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tv   Bloomberg Surveillance  Bloomberg  January 27, 2023 8:00am-9:00am EST

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>> i think there is going to be some significant aspects that are going to stop showing. >> this is about taking advantage of >> opportunities after last year. >>are we able to -- the
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momentum? most of the data suggests we will not. >> how quickly it can do that, whether it once to ease back next year. >> i do not think we are out of the woods yet. i think we are going through the bottoming process. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. lisa: good morning, this is bloomberg surveillance. tom keene in new york. jonathan ferro in london. i am lisa abramowitz. core pce, income and spending. tom: we have been a mess here. looking at the collapse of intel and such. we have a huge turning dump coming in at 8:30. at 10:00. jon ferro has been ahead of me on this. i am not a fan of confident statistics. i am posh about it. lisa: it is because they did not
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call you. tom: exactly. i am looking at michigan sentiment. michigan five and 10 year forward inflation expectations, that is big data this morning. lisa: we have been fed fee because we have been focused on earnings on tangible day today on companies that have been reporting. this conversation will shift. it is the quiet period ahead of next wednesday. tom: thank god for that. lisa: the conversation may shift if you get core pce that comes in above expectations. tom: to me, the mystery is economic growth. we will do that in a moment with andrew balls with john in london. central banks have a plan, will they be derailed by some form of lesser animal spirit, nominal gdp and some form of disinflation? on a friday morning, i've got a 88 .46 brent crude. 90 near -- near $90 a barrel.
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lisa: this is the tension right now. do not write the fed. the mantra for a decade all of a sudden is, fight the fed. if you look at equities, they are marginally lower. who knows what happens come 4:00 p.m. today. it seems everything bleeds higher. tom: lifts at 10:00 a.m. lisa:4059 on the s&p. the dollar strength you start seeing come back, how sustainable is it? are we seeing the end of dollar losses? 1.0860, down about .3%. 10 year stable and consistent throughout the past couple of weeks. tom: we heard that earlier, a turn within the bond market.
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at the end of the day, i am looking at bloomberg financial conditions index which did move this week away from what chairman powell wants it to be. lisa: let's get andrew balls, the head of fixed income for pimco with jonathan ferro. i wonder how much people are going to start talking more about the do not fight the fed, fight the fed because the fed is wrong. jonathan: let's talk about that now. thank you. andrew, welcome. we put out a outlook recently with tiffany while billing. you've got recession in the u.s. and europe. that europe story is starting to change. why are you sticking with that call? andrew: baseline is whenever europe and u.s., a number of countries, the energy price situation is clearly a big positive in terms of the european outlook and when you are thinking about the shallow
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recession versus a deep recession, i think that is an improvement in the outlook given the financial conditions tightening that we have seen. more to come from the ecb. the baseline is for shallow recession in europe, which is broadly what we think financial markets are pricing in. jonathan: what is the baseline for the united states now? you got federal serve saying hold, you've got markets saying cut. where are you on that? andrew: i think the fed will go two more times and hold in march. powell has created the space for this, talking about the maximum and so on. from our point of view, it is likely the fed will be on hold for some time. when you think about markets, markets pricing in all sorts of scenarios. scenarios where the fed will have to the cut deeply if the recession is much deeper.
