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tv   Bloomberg Surveillance  Bloomberg  December 5, 2022 7:00am-8:00am EST

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>> >> >> more cuts will happen in 2024. >> what matters is spiral >> this is bloomberg surveillance. jonathan: a long weekend.
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she told me on saturday that she is too important to work mondays and she was just going to do tuesday through friday. tom: we are doing this. it has been an exhausting year. every month has been like the last three weeks of december. can we get onto the new year? jonathan: futures are down. we have cpi on the 13th and the federal reserve. tom: i'm hearing that this monday does not matter, but i do not buy that. i have a bond market moving and it is screaming the combination. the index is -.483.
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and it is going the wrong way for chairman powell. hope-ium. i like that word. jonathan: he was basically told that it was up. what did he deliver? what many deliver as the greatest hawkish hits. tom: you mentioned this at the top of the last hour. people confounded by the resiliency of the market. jonathan: the idea that stocks were down and yields were up on a two-year off the back of a blowout jobs number. i was expecting more than that.
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tom: i agree that the wage growth focus is important. steve will be with us in the 8:00 hour. we will have the video for you later. that is a merck. one of our best guess said the language from the 60's. jonathan: your 10 year yield in america shaping up as follows on a 10 year right now. where are we right now? that is a turnaround. tom: it shows them related to that weaker dollar.
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jonathan: thomas kennedy is about to my it up. we start there with chairman powell? where was the pushback that we were looking for? thomas: it was basically the same except to the point that he did not push back easing conditions. we do not see the reason for him to get off that financial conditions merry-go-round, if you will. conditions happen type for about nine months. it will take time. by the way that we will look at it and frame a framework around it. it will take time. if we are right and this continues into the middle of the
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month. jonathan: first part is that you decelerate. where is the second part of that story? thomas: being purposely humble there, but it is close. it is not necessarily that conditions have not moved. the rest of the economy is not following suit. tom: good morning. frankly, i invented this for people. you have 55 pages out. i will get to that in a moment. you guys have 55 glorious pages.
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how did you do this year in the first bond market ever? a balance of still -12%. thomas: 2022, a tightening of conditions. someone like my father was in the business 30 years ago. tom: what are you laughing about? jonathan: i'm just smiling. thomas: we experienced a painful year. it has proved as well. we had to pivot as well. tom: is jamie dimon and on the meetings?
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thomas: he is invited every time. tom: weaker growth and stronger markets is the conundrum that our viewers space right now. thomas: the tightening of financial conditions. when does the bond market, when do the rates peak? are we close? we think that we are. the next point becomes, we become forward and move through this economic pain quite quickly. i think there are a lot of challenges. it is not suggesting that they will not see price pressure, but they should outperform. jonathan: it is not just the
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equities drop. they were the epicenter of what was happening in equity. we are at 350 right now. thomas: it would be the cause of economic pain in the year ahead. everyone will be out questioning how severe that will be, the merits of a financial crisis are not there for us. marcus will be able to respond on a moving forward basis. when you look at bonds, across the whole platform, you have a triple threat.
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you have a price appreciation. you had bond prices at 105. to your point, our clients are under invested in this asset class. that is my job, overly simplified. tom: you sit at home and read like six papers a weekend. there was a great housing article out of dallas. what are you reading from your federal reserve system? is it housing that has your interest? thomas: it is the resiliency of the consumer. tom: can we recall -- can we say
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that is the missed call this year? thomas: the excess savings conversation, from our perspective is starting to run out. by the time we break down the data, we are close to exhausting the savings. maybe i am talking to myself there. the last part is the duration of tightening conditions. it takes time. it does not mean that it would not happen. tom: you were weaned on 6030 or 60/40. thomas: i think you can de-risk this conversation even further. tom: you are going to de-risk
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the conversation? thomas: we are talking about bonds under invested. we want to focus on where we can find security and stability. vulnerabilities and supply chains. robotics and infrastructure. also, security. it is showing some vulnerability. jonathan: you're going to get in trouble with the fed calling them all geeks. tom: i remember 20 use ago -- come on. this is really important stuff and i do not have the material in front of me.
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there was a definitive article on housing a couple weeks ago that was really important. you lived this with dudley. you had to keep track of all of this. what i know is we have a plan to the middle of january. jonathan: it drives me nuts. do you think that the new york fed misses dudley? tom: i would not have expected anything else. jonathan: you do not have to answer that. futures down one third of 1%. this is bloomberg. lisa: keeping you up-to-date with news from around the world. keeping oil production unchanged.
