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tv   Bloomberg Surveillance  Bloomberg  December 19, 2022 6:00am-9:00am EST

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>> given the fact the economy is likely to contract her, central banks will be cutting in the back half of next year. >> the danger is that central banks start to go too far. >> i think the fed will raise rates through the first quarter. >> we've got 75 basis points worth of hikes left in the dot plots and you will likely see that. if you fight the fed on this, you are pharaoh. -- feral. >> this is bloomberg surveillance." jonathan: most likely the best world cup final so far.
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lisa: that was a step so -- step too far. jonathan: let's start with the elephant in the room. tesla up almost 5% in the premarket, there was a poll on twitter hosted by elon musk. the question as follows, should i step down as the head of twitter? i will abide by the results of that poll. that whole closes in about 18 minutes. tom: i have not taken the pole. i was like most people, unhappy with the antics of the last seven days. i guess the pole it's there. what i would suggest, if you buy something for a time sales, whatever it was, you have to reset, you better find the biggest pool of money which is near the biggest pool of loyal, which is in the biggest pool of english football. jonathan: which happens to be where elon musk was over the weekend, raising the questions on the future of this company and going back to the tesla point, i imagine there might be happy tesla investors if this
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concludes where it is right now. as sim met 57%. lisa: with more than 17 million votes administered. there is an issue whether this is basically an excuse to back away from something that is a done deal. is there a question behind the scenes? there has been a lot of concern what kind of investor pushback he is getting after a number of moves that have caused advertisers and users pull away at a rapid pace. how much does this cover from some of those steps? jonathan: tesla in the premarket up by more than 4%, up to close to 5%. equity futures trying to bounce off the lows on the s&p 500, coming off the back of a weekly loss. up by .4% on the s&p 500. we are doing ok and the bond market. 3.51 yields higher by four basis points. tom: bitcoin stable with binance, not much news this morning.
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with the recession gloom, we will talk about people looking at growth. mike wilson out with a smart note over the weekend. texas intermediate 74.63, not too distant from a recession. we are not there yet. jonathan: jobless claims, 211,000. that is not screaming a recession right now. tom: no. i've got to be careful. we are not in the business, even one day when we are taking polls to take an opinion. i will stay categorically the certain recession tone, may be off the mark. michael for orally of jp morgan emphasized 1.5% gdp for this quarter with tray dynamics being the variable that they see a robust consumer. jonathan: futures up .4%. lisa: i like the idea of taking twitter polls on terms of if we should take opinions on different issues. just kidding. week ahead, it is a quiet week.
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a quiet day. we get a bunch of housing data, including homebuilder sentiment today at 10:00 a.m. we get existing home sales 10:00 a.m. wednesday. new home sales friday at 10:00 a.m. existing home sales, how much did volumes plummet as there is a stasis in a market poised for ongoing beginning? that is an issue given the fact we have seen mortgage rates go up to where they are,, a little bit. can we get a softening? we focused on the consumer thrust week. wednesday, we get consumer confidence data. friday, personal income spending data and the core pce metric the fed looks i. how much do you see a real deceleration in the fed, or do you see a concern about a reseller ration -- a re-acceleration? you guys both mention it, planned labor strikes. we have been talking about them in the u.k. in the u.s., we have a few were
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strike today in new york. friday in the united kingdom, there were 1000 workers planning a strike in a number of u.k. airports. how this factors into a discussion about wages at a time when a lot of policymakers went to see wages decelerate come down or soften. a lot of people are saying, how are people going to live? this is tension heading into year-end. jonathan: looking forward to the coverage of those themes through this morning particularly the strikes around the u.k., whether that spreads to the united states in a much more material way in the coming months. tom: i am watching this, it looks like u.k. did back in the 1930's. it is tangible over there, it is a good day to have a first guest that's got a visceral feel. his note this morning is very much towards an analysis of the united kingdom. jonathan: the headline of that particular note, before the hangover kicks in. i guess you should answer your
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own question, is there time for a santa rally before the hangover sets and? >> more room for one and the foreign exchange market than the equity market, which i never know anything about anyway. if the central rally is a weakened dollar and sometimes stronger equity market, part of the problem of the u.s. is the equity market had a fantastic november. when christmas -- christmas came early. the foreign-exchange market, i think the dollar could go one weakening in the backend of this month. in both cases, partly largely because the market is convinced it will not be -- in a hurry from the idea of the economy slowing and the fed will not be able to keep rates as high is it says it is going to. i think that is going to run into us in january. i think it's assets will struggle -- risk assets will struggle. we might need to have rates at 5% for time because they have been saying so, because nobody canceled christmas and the u.s.
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consumer has a fair amount of money saved up. employment is strong. wage negotiations are on the side of scarce labor. i think we would say january could be bumpy, but enjoy this week. tom: i am going to look at the standard force 500 and eight moving day study three day moving average, the three moving average for the first time since the spring of 2018 i believe is doldrums is where we are. across assets and in terms of taking on risk, what do you do when you've got a moving average convergence like we've got right now? kit: you have to be careful across assets. in general terms, i think things get helped by the fact bond market is going to look a long way through the rate cycle. treasury yields, i think are almost certainly peek at the longer end of the curve. we will spend a lot of time worrying about recession because the curve is inverted, central banks are still fighting
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inflation. that is going to help things. i think credit market is going to continue to take comfort from the level of yields and spread that have been available. equities are more difficult. in the foreign-exchange market, it is still what comes up comes down. the dollar has peaked, it is going down from those levels because the u.s. had such a perfect storm of beneficial news over the last couple of years. lisa: you say what goes down may come back up, are you talking about the ian? -- yen? a possible move away from some of the incredibly dovish policies? kit: i think 90% of the yen story is about the u.s. the japanese investors have got to start hedging the currency elements of u.s. treasury holdings were dollar holdings at this point in time as the currency turns around.
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it is correlated closely with moves in 10 year yields. it will not be a straight line full, but dollar-yen should fall. frankly, if it felt to 120, people would have to revise their forecast 115. history on dollar-yen, it can go awfully way up and go all the way down. this thing in real terms is cheaper than it was when rent was ended in the early 1970's. it is astonishing how cheap it is. tom: the cheapness is tangible, but looks for a big figure move. can you place a little money on long ins, strong yen to get a big figure chance, almost like a ben in las vegas if i was betting on france to win the world cup? kit: [laughter] you could. the danger is, it has --the world's biggest holders of foreign assets. if you turn around and say the japanese owns the sake of argument most of u.s. treasuries
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and as the u.s. curve flattens as short yields went up, it became more extensive to hedge the foreign-exchange and they made money as the dollar went up. they have to hedge or get out of those assets as dollar-yen goes down. that gives it a capacity to overshoot that is scary. when you say that fair value was somewhere a long way below, the temptation is to say, i would like to have some leverage then a long way down the dollar-yen can fall a long way or the yen can go against something else a long way. jonathan: million on a martinez 2012 to 2015, appearances. why did you never play the sky? kit: we played him 15 times. it was a wonderful story. he came to london to help finance his family, which were very poor. young goalkeepers never gave him much of a chance. he is possibly the best penalty
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shooter the gold team has ever team. he was popular. jonathan: awesome for argentina. tom: is it legal to do this? lisa: that is illegal. whatever that is. [laughter] jonathan: whatever you are doing is illegal. tom: it is legal to do that? jonathan: he was incredibly intimidating for a lot of those players, holding the ball and throwing it that way, making the other player to go and get it. it was a psychological game. tom: huge. jonathan: that is what it comes down to. tom: i said this a couple of days ago. i stand corrected. mr. ferro has made it clear to me penalty shots are harder than they look. the camera comes down, the goal small. jonathan: can you imagine the scenes in buenos aires when the team touches down and they do the world cup right? tom: ignoramus like me, the mess is done. jonathan: i thought he might
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from the international scene, apparently not. tom: does he run for office? jonathan: -- tom: messi madonna? jonathan: i am ignoring him. lisa: his analysis is almost as good as mine was. get it in that goal more. jonathan: i love how engaged he was. the score to win, bramhall. -- bramo. jonathan: stuart kaiser, 7:00 a.m. eastern time. next on this program, elon musk twitter poll concludes. in about eight minutes time. ♪ lisa: bloomberg has learned ftx
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cofounder sam bankman-fried plans to drop his fight against extradition to the u.s. he has been lined up in the bahamas since last monday when he was arrested at the request of u.s. authorities. bankman-fried has been accused of fraud and other crimes. a crucial vote today in-house january 6 committee. members will decide whether to recommend former president trump be prosecuted for obstructing a government receding and conspiracy to defraud the u.s. bloomberg has learned panel is considering a charge of insurrection. there is suspicion china is hiding the true scale of fatalities from covid. more than a month after a huge increase in covid cases, the country has reported only two deaths. that defies the expense of other , more vaccinated places with better resources. shares of tesla higher on the prospect of elon musk potential he stepping back from twitter. investors say the social media company is distracting him from running the electric carmaker. musk we did sunday he would
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abide by the results of a poll asking if he should step down as twitter. most of the millions responding to say yes. in argentina, it was a rare moment of euphoria and happiness for a country battered by soaring inflation and clinical uncertainty. fans jammed the streets of buenos aires after argentina beat france for its third world cup title. the victory was a time for lionel messi scored two goals. global news 24 hours a day, on air and on "bloomberg quicktake." powered by more than 2,700 journalists and analysts in more than 120 countries. i am lisa mateo. this is bloomberg. ♪
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>> i think everyone will blame me for everything. [laughter] if something goes wrong, it is my fault.