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the most likely outcome is the fed on hold. we are's -- are still not out of the woods on inflation. a lot has to go right on the inflation front. the risk which markets were very focused on last year has receded in terms of the fed have to be a lot more unfriendly. in terms of our positioning, we want to pay a lot of attention to a scenario where inflation is stubbornly high and you're going to to have to have another period of fed rate hikes which would be quite difficult in terms of risk assets, asset markets more generally. jonathan: can we talk about volatility in the bond market? the difficulty of last year was pricing the so-called risk-free asset which makes it impossible to price the risk assets. this year, i think people were hoping for stability in fed funds. if we have this gap right now between market expectations and
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what the fed is trying to signal, can we reconcile without getting a burst of bond volatility? andrew: -- there was a lot of volatility last year. i think if over time, markets price out those fed rate cuts priced in or the second half of this year, i do not think there has to be a dramatic -- as dramatic when you get more confidence in the shape of the recession and recovery this year. that seems plausible. i think the thing that would be destabilizing allah to liddy would be -- volatility would be if core inflation got over to percent and you have to think about further rate hiking the head, causing more of a slowdown. guard against that. market pricing out the rate hikes, rate cuts in the second half of this year, i think that
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can happen in the lower volatility environment. a lot of the strategies we will do in the positioning will be positioning for lower volatility and fixed income but continuing to guard against the tale of worst macro outcomes or worse inflation outcomes. jonathan: let's talk about the investment process at pimco. take be inside the investment committee. you've got fed funds, further out you've got circles. can you go through what these circles are and how far away you want to move away from the core fixed income? andrew: we talked about this in our outlook. at the center of global financial markets, you have the fed, short and intermediate interest rates in the u.s. and in the g10. this is important, the stability is important in terms of the effects on risk assets. as you move out of our
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concentric circles into credit, into emerging markets, into equities, we think a prerequisite and asset allocation portfolios say of wanting to add more equity type risk is wanting to see that stability in local fixed income. hopefully, the restoration of more normal correlation between fixed income and risk assets and equity markets. last year, we destabilized the center of the global asset markets, the fed funds rate expectations, big shift in terms of the fed or treasury yields in the u.s. very destabilizing for local equities this year -- global equities. this year, we have the prospect of lower fixed and scum -- fixed income volatility. and our investment sentiment, we will be emphasizing core fixed
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income, good yields so you can get there and be careful about the risk you add high quality investment grade credit made sense, but we do not need to have lower quality credit, high-yield. we can get good enough returns we think in the center of this distribution and continue to respect the fact the recession risk is two ways. it could be better than our baseline, or a lot worse. jonathan: this is another thing i do not like about emerging markets right? andrew: positions, select fx positions, local or dollar based yen. i think it will depend on your asset allocation. for us at this stage, core fixed income very good yields about 5%. as we get more confidence in terms of the shape of the
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recovery and the path of the fed, you can scale into en over time. e.m. was earlier hiking, they were earlier in the cycle, the yields were attractive. i think there is good opportunities there. jonathan: you are a bond guy, so naturally you are worried about something. we talked about this the last couple of weeks. this is the third year pandemic economics. every year, we seem to have gotten it wrong. is there one thing you are worried right now people have gotten wrong as we go into year three of this? andrew: the thing i am worried about is the possibility of higher inflation. to relate it to the pandemic, longer time for healing in terms of the disruptions we have had. stubbornly high inflation that dates more from central banks to care. it is not the baseline, i think that is a big risk.
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if you look at the last couple of years, no one has won any prizes for their inflation forecast during this period. the baseline is the baseline. you need to think carefully about these risk cases. one which would worry me at night is stubbornly high inflation, settling -- certainly above 2% or 4% core inflation. if that happens, that is going to be interesting in terms of financial markets and volatility. jonathan: always good to see you in person. andrew also pimco. a worry for you as a bond investor, there is one for you the year ahead. tom: futures -14. stay with us. this is bloomberg. good morning. ♪ lisa: keeping you up-to-date with news from world -- from around the world. there will not be a tax cut soon in the u.k. chancellor jeremy hunt spoke to bloomberg tv today in an
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exclusive interview. >> we do not have the headroom for major tax cuts. if i was going to prioritize where i would like to see tax cuts, it would be business tax cuts. lower taxes, stability. inflation is a fundamental threat of instability in economy . it is a worry for households. it stops them spending. it cuts off businesses from investing. lisa: pushback against u.s. and european plans to subsidize green energy, which threatened to divert investment from the u.k. bloomberg has learned vladimir putin is planning a new offensive in ukraine. the russian president is preparing his country for a conflict with the u.s. and its allies that he expects to last for years. the kremlin wants to show its forces can regain the initiative after months of losing ground. it is willing to force ukraine and its backers to agree to some kind of trees. bloomberg reports japan and the
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netherlands will join the u.s. in limiting china's access to semiconductor machinery. the alliance is aimed at undercutting beijing's ambitions to build its own chip capabilities. u.s., dutch and japanese officials are set to conclude talks as soon as today. chevron posted a record profit for a full year thanks to surging commodity prices and domestic oil production. that generated unprecedented cash flow that help pay for a mammoth 75 billion dollars share buyback program. earnings more than doubled its $36.5 billion from a year ago. global news 24 hours a day, on air and on "bloomberg quicktake." i am lisa mateo. this is bloomberg. ♪
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>> this is not going to be an easy one for the bed. currently, market is pricing 4.9%. 5% terminal rate. i think you could reprice a bit
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higher. the fed has become a far maturing thing. we are getting closer, driving global expectations. this has been reignited by the chinese reopening. this is what is driving the markets. tom: of citigroup looking at the international ramifications of speculation of foreign exchange in this earnings season. lisa and i are looking at the foreign-exchange effect for multinationals. i am going to say so far it is 4-ish. it is in between-y. lisa: it is in between-y because of the hit people took last year and the tailwind they will get this year. it is a wash. people can look past. in effects, hundreds of millions of dollars. tom: the rule of thumb, 2% or 3% is normal. last year, it was 5%. saw some 7%. you've got a foreign-exchange effect of 4%. it is in between-y.
