Bloomberg Surveillance 12/11/2023

>> LABOR MARKETS HAVE BEEN STRONG. IT WILL BE AN INTERESTING STORY. >> WE ARE NOT SEEING THE LEVEL OF RESTRICTIVENESS TO SHOW UP IN THE LABOR MARKETS. >> WE DO THINK THE RECESSION RISKS ARE HIGHER NOW. >> THEY NEVER HAPPEN RIGHT WHEN YOU EXPECT IT. >> WE ARE NOT IN RECESSION RIGHT NOW BUT IT IS NOT NECESSARILY AN ALL CLEAR SIGNAL FOR NEXT YEAR EITHER. >> THIS IS BLOOMBERG SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO AND LISA ABRAMOWICZ. >> ON RADIO AND TELEVISION. WHAT A WEEK IT WILL BE OFF THE JOBS REPORT. 80'S DEEP IN ECONOMIC DATA AND DEEP ON SHIFTING CALLS INTO 2024. WHAT INTERESTS YOU? LISA: THE LAST MASSIVE WEEK AHEAD OF A QUIET PERIOD OF TIME AND A PIVOTAL MOMENT TALKING ABOUT DISINFLATION THAT'S IMMACULATE WITHOUT THAT SLOW DOWN PEOPLE TRYING TO FIGURE OUT WHAT THE THRESHOLD IS FOR CENTRAL BANKS TO CUT RATES. TOM: JONATHAN FERRO ON ASSIGNMENT HERE. A HELL OF A WEEKEND. TELL US ABOUT THE ECONOMY. TELL ME ABOUT PINES -- PINE TREE VERMONT. WAS IT PACKED AND BOOMING? LISA: NOT ENOUGH TO MAKE IT A PLEASANT EXPERIENCE. YOU ARE SEEING PEOPLE SPENDING AND RESTAURANTS PACKED. THERE WAS SNOW. BUT WE WERE ALSO DISCUSSING HEATEDLY INFLATION AND HEATEDLY DISCUSSING OIL PRICES AND GAS PRICES WERE BELOW THREE DOLLARS A GALLON IN SOME PLACES WHICH GIVES YOU A SENSE OF WHERE WE ARE AND SOME OF THE DISINFLATION IS TANGIBLE TO PEOPLE. >> WHAT TO ME IS SO IMPORTANT IS RETAIL SALES ON THURSDAY WRAPPED AROUND THE ECB AND BANK OF ENGLAND IS MAY THE DATA POINT OF THE WEEK IN TERMS OF FIGURING OUT THE REAL GDP. >> WE GET A SENSE OF HOW MUCH INFLATION HAS TICKED UP. THIS WAS INTERESTING FROM DEUTSCHE BANK THIS MORNING THAT IF IT COMES IN AS EXPECTED TRAILING THREE MONTH AND SIX MONTH AVERAGES FOR CORE CPI. >> GETTING YOU SET UP FOR THE WEEK AS WELL. FUTURES AND NEGATIVE FIVE. A LITTLE BIT OFF THE NIRVANA. THE REAL YIELD 2.0%. OIL, $70 A BARREL. THERE'S NOT MUCH, YOU MENTIONED SWISS NATIONAL BANK. BEING STRONG HERE -- BEING IGNORED HERE. AN INSIDE BASEBALL DISCUSSION. LISA: ARE THEY BEING IGNORED OR OVERSHADOWED? THIS WILL BE A MOMENTOUS WEEK. TOMORROW I THINK THE BIGGEST DATA POINT OF THE WEEK. CPI, WEDNESDAY WE WILL GET PPI. RETAIL SALES ON THURSDAY. THE IDEA THAT IF YOU HAVE A TRAILING THREE MONTH OR SIX MONTH AVERAGE THE CORE CPI YOU ARE LOOKING AT SOME OF THE LOWEST LEVELS BACK TO 2021. THIS IS SIGNIFICANT. TOM: MONTH OVER MONTH YEAR-OVER-YEAR. ALL THE ADULTS ARE USING OUR CUMULATIVE STUDY THEY CAN AND I GUESS THEY ALL POINT TO DISINFLATION. LISA: THAT'S THE KEY QUESTION IF THE YEAR-OVER-YEAR GETS MORE DIFFICULT. WE GET A SENSE OF THE REACTION FUNCTION. WE WILL BE HAVING THE FED DECIDES LATER IN THE AFTERNOON. SWISS NATIONAL BANK AND THE BANK OF ENGLAND COMING OUT ON THURSDAY AFTER WHAT WE HEARD FROM THE BANK OF JAPAN OVERNIGHT. BLOOMBERG REPORTING THEY ARE PUSHING BACK AGAINST SHIFTING AWAY FROM THEIR NEGATIVE RATE POLICIES. >> IT'S NOT BACK TO 160 IT'S COME BACK A LITTLE BIT. IT'S WEAKER YEN IN THE LAST 72 HOURS I WOULD SAY. IT'S GOING TO BE UGLY. >> THE QUESTION IS HOW MUCH COULD THEY PROLONG. THERE ARE SO MANY AUCTIONS. IT'S NOT JUST TODAY. COMING IN AT 11:30. THAT WOULD COME IN AT 1:00 P.M.. TO ME THIS IS FASCINATING. THIS MATTERS. THERE'S AN ENTIRE ARTICLE ON THE FRONT PAGE BASICALLY SAYING OPTIONS MATTER. WHAT YOU'RE LOOKING AT RIGHT NOW -- IS A SENSE THAT WE ARE GOING TO BE BE ROILED BY MARKETS. WHY TREASURY AUCTIONS HAVE WALL STREET ON EDGE. WHY DOES TOM NEED TO CARE. WHETHER THE MARKET CAN ABSORB THE ROILING WAVES OF DEBT IS THE BIGGEST QUESTION ON WALL STREET, OF THE LAST THREE OR AUCTION WAS PREVIEWED -- POORLY RECEIVED IT RATTLED PARTS OF THE MARKET WE HAVE SEEN ALMOST RECORD AMOUNTS OF ISSUANCE. WE HAVE ALMOST A MONTH LEFT. >> LAST NIGHT A BOMBSHELL. THIS IS REALLY IMPORTANT AND THIS IS ABOUT WHAT WE'VE TALKED ABOUT THROUGH THIS PANDEMIC, THE COURAGE TO BE IN THE MARKETS. LAST NIGHT A BOMBSHELL. WHAT HE DID WAS NOT SO MUCH PICKED A LEVEL OF THE EQUITY MARKETS, BUT HE TOOK HIS TIMELINE OUT. RATHER THAN RAISING THE YEAR-END TARGET WE ARE RAISING OUR EXPECTATIONS OF WHAT WE CAN DO TO END OF 24 AND BEYOND. WE ARE RAISING OUR YEAR END 2025 TO 6000. $300 SPX EARNINGS. THROWS ON A FOUR TO 20. CHIEF EXECUTIVE OFFICER FUNDAMENTAL PORTFOLIO MANAGER AT SPX 6000 CAUSEWAY CAPITAL MANAGEMENT. DO YOU HAVE THE OPTIMISM? >> THAT'S A TOUGH ONE TO CALL. THERE'S BEEN A LOT OF MULTIPLES. GIVEN INTEREST RATES HAVE GONE UP. THAT WAS THE OPPOSITE IS RATES WERE FALLING. INVESTORS ARE CLEARLY INTERESTED IN GETTING ACCESS TO U.S. EARNINGS. THIS MAY BE TOUGH FOR EARNINGS TO GROW AT THAT LEVEL. THE FED HAS BEEN SO ACTIVE AS WE KNOW. OUT OF THOSE EARNINGS MATERIALIZE. >> HE CALLS IT THE ROARING 20 20'S. YOU NEED REAL GDP AND GDP PLUS INFLATION ON TOP OF IT. >> WILL WE IS THE QUESTION. YOU CAN HAVE IT BOTH WAYS. ECONOMIC SLOWDOWN IMPACTS EARNINGS. THAT TAKES CARE OF INFLATION BUT ALSO CREATE SOME REAL RESISTANCE TO EARNINGS GROWTH. >> YOU ARE PUSHING BACK AGAINST THIS IMMACULATE DISINFLATION. SARAH: I SPEAK FOR OUR WHOLE TEAM ACROSS THE STRATEGIES MANAGING MOSTLY VALUE-ORIENTED AND IF YOU GO IN OPTIMISTIC AND YOU ARE WRONG, THAT'S WORSE THAN BEING VERY CONSERVATIVE AND ESTIMATES. >> WHAT DOES VALUE MEAN RIGHT NOW? >> IT MEANS BEING VERY DISCIPLINED ABOUT PRICE ENTRY POINT AND ENSURING THERE'S A LOT OF ROOM IN CASE YOU'VE MISCALCULATED SO THE STOCK IS STILL PERFORMING. >> YOU ARE OUT OF LOS ANGELES. MR. KIRBY SPOKE TO THE NATION IN 1987 WHEN HE SAID ALL YOU WANT TO DO IS MAKE THE STANDARD & POOR'S 500 PLUS 2%. THE MAGNIFICENT SEVEN VERSUS 18 OR 19%. HOW DO YOU AS A VALUE MANAGER ADAPT TO THIS NON-DISPERSION. >> AS LONG AS INVESTORS COMPARE -- CARE THERE WILL BE ROOM FOR VALUE, FOR NON-US INVESTING TO COMPLEMENT THE CRAZE IN THE U.S.. IT IS JUSTIFIED BECAUSE THE BULK OF SOME OF THE EXTRAORDINARY TECHNOLOGICAL INNOVATIONS, WE DON'T HAVE THE SAME TYPE OF ANTIMONOPOLY OBSESSION EUROPE DOES SO WE CAN HAVE HYPER SCALARS AND A HUGE PLATFORM OF COMPANIES. THE QUESTION IS CAN THEY CONTINUE TO PERFORM AS WELL AS THEY HAVE THIS YEAR AND IT SEEMS UNLIKELY TO HAVE CONSECUTIVE YEARS OF SUCH STRONG PERFORMANCE OUT OF SUCH A NARROW PART OF THE MARKET. LISA: WHAT'S THE MOST IMPORTANT EVENT THIS WEEK? >> I THINK THE FED'S RISK IS ASYMMETRIC. THE FED NEEDS TO ENSURE INFLATION IS STAMPED OUT AND WILL NOT RETURN. WHICH MEANS CAUTION. >> AS TIME GOES ON THAT BECOMES MORE CLEAR AND THEY'RE WILLING TO DO SO. IT'S HIGHER THAN WHAT CERTAIN PEOPLE ARE EXPECTING. WHAT DO YOU HAVE TO HEAR FROM FED CHAIR POWELL TO CONFIRM THAT. >> HE IS ATTEMPTING TO ENGINEER THE GOLDILOCKS SOFT LANDING SCENARIO. I DON'T BLAME HIM. FINANCIAL CONDITIONS HAVE LOOSENED LATELY. QUANTITATIVE TIGHTENING COME OF THIS REDUCTION WE ARE EXPECTING TO SEE IN MARCH OF THIS DIRECTION WENT BRIEFLY IN ORDER TO PUT A FLOOR UNDER THE BANKING SYSTEM. >> FIRST OF ALL DO YOU HAVE DODGERS SEASON TICKETS? >> NO DODGERS SEASON TICKETS BUT I MIGHT CHANGE MY MIND NOW. >> WE WORK WITH PAUL SWEENY ON BLOOMBERG RADIO. YOU'RE LIVING IN LOS ANGELES WHICH IS THE IMPLOSION OF THE MEDIA BUSINESS, IT'S REALLY NOT GOING WELL. NOT SO MUCH THE PREDICTION ON WHAT MEDIA WILL DO BUT AS A VALUE INVESTOR WHAT DO YOU DO WHEN THIS BLOWS UP? SARAH: BUY MORE. DISNEY IS GETTING TO THE POINT WHERE THEIR CASH FLOW WAS BEGINNING TO TURN UP. DISNEY WILL BE A FANTASTIC STORY INTERVIEW NEXT YEAR. BOB IGER WILL BE ABLE TO RETIRE. >> THANK YOU SO MUCH. GOOD TO HAVE HER START US OFF ON A MONDAY. I LOOK AT THE BLUR AND LINKAGE IN THE FED MEETINGS. TALKING ABOUT ECB ACTING BEFORE THE FED. IT'S A LESS POIGNANT, GDP LIKE ECONOMY. LISA: WAS THE JOBS MARKET REPORT WE GOT ON FRIDAY CONSISTENT. >> I'M SURE YOU SAW THIS BY THE CAMPFIRE THERE. YOU DO LOOK LIKE ROSEMARY CLOONEY NOW THAT I THINK ABOUT IT. THE BOTTOM LINE IS THEY ADJUSTED OVER THE WEEKEND FROM A PRETTY GOOD NUMBER AND YOU TAKE OUT THE STRIKE, MAYBE 20,000 PEOPLE OUT OF MACY'S. I'M NOT SURE -- WAS IT THAT GOOD? >> IT WAS PERFECT DISINFLATION AND THIS IS WHAT A LOT OF PEOPLE HAVE BEEN TALKING ABOUT. HOW PEOPLE ARE UNDERESTIMATING HOW MUCH WEAKNESS ALONG WITH THE DISINFLATION. HERE'S WHAT WE HAVE SEEN. INFLATION COMING DOWN IS IT BECAUSE THE FED POLICIES OR BECAUSE SUPPLY-SIDE ISSUES GOT RESOLVED AND PRICES ARE COMING IN AS THE MARKET INCREASES ITS PRODUCTIVITY. THIS IS THE KEY QUESTION. >> ARE AUCTIONS THE SAME AT THIS NEW LOWER YIELDS THAN THEY WERE IN THE SWEAT OF HIGHER YIELDS. >> THEY ACTUALLY GO BETTER WHEN PEOPLE HAVE A SENSE THEY ARE STABLE. WHEN WE -- PEOPLE KNOW WHAT THEY MIGHT BE GETTING PAID WE HAVE 30 YEAR AUCTIONS ABOUT A MONTH AGO NEXT MONTH. IT WAS REALLY PROBLEMATIC. SOME OF THE LONGER TERM ISSUES. THE BUDGETARY ISSUES OR NOT, GET SOLVED. THIS IS THE LAST FUNCTIONAL WEEK . UNCLEAR WHETHER FUNCTIONING IS BEING USED SIMPLY AS A GENEROUS TERM OR WHETHER WE GET SOME TYPE OF ACTION. >> SETTING UP YOUR MONDAY MORNING INTO THIS WEEK. NEGATIVE FIVE ON THE SPX. 10 YEAR YIELD, 4.25%. -49 BASIS POINTS. I STAY FOCUSED ON THE REAL YIELD 2.02% AS WELL. LISA: DID YOU DECORATE YOUR TREE OVER