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100%. i think there will be quite a few hours, i guess. jonathan: that was elon musk, twitter ceo on a ted talk months before purchasing twitter. results so far. elon musk put out a question on twitter yesterday evening with a poll. it reads, should i step down as head of twitter? i will abide by the results. more than 17 million have voted in this. there are four minutes yes. yes is 57.5%. no is 42.5%. we basically know where this poll is going. need to work out what happens after that. tom: six days ago, he took sex number of reporters out. he waited -- -ex-number of reporters out. taylor written stated last night, what does he do after the poll? he can change the rules. he has proven he can do that. i do not know what to do with this, i like your idea that he was in qatar watching football.
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jonathan: i imagine there is other reasons to be there. perhaps he will speak to that area tesla up by 4.75%. i think that is screaming something else. we want your focus on this company. lisa: it indicates there is more behind the twitter poll than a whim, more than just whimsy. that has been a lot of the speculation. there has been a lot of questions around whether he was going to raise money if he is speaking to qatar, his own bankers, is he getting margin calls. why is he selling tesla shares? there have been a lot of questions continuing to circulate. tom: bramo, ferro and tom do not know what they are talking about. let's go to matthew bloxham, bloomberg intelligence analyst. very good at linking in the social part into the finance part. i've got to go to the finance, that seems to be the mystery. how financially stressed is mr.
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musk right now? >> i have more financially stressed then a few months ago. inevitably, he is going to be under pressure from all sorts of peaceful -- all sorts of people. co-investors in twitter, personally, i do not think elon musk care so much about the financial stress. i do not think money is his primary motivation. if he lost it all, i do not think he would be stressed. he is a complex person to be dealing with as a co-investor or financer. you would be pulling your hair out if you would be lending money or co-investing with him in twitter right now. tom: to jon's allusion for bankers behind twitter at $44 billion and i would guess eight times sales, do we have knowledge of the debt construction or equity preferred construction where they hold
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sway, they hold power even if they are invisible and behind the scene? matthew: there is all sorts of complicated structures, margin calls, pressure on his tesla shareholders. i think they were shooter -- date for sure hold a degree on what happens with twitter. it is a curious way to run a business. asking twitter, social media subscribers to vote on whether you should be the ceo or not. i think if you are a anchor or coinvestor, the people you should be talking to about what the best thing is to do. it is a bit of a sideshow, whether he is the ceo or not, he is clearly going to be in the background influencing twitter policy. how research can you be as a tesla shareholder his focus is going to pivot completely away from twitter? he has been obsessed with
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twitter for years, it is hard to imagine that session is going to disappear overnight. lisa: this twitter poll is part of the antics we have come to grow used to. there is a lot of questions about what is going on behind the scenes with some of those bankers that might have led up to this. you say perhaps he is not as financially stressed or it is not as important to him as we are making it out. is there a sense of what kind of constraints he has in terms of debt repayments, interest payments that count on millions of dollars and whether that is all tied to some of his shares cells from tesla and ongoing negotiations elsewhere? matthew: personally, i do not have enough visibility into that whether there is immediate stress. i would be surprised if there was right now it is clearly a consideration into the midterm year. i think twitter has been under pressure in terms of the limited ad revenues. what has happened since he took it over is, the revenue generation has probably shrunk because so many advertisers pull
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away from the platform, waiting for stability in what twitter is and is going to be. the last week, two weeks, months has added to the uncertainty rather than diminished it. he said he will abide by the poll, but we have seen so many twists and turns, new policies twitter has announced to be withdrawn within hours. we are further away from stability for advertisers, which is 90% of twitter's revenue, then we have been ever since he took it over. lisa: an update as we have seen to have passed the deadline, we are now officially 57.5% for yes. he should step down. as the head of twitter. 32.5%, no. tom: california has not reported yet. [laughter] lisa: we will be counting later on. i'm curious whether the social media platforms -- jonathan: that was good, tom.
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lisa: it was good. whether people once a year are moving away from twitter and going to perhaps instagram, or facebook. is there any sense of what the readthrough is for other social media companies? matthew: i do not think there is a huge amount of readthrough. in the grand scheme of things, twitter has never been a huge part of the social media advertising sphere. it is relatively small player. i think this makes life bit -- a bit simpler for those people putting one social media platform out of the portfolio they use. in reality, the bigger issues with something like instagram is what is happening in the broader advertising market and other the economic pressure we are seeing is putting severe pressure on campaign spending budgets. that is the bigger issue. i do not thanks even a few million twitter followers jumping the platform and posting on instagram or facebook is going to change anything for those businesses. jonathan: wonderful to hear from you, as always. if you are just tuning in on tv
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and radio, elon musk asking in the last 12 hours, should i step down as the head of twitter, i will abide by the results of the poll. the poll wraps up 17.5 million people voted. 57.5% said yes. you get the feeling elon musk has got something to drink sometimes, playing this game? you've got to work out what he does off the back of this. tom: this is not in the cfa curriculum under equities or ethics. i am watching tesla to break out into new strength, maybe 157, 158 grade i am speechless. frankly, who cares? the guy grossly overpaid. everyone agrees. lisa: there is another twitter poll with 17,000 retweets, that would be snoop dogg asking if he should run twitter. tom: who? jonathan: here we go.
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i am not engaging. lisa has talked about this the last couple of weeks, stock has been down 50% since september. there has been a lot of concern about what is going to happen to the name, his involvement in it, what happens to his shares, the leadership there. do we get to clear some of that up later this morning? tom: is his focus on spacex changed because of twitter? isn't he doing spacex as well? lisa: clearly, his focus has moved away from everything to focus on twitter. there is a question about tesla, whether this is coming at a time he company is facing other difficulties then they have to grapple with. like the slowdown in demand, production issues. there are some in questions that affect a lot of people who own shares, own cars, who work at the company that is much more serious than a twitter poll. jonathan: we've got to talk about china, the reopening of china. the latest meeting and it comes
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to economic policy. they might have business friendly recommendations. i doubt we will get the big fiscal effort some people were over -- some people work hoping for. tom: washington post had a spectacular chart of the flu season in the united states. terrible, terrible overlay of covid and flu. that is a walk in the park compared to the reports i am seeing in china. jonathan: a tough, tough time. we've got to talk about what is being reported, what is actually happening. tom: serious, serious stuff in china. jonathan: chief economist at the -- institute joining us on that, next. ♪
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jonathan: coming into monday. good morning to you. they're trying to build on a morning of gains. nasdaq futures up about 1.5%. yields vesting down on the loss last week. we are back to 4.1778. up another eight basis points on the italian 10 year. i was just looking at these spread between the two.
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a breakout in both the italian 10 year and german 10 year has been phenomenal. tom: if you look at the turmoil of the last few days, it is not where you think we would be. we should be -- we are not because it is the doldrums. jonathan: there is nothing boring about it right now. up almost 30 basis points on the session. we have put a lot of weight back into that yield in the last few days.
