'Bloomberg Surveillance Simulcast' Full Show 12/23/2022
This is the most expected, most anticipated recession ever to be historic. We need to not go into recession. We do have the unemployment rate rising. I mean, that is enough of a high enough rate to cause a mild recession. You'll see a recovery before before you get out of the recession. Our baseline is that the U.S. economy will avoid recession. This is Bloomberg Surveillance with Tom
Keene, Jonathan Ferro and Lisa Abramowicz. Good morning, everyone. Jonathan Ferro Lisa Abramowicz Tom Keene radio and television were looking at potato gratin recipes as they staggered to the weekend as well. Lisa is looking to get away. Good luck. Oh, thank you. That's so sweet wishes. We welcome all of you on a Friday before
the holiday. Yes, we're all off next week, which is a great and beautiful thing. Thank you to our staff for making that happen. But we have an overlay of things here. I want to get this out of the way first. We are thrilled that Bob Diamond will have trouble getting it out. We are thrilled that Bob Diamond will be with us in the 8:00 hour to speak of his dear friend, Scott Miner.
That's the first order of business. We'll talk about Mr. Miner through the show. All of us here at surveillance in absolute shock all the way, all the way to put it. Also, huge shock over the mother of all storms. I mean, people are glued back in 1978, Liz. And this is the real deal. It was.
It was a biblical rain coming in today. Yeah, definitely. And that's going to freeze over and create pretty treacherous. Joseph, you say weather gloom. Can you say this?
Says the word. It's good to see you make it. Well, good luck. Hopefully I get out. Hopefully you all get out. Now, if you had a flight, I hope it wasn't one of the three. Thirty five hundred that have been canceled. This is going to be a busy moment and everyone is trying to get away. Today you cannot because there is
important data, there is important discussions about how next year is going to be a pivot point in many different ways. Not perhaps that many people want it as well as Bob Diamond. Michael McKee will be with us. He was missing yesterday, but it's important to get it up. And look at the data dump today. We have Michigan survey that. OK, it was there, but now it's important. Durable goods, part of that GDP
calculation, a piece of you deflator is what Michael McKee is going to focus on and we'll walk through. All of the data comes after investors just pulled the most ever out of stock funds in the past week and a week through. I miss that early yet. Really? Forty two billion dollars from equities. This was that I finally went to cash. You also had money withdrawn from bonds. This is a question. Have we reached the end of the withdrawal of free money, of the end of the tightening? Or is this the beginning of a cascade that a lot of people are expecting at the beginning of next year? So we're going to have an interesting show. We hope you stay with us through all of
surveying listed. Are you doing the 9:00 or do you exit right after the show? I'm trying to fly out of it, flying out as well. There's a lot of people making it up here in New York City. And we hope you are safe. I looked at Chicago. I think it was minus 8 with a windchill
minus 20. And you moved east to, say, Columbus, Ohio, to above zero. It was 40 degrees in Pittsburgh. I mean, that's what we're that's what we're dealing with here. And heavy rains. And we'll get you through on radio, Rob, Carol. And we'll have important reports for you as well. And we've got Brian CAC Sullivan up in
Boston with us later on. What we're going to do here because we have an optimist on with us. We're going get Lisa to do the brief. I'll do the data. Why don't you do that? Are you ready to do the briefing? Yes, I'm making it up. Well, I'm I'm always making it up. What we're looking at today.
There are some really important data points. And this is notable because it is light volumes every day. Why don't we get our data done? But it is a data dump, 830 AM, a read on the consumer. We get U.S.
personal spending and income for November. We have seen personal spending come off. Real personal spending is expected just inch higher. However, the question here is the resilience and P.S. core deflator. This is the key inflation metric looked at by the Federal Reserve.
Yes, it's expected to come down, but not that much. There is not necessarily the downward trajectory that's as direct as with the broader CPI index at 10 a.m. like at the University of Michigan sentiment survey for December as well as November. New home sales. How much is sentiment continued to bleed upward? We saw that in some of the recent data and this particular yesterday as well. Yeah. And it really tracks entered oil prices, gasoline prices.
And so you might see that inverse relationship come through on the data front. I mean, to call it churn, it's a bounce. A big two days ago down big yesterday and right now fractionally up. Futures up 16. The VIX is real to me. The VIX is telling of this December week where we ought to be out 23, 24. We are not. We're at twenty one point eighty two on the VIX. The Bloomberg Financial Conditions Index
gives Chairman Powell accommodation, not restriction, some curve dynamics. A little bit of an. Decent version, I guess I call it a two year yield. Four point to a percent. Worth watching as well. And we note as we look at the data that
John Fehr on his way to Cornwall, still moving past boff in Exeter, heavy rains in southern England. Just one light. You know, the other thing on my agenda is at 2:00 p.m., the bond market closes early. I do not know. That marks a coda to a year that has been incredibly dramatic. I think we're going to celebrate with an auctioneer at one.
Oh, my elevate with an auction, with a tie. But I was going to say it's been a marked remarkable make this month. Can we get one at the end? Amy? We get one of the interns over here. Can you do an eight page paper by 12 noon on why the equity market is not closing it to? Do we have any idea why? No, Cliff. No clue. Here's the good news. You can use my closing it to John Stoll office knew that chief investment strategist at Oppenheimer Co and we're thrilled he could join us this morning.
John, what's so important here is you've been a bull with a select few others. You have maintained your bullish stance. And like an adult, you have the courage to move out the x axis into 2023. We've done the same thing with the
recession call. We've moved the recession call out into 2023. Is your bullishness in the recession call out? Are they linked? I think to some extent, you know, there is risk of a recession. We end that montage that you showed just a little bit between the bit between the points of the show and the commercial sanction. And you can everybody is speaking with great authority, whether it's those that believe or moving into our recession or not.