THE WEEKEND? TOM: >> ALL THIS PROJECT STANDS IN CONTRAST TO MY PREDECESSOR. THEY TALKED ABOUT INFRASTRUCTURE WEEK. FOUR YEARS OF INFRASTRUCTURE WEEK, BUT IT FAILED, HE FAILED. ON MY WATCH INFRASTRUCTURE WEEK AMERICA IS HAVING INFRASTRUCTURE DECADE. >> ON THE ROAD RAISING MONEY GETTING OUT IN FRONT OF THE PRESIDENTIAL ELECTION MR. BIDEN SPEAKING FRIDAY IN LAS VEGAS. GOING AFTER THE FORMER PRESIDENT. MR. BIDEN TRAILING MR. TRUMP IN A HYPOTHETICAL REMATCH. MR. FARROW, MUCH NEEDED ASSIGNMENT. LISA: I WANT TO GO ON SOME OF THESE EXCITE -- THESE. >> A HUGE ECONOMIC WEEK AND I REALLY HAVE TO SAY EQUITY MARKETS IN SHOCK OVER WHAT WE'VE SEEN WEEK AFTER WEEK AND DAY AFTER DAY. WE ARE REALLY TOUCHING TO THE BEGINNING OF 2026, S&P 500. LISA THAT'S A LONELY CALL. >> IN OTHER WORDS GIVEN ALL THE UNCERTAINTY HOW DO YOU EXTRAPOLATE FURTHER. WHEN WE TALK ABOUT THE POLITICAL BACKDROP, THE POLE THE TALKED ABOUT FORMER PRESIDENT TRUMP BEATING PRESIDENT BIDEN IN A MATCHUP AT A WIDER MARGIN. HIS LEGAL ISSUES EVEN THOUGH THEY CONTINUE IN NEW YORK. IS HE THE PRESUMPTIVE NOMINEE AND NOT JUST THAT IT'S SEE THE PRESUMPTIVE POTENTIAL PRESIDENT IN A WAY PEOPLE HAVEN'T FACTORED IN. >> A NEW JANUARY OF IOWA CAUCUSES. GREG JOINS US THIS MORNING. LISA WANTS TO TALK ABOUT THE VARIOUS AND SUNDRY WARS WE ARE IN. I NEED TO TALK ABOUT THE WAR IN THE PRESIDENTIAL ELECTION. IS IT THE TRUMP IS AHEAD OR THAT BIDEN IS BEHIND? >> I THINK IT IS MORE THE LATTER THAN ANYTHING ELSE. JUST LISTENING TO THE SOUNDBITES OVER THE WEEKEND, JUST CRINGE INDUCING FROM BOTH BIDEN AND TRUMP TRADE IF WE ARE IN FOR ANOTHER 11 MONTHS OF THIS, THIS IS CRUEL AND UNUSUAL PUNISHMENT FOR THE AMERICAN VOTER WHO STILL THINKS THERE'S A CHANCE FOR SOMEBODY ELSE. >> IT'S NOT GOOD TO BE DECIDED AT THE IOWA CAUCUS IN THE NEW HAMPSHIRE PRIMARY AS WELL. WHERE ARE WE IN FEBRUARY AFTER THIS JANUARY POLITICAL EVENTS? >> TRUMP WILL WIN IN IOWA BUT MAYBE NOT AS MUCH AS PEOPLE HAD EXPECTED. I THINK YOU WILL BE THE PRESUMPTIVE NOMINEE BY THE MIDDLE OF THE SPRING. THAT'S NOT A COURAGEOUS CALL ON MY PART BUT WITH THE DEMOCRATS I STILL THINK THERE COULD BE A SURPRISE. MAYBE THIS GUY FROM MINNESOTA, HE IS WAY BEHIND BUT HE IS DIFFERENT AND NEW. EVEN ROBERT KENNEDY WHO IS PRETTY EXOTIC IN HIS VIEWS HAS ATTRACTED SOME ATTENTION. I SENSE A LOT OF DEMOCRATS NOT JUST DAVID AXELROD, WHO ARE DESPERATELY LOOKING FOR SOMEONE ELSE. LISA: CRUEL AND UNUSUAL PUNISHMENT FOR THE AMERICAN PEOPLE AND THE EXOTIC VIEWS OF REPRESENTATIVE KENNEDY. HOW MUCH THE LIKELIHOOD OF PRESIDENT BIDEN IS TYING INTO SOME OF THE MILITARY CONFLICTS. >> THERE'S TWO BIG STORIES THAT YOU ALLUDE TO. THE TROUBLE THE TRUMP WILL HAVE WITH HIS SON. THIS WILL GO ON AND ON AND IT'S AN EMBARRASSMENT AND A DISTRACTION. IT'S A PLUS FOR TRUMP BUT THE OTHER BIG STORY IS UKRAINE. THAT COULD BE A DEVASTATING STORY FOR WASHINGTON IN GENERAL. IF WE CAN GET MONEY FOR UKRAINE MAYBE THEY WILL GET A PITTANCE, MAYBE THEY WILL GET A HAIRCUT. I DON'T SEE A HUGE CHUNK OF MONEY FOR UKRAINE AND VLADIMIR PUTIN HAS TO BE VERY HAPPY. LISA: VOLODYMYR ZELENSKYY IS TALKING DIRECTLY WITH CONGRESS MEMBERS INCLUDING HOUSE SPEAKER JOHNSON TO TRY AND PLEAD HIS CASE. THERE WAS A LOT OF DISCUSSION ABOUT HOW THIS COMES DOWN TO FUNDING AND IF UKRAINE DOESN'T GET FUNDED THEY WILL LOSE. ESPECIALLY BECAUSE RUSSIA IS PUTTING ITS BUDGET INTO THE MILITARY. DO YOU AGREE WITH THAT SENTIMENT WHERE IF UKRAINE DOES NOT GET AID IT KIND OF ENDS? >> IT DEPENDS ON THE DEFINITION OF LOSE. I DON'T THINK THEY WILL LOSE THE WAR ANYTIME SOON BUT THEY ARE CLEARLY ON THE DEFENSIVE. THEY HAVE NOT HAD A GOOD WINTER. THEY LACK SUPPLIES. I WOULD SAY THE MOMENTUM RIGHT NOW IS WITH RUSSIA AND IF THAT IS TRUE, WHAT DOES VLADIMIR PUTIN THINK ABOUT ESTONIA, LITHUANIA, LATVIA. DOES HE THINK ABOUT OTHER COUNTRIES THAT MIGHT BE NEXT. >> THE NEWS OVER THE WEEKEND ON GAZA WAS ABSOLUTELY GRIM AND THERE IS NO OTHER WAY TO PUT IT. THE WEIGHT OF THE -- OF THIS AS WELL. WHAT IS THE ACTION THE ADMINISTRATION CAN DO THIS WEEK? >> I DON'T SEE A LOT. I DON'T SEE MUCH WE COULD DO. WE COULD SEND MORE AID BUT I THINK IF IT'S TIED TO UKRAINE THAT'S NOT GOING TO HAPPEN UNTIL AFTER THE NEW YEAR. I DO THINK IN TERMS OF THE WORLD IN GENERAL THE ISRAELIS MAY BE ONLY HAVE A FEW WEEKS LEFT BEFORE THEY TOTALLY LOSE SUPPORT. THE WINDOW WAS STARTING TO CLOSE, THEY HAVE TO WRITE THIS UP -- WRAP THIS UP QUICKLY. LISA: SO MUCH DISCUSSION OVER THE WEEKEND ABOUT THE UNIVERSITY PRESIDENTS, AFTER WHAT WE SAW. WE ARE HEARING THAT A LOT OF CONSERVATIVES ARE SAYING WE TOLD YOU SO AND THAT UNIVERSITIES HAVE BEEN CONSTRAINING FREEDOM OF SPEECH FOR A LONG TIME AND THIS IS ONE EXAMPLE. HOW MUCH YOU ACTUALLY SEE DEMOCRATS GOING WITH THAT. >> I DON'T SEE ANYTHING THAT IS GOING TO CHANGE THE POLITICAL LANDSCAPE QUICKLY. BUT IT IS AN EMBARRASSMENT FOR THE IVY LEAGUE AND I THINK THAT WILL PERSIST. THE ABORTION FIGHT IN TEXAS HAS LONG-TERM IMPLICATIONS AND I THINK MORE AND MORE PEOPLE WILL BE LOOKING AT THIS SAYING THIS IS NOT RIGHT. TOM: GREG, THANK YOU SO MUCH. MANY DIFFERENT TOPICS INCLUDING WHAT WE SEE IN UKRAINE. ANOTHER EQUITY CALL IS IN OFF OF 2025, JOHN STOLTZFUS KEEPS IT SHORT. A BIT OF A PIN YADA 18 MONTHS AGO BUT HAS BEEN RIGHT AND WHAT'S IMPORTANT HERE IS A CONSTRUCTION 5200 SHORT-TERM IT'S LIKE A NORMAL CALL. 9% EARNINGS GROWTH NEXT YEAR AND HE SLAPS 21.7 PRICE TO EARNINGS RATIO AND ON TOP OF THAT, WHICH I THINK IS 52, THAT'S A MORE CONVENTIONAL CALL. >> WE ARE GETTING SO MANY CALLS AND THEY ARE COMPLETELY UNDERPINNED WITH DIFFERENT REASONS. THEY CAME OUT AND SAID GOOD NEWS IS GOOD NEWS. I COULD HEAR HIM SCREAMING INTO HIS PAPER AS HE TYPED THAT BUT THEN THERE IS THIS QUESTION OF IS IT BECAUSE THE FED WILL CUT RACE -- WILL CUT RATES. TALKING ABOUT WE HAVE A ZOMBIE ECONOMY. FED RATES AND QUANTITATIVE TIGHTENING. BASICALLY SAYING THE ONLY CURE IS RATE CUTS TO THE DOWNSIDE. TOM: IT'S WHEN YOU CAN DO A MERGER. THEY WANT TO BE THE NEXT UNITED HEALTH. LET'S BUY BACK 10 GOOD BILLION DOLLARS OF STOCK. WHEN YOU SEE THINGS LIKE THAT. LISA: WAS IT BECAUSE OF REGULATORY ISSUES? ESPECIALLY CONSIDERING BOTH OF THE PRICES WENT DOWN SO TO ME WHAT I FIND INTERESTING IS THE QUESTION YOU'VE BEEN ASKING. HOW MUCH ARE THESE COMPANIES GOING TO USE CASH AND DEPLOY IT FOR SOMETHING THAT MIGHT BE SYNCHRONOUS IN SOME CAPACITY VERSUS BUYING BACK SHARES. >> I THINK IT IS UNDERRATED BECAUSE EVERYONE IS LOOKING AT INCOME. THE ANSWER IN THE FIRST HALF COULD SURPRISE. AT OUR WORLD HEADQUARTERS ACROSS THE STREET. THEY TURNED ME DOWN FOR SANTA CLAUS. MAYBE I WILL RUN DOWN. >> I CAN JUST IMAGINE THIS. WHAT DO YOU WANT FOR CHRISTMAS. >> SEE YOU KID. >> LET ME TELL YOU ABOUT THE MICRO ECONOMIES. TOM: BLOOMBERG SURVEILLANCE, WE DO INTERNATIONAL AS WELL. WHAT'S GOING ON IN THE WORLD. EXCEPTIONALLY BUSY WEEK. JONATHAN FERRO ON ASSIGNMENT. THANK YOU FOR BEING WITH US ON RADIO. THERE IS THIS THING, DID YOU HAVE CAR PLAY THIS WEEKEND WHEN YOU WERE GALLIVANTING AROUND? IT'S A THING YOU PUT IN YOUR CAR. I'M LEARNING ABOUT IT. YOU PRESS BUTTONS. IT HAS THE DIALS THAT YOU TURN. LISA: PAUSE. CAR PLAY IT'S A THING WITH BUTTONS. >> APPLE CAR PLAY. IN THE BENTLEY I USE BLUETOOTH. LISA: ALL I CAN SAY -- >> WE DO THIS WITH FUTURES AT NEGATIVE SIX. A LOT OF EQUITY CALLS THROUGH THE SHOW. >> HOW WE'VE GOT SIX STRAIGHT WEEKS OF S&P GAINS. IS THERE SOMETHING MORE SIGNIFICANT BEHIND IT. VERY MUCH FRONTAL FOCUS. FOLLOWED BY THE BANK OF ENGLAND ON THURSDAY. THE FOLLOWING WEEK EARLY NEXT WEEK THEY SEE LITTLE NEED AN INTEREST RATE PAID THERE HAVE BEEN SPECULATION LAST WEEK THE BOJ MIGHT MOVE TO END ITS NEGATIVE RATE POLICY AS SOON THIS MONTH. THE BANK OF JAPAN WILL BE IN FOCUS. I'M SO INTERESTED TO SEE HOW MUCH JAY POWELL PUSHES BACK AGAINST THE SENSE THEY WILL CUT RATES SIMPLY TO INFLATION COMING DOWN RATHER THAN TRUE ECONOMIC WEAKNESS. >> HE HAS TO WAIT TO SEE WITH THE ECONOMIC DATA IS LIKE EVERYONE ELSE. LISA: HE HAS SOME TIME BUT IT'S KIND OF LIMITED AND WE'VE GOT AN EASING OF FINANCIAL CONDITIONS. TOM: CAN HE CUT RATES AT THIS MEETING? THE ANSWER IS NO. LISA: HE'S NOT GET A CUT RATES OR DO ANYTHING. HE MIGHT INDICATE SOME PAUSE. WHETHER THEY ADVISED THAT ANYWAY. SHARES OF MACY'S. WITH THE RETAILER RECEIVING A BUYOUT OFFER FROM INVESTMENT GROUP. OFFERING $21 A SHARE FOR THE DEPARTMENTS OPERATOR. IT COMES AS THEY ARE READYING A CHANGING OF THE GUARD. HE IS GOING TO BE REPLACED BY BLOOMINGDALE CEO TONY SPRING. WHY ARE YOU SO KEEN ON THAT. TOM: IT IS SO POPULAR IN NEW YORK. YOU'VE GOT TO -- YOU DON'T LINE UP LIKE A CHRISTMAS STORY. YOU HAVE TO MAKE A RESERVATION. >> TO BE A KID OR SANTA. LISA: WITH RESPECT TO THE MACY'S. THE QUESTION CAN THEY DO BETTER AS A PRIVATE COMPANY. HAVE THEY BEEN HAMPERED BY ACTIVIST INVESTORS AND SHORT-TERM THINKING AND WILL THEY BE MORE SUCCESSFUL. MORE THAN 22% GRADE THAT'S A KEY QUESTION IN MY MIND. >> WHAT'S INTERESTING IS DO YOU WANT TO BUY INTO AN INDUSTRY WITH THE 10 YEAR RETAIL. IF I LOOK AT NORDSTROM'S OR MACY'S AND THE OTHERS, WHAT IS THE LAST 10 YEARS TEACH ME. >> IT'S A DIFFERENT MECHANISM OF BUYING