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tom cohen focusing his entire morning note on ukraine. billy, you have not been to china, but you have connections like no one else. what is it about the hardship to the chinese people? >> everyone i have talked to about china have mentioned this. all the outbreaks taking place, this reversal of covid policy is striking everyone as not being well done. there is a shortage of everything from tylenol to cough medicine, and one of the things that has been pointed out is that xi jinping has been silent
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throughout this entire episode. he was first out there to say, what a great job the people are doing. right now, he is completely silent and they will have to do something about the loss of face with xi jinping not being able to live up to the zero covid policy anymore. tom: what is our experience in a uniquely chinese regime, dealing with the loss of face and dignity? >> let's go back a few months to nancy pelosi's visit to taiwan. right now, we have -- just wait a few more months and see how
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things turn out. if the revival of the economy does not take place, i think you will start to see some kickbacks. lisa: based on this, what is your gas in terms of how long it will take for economic activity to return to something more normal? >> the consensus view that everyone has is that once the sickness gets out of the way and people can get out of work -- get back to work, there will be an increase on domestic demand in particular. everyone will have so much savings in their pocket. i think there is a huge downside
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risk to that scenario. the property market is in disarray. accounts for the bulk of the savings for most consumers. the wealth effect is depressing consumption. when your children are not able to get a job, the permanent income of a family has been completely destroyed by what is going on in china. that scenario is something that people have not talked about enough. revival is the that is questionable. lisa: you have talked about the main way and how different they can be. basing your conversation on
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people now, has that changed? is there a feeling of moving away from china as well as the potential uncertainty around leadership making people bolder? >> we have a forecast of growth. now looking forward, i'm hearing rumblings of this distribution in all the forecasts. it is getting a lot of the public play, but the downside risk that i talked about is something that is very real. one of the linchpins is whether or not the government is able to put together a program that allows the property markets to come back into shape. the only way to do that is by debt. right now the only source of --
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they cannot sell land. the worthiness of these bonds is going to go down the toilet. i have a hard time seeing how fiscal policy will help with revival. it is really very hard to put together that gdp revival that everyone seems to have. tom: how is it tipping right now? is it more federal or more steady-state china? >> there is much more federal blame for incompetence and the kind of rhetoric that we are hearing. all of the downside is being attributed to the over enthusiasm of local authorities
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opening without adequate planning. that tension is just growing. right now, the shift is being put on local authorities. things are not going so well. jonathan: we know from reports that the dead are arriving at funeral parlors across the country. over the last two weeks, we had not heard of a single death in the country. i believe the country has reported two virus deaths across the whole country. can you help us understand how reliable some of this information may or may not be in the coming months? >> i know that my colleagues put this data together.
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it is about as good as it can get, but what is being reported? you cited that the overactive use of crematorium's and funeral homes, the backlog there is something that my friends have decided i evidence that things are not going well and we do not really know the depths of how bad things are in china. jonathan: it is depressing stuff, it really is. deeply depressing stuff. widely expected by many people, i'm sure. tom: obviously, there is huge risk and huge visibility. so why don't you have some form of original vaccines and boosters come in to make everybody win, including the
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leadership in beijing? we are just not there yet. jonathan: we have been told this before. tom: there has been a change. even if it is a conduit through another country, you take the science of the west and everybody save space. lisa: it is another thing to just not report the deaths when the data does not resemble anything that we have seen in any of the re-openings around the world. how they message this will be key. it is a great question.
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do they focus on the economy? or the ability to go out and shop at stories as a measure of success? tom: we are focused on twitter pose today. i think it is important. martha stewart called me. she said, david, houston is killing it right now. brussels sprouts for christmas. you make the call. i love it. it is a lovely taste of christmas. but this is the kind of pulling. it is something that twitter has clumsily underplayed. it could be a real revenue raiser. this is way before elon musk.
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they never found opportunity. jonathan: are you offering to provide some leadership? the way you made this segue was very serious. tom: with the collapse of twitter, i have a new appreciation. parts of twitter just died instantly. the security filters, the vetting of people, some of the garbage that i see on my feed. jonathan: i get a lot of crypto stuff. the next bot comes in and says, i tried that.
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lisa: i love brussels sprouts. jonathan: satan's gift from hell. this is bloomberg. ♪ >> keeping you up-to-date with news from around the world with the first word. bloomberg has learned that same -- sam bankman-fried blended his battle to stay in the bahamas. he plans to drop his fight. he has been locked up in the bahamas since last monday when prosecutors accused him of fraud and other crimes. european union members will try to break a deadlock to contain the impact. it is almost one third though her than the original plan. belgium, germany, italy demand
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for a more aggressive tool. an antitrust complaint against meta. they say the classified ad business distorts competition. they also say it imposes unfair trading conditions on competing add companies that advertise their services on facebook or instagram. 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. this is bloomberg. ♪
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>> the wage growth itself is not the problem. the problem is the labor market is out of balance, causing the effects that we see.
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jonathan: weighing in on the labor market and the effort to rebalance things. let's get you a feel for the price action. just off session highs. let's talk about tom's favorite, industry. a tough year for airline stocks. things are going to get better in the year ahead. airline shares are not far off pandemic lows. but they are keeping pace. we expect higher costs driven by labor field maintenance, but we believe that revenues will grow with a mix more high-yield traffic. tom: you talk about the traffic and i will talk about the
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financial construct of where we are. there has to be a behavioral change out there. it is 10.4 to one. is there going to be a change on the aircraft to more business and economy, where economy just away? >> we have seen a shift in people who prefer comfort. they are not willing to go all the way to business class, but it is comfort and less expensive and more affordable. that is what we are seeing.
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it had to do with a shift away from so much domestic leisure and into higher-yielding international and this is travel. tom: what is the constraints that they face? what is the constraint to the huge optimism that you have? >> there are a lot of constraints that we see. when i asked about timing, because if you look at the aircraft orders, there is a huge mismatch. there is a contract, but i'm not sure that they can make good on that contract. they are going to come for at least the next couple of years.
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number two is labor. everyone is well aware that we do not have enough pilot. there are several ways that can be changed, but it will take a couple years for training to catch up. we are seeing a lot of air traffic controllers retiring. it takes several years to become a controller and a lot of them do not want to work in the busiest airport. you have a shortage of controllers. the airspace -- we just need more controllers to be able to expand. finally, in terms of airport base, we do not have enough of
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that either, but airports are making good on their plans to build out. united was the best idea for 2022, and we went with it again for 2023. delta and southwest -- i would focus on all of the big airlines. but even american, we think it will be fine in the next couple of years as well. lisa: it sounds like there is a confluence of things coming together to make the experience even worse. >> yes. tickets are going up, somewhere in the mid-single digit to low double digit range, which sounds huge, but given that factors are
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between 80% to 90%, we do not have as much capacity on stream as the airlines would like to see, but we are flying almost as many people as we were flying with 20% less capacity. that tells you that if we got back to 100% levels, you would need to see more capacity to handle it comfortably, so there has to be a shift in aircraft, so more seats per departure or fewer departures per day, but you cannot get everyone in quickly. where you raised ticket prices. that is the other solution, so that is what we see airline doing.
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tom: i we anywhere near a government response on whether or not they are skyhigh airline prices? >> i do not think so. hotel rooms are also outrageous, as are rental cars. our very good analyst has airbnb as his best idea for 2023. part of it is a shift away. rates vary so widely. there has been this shift, according to him, away from some of those changes. so that is what we see happening. we see a lot of demand for air and people wanting experiences again.
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now it is a shift back to experiences. jonathan: depressive for us and impressive for them. that to be this way. lisa: and he paid that much more for hotels and rental cars. tom: she mentioned the airlines is her best pick. it is 1700 dollars business class and $180 -- jonathan: they are making the other cabins bigger. that is what is happening. tom: there is no other way that i see this.
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my basic take -- i would love to hear from all of you, but the bottom line is -- elon musk, if you're listening, weigh in on this, but i am on the plane, i'm stunned at how people will not fly economy. lisa: we are living in different realities. the kids were bribed with other or not they got to purchase. can i say something now? there is not really a reason to have a congressional hearing. however, there is a question around dividend payments at a time when the airline industry is cutting back in a number of ways and had to get assistance.
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do they need to have a bigger crisis buffer? they need to build it up rather than delivering it to shareholders? tom: this is something that has been talked about for years about if there will be a change in airlines. jonathan: that was about a rumor around ryanair. i would have done it a long time ago. tom: they were terrible hawaiian and injuries. jonathan: i saw that. from new york, this is bloomberg.
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>> given the fact that the economy is likely to contact next year, central banks will be cutting in the back half of next year. >> they started to go a little too far. >> i think they will raise rates. >> we have 75 basis points worth of it. i think you fight the fed at your peril.
