guy: a huge reaction to christine lagarde. maybe some pent-up reaction from the press conference as well. we are down by 2.5%. a big move to the downside, every sector in negative territory. technology leading on the downside. spiked initially on the back christine lagarde is now falling. basically the market is getting nervous so it's running back to the dollar. single stocks, we are seeing caring -- kering down pretty hard. some alarming numbers when it comes to covid cases in the data out of china i appreciate its november data pretty ugly. alix: we were picking up steam to the downside on the s&p. you could make the argument this is delayed reaction to powell that it seems more to the point that the markets are falling dust following in sympathy with european debts with europe which is getting hammered. elon musk keeps selling stock and it got a part -- price target downgrade because of margin concerns. tesla would not be spared, up by 6/10. the dollar flipping the higher. if you have a hawkish ecb maybe you have a stronge

but when alix was talking about what christine lagarde said, i thought if you erased lagarde and put in power, you would know the difference. ira: one of the issues markets are having is trying to figure out how to slower growth is going to feed into the fed's reaction function. the market's not believe the fed will do what paypal has been saying since the summer, -- jay powell has been saying since december, which is that they will keep interest rates for longer than they have previously. the market has been trained for 35 years to think that there is a fed put close to the money when it comes to and plymouth. that when the unpleasant rate goes up, the fed is going to cut. they have not been convincing that has gone away, but i think that that punt is farther out the market expects. alix: what should the two-year be trading at two tell you it is listening? ira: if the federal reserve gets up toward the 5.25 upper band, you would still be looking at a 4.5% to year yield, another 30-ish basis points from the date entered that is important because the market is pricing for aggressive c

responding to a question from annette, lagarde did say they would clamp down on inflation. >> significant rise at the steady pace means that we should expect to raise interest rates at 50 basis points pace for a period of time the second element that you have in the paragraph is the reference to a steady pace so it's significant and it has to be a steady pace which means that we have made progress over the course of the last few months, but we have more ground to cover we have longer to go and we are in for a long game >> the portfolio manager at pimco is joining us and what this could mean in market terms. of course, konstantin, it was only one piece of inflation data it is not as if it dropped off substantially. we shouldn't be surprised that the central banks still said they need to march on with this because that's what we asked from them a while ago, isn't it? >> yes, i think that's right the uncertainty with inflation remains high i think what the ecb tried yesterday was to make clear they are stepping down from 75 to 50 basis points and the market would not perceive as them taking

remember madame lagarde has said today she would lay out the principles. market wants to know when, but also the format. will she go into detail? that is the big unknown today in this meeting in frankfurt. and on that note, francine, happy birthday! tom: francine: it does not get better than a birthday present with five central banks. tom: francine lacqua's birthday, this is the headline of the day. maria, i am looking at swissie weaker against the euro. i don't know how much of that is down to francine, and how much of that is down to the ecb. talk to us about the divisions around qt. you are very well sourced on the european central bank, what are you hearing as they outlined the blueprint for this in 2023? maria: that's a very good question. as you know, these are important decisions that never get taken separately. the head of these european central bank, madame lagarde, has always talked about this holistic 360 vision. the rates and qt are connected. you could be inclined to think that if we get a smaller hike today, that qt could come in earlier. if

lagarde it's christmas from us with hawkish and is in the conference. 50 basis point move was not a surprise but she basically announced to further 50 basis point moves. you could infer from what she said that there will be movements be on that. expect 125 basis points further rate hikes the ecb in 2023. it will separate itself from the fed. for longtime you could say it was the fed -200 and now they will do more. that means the interest of rental between the dollar and the euro will narrow, which i inc. will lead to some depreciation of the dollar and appreciation of the euro. manus: let's see how high she flies in terms of those calls. christian, have a great holiday. head of fixed income and fx at union investment. coming up, we will hear from the german finance minister spoke exclusively to our very own maria in berlin. that conversation coming up right now. ♪ christian: this year has been difficult of course. we were harmed by the russian energy war, and due to our two high dependence on russian energy of course. yes, it had been a mistake but now

lagarde signaled there is more to come. let's bring in economics reporter jana randow for mark, everything we keep hearing about this decision seems more hawkish. the latest, perhaps more members wanted to go more than 75? >> we were quite surprised there was such a big number that would have favored a 75 basis point move. but it ended up being a big compromise, that had a bit of everything, and somehow strangely the hawk still managed to win, if there is a winner that is. we saw that 50 basis point rate hike slowdown that match what other central banks did over the past days. that is a clear win for the doves. they were concerned the ecb is underestimating the weakness of the economy. that inflation may slow faster than expected. the forecasted and show that. the forecasts were revised up significantly for inflation. the rate hike was in line with expectations, it was lower than before but what the hawks managed to get was a commitment that this is not the end of. more is to come, and signet can rate steps are going to com

here is the ecb president, christine lagarde. pres.ou to our press conference. the governing council decided to raise the three key interest rates by 50 basis points. based on the substantial upward revision to the inflation outlook, we expect to raise them further. in particular, we judge interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to our 2% medium-term target. keeping interest rates at restrictive levels will, over time, reduce inflation by dampening demand, and will also guard against the risk of a persistent upward shift in inflation expectations. our future policy rate decisions will continue to be data-dependent and follow a meeting by meeting approach. the key ecb interest rates are our primary tool for setting the monetary policy stance. the governing council also discussed principles for normalizing the euro systems policy securities holdings. from the beginning of march, 2023, onwards, the asset purchase program