No one really knows. We belong to the camp that we think we might skirt a recession or if we do a recession, it'll be relatively light. The economy's resilience is pretty clear by the economic data. Anything good news yesterday turned into bad news for the market as people voted. It gave the Fed reason to extend or raising rates for long.
And we'd have to think that know there's an opportunity 12 months ahead of us to really see the markets come back. We don't think it's going to be necessarily a year of robustness, but one in which resilience shows that we can write back, talk and believe John Lisa Abramowicz is too young to remember FIFO life of first in, first out and all that. And there I was looking at Nike's inventory success of moving sneakers out after they bought too many or had too many during the pandemic. Well, how do you extrapolate the good news of FedEx and Nike a few days ago out in the store office, optimism for next year? Well, we'd have to say we think that's evidence of exceptional management teams utilizing technology to arrive at solutions to help them navigate the really turbulent waters. And we've seen corporations do this through the pandemic. Earlier, they did it through the financial crisis recovery period, and we think they're working on it right now.
It's not that all corporations will succeed in that, but the better ones will. So that's one of the reasons whether you're in small, men's or large with our growth or value. We suggest you go for quality year one shift that we've heard and tone, John, it is people pushing back their expectations of when the recession will start. Just because of that optimism that you're seeing in corporations, is that a good do scenario longer term for stocks or is that just a good term, a kind of short term trading opportunity? I actually think it's a it's a good term. It's good for the longer term in here. I'll never forget in 0 9, we were early on the bullish call in 0 9 and everybody was always looking for the next shoe to fall. It was always with an authoritative
stance and it just didn't really happen. And we think that this year, 2023, the new year is going to be a take it back to where we once belonged in the sense that we're going to see fundamentals become more important rather than momentum and projecting anything negative today, forward negative into infinity. We think better things are yet to come. And some of the evidence proves just in those two companies that Tom mentioned, it's a good things can happen here with good management. I want to pick up on what you said, that next year it'll be more of a fundamental story. Which stocks or sectors do you think
didn't trade on fundamentals this year when we saw the biggest sell off in equities going back to 2008? You know, I'm the first thing is to remember that the sell off, the maximum brand out. Well, let's just say that the total decline, 48 percent in in in in 0 8. And this year where we down 19 percent or so, 18, 19 percent right now, we've been worse than that. But at the same time, if this isn't 0 8, it's a very different structure that we have here. So we would have to have to say, when we look at the at the environment, it appears to us that there's a lot of opportunity for positive surprises coming out of this. And part of it is, you know, we don't
think Jerome Powell wants to go down as the history. There you go. Gerard took us into a bad recession. John, big tech. Final question. Big tech. Everybody hates it. Massively unloved, stole for some big tech. Yeah, I really like big tech, but I like big tech.
The big tech that is embedded in the daily lives of individuals and corporations are not from a social media perspective, but more towards manufactured products. Right? Whitman Very much the industrial sector we like and does. Yeah, because it's heavily embedded with technology like industrial.
Yeah. John, I know you can't mention individual securities would hold still while I take a photo with my iPhone of you charge store for Sarah, not mentioning how well he is with IBEX and we thank him for his optimism along with Ben from China and others this year. John Gallup was great yesterday as well. Can we just generalize that, you know, not to bust your chest? BRAMWELL But it's pretty gloomy out there. I look at the bond market combined with the equity market, you've got to go back 40, 50 years. I actually don't think it's all that gloomy considering what we just saw, which was a historic move away from you commentary.
But if you look at what people are saying, there's a war, perhaps recession delayed, perhaps it's pushed out there. Perhaps there won't even be a recession. A soft landing has made a rebound. I mean, heard this so much more over the past couple. I'm looking at the survey Michael McKee
again at 830 personal income. I think it's a plunge, zero point seven percent to zero point three percent. Here's I don't know if we have a shot of this yet as darkness at dawn for Lisa. She's travelling today.
We are in torrential downpours here in New York. There's no other way to put her to try to troll me. No, there's no way I'm going to get this. This is The Shot, folks, on the top of Lisa's apartment. It's a really beautiful shot. We're going to send Sonali Basak out to
Roosevelt Field, but it didn't work out. She's going to join us later on Goldman Sachs and The View forward on Wall Street. You like our correspondent commentary from the airport waiting for Lindbergh to announce. Not sure whether Lindbergh and Charles Lindbergh. Thank you. It was a few years ago. Stay with us.
Good morning. Keeping you up to date with news from around the world with the first word. I'm Lisa Matteo. Elon Musk says he's not planning to sell any Tesla shares for at least 18 months. Speaking on Twitter spaces, Musk also said he favors a share buyback once the company is more confident in the direction of the economy. The Tesla CEO has offloaded almost 40 billion dollars worth of his stock this year, mostly to fund his purchase of Twitter. FTSE co-founder Sam and Free. It has been released on a two hundred
and fifty million dollar bail package after his first U.S. court appearance on fraud charges. A prosecutor calls it one of the largest pretrial bonds in U.S. history. The package includes a personal bond secured by his parents house in California. Its terms require banks and free to stay with them and submit to electronic monitoring.
His next court appearance is scheduled for January 3rd, and Metta has agreed to pay seven hundred and twenty five million dollars to settle a long running lawsuit that claimed Facebook illegally shared user data with the research firm Cambridge Analytics. Facebook users sued after it was revealed that the UK research firm connected to Donald Trump's 2016 campaign for president gained access to the data of as many as eighty seven million of the social media networks subscribers. A massive winter storm is hitting a huge portion of the central U.S.. Thousands of flights are canceled. The National Weather Service says more than 200 million people. Around 60 percent of the nation's
population are under some form of winter weather warning or advisory. Wreaking havoc on America's travel plans ahead of Christmas. Global news 24 hours a day on air and on Bloomberg Quicktake, powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Lisa Mateo. This is Bloomberg.