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jonathan: aren't we so done with 2022? is going to do this interview and walk out. good morning. tom keene and lisa abramowicz. futures are positive. you have talked about the dates on the horizon. can i throw this out there as well? on the 13th, you have jp earnings. tom: they were under their under the last tech there be. i will go to the 12th and what is important in my observation is we are down to a tipping point of convergence. the last time we were here was spring of 2018 and that is the doldrums that we are in.
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jonathan: rates and inflation may have peaked, but we see it as a warning sign for profitability. it is a reality that we believe is still underappreciated that can no longer be ignored. lisa: he was saying that he was leading towards his base case forecast of a 22% for the decline for the s&p. his comment, do not assume until it actually happens. perhaps i have been missed casting the rally that we have been seeing. maybe it is a girding of what is to come. jonathan: we are slightly elevated.
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euro-dollar almost unchanged. reclaiming a 106 handle. lay off the highs of the year. the average of $95 this year. tom: we all know this story as well. at citigroup, they have ed morris who says, that is fine, but we are not there yet. he maintains this level and it is an outlier. lisa: i want to run you through some of the data points. we have housing sentiment. we get existing home sales and new home sales.
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there is also a focus on the consumer. personal income at 8:30 a.m. this is one of the key metrics we get a look at. does it go the other way? this has been one of the biggest debates among economists. on friday -- i want to highlight this. we have been talking about where the inflation comes from. there are planned labor strikes. we have an uber strike, rolling starbucks strikes and an eight plan to walk out. john, you have been touching at this.
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theoretically, they occur, but it really highlights some of the pressures there. jonathan: i am going home earlier than i anticipated. i anticipate that heathrow might be a little bit of a mess i the weekend. tom: what -- i biggest problem is that i could not get home. i could not return. jonathan: where you trying to go to? tom: i tried. jonathan: was it too much? tom: she is in sicily or something and i said, i cannot get home. i just booked march with three seats left. it is nuts.
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jonathan: what is the jelly of the month? can you tell us what a jelly of the month is? >> it was a disappointing bonus that was given to someone. he was going to build a swimming pool and then he got the jelly of the month and could not. jonathan: can you tell us why the fed delivered the jelly of the month? i know exactly what peter is thinking. he is thinking, i like that movie as well. >> the most powerful thing they did was in the fed forecasts. a lot of people focused on the fed.
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but i think it was more impressive and impactful from my perspective because you had a lot of divergence in views coming from the committee and it seemed that they were able to get on the same page and put out an intentional effort to send a hawkish message. the market was reading thy -- reading the divergence to have a little bit more leverage in the committee. tom: you nail where i have been for months down to 7% of the stock. i totally agree with you when you get into these worries and uncertainties. how do you prosecute that forward? question want to avoid stocks
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that are to growth sensitive. not only do you want quality, but you want it at the same time. tom: this is gospel. lisa: people are shrugging off the idea of this. are you with him that it looks more like a base case? or are you with the others think it is the strength of resilience that is the highlight? >> it has been in place for months. it is not new news. to suggest that they are not prepared for that, i do not think that is accurate. you have a chief risk factor in
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the market and it has come off the peak. the market responded positively to that. peak inflation becomes your number two concern. that is where the discussion becomes how deep of a recession? what do we see? there are two really important catalysts because i think it will be hugely important. if they are sloppy and you get a lot of negative guidance, that will crystallize. if it is not, you take a little bit of the starch out of it. it is not our forecast, but if they came out and said, we are making good progress on these, it becomes a much more balanced discussion. earnings and growth are the focal way and we will just get
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it done in the middle of january. jonathan: is there a concern that this gets pushed out? >> i do not think they expect a recession. the question is when you start to trade that. if average hourly earnings are strong, you are going to trade pretty quickly. if they come in morrison take, maybe we are again having this discussion in april. that is why i think those events are so important. jonathan: it has gone over well. i have to watch that. tom: we got the big tree this year, like a real tree with real
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light. i will put the photo back on twitter, if i am not banned yet. but we fed the squirrel. the squirrel is afraid to get down, so the squirrel is in the tree, hanging out. jonathan: those cruelty organizations might be getting in touch. it has been the perfect storm as advertisers run for the hills. it will -- it will be a major positive for tesla stock. if you are just tuning in, they conducted a pool saying, should i step down as the head of twitter? you know the results.
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more than 55% said yes. more than 17.5 people voted in that poll. tom: the mystery there of what is his financial situation? i misspoke. excuse me. i stand corrected. jonathan: stuart keiser, thank you once again. come back soon. two more days to go. this is bloomberg. >> a crucial vote today in the house committee. members will decide whether to recommend that president be prosecuted for obstructing --
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bloomberg has also discovered that there is a plan to drop the fight to ask -- for extradition. he was arrested. jones targeted the capital city of kyiv. some of the others damaged the power infrastructure. shares of tesla are higher. elon musk tweeted that would abide by the result of a pool as if he should step down as head of twitter. many responding saying yes.
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a rare moment of euphoria and happiness. fans jammed the streets after argentina beat france for its third world cup title. the victory was a personal triumph for lionel messi. 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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>> i do see growth slowing. inflation is coming back down.
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jonathan: there was a misstep. we have always said, they have just been arguing with each other. what did you make of that? tom: we are going to get to it right now, but i think there is so much to talk about here. we are going to give you world cup coverage. we are honored to have joining as, maria, giving us the high point. i have to start with you. something happened that i
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thought we would never see. the french coach took two stars out in the 41st minute. with does signal to you as they finally woke up? >> the first half, they were completely out of the game. the real star, he broke that game. the pace of strategy was very well done and that is where he scored the second goal. to me, that is beyond the point because yesterday, that was the final for the ages. it was the energy and the passion. it was one of the best games i have seen in my entire life. believe me, i watch a lot of
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games and i shed many tears. tom: this change how soccer is played? will this change the style of play that we saw? >> i think what it shows is that there is a lot of talent in latin america. this is going full-circle. they had waited years for this moment. it is absolutely deserved. i think there are questions going forward about fifa. i think there are a lot of questions around the management of fifa. the other takeaway is the fact that we are hearing -- we are on american tv and talking about
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football. you guys finally get it. lisa: we are done with that. >> everybody said this was lionel messi's cup, but the one issue i have is that first penalty that i thought was so soft. it could have been to p1. scoring two goals back to back, and that one touch on the second goal was incredible. what is interesting is that they will be playing together in the matter of a few weeks. lisa: i know you -- let's see
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what this works. we have preparing for a u.s. world cup, the next world cup. it will come to the u.s. there is a lot of time between now and then. what are you watching? we heard about biotin doubling down on his presidential election and that there are more victories that other people are not accounting for. what are you watching? >> aside from the fact that they had to reach an agreement to avoid a shutdown, today and the rest of the leak will be on the january 6 committee. we are expecting referrals. we have never seen a former president get this kind of charge. they do not carry a ton of legally, but you see them slumping in the polls.
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tom: doesn't all this go away when the republicans take over the house? >> a lot of this does not carry a ton of weight unless the department of justice picks up the baton. it was clear that after the midterm elections that the candidates not do well. if this republican party once make sure that they have independence, which is moving the tide either way, he will have to be the one to potentially exit. jonathan: that was one of the
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best that we have seen. i think it is absolutely fantastic. the one missing link has been this country. i think yesterday went a long way to recruiting more fans. tom: the thing that you taught me is that the clock moves and i like watching. jonathan: these are the numbers and the stat. the amount of time in motion? about 11 minutes on average. that is ridiculous.
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lisa: i do not think we are measuring sport, necessarily. jonathan: it is much higher in football. lisa: i will say that all or soccer has gained a lot of traction in the u.s. because younger people have opted to play. that is one reason why it is getting traction. tom: what is it like? jonathan: it will be interesting to see. tom: what happens in european put all? >> you go back and enjoy it.
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we have a lot of viewers in argentina because my phone was blowing up yesterday. i will go to buenos aires. you have my word. we will go back to playing together. when you look at a team, it is not even how do they compete and work together. the reality is, if they want to have that glory -- it is too late. when you are 23, you should not care about the money. that is a lesson from everyone out there. jonathan: i can sit out of these conversations and you guys can go at it. it is a beautiful thing. tom: what do i know? i think it is great.