THINGS. >> ONE ACTIVIST INVESTOR TALKING ABOUT SPINNING OFF THE E-COMMERCE UNIT IN PARTICULAR BECAUSE THAT HAD DIFFERENT VALUES. I VIEW A LOT OF DEPARTMENT STORES AS CLOSETS WHERE YOU TRY ON THIS STUFF. TOM: I BOUGHT A PAIR OF SHOES. TRIED THEM ON BOUGHT THEM ONLINE. >> YOU KNOW WHO HAS BOUGHT A PAIR IN EIGHT YEARS, BASEBALL STAR SHOW A OTANI. THE BIG NEWS IN THE YOUNGER HOUSEHOLD. SHATTERING THE RECORD, THE 10 YEAR DEAL WITH THE L.A. DODGERS. THE REIGNING M.V.P. BEST KNOWN FOR HIS ABILITY TO HIT AND PITCH COMFORTABLY TOPPED THE PREVIOUS BIGGEST AMERICAN SPORTS CONTACT -- CONTRACT. EXPECTED TO RECEIVE FROM KANSAS CITY. >> I SAW A BIT OF THE GAME LAST NIGHT IS MR. KELCE ON THE KANSAS CITY CHIEFS. HE GOT THE BIGGEST CONTRACT. >> DO YOU THINK IT IS MANUFACTURED JUST FOR THAT. TOM: I DON'T KNOW. THEY SHOWED HER HUGGING SOME GUY IN THE BOOTH. NO DOUBT GAME CHANGER. MICHAEL -- WE WILL HAVE A LOT ON THIS. IT'S A REAL COMPLETE ADJUSTMENT OF WHAT WE SEE IN THE ECONOMICS OF SPORTS AND ENTERTAINMENT. HERE WE ARE REALLY GOING TO FOCUS ON YOUR CUMULATIVE INFLATION. SARAH, WE HAVE SO MUCH GOING ON FOCUSING ON CPI. A GALLON OF PETROL. WE MISS JONATHAN SO MUCH. A GALLON OF PETROL IS DOWN 32% FROM THE MID-SUMMER SURGE OF A YEAR AGO. ISN'T THAT DISINFLATION? >> THE DECLINING GASOLINE HAS BEEN A HUGE TAILWIND FOR THE DISINFLATION STORY WE HAVE SEEN WHERE OVERALL CONSUMER CPI PEAKED OVER 9% LAST SUMMER AND WE ARE LOOKING FOR IT TO COME DOWN ON A YEAR-OVER-YEAR BASIS WHEN WE GET TOMORROW'S NUMBERS WHICH WOULD BE THE LOWEST SINCE MARCH OF 2021 WHEN WE SAW THAT BROAD REOPENING OF THE ECONOMY BUT IT'S ALSO NOT JUST THE IMPROVEMENT IN THE ENERGY PRICES WE HAVE SEEN CONTRIBUTING TO THIS DISINFLATION. ITS GOODS MORE BROADLY AND MORE RECENTLY IT'S BEEN HOUSING HELPING IT SO IT'S BEYOND JUST ENERGY. TOM: HEADLINE INFLATION YEAR-OVER-YEAR, 3.1%. FROM THE AGONY OF A YEAR AND A HALF AGO. HELP ME HERE WITH WHAT MIKE MCKEE SAYS WHICH IS LOOKING MONTH OVER MONTH HEIGHT PER MONTH OVER MONTH INFLATION DYNAMICS VERSUS THIS PHRASE I AM USING FROM LAEL BRAINARD, A CUMULATIVE INFLATION. DON'T TELL ME WELLS FARGO CLIENTS AREN'T AGONIZING OVER THE CUMULATIVE INFLATION OF THE PANDEMIC. >> I THINK IT DEPENDS WHERE YOU SIT IN THE ECONOMY RIGHT NOW. INVESTORS AND POLICYMAKERS ARE LOOKING VERY MUCH MORE AT SOME OF THE SHORT-TERM TRENDS IN INFLATION SO FOCUSING ON NOT JUST WHAT WE WILL SEE IN TERMS OF HEADLINE CPI TOMORROW AND THE MONTH OVER MONTH CHANGES BUT WHAT WE ARE LOOKING AT ON THE THREE MONTH ANNUALIZED RATE WILL BE EXPECT CORE CPI TO BE LITTLE CHANGE AT 3.5% ON THAT ANNUALIZED BASIS BUT WHEN YOU STEP BACK AND THINK ABOUT THE CUMULATIVE INFLATION A LOT OF CONSUMERS ARE STILL FEELING SO THE FACT YOU'VE SEEN THE PRICE LEVEL RISE CLOSE TO 20% IN JUST FOUR YEARS SO YES WE ARE SEEING INFLATION FLOW BUT CONSUMERS AREN'T REALLY FEELING THAT. THEY ARE STILL SEEING A HIGH LEVEL OF PRICES WHICH IS CONTRIBUTING TO SOME CONSUMER FATIGUE WE ARE STARTING TO SEE DEVELOP AND WE THINK WILL CARRY ON. >> THIS COULD POTENTIALLY CREATE A SENSE THAT INFLATION IS PLATEAUING WITH PEOPLE GETTING SOME FATIGUE. YOU'VE BEEN EXCELLENT ABOUT THE LAST MILE. DO YOU THINK THERE TRULY IS SOME FEAR THAT IF THE FED CUTS RATES NEXT YEAR BY 50 TO 75 BASIS POINTS THAT COULD REIGNITE INFLATION IN A MATERIAL WAY? >> I'M LESS WORRIED ABOUT A RE-ACCELERATION BUT THINKING ABOUT HOW LONG IT TAKES TO GET ALL THE WAY BACK TO 2%. WE STILL HAVE A LOT OF DISINFLATIONARY FORCES SO I MENTIONED GOODS PRICES EARLIER. WE HAVE SEEN SUPPLY CHAINS IMPROVE RAPIDLY. SOME OF THAT CONSUMER DEMAND FADING. THERE'S MORE RUNWAY FOR GOODS TO DEFLATE OVER THE COMING YEARS ESPECIALLY IN THE AUTO SECTOR. HOUSING HAS A LOT FURTHER TO DECELERATE AS WELL. SO FURTHER DISINFLATION IN THAT SECTOR AND EVEN IN SERVICES GIVEN THAT YOU ARE SEEING COOLING IN THE LABOR MARKET THAT THERE IS ROOM FOR THAT TO SLOW DOWN AS WELL. DO WE SEE THAT SLOW ENOUGH TO GET INFLATION ALL THE WAY BACK TO 2% IN A TIMELY MANNER ESPECIALLY IF THAT GOODS DEFLATION TO THE DEGREE WE ARE SEEING RECENTLY DOESN'T LAST. THAT THIS IS PAYBACK FROM THE RECENT RUN UP SINCE THE PANDEMIC. THAT REMAINS A CHALLENGE WE WILL LOOK AT. LISA: THIS IS SOMETHING PEOPLE HAVE BEEN TALKING ABOUT. WE HAVE SEEN INFLATION COME DOWN RAPIDLY. WHAT'S THE TIPPING POINT WHERE IT BECOMES STICKY AND INGRAINED IN PEOPLE'S PSYCHE? SARAH: IT'S WHEN WE SEE SOME INITIAL UNWINDING OF THESE PANDEMIC EFFECTS. WHEN DO THEY SEEM TO PEOTTER OUT AND WHAT IS INFLATION RUNNING AT AT THAT POINT. WHEN YOU START TO SEE THAT MORE STABLE PICTURE FOR GOODS INFLATION AND MORE STABLE PICTURE FOR HOUSING. WHERE DO WE HAVE THAT RUN RATE FOR INFLATION. WHAT'S HAPPENING WITHIN THAT CORE SERVICES. I THINK THE OVERALL TIMEFRAME IS STILL UP FOR DEBATE AND THAT IS SOMETHING WE WILL BE LOOKING TO FOR CLUES AT THEIR MEETING THIS WEEK IS WHAT'S THE SPEED OF THAT DISINFLATION THEY CAN LIVE WITH AND WHAT STILL NOT FAST ENOUGH WHERE THERE IS STILL WORRIED ABOUT INFLATION EXPECTATIONS. >> MY TAKE IS OUT WEST RATES ARE DECLINING. THAT'S NOT HAPPENING ON THE WEST SIDE OF MANHATTAN. I CAN TELL YOU THAT FOR CERTAIN. HELP ME WITH THE OTHER HOUSING HOME RENTAL HOME SALE INFLATION STATISTICS THAT YOU HAVE. WHAT ARE THEY SIGNALING FOR Q1 OF NEXT YEAR? >> WE ARE SEEING FURTHER DISINFLATION IN THE PIPELINE FOR HOUSING ON THAT MONTHLY BASIS SO WE THINK THAT WILL SEE THOSE SHELTER INDICES PROBABLY SLOW THROUGH THE SUMMER OF NEXT YEAR. AND THEN THAT WILL CARRY FORWARD IN TERMS OF THE YEAR-OVER-YEAR NUMBERS AND THAT CONTRIBUTION CONTINUING TO CONTRIBUTE LESS THROUGH THE EARLY PART OF 2025. BUT AS WE ARE STILL SEEING IN TERMS OF THE MONTHLY RATES IN THE PRIVATE SECTOR MEASURES THOSE ARE BEGINNING TO STABILIZE MORE RECENTLY WHICH SUGGESTS THAT DISINFLATIONARY TAILWIND IS LIKELY GOING TO PEOTTER OUT TOWARDS THE END OF THE 2024. RENEWING THOSE QUESTIONS ABOUT WHERE DOES INFLATION STABILIZE ONCE WE GET THROUGH THIS CORRECTION OVER FROM THIS UNIQUE PERIOD WE'VE SEEN. >> WE'VE BEEN TALKING ABOUT THE CALLS WE'VE BEEN GETTING AND THE FULL YEAR 2024 REJECTIONS WE ARE SCRIPTING AND PLANNING TO REVISE IN JANUARY. WHAT'S YOUR HIGHEST CONVICTION FOR 2024. >> OUR HIGHEST CALL IS GROWTH IS LIKELY TO BE A LOT WORSE THAN IT IS OVER THE PAST YEAR. OUR BASELINE IS STILL A MILD RECESSION. WHETHER WE GET THAT TECHNICAL RECESSION OR NOT WE THINK GROWTH IS LIKELY TO BE A LOT SLOWER AND WEAKER AS YOU STILL HAVE THE IMPACT FROM A RESTRICTIVE STANCE OF A FED POLICY WEIGHING ON OVERALL ECONOMIC GROWTH. THE FACT WE HAVEN'T SEEN THE SUPPLY SIDE HELP A LOT IN TERMS OF BRINGING DOWN INFLATION BUT INCREASINGLY SEEING SIGNS OF DEMAND CHIPPING INTO THAT DYNAMIC AND WE THINK THERE'S MORE OF THAT TO COME. >> IT IS JUST STUNNING THE JUXTAPOSITION. JUST DOING ECONOMICS BUT THE DIFFERENCE BETWEEN WHAT WE JUST HEARD THEIR OWN SLOWDOWN TALKING ABOUT THE ROARING 20 20'S, IT IS ABSOLUTELY REMARKABLE. LISA: A QUESTION OF WHETHER A SLOWDOWN WILL BE PUNITIVE OR AT THE STAGE FOR THE RALLY. THAT'S WHAT WE HEARD LAST WEEK FROM CITIGROUP THAT BASICALLY SETTING UP THE NEXT LEG OF A RALLY, TO ME THIS IS THE ULTIMATE QUESTION. YOU CAN HAVE THE SAME CALL ESPECIALLY GIVEN WHICH COMPANIES HAVE LED AND WHICH PEOPLE EXPECT TO KEEP BLEEDING. >> IF I WATCH 42 MINUTES OF BLOOMBERG SURVEILLANCE I'M GOING OK WISE GUY. WHATEVER THAT IS DOWN 37, 30 8000. WHATEVER THE NUMBER IS. BUT THE ANSWER IS THAT NUMBER, HOW DO YOU JUXTAPOSE THAT. AND LINK THAT INTO A SLOWING GDP. A LOT OF PEOPLE CAN'T DO THAT. >> THIS IS WHERE I THINK THIS IS WHY IT'S A TRICKY MARKET TO TALK ABOUT. GROWTH HASN'T REALLY LED TO THE SENSE OF WHAT THE MARKET IS DOING. IF YOU KNEW GROWTH WOULD BE -- WOULD YOU LOOK AT THE RALLY AS JUST EUPHORIA OR LOGICAL PROGRESSION. >> WE WILL HAVE TO SEE. THAT WAS GREAT JUST TO FOCUS ON INFLATION. WE WILL DO THAT WITH ALL THE ECONOMIC DATA WE HAVE. TALK ABOUT THE BIGGEST SHOES TO FILL ON WALL STREET. MAX LAYTON TAKES OVER ON COMMODITIES AT CITIGROUP. >> WHERE PRICES ARE RIGHT NOW WE THINK THAT LIKELY INCREASES THE COMMITMENT FROM OPEC-PLUS AND WE COULD SEE HIGHER COMPLIANCE FOR THAT OVER 2 MILLION BARRELS THEY CUT IN THE FIRST QUARTER OF NEXT YEAR BUT OF COURSE THE VOLATILITY WILL REMAIN FOR THE SYSTEMATIC SELLING GOING ON. THE DEMAND PICTURE REMAINS INTACT. TOM: SENIOR U.S. EQUITY STRATEGIST AT UBS GLOBAL WEALTH MANAGEMENT THERE BEFORE THE JOBS REPORT ON FRIDAY SAYING YOU HAVE TO STAY ON THE MARKET. SOME OF THE BEARS READJUSTING A LITTLE BIT HERE, LET ME GIVE YOU THE SHOCK AND ALL OF THIS. FUTURES UP SIX, THE DOW 36,000 623. THE CALL A YEAR, TWO YEARS, TWO YEARS AND ONE MONTH AWAY. THE CALL END OF 2025 IS THE DOW SPX EQUIVALENT OF 47,000 200. THAT'S HOW SHOCKING THIS CALL IS IS HE EXTENDS OUT JUST OVER TWO YEARS WITH EARNINGS. OF $300. I AGREE WITH OUR FIRST GUEST THE EARNINGS CALL WAS SHOCKING. TOM: DID YOU -- LISA: DID YOU DO THAT BECAUSE JONATHAN WASN'T HERE? I FEEL LIKE I HAVE TO REPRESENT HIM IN BEING VAGUELY DISTURBED. THE SENSE SIX STRAIGHT WEEKS OF GAINS. BILLS IN THE SENSE THAT THERE IS OPTIMISM. IS IT ALL BECAUSE OF THE DISINFLATIONARY