'Bloomberg Surveillance Simulcast' Full Show 01/04/2023
There are a lot of real fundamental issues that are going to be pulling down inflation next quarter to we stay in this nominal GDP, dwarfing real GDP environment driven by still elevated inflation. You can't ignore the shorter term data. You have to take it all into account. I think we see equities down in the near term, possibly recovering towards the end of the year. What's different this time, I think, is that if we have a recession, that's going to be a Fed induced recession. This is Bloomberg Surveillance with Tom Keene, Jonathan Ferro and Lisa Abramowicz. The band is back together around one
table, a beautiful thing. Happy to Bremen, I did that yesterday. Overdone the band. You're done with Happy New Year's. I can move on. Larry David said you can have about three more days if you want it. You don't fancy it. Okay. From New York City this morning.
Good morning. Good morning. For our audience, worldwide TV and radio. Happy New Year. Let's talk about Tesla on the stock down by some 12 per cent in yesterday's session.
Bit of a bounce back this morning in the premarket by about one point five per cent or so. But huge pressure on that stock, T.K., to close out last year and to begin this year as well. I have no idea of the two pointers from Mr. Mouse. What is the predominant shareholder I noticed on the HD ISE function on the Bloomberg terminal? This is the lineup of horns. What Vanguard, BlackRock, all the index funds out there with obligatory ownership.
He's got about a three factor over them. He has 11, 12 percent. The company, whatever the number is, it doesn't matter. The answer is with this plunge down in this new leg lower.
The critical thing is where is that tension point from, Mr. Musk? I think it's right here, right now we're down 60 per cent since the start of Q4. For that name. It's been brutal. Catch up with PFI to go a little bit later on. New street research. Still bullish, 6 1. And you're already promote your show. Well, I'm promoting pathetically new street research.
Okay. And 940 Eastern Time on Bloomberg Television, if anyone interested. You mentioned it later. This is his line. It will be able to grow faster, maintain superior margins for years to come. The books are still out there, Sam, by
this name. But it's not showing up in the price. You're seeing that from Cathy Watt as well, saying that she's going to buy the steps. She's been saying that every Deb, all the way down about 70 percent over the past 12 months. I am curious, though, about whether we see a similar type of decline in the deliverables from other automakers. We see that today with the auto sales numbers for December, do we start to get a sense that Tesla isn't alone? And if it is alone, does it get punished or more for possible loss of for dominance? Well, it's not just Telstra. It is not just the automakers. It's Apple as well.
Apple yesterday dumped by more than 3 per cent, close to 4 per cent lower on the session, the lowest level since June 2021. Tom Keene that name. I mean, it's real. It's not just Telstra, it's Apple as well going into earnings at the end of this month in its earnings and it's all going to go to revenue. I'm not going to go to the earnings line in the margin line. Got to go to the revenue way. What's apples revenue out of the manufacturer and particularly the sell in China.
Carl Weinberg had a brilliant note out here saying China could go either way. He didn't make a prediction. He says there's too much uncertainty. But he says his certitude of a China opening, it has to be measured. A major issue for that name right there. Futures more broadly elevated this
morning by about a third of 1 per cent will be up through the price action for you. Briefly on the equity market, up about 13 points on the S&P and the affects market Eurodollar 186 21 euro dollar positive, seven tenths of one per cent ticker. You mention inflation out of Europe. I think you mentioned Spain yesterday, Germany as well. Take a look at France this morning.
No. Can we get some disinflation? Number one thing, NYSE is disinflation. Variant perception out on Twitter. A smart one to follow has a linkage of fertilizer prices to food prices. Fertilizer prices like lumber have cratered, and that is the signal of a potential disinflation in American food prices like what we're seeing in Europe.
Well, yields coming down right now by another four basis points on a 10 year lease have right now. This morning, 369 John Micklethwait any night. The data is confusing. And I will say this because when you see, for example, the weaker than expected inflation in France, you also see stronger than expected ISAF service data coming out of Europe. So this is really complicated, perhaps will get more complicated at times. Therefore, the United States will get
December ISE manufacturing. And we also get November U.S. jobs data. Do we get the job openings really coming down as fast as people want? Or do you start to see ongoing resilience, ongoing stickiness in how tight the labor market is? It really flies in the face of some of the weaker than expected inflation rates that we've been seeing around the world today. We were talking about Tesla and the weakness that we saw those shares yesterday following weaker than expected deliverables.
How much we see that in other vehicle makers, we get U.S. vehicle sales today, including Toyota, turn at GM at ten thirty. Those shares all across the board. The automaker space have been pummeled
over the past 12 months. You've seen them down more than 50 percent if you take a look at Ford. So again. Yes, Tesla in a world of hurt, but so are the other automakers as they face chip shortages, as they face. Also, people who cannot afford to the
degree that they once were, autos that have gone up massively and price at 2 p.m., we get the FOMC meeting minutes. I don't understand the terminal rate. I understand. John, to your point, the balance of risks, do you start to feel like there are more Fed members concerned about hiking too fast and stymieing any kind of recovery, creating a crash too soon, given the deceleration in inflation too? I see. I don't know. Transitory late start to creep to see what you think about the T word this early in 2023 from I thank you to t went back on its like Yousef Gamal El-Din translates for Haidi Lun level a gloomy.
I really couldn't judge it yesterday. Being with Ian Bremmer down at Eurasia. Thank you, Dr. Romer, for the hospitality and smart conversation. I'm sorry, the Rameau gloom level
yesterday was at a certain early new year. Week with an odd sprinkler bullishness Joel Weber. Yeah, just as I was searching to make sense of it, I said it was the edge of here. And, you know, I said here and I'm
sitting there with grammar. And Bremner is like, is she always like this? And I said, it's the Brahma world of her every single time we're all still here. Just letting you take enough time off over the holidays. I know that was what it's about some time. I like right here all day. I'm committed to pain and just s torture. And later joins us now. Global market strategist.