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reflecting the unpredictability of supply and demand. they have implemented the 2 million barrel a day. european union sanctions coming into effect today. authorities appeared to be shifting away from the strict zero covid policy. the loosening of restrictions comes as they introduce downsizing. that is the lowest level in almost two weeks. rejecting and offer aimed at a strike action. the union says that was conditional on a number of changes, including job losses to get offices. one of the investors in a new
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investment bank. considering an investment of around $500lion. they are spinning off the investment bank following scandals and huge losses. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪
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>> the labor market is strong and we are still an unprecedented territory. i think what that has to tell you is that we have a long way to go to get inflation down to where the fed has said that it once it to be. jonathan: rebalancing is a big effort. equity futures down .4% on s&p 500. yields are higher by a couple of basis points. 82 dies. we are positive. tom: a lot of talk about opec-plus.
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jonathan: why do you have to keep do that? why do you have to keep bringing that up? it is just rude. i am still bruised and upset about that. tom: the guy from france is doing well. what we know is that there has been a lot of talk about oil. joining us from our shockingly competent team. i want to bracket the price right now. if i am in riyadh and a functionary for the elites who have to figure out what to do with oil, bracket from $88, what is to cheap for saudi arabia and where does it get to a good price for them?
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>> i think that bracket is movable and i think they want what they can get without tipping the world to faraway in the short-term or in the long-term. clearly, they would like prices closer to $100 a barrel as opposed to 75 to $80 a barrel. even this price level, given that saudi arabia is producing as much as it has ever produced, this is not bad for them. it is looking pretty healthy. jonathan: what are you expecting from the meeting? >> clearly, a chinese opening is really good for producers.
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it will have a positive impact on demand. how positive will depend very much on how quickly china reopens and how quickly the industry gets back to normal, how quickly people start to travel. that could be some time away. it will depend very much on the overseas demand for chinese manufactured goods. it does not help so much if china recovers and the rest of the world does not. we will not be buying the stuff that the chinese industry is making, so it is part of a healthy picture, but it is not the whole deal. looking ahead, saudi arabia and other producers have come under increasing pressure from discounted russian barrels
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trying to find a new home after being shunned by europe. we might see an attempt to try to strengthen that relationship, in terms of oil sales from saudi arabia and into china. jonathan: wonderful. i think this is the conversation , how this oil market responds. tom: i totally agree. 11 months ago, it was delayed. i agree it is the debate and factor in oil. head of research. how does china fit into your 2023 hybrid -- carbon calculus?
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>> there are other questions as well. right now, the chinese refiners are back in the market. that could be a day balancing factor when russian diesel gets impaired. not with today's embargo and price cap. tom: what is the case of -- state of distillates in america that clearview sees? >> we are less short than we were, but still quite short. this is alarming. it is not just transportation fuels at risk, but home heating fuels. you have a big hole.
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the rest of the world that used to use less diesel because they could get it from russia will be bidding for the same barrels. tom: take us away from the political debate and give us the most micro theory of what it means for a gallon of gas. >> it means you are essentially adding supply that was not there before. it is almost. there are questions about whether or not it displaces investment. we have been doing it by 235 million barrels. it could crowd out investment and have a long-term effect on
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supply. tom: now we are 20% under that. why invest? >> if you look at their performance, the slope of the rise is much flatter. substantially flatter. that is despite a much steeper price. jonathan: he is on the spot. kevin, thank you. this was brilliant. we are catching up with senator cassidy and the louisiana in about 20 minutes time. we will talk to them about some of this. tom: he is -- with respect to his public service, he is different than most politicians, which is really cool. jonathan: he does not sound like
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a politician, is that what you are saying? tom: he had a day job before he started doing it. jonathan: it is the oil story when it comes to the conversation. tom: public policies went down to voting defeat. they were so angry. the answer is that there is no american oil policy. we were saved by technology. we did not see the shale revolution coming. technology gave us the comfort. jonathan: you remember the conversation. do you remember that? it completely changed the conversation.
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tom: there are these one offs if the plug-in that upset -- that is why we need a little bit of humility here. jonathan: you have said it all morning about being too cute. when are we pivoting? is that the bottom of the equity market? 10:00 p.m. let's talk about that in a moment. futures down .5%. ♪ to keep in the family or passing down the family business or giving back to the places that inspire you. no matter your purpose, at pnc private bank,
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jonathan: live from new york city this morning. it markets are shaping up as follows. down .4%. no real drama as we kick off a brand-new trading week. the idea that we had a monster upside surprise running down .1% at the close. we do have guests. two year yields were up? tom: i would not.