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in four years, providing surveillance coverage. this is three countries and exit amount of cities. jonathan: we have seen a lot of this and rhea mentioned south korea. not the first time we have shared it world cup across different nations. team coverage. that would be great. ♪
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jonathan: this just in. surveillance sports with a proper splash screen boom. i you ready for that? tom: we talked about sending all of us. we did not do that because of the fed inflation reading, but the value-added of what you did and maria did. i think it is cultural and you had a massive add. jonathan: to be a lease of
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losses on the s&p 500. lower in the face of the federal reserve. a delivery downside surprise. we totally forgot about that. tom: the focus is in america today, but we have to be set and we calibrate off of the data that we have and on two important meetings in january. we really have to step that up in the coming days. jonathan: i'm with you. on the 12th, you get cpi. j.p. morgan earnings on the 13th with so many people looking ahead to leaker earnings. publishing on friday, not your mom and dad's recession.
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then she said this. this is where i think it is interesting. credit risk may be more evident with long-duration growth plays then at regulated banks. it is not just a narrative. are the calls going to be different this time? tom: the liquidity issues are there. they have not gone away. are we going to do equity movers? lisa: it relates to this idea of equity capital. it seems that the poll said that elon musk should leave and test the shares have been flying because of it. i want to look and piggyback on what we were saying. the other major automotive makers.
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how much of a risk premium has been baked in? i'm saying, how much of a risk premium is baked in because of elon musk's distraction? ford down today. general motors down. rivian is down. that is another story. how much can you inflate these stories? if we take a look at where tesla is trading, you have been raising this issue. can you see a rep here if he focuses on tesla, or are there other fundamental demand issues? jonathan: we will find out later today. there are people who believe
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that if he steps down, it will be a positive for tesla. he thinks it is a positive for the name. focusing less on twitter and more on tessa. lisa: who else are you talking to? lionel messi? jonathan: just catching up with some of the greats out there on wall street. lisa: you are right. tom: are we done? joining us is dana peterson. she is our first conversation of the week to recalibrate. do you need to retreat things?
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has the data been soft enough to where they need to recalibrate? >> we do not need to recalibrate. the u.s. probably started to enter into a recession for early next year. we will probably see about .75% retail growth. the stubbornness of inflation does not bode well for the consumer outlook. tom: i want to go there. our trade dynamics the kind of thing that could put a flat america into an economic -- >> europe is certainly slowing, probably already delving into
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recession. we are expecting recession in the fourth quarter. most economies are slowing or entering into a recession. certainly even imports could be in offset. so it will be a tug-of-war there. inman negative, going forward, not providing any impetus. lisa: gas prices have tracked pretty closely. i'm looking at gasoline prices on average. $3.14, the lowest since july of 2021. we heard that this administration is planning to restock the petroleum reserve in february. how much will higher gasoline prices affect the consumer
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confidence level? how direct is that correlation? >> it certainly shows up in our gauge, but it is not just gasoline. they are paying more for gas and shelter. consumers are definitely less upbeat and they are concerned about the outlook. they are concerned about business activities, which is negative for job prospects. they are concerned about personal finance. once consumers think that they can get fired, that can cause people to spend less money. it is all these other pressures on the consumer as well. lisa: we are talking about the potential in the first quarter and airline tickets are flying to the moon and airline being able to chair -- being able to
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charge whatever they want. there is a question about what is wrong here. >> spending has certainly shifted. they are not stuck at home and it is much more expensive to finance things like cars and furniture. we are seeing people spending more on services, but the services they are spending more on our experiential things. things like going on vacation. we are definitely seeing inflation rise because there is demand, but when you think about how people are paying for this, credit card use is skyrocketing. they are not using their income. they are using credit cards. this suggests that they will pull back.
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tom: can you extrapolate a timeline for when the consumer slows? that has been concerned that the consumer will slow, but can you make an informed estimate? >> you could point to the november retail sales data. granted, some of the retail sales might have been pooled into october because you had massive discount and concerns about supply, but in general, we could see very weak sales in december. our own survey suggests that many people were going to spend less money on gifts and more money on things like food. if they are spending more on food and not gifts, that does not bode well for december. when we look at the future of the first quarter, a lot of
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momentum will be gone. they are not going to buy a fifth or sixth car and they probably have already gone on vacation. i think we will start seeing negative rating -- negative readings in the first quarter. jonathan: basically the point that morgan stanley is making, coming sooner and harder than you might appreciate. tom: didn't we have those same predictions about a month ago? i do not have a strong opinion on this other than, i get that some will be less buoyant, but i have trouble with what 70% of the economy is going to do.
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jonathan: one of the biggest calls going into next year is whether the cushion evaporated or whether they just let her up. lisa: they are already levering up. dana peterson was just saying, why not keep going? if they want to lend and have the capital, how far can they go before they have to pay it back? they are saying that they will hit a wall at some point. jonathan: i keep asking the question and get different answers. lisa: the risk to stocks is that it gets pushed out. the risk to the economy is similar. the excess is built up at the twilight of this era. it could be problematic.
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tom: it is part of the debate that will take us to the fed meeting. but what i really like about mike wilson's analysis is the kickoff of jp morgan. day after cpi, we had jp morgan out and then we are off to the races. revenue is going to be terrible, well, show me. jonathan: they come out with the numbers and it does not work. are you cooking this weekend? how's that working out? tom: i bought a ham and i had to refinance. we are going to have him.
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watch a jim carrey movie. jonathan: futures up by 1%. this is bloomberg. >> keeping you up-to-date. with the first word, i am lisa mateo. ending a battle to stay in the bahamas. he plans to drop his fight to face criminal charges. locked up since last monday when u.s. prosecutors accused him of fraud and other crimes. there is a suspicion that china is hiding the true scale of a talladega after covid. china has reportedly only two deaths, which defies the experience of other, more
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vaccinated places. a complaint against facebook parent meta. they say they are unfairly squeezing out rivals. facebook says those claims were without foundation. 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 am lisa mateo and this is bloomberg. ♪
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>> there will be a shortage. i think that is on the more optimistic side, on the brighter side.
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i'm not feeling as optimistic. there is room for additional shortages. jonathan: looking ahead to next winter in europe. closing out 2022. just a brief sneak peek. yields are higher by five or six basis points. hugging on to this level over the next couple of weeks. euro-dollar is stronger on the euro side against the weaker dollar, but we still have one eye on what is happening in the european bond market. tom, it has been quite the move. we joke about the ecb news conference, but it was the news conference to watch last week,
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without a doubt. tom: unmentioned is the war in ukraine. to me, any analysis is overwhelmed by that. jonathan: we basically have a base case for a recession into a new year, and they want to keep hiking. tom: they have the normal spirit to get away with it. we will find out on that. but we will do now is a public service particularly for americans, distant from europe. my eyes have glazed over due to the price cap. it would be nice to talk to somebody who is actually. the founder and chief executive
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officer, they barely describe competency with the white house on energy matters, and much other work, including at citigroup. good morning to you. in a nutshell, will these work against mr. putin? >> good to be with you. the meetings happening today, they have been going at this for a while. behind their efforts is sending clear signals to russia about their displeasure and his agreement with his invasion of ukraine. it will not go into final action until next year, so if they come to an agreement today, they will use the next couple of months to look at the impact of what this will do. there are several delivery channels that they have used.
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this one, they decided would work best for the eu. this is the best impact. tom: with all of your studying, when all of that is said and done, is this a system of other petroleum products where there is enough gauges where this is just as he said, hope and that is all it is? >> is different than the u.s. because there are borders. they do not have the ability that we do in the u.s., so as they make the decision to bring unity among the countries, you have those who are anti-market interference like germany and austria, and you have those who have physical capacity challenges and concerns like
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poland, greece and italy, who want to see a mechanism that will allow them to be more unified. we want to make sure that you understand what is coming out of this. there is the ability to pool supplies so that they have a stronger voice. if they agreed to a price cap, there is concern that it will be sold somewhere else. trying to compete for the purchase of gas, the highest bidder will go. they have included mechanisms to pool their ability for supply for the more longer-term view of how to address energy independence and supply. lisa: sure will be an interesting moment. there has been a question about
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if any russian oil has been taken off the market. you are also getting the repurchasing of supplies by the u.s. government. how does this manifest itself in pricing despite all the telegraphing ahead of time? >> they will use this period to review but the best way is for this to work. you will be well into the winter . everything is unknown as long as the ukraine war goes on. the u.s. is currently out buying gas. for the eu, how this will best work as they look at emissions
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trading capacities and abilities , but they have done is tried to set it so that it takes into consideration what is happening with haslinda: -- lng. they want to bring in some flexibility, but they have not come out yet. the latest i heard was they were trying to end up around 180. depending on where they set that price, they can determine what it will be. even going down. this is a very dynamic market. they want to give themselves the ability to decide what is the best mechanism to set this up?