FEEL. YIELDS HAVE BEEN LOWER AS WELL. TOM: GINA MARTIN ADAMS WAS BRILLIANT ON FRIDAY. SHE SAID ALL OF THE POND INCLUDING THE THREE OF US ARE FORGETTING ABOUT THE REAL ECONOMY AND SHE SAID WE ARE GOING UP BECAUSE THE REAL ECONOMY IS DELIVERING REVENUES AND EARNINGS. COMING UP ON HOW CAN THE REAL -- LISA: LEGENDARY ON THIS CALLING IT CORRECTLY WENT AGAINST THE GRAIN AND PICKING UP WHERE HE LEFT OFF IS MAX LAYTON OF CITIGROUP SAYING HE NEUTRAL TO BEARISH WRITING RECENT MOVES BY OPEC-PLUS ARE A DECENT STOPGAP BUT NOT ENOUGH TO STOP A GRADUAL DETERIORATION ASSUMING OUR BASE CASE OF SUBSTANTIALLY WEAKENING MATURE MARKET GROWTH AND SOLID NON-OPEC SUPPLY GROWTH, BUT THE U.S. PRODUCTION BITS ALL-TIME RECORDS AND OFFSET WHAT WE'VE SEEN FROM OPEC-PLUS. TOM: I THINK OF ETHAN HARRIS RETIRING THIS YEAR. ADD ON THE EDGE I THINK HE IS 63 OR 79. THE GIANT AND PARTICULARLY SO GOOD WITH COUNCIL ON FOREIGN RELATIONS ON THE GLOBAL POLITICAL ECONOMICS. JOINING US NOW WITH THE BIGGEST SHOES TO FILL ON WALL STREET. MAX LAYTON WITH JEFF CURRIE AT GOLDMAN SACHS. GLOBAL HEAD OF COMMODITY RESEARCH. I'M GOING TO CUT TO THE CHASE. YOU AND DR. MORRIS HAD THE CALL OF THE YEAR. EVERYBODY WAS LOOKING FOR OIL RESILIENCY, OIL HIGHER. YOU GUYS WENT SOUTH. HOW FAR SOUTH FROM BRENT 75 CAN WE NOW HEAD. >> WE THINK OVERALL A LOT OF THE MOVE IS DONE AND OPEC-PLUS IS DOING SOME WORK TO REBALANCE THE MARKET IN THE FIRST QUARTER AND OUR BASE CASE IS THEY WILL BE SUCCESSFUL IN DOING THAT. THE PRESSURE INCREASES FOR THEM TO ROLL THESE CUTS FORWARD THROUGH THE REMAINDER OF THE YEAR. WE WERE AT ONE MILLION BARRELS A DAY SURPLUS FOR THE SECOND QUARTER. UNDERGROUND AND OVERALL SERVICE OF SIX -- 6 MILLION BARRELS THROUGH THE WHOLE OF 2024. THESE CUTS NEED TO BE MAINTAINED TO BALANCE THE MARKET FOR THE COURSE OF NEXT YEAR AND OUR BASE CASE GLOBAL GROWTH ENVIRONMENT. >> IN THE BASE CASE WHAT'S THE RELATIONSHIP OF SAUDI ARABIA TO OIL-PRODUCING RUSSIA AND IRAN? >> OBVIOUSLY THERE'S A LOT OF COMPLEX FACTORS GOING ON WITH THE POLITICAL RELATIONSHIPS BETWEEN THESE COUNTRIES. OVERALL THE SAUDI'S HAVE TAKEN A BRUNT OF THE CUTS SO FAR. AND RUSSIA IS CONTRIBUTING AND WE EXPECT THEM TO CONTINUE TO DO SO. THEY'VE BEEN PRETTY FORTHRIGHT IN WHAT THEY WANT TO DO AND IN THEIR EXPECTATIONS OF COUNTRIES MEETING THEIR QUOTAS THROUGH THE FIRST QUARTER. OVERALL I THINK WHEN YOU LOOK AT THE TRADE-OFF OF THE OPEC-PLUS COUNTRIES, THEY ESSENTIALLY MAINTAIN THE EXISTING CUTS, HAVE SOME INCREMENTAL COMPLIANCE AND CAN BALANCE THIS MARKET AND KEEP THE PROCESS AT 70 TO $80. THE ALTERNATIVE IS SUBSTANTIAL SPARE CAPACITY GETS RAMPED UP AND PRICES COULD BE DOWN THERE -- 30 OR 40, EVEN 50%. I THINK THE ALTERNATIVE IS SO PAINFUL THAT IT'S MOST LIKELY YOU GET THIS KIND OF HALF A MILLION BARREL A DAY CUT THROUGH THE COURSE OF NEXT AT THE RIGHT PRICE. >> I WANT TO DEVELOP THAT A LITTLE BIT BECAUSE YOU'RE TALKING ABOUT A POTENTIAL 50% PRICE CUT. EVEN $35. THIS COMES LAST WEEK. THERE IS THIS RISK THAT IS THE U.S. RAMPS UP PRODUCTION IN SAUDI ARABIA LOSES MARKET SHARE THEY WILL SET YOU GUYS ARE GOING TO DO THIS LET'S GO. PUT ALL THE BARRELS OUT THERE AND GET PRICES LOW ENOUGH THAT PEOPLE START CUTTING PRODUCTION. WHAT HOLDS THEM BACK FROM DOING THAT? >> I THINK OBVIOUSLY THAT KIND OF PRICE DECLINE WILL HURT EVERYBODY'S CONFIDENCE IN REVENUES. THE STICK THAT SAUDI HAS IS QUITE EFFECTIVE IN THE SENSE THAT THEY HAVE THE ABILITY TO RAISE PRODUCTION 20% THEMSELVES SO THEY COULD OFFSET FOR EXAMPLE ON PAPER A 20% DECLINE IN PRICE WITH A BIG INCREASE IN THEIR OWN PRODUCTION. VERY FEW OPEC-PLUS COUNTRIES HAVE THE ABILITY TO DO THAT SO IN THE WORST-CASE SCENARIO IT'S POTENTIALLY LEAST PAINFUL FOR SAUDI ARABIA AND MORE PAINFUL FOR EVERYONE ELSE. I DO THINK THAT DYNAMIC MAKES THIS QUITE EFFECTIVE. OBVIOUSLY IF THERE WAS A HARD LANDING ON THE DEMAND SIDE IF NON-OPEC SUPPLY CONTINUE TO GROW STRONGLY. WE DO HAVE A MATERIAL SLOWDOWN IN U.S. GROWTH IN FORECASTS FOR THE NEXT 12 MONTHS. MOST OF THE GROWTH WE HAVE IS ACTUALLY OPEC-PLUS BRINGING BACK SOME BARRELS AND/OR RAMPING UP OVER THE NEXT 12 MONTHS SO IF YOU TAKE THAT OUT OF THE MARKET AND THESE CUTS ARE EXTENDED WE ARE RUNNING A DEFICIT IN THE FIRST QUARTER. AND OVERALL, WE ARE ASSUMING GETTING OUT THE SURPLUS IN THE FIRST QUARTER. IT DOES APPEAR IT'S WITHIN OPEC-PLUS'S GRASP TO HOLD THE MARKET TOGETHER IN THE BASELINE. ON THE DEMAND SIDE AND THE SUPPLIED. LESS DISRUPTIONS THAN NORMAL. PERHAPS OPEC -- I THINK YOU HAVE TO GET INTO A PRETTY DARK GLOBAL GROWTH ENVIRONMENT TO EVEN -- >> THERE COULD POTENTIALLY BE SOME SIGNIFICANT DOWNSIDE SHOULD PRODUCTION COME BACK ONLINE. ARE WE IN A PRETTY NARROW RANGE AFTER A LOT OF REALLY MASSIVE SWINGS FOR THE PAST COUPLE OF YEARS? >> WE THINK SO. POSITIONING IS EXTREMELY LOW NOW. AND YET THE PRICE IS BEING SUPPORTED HERE AND US FOUND SOME BASE YEAR WE THINK AROUND $75. BASE CASE WE BOUNCE BACK OVER THE NEXT MONTH OR TWO, A PRICES STABILIZE A LITTLE BIT HERE AND WE THINK CHINA WILL ROLL OUT A SIGNIFICANT EASING PACKAGE. SIGNIFICANT AS INTO STABILIZE THE SHIP NOT A 10% EASING SHARE OF GDP. BUT SIGNIFICANT ENOUGH THAT THE MARKET THINKS CHINA WILL BE FINE NEXT YEAR. IT WILL ACHIEVE GDP GROWTH. THERE'S BEEN SOME BIG BILLS WE EXPECT TO STOP. THAT WE'VE SEEN OVER THE LAST THREE WEEKS OF THE NEXT COUPLE OF MONTHS. WE ARE EXPECTING A STABILIZATION IN PRICES FROM THE NEAR SHORING. >> THANK YOU SO MUCH AND CONGRATULATIONS. GLOBAL HEAD OF COMMODITIES FOR CITIGROUP. >> THAT GOES TO WHAT I WAS TALKING ABOUT LATE LAST WEEK. WHETHER CHINA AND THERE MAX LAYTON WITH THE IDEA THEY WILL STABILIZE IT. BUT THE GLOOM IS NOT THERE. I WONDER IF THAT WAS PART OF THE EQUITY POP THAT SOMEHOW CHINA DOES BETTER. >> AT LEAST THEY DON'T DO AS BADLY AS SOME EXPECTED AFRAID IT DOESN'T SEEM LIKE THEY WILL COME OUT WITH SOME BAZOOKA TO GENERATE THAT GROWTH. BIGGER DEFLATION THAN EXPECTED OVERNIGHT IN CHINA. YOU START WONDERING HOW THAT'S PLAYING INTO SOME OF THE COMMODITY CALLS AS WELL. >> DEFLATION IS NOT DISINFLATION. WE WILL TOUCH ON THAT THROUGH THIS WEEK. TOMORROW THE CPI REPORT A VERY DENSE REPORT. >> LABOR MARKETS HAVE BEEN STRONG. IT WILL BE AN INTERESTING STORY WHEN THAT REVERSES. >> YOU ARE NOT SEEING THE LEVEL OF RESTRICTIVENESS SHOW UP IN THE LABOR MARKETS. >> WE DO THINK RECESSION RISKS ARE PROBABLY HIGHER. >> THEY NEVER HAPPEN RIGHT WHEN YOU EXPECTED. >> WE ARE NOT IN RECESSION RIGHT NOW BUT IT'S NOT NECESSARILY AN ALL CLEAR SIGNAL FOR NEXT YEAR EITHER. >> THIS IS BLOOMBERG SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO AND LISA ABRAMOWICZ. >> GOOD MORNING EVERYONE. JONATHAN FERRO AND LISA ABRAMOWICZ, TOM KEENE THANK YOU FOR BEING WITH US. WHAT A WEEK TO BEGIN WITH. HUGE ECONOMIC STREAM OF DATA INCLUDING THE FED DECIDES ON WEDNESDAY. INFLATION ON TUESDAY. MARKET ADJUSTMENTS IN DECEMBER. >> I KEEP GOING BACK TO SIX STRAIGHT WEEKLY GAINS. VERSUS SOME SENSE WE ARE NOT NECESSARILY GOING TO SEE ANY KIND OF WEAKNESS AND THE PROFITS WILL ACCELERATE AFTERWARD GINA MARTIN ADAMS HAS BEEN SAYING IS A PROFIT RECESSION THAT SEEMS TO BE TURNING AROUND. YOU HAVE CHRISTMAS TREE ENVY. YOU ALWAYS DO THIS. >> RIGHT NOW I HAVE TERRIBLE ENVY. MANUS CRANNY THE ARTICLE HERE AT 5:00 A.M. ON BLOOMBERG TELEVISION TALKING ABOUT THE OUTRAGEOUS PRICE OF CHRISTMAS TREES IN NEW YORK CITY AND THAT GOES TO INFLATION HERE. IT'S EVERYTHING INCLUDING THE $242 TREE. >> PEOPLE HAD PRETTY -- PRETTY IDIOSYNCRATIC. WE ARE EXPECTING MONTH OVER MONTH TOMORROW WITH CPI IS FOR A TRAILING THREE-MONTH AND SIX-MONTH CORE CPI TO BE THE LOWEST GOING BACK TO MARCH OF 2021. YOU TALK ABOUT THIS RIGHTLY SO. IF A CHRISTMAS TREE IS $400 IT'S PRETTY SIGNIFICANT. I DON'T KNOW WHERE YOU SHOP FOR YOUR CHRISTMAS TREES AND I DON'T EVEN HAVE ONE, BUT JUST THROWING IT OUT THERE. TOM: THROWING THIS OUT THERE BEFORE LISA GETS INTO THE BRIEF. THE SCHEDULE IS CORPORATE ACTIVITY. WIDELY ANTICIPATED OCCIDENTAL PETROLEUM IT IS A SUBSTANTIAL PERMIAN BASED AND DEAL OF $12 BILLION. I DON'T THINK YOU WILL SEE MUCH MOVEMENT ON PRICE BUT WHAT I WOULD NOTE HERE IS THE SUM OF CORPORATE ACTIVITY OVER THE WEEKEND INCLUDING TWO PARTIES GOING AFTER MACY'S WHICH HAS A CERTAIN VALUE ON IT. ALSO THE BLOWN UP DEAL OF CIGNA AND HUMANA WITH A FOLLOW-ON SHARE BUYBACK. IT SEEMS LIKE SOMETHING THAT GETS OUR RADAR UP ON THE WEEK IS CORPORATIONS DASHING TO THE END OF THE YEAR. LISA: CAPITAL MARKETS ARE KIND OF REOPENING GRADE EVALUATIONS THAT MIGHT NOT MAKE THE DEAL, THROUGH MAYBE IT WAS TOO EXPENSIVE. I THINK THIS IS INTERESTING ESPECIALLY BECAUSE THERE IS SOME SORT OF ANTITRUST INQUIRY INTO THE EXXON PIONEER DEAL. THERE'S A QUESTION OF WHERE THESE WILL STAND GIVEN THE FACT THAT ON ONE HAND THE U.S. IS PRODUCING RECORD AMOUNTS OF OIL. ON THE OTHER HAND THIS ADMINISTRATION HAS HAD A FOCUS ON TRYING TO PREVENT COMPANIES FROM GETTING TOO BIG. TOM: I NEED A BRIEF JUST TO FIGURE OUT WHAT I'M DOING THIS WEEK. LISA: CPI TOMORROW. THE EXPECTATION IS FOR TO COME IN ESPECIALLY ON THE CORE LEVEL. WE GET PRODUCER PRICE INDEX. THURSDAY RETAIL SALES AS WE GET A SENSE OF THE FUTURE. OUTRIGHT