We believe we have real needs on the defense side now with Ukraine more than ever. But we believe there are just as many and just as importantly leads on the domestic side. Now we've got a whole lot done here. The budget was bigger. Senator Schumer, I believe, a Democrat from New York and we can confirm Sam Abramowitz on top of this story this morning, the Senate majority leader, Chuck Schumer there after a really interesting year in politics in America, Lisa wants to talk Covid and China realized that in a moment because this is a really burgeoning story. I just did the math.
This is off of Google this morning. And this is the fiction that's out there. Lisa, China deaths from Covid 0 7 day average one is a fiction. Well, and everybody kind of it's an open secret that it's a fiction. Xi Jinping, the president of China has
yet to comment on this. And yes, they did pass the omnibus spending bill. It Senate did. And now it goes over to the House for passage. And that's why we have Chuck Schumer there announcing that. What's next? Tony Blinken, secretary of state, was talking with his counterpart in China saying, let us help you. We are worried about the lack of transparency and we are worried about the virus cases whipping through the nation.
The lack of information, this could be what the secretary of state do. I feel like we're talking about the S.E.C. Department of Justice and by NANCE. Okay, great.
Wring our hands. What can we do? He's saying, please let us send you some gear. Let us send you some vaccines. Let us help you get this under control.
We dealt with this. Also, they haven't gotten anyone to take them up on that. Well, I think it's it's coming out of the anti science to be optimistic and. Well, we'll have to see. It's a story unfolding in the course into this weekend, I'm sure. You know, it's going to be a full time effort for everyone as well.
Futures up 12, Dow futures up 111 this one year, trading bromo reporting, surveillance, reporting the market, the bond market closing at 2 p.m. as well. And then they stagger into the final week with the bond price down, what, 15 percent on a blended basis. Bloomberg total return index. Worst case for the year. Yeah, a little bit of a bounce. Yeah. And worst performance going back decades and decades, questionably, whether potentially ever. Yeah.
Well we'll have to see right now. I think we've got. Do we have Terry ISE had and heard from Amy. I'm losing in the control. Oh the control room's out. OK. We have Terry Haynes, Terry ISE, thank
you so much for joining us of NGO policy. And I want to talk about the philosophical idea, Mr. Heinz. This is reporting this is out of the post Bloomberg ISE. It is. Well, basically selected Republicans sat on their hands for Mr.
Zelinsky. Bobak gets Birch, yet others didn't even bother showing up. Is Mr. McCarthy played with his microphone stand. And what I find fascinating, Terry, is the post does a body count and says a few Republicans felt that way. As you said to us a couple days ago, and
yet I see out in the Republican Zeit Geist that this is a huge opinion of Republicans. Which is it? How narrow is that top part of the Republican Party? Well, good morning, Tom and Lisa. I think what you get here is a situation where you've got sort of fringes on both sides. We've we've long talked about the four factions in the Congress as opposed to the two parties. And what you have is four factions here. What what Republicans I think want is they want accountability on Ukraine funding. And that's fine. They can get that in a variety of different ways.
But they're also trying to make political points. Shocker. I know. But that your political points on kind of, you know, fiscal restraint, too much debt, that sort of thing. So I think that's that's where you see
the there's still in more than anything else to to drag us into next year. Mr. Haines. If the most interesting battle we don't own with President Biden is going to do. But if it's Republican, the fact is President Trump has a core Republican constituency of a certain size. Do you, as a grizzled pro, think they will actually switch their creed, their faith, their religion over to somebody else? I mean, are they going to shift? I think some of them will, yeah. My view now has been for a while that I think President Trump has really jumped the shark on it politically.
And it's a combination of two things. One, it's a combination of the January 6 and post January 6 behavior. And that's combined with the fact that he's now committed the other unforgivable sin in politics, which is it is that he's a serial loser and gone back to the 2020 elections and now most recently, the midterms and the Georgia runoff. So what you have here is somebody who is, among other things, suggesting that the constitution should be suspended to accommodate his theories about the 2020 election. Plus, being a serial loser, Republican
Party has been trying to get past Trump for some time. And this has only made this combination has only made things much more urgent. So, yeah, I think they do. And they're engaged in a dance to try to keep as many of those Trump supporters as possible, but they have been for a while. I think they got some of them.
Yeah. But it's the point now where Republican leaders think it's more important to preserve the brand than it is to worry overmuch about Trump. We strip away the political drama. There is a question after 2022, what will be the main issues? He main flashpoints, the main economic challenges in 2023, which is the reason why I was pointing to the story of China and the U.S. pushing them to accept aid from the United States, tried to curtail some of the virus spread. How important is this story, do you
think, in shaping 2023 politically? Oh, I think it's very important. What you have is a situation where it's the overture from Secretary of State Lincoln shows that the United States, as is, continues to be very interested in constructive engagement with People's Republic of China, with their governments, and and wants to be helpful wherever it can. Yeah, there's a subtext here, of course, which is, you know, we can help you, but means they can't help themselves to some extent.
And, you know, that's a problem, as you pointed out, that the Chinese government is probably can't get over quickly or easily. But nonetheless, it shows an outstretched hand. It shows a concern for the humanitarian side of the tragedy that's been unfolding in China in some time. You know, that's all to the good.
But what you see is kind of the push pull of U.S. trying to relations. And yeah, yeah, I think that'll continue. And it is very important for 2023.
What about immigration? And I ask this because we have been talking about the worker shortage and yet there still is this fight over the legacy Covid era immigration restrictions left over from president former President Trump's reign. How much do you see Republicans getting on board with Democrats in 2023 and allowing more immigration? I think, you know, I think the the immigration policy in this country is broken. That's obvious. I was a little less obvious. It's been broken for almost at least a decade now. Frankly, at least a decade. The last time the parties tried to engage constructively on immigration policy was back in 2013. Since then, they haven't.