. >> talked about the hawkish news from christine lagarde. it was on this lot survey were we talked about the bear market in u.s. stocks. u.s. stocks will start suffering again. they will not leave european stocks unscathed. they have a hawkish central bank to boot, it's not going to be a good day. thursday was a worse day for the euro stoxx date since march of this year. lower after a two-month recovery rally where they have done well. this yellow indebted line is the average for the past year. at that was interesting to note that european stocks are trading above the average for the past year. without even being to bearish, you can see they have quite a bit to fall the next few weeks. however, i am quite bearish i will say erdogan to look at the next chart. the next one is a longer-term chart, evaluation chart over 15 years looking at best estimated price earnings ratio, blended. we are talking about 11.5. the yellow line is again the average. the average net the price is time which is about 12.3 were the past 15 years. note we trade during

madame lagarde is speaking today from the ecb. we have cpi next week out of the u.s. we will see if that gives us more clarity on the direction of travel amid the recession risks. futures in the u.s. are range bound by the s&p and the nasdaq futures. still a strong rally in hong kong, particularly the tech stocks listed in that jurisdiction, close to 7% amid rumors that they will further ease restrictions from covid. francine: coming up makram azar on spac's. this is bloomberg. ♪ as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to 60% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. francine: welcome back to the open. 30 minutes into the trading day and here are your top storie

i am reeling from christine lagarde's press conference yesterday.he was talking about 3.5 percent on rates out of the ecb. alix: you are seeing that reflected in the bond market. you mentioned the ecb with the sell off continuing with them getting hit pretty hard. you have triple witching at the end of the year. guy: many people were done yesterday. they thought yesterday was the last big day. many people don't come in fridays anyway but you feel as if yesterday was the last big day. so many people are not in next week. alix: will you hold onto positions and hope that the next couple of weeks feels good? guy: it's not as if the geopolitical risk is not there. i'm starting to see a refocus on what is happening in ukraine with the potential push on kyiv by u.s. forces so there is a lot that could trip up market. we have $4 trillion in options expiring at the end of this year. given the fact that we are not clearly seeing equities feeling less good about the end of the year, believing that santa claus may not show, how bad does it get? let's figure out

what is the biggest challenge christine lagarde has in the coming 90 days?stine and -- thank you for having me, firstly. and thank you for describing the as the most interesting person, but that is for a separate discussion. christine and all the members of the governing council are facing the sorts of challenges that i think many people across europe, if not the world, are facing, which is dealing with some extreme uncertainty. i know we have been talking about that for a while. the combination of the recovery from the pandemic, the supply chain problems that we have had, the news about china that i've have just heard you talk about, the ongoing russian war in ukraine, and so one, we have a consolation of issues that we have to navigate through -- we have a constellation of issues that we have to navigate through. it is a challenge. tom: i would note ireland's leadership in growth -- it has been a growth engine, everything said and done. one of the -- the nominal gdp of america versus a lesser nominal gdp in europe. do you push against that? do you say we u

the past few months have been life changing for sarah de lagarde.azingly she survived and is learning to walk again and puts her recovery down to herfamily and a trip to mount kilimanjaro only weeks before. she's been sharing her incredible story with luke hanrahan. a london commuter�*s worst nightmare became sarah de lagarde's reality. i remember falling into the gap and into the darkness and thinking, this is not right, i shouldn't be here. i remember the train departing and i remember the train departing and i remember trying to get up but my right side didn't move and at that point, i remember looking at my arm and thinking, that arm is gone. travelling home from work in september having onlyjust recovered from strep —— having recovered from covid, sarah rushed to change trains and fell through the gap. i called out, "my name is sarah and i don't want to die." i out, "my name is sarah and i don't want to die-"— want to die." i shouted that over and over again — want to die." i shouted that over and over again and _ want to die." i shouted that o

hearing from ecb speakers today and they are really reinforcing the message we got from christine lagarde yesterday. the market coming into yesterday was nowhere near that kind of language. how bad could it get for european assets? >> if you look at the italian premium gauges the gauges how much risk we are saying in italy for example, the market is trying to respond perhaps aggressively to be message and they're finally listening to policy members who are saying we are not stepping down, inflation is the biggest goal even if session comes ahead. i don't think we will have to worry as much about session as we did just a couple of weeks ago. the energy crisis was a big concern. you have seen prices come down substantially and now other indexes are showing perhaps the economic downturn isn't as bad as we might have feared. >> it could have been worse. >> i kind of agree particularly for europe. that's exactly the message. because the economy is not quite as weak as some had feared, that allows the ecb to raise more that raises the terminal rate. that takes some of the pressure off the fed a