DEFLATION. IN THE MOST RECENT RATINGS. FOMC FOLLOWED BY THE ECB, BANK OF ENGLAND ALL COMING OUT ON THURSDAY. CURIOUS HOW MUCH THE CENTRAL BANKERS REALLY LED BY JAY POWELL OF THE FEDERAL RESERVE WILL PUSH BACK AGAINST THIS IDEA THAT THEY CAN CUT RATES IN RESPONSE TO INFLATION COMING IN EVEN IF THEY DON'T HAVE A SENSE OF WHY OR BETTER UNDERSTANDING OF INFLATION. >> WE HAD THE GRAPHIC UP, TO ME THEY ARE ALL VERY IDIOSYNCRATIC STORIES. IT'S NOT LIKE THEY ARE ALL ON THE SAME PAGE. >> CERTAINLY THE BANK OF JAPAN LIVING IN ITS OWN WORLD IN MANY WAYS. AUCTIONS ARE FRONT AND FOCUS THIS WEEK. A $50 BILLION AUCTION AT 11:30 A.M. EASTERN. TOMORROW THERE IS GOING TO BE $21 BILLION OF 30 YEAR BONDS. U.S. A REALLY GOOD QUESTION DOESN'T MATTER YIELDS HAVE COME IN. AT LEAST OVER THE PAST COUPLE OF WEEKS. A BIT MORE THAN THEY HAD RECENTLY. IT'S A GOOD QUESTION GIVEN THE FACT WE DON'T HAVE ANY RESOLUTION TO RECORD SALES OF DEBT, A DEFICIT THAT IS ONLY WIDENING. A SENSE THE FED WILL CUT RATES EVEN IF INFLATION COMES IN WITHOUT THE QUESTIONS. A LOT OF QUESTIONS THAT COULD POTENTIALLY CREATE A SOMEWHAT VOLATILE MOMENT. >> THE RESEARCH ITEM OF THE WEEK. CHEERING ON THE NEXT CHIEFS TOUCHDOWN. IT WAS FROM EDWARD ER DENNING. THIS WAS A SHOCKING PIECE OF RESEARCH WHERE THEY EXTEND OUT THE OPTIMISM TO YEAR END 2024. RATHER THAN RAISE THE 2023 TARGET WE ARE RAISING THIS BULL MARKET THROUGH 2024 AND BEYOND, HERE IS THE MATH TO GET THE STANDARD & POOR'S 6000 DOW EQUIVALENT 47,000 I BELIEVE, 41,000. GIANT ENORMOUS NUMBER. $300 PER SPX SHARE. 300 TIMES 20 IS 6000. IN SHOCK IS SARAH, YOU AND I WE FOLLOWED THIS FOR YEARS AND THIS IS WHAT IT DOES WITH ECONOMICS AND INVESTMENT, HE EXTENDS OUT THE X-AXIS. DO YOU HAVE THE VISIBILITY TO GO OUT PAST FOURTH OF JULY NEXT YEAR? SARAH: IT'S TOUGH TO HAVE THE VISIBILITY TO GO OUT THAT FAR. IT WILL DEPEND ON HOW WE START NEXT YEAR. THE EQUITY MARKETS GOT EXCITED IN THE BEGINNING OF OCTOBER SAYING THE FED IS DONE AND RATES WILL COME DOWN. YOU'VE GOT A STORY THIS MORNING ABOUT HOW FAST RATES HAVE TO COME DOWN BECAUSE COMPANIES WILL START TO REFINANCE. THE QUESTION IS EVEN IF YOU STARTED IN JUNE YOU WON'T START WITH 2% DOWN. I'M NOT SURE WE WILL START IN JUNE. THEN YOU GET INTO THE POLITICAL CALENDAR. WE STILL HAVE ALL THESE PEOPLE WAITING FOR LOWER RATES AND THAT'S BEEN POSITIVE FOR EQUITIES. TOM: DOVETAIL WHAT WE HEARD FROM WELLS FARGO WHICH IS A CAUTIOUS VIEW WITH THE ENTHUSIASM CORPORATIONS WILL MOVE FORWARD TO A GREATER BULL MARKET. CAN YOU HAVE A GREATER BULL MARKET IF YOU GET SUBDUED GROWTH? SARAH: THAT'S THE BIGGEST QUESTION IS WHERE GROWTH WILL GO AND CAN EARNINGS HOLD UP OR GROW IN 2024 WHEN WE HAVE THAT COMING DOWN OF INFLATION WHERE SOME OF THE EARNINGS THAT WERE HIGHER BECAUSE OF INFLATION. YOU HAD A ROLE IN GLOBAL SLOWDOWN. ROLLING SLOWDOWN IN THE U.S.. IF THEY STIMULATE IS THAT ENOUGH TO CHANGE THE PROCESS OF NEXT YEAR AND 10 WE KEEP MARGINS WHERE THEY ARE. IT IS TOUGH TO ROLL INTO AN IDEA OF WHERE EARNINGS WILL BE. LISA: IT MAKES ME THINK MAYBE YOU ARE ROTATING OUT OF STOCKS INTO BONDS. SARAH: THERE IS A REAL PLACE FOR BONDS. INVESTORS ARE MORE INTERESTED IN HAVING A MORE BALANCED PORTFOLIO. THIS GOES BACK TO THE ATTENTION OF A PRE-FINANCIAL CRISIS WORLD WHERE RATES CAN HAVE SOME SORT OF MEANINGFUL ASPECT IN THE PORTFOLIO. WHERE THEY SETTLE WILL BE THE QUESTION. THE EQUITY MARKETS ARE GETTING EXCITED RATES ARE COMING DOWN FURTHER THAN PEOPLE EXPECT THEM TO. I DON'T KNOW WHERE THAT ANSWER IS YET. LISA: ONE OF YOUR HIGHEST CONVICTIONS HAS BEEN THE ENERGY STOCK TRADES. PARTICULARLY SURPRISING GIVEN THE DISRUPTION WE’'VE SEEN. HOW MUCH DO YOU STILL LEAN INTO THAT AND STILL THINK OIL COMPANIES ARE A GOOD BUY HERE. SARAH: THE ISSUE HAS BEEN MUCH BIGGER SUPPLY. THE FACT THAT EVERYBODY EXPECTED MORE OFF THE MARKET AND THE FACT THAT THEY REALLY DIDN'T AND OTHER PEOPLE INCREASED SUPPLY. IF YOU GET A REALLY BIG SLOWDOWN THAT WILL HIT THE DEMAND SIDE. I THINK LONGER TERM YOU'VE GOT GOOD DIVIDEND YIELDS AND A LONGER TAIL ON HYDROCARBONS WHICH WILL BE MEANINGFUL. TOM: HYDROCARBONS HAD A BAD MONTH OR WEEK. WE CAN TALK FOREVER ABOUT THAT. ALL EVERYONE IS TALKING ABOUT ARE THESE SUPER GROWERS WE HAVE WITH 30, 40 AND 50 MULTIPLES. DO THEY DO YEAR TO, DO THEY KEEP GOING? SARAH: THOSE MULTIPLES ARE NOT IN THE TEXTBOOK BUT THEY HAD FANTASTIC EARNINGS THIS YEAR AND CAMERON DAWSON HAS BEEN QUICK TO POINT THAT OUT. THE QUESTION BECOMES CAN THEY KEEP THAT UP AND IF THE DELTA IS NEGATIVE. IF THE RATE OF CHANGE IS NEGATIVE SO I'M GROWING LESS FAST. -- GROWING LESS FAST, DO I DESERVE THAT 30 OR 50 MULTIPLE. I DON'T KNOW THE ANSWER TO THAT QUESTION? LISA: I LIKE THAT YOU ARE HONEST ABOUT THIS. WE HAVE SEEN THESE PROJECTIONS ABOUT THIS IS WHAT WE EXPECT TO HAPPEN IN 2024 AND 25. IF YOU HAD TO, WHAT WOULD YOU BE LOOKING AT TOWARDS THE END OF NEXT YEAR? SARAH: ONE OF THE THINGS THAT'S BEEN SURPRISING IS WITH THE STRENGTH OF THE LABOR MARKET YOU HAVEN'T SEEN WAGES INCREASING AS FAST AS PEOPLE PREDICTED THEY WOULD. WHEN PEOPLE SAY THE LABOR MARKET IS STILL VERY STRONG BUT WAGES AREN'T INCREASING THAT MUCH. IF WE CAN KEEP THAT PRETTY LOW AND YOU DON'T SEE AS MUCH WAGE ACCELERATION THAN THAT WILL HELP ON THE MARGIN SIDE. THERE IS A TENSION TO THAT. INFLATION MAY BE COMING DOWN BUT GOING TO THE SUPERMARKET DOESN'T FEEL BETTER FOR ANYBODY. THOSE OF THE THINGS FOR PEOPLE TO SAY IT WON'T BE ROBUST. >> SARAH KNOWS THAT I LIKE THE SMELL OF PINE TREES SO SHE GOT ME THAT. I WILL SHARE THAT WITH YOU. WE WILL LIGHT OUR CANDLES. TOM: SHE WENT TO THE PLACE THEY DID WHITE CHRISTMAS THIS WEEKEND. ARE YOU GOING TO UNWRAP THEM SO WE CAN SMELL THE PINE? LISA: WE WILL DO THAT. NEXT EPISODE. TOM: MY HEAD SPINNING ON THE EQUITY RIGHT NOW. I CAN QUOTE WHERE WE ARE RIGHT NOW. STANDARD & POOR'S, GREEN ON THE SCREEN IN THE DOW. STANDARD & POOR'S 500 DOWN. LISA: BASICALLY JUST STABLE. INTERESTING THAT WE SEE THE INCREASING MERGER BALLET. IT SORT OF RAISES THIS QUESTION. IF THE CAPITAL MARKETS IN A MATERIAL WAY. ALL OF THE DEALS BUT DID NOT GET DONE THIS YEAR, YOU HAVE TO DO SOMETHING. IT'S BETTER TO DO IT NOW THEN WHEN YIELDS WERE HIGHER. TOM: I AM PROUD THAT WE COVERED THIS. IT IS HERE AND IT WILL BE SUSTAINED AND FINALLY, MONEY COSTS SOMETHING PRAYED THE THEME FOR THE PAST SIX MONTHS, IS THIS REAL YIELD THAT WE QUOTE 2.02%, ONE WAY OF MEASURING IT. THIS PERMEATES A SMALL BUSINESS. IT PERMEATES EVERYTHING TO DO WITH SMALL CAPS, MID-CAPS. MAYBE THAT'S THE DISCOUNT THAT WE SEE RIGHT NOW. IT COSTS MONEY TO DO THINGS. YOU WONDER IS IT IS 2024. LISA: DO PEOPLE FEEL THE PAIN OF THESE RATES THAT WERE SUPPOSED TO BE FELT BEFORE. RATES ROSE 5% AND NO ONE SEEMS TO CARE. DOES THAT TIME RUN OUT? TOM: IN OUR WORLD WITH THE RATIONALIZATIONS OF DIGITAL ADVERTISING BUT THERE IS A NEW COST OF DOING BUSINESS AND IT IS AN INFLATION-ADJUSTED RATE THAT'S TANGIBLE. LISA: I THOUGHT YOU WERE GOING TO SAY -- TOM: IT IS AN APPLE WEEK. WE WILL HAVE TO SEE. FUTURES AT NEGATIVE TWO. YIELDS ELEVATED A BIT. FEROCIOUS WEEK OF ECONOMIC DATA. >> WE THINK THERE NEEDS TO BE A PREMIUM ON PROTECTING CIVILIANS. AS I SAID I THINK THE INTENT IS THERE BUT THE RESULTS ARE NOT ALWAYS MANIFESTING THEMSELVES. ISRAEL NEEDS TO BE ABLE TO DEFEND ITSELF TO PREVENT OCTOBER 7 FROM HAPPENING AGAIN. IT'S IMPERATIVE IT IS PROTECTED. TOM: THE SECRETARY OF STATE WITH CNN URGING ISRAEL TO DO MORE TO PROTECT INNOCENT CIVILIANS IN GAZA AS THE STORY CONTINUES. JON FERRO, DEEP ASSIGNMENT HERE BEFORE THE HOLIDAYS. LISA ABRAMOWICZ AND TOM KEENE EXCEPTIONALLY BUSY WEEK. LET'S DIP INTO RETAIL SALES. A SMALL MATTER OF A FED MEETING ON WEDNESDAY AND THAN THE REAL DATA WHICH IS 70% OF THE AMERICAN ECONOMY. LISA: THE EXPECTATION IS FOR ITS DECLINE EVEN ON INFLATION. TOM: IF IT COMES DOWN BY DEFINITION IT COMES DOWN. LISA: IS IT COMING DOWN SIMPLY BECAUSE INFLATION IS THIS INFLATING -- IS DISINFLATING OR ARE PEOPLE JUST EXHAUSTED OF PAYING THESE HIGH PRICES? DO WE SEE THAT PLAY OUT. TOM: I'M BIG ON CUMULATIVE EFFECT RIGHT NOW. THIS IS PANDEMIC INDUCED. BUT I SEE IT ANECDOTALLY EVERY DAY OF PEOPLE THINKING IN TERMS OF END OF 2009, FEBRUARY OF 2020. LISA: WHEN KIDS ARE ASKING ME MORE FOR LUNCH IT GIVES YOU A SENSE OF WHERE WE ARE AT. TOM: ON THE READ OF THE WEEK, GRETA GREEN ON THE SCREEN. ENDING UP A RECORD HIGH HERE AT THE END OF THE DAY. MAX LAYTON, THANK YOU SO MUCH FOR JOINING US. BRENT CRUDE 75, 55. GREAT TO TALK TO CITIGROUP ON WEAKER OIL PRICES. DOLLAR FRACTIONALLY CHANGED. THIS IS IMPORTANT CONVERSATION. ON AMERICAN POLITICS. OUR BLOOMBERG WASHINGTON CORRESPONDENT. THE WASHINGTON POST WRITING ABSOLUTE TOUR DE FORCE ON THE FACT YOU WILL ONLY VISIT LIKE THREE STATES FOR THE ELECTION. THEY SUMMARIZE IT ONLY 18% OF AMERICANS MATTER FOR THIS ELECTION. THE POPULAR VOTE AND THE ELECTORAL VOTE AND ALL OF THAT. HOW ARE MR. TRUMP AND BIDEN ADAPTING TO THE MICHAEL SHARE ARTICLE THIS WEEKEND THAT SO FEW STATES, COUNTIES AND ELECTORAL VOTERS MATTER. ANNMARIE: WE HAVE A MONTHLY POLL THAT FOCUSES ON SEVEN SWING STATES. WHEN YOU LOOK AT THE ELECTORAL MAP LEASES WHERE ELECTIONS