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this is a joy. we did this on short notice. we have done so many surveillance corrections today, somebody said save the show. we do this with joe feldman with kelsey advisory group. i -- what i love about joe, he does not write a page notes. he writes four page specials and cuts to the chase. we are going to devote this section to amazon. which, everyone on radio and tv uses joe feldman. if they lost to their step, when you look at amazon, joe, do you say to yourself, the boxes in our houses, in our stores, the ubiquity of it, that it is threatened? joe: i would not say it is threatened. however, we are maybe seeing where they are not immune to the consumer slowdown we have seen in the past couple of months. the concerns we have about
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consumer going forward, you add on to the fact they are a aws business. there cloud business has been slower because cloud computing has been slower. they were a huge beneficiary during the pandemic with people shopping online and having boxes shipped to their homes. since then, they have had to readjust. tom: joe, this is important. this is what is unspoken on the conference call, which you are on. the shaken interpretation of seattle when they go, mr. feldman next. real simple, the cloud guy has come in to pick up the pieces. the great unspoken is about the guy before him. would mr. bezos screw this up, or did mr. bezos take his eye off of it because he was in hollywood figuring out the next spaceflight? joe: [laughter] i think the management got a little ahead of themselves during the pandemic.
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they were trying to keep up with the demand. as a result, they built out their capacity much quicker. there was such an exhilaration demand, the capacity doubled or was increased by 50%, not doubled. that was arguably too much. they have had to readjust and bring that back down. that is where you could say management -- i think they were doing what was right for the consumer, but they got stuck and had to backtrack a little bit. there was erosion in profitability at the same time sales were slowing a little bit. lisa: we know the story, this has been the question. how much has been priced in given these shares lost 50% of their value last year? joe: that is a great point. i think a lot of this is priced in. earlier this week when we did our preview, we didn't lower our price target to $125. -- we did lower our price target
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to $125. we very much like amazon, we think this could be a nice recovery year for them in terms of better profitability, especially as they lapse some challenges they faced in 2022. from a spot perspective, it feels like a lot is priced in. i think there is optimism in 2023. lisa: we have been talking all morning about the changing workforce, potential for retirees to get back to work as some people in the u.k. are calling for. this question of artificial intelligence and how it affects some of the biggest employers out there. i look at amazon and what they are doing there, how much of that is part of the recovery story in terms of automating parts of their warehouses and leaning on that to fuel their growth? joe: i think amazon has been on the forefront of leveraging technology to fulfill customer demand. it is among retailers. they are one of the leaders, they were early leveraging
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robotics, technology. i think that is going to continue to help them be more efficient in the future. tom: a two-part question link together, this goes back to the pre-pandemic analysis. amazon stumbled, but do they get ae bit. margin back --e-bitda margin back? and flip to free cash flow that can exceed the wonderful year of 2019? is this the year that happens? joe: i think this could be a nice recovery year for them. we think you were going to see the 14%, 15% type ebita margin this year. i think there will be -- it will be a decent year for amazon. they can operate more efficiently. i think they are controlling their costs, watching the labor, leveraging their technology. if they can maintain some solid
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level of consumer demand, which we would expect. we are forecasting sales to be up 11% this year. they should be ok. i think it will be a good year for amazon. lisa: how much is that belief that optimism is hinging on a macro call of greater consumer spending versus a idiom craddick -- idiosyncratic story? joe: great point, i think some of this is related to the consumer holding up somewhat. we are forecasting some slowdowns in the first half, maybe middle half of the year. we are hopeful second half starts to recover a little bit towards the holidays again. i think amazon is taking market share and continues to take market share across many different categories. they got aggressive with their prescription pharmacy plan they offered to the other day to prime members. that is one small element.