Ben, thank you for being with us. Ben, you've got three reasons to be constructive bullish 3Q 1. What are they? So I think they inflation and interest rate shock that drove markets weaker in 2022. I think that sort of fever is breaking. We're probably going to get our sixth straight month of lower inflation in the US next week and we're getting visibility on top of this Fed interest rate cycle. I think the sooner that calms, the sooner that gives a little bit of relief to recession expectations and to valuations. That's one to 2.
China's going for growth. That's what you're seeing with this surprisingly quick loosening up of the Covid 0 Covid policy. It's the second biggest economy in the world. If they can stabilize growth over the next quarter and it will take a little bit of time, I feel like I was a long way to reducing these global recession risks. And the third one, which you alluded to at the beginning, global equities can do well this year unless tech does less Bible effect a broadly defined it's a third of global equities. I do think earnings will be under pressure.
We forget how cyclical some of these tech stocks are. And I think that's what you'll see with Apple. I'm sort of Tesla right now. These are recession concerns mount.
But also, remember, valuations have been absolute crushed. You'd stay well controlled here and with valuations being turned around. I think that's why you're going to get some tax relief this year. Then you pull economics into your strategy. And the key theme of your economics is we see inflation adjust from a good disinflation over to a service sector disinflation.
Give us the level of confidence in that process. Direction of travel, absolutely. I think it's much more about speed, though, you know, everything we've seen so far has been good disinflation, no easing up of supply chains, you know. That's right. That's giving you these five straight months of declining inflation. And now what it looks like our second straight month in Europe, what we need to see and more importantly, what the Fed needs to see is not just continuing to spread into the labor market and into services. I think if we look at the food king or the coincident data, we're gonna get the jolts today. We're going to get the iPhone prices
paid data today. You're gonna get the iPhone employment data today. These are the types of things I'm looking at. That this sort of backward looking sort of mirage of a US reported housing inflation, which I'm basing I don't think a single positive in the US actually actually pays. If you look at that from career instead of forward looking data, I think it's all easing. We would like to see it is a quicker and I think you're going to get some more incremental data points, you know, hopefully starting today, which gives us a less bad upward look.
And that's all you need to see. When sentiment is as depressed and as bearish as is right now, you need a little bit of less bad news. And that's why I think we need to take markets higher.
Well, we hold a little bit lesser bad news yesterday and today as well. When you look at inflation easing a little bit faster than expected in the euro region, we saw some stocks try to rally, not tech. And that's something that is notable. So what's going to send tech higher are the 10 suppressed valuations, as you believe, is necessary for a bullish outlook. Yeah, I think taxi to take time.
I don't think tanks got a lead here. All I'm saying is you can't have tank be the AG on the market than it was last year. I think there's a shoe to drop on CAC earnings.
We've started to see that with the tech revisions company done quite hard. But I do think a lot of that gets offset by valuation. He talks on Tesla earlier on coming into last year. That was on a PE of something like a hundred and thirty times. Now it's on closer to sort of 25 times. I'm not saying that's the right number,
but you've seen an absolute turnaround in valuations and Tesla is still growing still growing earnings well into the double digits. So what is the right number? I don't know, but you've seen absolutely dramatic turnaround. But I think bond yields stay at these levels or come down from here. I think that is going to be a key support that was really missing last year. You've touched on the broader signal you can take from a single name. We talked about test it out and can you talk to me about Apple? What's the signal that you take from the price action there through December and into January? I think this is the same story.
Needs a consumer discretionary was the worst performing sector last year. You know, investors worried about the slowdown in goods demand, investors worried about the cost of living crisis on the consumer that conducted the consumer really rich or that 40, 50 thousand dollar total car, all that high priced piece of Apple hardware at the market is increasingly telling, you know, and I think the closer we get to a recession and this is a race between the Fed cycle and recession, I think the more those concerns are just going to I'm going to continue to I'm going to continue to add and I think that's that's what you're seeing here. Ben, appreciate your perspective, as always. Thank you, sir. Ben Knight did that at the time. Looking ahead, semantics a little bit
later this month. Apple at the end of January going to be in big, big focus. So here's the challenge to this morning. And AMH is really gonna to pick it up in about 10 minutes time. T.K., can you explain what an earth is coming out with Kevin McCarthy down in Washington, D.C.? That's some good work on this. This morning, a shout out to Carl Hall's legendary at The New York Times with over thirty years of work on this. The word he used to squandered and what
we have here is a majority party squandering their first hour, their first minutes in office. It is historic. It goes back 100 years. It's gonna be interesting today. And I think it does merit scrutiny into this afternoon today to see how this soap opera unravels. This is history, right?
Kevin McCarthy. Well, he was the first person to not get elected House speaker in the first round going back to 1923 and only the second person since the civil war. This is highly unusual. I don't understand why the market's not responding to the likelihood of a possible default. I mean, honestly, because this really racist. So are you taking that jerk?
I mean, look at a budget that I just said looking looking over. You look at all the discussions for everything that we know. We got some of that stuff. Honestly, I do wonder whether this raises the specter of not being able to get stuff done. We also know that needs to get done. This coming year, just for the record,
you spent months laughing at British politics. Oh, this is a top tip. Come on, guys. Sarah Hang Seng pint Saxon words coming up in the next hour. Look out for that. AMH down in D.C.
is coming up next. Keeping you up to date with news from around the world with the first word. I'm Lisa Mateo. Well, you just heard about it. It was chaos at the Capitol. Republican Kevin McCarthy saw his longtime ambition of becoming House speaker, slipping away after a humiliating showdown with a conservative minority in three rounds of balloting. McCarthy couldn't get the votes he needed to become speaker. He'll try again today. The Federal Reserve is about to shed more light on why it's worried that strong inflation may linger. Today, the Fed will publish minutes of
last month's policymakers meeting. At the end of that meeting. Fed officials published new projections showing they expected inflation would end 20 23 higher than they previously thought. More signs of easing price pressure throughout the euro area. Inflation in France unexpectedly slowed last month.