ARE WON AND LOST. YOU WILL SEE CAMPAIGN EFFORT TO PRESIDENT BIDEN. ALSO WHEN IT COMES TO THE FORMER PRESIDENT WHO RIGHT NOW HAS TO GET THROUGH THE REPUBLICAN PRIMARY EVEN THOUGH HE IS BY FAR OUT AHEAD OF ALL OF THE OTHER POTENTIAL CANDIDATES. YOU LOOK AT THE DES MOINES REGISTER, 51% OF LIKELY CAUCUS-GOERS ARE GOING TO VOTE FOR HIM AND THAT'S HIS FIRST CHOICE. THIS IS THE HIGHEST THEY'VE SEEN IN THAT PARTICULAR POLL BUT OVER THE WEEKEND HE WAS IN NEW YORK TALKING ABOUT HIS COMMENT OF WANTING TO BE A DICTATOR ON DAY ONE. POTENTIALLY HE WILL HAVE MORE WORK TO DO. BUT THAT WILL START TO COME INTO FOCUS MORE SO NEXT YEAR. >> WHAT'S INTERESTING TO ME AND THIS IS OFF THE ARTICLE. GREG IS ABSOLUTELY ENCYCLOPEDIC OF THIS. THE IDEA OF COUNTY BY COUNTY WHAT DOES THE PRESIDENT TO GET OUT THE VOTE. EVERYONE UNDERSTANDS BIDEN HAS A REDUX OF 2020. HOW DOES HE DO THAT WHEN GREG -- WITH THIS COUNTY BY COUNTY STUDY. ANNMARIE: THEY WILL BE SENDING OUT A NUMBER OF INDIVIDUALS FROM THE CAMPAIGN THAT ARE SURROGATES FOR THIS CAMPAIGN AND WILL HAVE TO FIGURE OUT HOW TO TAP INTO THE YOUTH VOTE. THERE WAS OVERWHELMING SUPPORT FOR PEOPLE THAT CAME OUT IN SUPPORT OF BIDEN. NOT BECAUSE THEY NECESSARILY LOVED BIDEN BUT THERE WAS AUNTIE TRUMP VOTE. CAN HE RAMP UP THAT KIND OF FEELING ONCE AGAIN ESPECIALLY WHEN THE FORMER PRESIDENT IS DOMINATING IN HEAD-TO-HEAD MATCHUPS AGAINST BIDEN. THE WALL STREET JOURNAL POLL THIS WEEKEND SHOWED BIDEN AT THE LOWEST OF HIS PRESIDENCY AND MANY ARE SAYING THEY PREFER THE FORMER PRESIDENT WHEN IT COMES TO ECONOMIC ISSUES WHICH RANKED NUMBER ONE ON TOP OF VOTERS MINDS. ESPECIALLY GIVEN THE FACT AMERICANS ARE STILL DEALING WITH HIGHER INFLATION. >> ARE SOME OF THE POLLS PROTEST VOTES? PEOPLE FRUSTRATED WITH FOREIGN POLICY NOW? ANNMARIE: WHAT YOU SAW IN THIS POLL IS THEY HAD ALIGNED TALKING ABOUT A NUMBER OF INDIVIDUALS WHO ARE FRUSTRATED WITH THE PRESIDENT BUT NOT SURE THEY WON'T VOTE FOR HIM IN NOVEMBER. SO POTENTIALLY THEY ARE GETTING A CALL, SO THIS PROTEST POLLING BUT THEY WILL COME BACK AROUND WHEN IT COMES TO NOVEMBER. WE ALSO CAN DISCOUNT ABORTION AS AN ISSUE THAT DRIVES DEMOCRATS IN CAMPAIGNING. THEY SPENT A FORTUNE ON THIS IN VIRGINIA. THERE WAS A BALLOT POLL VOTE IN OHIO ON THIS. KENTUCKY A DEEP RED STATE WITH A DEMOCRATIC GOVERNOR. ABORTION IS A REASON WHY PEOPLE GO OUT TO VOTE. I DON'T THINK WE CAN DISCOUNT THAT BECAUSE MANY PEOPLE SAID WE WOULD SEE A RED WAVE IT COMES TO THE MIDTERMS. LISA: THE FOCUS HAS BEEN ON FOREIGN POLICY BECAUSE IT HAS BEEN SUCH A DOMINANT THEME INTERNATIONALLY FOR THE ALLIES OF THE UNITED STATES AND OTHERS. WE ARE TALKING ABOUT THE DOMESTIC ISSUES HOW MUCH FOCUS THERE IS ON VOLODYMYR ZELENSKYY COMING TO CONGRESS AT A TIME WHEN THEY ARE TRYING TO SHORE UP THEIR DOMESTIC BASE INTO NEXT YEAR'S ELECTION. ANNMARIE: FOR ZELENSKYY, THINGS ARE LOOKING PRETTY DIRE ON THE GROUND. THE DIRECTOR OF OMB PUT OUT A NOTE SAYING THERE IS NO EXTRA POT OF MONEY AT THE END OF THE YEAR. THEY WILL BE RUNNING OUT OF FUNDS TO SUPPORT UKRAINE. ZELENSKYY DITCHED RECENTLY A ZOOM CALL WITH THE SENATE AND WILL BE MAKING HIS PLEA TO SENATORS IN PERSON TOMORROW. HE WILL ALSO BE MEETING WITH SPEAKER JOHNSON. THIS IS WHERE REPUBLICANS HAVE A LOT OF PUSHBACK WHEN IT COMES TO UKRAINE MORE SO IN THE HOUSE THAN SOME FOREIGN DEFENSE HAWKS IN THE SENATE. HE WILL MAKE THAT CASE IN PERSON. THERE WILL BE A TREMENDOUS AMOUNT OF TENSION IN WASHINGTON DC WHEN HE ARRIVES TODAY. THIS IS AS THEY ARE TRYING TO SHORE UP IN THE SENATE PULLING TOGETHER A UKRAINE AID PACKAGE THAT LINKS TO OTHER ITEMS LIKE MORE FUNDING FOR THE U.S. BORDER AND MORE REPUBLICANS WANT TO SEE STRICTER ASYLUM LAWS AND STRICTER PAROLE LAWS. >> OUR CHIEF WASHINGTON CORRESPONDENT. LOOK FOR HER WORK AS WELL. WE ARE FOCUSED ON THE MARKETS. SOME AMAZING BULL MARKET CALLS. TWO YEARS AND A MONTH, THAT'S AN OUTLIER. IN THE TRENCHES IT'S A REAFFIRMATION OF BEAR MARKET CALLS. A GENERAL STATEMENT, 4400. RIGHT 4658. OTHERS THAT ARE SORT OF WE WILL TURN AND THEN THERE IS THE BULL MARKET CALL THE DEBTS THE HEADLINES. YOU SIT THERE AND GO TO CASH? DO YOU JUST GO AWAY? I DON'T KNOW WHAT YOU DO? LISA: WHAT DOES THAT MEAN? DOES BIG TECH HOLD IN GAINS AND SOME OTHERS CATCH UP. DO CERTAIN ONES WIN AND OTHERS LOSE IF YOU UNDERSTAND THE RECESSIONS IN DIFFERENT INDUSTRIES. WHAT I FIND FASCINATING IS YOU GET FOUR PEOPLE WITH THE SAME ECONOMIC CALLS AND TO DIFFERENT VIEWS ON THE MARKET BECAUSE THAT SHOWS HOW DIVORCED THE ACTUAL CORPORATE PERFORMANCE HAS BEEN THAN SOME OF THE FUNDAMENTAL DRIVERS AS REPRESENTED BY BANK LENDING AND CONSUMERS IN THE LOWER -- TOM: I'VE GOT THE HP 12 C AND ON $5.8 BILLION FOR MACY'S, 5000 800 MILLION, THEY GOT 300 STORES SO YOU ARE BUYING A STORE FOR $19 MILLION EACH. IS THAT ALL MACY'S IS WORTH? SANTA LAND ALONE IS WORTH 50 MILLION. LISA: IS THIS YOUR PITCH TO BE SANTA? TOM: I'M TRYING. 5.8 BILLION FOR MACY'S. TOM: "BLOOMBERG SURVEILLANCE" ON TELEVISION, ON RADIO, ON CAR PLAY, WHICH IS EXTRAORDINARY NEW TECHNOLOGY. THRILLED ABOUT THAT. WE WILL BE TALKING A LOT ABOUT THAT INTO THE NEW YEAR. GET RED IN GREEN ON THE SCREEN. RIGHT NOW, ALL RIGHT. THE VIX 13.09. WE GO INTO AN INCREDIBLY BUSY WEEK HERE. NO OTHER WAY TO PUT IT. 2.04%, UP FOUR BASIS POINTS ON THE REAL YIELD. I SHOULD POINT OUT THE BLOOMBERG FINANCIAL CONDITIONS INDEX, WHEN WE GET TO THE FED IN THE MOMENT, AND I WILL NOT GO IN TO HOW THEY DO IT ON A STANDARD DEVIATION STUDY -- IT'S WICKED ACCOMMODATIVE. THAT IS HOW THEY DO IT AT THE BOSTON FED. LISA: SO WILL FED CHAIR POWELL PUSH BACK AGAINST THE WICKED ACCOMMODATION THAT HAS BEEN MOVING IN THE WRONG DIRECTION? THIS WILL BE THE KEY QUESTION WEDNESDAY. TOM: WE WILL TALK ABOUT BONDS IN A MOMENT. OUR SPECIAL COVERAGE ON WEDNESDAY, THE FED DECIDES -- AND COLLECTED, INTERESTING GROUP TO GET YOU THROUGH CRITICALLY THE PRESS CONFERENCE FOR CHAIRMAN POWELL. HE IS OUT IN FRONT OF THE OTHERS. THEY HAVE TO FOLLOW HIM. LISA: EITHER THEY ARE GRATEFUL THAT HE CAN SET THE TONE AND COME UP WITH THE WORD OF THE DAY AND THEY CAN ALL SAY IT. ON "SURVEILLANCE" THIS MORNING, UKRAINE'S PRESIDENT ZELENSKYY HEADING TO WASHINGTON -- ZELENSKYY EXPECTED TO MAKE AN ADDRESS TO U.S. SENATORS IN A BID TO UNLOCK EIGHT. HOUSE SPEAKER MIKE JOHNSON WILL ALSO MEET THE UKRAINIAN PRESIDENT. I HAVE TO WONDER HOW AWKWARD SOME OF THOSE DISCUSSIONS MIGHT END UP, GIVEN THE FACT UKRAINE SAYS IT IS RUNNING OUT OF TIME, RUNNING OUT OF MONEY, AND THERE IS A LOT OF TWIDDLING OF THUMBS AND TIT-FOR-TAT FOR BORDER SECURITY AND OTHER ISSUES WHERE THINGS HAVE NOT BEEN ABLE TO GET PAST. TOM: MY TAKE ON THIS, ONE OF THE GREAT COMMON FEATURES OF THE AMERICAN WAR EXPERIMENT IS WE ARE ALWAYS SURE IT WILL BE A SHORT WAR, AND IT NEVER IS. IN THIS CASE, IT IS A DISTANT WAR. I AM NOT AT ALL SURPRISED THERE IS A RAGING DEBATE GOING ON. LISA: SOME PEOPLE ARE SAYING RUSSIA HAS THE PHYSICAL UPPERHAND, BECAUSE THEY HAVE THE ENTIRE GOVERNMENT BEHIND THEM, WHEREAS THE COALITION OF ALLIES BEHIND UKRAINE ARE FALTERING. -- ON WHETHER CALLING FOR THE GENOCIDE OF JEWS IS AGAINST FISCAL POLICY. NOW THE LATEST IS -- WHO HAVE COME UNDER INCREASED SCRUTINY. A HARVARD GRADUATE, WHO HAS BEEN VOCAL ON THIS ISSUE, POSTING ON X, IN HER SHORT TENURE AS PRESIDENT, CLAUDINE GAY HAS DONE MORE DAMAGE TO THE REPUTATION OF HARVARD UNIVERSITY THEN AND INDIVIDUAL IN OUR NEARLY 500 YEAR HISTORY. TOM: LIKE EVERYBODY ELSE, I SAW THE "SATURDAY NIGHT LIVE" ON THIS -- WHAT ABOUT ANOTHER 50 SCHOOLS OR ANOTHER 200? CHICAGO, YOUR UNIVERSITY OF CHICAGO REALLY STUCK OUT FOR SAYING WE ARE NOT GOING DOWN THIS PATH. BUT IS IT ABOUT THREE FANCY SCHOOLS? WHAT ABOUT THE OTHER X NUMBER OF FANCY SCHOOLS? LISA: THERE HAS BEEN A RAGING DEBATE AROUND WHAT DOES FREE-SPEECH MEAN, AND WHAT ROLE UNIVERSITIES PLAY IN FOSTERING FREE-SPEECH. WHAT HAS BECOME CLEAR, THERE HAS NOT BEEN FREE-SPEECH IN THE DEFINITION OF MANY DIFFERENT VIEWPOINTS, FROM ALL SIDES OF THE POLITICAL SPECTRUM, BEING VOICED WITHOUT BEING SHUT DOWN. HOW DO YOU CREATE THAT CULTURE IN UNIVERSITIES THAT HAVE CREATED A DIFFERENT CULTURE FOR 10 TO 15 YEARS, AND THEN YOU HAVE INCONSISTENT STANDARDS, AND THIS QUESTION OF WHICH SPEECH GETS CENSORED, IN WHICH DOESN'T? IT COMES DOWN TO AN INABILITY TO BE INTELLECTUAL IN DISCOURSE THAT GETS LOST. TOM: UNCOMFORTABLE IS THE KEY WORD RIGHT NOW. UNIVERSITY OF CHICAGO SEEMS TO BE GETTING A CLAIM HERE. -- DID YOU MAKE THE TREK UP NORTH TO THE CUBS? THEY WILL -- TOM: -- LISA: IF YOU ARE GOING TO WRIGLEY FIELD, JOIN THE OTHER PEOPLE TRAVELING. A RECORD NUMBER TO BE TRAVELING, BEATING THE PRE-COVID RECORD. THAT IS SHOCKING TO ME. -- WHEN IT COMES TO EXPERIENCES, TRAVEL, THE ANSWER IS YES, THEY CAN. YOU GET A SENSE JUST HOW MUCH DEMAND IS PICKING UP. TOM: AND PRICE THEORY, BECAUSE PRICES ARE LOWER. ALL OF A SUDDEN, THERE ARE A LOT OF EMPTY SEATS AND THE PRICES COME DOWN. NOT LIKE PETROL, DOWN 32%, BUT THE ANSWER IS THE TRIP TO PARIS IS WAY DOWN. THERE IS NO OTHER WAY TO PUT IT. THE ANSWER IS IT IS WAY DOWN. LISA: FOR NOW, AND WE WILL SEE AS IT CONTINUES. TOM: THE CALENDAR IS SO FULL OF THIS WEEK. RIGHT