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where we are now from june or september, the dow statistically is flat. this is in correct the phase. 4.3065. just around things out for an, we look at something like this on the euro-dollar. we caught up with the governor of the bank of ireland who is talking up. a technical recession is the word that he used.
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it is about how you let the balance sheet rolloff. tom: who is that infant? he was there with a trenchcoat. all this microanalysis. it was good. it is. this is a very important conversation. suddenly, we are hearing people on and off camera talk about liquidity concerns for 2023.
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she is a pro at this. when somebody tells you whatever their angle is in the street that we are headed for a liquidity crisis or attention, how do you respond to that? >> it indicates to me a very big drawdown in the quiddity. we are headed into a liquidity crisis -- that is mature. where is there still cash.
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there is still a lot of cash in the system. tom: the solution is that they will want more cash. are you going to see a global cash call, because the way the cash -- because the way it works out is you have to put more cash in? >> there has been a push from a credit fundamental standpoint. they have been hired cash balances for the past 10 to 12 years. from an investor perspective, what we are hearing from clients is 20% cash. jonathan: do they need to rethink where they need to go?
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>> hardening recession, the difference but outcomes are -- spreads are gapping at the widest level. they remain year elevated levels. a balance sheet recession is a little bit more tricky. you see more dispersion across the my -- the market. jonathan: are we going to say that finishes with 500 basis of spread widening gone? is that it? blow up decade's worth of stimulus? >> it is tricky. we have seen a lot of cash going into direct lending. they tend to be a little less equated.
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so what we are looking at is the much has become very dislocated from the rest of the high-yield market. the nice compression that we have been seeing, they have been left out the cold last few weeks. tom: why isn't lisa leading this? there is this spread in the dynamic market. are there going to be trouble companies and trouble institutions?
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>> absolutely. we are seeing some pockets of risk coming apparent. health care is a great example. the next 12 months will be absolutely pivotal for those companies. they could fly the skin of their teeth. tom: this is the nitty-gritty. the bottom line is that they have to restructure their debt. >> at current operating profiles, yes. tom: what are the constraints that they face? >> the reality that both of these companies have been long-term challenges in the credit market.
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they are very familiar with the management teams and all of these things. the beauty of it all is that at higher levels, private equity and private credit tom: your reading my mind. they want an equity kicker make that get said 20 -- 2027. did i do ok there? i was trying to channel my inner lisa. plus she has better hair. jonathan: you think? i'm not participating in this. thank you. heard this a lot when it came to credit. the index has improved a lot and because of that, if we get an economic downturn.
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tom: a grizzled pro of what actually happens. there will be workouts. you had some make it work. maybe that is what it looks like in the lease the world. jonathan: let's talk about austerity. gripping companies like meta. i'm just saying that finally come up these big tech companies -- i will not say it was easy, but the environment has suited them. that is why you are seeing mark zuckerberg having to make cuts and they will likely be coming to amazon as well.
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they are confronting things that they have never had to confront before. tom: are they bringing it back a -- are they reallocating those jobs where they have layoffs, firings, etc., but at the same time they are hiring in another division? jonathan: the hiring through the pandemic, clearly, there is some excess there is that they need to unwind. you could lose money in that unit, repeatedly. it is kicking in there as well. tom: i can barely get to the stairs to the walkup. it is bigger than the pandemic number. jonathan: are you still thinking
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that is a walkup? this is ridiculous. are you still pretending that it a walkup? tom: it is a walkup. we lived in the same building together for a while. jonathan: you decided to move 20 floors above me. i do not know what that was. it's you trying to make a point? tom: what is the most miserable part of the day? it was trying to get the kids home from school around 4:00. jonathan: coming up shortly, senator bill cassidy, the senator from louisiana. he will be on with us. i'm looking forward to that. looking forward to that. do we need to get you up to
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speed on the market action as well? just loosening the testing roles in cities like shanghai. we have the reopening, av -- this is based off of what we saw in payrolls on friday. tom: 1.08% on the 10 year real yield. that is the single biggest shock in the bonds space. jonathan: 352.42. this is bloomberg. ♪ lisa: the price of oil is rising today. they have agreed to maintain production at current levels at opec. crude exports from russia came into effect today.