Consumer prices rose six point seven percent from a year earlier after record increases of seven point one percent in October and November. That's a relief for a European Central Bank policymakers who opted for a smaller half point rate hike at its last meeting. China is pausing massive investments aimed at building a chip industry to compete with the U.S.. Bloomberg's learn that top officials are
discussing ways to move away from costly subsidies that have done little but encourage graft and American sanctions. The recent Covid outbreak has been straining Beijing's finances. Global news 24 hours a day on air and on Bloomberg Quicktake, powered by more than 20 700 journalists and analysts in more than 120 countries. I'm Lisa Matteo. This is Bloomberg.
Today is the day I wanted to have. I mean, there was a lot of things we want to do. Want people eighty seven thousand IRS agents. We want to set up a number of
investigation going. We want them to notice the different committee hearings we have actually on the board. But what if we're able to work out our differences this time? We'll only be strong to be able to accomplish the things. Representative Kevin McCarthy of California struggling to get the votes to become the next speaker. Dan in Washington, D.C., on the other side of the aisle, Democrats casting their votes for Representative Hakeem Jeffries of New York. Sad day for the House of Representatives as an institution. Sad day.
For democracy, we are prepared to try to find common ground with the other side of the aisle to solve problems on behalf of the American people. But we don't have a willing partner. In House, Republicans take a messy 24 hours for House Republicans, lucid and civics, I think is what we're seeing right now. Reading it, an update here right now. The Annmarie Horden or Bloomberg Washington correspondent Annmarie Horden want to go to getting things done today. There's massive symbolism of the president of the United States and the gentleman from Kentucky.
They'll be where, 75, 75 and ISE 71. Cross that bridge between coming to him in Cincinnati, you know. Well, the Waffle House on the Kentucky side of that bridge, Emory. That's what it's about. Republicans and Democrats coming together with fat, with pork and all that and building bridges. Can these Republicans do that a week from now, a year from now, four years from now, literally building bridges, right, Tom? The president is going to be showcasing the work he did with Republicans and getting that hard infrastructure on the line during the first, you know, two years of his presidency.
And he's going to be standing there with no other than Mitch McConnell, the Senate minority Republican leader, who at this point actually is the longest service Senate leader. And really he celebrated that milestone yesterday. Very different scenario than is what is going on on the other side of Congress. And to your question, what we are seeing happen in Congress, which is the fact that at this moment it is Groundhog's Day in D.C.. The House is speaker list and there are
only members elect. Not a single individual was sworn in because the first order of business, which is largely ceremonial, is to elect a speaker. And if they cannot even decide who is going to lead their party, this foreshadows and really ask serious questions about how they are going to fund the government, how they going to honor U.S. debt, how are they going to potentially coalesce about another Ukraine package. And it doesn't seem that this is going to be a viable Congress. You should see the Brando cam right now. Was lit up like a torch. Jihye Lee rolling her eyes.
No, not really glad. ISE. I'm emphasizing what you're saying is you're getting to the point. Go on. No, no, please, sir.
I insist. Please. A question for Ms. Ward. But Ed Murray, this is exactly what a lot of people are worried about. And I was surprised that we didn't see any kind of reaction markets. This is kind of the similar dysfunction that you saw in 2011 that led to a lot of the debt default debacle that led to the big sell off and of ultimately an agreement. However, the turmoil to get there was significant. Why is it not just gonna be a repeat of
that? Is are signs of hope that we're going to avoid that kind of gridlock heading into your end, not just significant in terms of politics, but significant in the sense that the U.S. was downgraded in 2011. We also saw this from the Republicans in 2015 when the hard right wing of the Republican Party ousted John Boehner.
Now you are seeing it almost on a different level and a different scale. I think a lot of individuals in New York, because I was getting a ton of messages on the terminal from people saying it's baked in, it'll be a show and then they'll agree on McCarthy. It's all politics, et cetera. And maybe to a point that is. But when you wake up this morning and he's on the phones overnight. So far you've heard from none of the 20
individuals. This was a rebellion against him from 20 individuals. He can only lose four if every member is present. Not saying they're going to switch his vote. How are they going to get anything done
down the line? This isn't just passing simple legislation. Well, what's usually I mean, more complex legislation, which you could see a little bit more of of ideological and policy differences. This is becoming more personal. Well, who's leading the rebellion? Right. Because Donald Trump at one point supported McCarthy.
Now he's sort of on the fence, not saying anything. A lot of people are coming to ask him for for his praise, he says. But I'm just curious, from your perspective, is there a leader to the opposition or is it just a free for all? Well, it's really members of the Freedom Caucus and not all members of the Freedom Caucus, but a group of them, you know, notably you have the likes of or Bob Byrd and Matt Gay, too.
Also yesterday sent a letter to the architect of the Capitol asking why you had Representative McCarthy moving his boxes and furniture into the speaker's office. Given the fact that he was not yet elected speaker. So you have these rebellion and rebellious individuals who a lot of it also is it's not really about policy. They don't want to see him become speaker of the House. Look at this, Emory. And I think of schools and others who are supporting McCarthy. And yet they're also picked to be future
leaders of the House. Let me pick up on Jim Jordan of western Ohio as well. Who is he taking his cues from in his electorate for Mr. Trump is Lisa Abramowicz mentions where he's accused coming from for these 20 people other than a primal what I'm going to call libertarian scream? Well, they're definitely trying to make a point and it doesn't seem like they are going to back down.