And that's to the country's detriment. As a citizen, I certainly hope they will. But there is there is a gulf between the two parties on lots of things, including a path to citizenship.
You know, the last time this was engaged with constructively, there was a centrist coalition that really tried to bridge the gap. That's going to be very tough in a world where you have, you know, the two of the four factions being progressive Democrats who want to liberalize immigration and more conservative Republicans who want to not restrict immigration, but put stricter controls and on making sure that people are in the country legally. You know, it can be done, but it's going to take a huge amount of effort. The Supreme Court may well kick kick
that off with a ruling on Title 42 here over the coming weeks. So I'd look for that sooner rather than later. Here he is. Thank you for the brief on this Friday of December. Mr. is a Penn Geo policy. This happened overnight. I wasn't even aware of it till 10 minutes ago.
Last season, Lisa, my absolute favorite baseball game of the year was a guy pitching for the San Francisco Giants who looked out of 40 years ago. His name was Carlos Rona. And I'm not stunned. But here he is signing with the Yankees, the Yankees win. There's no other way to put it. This is a spectacular sight. This is as important is signing here in Judge Bell and Yankee fans had before he even signed, sent him money, Venmo, to try to get Roman to try to take matters into their own hands. I would pay a thousand bucks to see Roden go after Verlander. Yankees.
Mets. Good morning. Bloomberg Surveillance ISE, Good morning, everyone, on radio and television. We hope you're safe, particularly out driving with Bloomberg Radio. We assume you're not watching movies,
television and your car. Coast to coast challenges of ISE that dreaded dark ISE over the to truly torrential rains on the East Coast that we see right now really do a complete data check. Now we've got lots of distractions today. Again, I do want to mention that Mr. Diamond Bob Diamond will be with us in the 8:00 hour in honor of his good friend, Scott Miner. We are all shaken and we'll get to that through the morning.
Right now, though, a day to check list. I'm going to jump on equities with the VIX twenty one point nine, three up big, down big. Who knows what will be and does next week matter? I'm not sure. SPF gets up nine points. We've got 100 hundred points on the Dow, down thirty three thousand three hundred shows how we've been churning. And it's a moving average convergence
where we talked to Liz Ann Sonders about an equities at doldrums. We also don't talk as much about the sell off this year. And as we end the year became the rally. So protesters bond sell off.
It is the stock sell off. Do you know that the Nasdaq is down more than 32 percent on a total return basis since the end of last year? That is almost double what the S&P is down of 18 and a half percent. These are the kinds of numbers that we're talking about. But a 15 percent decline in bonds for the year, just traumatic. And so how do we reset? Is this enough? And I think that is one of the key questions going into next year. Have we seen truly the full withdrawal of free money or is this the beginning of a new era of investment? And my answer to it, as we heard from John Stauffer, says profit is a differentiator.
And, you know, we saw it with Apple share buyback. Apple went down less than other profitable and non profitable tax. But it'll be really interesting to see use of cash next year and if that in cash free cash flow, if that helps divide the market from the gloom you're talking about over to people who can keep. What do we do with oil? We're looking at 69, 6, 7 days ago.
We're now up at seventy nine dollars. West Texas Intermediate up a dollar thirty on Brent crude at eighty two dollars. I should call it Brent Dog. I'm sure. What's going down there. People would love it. Also we should mention the dollar and the weakness that we've seen.
And really that's another big debate heading into next year. And Kate. It was really hot on that this morning, talking about how perhaps we will get a weaker dollar. That will give life to some of the riskier assets throughout the world. Citigroup with a small note off the Tokyo desk this morning saying they don't think they can sustain the bond purchases of pulling in essentially private peoples and companies bonds into the government through February. They can't get the march with their present strategy.
So Citigroup alluding that the decision tree for the Bank of Japan and the people of Japan is a lot closer than some people think, especially after the inflation data came out of Japan yesterday, overnight. And it was once again the fastest pace in 1981, three point seven suppressed by subsidies to a whole host of things that the government. To keep that down with core inflation are exceeding their price target for eight straight months. There is a theory out there that was her hook. Kuroda would like to get ahead of her
exit in April because he has the credibility. He doesn't want to leave the mess to his successor to be able to lift the Band-Aid at this point. This complete data check, the final data point, which you only do because Ms. Greifeld is here. Bitcoin down 65 percent. It was at sixty thousand. And then at the beginning of the year, the vicinity of 50000.
It's not there today. It's called doing a Tesla. She joins us now. Katie Greifeld of crypto fame and Glory as well. Open question.
When you woke up today, what did you focus on in the crypto world and the Zakk Ghost? It's out there. I mean, all the focus is still on Sam Beckman. He's still on the soap wrapper of this guy. That's why you did it. It's of course.
Of course, it's the biggest news in the crypto industry. You know, it's the only news that we have really in terms of when you think about where the potential next shoe to drop is right now. Right. We know for sure is happening is what's going on with Sam Beckman freed because it's playing out so publicly. Obviously, the news yesterday was the 250 million dollar bail bond. This was a silly conversation. The adults are saying, would everybody
calm down? This is the way it works and however it works with his parents home and that baloney. Were you surprised this clown didn't plead guilty coming off the plane? It is interesting. That is the next obvious point to watch in the story. Well, his next appearance is January
3rd. So maybe not today, but that's what we're watching for. He has maintained up until he was arrested on the media tour ended that he wasn't committing intentional fraud at RTX, that it was just basically gross mismanagement. That gets harder to defend when you have the likes of airline, Alison, you've had the likes of Gary Wing flipping, cooperating with prosecutors and saying no. This was fraud. OK, I get that. I feel like it's mosque. It's like almost a celebrity thing. And I know John Farrell's on the same
page as I am. I don't know where you are in this list, but I'm I'm sort of offended by the whole thing and what I see in your world and I'm speaking from a distance, you know how negative I am on this idiocy is. Everything's about bein. That's what should our viewers and listeners focus on with this strange maybe Cayman Island foreign company. The DOJ can't get the tentacles around. What do we look for from bein Anson the last week of the year? The biggest thing to know about finance right now is we report out what is going on. There is just how big it is according to some data we have. It is scope and scale. Fifty three percent of market volume in November.