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they are getting deeper into grocery, doing so many things that can capture market share to help offset some of the slowness in the broader consumer. tom: they are getting deeper into grocery. do you suggest they will expand whole paycheck from sea to shining sea? joe: [laughter] they like their amazon fresh format. i think we will see more of those amazon fresh stores. there is one in new jersey, i think we will see more in the northeast and across the country. tom: what is amazon fresh? inform me. joe: it is their version of a grocery store. it is like a traditional grocery store, but it has the bells and whistles and technology where you can go in, scan your phone or your palm and it attaches that to your credit card and you can shop the store and walk out without even seeing a cashier. tom: are the avocados cheaper there than at whole foods? joe: [laughter] yes. amazon is positioning this fresh concept as a more moderately
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priced grocery store, relative to whole foods. tom: everything is more moderately priced than whole foods. lisa: i love you are doing your shopping with joe feldman. [laughter] tom: you and i are so behind on this. there is so much technology in food now. amazon is trying to do it. i have never been on amazon fresh. like he says, you walk in with your phone. lisa: it tracks you. you just walk in, walk out. tom: have you --? lisa: i have not. i have done other technologically induced food expenses. tom: velveeta. remember the magic of fairway on the upper west side? lisa: it was not because of technology. it was because of some of the goods and what you could specifically by their and specialties you could purchase. i want to bring this up.
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there are more people falling behind on car payments than at the peak in 2001 -- we are talking about the resilience of the u.s. consumer, yet you see this issue after the prices of cars exploded ring the pandemic. tom: the old $250 a month is now $400 a month? lisa: there are people paying more than $1000 a month, it was basically another mortgage depending on what they financed. tom: i paid off my car in 1968. i still have it. it is great. i do not take it much out in the winter. lisa: [laughter] if you hear the clunk, clunk, clunk down fifth avenue, that is tom keene. [laughter] hevron, we're working to help reduce the carbon intensity of the fuels that keep things moving. today, we're producing renewable diesel that can be used in existing diesel tanks. and we're committed to increasing our renewable fuels production.
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tom: bloomberg surveillance from new york and london. look for the 9:00 story from mr. farrow -- mr. ferro. lisa, you and i have failed in earnings season. lisa: which aspect? tom: there are too many. we have underplayed the important economic data. lisa: this is some key data the federal reserve looks at. core pce will be interesting, income and spending are getting those figures right now. tom: that means michael mckee will dissect like he did. a buoyant gdp statistic earlier. michael: buoyant headline, not so good below. we will take it.
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here is the numbers you want to see. pce deflator up .1%, that matches last month. that is a little bit ahead of the expectation for a flat reading. year-over-year basis pushes us down to 5% from 5.5%. core rate is up .3%, a 10th more than last month. that matches expectations, pushes us down to 4.4% for the year-over-year, down from 4.7%. the fed is getting progress in its inflation fight. personal incomes up .2% on the month. personal spending down .2%, those both match estimates. bravo to the economists who did the forecasting. incomes number down from a revised .3%. spending is down from a revised
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-1/10 percent. interesting note. this did not show up as much in gdp because that comes out as a quarterly number. october personal consumption was up, but november and december down. the sequential move is to a slowing consumer at this point. tom: i want you to go to the basics. amateur year-over-year pce deflator, 5.5% down to 5%. you have been lecturing me month over month matters. into this new year, is month over month important to you than the fed then year-over-year? michael: personally, i do not care. to the fed, it matters because of what they are trying to do. they are trying to eliminate the base effects from last year and one to see what the sequential progress is. if you are going to do a comparison to last year, you might want to do something compared to march of last year when they started raising
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interest rates. year-over-year is what gets headlines. what the consumer looks at. the fed is looking at the sequential change because they want to make sure they are getting a regular decline in the numbers. let me give you this savings rate, went up to 3.4% from 2.9%. that was a concern, that people were spending all of their leftover stimmy money and now, it looks like they kept some aside in the month of december. wages and salaries, they the celebrate -- decelerate. revised down to .3%. a slow wage on the salary front, good news for the fed. lisa: not that news-y for the markets. baseline stasis is that people
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priced and most of this, right in line with expectations. one area i want to focus in on, real personal spending when you strip in inflationary impulse behind it. it dropped more than expected. are we seeing a consumer being warned by what is going on and pulling back ahead of the storm? michael: i think you are seeing basically that. is it because they accelerated their spending into october and september was large as well because they felt they needed to get their christmas shopping out of the way early, or is it because people are really pulling back? this is something of a seasonal thing. lester, we saw basically the same dynamic. are we seeing ace -- a change in consumer spending patterns? consumer spending, lower now that you were taking personal spending out of it. it does show a slowdown. let's see what happens in january when tom goes to amazon