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jonathan: do you remember when people thought that this would not happen and then they thought maybe a month? here we are, nine months into this, going into a new year. tom: the theme is that the word get several longer. europe is just flat out not the u.s. and i think it is about all the leakages within the system. jonathan: i will bring you some of the reporting from the new york times. taking aim at an issue with more serious potential and consequences, whether mr. elon musk has created a series -- he also runs this piece saying, as you know, it is the legal
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obligation to ensure that the ceo is meeting all of his legal responsibilities and serving as an effective leader, essentially, according to this piece, senator warren is asking whether mr. musk's diverting of resources from tesla, including software engineers and executives is harming the carmaker. lisa: i will say that i do not know whether the security issue and board issue is in the domain of congress or the net, but it highlights how the focus is on the public entity because twitter is private. it brings up who the next leader of twitter will be, if elon musk steps down and you end up with a vacuum of power. jonathan: there is a suggestion in this piece that senator
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warren is suggesting the possibility that musk is shortcoming either to benefit the other. i guess that is a conversation that is ongoing. tom: you could even bring spacex into this. but i mostly look at here is just field experiment after another is observed in the market, whether it is the price to sales ratio or the price of tesla. lisa: do you think that this is a larger issue, a larger investigation? jonathan: i do not know. i have no idea. lisa: -- jonathan: we hear from elon musk off the back of that pole? not yet. this is bloomberg.
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>> a global recession is likely into 2023. >> it is a lady recession that happens to be deeper.
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>> concerns about a recession. the concerns are a little premature. >> it will be a mild recession. they will raise rates through the first quarter. >> this is bloomberg surveillance with tom keene, jonathan ferro and the soprano it's. tom: good morning, everyone. it is a different monday in new york. we are looking at economics. we will do some soccer talk. what we will do with this odd week before a week before christmas. means as we switch over to january. tom: it will --
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jonathan: it will all be about earnings. the call for the first half is the earnings story gets weaker. that seems to be the consensus into '23. tom: what i love is what kaiser said -- kaiser citigroup said. in the doldrums you narrow down your selections. jonathan: if you are at the index level, big tech has had big problems this year. tom: 35 stocks out of 100 -- you cannot do that math with the dow jones industrial average. we will have ig chat in a moment. lisa: was that his holiday gift that you are giving a nod with the dow? jonathan: we are both on the same pages when it comes to the index. lisa: we can celebrate that. tom: i got a thesis from
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vanderbilt i found. it is the history of the dow. jonathan: i respect the heritage of it and tom respects how flawed it is. lisa: what is going on here? jonathan: it is christmas! lisa: to answer your question about spreads, one of the most interesting stories i saw over the past 24 hours high-yield bond,s have been sold at the lowest pace in the u.s. going back to 2008. at what point does the stasis, the complete lack of action matter with respect to companies' need to raise money. tom: you have been talking all morning about the pulling of mr. musk. i think the whole thing is ridiculous. to the point, it has moved tesla. jonathan: yesterday evening elon
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musk conducted a poll -- " should i step down as the head of twitter?" 17.5 million people voted in that. we looked out where tesla was trading -- it was up about 5%. it is now up 3%. they! would like to see him -- and they are happy with the news! they would like to see him focus on tesla. 9:45 we will catch up. tom: let's look at the data right now. my data check is three moving averages, which converge to a point on the standard. first time i've seen that since in the vicinity of spring 2018. jonathan: i will gloss over bonds, which are up today.
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it treasuries are down, positive on the currency by 2/10 of 1% on the euro-dollar. 75, on wti half of 1%. the average this year has been 95, which tells you how persistent elevation has been until we got until the last couple of months. lisa: which shows how an ear there could be a triple digit average. that does not mean anything for where prices may be in any given month. jonathan: you asked the question do we have a new floor? that is a good question to probe. lisa: exactly. that is why i am wondering. all of this is happening early next year at a time when potentially you could see a rollover in terms of economic growth. jonathan: barons with their oman
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to the dow jones industrial average-- jonathan: do you think there may be -- tom: barons with their oma's to the dow jones industrial average -- jonathan: do you think there may be a dow jones -- tom: joining us now is matt brill. the bond market needs to winek's dear after a horrific -- to win next year. what is the path to total return next year in debt markets? >> it has been a challenge when -- challenging 2022. the coupon is materially higher going forward. the starting point is good. we think that for two reasons we tend not to have back-to-back negative years for fixed income.
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a higher yield gives you a higher buffer going forward for volatility and spread and interest rate rising. it is generally a burden on the economy. as you have a higher cost of debt it slows the economy and eventually the fed cuts, which is in the back half of 2020. i think the technicals will be good for ig next year. jonathan: let's talk about the pain. i'm looking at stocks and thinking to myself, " is that it?" i look at where spreads are this year. is that the price we have to pay for 400 basis points in nine months? others say no way you were not getting away with blowing up a decade's worth of policy. what do you say to those people? matt: i will speak to the
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fixed income part. we were down over 20% at one point. that was an absolute catastrophe. very few people were calling for a 20% down year in the bond market. i think the readjustment has taken place. when you hike for basis points in less than nine months -- 4, that will leave a mark -- 4 basis points in 9 months that will leave a mark. the floor has been set the floor has been set. . lisa: -- the floor has been set. the worst is behind us. lisa: are they pricing in something more mild? matt: if you just to look at spreads, the answer is no.
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that is 40 to 50 basis points whiter on the year but they have been cheaper about -- wider on the year but they have been cheaper, so we are not pricing in a recession. if things were to significantly slow down credit spreads would go no wider. all in yields are still very elevated. are you better off in credit? tom: dressed in argentina's blue and white you are in qatar for many of these games, you experienced it firsthand. the world cup in four years will address new york city as well as other cities across this nation. what should we look for in 4 years after what do you experienced this year? matt: i just think it will be a
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hot ticket in the u.s.. we have a young team. i'm not sure if we will get a new coach or not but i feel like we will. everybody is talking about the youth ranks this world cup. i was able to get 6 games in 4 days. i don't think we will necessarily be able to do that in the u.s.. it is in canada and mexico as well. jonathan: can you imagine how expensive it would be if you do not get those tickets at face value here in north america? tom: maria tadeo and matt brill -- go to mexico, go to canada, surveillance team coverage. lisa: serious question -- will live nation sell the tickets? they just had serious problems. i'm serious!
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that is what i am saying, taylor swift, move over. jonathan: i complained about the cost of the u.s. open tickets. they were pricey. tom: it is so broken. forget about the analysis. it is broken -- fix it! you need to show visible the take of the artists. the artists are trying to hide desperately how much they are making. jonathan: you are suggesting they make a massive slice of it. tom: a massive slice. the reporting i have had is this is nothing more than the artists embarrassed to show their fans how much they are taking home. jonathan: it is dangerous to take a dig at taytay. tom:. -- tom: i don't know. jonathan: do you want to take it
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back? twitter could get mean tonight. matt, thank you. lisa: matt is like, " get me out of here." jonathan: matt made it to 7 games. tom: i would have sent you and maria. jonathan: you have 20 seconds to tell the world how much you love taylor swift. tom: i love -- lisa: [laughter] tom: i love what she and jack are doing at the national. some of it rings true. jonathan: this is bloomberg. ♪ >> keeping you up-to-date with news from around the world with the first word, i'm lisa mateo. a crucial vote today on the house january 6 committee. members will decide whether to recommend former president trump be indicted.
