point rate in that it is driven by slower job gains and higher labor force participation. i understand that's a beautiful scenario for the fed and we have them cutting next year by 100 basis points because of normalization. that's very different from cutting because the fed think there's a recession.

they are starting big and they are doing a lot and they are different from the normalization scenario. >> overlay with that from what we are hearing. coronado suggesting productivity is underestimated. do you believe we have an underestimation of the efficiency of the american economy and that gets you to a benevolent 4.3% unemployment rate? >> so i do think that productivity is being underestimated. i would add, though, that productivity has not been well estimated ever. you cannot just say it's being estimated, you know, worse than before. i am not sure we can say that. i think there are a lot of new ways that productivity exhibits itself in the economy that we are not able to capture, government data is not able to capture. if productivity is higher, then you can withstand higher wage growth without it being inflationary. it gives the fed more runway

because it keeps a lid on inflation. so it saw boats. it's productivity and infrastructure, what economists sleep dreaming about. >> a reason why people are sort of hopeful we will get that and create the soft landing and avoid something more challenging. to wrap it up, we have been talking all morning about the potential for deflation. tom was talking about how difficult that is for any economy to handle. this is the word walmart used. you are talking about normalization. how concerned would you be to see some sort of material deflation, not disinflation, in certain goods sectors that we have been seeing on the margins over the past couple of months? >> good sectors i am not worried about at all. goods prices in the u.s. have been in deflation for decades leading up to covid. that's normal. a lot of deflation. but that's externally determined. i would be concerned about a

deflation scenario in the u.s. for services, domestically determine prices -- determined prices. you're talking about an extraordinary downturn on the magnitude of financial prices in 2008 that that would get that kind of decline, declines in the level of prices. instead i think to celebration is printed -- trending. i think they should be pleased with the progress we see. >> ellen zentner of morgan stanley on the dynamics of place change -- of price change. lisa, i thought you did that well. we talk about this. we will pick this up. a quick data check with what we are doing better on. s&p, on a percentage basis, flat. lisa abramowicz and tom keene this morning. we talk about any number of narratives.

on deflation, i thought allen's inner -- i thought allen's inner nailed the massive changes you would have to see to get true price decline in america with our resiliency, with what some would call our dynamism. we have avoided this but it's seared into the memory of europe. >> the distinction between the goods and services sector keeps widening. she made that distinction well, the idea of goods deflation. service sector deflation would be harder to see, especially because the costs have gone up so much to pay for employees, to pay for all these goods. you will not see it so quickly passing along. have you eaten out recently? >> it is ridiculous. eating out in new york has become no fun. it's a simple way to put it. what i find fascinating is the idea of the dynamic nature of the american economy and what those cautious would say is

fueled by debt, fueled by stimulus, and so that fiscal boost that keeps us going is that illusion of disinflation, inflation, or would we be in japanese like deflation if we did not have all that fiscal response? >> certainly part of the conversation next year with the political outlook. i'll think it's important to see is what is good for the economy good for the stock market on the other side? >> i don't know. i do not have a theme for next year yet. email me. send a carrier pigeon. what is my theme? usually i have three. i have zero. futures have improved. negative three. bloomberg surveillance. ♪ ♪

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>> wal-mart's numbers, down five yesterday.

macy's down six or seven. it's uniform. there are pressures across the board. it is not like burberry earlier. more color from nordstrom next week. it's uniform. >> is they slow down or is it simply normalization? gordon weighing in, talking about the potential for a normalization. we will speak with ellen zentner -- we spoke with ellen zentner of morgan stanley about that with jobless claims also a normalization. no drama with the markets especially after a drama fueled week. basically flat on s&p futures, fluctuating between gains and losses, euro gaining. 10-year yield, look at that, eight basis point drop as people consider jobless claims. it's been this ongoing ping-pong act. 4.472. >> les to talk about that you

are dead on. give me some more equity. i'm addicted. the russell 2000 does not go up 3% today, if it does not, it's a failure. in the bond market, there's a subtlety here. if i was writing a banner, i would say it's retest thursday. are we going to test new low in the two year and the 10 year and there i say two point 17% in the 10 year real yield? that's more in -- more important just morning. lisa: because of names in the stock market. walmart came out with better-than-expected earnings, forecasts, albeit marginally, but then comments around a rapid deceleration around consumer spending, and this line. in the u.s., we may be managing through deflation in the months to come. those shares down 6%. target shares down 3%.