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fresh and shops. tom: it will be a test effort. michael mckee, thank you. getting ready for the fed meeting next week. red and green on the screen. yields space up three basis points, 10-year yield 3.5%. this is a joy, a heritage of what neil saw did at credit suisse. joining us, he and i are on the same page that inflation adjusts and mr. harris and i go, maybe not. nominal gdp matters. what is the global credit suisse outlook on the dynamic outlook of nominal gdp with disinflation in place? >> that is right. the key thing for corporate profitability, outlook for earnings, is nominal money and nominal gdp growth after a boom
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in late 2021 or early 2022 is slowing a lot. that is the disinflation process. what that means is, at the top one, revenue growth is going to come down. we are already seeing that. there is a link between nominal gdp growth swings and margins. argent's are going to come down. we are seeing that. although we think there will be consumption growth in 2023, that consumption growth especially in the goods sector is going to be very weak. slowing revenues, squeezed margins and not a lot of volume growth. tom: sitting in the chair this week have been a number of people modeling out some form of reaction trajectory, down to a level of disinflation. 4%, 3%. some even modeling under 3% as an inflation picture for the
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united states. our central bankers prepared to have their minds change when the feds change? ray: the fed is moving. you can see the fed, this shift from 50's to 25. i suppose recently the comments out of -- suggest the fed is beginning to adjust to the fact economy has weakened and it views itself as being in restrictive territory and at some point, it is going to pause. that is the right to do. what they are not ready to do because of the level of inflation, there is the month on month which looks good. then there is the fact what the public cares about is the year on year on your numbers, those are still high. the fed is going to have something of an asymmetric bias towards hawkishness until it can get year on your numbers down below 3%. lisa: some people including
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citigroup's and your hollen horse saying if she does take the job with the white house, this could increase the hawkish tilt of the federal reserve. she was more of a moderating voice saying maybe the risks are more balanced. do you agree? ray: maybe. i think there is probably some extent to which she has been a balloon -- a trial balloon. this bed seems to be in communication to be much more coordinated and game planned than feds of three or four years ago. lisa: when it comes to actual economic data, how much are people overlooking the chinese coming online, the fact china ended zero covid and we will get some sort of boost from consumer spending that perhaps could -- demand for commodities and other goods? ray: we just wrote about this. the global level impact this
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year will be modest, about 0.2% of global gdp. most of that be focused outside of china, most focused in asia. countries like thailand, singapore, philippines will benefit as chinese begin to travel abroad again. europe, maybe a small boast. -- small boost. united states, very small. the key thing is the impact on energy prices. this is one of the reasons why the fed at this stage, even with a succession of pretty good month on months, cannot take for granted victory if for whatever reason the chinese managed to drive up oil prices above $100 a barrel. headline inflation will return. tom: you own the pacific rim for credit suisse for years and years, the bottom line is, you are suggesting brent crude with pacific rim oil demand coming
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back. are you suggesting it could pop above $100 and buy new levels above $120? ray: our forecast is around $90, where we are now. it has been difficult to predict. we have to recognize the energy markets are very tight. we are not getting as much of a response out of the united states. opec is sort of back and control. if i were the fed and i am sitting there, is there a chance that despite my forecasting, oil surprises to the top side and that damages might inflation outlook? yeah, there is a chance. i cannot take that risk. tom: with your history of pacific rim, do you model out yield curve as it goes away and get ian back to stronger as we know it? ray: i think that is only after the new governor comes in. we need to get the new governor in april and policy review, then probably in june take away the yield curve control. note the boj has a new facility
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that allows it to lynn banks against jgb's at submarket yields. it has created a facility that will allow it to manage the process of 10 year -- >> to me, it is almost like sterilized currency. almost like a sterilized yield curve. ray: it is the one place that once inflation. externally, the imf may be excited about japanese inflation. we will start with the japanese except in the opposite direction. they want it. tom: thank you. ray farri with credit suisse and pacific rim credit. lisa, bonds lift. we've got another tranche of economic data coming up. lisa: university of michigan sentiment survey, which will perhaps give insight as to why people are saving more and spending less. that is the theme i can see, people are girding for a winter that has not come yet. tom: i was not briefed on this.