obviously david tepper's comments that everybody should believe the fed and calling christine lagardeear are just realistic, because we haven't heard any indications that the fed has plans of course, as always, when we look at the wcld, it moves inseriously to the a different part of the cloud sector we don't often talk about lowers levels since notify 2020. we also heard from investors themselves in general there's two choices when it comes to the cloud and enterprise stocks. either we know exactly what -- or you can do what multiple venters do we've heard that that foreign minister analysts, one focus sent simply enough it's not rate pressure today there's still about 50 basis points from the high we saw this year back in october. >> pretty interesting, mike. cloud is one of those areas where the street is trying to get ciritical. >> there's probably not enough in the way of buying interest, but it can create a general sense of support at least against the stuff that's really gotten washington out. i think that's a fair theme. there will be lucky justice -- ones that good taken out

i shouldn't have said that we were talking about christine lagarde, 50 basis points well, you then don'tay, what she really meant was 25. you kind of keep it simple you keep it simple you give away mccaffrey, and you -- >> i found tepper fascinating. i listened to every word he had to say >> i did >> even if he did say, it is what it is >> i said, please be quiet, even though i just learned her dad played golf with my late uncle i said, i don't want to hear that because tepper's on and there he was central banking. >> there he was. and he talked about -- >> he central banked >> he was very focused on the teddy bear that is how he referred to chair powell versus the grizzly bear, which is how he referred to christine lagarde. >> yes >> and he went on from there i think we've got -- >> you have some clips maybe we have a little clip? >> we have a nice clip that sort of embraces his view of both what the fed and the ecb and the boe and the boj are doing. >> wpa and the wnba and also the nfl and then cmc >> and how that translates to his view of the equity market. take a listen. >> just beca

. -- madame lagarde has made that point clear. the official policy makers saying they have no option to do anything but what they are doing now. dani: it will not be a quiet week. thank you. closer to the u.k. or in the u.k. power prices for monday jumped to record levels as freezing temperatures are set to cause a jump in demand. joining us now is bloomberg's lizzy burden. what does this mean in terms of power pricing? >> waking up to a white winter this morning. this is the worst possible timing and terms of people's energy bills. the last thing we needed. u.k. power consumption is expected to peak at 5:00 p.m. this afternoon which in turn means the day ahead has cleared an all-time high of more than 2500 pounds of megawatt power and the wind has weakened to almost zero which means that wind generated power supplies have also fallen. if you can afford to work from home today and have the heating on, it is probably the day to do it. the office has a whether -- has a yellow whether warning in place and across europe the cold snap

but christine lagarde signaled there is more to come. let's listen to what she said, oh, so carefully. >> we judged that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive, to ensure a timely return of inflation to our 2% medium-term target. our future policy rate decisions will continue to be data dependent and follow a meeting-by-meeting approach. >> and if that wasn't clear enough for you from her prepared remarks, in answering reporter'' questions, she said, this is not a pivot. there are more such moves to come. they are also going to start reducing their balance sheet in february. the tightening continues. the bank of england, led by andrew bailey, where they also hiked their key rate. their inflation has fallen a bit, but when you get down to 10.7, you need a lot more. even though they acknowledged they are probably already in a recession, they still see the inflation risk tilted to the upside. they are still ready to do more. i think it's less of a sure case wit

christine lagarde is sending a warning to the market. it is time to adjust it >> more needs to be done. as a result, new market expectations will hopefully be embedded in future projections, which indicate that we can reach the 2% inflation target. >> more work needs to be done. being joined now, from than denver, is president lagarde as hockett said was yesterday? >> that took us a little by surprise. we can see evidence that the economy is in recession. that there is probably not an immediate demand-side element to this inflation. there are wages in the u.s., or the u.k.. the danger is that the central bank starts to go a little too r. the policy work, with all of the central banks reacting to inflation. they may now be repeating the opposite mistake because reacting too late to the science of disinflation. >> do you think something could break have been the pace of these recent moves? >> it depends how you define break that's what gives you the inflation. we would like to think that central banks can find tune, but it can. they are cl

christine lagarde came out, and she made it crystal clear just in case min wasn't listening that they've go, rates are going higher in 50 basis point increments. so while he may say he doesn't care what the market does or he's not trying to bring it down, all the actions by jay powell, christine lagarde and all the other central banks suggested heavy got to take the fluff out of the system. and one of those fluffs is the stock market. stuart: look, we're at 33,000 barely on the dow at the moment. a couple of days ago we breached 35,000, for heaven sake. how deep does this selloff go? >> right. well, so, listen, you and i have talked about this. i think the trend line on the s&p right now is 3840. and if the futures hold where they are, we're going to kiss that right on the opening, and investors should keep their eyes on it because if we slice through it like a hot knife through butter, the way barbra streisand would i say, we're going to 3800, a level that i thought we were potentially going to see before we see this year-end santa claus rally. once the new year starts, slate is wiped c

but i want to say, lagarde went max hawkish. that's competition from the european bonds japan widened the band on its ten-year yield curve control and so there's competition from overseas, and i think you would make a very interesting point. this is happening just as you get the sense that inflation is cooling, which tells you essentially, kelly, that it's the bond yield is not strictly tied to the inflation outlook. in some ways, it's been negatively correlated in the sense that the higher inflation went, the more people thought that the fed was going to make a mistake. and you get this inversion out there. but right now, i think it's the -- it's a resettling or a search for a new equilibrium between global bonds, which have previously been much more tied at the hip before the pandemic, and now i think they're getting re-correlated, if that's a word. >> what would you add to that, rick how much do we interpret any kind of december moves as too much but as when people are saying, it's just a day tor two, but steve's right. how m