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they are considering a charge of insurrection. sam bankman-fried plans to drop his fight against extradition to the u.s. he has been locked up in the bahamas since last wednesday. bankman-fried has been accused of fraud and other charges. in ukraine the government says drones targeted kyiv overnight. they said 15 of the 23 aircraft were intercepted. tesla shares are higher on the potential of elon musk potentially stepping back from twitter. the social media company is distracting him from running the electric car maker. muska said he would abide by the results of the poll asking if he should withdraw from twitter. hybrid vehicles are sticking around longer than many
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expected. supplies are scarce -- the result? drivers around the world bought almost 2 million hybrid vehicles. that is a 45% increase from a year earlier. powered by more than 2700 journalistss and analysts in the 120 countries, i'm lisa mateo. this is bloomberg. ♪
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>> it is one thing if you're going to have competition. the other thing is when you help be competitor compete -- help
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your competitor compete. we get that, that is competition, but we will not help you do it. jonathan: that was the u.s. ambassador to japan rahm emanuel. good morning. this is the holiday edition of bloomberg surveillance. equity market positive. i can confirm that i got my remote controller over the weekend. lisa: i was going to get you one. [laughter] jonathan: absolutely loving it. lisa: anyone else loving it in your apartment? jonathan: someone else is loving it too. can confirm. knocking into the furniture -- i haven't got a track yet, just going up and down the hall,
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smashing into the christmas tree. i'm going to buy you one, t.k. someone thought of a promo for the show where i take the car to central park and tom would be like daddy keen. lisa: i was going to get you one. jonathan: i will take another one. tom: i well tried to get a squirrel out -- will try to get a squirrel out of a tree. bloomberg financial conditions index suddenly showing a little bit more accommodation over where we were 2 hours ago. not sure what that will mean. we are in need of a brief from terry haynes. terry haynes is the founder of pangaea. we welcome him again this
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morning. we are all distracted by the holiday season. is washington shut down yet or are they actually pretending work this week? >> they will be working all week on what i hope are the final touches on a full year spending bill. they have been promising that will happen. it probably will happen. tom: help is here. with all of the knowledge base you have of the 200 people it takes to make a run for president, which people are percolating the hardest, besides the obvious names, to make a -- for the presidency? who are -- a dash for the presidency? who are hiring? terry: there are a lot of usual
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names from desantis going through vice president pence, haley and others. they have staffed up and briefed up. back in the 80's, the man who became bush 41 was thought slightly insane for starting his campaign 3 full years early but ever since then it has been that sort of staffing up. everybody is jockeying for position. they have been for some time. lisa: how much pushback is there in the democratic party from joe biden running again? we have seen reports of how he is beefing up his social presence, especially in networks that do not have a little advertising allowed. what do you take from this? terry: i take largely that the president intends to run for reelection and the party cannot
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identify a good alternative. there are a lot of voices in the party that say the president should not run again for a variety of reasons, age being -- age and the bridge being the major ones. there is nobody around who will be able to command the ability to continue to attract progressives. haydn has been essentially running -- biden has been running the progressive agenda. h is makinge a case that what is what the midterms showed. they are all reluctantly falling in line. one of his hallmark policies had to lisa: lisa: do with oil prices, gas and the fact -- lisa: one of his hallmark policies had to do with oil prices, gas, and the fact that he released some from the
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strategic reserve. they will be refilling it. how will that impact prices and popularity if it reverses some of the price drops we have seen? terry: the president is not particularly popular, as everyone knows and is not going to magically become more popular. his popularity still hovers around 40% 45%to -- 40% to 45% depending on what poles you read. it will have a detrimental impact on gasoline prices during the winter. that will be difficult for a lot of people. they're trying to balance as best as they can. now that he has gotten past the, midterms i think you can say he feels a little bit freer to
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reengage and reinflate the spr. tom: what is your betting that the president of the united states will run for a second term? terry: 90-10. they have given every indication that he will. i see no reason today why he won't. jonathan: terry is brilliant, is a t -- isn't he? tom: he has some serious credittom:. he has been through this several times. there is i bought -- there is a binance percolation. it is a big take on the future of binance. lisa: there was a story out this morning on binance. a deal that is worth more than $1 billion. i was trying to do research. it was shocking to me.
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i was wondering whether the names were flipped when i read it. is this a show of strength? jonathan: my quick read -- it reminds me of something i read earlier this year. lisa: i know. jonathan: do you remember that one? people ran around calling it jp morgan, stuff like that? tom: approval of the court is necessary. that is always important in bankruptcy. bitcoin is sitting on their books in bankruptcy. i don't think they are buying assets. jonathan: since 1950 the s&p 500 has posted a total return of 13% on average over the 12 months following 13 major inflation peaks.
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it returns 13% on average following those 13 inflation peaks. tom: we have not talked enough about the optimisms out there. jp morgan calibrated where we are right now as 1.5% real growth. throw thata on with inflationn -- throw that on with an inflation statistic and it is buoyant. lisa: in 2022 it was all about inflation. that was the preeminent risk. next year that is the number two risk. the number one risk is growth. has the inflationary environment been present long enough to cause the rally, the recovery on the others, or have we not seen the earnings decline we need? tom: how many votes did elon
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musk have on his pole? -- on his poll? jonathan: 17.5 million. tom: we are close. let's go to the 'bramo cam. lisa: how gloomy i really am. jonathan: gloomy on what? lisa: exactly. honestly, this is just reality. jonathan: morgan stanley on " reality," an hour from now. lisa: [laughter] ♪
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tom: bloomberg surveillance. welcoming all of you on a monday. it is an important week as we prepare into january. one of the things we need to look at is the bigger picture. one thing i have not addressed is what i will call the decile aspect. this is something you have been great on through the pandemic, pushing on three years here as the haves and the have-nots of this prosperity. we are a prosperous nation, relatively factor superior to other nations out there, yet we are seeing a boom out there within certain parts of the
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economy. we make jokes about business airfare but there is a part of america flat on its back. lisa: it is a growing portion. i will give you an example -- used cars have seen deflation. new cars have seen inflation still. why? it is because who can afford to buy used cars versus new cars. if you look at what it takes to finance a used car, it is 12%, which makes it really unaffordable. tom: the real atlanta wage tracker is the fancy name for this, and it is not so much the decline in real wages as we are saying. the answer is it is a bad statistic. it has been the duration, the depth and this pandemic and the shock we have seen off the boom. lisa: it is one of the reasons people have said the haves have
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continued to spend is they have not lost that much. there have been pockets of gains. if there is the earnings gloom, the housing downturn people are talking about, does that start to change too? emaar synchronized reality for more people? tom: there has been a bounce in the bonds. we can do this in real time. it is a gift to the bloomberg as we say. from the peak 2021, the bottom was down 22%. even now with the bounce, we are still -15% on corporate bonds. lisa: you cannot erase the negative on your statement. that is going to make people withdraw cash. that will make people think twice about the investment. just after guest has come on the show and said, " actually it
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means you're having a sale." tom: i get that. for retail and institutional, you can do a rationalization out 1, 2, 3 years. we have not made enough talk about this -- the worst bond market since, what? napoleon? lisa: [laughter] tom: -- lisa: i was speaking with howard marks of up tree and he sees the public market as having a lot of opportunity. the private markets will be a place for reset. tom: this is a joy on the day of the federal reserve meetings. we had the former vice chairman and william dudley, the former president of the new york fed as well and we are thrilled, bill
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dudley you would find on your date calendar to join us here as we reset into january. what will you glean -- i know what you will tell me. you will not rely on one data point -- but what does the inflation report signal to the fed. they will have three data points lined up marking some line of disinflation. >> to achieve success powell needs to see a moderation of goods prices, which he is seeing, a moderation of services prices, excluding housing, which he is not seeing, and more slack in the labor market, which he is not seeing. he has only achieved one of his three goals. what is happening in the labor market, we have months of payroll employment increased. we need to see payroll gains of
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75,000. we need to see an increasing unemployment rate, unfortunately. we need slack in the labor market. jonathan: you were -- tom: you are an expert on this. i love what you are saying. we need to get from 200,000 plus two something that is -- to something that is 50,000, 75,000 plus. that is -- where does that dearth of job growth come from? i am going down in flames. how do we get from here to there? >> we need tighter financial conditions to slow the economy down so there is less demand for labor. at the press conference last week he was pointing out that if the financial conditions these,
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the fed will have to do more. when don's rally and stocks rally, that just means -- bods rally and stocks rally, that just means there is more for the fed to do. lisa: there has not been a real increase in bond yields and there is still priced into the market a lower terminal rate than what the fed has said they are going to do. how do you understand that/ >> there are two possible explanations. the market is basically saying the fed does not mean what it says. they are trying to talk tough but when the going gets tough the fed will fold. i think powell is going. to do whathe says they may have a more benign view about how fast the market will come down. we knew goods price inflation would come down for 2 reasons. first, the switch in the pandemic has reduced the man for
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goods and services. used car prices -- lisa: people point to the fact that credit card receivables are going up. people are borrowing more. it indicates the cushion is getting used up. there will be a music stoppage at the beginning of the year. how do you push back against that and say there is more dynamism behind that the fed needs to curb? >> people's wages go up bit further than they did before. there is still a lot of money in savings above what you would expect those to be. there is going to be a lot more income for people caused by indexing. look at social security -- 8.8%
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increase coming next month. that is an increase in federal spending. lisa: what kind of recession do you foresee, given the fact that gasoline prices --that if gasoline prices rise, the momentum is waning? bill: the economy still has considerable forward momentum. look at the gdp forecast for the fourth quarter. it is in the 2%, 3% range. when the recession finally does occur it will be mild because the federal reserve is in control. this is a recession that, if it occurs, it will be generated by the fed to create slack in the labor market. the fed can relent. plenty of room for the fed to cut rates to stimulate the economy when the time comes. this is why the stock market is
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still pretty buoyant. tom: this is why we love to have you on. this is so important, folks. i knew we were going up 8.7% social security, but there it is, dr. dudley quantifying it and it showing that it is a return. i expect wayne angell to be on after you. we are back to the 60's and 70's with an observation like that. is this good old demand-pull inflation. we got our social security check, let's go spend it, prices go up. bill: that is a big job for the fed to pull off. jonathan: -- tom: bill dudley, thank you on short notice today. that is the insight you get from deadly. he is one of the -- from
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dudley. the incredible rigor of spreadsheets over a broad material of policy. lisa: you're seeing this with the labor market pushback. people keep getting raises in their incomes even as you get a slowdown in the economy. i wish i had more time with him. i'm still thinking about what he said. he does not see a recession yet. when we get it eventually it will be a shallow recession. it will be completely induced by the federal reserve so there will be enough momentum to bring the economy back up. he thinks this is the reason the market has been so resilient. how does the fed get there? tom: we will have to see. the uncertainty that is out there, and we will all feel this into january -- i feel like the last three days has been, "omg, we are slowing down."