It's hard to overstate how big this extreme. So when I see bitcoin on a Saturday morning. Yeah, I one like this. Much of that's going on Finance's desk, especially now with RTX out of the game. And so 53 percent of total market share,
two thirds of derivatives trading in the crypto space is going through by Nansen. Actually, remember, we had those Senate hearings in December. It feels like a year ago, but that was just in this month. You had Dent, Tennessee Senator Bill HAGERTY saying that if we hypothetically saw a similar implosion at finance, that would be catastrophic for the industry. Like Thomas pointing out bitcoin, it's not really doing much at some 65 percent year to date, but hasn't really wiggled around too much in the past month and a half. If finance goes under. That's potentially an entirely different story.
There are three reasons why I am fascinated by this drama. You said you didn't know where I stood on this, Tom, so I will tell you where I stood. I stand on this. Number one, there is a theory out there that the current regulation was sufficient to cover this. Right.
And that has been the line from a lot of Congress members as well as the S.E.C.. So this really raises a question of what went wrong. Number two, there is a question of culpability, how much he basically shunts the guilt because he gave a lot of the money away. And then there's the political angle, all of the donations. So let's start with the first one, that regulations were sufficient to stop this. Where are they saying that?
What are they looking at in terms of transparency, in terms of oversight that was sufficient to prevent this? If he hadn't been so clever to get around it. What's the theory here? I think it's hard to say that regulations were in a sufficient place where it could have stopped this, given that it didn't stop this, that this still happened. And I mean, for the past two years, really, we've been having philosophical discussions about who actually has oversight over some of these crypto companies.
You think about RTX, for example, headquarters in the Bahamas, but a lot of U.S. customers lost money. So it's it's a question. And then now you're seeing three different agencies, the DOJ, the CFTC, the S.E.C.
come out and, you know, charge RTX and some of these players involved. It feels like obviously there was a failure here. And where it goes from here, there's obviously a push of fuel to do something. What that actually looks like the
regulatory picture, I'm not sure. There's also the issue of people highly intelligent, highly capable, innovative innovators who are celebrated as such, who basically were playing with monopoly money. And there is a question of whether it indicts an entire industry of people who are creative and innovative and trying to come up with something new but essentially are playing with monopoly money. How much is that what people are talking about in terms of select corners and the sort of intellectual heft that is being put into what could be great innovation? Well, I think that's a really interesting sort of narrative, because at the end of the day, this was pretty simple in terms of the fraud that was committed because you had one entity, RTX money was coming in from customers and they were funneling it to Alameda, a different company. They weren't supposed to do that. And then maybe this stuff that Alameda did with that money in terms of the trading went up that went on was a little bit more complicated and sophisticated.
But at the end of the day, it was pretty simple. I forget exactly how John Jay Ray, the third phrase did. He's the new CEO of RTX. He handled Enron's liquidation, but he said something along the lines of this is just old fashioned embezzlement. How much of the money is going to get recouped? That's also an open question. There's still billions out there that's
left to recover. That process is ongoing, but it's expected to take years. What are we watching? Tesla implode, unmoored Tesla's this morning in a really ugly day yesterday.
I think it's on the bed this morning. Good news from Mr. Musk, but what are the ramifications to these players? And they're going to circle back to finance and frankly, the the legal and the alleged criminal activity that flows through buyouts. I don't know what the answer is. What's the ramifications of sixteen
thousand eight hundred Bitcoin becoming, say, 13000? Does the price of bitcoin matter in the crypto world of Jihye Lee lines? Well. The price of bitcoin matters. If you're a Bitcoin miner, for example, we know that that entire industry does this just to get me going, you know? OK, so bitcoin miner not actually out there with picks and shovels, but you think about the hardware that they have to buy. How much money that they've locked up in these machines. It's very capital intensive, actually. Even though they are affected by the cold of these clowns moved from China to Texas. Yeah, they're doing electrical generation in Texas. Does two below zero in Abilene matter? Oh, big time. I mean, a lot of crypto miners that are
in Texas have had to shut off their machines to, you know, alleviate some of the stress on the grid when you do have extreme weather. So what does that do to the price in terms of the price? Maybe that are the direct effect from the miners to the price isn't there, but the price affects the miner. It affects those companies. You've seen a wave of bankruptcies in the crypto mining space. So there's your big problem. Just keep his mouth shut. Silence. You heard folks as a surveillance court in my mouth, I think.
Thank you so much. Thank you. I think this is really interesting because there is an issue with innovation. How do you foster innovation and new concepts to potentially create some interesting infrastructure that could make things better while weeding out bad actors? How do you do that? And this really throws a damper on that. And it really shouldn't happen. OK.
I'm in trouble now. You can't weed out the bad actors if the underlying doesn't exist. And that's the debate. Ms. Greifeld will say Tom Keene a tool of
commerce is something that we're talking about, a tool of commerce changing easily. It's a currency button on the Bloomberg. It's a yellow button. And I believe it has not acted like a currency reasons. I went to Zimbabwe, but I will. It was sure. I mean, you can point to El Salvador. They tried to peg their currency to Bitcoin. It didn't work out very well. There is just an interesting also
technology underpinning that. William, unfair to John, come home, say, I mean, he would agree with me. Oh, you think something? So we'll find out. Yeah. Call from a pay phone outside Exeter on your way to Cornwall. Katie, group profile. Thank you so much.