does that change the script for bailey in lagarde versus the fixed rate of jerome powell?oes. the terminal rate is only 20 basis points below the feds terminal pricing. it makes no sense when you have the consumer and the uk's suffering significantly. the gdp numbers we have this morning, personal consumption was down 1.1%. thus the weakest since q1 2021. but the country was locked down. nobody could spend anyway. the consumer is suffering because their mortgage payments are going up. the real earnings squeeze is happening there as well. but if you have your house and you are not going to move, your mortgage payment has not changed. 90% of u.s. mortgages are fixed for 30 years. that is a problem with the fed when it wants to curb excess demand. a problem not faced by others. lisa: how this factors into what your call is for next year, does this mean more dollar strength? there is this greater resilience to higher rates when it comes to housing and cars than in the united kingdom or continental europe? lee: that is exactly what it means. when we see divergence in the first

rate decisions thursday including the boe and ecb and a news prep conference followed by president lagardefinally wrapping up the week this pmi and cpi data out of europe but it is time for the rapid fire around running out of time but let's start with you, i think i know the answer, can the u.s. economy avoid a recession? lotfi: yes. brian: no. katie: does the twos 10 curve on inverted next year? lotfi:? yes. brian: by the end of the year yes. katie: tighter or wider credit spreads? lotfi: modestly tighter. brian: wider. katie: you guys, brian rehlings and lotfi karoui, thank you for your time. that does it for us, same time next week. this is "bloomberg real yield". ♪ >> welcome to bloomberg. i mark crumpton with first word news. the democratic led senate has gotten a jolt. arizona's senator kyrsten sinema registers as an independent today, days after democrats gained a clean majority in the chamber. her move will not affect the overall control of the senate next year, but it could complicate the party's agenda. she says she will not caucus with republicans. vladimir putin said russia ma

you are right, lagarde and jay powell have some cover coming from the bank of japan. i think the worries fill a lot more acute, particularly speaking from the european perspective. that brings it back to, what you won't be surprised to hear me say, extends to its geopolitics is the main driver of the economy and the investments environment. tom: help us with the geopolitics christine lagarde has with the war that is basically unmentioned in economic talk. i do not fault her for that. overlay a continued war overnight, ukraine attacking over the russian border. tina: central banks do not explicitly incorporate geopolitical criteria into their analysis, which is why you're not hearing too much talk. it is the most difficult variable with a constellation of factors they are looking at. we have been lucky so find that russia has not escalated -- so far that russia has not escalated and used unconventional weapons. knowledge of the potential risk -- no it is a potential risk. ukraine is being told everyday not to fire over the order. the next three months it will be the wo

from the ecb a year ago, lagarde told us pricing rate hikes was premature. onto hike 250 basis points and set a few weeks ago there is a series of 50 basis point prices in the cards. the rba this time last year had said they are years away from hiking. but i am looking for a snazzy acronym to sum up this year, so if you come up with any good ones, let me know, francine. francine: if you look at central banks, they started saying we will be fine, it is transitory then there is all these mea c ulpas. >> they left us with nowhere to hide, a lot of traditional hedges broke down, the big one being the 60-40 portfolio that a lot of pensions and had funds track. it is down, this is a graph of yearly returns going back to 1990, you can see how stand out this year wise. why, because stocks and bonds fell together in a momentous way that we really have not seen probably since world war ii. a lot of this is posing questions that got everyone nervous about where to hide in this crazy year. and whether this will extend into next year, we will get to see. francine: hcb, h

talking about 50 basis points super hawkish, christine lagarde doubling down on it.nd you have some potential upsides, what does that wind up doing. melanie: we now expect four hikes next year. so we agree suggested that there was how they understand the stable comment because they need to sustainably and have a stable hike over the coming months. and she suggest that's 50. so we see those over the coming meetings. inflation is started to turn and we think it is further to fall. with ink it will pivot further to 25 basis points. that takes the deposit rate to 3.5%. it is shockingly high. we've also downgraded our growth forecast as a result of that and bogs down the inflation forecast as it will have the tightening affect consumers. guy: it is going to affect different economies differently. 3.5% for germany is one thing. where are you going to watch next year to get the best understanding of the impact policy is having. >> when it comes to loans because the eurozone economy it will not be the same especially the big four and the likes of spain and italy, so there th

a hawkish christine lagarde following the latest decision. let's get more with james.hristian linder sees inflation as the number one priority. is he going to get good news next year? is inflation going to come down to such a level that we can stop worrying about it. >> i forecasted looking at inflation coming down probably not to the level most central bank will be overly satisfied with. it's worth flagging some of those down. not necessarily just with energy prices but look at goods prices in the u.s.. some of these easing up supply chain challenges starts to pull down some inflationary pressures. consumer demand being weaker. maybe that takes some price pressures out, how weak does consumer demand get it is that enough to bring down inflation. we are seeing some of that u.s. data alix: -- in that -- some of that u.s. data. alix: how much you think u.s. inflation will come down versus eurozone? is that all the consumer play? james: energy is the important one. we had some good news on german ppi this week but it's still very high. if your european business are seeing