Even given the fact that McCarthy has really given up a lot of concessions, even making it so much easier for a no confidence vote, a.k.a. being able to fire him on the spot. When you think of the likes of Jim Jordan, obviously he was at one point a fierce rivals, McCarthy, now an ally. He actually nominated him on the floor. And then a moment later, Matt Gates nominated. But you didn't get it.
He's not. You may get the 218, but this is too important. What is the theology of Jim Jordan, wrestling coach of Ohio? What is his belief? Talk to our international audience about this.
Well, he is part of the ultra what we can maybe call magic or right of the Republican Party. But what I'm trying to paint a picture of for you, Tom, is the fact that he is not part of that rebellious group. He is actually voting for Kevin McCarthy to become speaker. It is individuals of that rebellious group that are coalescing around him.
He is ultraconservative, but he is not going to get to 218 and everyone knows that. So then you have the likes of Scarlet Fu and then even potentially in what the Hill is calling a breaking glass moment, maybe Patrick McHenry, which I know, Tom, you know very well, I might. Just briefly, how much longer can this go on for? Worst days, I think at one point history went on for two to three months. But yeah, it could. It could go on for days.
They could have a similar situation today at noon and then adjourn until they figure out who is going to become speaker and no legislation can get done until they have a speak. I mean, I know we've got a good job, but, you know, in Wikipedia, Marjorie Taylor GREENE of Georgia, Wikipedia has her is an American politician, businesswoman and right, far right conspiracy theorist. She's for the gentlemen trying to be speaker. She has said to these people, you're out
of your mind. I think that's just critical to line up the ducks here. I'm race touched on this a few times in private conversations we've had in public conversation. Talk to you privately. She's never to a phone call. And that's when I haven't talked to. I haven't talked to in like eight months. Marie, can you tell us how strange it is
to have an individual like that being seen as the voice of reason in a moment like this? Yeah, she's saying that they're being obstructionists and that they need to get on board and that she was personally not even given a concession for herself. She's not even on a committee, she says. But she's still going to be backing Kevin McCarthy. And she thinks that what her friends and her Freedom Caucus are doing is showing to the American people that they cannot govern. So you do have this very awkward moment when you have this individual who is, you know, a Q and on individual who has felt delved into the conspiracy theories being the voice of reason on the right, a march down in Washington. Take a look at this time. I learned a lot there. I always say it's embarrassing. I mean, you know, does it allude to the
embarrassment of the British government process eight months ago? Maybe this is worse. Why are you putting this? We'll continue this commercial break. Like a lot of times was a conversation, the commercial break. You know, it's things get really tired
down a little bit. Do the Wikipedia. Great source, Tom Cruise. So I went to. He's trying to bounce her equity futures positive by four tenths of one per cent on the S&P 500, on the Nasdaq 100 right now by five or six tenths of one percent. One stock to watch in a free market
right now. Its sales force. Here's your headline. We had too many people leading into an economic downturn. And here come the cuts. Tell them they will cut the workforce by about 10 per cent in a restructuring effort. Stock up in early trading, some by 2.5
percent. Mark Zandi offered some executive turmoil wrapped around that. I'm sure it's been a huge discussion and debate there. Well, I would point as a stock is three and a half standard deviations off a solid long term trend. This is a stock that's been really on a cash flow driven revenue building like a rural trend. And it has been decisively broken with
this pullback. Just a little bit more detail here. The workforce cuts will mostly come over the coming weeks. They go on to say the plan will be substantially, completely set by the end of year fiscal 2024. So 10 per cent is a big slice of the workforce. You just wonder who's next.
Well, and how quickly and how hard they need to go, especially. Look, Salesforce had been in turmoil for a while. Thomas touching on that massive executive departures. There has been a lot of questions around its future. There's been a huge decline in some of its valuations and ended stock market.
How much does this also indicate the difficulty of tech to revive itself? Because it's not just the big tech names, it's also software. Some of the basic functions that companies were looking to to try to gear up during the pandemic that now find themselves overvalued all overboard. I mean, that's all there is to other tech companies. And that's where the exits are built. And they're adjusting without a doubt. There's another dimension to this as well, Tom.
And you see it in the headlines coming from this release, select real estate access and office space reductions as well. Now, that was a feature of the pandemic. We had that big conversation. I think some do. We need to renew that conversation as the other companies pull back and cut. Based on my conversations in New York. Yes, yes. Yes.
There is a moment here with the whole work from home off the pandemic dynamic. That's tangible. I would note the headline here and this sounds like classic Marc Benioff affected U.S. employees to get minimum nearly five months pay. That's the way Benioff shows people the door. But it goes back to your point, John. Is this just a tax specific, specific
named type of situation or is this broader because you see the same at the same time, the U.S. tech companies pulling back on office space. You see the Morgan Stanley's and Goldman Sachs as the world saying get back to the office right now. It's full time. It's back to where we were pre pandemic. And you're seeing that with more and more companies.
So it is a very difficult really one to Paris, given that some of the layoffs in the tech companies as well as some the pain there versus the resilience and the ongoing commitment to office space in other places. Let's borrow their own language. We had too many people leading into an economic downturn now for many people. They can't fire what they couldn't hire
because there are a lot of people out there that couldn't hire going into this downturn. They were trying to they couldn't deliver on it. So really, who were who were the individuals, the companies that were able to beef up the workforce in the way they wanted to? That's where the access is going to be. That's where some people are looking at the labor market data and saying, you know what, maybe this labor market data won't have that big turn lower in this downturn because there's so many companies out there that just can't hire the labor they wanted to hire in the upswing. Well, and there's a rolling boom and a rolling bust, and it's idiosyncratic.