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china is easing measures that have you voted it fuel consumption. iran has suspended the actions of the morality police, whose actions sparked protests. they arrested those they said were flouting religious dress codes. a woman fell into a coma after being detained for her attire. ftx has continued a round of media interviews. bankman-fried was asked if he knew that it was wrong to borrow money from depositors to give it to a sister company. >> there were explicit mechanisms by which there was allowed borrowing and lending on the platform. i completely agree that it is, in general, a huge warning flag. i thought that we had processes
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in place that were managing it. i did not do nearly as much due diligence on that, as i should have. lisa: he is speaking against his lawyer's advice. apple has resumed advertising on twitter. musk added that apple is the biggest advertiser on the platform. last week, he blasted apple saying that they had basically stopped their adverts on twitter. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm lisa mateo. this is bloomberg. ♪
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>> labor supply looks like it will remain constrained. americans still have about 1.3 trillion in savings than they
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did pre-pandemic. jonathan: from new york city, the good news -- a quiet period has kicked in. the fed decision will be on december 14. the march towards inflation. equities look like nice. just a little bit higher on 10 year treasuries by three or four basis points. tom: we do what we love to do. it is a joy to do that with people who were not weaned as politicians at 22. a senator from louisiana, dr. cassidy. bill cassidy here with everything you have done in gastrointestinal -- i am in the
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surveillance timeout chair because i had a french hill on the other day from arkansas as we were having another mass shooting. not about walmart or any other institution of america, but the challenge that we have from the distance of new york to baton rouge. where is the common ground that we have that we can search to? so you can come up with solutions? >> we have seen that common ground. in response to uvalde, we came together in a way that protected second amendment right for those who are law-abiding, but it made it easier to screen to prevent those who may have every season
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-- that law is being implemented now, but i think -- tom: the issue is that the technologies overtaken america. they have these military like weapons as well. how can we constrain their access to these technological weapons? >> you want to constrain the actions of those susceptible to violence. there is kind of a profile for those who commit these mass crimes. sometimes they are with handguns. typically, it is a male with a history of mental illness with
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some other marker of isolation. it is classic. with uvalde, it was a young man who was troubled as an adolescent. tom: how do you find a common ground? how do we get to that edge with republicans and democrats? >> israel has one of the highest incidence of gun ownership in the world and one of the lower instances of violence with guns. it is the person who possesses the weapon that is most at risk. going back, we gave permission yield the records of an adolescent, gave them an extra days to review the record to decide.
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the shooting in south carolina, a young man walked in to african-american church and shot multiple. there was a typo on his form. if they had more time, they would have seen the typo and he would not have been able to purchase the weapons. tom: i hope you can continue this debate forward. you are one of the leaders here in a complex to be as well. how convoluted is the path? >> the republican elephant in the room that you are describing a how do publicans address the fact that former president trump has announced? we lost the house, then the senate, then the presidency and people have attributed that
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support endorsements. you look at that and i see people who are strong supporters of the former president. we are about winning, so we have to do something different. that is understood in our party. we have to make those changes required. jonathan: could you touch on this of the weekend and the worries of platforms influence thing this country? >> i think it is an appropriate. as a republican, i see more of that pushing to the left. what he has done is a nice corrective. he is trusting the american people to take this information, to comprehend it and to hopefully provide some trance and.
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jonathan: you saw how the former president responded to this. your thoughts on that? >> that is a fantasy. it is not going to happen. it is a hail mary. i'm not doing well in other regards, so let me toss this out there. i do not think it will be taken seriously. >> i find that political analyst often fight the last battle. people who want to win saying that we need to go in a different direction. tom: you were kind enough to
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talk about something that i wanted to talk about. how do we actually jumpstart investment to make a marginal barrel of energy and yet remain true to a climate change path. you have a minute and a half. >> there has to be a better regulatory environment. now you have to give the permission to build a pipeline to offload the carbon that is being produced. thirdly, you have to have a strategy to reduce carbon intensity. the europeans wish to have a lower intensity product.
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this is to offload the carbon produced. if you do that, you will be able to lower the cost for the homeowner, but people will also lower the carbon intensity. we will be putting forward a bill that will achieve all of these goals. tom: years ago, this was delicious tension. what is the tension between oil investment and business? what is the distance of them from ? >> they are investing in offshore oil wells.
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exxon is making these major investments. i'm not sure that the independents are -- what we attempted to do is to make it achievable for the independents so that they can lower their carbon intensity. jonathan: a wide-ranging interview. tom: are vitamins efficacious? do i need a vitamin? >> i would take a vitamin, if i were you. you could lose a little weight. tom: there you go. he is gone.
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jonathan: that is going to be on our highlight reel for 2022. ♪
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>> it doesn't look like an immaculate disinflation. interest rates will have to continue to rise. >>


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