In the 8:00 hour on our dear, dear friend Scott Miner, we will speak to Bob Diamond. That will be must listen for global Wall Street. Must watch as well. This is Bloomberg. Good morning.
Keeping you up to date with news from around the world with the first word unleashed, Mateo. The House committee investigating the January 6 attack on the U.S. Capitol has delivered a scathing report blaming, quote, one man, former President Donald Trump, for inciting violence in an attempt to hold onto power.
The 800 page report details Trump's behind the scenes fury and his efforts to pressure state officials and the Justice Department to overturn the presidential election. In China, soaring Covid infections are causing a drop in travel and economic activity. The latest high frequency data shows less traffic congestion in major cities. Fewer flights and fewer people taking the subway. Following the abrupt end to Covid zero controls, more cities have infections leading to crowded hospitals and queues at funeral parlor parlors.
China plans to cut quarantine requirements for overseas travelers from next month. Inflation in Japan has further accelerated to the fastest pace since 1981. Consumer prices excluding fresh food. It climbed three point seven percent in
November from a year ago, matching estimates. The data may fuel speculation that the BMJ will surprise markets again with more policy tightening early in the new year. Guggenheim Partners Chief Investment Officer Scott Minored has died. Guggenheim says in a statement that miners passed away after a heart attack during his regular workout. He became one of the leaders in fixed income through the 1980s and 90s during stints at Merrill Lynch, Morgan Stanley and Credit Suisse First Boston. Scott Maynard was 63.
Global lose 24 hours a day on air and on Bloomberg Quicktake, powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Lisa Matteo. This is Bloomberg. We need to be humble. Right now, the labor market is very
tight. The Fed is not going to back off in its inflation fight because inflation is just no way above where it needs to be. I think there's a disconnect between what the markets are thinking and where the where we're actually going to end up. But, you know, I think markets are probably expecting the Fed to sort of back off once the economy starts to slow. Ruby for Farooqi of High Frequency Economics are chief U.S. economist.
This morning, we welcome all of you, Lisa Browns and Tom Keene John Farrell on assignment. And a most interesting day. We're watching the weather across this nation. Torrential rain here in New York City. We hope you are safe as well. As I mentioned, Bob Diamond did come up here on this tragic loss of Scott mine. And we're also looking course here into when Lisa and I exit.
But far more than that, we wanted to talk on the state of Wall Street and where the destruction is, whether there is only one story in New York. So we speak with Sonali Basak, our Wall Street correspondent, on the travails of the always visible Goldman Sachs. But first, you talked to Scott minded and frankly, more than I did. Everybody thinks Scott and I were, you know, Pelosi Wells. We weren't, you know, we adored each other, etc., etc. in interviews on that. But you talked to Scott is part of your reporting a lot.
And you have a vignette from I believe 2020 about what the minor distinction was in the heat of the pandemic. Remember, you had 10 percent of his portfolio tied to airlines as the pandemic was coming. So everyone thought he was crazy when he was warning about a global shutdown in February of that year in 2020. But he had to sell, sell, sell, and he
locked himself up quite early at that time. Later on, he actually suffered from long Covid for a while. But he did earlier on. Stop all the sob.
Everything's not travel. Go to California and start selling. There was a moment he pivoted, and it was the absolute bottom of the market. It was March 23. That is the lowest day of the S&P. And it was when the Fed stepped in. And he knew as a Fed watcher, as a Fed critic, frankly, very often that that would be the pivotal moment that supported the market. And he put seven billion dollars to
work, including more than a third of that into high yield. I remember that. And honestly, this idea, this nimbleness was also reflected by his life, the ability at age 37 to say, I'm kind of done with this. I had some New York and go out to California to pursue bodybuilding and being on Venice Beach and this concept of choosing yourself and basically just going with the wind in a way, but also with your gut. How much did he get rewarded for going with his gut at a time when a lot of other people didn't feel that freedom? Often he was criticized for it, too. People said his calls were bold and sometimes they were right and sometimes they were wrong.
But isn't that everybody on Wall Street? Frankly, I think the important thing when it came to Scott is the lesson he always pitched and preached here, which is never hire an optimistic bond fund manager. The downside protection. Bob Diamond with his coming up in the 8:00 hour as well. I need to talk about Goldman Sachs this
year. Any number of media organizations, it just seems to be at the top of the pile now. How at risk is Mr. Solomon's tenure at Goldman Sachs? Listen, he's into year five. He is hitting some very pivotal marks coming up, which is the Investor Day coming up early next year, as well as a partner offsite in early February. Remember, this is as the Zeit Geist
uprising. Bonuses are falling on Wall Street, a worry that you are taking from Peter to pay Paul. This idea here that they're about to have the second best year by revenue ever. But the consumer business has lost four billion dollars since 2019. So this is important.
Are you were this, Lisa, that their business is great except the bank. So an industrial banker at Goldman Sachs has to have less bonus. Listen. Is that true? I think you have to think about this in two ways. And this is really important. One is, what does the new consumer business look like under David Solomon? Clearly, the ambitions have been pared back. They're very big business lines that are
not going to sit the day of light like checking, for example, which they were going to invest heavily in. But I will also say this Goldman will keep who they want to keep. And guess what? They have something on their side here. The engineers that would go to Metta
just a couple of months ago are probably not doing that. They're not running to crypto because firms are falling apart. That we just did. That was key. Well, I wonder how much this is also lip service and a political statement as well and how much the banks are going to try to get ahead of a recession next year by saying we're going to cut bonuses, we're going to trim, we're going to be humble at a time when they're still making quite a bit of money. If you take a look at some of the
income, particularly with interest income. How much is that a real messaging angle behind some of the shrunken bonus pools? And it's interesting, too, Goldman has been holding up in the stock market more recently. Again, they have been doing well by revenue, but you also have them trailing from a price to book perspective from rivals like Morgan Stanley that have made big, big, big strategic decisions early on. You saw them do two of the biggest deals since the financial crisis in the heat of the pandemic, essentially at low valuations. And the question is, is David Solomon
going to do something transformative for Goldman Sachs? This. Coming into a period of some distress and there's concern about what these banks do with loans on their books and Twitter or things of that nature that they will have to sell to the market next year. How much is that a concern and how much has that been overplayed? At a time when risk control has been at the forefront of every bank's minds, it's not overplayed.