And you see the retailers, for example, in the service sector continuing to hire, not laying people off because they couldn't get anybody during the pandemic. I do wonder whether you get more office workers who get laid off in this next wave of whatever kind of downturn this is and more resilience in some of the service sector and wait for the data like the Spanish and French inflation. You just show for the data and see what is jolts us today. Right. Yeah. John Dow Jones when it jolts Wednesday are you're branding Bloomberg Surveillance Wednesday or McKee would want that jolt Wednesday. Fine into a critical jobs report.
All of it's secondary to January 12th on January 13th. We know a lot more than we know right now. Tom, this is the issue, isn't it? We're looking at delivering, what, 200000 payrolls growth again on Friday. Look, unemployment is still around three
point five percent, wages at around 5 percent. You mentioned JOLTS, job openings, one point seven jobs open for every unemployed America that the official statistics. And then you've got these big tech companies screaming, no, we're doing something else. I just you know, at what point does that something else bleed into the broader numbers? We're not seeing it yet. Every time we get these numbers, the question is, where are these tech layoffs that we've been reading about and all the others? Well, they're there. But, you know, there's been some reports that these people are losing their jobs and getting jobs quickly are going to be careful with that.
You know, I don't financed, you know, is that fact. We had that story and a couple of weeks ago about Goldman making major cuts. And then you had was at HSBC. We're talking about sending out emails,
the people being laid off by the bank Santander as well. Mr. Yeah. I do think that Mizuho also I mean, honestly, just trying to beef up particularly talent in the US so it isn't exactly Armageddon for the jobs picture even in the banking test is not. It's about who is able to attract the talent as we are really trying to beef up the staff.
And dare I say there was a hierarchy of banks that were able to attract the talent. There were other banks that weren't able to then these big banks that were able to do in the cuts. And these are the banks that want to beef up in certain areas, certain regions. Dare I say, lower down the hierarchy for certain individual, Santander, HSBC. Guess where that that's where that amount is. Jason Kelly.
This isn't a picture of paying for the labor market by any means. Picture a picture paint. It's about where we can a window. I mean, to go back to that word, cumulative tightening.
Frank Jonathan Ferro from Vice President Vice Chair Brainard, ultimately we're still trying to answer that question. How much how long is the lack from the credit of tightening we've already seen and when will it show up? How short is the lack of. Well, I mean, we've got to work these things out in the year ahead any time. It's a guessing game. Let's be clear about that. It is a guessing game for these central bankers. I can't emphasize enough how almost thinking over the holidays, including a ten point nine six percent rise in the price of champagne is colored by the pandemic.
We're still we're just not done. You can't risk Covid better anyway. We're talking about job cuts. He's talking about the cost of Tidjane Thiam. I just bring it back to the job cuts. Right. Bill Dudley, as sure you did speak to
time. He puts the number at sub 100000 jobs being created for several jobs. Prince consecutively to get where we need to get to limit some of the wage pressure conversation finished at that conversation. I think this is this is intemperate champagne ramifications of. How can you have 11 percent?
She had a meeting. I have no question. So while you're on the air laughing, I could see in your face ridiculous. You're right, Donna. Right now, 1 0 6 0 9, where our week were positive, six tenths of one percent voluntary like What'd You Miss? and Davos along with at the Emma Chandra. I'm talking about the disinflation across Europe, France joining the club this morning. Downside surprise there. Saw it in Germany yesterday as well. Now, Maurice Jordan, Rochester reckons
we can hit 110 on euro dollar by the end of the month, saying this time it has often been the case. In the first few days of the new year, a new narrative prevails and euro suffers from negative seasonality, too. But we suspect the euro will continue to climb higher in the weeks ahead, and we remain long. Euro, dollar, general interest, a huge value to Bloomberg Surveillance last year. And he starts strong this year with us as well.
John, I'm going to cut to the chase. The first thing I looked at was ADX y the Pacific Rim. But I want to bring it over to your insight on euro as well. Is the weak dollar trend in tact led by strong euro? Well, yesterday time and happy New Year, everybody. It was a pretty tough day for that year along. We saw a big move over 1 percent, much
bigger than a normal January move for euro. In fact, it's been similar to the entire monthly move of euro in January in previous years. It just tells you that volatility was alive last year and it's still alive in the first few trading days of this year.
Low liquidity, people dusting off their holiday e-mails and also putting fresh capital to work. And as you mentioned, is that negative seasonality. So a 64 percent hit ratio since 1980, euro dollar has had it lower on average, around one point three per cent. So we're currently betting on the 36 percent historical chance that year goes higher. For a number of reasons. The first one was proven today, which is I think the European growth data.
It's going to point towards recession. It's not to be as bad as what people think. We've had the PMI ISE revised up this morning for the euro area and I think they're reopening in China already helped boost the euro area economy as well as as as we're also seeing gas prices, natural gas, electricity prices much lower with the warmer weather. The ski season has been awful, but that's been fantastic for industry looking at much lower levels of input costs and therefore boosting production.
So we're having a growth story. And then yesterday was the weird one. We had the north for us wine, German numbers. That's that signal that German CPI would come in week. We've not had the French numbers suggesting the same. So what euro inflation later this week is very weak.
Then what was previously thought that kind of means the ECB super hawkish in December. That did boost euro slightly. Perhaps they won't need to be as hawkish as what was what the market thinks this year is the message from the inflation data. Just one data point and the growth numbers might offset that.