NOW, I THINK IT IS IMPORTANT TO TALK TO THE GLOBAL COHEAD OF DEBT AT BARCLAYS, LINKING WHAT THE BOND MARKET TELLS US ABOUT WHAT THE FED COULD OR SHOULD OR WILL DO. LISA: OR WHEN COMPANIES ARE GOING TO REFINANCE. THAT IS WHERE I WANT TO START. AT A TIME WHEN PEOPLE ARE WONDERING ABOUT THIS REFINANCING LOWER WE ARE SUPPOSED TO GET THIS YEAR, NEXT YEAR, THE YEAR AFTER, AND NO ONE REALLY SEEMS TO CARE. DO YOU SEE MATERIAL CHARITY WALL THAT MAKES THE RATES IN THE MARKET, SOMETHING COMPANIES HAVE TO ACTUALLY GRAPPLE WITH IN TERMS OF HIGHER FINANCING COSTS? >> IT IS A GREAT QUESTION GET ON THE INVESTMENT-GRADE SIDE, WHAT WE ARE SEEING IS A FAIRLY MANAGEABLE MATURITY WALL WHERE THE POWERS BECOME A BIT MORE OF A CONCERN IN THE LOANS MARKET AND THE HIGH-YIELD MARKET. WITH A REPORT ON FRIDAY REALLY OPENING THE DOOR TO ONE MORE ABOUT OF ISSUANCE TO CLOSE OUT THE YEAR. WHAT WE ARE SEEING IS A NUMBER OF CFOS AND TREASURERS LOOKING TO TAKE CARE OF POSITIVE TECHNICALS WHEN THEY ARISE. IN THIS CASE, THEY ARE TRYING TO GET AHEAD OF CPI AND THE FED AND GROWING JANUARY BACKLOG. THE CORPORATE ARE LOOKING AT FUNDAMENTALS ARE IN VERY GOOD SHAPE AND ARE WILLING TO WAIT THINGS OUT AND HAVE GIVEN SOME CREDIBILITY TO THE IDEA OF MULTIPLE CUTS BEING PRICED IN AND THEY WILL WAIT FOR THEM TO COME AND GO BEFORE THEY ELECT TO MOVE FORWARD. LISA: IT SORT OF SETS UP AN INTERESTING DYNAMIC. PEOPLE HAVE BEEN TALKING ABOUT GREAT SHRINKING OF THAT MARKETS ARE THAT IS WHAT YOU'RE SEEING IN CORPORATIONS AT THE SAME TIME THE GOVERNMENT DEBT MARKET IS BALLOONING IN TERMS OF SIZE. HOW MUCH DO YOU SEE IT CONTINUING, THAT THE OVERALL SIZE OF HIGH-YIELD AND INVESTMENT-GRADE DEBT MARKETS, SIMPLE BECAUSE COMPANIES DO NOT NEED TO RAISE MORE MONEY, AND IF THEY CAN RAISE MONEY ELSEWHERE, THEY WILL? MEGHAN: OUR CALL IS WE WILL SEE REASONABLY STABLE INVESTMENT-GRADE ISSUANCE NEXT YEAR, SO $1.25 TRILLION. IF YOU LOOK AT RATINGS IN SECTOR AND TURNER, WE ARE UGLY TO SEE A MUCH LARGER PERCENTAGE OF SINGLE AND HIGHER BORROWERS, AN INCREASE IN FINANCIALS, WITH SPREADS NEAR ALL-TIME TYPES, AND YOU ARE LIKELY TO SEE LONG DATED SUPPLY CONTINUE TO UNDERWHELM. THERE WILL BE A BIASED TO SHORT UNTIL WE GET -- TOM: GINA MARTIN ADAMS WITH A SPIRITED, STATION FRIDAY THAT WE ARE ALL LOOKING AT THE PARLOR GAME THAT YOU ARE GLUED TO 24/7 AND WE ARE FORGETTING ABOUT THE REAL ECONOMY, WHICH YOU AND LISA JUST TALKED ABOUT WITH THAT ISSUANCE AS WELL. ARE WE OVEREMPHASIZING THE FED GAME WEDNESDAY? ARE WE ALL ADDICTED TO THE DOTS AND THE POLLING IN THE FUTURE IS WHERE WE SHOULD BE LESS SO? MEGHAN: I HAVE NOT BEEN OVERLY SURPRISED TO SEE A BIT OF A SANTA RALLY EMERGE AS WE RAN OUT THIS YEAR, IN LARGE PART BECAUSE WE ARE ENTERING NEXT YEAR WITH A GROWING SENSE OF OPTIMISM, AND THAT IS NOT BECAUSE WE DO NOT EXPECT THE ECONOMY TO SLOW -- WE DEFINITIVELY DO. IT IS NOT BECAUSE WE THINK INFLATION MAKES ITS WAY TO THEIR 2% TARGET ANYTIME SOON. OUR BASELINE IS, AT THE END OF THE YEAR, DOWN 2'S. IT DOES BEG THE QUESTION, ARE THE FOUR TO FIVE CUTS BAKED IN A RESPONSE TO AN ECONOMY WHERE THE DEBT IS NECESSITATING AN AGGRESSIVE FED MOVE OR IS IT RELUCTANT OF A MARKET THAT IS BULLISH? I THINK IT IS THE CASE THAT IT IS THE LATTER. TOM: TAKE YOUR LEGIT PRO CONVERSATION AND RENTED OUT TO CUPERTINO CALIFORNIA OR SEVEN OTHER PLACES WHERE THEY ARE ALL UNDER BOND, THEY DESPERATELY NEED TO DO A DEAL WITH BARCLAYS, AND THE ANSWER IS, WHY AREN'T THE TECHS ISSUING BONDS RIGHT NOW? MEGHAN: ALL-IN YIELDS FEEL EXCESSIVELY PUNITIVE. EVEN WITH A POINT LOWER OFF THE PEAK, THERE IS A REAL BUY INTO THE IDEA RATES COULD MOVE LOWER OVER THE COURSE OF THE YEAR. WITH MATURITY TOWERS MANAGEABLE, THE ABILITY TO WAIT THAT OUT IS MORE PALATABLE. YOU COULD HIDE OUT IN CP, IN THE FRONT END OF THE MARKET, WITHOUT LOCKING INTO THESE LEVELS FOR A PRONOUNCED PERIOD OF TIME. LISA: WE HAVE BEEN TALKING INVESTMENT GRADE, AND I WANT TO TOUCH ON HIGH-YIELD AT A TIME WHEN SPREADS, THE BENCHMARK YIELD, THE EXTRA YIELD OVER BENCHMARK RATES HAS DROPPED TO THE LOWEST GOING BACK TO APRIL OF 2022, THE LOWEST IN 18 MONTHS. CAN THIS KEEP GOING LOWER? MEGHAN: I THINK IT CAN. I DO NOT THINK IT WILL BE A ONE DIRECTIONAL MOVE. YOU ARE SEEING SIGNS OF LIFE. THERE IS A WILLINGNESS TO STAY IN THE UPPER ECHELON OF THE HIGH-YIELD MARKET AT THE MOMENT. IF YOU THINK WE ARE HEADED FOR A SOFT LANDING, RISK APPETITES SEEM TO BE COMING BACK INTO THE FOLD. THE AMOUNT OF CASH FLOODING INTO THE CREDIT MARKETS AT THIS POINT IN TIME, TO TAKE ADVANTAGE OF RENEWED CARRY OPPORTUNITIES, IS VERY MUCH THERE, BUT IT WILL BE A CREDIT SELECTION PLAY NEXT YEAR FOR HIGH-YIELD, AND DISPERSION WILL BE THE NAME OF THE GAME. TOM: THANK YOU, MEGHAN GRAPER. VERY, VERY APPRECIATE IT HERE. NOT MUCH GOING ON ON THE TAPE HERE. I GUESS IT IS NOT MUCH OF A SURPRISE WITH A WELL UPDATED TOMORROW. LIV-EX ELEVATED, 13.1 PERCENT. YIELDS ARE UP, 10 YEAR YIELD UP FIVE BASIS POINTS, 4.27%. REALLY NOT ALL THAT ELEVATED OFF A JOBS REPORT FRIDAY. THE REAL YIELD WAS 1.99. $71 WEST TEXAS. BRENT CRUDE, ROUNDED UP, $76 A BARREL. STANDARD PORT DOWN 0.1% -- STANDARD POOR DOWN 0.1%. LISA: IT IS GREAT WE SPOKE WITH MAX TALKING ABOUT HOW LONG THIS CAN CONTINUE. IF YOU LOOK AT THE BLOOMBERG COMMODITIES INDEX, IT IS AT ITS LOWS GOING BACK TO DECEMBER OF 2021. THIS IS RAISING QUESTIONS ABOUT IS THIS SOME SORT OF SIGNAL ABOUT TRENDS AS AN ECONOMY AND THE DEFLATION WE ARE SEEING THERE? IS THIS PEOPLE SHIFTING SOME OF THEIR ENERGY SOURCES? HOW MUCH IS THAT THE ISSUE? HOW MUCH IS IT A SOURING OF DEMAND IN PLACES WE HAVE NOT SEEN IT? HOW MUCH IS SUPPLY? I DO NOT KNOW THE ANSWER. AS MUCH AS PEOPLE COME UP WITH THEORIES, WE DO NOT REALLY KNOW. THIS IS ONE OF THE BIGGEST RED FLAGS. TOM: I SET IT THURSDAY AND FRIDAY THAT I AM LOOKING AT THE BLOOMBERG COMMODITY INDEX, WHICH HAS A NICE WEIGHTING IN OIL. BUT, YOU KNOW, TECHNICALLY I DO NOT KNOW WHAT TO MAKE OF IT OTHER THAN THE BROAD DISINFLATIONARY TREND OF COMMODITIES IS IN PLACE. GO BACK TO THE TENDENCY OF THE CALL -- MY ECONOMIC CALL, YOUR ECONOMIC CALL, EVERYTHING IS HINGED AROUND CHINA. -- THEY'RE NUMBER FIVE. BUT WE DON'T DO SOCCER TALK LIKE JON DOES SOCCER TALK. LISA: I THINK THAT IS THE UNDERSTATEMENT OF THE YEAR. TOM: MOVING ON. LISA: MOVING ON FROM FOOTBALL, WHICH WE CALL SOCCER. TOM: THE ANSWER IS CHINA IS IMPORTANT. LOOK TO YOUR AMERICAN EVENING ON BLOOMBERG ASIA TELEVISION AND RADIO, ALWAYS IMPORTANT. ON WEDNESDAY, FED DAY. WE WILL SPEAK WITH CARL RIC CADONNA. >> AMERICANS CAN REST ASSURED THAT OUR BANKING SYSTEM IS SAFE. YOUR DEPOSITS ARE SAFE. LET ME ALSO ASSURE YOU WE WILL NOT STOP AT THIS. WE WILL DO WHATEVER IS NEEDED. I WILL ASK CONGRESS AND THE BANKING REGULATORS TO STRENGTHEN THE RULES FOR BANKS TO MAKE IT LESS LIKELY THIS KIND OF FAILURE WOULD HAPPEN AGAIN AND TO PROTECT AMERICAN JOBS AND SMALL BUSINESSES. TOM: THE PRESIDENT OF THE UNITED STATES SPEAKING EARLIER THIS YEAR FOLLOWING THE DOWNFALL OF A CALIFORNIA SHOP, SILICON VALLEY BANK. A ROLLER COASTER YEAR FOR THE BANKS UNDULATED BY THAT COLLAPSE , AND ALSO OF COURSE, JPMORGAN STEPPING INTO ACQUIRE FIRST REPUBLIC. THE BANKS FINISHING THE YEAR STRONG. KBW BANKING INDEX, UP 13% FROM LAST MONTH. JOINING US NOW -- JON FERRO ON HOLIDAY. LISA ABRAMOWICZ AND TOM KEENE. FIRST WILL TALK HERE ABOUT BANKING AS WELL. LET'S SAVE THE BANKING FOR ALISON WILLIAMS AND LOOK AT THE WALL STREET BANKING. THE MEDIA BUSINESS IS HEMORRHAGING JOBS. DIFFERENT SECTORS ARE CUTTING. ARE YOU ASSUMING WE WILL SEE RIGHTSIZING, AS THEY SAY, INTO THE NEW YEAR AMONG MAJOR BANKS? >> WE SAW A LOT OF AT THE TOP OF THIS YEAR. IN JANUARY, GOLDMAN SACHS CARRIED OUT ONE OF ITS BIGGEST ROUND OF LAYOUTS, CUT ABOUT 200,000 JOBS WHICH THE FIRM HAS NOT DONE IN A LONG TIME, HAS NOT DONE THAT HIGH OF A MAGNITUDE OR DONE EVER BEFORE, CLOSE TO THE MAXIMUM JOBS IT HAS CUT. WE FOR -- BEFORE THAT, WE SAW MORGAN STANLEY TAKE OUT CUTS. CLEARLY, THESE THINGS HAVE BEEN TAKING OUT INEFFICIENCIES. IN TERMS OF JOB CUTS, ESPECIALLY CONSIDERING THE FACT WE HAVE GONE THROUGH A YEAR WHICH YOU COULD ARGUABLY COULD CALL THE TROUGH OF THE INVESTMENT BANKING CYCLE, THE DEALMAKING CYCLE, IT IS HARD TO IMAGINE THEY WILL HAVE TO CARRY OUT ANY MORE LARGE-SCALE CUTS. THEY WILL CONTINUE TO BE LASER FOCUSED ON EXPENSES, BUT I DO NOT SEE ANY MASSIVE CUTS AT ANY OF THESE BANKS, UNLESS THEY NEED TO DEAL WITH MORE PROBLEMS. CITIGROUP IS A PRIME EXAMPLE. LISA: DEAL WITH MORE PROBLEMS -- ELABORATE, PLEASE. THAT IS A BANK THAT HAS GAINED TRACTION IN TERMS OF CUTS. THEY HAVE ALSO PERFORMED BETTER-THAN-EXPECTED ON THE INVESTMENT BANKING UNIT. WHERE ARE THE ISSUES? SRI: LET'S TALK ABOUT CITIGROUP FOR A SECOND. WHEN YOU HAVE SOMEONE LIKE JANE FRASER, A COUPLE YEARS INTO HER TENURE, YOU STILL HAVE A STOCK TRADING WELL BELOW PRICE TO BOOK. THE KEY METRIC INVESTORS ARE LOOKING AT OUR NOT UP TO MARK. SHE IS TRYING TO CUT THROUGH SEVERAL MANAGEMENT LAYERS, TRYING TO JETTISON BUSINESSES THAT DO NOT WORK, AND MAKE IT A STOCK THAT INVESTORS CAN EMBRACE. A FEW CHIEF EXECUTIVE OFFICERS BEFORE HER HAVE TRIED, HAVE NOT REALLY SUCCEEDED. THE