designed to make policy more sustainable, but do you think his hand was forced by how hawkish christine lagarde was the other day, how hawkish jay powell was the other day. are they surprised other major central banks are pushing as hard as they are and as a result they had to take action? kathleen: it may be a little more complicated than that. if you have been listening to the fed and you are a central banker like mr. kuroda, you might not be surprised that they are remaining hawkish because of high inflation in the u.s. political pressure, wiki n is very unpopular among the japanese people and some conjecture that this was a pressure that was put here just to put a little relief there. those approval ratings are way down. another reason they are probably looking at someone to a wing who can carry the policy forward who will take over in april who is more in the camp of look, we have got to drop the extraordinary stimulus, start removing some of the liquidity. in fact the government bond market is owned 50% now by the bank of japan and that's of increasing concern as well. alix: absolutely. a

guy: in a timely manner, christine lagarde speaking at a conference in bangkok talking about inflationxpectations. she wants to see those inflation expectations being anchored. that is the single needle in the ecb's compass, inflation. we had a conversation about ukraine, potentially in the offramp for russia. we have to factor in what is happening with china. let's talk about what is happening with the euro. joining us is kit juckes, cheek -- chief fx strategist. let's go to the euro for a moment. most of these conversations start with the dollar but i want to come from a different angle. we went from 95 to 10 five, that is a decent move. is that dollar weakness or is that euro strength? kit: it is both. i don't know how many outlooks you have read, but terms like soft landing might have turned up. the dollar is moving toward the middle, this delightful place. i might as well call the dollar the grinch and the euro santa claus. that is a weaker dollar theme which can only go so far because it's days numbers knock back a bit. we have cpi numbers next week which could do damage. the eur

read writing for you on the notes ways and get a wrong, what is the risk of a trichet mistake from lagardehere they have to ramp up and rollback and very quick succession? what is the risk of a trichet take-two? >> 25 to 33% something like that. that is the normal risk that there should be for the 20 years we've known them. manus: [laughter] dani: i also love that perhaps the market is getting used to ecb mistakes that you write. biting words. thanks so much for joining us. we are out of time. mads pedersen human edge investment technology each it's intending to reach a deal to cap gas prices. we'll bring you more about that meeting. this is bloomberg. ♪ manus: let's get you some first word nudes. >> former ftx ceo sam bankman-fried has been arrested in the bahamas after u.s. filed criminal charges against him. a new york attorney says the arrest was made at the request of the u.s. government. more than 100 ftx related entities filed for banker see last month and make been freed as facing investigations into a range of possible misconduct. china is warning that it faces a steep surgeon cov

lagarde has said they want to be measured and predictable. that may mean they turn to mature debt roelofs, instead of reinvestments. they might also cap reinvestments. there are still tools in case things go wrong and they roil the markets perhaps pushing things from the pandemic bond if things go awry. tom: excellent preview of the fed and ecb, michelle, thank you indeed. now to the make of england, and the boe is likely to slow the pace of interest rate rises today as it balances risks from high inflation with concerns that overly aggressive action by unnecessarily deepen the recession. joining us now is u.k. correspondent lizzy burden, investors are looking at a have point hike. it is a conundrum for the boe. >> that's what we're expecting to follow the fed, taking the key rate to 3.5%, the highest in 40 years, but the smallest hike of 75 now seems like a one-off. we have got 10.7% inflation in november. it is proving persistent even if we are past the peak it seems. there are predictions you could see a four-way split for the first time i

guy: when christine lagarde sounds hawkish, jay powell some talk as come you do not believe them?: i do not think they will be able to hike to much more, they will not let them. the equity market, the rates market in particular has not been pricing in this extra hawkishness they have been coming out with. alix: basically, you infer you believe them, but the economy will be so weak harry: it cannot deliver. harry:they might deliver on some hikes. certainly, i think the rates market is going to -- got it broadly right. they will not deliver on all of them. this is the point as the debate ships into next her, markets become more focused on the other side of the mandate, increasingly contracting earnings. guy: is this a soft landing? harry: we will see retrenching in the manufacturing sector, housing is in a lot of trouble. i think we've got mortgage rates in the u.s. of 6%. guy: it was seven. harry: it was a massive rate shock for hiking. it all feeds through to a negative world effect. it dampens spending, dampens appetite for credit. we start to see a private sector that begins to

now, we got a little help -- or the bears got a little help this morning from christine lagarde whenid something like, the market is clearly underestimating how high we're going to have to raise rates to cut inflation. that scared the heck out of everybody in europe. and the yields on european bonds began to spike we already had weak economic data here. we were softer that led to these lows that spike in european rates led to these lows. now, i don't mean to hog up the whole thing but let me get this out because today is very important. number one, you got to try to hold at 3900 level if you break 3900, be careful as to how the rest of the day goes. if it develops into washout selling, that raises the possibility that you could get an extension to get new selling on not friday, but on monday and tuesday. so, if you've been doing this 60 some odd years, as i have, you get to see these patterns develop. nothing certain about that that's, at best, a 10% risk. but watch how they close today do they hold 3900? do they get a late-day bounceback if they, in fact, you get a washout day, you