It's not overplayed at all. And you have two things. First of all, Goldman can do their victory lap about missing that loan. Right. They advise on the Twitter side. Morgan Stanley is the one to watch when it comes to Twitter and itself.
Remember, they were punching so hard into the leveraged loan market. Does that position them not to fight as hard and leverage loans once they come back? There is also this worry that, hey, listen, big banks are shedding customers. Why are they losing millions of dollars in leverage loans? Could Twitter be owned by Morgan Stanley? I mean, you have to think about. I mean, you're talking about the prospect of bankruptcy. That is a very scary stock. Thought, thought for the lenders here. Remember, I would say that there is a
whole other side of this where the buy side is waiting for things to get bad enough to buy things on the cheap. So it may never get to that point. I want to go to your reporting. A Shery Ahn Drudge is reporting and frankly, everything else on the street and redo what you said four minutes ago. A banker, a trader at Goldman is going to see a reduced bonus because of the consumer bank challenges at Goldman Sachs. Is that what you said on the record on television with us about two weeks ago, David Solomon told us that firm wide performance is what they're going to pay off of paganism. He's under the delusion that he's going to pay traders in whatever off of an aggregate performance of Goldman Sachs.
I think the interesting flipside to that is he said that the talent war is still sticky. So listen. Like I said, they're going to fight, right? People they want to lose Mr. Gorman. And let's say Mr. Gorman has his last slowness in asset management or whatever. Eaton Vance came in, whatever the song
and dance is. Is he doing the same thing, applying an aggregate performance or slowdown over to high performing bonuses? And those people won't get paid at Morgan Stanley. Listen, you FTSE reporting at the investment bank alone at Goldman Sachs. Bonuses could fall by 40 percent. Listen, Goldman's mortgage business fell by 40 percent. Goldman Sachs currently today is leading
mergers and acquisitions league tables against its peers by almost 10 percentage points, 10. So, I mean, the thing is for them to cut bonuses by 40 percent, it's leverage. I'm hearing sure here bankers are going to go. But I defer to you or Paul Sweeney that Lisa. I've never heard this. I've never heard you can take derivatives traders in the sweat and tumble. You know, it's hear them.
All right. It's exactly pencil sharpening. The numbers are not set in stone right now. If you say 40, everyone else goes 40. So it's it's an honestly, I also view this as the big next wave of layoffs will be in the middle sectors where that will be some of the curtailment. And if you look at how much the staff has been expanded, there are many areas you can cut while still rewarding the people you want to keep. And that's going to possibly be a story around not only Wall Street, but just another.
Aren't they laying off old style people and hiring digital animals? Computer is interesting about that. Even with the 4000 person headcount reduction at Goldman, that's still probably brings it to levels above where they started the year. So for started 2012, right? Dallas, yes. They've expanded like by what? Thirty eight percent or something since that 2009. It's painful. Absolutely painful.
But if you think about how much they've grown, it's really a drop in the bucket. I would say also remember this competition, even from the buy side, even if you see big malls are strapped firms like Citadel hiring here, you do see so many hedge fund firms, the big talent takers, the Tiger Global's leading. Right. And so even the macro funds that have come back, they're coming back after a bad year performance last year. So the talent war here is not as intense
as you would think at this time because there's just not them to predict. People will leave. One final quick. Do you believe people will leave these banks because they're 40 percent off in bonus? They will. They always do. But again, Goldman will probably pay for the people they want to keep and others will be singled out as your brief for the day from Sonali Basak. And she'll have that out on digital, I'm sure, here. Very important for global Wall Street.
The challenges of a difficult bonus season to say and to say the least. Futures of five. Dow futures up 64. Important economic data coming up today. It is a Friday dump of economic data. Lisa Abramowicz focused on P.C. deflator. This is Bloomberg Surveillance.
It is the most expected, most anticipated recession ever to be historic. We need to not go into recession. We do have the unemployment rate rising. That is enough of a high enough rate to cause a mild recession. You'll see a recovery before before you get out of the recession. Our baseline is that the U.S. economy will avoid recession. This is Bloomberg Surveillance with Tom Keene, Jonathan Ferro and Lisa Abramowicz.
Good morning, everyone. Bloomberg Surveillance, Jonathan Ferro, Lisa Abramowicz and Tom Keene. On a Friday, an exceptionally busy economic day. It is not the sleepy Friday before a wonderful holiday. A wonderful final week of the year. This is an important day of important economic data. Futures up 6, Dow futures up 74. Fear on assignment is there was a
sighting south of Exeter on his way to Cornwall. Heavy rains in southwestern England. But Lisa, this day to today, a new focus on what Jerome Powell focuses on, which may be quiescent. P.S., deflator personal consumption expenditure is how much to people end up continuing to fuel a core inflation that the Fed is concerned about.
Market respond to that. If you get a bigger than expected popper, you don't have as big of a decline in that core P.C. figure. Do you see stocks completely sell off side of bed? Do you see bonds? You know, yields rip higher price down or do you see a mutual response as everybody kind of waits for the holiday? Let's look back 48 hours and looked at gloomy data two days ago. But corporate data, good Nike, FedEx, the market went up, Gazan boom up we went.