But there's two factors going on here. Growth up, inflation down that revises up your real GDP estimate for the euro area. In some respects, and therefore, I think euro can stay supported in January. How much does your 110 target by the end of January hinge on the weather? Well, the weather's already baked in. So October, November, and we had that cold snap in December, but now we're back into a warm snap.
So we've already got the story of Germany having having blackouts. They've kind of gone to the side. So it's unlikely that we'll run out of gas next winter. Could be a bigger problem. But what we have seen is that Germany has just switched to coal burning. And so that has really allowed for the gas story to weaken as a problem for Europe. So, yes, if some amazing blizzard came, it came along. That could be a factor for industry.
But I just don't see it in the forecast right now. Jordan, where's the ECB fit into this? Been a tough one to use the ECB view and put that directly onto euro has been quite frivolous, actually. If you kept doing that last year because we're trading at stagflation story when it comes to framework for foreign exchange. So ECB. Yes, they'll be hawkish.
That will boost European yields. We're already seeing portfolio inflows into European government bonds for the first time, a long time. So that's going to boost the euro. I think on the ECB side by raising
rates, that's going to knock growth, though. So those two force says offsetting 7 probably. I guess John will just bring all back to the Fed if the Fed pauses, as we think they will. And if they look to cut rates later this year, which we think they will as well, they'll keep your dollar supported no matter what the ECB do. You can't see this on.
Radios weren't announced to volatile just here. I actually think he might be. I think he might be. I think it's in his. That might be ISE. Yeah, that's right. Well the action is with the team emblem on this. Yes. That's why. Why am I wearing it's high.
John, can you remind us all yet. You tell me. I won't watch the highlights of the tights Aston Villa game. Is the Aston Villa good or as Tottenham that bad? Jordan. Help me make sure that too. It's been one of the worst runs for Tottenham in the league since 1988. You conceded more than two goals in each game for seven games in a row.
That hasn't been done since 1998 for Villa. We've got a new manager and things look to be on the up. We've had a good start. We should do a podcast with Jordan Rishaad Salamat. We should too. Never mind. Phonics Joel Weber. Yeah, I won't get him. Righteous to thank you ISE for tomorrow
with an f x colon. The child of anyone that high just supports Tottenham. I see you soon, I think. Is he allowed to start a new trend as he clamp back on? You Steve measures going to shop with a Western Westphalia.
Same colours. Oh, is it? You can wear that sort if you know that Crystal Palace DAX today. You don't get the Crystal Palace. They're not playing the same arenas.
Rochester, the same arena as Rochester, Rochester FC. I think that they're making things up. Yeah, they are. You're making fun. No.
Yeah. Yeah. I mean, I don't even follow this palace. What are you talking about? They're playing today. I don't get it.
AFAIK, copies this weekend. What's a pay cut? We haven't got time to do this. Okay, we're done. I'm ready. Since coming up from energy aspects. Cruise is 74 90. Can wear the developed developed two point six percent. Keeping you up today with news from
around the world with the first word. I'm Lisa Matteo. It's back to the drawing board for Republican lawmakers today in another attempt to elect a House speaker. After three rounds of balloting, Kevin McCarthy was unable to gain the majority of votes from his own party. It's the first time since 1923 and only the second time since the civil war that a House speaker wasn't elected on the first ballot. The European Union is moving toward requiring Kobe tests for travelers from China. EU health advisers have agreed on a
draft opinion that includes masking and pre-flight testing requirements. Several European countries, including Italy and Spain, have already imposed testing rules on flights from China. RTX founder Sam Beckmann Free Now faces a trial in October on the collapse of his crypto empire in a court in Manhattan. Bagman Freed pleaded not guilty to criminal charges. U.S. prosecutors say they expect to produce all the evidence for the case in the next four weeks. Job cuts are on the way at Salesforce. The cloud based software company says it plans to cut about 10 percent of its staff in a restructuring. As of last October, Salesforce employed
almost 80000 people. The company says it hired too many employees leading into the economic downturn. 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. You still have relatively tight commodity markets, and if China opens forcefully and fast, you could see a bit of a replay of the commodity, let inflation, which we have coming into this year, off the last year or so to some extent, where we are kind of bit more worried that it could reignite the commodity strength. That is a risk coming into 2003. That was the pretty and Christine Miller Glassman that the managing director and portfolio strategist over at Goldman Sachs says the price action for you in the equity market on the S&P and the NASDAQ 100, the S&P advancing by four tenths, the lift in the Nasdaq as well. Yet let's look like this.
And I think this is the one to watch the start. The year yields down aggressively yesterday down again. Today, we're down by five or six basis points to 368. And a team here at Bloomberg, Tom says this is the strongest start for treasuries going back to 2000 and won the strongest new year start to the Treasury market. It's worth Vonnie Quinn. I mean, there's no question about that. You're going to IBEX has sort of been boring. The real yield, one point forty two
percent. Not giving me much information, but the yield lift we had the end of December. We're not halfway back from that. I mean, I just want to make clear there was a hell of a yield left. We just had a record. I think we were about 200 basis points south of where we are right now, this time 12 months ago. And the equity market was at all time highs a little more than a year ago as well. On the commodity market, take a look at
this time. The latest reporting from the team here at Bloomberg. Chinese bureaucrats are discussing plans to resume some imports of Australian coal after a more than two year ban. So two prong story here. Want relations perhaps improving between
China and Australia? That's the point. One point, too. China clearly needs the commodity as they reopen. Don't NASDAQ. And our conversation with Kevin Rudd yesterday, the former prime minister of Australia. He will be the Australian ambassador to the United States. Spoke to that. They've got to get along. I mean, it's the geography says.
So are we going to see a different approach from the Chinese foreign ministry, from leadership? There may be a subtle hints of that in the new foreign minister in the last couple of days. I will defer to occur in another wiser than me. But the clear tone I got yesterday from Bremmer was Gee is awfully powerful, even if he's got a tough road ahead once a watch.