the president of the european central bank christine lagarde saying the sentiment is not to give up on the inflation fight, but continue to press on we saw pmi numbers come out today. yes, better than expected. still in contractionary territory. fight against inflation is not over in fact, some of the ecb council members are saying 50 basis point hikes may be possible in february as well as march. the first quarter still more hikes are possible down the market goes for now a lot of it based on the interest rate action >> all right arabile, thank you very much have a great weekend. >>> let's get to the top headlines happening on this friday with silvana henao. good morning, silvana. >> good morning, brian let's start with twitter it is suspending accounts of half a dozen journalists all of whom covering the platform and elon musk elon musk says it is because they were reporting the location of his private jet something he felt was a risk to his family safety. the move comes a day after twitter changed rules surrounding accounts that track private jets including one owned by musk. >>> a

nine trillion dollar bubble created by jay powell, nine trillion in europe, created by christine lagardethat has to be worked off. i think we're in the midst of it right now. the greatest growth stocks in history will be technology and medical and medicine going forward. it is not the right time right now. i still think we're in the throes of big institutions selling stocks into the market. i think you have to be very wary near term. lauren: patience is a virtue. gary, senator elizabeth warren tweeting about chair powell's she calls it his extreme interest rate hikes. it feels extreme to a lot of people, pushing our economy into a recession that cost millions of americans their jobs. she continues, the fed needs to remember it has a dual mandate, fight inflation and protect jobs. do you agree with her? >> about 99% wrong and i say that because look, i've been one of jay powell's biggest critics as far as printing too much money but his job right now is to tighten the screws but let's not forget elizabeth warren and friends massive record deficits, massive record debts, massive record fed

we will get christine lagarde. she is talking at a systemic annual risk conference. what she will say about the balance of risk, does she start to push back against some of the easing of financial conditions perhaps more aggressively than the united states, will be interesting. we are not seeing the weakness. that's the one spot that keeps coming back. disinflation in other areas, wages, the need to hire, the ability to hire. that is still a very tight labor market that puts a bit of a floor under how low inflation can go. jonathon: payrolls on friday. wages up, pay low growth in a week -- payroll group -- growth weakening. lisa: what's going to cool it off, given it is a big component of the cpi index? i have been so interested in the retailer index. these companies have had different faces. lululemon is down 4% or 5%. do you where their suits? jonathon: not a chance. how dare you. lisa: they have men wear. jonathon: i understand this has become part of the midtown uniform. you where those pants with a long shirt. i hate that. but what has costco got to do with that

christine lagarde said that they're going to be raising rates more than what the market anticipated. they had laid out a plan for qt, which will start in the second quarter. while it's going to start very slowly, at only 15 billion euros a month, it's likely going to pick up thereafter in q3, q4 so you saw 30 basis point increases in some european bonds, and that's rather sharp, so i think it just reaffirms this global monetary tightening still has a ways to play out >> bob, what are you hearing from traders do they want the fed to stop hiking, start cutting? what do you hear >> sure. look, 2022, the story was about inflation and figuring that out. 2023, everybody is obsessed with the recession and what side of the recession debate are you on? so the soft landing crowd has had a lot of currency in the last few months. and haas why the stock market has lifted to the extent that today is about the soft landing crowd basically losing a lot of talking points, that's a good reason why the market is down, in addition to what peter is talking about on the ecb so, again, you go back to this

listen, the ecb, this is the one week picture we could show you two days galore, the e cb christine lagard said just because she went from 75 basis points to a 50 basis points hike yesterday, she said "this is not a pivot, this is not a slowdown" which leads at least some people, some investors to fear that we might face a global recession. where do you stand on that? >> i think the risk of certainly a recession in europe is already there, very very high , and in fact, we saw at the jackson hole meetings back in august, which i was at, you know , the meeting was sort of book-ended by jay powell's eight minute 34 second speech where he said listen, it's price stability, over full employment and the fed now believes the non-inflationary rate of unemployment is higher than it once was at 3.5% that they were able to get down to pre-crisis. that's important. the other end of that was the e cb who basically said we need a recession in order to derail what's becoming a more systemic inflation and i think that's not changed. the message has not been reached by financial markets though. liz: well,

if you look at the global factors, look at christine lagarde saying the european central bank will havee to tighten as well with a weakened euro and higher energy costs, this is a global issue and we have to wade through rocy -- rock hey waters. maria: markets are down this year. we're about to end 2022 and we're looking at a decline of 30% in the nasdaq, almost 20% lower for the s&p 500. do you see opportunities going into 2023? how do you want to be he positioned, rebecca? >> yeah, it's a great question. it's so difficult right now, maria. we're still to the bear side. we see pullbacks and corrections coming. s that's because we just absorbed so much stimulus after corona 2020 and because we don't have fundamentals back in order, we don't see that opportunity unfortunately in the short or near term. we're still looking at hedges to protect wealth and until we get through the worst of this and so for that reason we're to the commodity side and avoiding risk acetassets right now. maria: this morning yields are higher, 10 year back up to 3 and-a-half percent, mortgage rates are at 6.42%.