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pending home sales at tenant -- at 10:00, liz saunders heated she is watching home economics, if you will. more than anything in america. lisa: [laughter] we are not talking different cooking classes. this question of whether we have seen the bulk of the fed moves in the most sensitive area of the economy, that is the housing market. tom: housing market and labor market. goodyear tire, off the radar. goodyear tire to cut 5% of global salary staff. this is special, richard haass out with a new book. he will join us in a moment. stay with us. red and green on the screen. this is bloomberg. lisa: the u.k.'s chancellor is dismissing calls for tax cuts in an exclusive interview, jeremy hunt told bloomberg tv we do not have the headroom. he -- written as a hub for
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high-tech industries and innovation. >> i think we have the opportunity with our universities, our financial services and technology strengths to be a silicone valley. lisa: -- pushback on u.s. and european ballads -- plans to divert investment to the u.k. it has been almost a year into the invasion that vladimir putin figured would be over within weeks. bloomberg has learned the russian president is planning a new offensive in ukraine. he is bracing his country for a conflict he expects to take years. the chrome and wants to show its forces can regain the initiative after months of losing ground. -- to force ukraine to some kind of trees. customers using american express spent a record amount last quarter. the credit card giant pricked revenue and profit for this year will surge above estimates. amex has been tweaking rewards on many of its cards, that has
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helped it add millions of new cardholders last year. americans are falling behind on car payments at a higher rate than during the financial crisis in 2009. according to finch ratings, percentage of subprime auto borrowers at least 60 days late on their bills rose almost 5.7% in december, more than twice the record low set in 2021. 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. ♪ this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight.
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conventional thinking delivers conventional results. at allspring, we break away with purpose. harnessing data-driven insights and boundless curiosity. we dissect the market from every angle. helping to build portfolios that redefine what's possible. because investing isn't one size fits all. allspring. purposefully divergent. >> if the public doesn't want to work together and continue to grow manufacturing jobs and build the strongest economy in the world and make sure americans are paid a fair wage
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-- the united states of america, we pay our debts. it took 200 years to accumulate that debt. tom: the president of the united states, driving or the story of maybe late summer or autumn. the debt ceiling debate, we try to avoid it this week. we failed. it is ever ongoing and will be a political football into the sunday talk shows. it will not go away. lisa: it will not. even if they could get down to september 30. tom: jon ferro getting ready in london getting ready to move the story forward. red and green on the screen. we are going to stop right now. we can do this with richard haass, it was my book of the summer, book of the year, cannot remember. it -- his book on how to figure out the new western civilization 101, the world was so important. it -- he comes back with a jewel. it is the bill of obligations,
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but far more, this goes back. this is corny, but unbelievably tangible right now. trustworthy, helpful, courteous, kind, obedient, cheerful. thrifty, brave, clean and reverent. richard haass takes us back to another time and prime police creams for some stability within our fractured american --primal screams for some stability within our fractured american society. richard: interesting you quote our scouts on one of the very few organizations in america, the girl scouts, who teaches civics. they are invested in the fabric of society. tom: how did we get here? how did our society get to where you had to write a piercing 140, 1 hundred 50 pages on america, get your act together? richard: a couple of reasons.
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one, we do not teach our story. the fact we do not teach civics in many schools. the fact you can graduate from any college or university and if you navigate your course distribution right, you will never study united states civics. you will never understand --or, civics, for that matter. i think social media has contributed to increasingly people go into their own ecosystem or echo system, they go for things to confirm their social biases. social media is about more than -- social media is where people get their misinformation. i think people become more skeptical of government. the failure to manage the economy, the wars in iraq and afghanistan, has created a sense of populism in this country. there has been backsliding here. it is not unique here. you see it in brazil, mexico, parts and europe.