Look, they're trying to reopen that economy. They're trying to do it quickly. Clearly, sickness is on the rise once they get through that. If they can't get through that quickly, we've got to focus on a big commodity storytelling through 2023.
Your briefing today on oil and coal and we The Sun joins us, director research energy aspects, of course, are looking at all of the different hydrocarbons, including the grizzly core. I'm going to look at Rita right now and I'll call links in the oil. Is there a substitution effect if Germany uses coal? If China uses coal? Does that adjust Brent crude price? No, no, Tom, thankfully not that be yet another variable. Of course, it impacts gas hugely. And yet, look, when we've had gas prices surge, we have seen in Europe, for instance, coal usage go up a lot. And at the margin, we've obviously seen
oil usage quite a lot as well. But no, there isn't any direct link simply because, you know, oil is barely used in power. Generation is the rudest in microeconomics in place for oil to surge. People talking about Brent, 80, 90, 100. Dare I say higher as well. Is that set up in place here at the
beginning of the year? I'd say the beginning of the year, no. But I really do think the second half of the year and particularly of China opens up in the way we are now, we are kind of hearing headlines from them around the reopening scale. We've tended to forget what we saw in the West, right. It took us two years to get over the pent up demand in terms of airline travel, in terms of car travel or the mileage driven that we've seen. And I keep seeing this, particularly for
Jet. It's a multiplier effect. When China reopens, other parts of the world will also, you know, people from other parts of the world will also want to go to China. And China is so connected to the rest of Asia, beat Korea, Thailand, Vietnam, Philippines, all these countries, they have huge trade relationships with China, 25 to 30 percent tourism or just petrochemical exports linked to China. So we all want to see some big demand numbers. The problem now, Tom, is that we've seen these big freeze offs in the U.S. and that's mended. The crude balance has actually weakened.
We've seen so many refineries having to forcefully shut down because of the cold that's lost us crude demand. So that's why we are on a softer footing. And then it kind of turns into seasonal turnaround season, says a few more weeks of softness.
I think I'm ready. Forgive the pun. But what's the canary in the coal mine when it comes to the reopening of China, given the fact that there are a whole host of different energy sources up the table? I know it's kind of a terrible pain. But what source of energy will we see the first pickup in demand that will represent the next phase of China's reopening in the affected energy markets? That's a great question because like in you guys were saying, there's just now as well. When China does reopen, they will need all energy products, right? It's not just going to be oil. You know, oil stocks aren't particularly high. So we should see them come out and buy
crude oil probably if not this cycle, definitely from next cycle onwards. They are going to need coal and gas as well. So I would genuinely say all three of those, I think metals you've already seen them buy. If anything, I think energy or energy imports should outperform the other commodities because right now with the reopening, the focus shifts back to consumers, which is kind of again goes directly into energy consumption as opposed to metals, which was more infrastructure driven. That happened last year.
Some people pushed back. They say, well, tennis spent the past couple of years stockpiling crude, stockpiling energy sources, and they're not going to need an excess in supplies even if they do reopen in full, at least not for a very long time. Do you have any sense of reader of how significant those stockpiles of energy sources are in China? Absolutely. Look, we track stockpiles in China to our best ability on a daily basis. And I think this is a big misnomer. Let's talk about oil. For instance, China's oil stocks have been rising for sure, but over the course of last year, they've been drawing down stocks on a consistent basis.
China was importing barely 9 million barrels per day instead of eleven million barrels per day. So that stockpiling took place in 2020, 2021, not last year. We've destocking in not enough in China for them to be at a high the level that they require for their days of cover, where now as they reopen, they do need to buy again at Emory. Emily, listen, I've got LNG moving here, moving.
They're having a blast of Bloomberg out with analysis of LNG in Japan today as well. Just a simple question with all your expertise, is the United States energy independent? It's definitely more independent than it used to be. Look, the U.S. still imports some oil and simply that's to do with location. The ability of certain refiners to run certain crudes. But look, yes, I mean, it's exporting natural gas. Now it does export well over 3 million
barrels per day of crude. Right now, there's still global linkages. Right. So that's where I don't like to use the word independence, because Brent crude is still the biggest driver off the gasoline that you are buying at the pump. Right. So it's not an island. And therefore, yes, it's independent in the sense that it's exporting a lot more products. It's still a net importer of certain products.
But at the end of the day, the global linkages haven't broken down just because of the way the refining system is set up. Just quickly and Rita, best guess for why you think it's going to end up city Q4 2003 has crude at 76. I've got Goldman wants him. I've got other banks with triple digits as well. Where are you at? I'd be triple digits as well, and I think, again, people are underestimating China's reopening and the multiplier effect on demand. Again, basic one to one economics that is going to have on the world economy. Yes.
Bad news for inflation, but it is definitely something to watch out for. I'm really sorry. Thank you. Vanishing aspects with another triple digit crude. Time for year end 2023.
Yeah, well, there it is. And it's I can we say it's in the zygotes I think. I think it's safe to say she was out of town with lifters there. And to add Morris's point, he shocked people with the 80 dollar cost seventy dollar call.
And that's what we had. I have real hesitancy in announcing that we're going to move 100 dollars a barrel. All my readers up with someone says that, say, 30 something dollar spread between the high estimate for your rent and ready send their lease I think was pretty clear. She thinks people are underestimating the impact the force the Chinese re-opening is going to have to this economy and the multiplier impact was the one that really struck me.