i'm not so sure, to be quite frank with you, the ecb led by christine lagarde had any credibility atll. the irony this move may gave them less credibility. i have a minute to go. >> charles -- charles: wall street, fed everyone is ignoring all the signs last week that maybe inflation, then inflation is coming down. i mean, so do they even trust their own work anymore? >> i don't think they do anymore. they have been so wrong looking at share own forecasts they're looking at another mistake. in turn they were not looking ahead in predictive way, multiples were wrong. they made a mistake. now they're trying to repair a mistake, charles. you're right, they're going to do another mistake. they will be very late, driving the car looking into the rear view mirror. they will hike us into recession and be very, very late repairing their mistake. macro investors it is not about what central banks should do but what they will do managing our portfolios. right? charles: you have to work around. al, one of the best. thanks for chiming in on the conversation. >> charles, always appreciate it. cha

christine lagarde is giving an address. a sixth annual conference. does she talk about the prospect of over-tightening? does she pushback against some of the recent easing and financial conditions? does she reiterate what we heard from chairman powell or does she press on, saying recession will not bring the market down to where we need it to be? seeing softening and a little bit of a tight labor market. lululemon and costco earnings. i need to put out a correction. lululemon does put out suit jackets for men. i think you are asking about where you could find suits. i would just like to point that out. [laughter] costco is also reporting earnings out of -- after the bell, down about 50% year to date. do we see a downshifting and terms of upper-class and middle-class consumers going to lower cost companies, grocery stores, goods as they face inflationary pressures? jonathon: i've heard a lot of comments from people. no chance, blasphemy, sinful stuff. lululemon suits. we are going to keep talking about this. anastasia amoroso, great to catch up with y

so you got a german ten-year bund trading at 250, and lagarde's going to 3%.re, the same thing in the united states, two years trading at 425, and it's hard to understand why it's not 480 and what's kind of interesting about -- i was just going to say, what's kind of interesting about this is the stock market seems to really believe the fed. >> yes >> and it's the bond market that thinks it knows better. >> is it that they're getting to 425 from us going up to 5 and then cutting 75. is it getting -- and is the stock market telling us it's going to be so bad that the fed is going to go all the way to 5 or whatever their end goal is and then have to abruptly reverse course because the data's going to deteriorate so quickly. >> now you're in a hall of mirrors trying to figure this out. the fed has said higher for longer, steve's right. why shouldn't we believe them? they stop at 5%, and they're still at 5% at this time next year, which is what nobody wants to believe, i think. that's part of the cognitive dissonance everybody's got about this i tell you how i kno

last week christine lagarde, head of the european central bank and a very smart person, said she might have to do three 50 basis point rate hikes. the bank of japan indicated they may have to tighten. all these central banks they own a had the lot of bonds that's going to push up interest rates. every time you he see high economic data like the revised gdp or strong jobless claims it's obvious the friend will have to keep bringing -- >> the house of pain >> -- along with its compadres in the rest of the world i try not to be too binary in my thinking because this is a weird moment for the economy but wall street's perspective is very clear. the bull scenario is that employment gets weaker, spending declines and corporate earnings don't get hurt too hard. the bear case is that employment stays strong, spending stays strong, and the earnings still get hurt again, that's from the perspective of the stock market. if you don't own stocks, the bear case might be better for you. today david tepper laid out the bear case. and you know, by the way, he's genuinely a very smart non-permabear. he'

sarah de lagarde was at high barnet station when the accident happened in september.cially because in my mind's eye, i could see my my daughters. i know that i texted them before and said, like, i was going to be coming home. that was what kept me alive. keepers at whipsnade zoo have created a winter wonderland for their asian elephant herd, including their newest arrival. baby nang phaya is three months old. her name is the thai word for queen — a tribute to elizabeth ii, who fed the elephants on a visit to the zoo in 2017. travel now, and this is how the tubes are looking... there's no service between south harrow and uxbridge due to a signal failure at rayners lane. there are also changes to some services on the overground between gospel oak to barking riverside. a good service on all other lines. now on to the weather. good morning. it is a very cold start this morning. the temperature is going to get colder. today we have plenty of sunshine, albeit for a little bit of cloud first thing. that cloud sinking away south, becoming brightly plenty of sunshine through t

the other thing about this is, i'm not sure the market takes into account the situation that both lagarde and powell are in. you are central bank president with inflation running, core inflation at 6%. you cannot sound dovish in any way, shape, or form. you have to hold the line and be as hawkish as is reasonable in those circumstances because you are triple your target rate. you got down to 3, 4, 5, then we can talk but not at 6. >> i think the market expected him to be hawkish and i think he was kind of, but it wasn't extreme. steve, thank you very much appreciate it. >> fair enough. >> for more on the market and the economy, let's bring in paul hicky and neildada neil i wanted to talk to you today because you've been a bull on the economy i'm wondering if anything has changed as the data has come in weak. >> has the data come in weak if you look at the atlanta fed that puts this together, q4 gdp tracking is close to 3%. and that's important because the consensus if you look at blue chip is at 0.5%. there's significant upside risk to the consensus and by the way, i think the consensus i