And then yesterday we had good economic data and we cratered because Chairman Paul is going to raise rates up to 9 percent or. This is the year that won't die. I mean, everybody just wants it to change. But surely there is this feeling going on and on with respect to all of the data and the twists and turns.
And I do think that China, Japan ending the year with a real bang, creating a lot of instability with some of the projections going out and just overnight circulating more on that front. Not that I remember. 73 clear as a bell. Good morning, Genesee Criminal. But, you know, I remember 73 rolled over and do an uglier 74 before the nirvana of 75 up on to the great bull market of 1982. No one's really talking about an extension of this news flow. This war in Ukraine, these markets, the end of the pandemic dynamics in the next year. It's supposed to be all over now. And I don't I just don't see that. Well, it feels a little bit like people
are throwing darts at a dart board. If you read all of the projections, they're like, why do we have to write your own projections heading into next year? Because we have no clue. But the parameters of gloom in the first half, an optimism in the second half seems to be prevailing as we head into a new year. We've got a wonderful guest coming up here in moments who threw the dartboard out years ago. She's got some incredible experience through the ebbs and flows of what to do with your portfolio program note.
I do want to mention I'm honored that Bob Diamond, I get really emotional about this. Bob Diamond will join us in the 8:00 hour on his his good friend, Scott Miner. We are thrilled that Mr. Diamond will attend futures of five Dow futures up 64 Shery Ahn to the market. But there is an anticipation to the
tape, even as Lisa mentions bonds closer to to all this economic data. And, yes, Michael McKee brought in on special notice. I think he slept here last night. He was carded and he was okay. You know that he's still. Mickey Seward, that's over there on the
backside of radio bonds. A two year yield is what Farrell would quote, 427 a three basis points. That's flat. Excuse me. I can't call it like Farrell. I'm sorry, 10 year yield, three point seven 0 percent is of note oil with a lift here as well. We mentioned that earlier, currencies
churning pretty much flat. Yen 132, 72. Maybe some Stacey's right now we need a brief, particularly on what happens in a 30. Lisa, what do you have? Well, it's the P.C. core deflator all watching that year
over year. It's expected to come down to four point six percent from 5 percent. What is the bigger risk for markets? This is really, I think, the more interesting question to ask. Heading into 90 minutes from now, is it that it underarms or overwhelms the upside, surprise or downside surprise? Right now, markets are thinly traded.
Everyone's trying to get out before the storms really consolidate ice around the rain. This really could be a potentially massively market moving event. 10:00 a.m. You get University of Michigan sentiment for December as well as November. New home sales expect a pop in sentiment. Often this particular index reflects the gasoline prices, has an inverse relationship to them. And we have seen gasoline prices at the
lowest rate going back to July of 20, 21. Also, 2:00 p.m., bond markets are closing early. No idea. No, no. A week in August, Beatriz Sagar. We can auction your antique train cup,
but we are curious about where we go next year. I just want to give you some sense of where we have been that so far year to date. We have seen at one point in November a 4 percentage point increase in the two year yield, 4 percentage point. Now it's about three and a half percent to four point to seven percent.
And it's been a doubling and more of the 10 year yield this year. Can I give you a weather report? Rob CAC is scheduled to be with me in the 9:00 hour. He is the best. I've been watching Pittsburgh, Pennsylvania, is this. He calls it a Siberian front, comes across America, 81 below zero, he said in Siberia this morning. When I first looked at this, Pittsburgh was 40 degrees. Just in three hours.
We'll know. I got it. I got in a five or six. Right? Yeah. Okay.
But Pittsburgh's already down to 23 degrees. Feels like 13. Well, that's not healthy asses that move. That's the reason why this is actually a
really scary storm. And that's why it becomes a bomb cyclone because of this really good. And you have suddenly 60 degrees bam of difference in the temperature, which is what creates the black ice, which is what creates the winds, which is what creates some of the potentially catastrophic scenarios that hopefully will not from getting out of the airport. That's a passing mechanism to the transportation gods. Lisa, doing the weather it like 615 ISE.
I was stranded once at JFK for almost two days with Tyler because that because of the snow. So I have lived the war stories of Empire enjoyed that. You never enjoyed experience and stallions in Atlanta. I believe a number of months. You have to bring that up. Yeah, we didn't get out. We ended up stranded at Atlanta. Stranded. All right. Let's just hope things go better.
Let's do this. Let's say that Crosby, chief global strategist at LPL Financial. This is a really important position. Quincy has to look at the bigger, broader view for representatives handling real money for scared people. Quincy, how does your outlook for next year change after Bond's price down this year? Equities price down this year. How do you write an outlook forward after what we've seen? You know, it sounds like Lisa talking about the weather over the next couple of days.
You know, you go through these stages and it's the most talked about, you know, weather bomb that we've had all year. So, you know, we're looking at the recession starting on a trading floor. We always learn to trade and invest in the markets.
You have not the one you want. And so we we come up with a number of scenarios and we try to build guardrails around it. So in our report, we have three different scenarios because we know that it's going to change. The data will change. The Fed will change. Chairman Powers tends to go into
different monetary lanes when he speaks. That will change, too. But overall, what we want to do is make sure that the clients get out at the end of next year. Right. As as best they can. And that's that's the issue. And we're lucky this year. I mean, there is some luck that the bond market is actually helping. You're not you're not wedded to equities
if you don't want to be if you want to be conservative. You've heard this over and over again all week, that to you go down short duration in treasuries, investment grade, short duration, get a little bit more. Right. Right. Great asset.
Lisa, what's important on this is Quincy really pushes against a gloom that's out there. It's a very measured approach versus some of the massive gloom reports we're seeing. Well, and a lot of people are agreeing with that. Quincy, we j
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