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could that reverse on a dime here with any good news? lisa: i don't see it. tom: i agree. lisa: people are completely checked out right now. tom: even if they are working, i agree. john was making a big deal about christmas day is a weekend day. i haven't started my shopping yet. lisa: how is the ham going? tom: the ham hasn't arrived yet. there is no question -- the big thing is do you get fresh or frozen? i don't know. it's outrageous. lisa: happy hanukkah. tom: started last night. i think that -- i definitely feel at least in new york it has begun early.
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you have to line up eight presence in a row? lisa: i'm terrible. i'm not that way. tom: you are not doing the -- lisa: they can cry. when they are older they will have their toy cars they will want to get that they will half to buy themselves. that will be my children on the therapy couch. jonathan: we will get his update not only on the world cup but also on the emerging markets of next year. stay with us. this is bloomberg surveillance. good morning. ♪ >> keeping you up-to-date with news from around the world, i'm lisa mateo. sam bankman-fried will end his battle to stay in the bahamas. he plans to drop his fight to stay in the bahamas.
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he has been locked up in the bahamas since last week. he will appear in court next week. there is a suspicion that china is hiding the true scale of fatalities from covid. china has reported only two deaths after a large surge in covid cases. that defies the experience of other better vaccinated places with more resources. binance is going to buy voyager. it sets a clear path forward -- voyager collapsed in july. its assets were set to be purchased by ftx, but that collapsed when ftx went bankrupt last month. avatar has fallen short of some estimates. it pulled in $134 million in north american theaters in its debut weekend. the box office expected it to
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take in somewhere between $150 and $175 million. i'm lisa mateo, this is bloomberg. ♪
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tom: lisa abramowicz and tom keene with one of the stars of wall street. she is definitive on esg. i will get some questions in on that. we speak with quantitative -- head of quantitative strategy. you have a very defensive view for 2023. my statement is corporations will adapt. how will the corporations adapt to your caution to husband free cash flow? >> [laughter]
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i think they are already adapting. what we are seeing is companies are replacing expensive labor with machines. we are seeing the seed of that to come to her also adapting to geopolitical risk and supply chain friction and a little on the esg, one of the biggest reasons companies are moving property and equipment closer to consumers is to reduce travel related emissions risks. there are a lot of reasons companies are adapting to this environment by spending a little money on a better set, up in the future but it cost money in the near term. tom: stuart keiser over at citigroup is in the same camp
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i'm in. when you get gloom your choice set gets smaller and smaller. will index funds get hammered versus active, more narrow, blessed diversified securities analysis because there are not that many good -- less-diversified securities analysis because there are not as many good options? savita: the problem is when everybody is gloomy, the chances are that is more priced into the market then when everybody is excited. i think it is time to avoid being an indexer and get active. i agree. there are early to -- there are a lot of reasons for that. extreme highs mean there is a
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lot of alphabet to be made by playing mean reversion of valuation. that is one reason. the other reason i think they will underperform active is the index itself is still very top-heavy in long-duration, high-growth, tech,tmt, the old leadership that did well when interest rates were falling to zero, the cost of capital was free, and any company got funding to do whatever it wanted. we are moving into an environment that is more rational and we need to sift through and pick the winners, figure out the winners from the losers. lisa: that seems to be more energy and financials rather than tech and discretionary.
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that is something you talked about, the flipping of the risk premium. how much does that take into account the likelihood of some sort of recession, the fact that yields will be coming back down and oil prices will not rise as high as people think? how much does that still support a narrative of financials and oil companies outperforming? savita: if rates come back to zero and if oil companies flood the market with supply, i'm going to be wrong. i don't think, either of those things happen over the next 12 months. oil companies finally have capital discipline and they are more interested in meeting esg goals then extracting oil. they have completely pivoted from flooding the market with supply. i i'm not talking about just constraints on energy from the war in ukraine. i i'm talking about something
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that has been in place for several years. oil companies in the u.s. are not motivated by increasing supply. they are motivated by pivoting to green. 90% of ceos at energy companies pay themselves not in alignment with production goals, but in alignment with esg goals. even if rates flatline, financials has gone from being the toxic sector of 2007 to a sector that has lower earnings volatility than, the s&p 500 sector that has had better balance sheets than it has in the history of its existence and can amp up its dividend. i think it is an interesting sector right now. lisa: where do we pivot to after next year? let's say it is the reset year where we understand whether we
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have seen peak inflation and their trajectory from their? are we heading to a lost decade or are we entering a new bull market that has legs? savita: i think we are in an environment where we are moving from price appreciation to total return. that has been our thesis for the last couple of years. if you look at the last 10 years most of the returns of the s&p 500 have been from capital appreciation. less than 15% of returns have been from dividends. we are moving into an environment where 50% of your returns will be from dividends, 50% will be from price appreciation. not as exciting, but it is very exciting from the idea that companies could increase their dividends, their total return profile could be that much better than bonds. i still like stocks more than bonds for the next 10
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thing i think is good news, is our long-term models were very negative at the beginning of this year. the good thing about this correction we have seen in the market, the good thing about valuations coming down is the set up is spitting out -- it is not going to be great like the 2010's but it will be better than negative. jonathan: savita here with us this morning. we have to get her back on to talk about the new esg. the war in ukraine -we were-looking at coal prices . -- we were looking at coal prices. lisa: coal prices were obsolete until they weren't, which raises
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some questions about the transition to esg for a lot of the oil majors and how that shifts as we focus on making it through right now. tom: i don't know the linkage to the war, but there is a new humility in esg and savita lead on that by avoiding the rah-rah and looking to a more statistical basis to evaluate esg. what do you see on the monitor on tuesday? lisa: when you get energy prices that hang around here -- tom: $68 west texas. lisa: there is a feeling that energy companies ra bu -- are a buy. i wonder if we have seen a floor put in. we have buy-in by the u.s. and you have reopening china -- b
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uying by the u.s. and you have a reopening china. tom: you have heated opinions. there is in the zeitgeist a new humility. everyone has been humbled in their own individual way. i have seen a dearth of 55 page outlooks. right now red and green on the screen, the vix to me is stunning after the 3, 4 days we have seen. almost a 4 standard deviation move. the vix, you think 24, 25, 26 -- no. the vix quite absent -- the vix quiescent. stay with us.
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this is bloomberg surveillance. ♪
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jonathan: can we just wrap up two already -- up 2022 already? the come down to the open starts right now -- the countdown to the open starts right now. >> everything you need to get ready for the start of u.s. trading with jonathan ferro. ♪ jonathan: live from new york city we begin with the big issue, looking out to 2023 twitter might be looking for new leadership. the


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