don't, in my opinion, the market route is again, a no-confidence vote on jay powell and christine lagard. joining me northman trader.com founder sven hendrix and overall , just your overall thoughts on why this market right now continues to sink the way it's sinking. >> hi, charles. a couple of reasons one is technically reactually hit a major resistance at the beginning of the week the market was rejecting from that and then it's just one bad news item after another, as the economy is rapidly slowing down. keep in mind, all the rate hikes that we've seen so far this year , including the one from this week, they will take months to filter through this economy, and it's going to be a hard, hard slowdown. this year, originally the fed had forecasted a less than 1% fed funs rate. now we had 4.25% and had forecasted gdp to be at 4%, now it's kind of limping at maybe 0.5% with a median funds rate of about 2% for this year and now they are asking everyone to believe that next year, we're going to have a median funds rate of close to 5% and still have 0.5% gdp growth. it's not believable, and i

we heard from christine lagarde who said that banks must ensure cpi remains on target.listen. >> the fiscal division can exceed 3%. starting next year, it starts to come back to below 3%. this is under the law. these last three years, the central bank has also [indiscernible] when we are seeing the global spillover from the war in ukraine, one, the fiscal giving more subsidy with some part of the financing of the central bank and we are debating with the best delivering the subsidy. the treaty is very important. fiscal subsidy for the social program or some part of the price subsidy, we are facing high commodity price and energy price from the global, and then we allocate more on the price subsidy and some part of them from the social program, thereby with giving subsidy [indiscernible] this is what we have. some sort of cost for direct transfer from the social program . the two of them will have direct impact. all of them do direct transfer. of course, the policy of the central bank will be safer, so we are grateful for more subsidy . second, on the monetary policy, of

australian has been deemed lagarde in the race for net zero but the country is poised to become a cleanrpower. one of the firms is the fortescue green energy unit. joining us now is mark hutchinson. good to have you with us. not a pipe dream, you say it will be a reality but it is about scaling. how do you get there? mark: we have to figure out where we get the best quality and cheapness of power. and we use that to convert to green hydrogen and ship to places like europe, singapore, japan, korea. haslinda: it is really about the infrastructure that needs to be built. demand is searching. how do you -- is surging. mark: demand is here today. we could sell it, you are absolutely right. making hydrogen at scale will be our biggest issue but we think it is doable. i think it is a lot of the components of how the inference rupture is already there. when you get the power from hydro or wind or solar you then have to convert it to green hydrogen. that is kind of a new process and that is the biggest from a technology perspective. then you use existing infrastructure. you can use lng infrastru

christine lagarde said very clearly don't think that a 50 basis point downshift is a pivot because we are going to do many more in the time ahead. they also announced tightening for next year letting the balance sheet starting to run off. that also adds some tightening on the edge. it seems inevitable central banks around the world not only because they see their own inflation slow to come down in many cases, but because they see their central banks like the fed still moving it puts more pressure on them. these three seem all in tandem now. >> u.s. retail sales coming in weaker than we expected for november. is this building a picture of weakening demand? >> it very well could. these retail sales numbers are very subject to revision. however, what we saw down the biggest drop in 11 months. this is not quite the holiday shopping season, it's the preholiday shopping season. retailers are cutting inventories because they are building up. manufacturing is weak and that's the part that i meant to say not down before the pandemic so it's another sign that if the beginning of the kind of slo

lagarde could raise interest rates to 3.5% or even higher to fight inflation. to have a stronger effect on the weaker areas in europe. so it's hard to see what impact it would have on the euro just because you've got issues around italy, and this time there's going to be no rescue package, because the focus is still on inflation. >> inflation, the energy crisis also continuing in europe, where where does that leave commodity currencies? >> next year, when we look at the canadian dollar, we think that the australian dollar, from an economic perspective is on a stronger place into next year. we both know that sterling -- that the new zealand dollar and canadian dollar, in terms of structural deficits, are pretty wide. they also have a high debt to gdp as opposed to australia. going forward, there will be a differentiation into probably the second half of the year. as we speak currencies move and turn more towards a fundamentals in which westerly will be supported. >> good to have you with us, the head of fx research at anz. up next -- we will get a preview on the

lagarde is consistent they have to go with inflation first, growth second., inflation data is slowing again. of course, the central bank feels they have to move. because of the benefits, wage gains, they have to keep a lid on that. similar for other central banks around the world. switzerland, norway, also making decisions today. all these central banks are saying, just because we are slowing the pace of the rapid tightening does not mean they are finished. as we head into 2023 it feels like mortgage rates on borrowing costs are still going higher. >> the question is whether inflation has peaked. also, even if it has peaked, what are the risks to the upside going into next year? >> i think that it has probably page. a lot of comments say look where commodity prices are. the food story has eased up a little bit, oil prices. in the u.s. this week we look at core inflation. you can argue inflation has peaked. where will it settle? just because it has peaked does not mean it will come back to the targets were central banks wanted. that's number one. number two,