Not only people in China moving around, but people going to China and visiting just the incredible commerce that gets rich, rejiggered and reignited. If China fully reopens. But you raise this question yesterday, John, and this I think is a really important point. Given all of the shifts culturally in China, what does the new reopening look like in terms of the international commerce and travel still remains to be seen? I am asking the same question.
I think we're both asking this question. Where does that amount show up and read a single shot being a commodity, Mark? Okay. I want to know whether revenge spend is going to take place. Did they go abroad in the same way they might have done three years ago? Or does it get spent at home? You're smiling. What are you thinking about? If you mean revenge spending, spend CAC billion murders and it's 60 third, it can be up a little bit.
Are they going to fly into New York to do that? They're going to spend, although that's a hard nerf. Seriously, do the Chinese tourists return to Europe as well? Yeah, big question, too. Sarah Hunt's coming out of Alpine Saxon. What's.
There are a lot of real fundamental issues that are going to be pulling down inflation next quarter to we stay in this nominal GDP dwarfing real GDP environment, right? Driven by still elevated inflation. You can't ignore the shorter term data. You have to take it all into account. I think we see equities down in the near term, possibly recovering towards the end of the year. What's different this time, I think, is that if we have a recession, it's going to be a Fed induced recession. This is Bloomberg Surveillance with Tom Keene, Jonathan Ferro and Lisa Abramowicz. Kicking off 2023 with a focus on the
labor market in America, live from New York City this morning. Good morning. Good morning for an audience worldwide on TV and radio. This is Bloomberg Surveillance alongside
Tom Keene and Lisa Abramowicz. Some Jonathan Ferro breaking news in the last 30 minutes or so, Tom. So I was forced to count 10 per cent of jobs. Joe Weisenthal may be following on from other tech companies. I think it has been signaled with the executive turmoil under Mr. Benioff, its sales force, they give out
five months, pay minimum to the people shown the door. There is not the Zeit guys, but a little bit of a flurry out there. The people exiting big tech who overbuild are finding jobs are not.
That's true or not, but I would suggest it's a fully employed America for subs. That's Thorsten Slack. Moments ago, Paolo says prime age workers are pretty much employed. It's the old people and the young people that haven't come back to work. A statement from leadership over its sales force, I think tells you a story pretty clearly, Rameau as our revenue accelerated through the France. AMICK We had too many people leading a debt. Did this economic downturn we're now
facing and the leadership say they take full responsibility for that. And there weren't that many industries that really built up their entire plan employment force during the pandemic. It was big tech and it was the banking system. And those are the places where you start
to see layoffs, which raises a question how idiosyncratic is this or how representative of the broader labor market? To Tom's point, there still is an inherent tightness in the structure that keeps getting represented in the numbers that Salesforce. Let's talk Tester and Apple and we can maybe talk about Tester a little bit later. It's not with Apple right now. Dan Ives of Wedbush, well-known. Some might call impermeable of this name lowers his price target from 200 to 175 this morning.
This is what Dan has to say. It reflects a more base case valuation in an uncertain environment as some demand had to start to creep into the Cupertino growth story. Tommy goes on to say that Apple remains our favorite tech name. We maintain our outperform rating, but
certainly had a difficult December and has had a difficult start to the year as well. 175 up 39 make it 40 percent is what the shift is, if you will, from being a hugely optimistic, I would suggest in the 14 times over the year that we called not so much for the death of Apple, but the stumble of Apple. You've been wrong. In the heart of the matter is new product people arose out of the fanboys looking for the new product. They need new product or they just need to sell these over that bill. I mean, I love it.
Well, I will say this. Dan Ives actually talks about the stability of the iPhone sales, but says that Apple appears to be cutting back on some orders around Macs, iPads and air pods over the coming quarters to reflect. And this, to me is the most important point to reflect a softer consumer backdrop. And this is the real issue that was reported by NIKKEI yesterday and I think contributed to the losses we had some in yesterday's session.
Yeah, no question about it. What I would do is look at the surveys as statistically valid of counting the number of lost air pod thingy things in the house to try to get the double digits. You can do it. How many have you lost? Oh, I don't know. Under the couch alone, it's gonna be four because you can find the case. But you can't find that now.
You can find it anywhere. You can buy an individual what you bring a case in and you can know that. Give you a spare. You give a spare. We didn't know that. Yeah, I didn't know that either. Mike, I looked at said, what did I buy? How much they charge for that? A lot.
This is the same. Just like you said. It's well they're they're ridiculous. I don't have them. No. Do you have seen you to use your parts?
No. But some in the family do it. The worst is when it goes to the wash. Thousands leave all of that. They put it through the. Now they said BOVESPA. So she does. Can raise Tom Mackenzie. You just put it through the wash on accident. And then she goes, oh, I'm sorry. It once was a wash they give.
At least that's how it works. Apple up by six tenths of one percent this morning, trying to bounce. Not much for bounce suffering at the broader price action in the equity market shaping up as follows on the S&P 500, futures up by just a third of 1 percent. The one thing that continues from yesterday is this move lower in bond yields, down another six basis points told on a 10 year, 367 53 and adding to the move like we saw in yesterday's session. Yeah, I mean, the yield stories there is technically it's not a big deal yet, but it's moving in that direction. And I would suggest the market is waiting on the data. Ample data today, including I assume
you're big on ISE is a big deal today. Without a doubt, leader rate in need of rate a first of the year. Need a read on this economy? Brammer, we'll get that read on this economy today and through much of this week. Today at 10:00 a.m. December, ISI manufacturing. That will definitely be interesting to see whether it actually picks up a little bit after dipping a little bit earlier. But I'm also watching at that same time,
November U.S. jobs data. The job openings. How much do we get a sense of a very tight labor market starting to loosen just a little bit. Given the dynamic that Tom was talking about with older and younger workers really staying out o
2023-01-09 21:31