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i think democracies are under pressure. we just never thought it would happen here. we are the world's oldest democracy. tom: chapped sacs screamed about this, talking about the fractured american education system. what is the best practice model worldwide that we can learn from to begin at the margin to improve our social education process? richard: we have good examples here. we have the best higher education in the world. the problem is, we do not require certain things. tom: have you seen the oberlin model? richard: [laughter] i would not put that at the pinnacle. people line up around the world to go to american universities. you have people on campus not requiring them to do certain things. 10 -- finland has started an experiment for high school kids. you have to become what is called literate and information. they teach you how to navigate this world of information, what is a fact, what is something,
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what is a opinion? one state of the 50 states has that law, new jersey. just passed at the other week. new jersey graduates will have to experience this information. lisa: you handed up the -- handed us this card, how much is this an indictment of the moment we are in in terms of people's attention span and ability to focus? do you see progress in the places you are saying, for civics, they can salvage what you are hoping for? richard: i see the potential for progress. almost every group i speak to, people know there is something wrong. americans get it. look at the polls. they have lost confidence in the future. there is a lot of interest in teaching civics. people know something has gone seriously wrong in washington.
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they are alienated from their government. the potential for reform is there. the question is whether we can get sufficient involvement. the fact recent midterm elections given recent stakes, less than half of eligible voters voted, there is something wrong. we've got to get people more informed and involved. lisa: how has this dovetailed into the united states position internationally? considering the fact the rest of the world sees a dysfunction in washington and reacts to it? richard: the chinese like nothing more than to show pictures of something like january 6 and say, see? democracy is the same as -- it makes it hard for our allies to trust us. they see the dis-continuities that coming 2 america. they no longer have assumptions of reliability. i think that is why our foes are willing to challenge us.
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tom: richard haass as we celebrate his new book. 150 pages, now we migrate to richard haass, oscar analyst, expert on movies. there i was, watching what i call the banshees. the irish movie that is out. i thought of you. they are looking at the harbor looking at the war going on in ireland. you lived it. did you see that movie and what did it bring back about the irish tension that is and will always still be there? richard: i did not see it. tom: you have to see it. richard: i have been kind of busy, tom. a lot of those issues, the problems the northern island, brexit. one of the many consequences of brexit, it has reintroduced friction into northern ireland. northern island went through three decades of troubles. i do not think now it is inconceivable we could see some
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sort of reintroduction. we are seeing greater friction there. by the way, given what we are talking about this morning, it is a warning for this country. i am not worried about a civil war. i am worried about an american version of the troubles where we have politically inspired violence from around the country. no one should think january 6 is a one-off. you've got a big business audience on this show. besides inking about esg, di, businesses ought to be thinking about, what can we do to promote american democracy? lisa: before we let you go, you were talking about social media and involvement there. there is a push to ban tiktok and part of chinese ownership. do you think restricting social media is the answer? richard: it is part of the answer. we have to regulate it. one of the responsibilities of carriers, are they publishers or pipelines? one of the more important, making the people that go to social media more discerning.
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how do we make them understand the limits of social media. i went to citizens to be critical consumers of information. ronald reagan calls for patriotism, first he calls for informed patriotism. make sure we are critical consumers of this information soup we are consuming. tom: i know you like to cover the ralph lauren sweater thing, for our audience, the bill of obligations is not just an american book. it is an international book about learning the civics we all know. democracy is more than procedures of laws and ethical ideal. lisa, that sums it up. lisa: and also knowing each other other then just what people say in your vacuum and the social media sphere. that is important, how bifurcated everybody's news streams have come. tom: every 90 days, i start
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screaming about lazy kids, how can we stay informed? i go nuts. it takes work. you have to work at it. lisa: i was having a conversation with someone in my home about the potential influence they get from the media that they read on tiktok or instagram. they told me, it is not a big deal. i can discern what is manipulative or what is potentially influencing me one way or another. really? these are some of the questions that need to be discussed. tom: we get ready for next week, a fed meeting in earnings. important earnings about the policy of what america doesn't, technology. lisa: big tech. amazon, apple and google, or alphabet as some would call it on thursday. tom: we continue on this friday. in 64 minutes, key economic data. stay with us on radio, on television. this is "bloomberg
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