this has been a concern even as macy's outperformed from a lobar how much this is a story. it is not just the retailers. we are seeing other stories on the margins underperforming. tom: they are underperforming. it will be interesting to see. why don't you bring in mandeep singh? lisa: fair enough. there are a lot of people who don't care. did you see me as a panda rolling around after your comment? moving on. this question of consumer spending but also business spending. cisco shares lower after reporting worse than expected earnings. potentially the biggest losses in 18 months. mandeep, how much of this is a cisco specific story and how much of it is a broader entrenchment in business

development, spending? mandeep: if you parse through the print, you can see cisco is more exposed to traditional networking, and right now, every enterprise wants to invest more around generative ai, where nvidia not only provides the gpu chips but also has working components, so i think the cisco print does throw into the fact that spending overall is decelerating, but clearly enterprises have picked out areas where they want to invest in, and that is the gpu's and associated network around it? tom: i don't know beans about nvidia other than they have fancy chips and a fancy computer. i want to focus on nvidia earnings next week, which, to me, have an importance like apple or microsoft, even though it's a smaller company. tim bradshaw has a tour de force

in the financial times today about an nvidia chip. whatever it is. everybody is out there going we have to build the next nvidia. can microsoft succeed in cloning or improving upon the miracle known as nvidia? mandeep: so look at how nvidia has built its data center business. it's over the last seven years and now it's at a run rate of 50 billion. they were a gaming chip company and focused on architecture, really tried to focus on providing something that is not given by intel cpus, and i think what they have done is found use cases time and again, whether it was crypto and now ai -- i think microsoft's core business is still public. they don't want to be in the business of making chips. tom: ed ludlow works at

bloomberg technology. what bradshaw has done at the financial times. this is a technology chase. it's almost like the space program. do you have confidence that microsoft, amd and the rest can succeed in cloning nvidia? mandeep: from my perspective, you need three things for generative ai. you need to chips, you need the distribution and the llms. microsoft's llms, largely which models -- tom: that is when lisa gets angry at me. continue. lisa: what microsoft has is the distribution. what google has is all three of them. they have their own large leg model, the distribution, and they are making chips. microsoft's positioning is good because they partnered with one of the earliest ones to build that llm and they clearly have the distribution. i think building ships is not

the core focus now but clearly they want to hedge their bets. lisa: tom mentioned something that is apt, which is the winner take all type of mentality. is that what we are seeing now in the tech space and chip space with cisco being heavily punished and the incredible success of nvidia as it consolidates its power? mandeep: look at the kind of run intel had over the years after they had the cpu. they had a 25 year run and they still have 80% plus market share on the cpu side. it's just on the gpu's and that is where i feel that because a lot of these environments are standardized on nvidia they will remain the incumbent. there will be an ecosystem built around it. tom: what do you look for from nvidia next week? mandeep: just how are they looking to expand beyond the gpu chips. because we know the chip business is cyclical. tom: guidance? mandeep: they do.

tom: likely will do 2024, whatever. mandeep: that's what has happened the last two quarters, they have raised their guidance. so clearly they have a high bar. maybe they can top that again. tom: lisa mentioned this and i go back to an essay from credit suisse on this. i will not go into the electrical engineering of it, but it devolves down to very few people win. is that what we are living with, the magnificat seven -- the magnificent seven? mandeep: given the scale of these companies and the distribution they have, data is what is you need for ai. these companies all have a lot of data and if you want to constantly train your models, be ahead in terms of the ai aspect, these companies, the incumbents, have a clear advantage. there will be somebody new develops a use case.

there will be more disruption around the application side as opposed infrastructure. tom: mandeep singh, thank you so much. my brain hurts. lisa: that's tough. the application versus the hardware meaning the chips will be a higher bar but if you come up with some kind of chatgpt new version that has the programming that is much more brilliant to write your papers in high school, thank you. tom: you know this. the chips that are in here, are these new nvidia chips? are they as dynamic as what we are seeing here? are they way beyond this? mandeep: clearly a server chip is a lot more powerful than what's in your phone. so clearly what nvidia has done is not scalable because we are talking about a chip that is magnitudes more powerful than what's on your phone. tom: thank you. panda is loving the bond market today. seven basis points? we have something going. lisa: whenever our viewers

pointed out that a panda is in fact a bear so it does work. are they actually bears? tom: are they nice? steve roach, he would go to chengdu just to climb up the mountains. lisa: if you are joining, the reason we are talking about pandas and looking at pictures of pandas is because xi jinping said they would send new pandas to the u.s. for panda diplomacy after removing the other ones and seeing the boxes as they sort of were shipped off. you know. tom: this is like an outtake from blue-eyed samurai. that's what it looks like to me. on radio, television. what can i say? lisa: the panda lobby. tom: your envoy of friendship. stay with us through the day. tomorrow, a guest.

coming up, the u.s. ambassador to japan. ♪

jonathan: a little bit of consumer weakness. live from new york, good morning. 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. jonathan: live from new york, coming up, walmart delivering a cautious outlook as fed officials refused to declare victory at biden-