QUESTION REMAINS HOW MUCH OF A RUNWAY DOES SOMEONE LIKE JANE FRASER HAVE? LISA: I WAS LOOKING AT THE KBW INDEX AND WE ARE LOOKING AT THE SECOND STRAIGHT DOWN YEAR SINCE 2009. WE HAVE SEEN REAL CANNIBALIZATION FROM THE BANKING SECTOR TO THE PRIVATE INVESTMENT FIRMS WE TALKED TO SO FREQUENTLY. I AM CURIOUS WHETHER PEOPLE THINK OF NEXT YEAR AS THE TURNAROUND, OR IS THIS SORT OF THE BEGINNING OF THE UTILIZATION, THE UTILITY-LIKE ASPECT OF THESE BANKS? SRI: IT IS EXTREMELY IMPORTANT THIS YEAR TO DRILL DOWN INTO THE CONSTITUENTS OF THAT INDEX. WHEN YOU HAVE SOMEONE LIKE JPMORGAN CHASE, THE LARGEST BANK IN THE COUNTRY, UP 20% OF THE YEAR, THAT IS NOT A TYPO. JPMORGAN IS UP 2% OF THE YEAR. THAT TELLS YOU A LOT OF WHAT IS GOING ON, AND THAT FLOWS THROUGH FROM THE REGIONAL BANKING CRISIS, OR THE WEST COAST BANKING CRISIS, WE SAW IT EARLIER THIS YEAR. THAT PRESSURE ON REGIONAL BANKS ONLY MEANT THE BIGGEST BANKS GOT STRONGER. THE CONCERN, HOWEVER, IS WHAT PRESIDENT BIDEN REFERRED TO -- TRYING TO PUT IN PLACE RULES THAT ARE STRONGER. THE SET UP HEADING INTO 2024 LOOKS LIKE EVERYTHING WOULD BE GREAT FOR BANKS, THE CONSUMER ECONOMY IS STILL DOING OK, WALL STREET DEALMAKING WILL PICK BACK UP HERE THAT IS GOOD FOR THESE BANKS. IF THEY GO AHEAD WITH THE PLANS TO PUT ON RESEARCHERS, THAT COULD BE A TURNOFF FOR INVESTORS. TOM: I GO BACK TO 2007, WHEN THE BANKS HAD TO SORT THEMSELVES OUT. THIS IS BALONEY. THE BOTTOM LINE IS JPMORGAN, AS YOU MENTIONED, IS UP SOME 260% -- I AM DOING THE MATH QUICKLY, DON'T AUDIT ME ON THIS --JPMORGAN 2007 IS UP 260%. THE OTHERS, EYEBALLING IT, ARE UP AROUND 40%. WHEN DO THEY START GETTING SCALE SO THEY CAN COMPETE WITH FORTRESS DIAMOND -- DIMON ON PARK AVENUE? SRI: IT IS PROVING TO BE CHALLENGING. TWO DIAMOND HAS BUILT A MACHINE, -- JAMIE DIMON HAS BUILT A MACHINE. IF YOU REMEMBER, CROSS THE BANKING SECTOR, THERE WERE A LOT OF EYEBROWS RAISED THAT JPMORGAN COULD GO AHEAD WITH A DEAL LIKE THAT. AT THE TIME, JPMORGAN HAD THE BEST BID OUT THERE AND THE GOVERNMENT HAD TO MAKE SURE THIS BANKING CRISIS PROBLEM DID NOT SPREAD. TOM: THE WIND OF THIS CHART -- TOO MANY LINES FOR A MONDAY MORNING. THE ANSWER IS THE WINNER OF THIS CHART IS FREE MONEY. THEIR FREE MONEY IS OVER. WHEN DO WE GET THE BANKING ROLL UP COME AROUND THREE, BACK TO ANDREW JACKSON, WHEN DO AS A BANKING ROLL UP SIMPLY TO COMPETE WITH JPMORGAN? SRI: YOU WILL GET A BANKING ROLL UP NOT NECESSARILY TO COMPETE WITH FORTRESS DIMON. THERE BANKING ROLL UP YOU'RE LIKELY TO GET IS BELOW THE TOP 6, 7, EIGHT. THERE ARE WAY TOO MANY BANKS IN THIS COUNTRY. THERE IS A REALIZATION THERE WILL BE A LOT OF CONSOLIDATION. BUT YOU'RE NOT TALKING ABOUT THAT IN THE TOP BANKS. THERE, YOU ARE NOT ACCEPTING A TON MORE DEALS, AT LEAST IN THE TRADITIONAL MAKE ON BANK CENTS. YOU WILL SEE MORE IN THE NEXT RUNG BELOW THAT. TOM: I LOOK AT THE GLOBAL WALL STREET BANK, AND THERE IS A LOT OF SLACK OUT THERE. IS IT THE MEDIA BUSINESS IMPLODING? OR GIVE ME ANOTHER BUSINESS IMPLODING RIGHT NOW. RETAIL, MACY'S. YOUR SOURCES, WHAT ARE THEY SAYING IS STRATEGIC TO DO, NOT ONLY FOR THESE BIG BANKS, BUT THE REGIONAL BANKS JUST BELOW THEM? SRI: THE REGIONAL BANKS WILL FACE A CHALLENGE -- NOT A CRISIS, BUT A CHALLENGE FOR SURE. EVEN THOUGH ATTENTION HAS MOVED AWAY FROM THEM, EVEN THOUGH THE PANIC AROUND THEM HAS SUBSIDED, THEY HAVE A CHALLENGING BUSINESS MODEL. THEY HAVE A CHALLENGING BUSINESS MODEL THAT IS ALSO BEING CHALLENGED BY THE NONBANK LENDERS OUT THERE. THERE ARE A LOT OF PEOPLE ARE VYING FOR THEIR BUSINESS, THE KIND OF BUSINESS THEY DO, AND PLACES WHERE THEY CAN MAKE PROFITS, AND THERE ARE SOME STRUCTURAL CHALLENGES IN WHAT THEY CAN DO. TOM: I NEED TO REVIEW THIS. CITIGROUP HAS HAD A HELL OF A MONTH, WHICH YOU MENTIONED. IT IS TRADING IN JUST BELOW FIVE DOLLARS PER SHARE. I WANT TO TAKE THIS BACK, WHAT IS IT, 16 YEARS -- THE COMPLETE PERFORMANCE BY ONE COMPANY. AND GOLDMAN SACHS IS, FRANKLY, NUMBER TWO. LISA: THIS HAS BEEN OF YOUR OF THE ARTIST WINNING THE MOST. WE HAVE SEEN THAT IN A LOT OF INDUSTRIES, WHETHER TECH, RETAIL, SOFTWARE, OR WHETHER IT IS WITHIN THE BANKS. BUT I WONDER, DO LOWER RATES ACTUALLY HELP DEMOCRATIZE THE BANKING SECTOR, OR BOO THEY CONTINUE TO CONSOLIDATE STRENGTH IN JPMORGAN, AS ALL THE OTHERS TRIED TO CAP UP WITH CAPITAL MARKET ACTIVITY -- TRY TO CATCH UP WITH CAPITAL MARKET ACTIVITY? SRI: I AM NOT SURE YOU CAN LOOK AT THE RATE DYNAMIC. THE SITUATION WE ARE IN, ESPECIALLY IF YOU LOOK IN THE USA, SOME OF THE BIGGEST ONES LIKE JPMORGAN, BANK OF AMERICA -- LET'S JUST LOOK AT WALL STREET ACTIVITY, WALL STREET -- THESE COMPANIES ARE NOT DISSING -- THE COST TO COMPETE IN THESE BUSINESSES HAS GONE UP. NEW RULES WILL MAKE IT HARDER FOR OTHERS TO SCALE UP INTO THEIR LEAGUE. WHAT YOU HAVE IS A FEW REALLY STRONG BANKS. EVEN IF THERE PROFITS ARE CHALLENGED, THEY WILL STILL REMAIN DOMINANT. IT IS THE OTHERS THAT WILL HAVE TO HAVE SERIOUS CONVERSATIONS ABOUT WHICH ARM TO CUT OFF SO THEY CAN SURVIVE. TOM: UNFAIR QUESTION. WE ARE PROBABLY FRONT RUNNING SRI ON THURSDAY. APPLE TOLD GOLDMAN SACHS "SEE YA," RIGHT? ON THE CHARGE CARD. WHO DOES APPLE PICK UP? SRI: IT IS A MORE COMPLICATED STORY, LARGELY BECAUSE GOLDMAN SACHS HAS BEEN WANTING TO GET OUT OF IT. APPLE NOW WANTS TO GIVE GOLDMAN A WAY OUT OF IT. IT IS NOT CLEAR WHEN THE TWO SIDES WILL AGREE TO A DEAL THAT WILL MAKE SENSE -- TOM: WHICH IS YOUR BANK THAT WILL PICK UP THE APPLE CHARGE CARD? SRI: JPMORGAN CHASE IS NOT A BAD BET, BUT REMEMBER, THE DEAL THAT GOLDMAN SIGNED WITH APPLE SEEMED TO BE SO WELL TILTED IN FAVOR OF APPLE THAT IT REALLY DOES NOT MAKE SENSE, IN THAT FRAMEWORK, FOR ANYONE ELSE TO PICK IT UP, WHICH IS WHY GOLDMAN HAS BEEN STUCK WITH IT AND, FOR MUCH OF THE LAST YEAR, HAS BEEN TRYING TO GET OUT OF IT. THERE IS NO EASY TAKER. TOM: DO YOU TAKE OFF THE REST OF THE YEAR NOW? EVERYONE IS BEING KING -- EVERYONE IN BANKING IS TAKING OFF THE REST OF THE. SRI: FUNNILY ENOUGH, I WAS TALKING TO PEOPLE SUNDAY EVENING, AND A LOT OF PEOPLE WERE SAYING THEY WOULD STICK HERE THROUGH DECEMBER. TOM: WE WILL CATCH UP WITH ALISON WILLIAMS IN THE COMING DAYS AS WELL AND THE BROADER BANKING BUSINESS FUTURES AT NEGATIVE THREE. THE VIX 13.1. A QUIET SCREEN. NO OTHER WAY TO PUT IT. ANTICIPATED. >> WE HAVE NOT SEEN THE OVERALL MARKET RISE YET, AND THAT IS WHAT 2024 WILL BE ABOUT. >> TECH WILL CONTINUE TO OUTPERFORM. >> FROM EVERYTHING WRITTEN THAT WORKED IN 2023 TO EVERYTHING THAT DID NOT WORK. >> INVESTORS WILL HAVE TO LOOK FOR SOME OTHER AREAS THAT HAVE BEEN UNDERPERFORMING. >> HIGHLY SUGGEST INVESTORS NEED TO DIG DEEPER. >> THIS IS "BLOOMBERG SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO, AND LISA ABRAMOWICZ. LISA: HEADING INTO THE MOST IMPORTANT WEEK OF DECEMBER, WELCOME BACK. TOM: IT IS NOT CHRISTMAS FOR THE LAST WEEK OF THE YEAR IS. LISA: IT ACTUALLY IS THE MOST IMPORTANT WEEK OF THE YEAR -- OF DECEMBER, AT LEAST. ON LIVE ON BLOOMBERG TELEVISION AND RADIO -- WHAT IS MORE IMPORTANT, CPI OR THE FED? TOM: I THINK RETAIL SALES. CPI IS WICKED, GET IT. THE FED IS ALWAYS IMPORTANT. OUR COVERAGE WILL BE WITH YOU AT 2:00 P.M. THAT AFTERNOON. BUT RETAIL SALES GET A REAL HANDHOLD ON GDP FROM 5% ON DOWN -- DO YOU BELIEVE IN THE GLOOM? THERE IS A LOT OF PEOPLE PUSHING AGAINST THAT THIS MORNING. LISA: WE GET CPI TOMORROW. WEDNESDAY, PPI. THURSDAY, WE GET RETAIL SALES. WHAT IS YOUR SENSE THAT AN UPSIDE SURPRISE, IF IT IS NOT AS BAD AS PEOPLE PREVIOUSLY EXPECTED, THAT PEOPLE HAVE TO CHALLENGE HOW QUICKLY THE CONSUMER IS ACTUALLY DETERIORATING AND WHETHER WE DO HAVE SOME SORT OF SLOWDOWN TAKING PLACE? TOM: THE MARKET IS -- THE YARD ANY CALL, -- THE YARDENI CALL. THESE ARE PEOPLE GETTING ON BOARD THIS FULL MARKET TO GET TO YOUR GREAT POINT, THERE IS A LOT OF PEOPLE THAT STILL ARE NOT CONVINCED. LISA: THE SLOW BEFORE THEY GROW. THIS IS THE QUESTION WE WERE ASKING. THIS QUESTION OF WE HAVE TO GET A SLOW DOWN TO ACHIEVE THE DISINFLATION THE FED WANTS TO SEE, BUT THAT WILL JUST SET UP THE SEEDS OF THE NEXT RALLY. IS THAT SOMETHING PEOPLE CAN BUY INTO NOW BEFORE WE EVEN SEE HOW MUCH THE ECONOMY HAS TO SLOW TO ACHIEVE THAT? TOM: I GO TO GINA MARTIN ADAMS. IT IS ABOUT THE REAL ECONOMY. UNDER WEIGHTED DUE TO ALL THE FED ANALYSIS. THE REAL ECONOMY, FOR PART OF AMERICA, IS BOOMING, NO QUESTION. LISA: YOU HAVE TO WONDER, IF GASOLINE PRICES ARE COMING DOWN, IS IT DISINFLATIONARY OR DEFLATIONARY? DISINFLATIONARY ON A HEADLINE FIGURE BECAUSE PRICES ARE COMING DOWN, BUT THIS MEANS PEOPLE ESSENTIALLY ARE GETTING MORE MONEY IN THEIR POCKETS AT THE END OF EVERY DAY, EVERY WEEK, BECAUSE THEY ARE PAYING SO MUCH LESS TO DRIVE AROUND. I DO WONDER, SOME OF THESE NODES OF UNCERTAINTY AT A MOMENT WHEN WE DO SEE PEOPLE SPENDING, THE RETAIL SALES FIGURE, COULD BE A MYSTERY. TOM: MARKET QUIET RIGHT NOW. OIL AT $71 A BARREL. HIGHER YIELDS IN THE BOND SPACE, 4.28% IN THE 10 YEAR YIELD. LISA: THIS COMES AHEAD OF OPTIONS. TODAY, WE GET THREE YEAR AND 10 YEAR, TOMORROW, 30 YEAR OPTIONS. A REAL QUESTION ABOUT, YES, SHORT-TERM, WE UNDERSTAND THE FED WILL CUT RATES AT SOME POINT NEXT YEAR, OVER THE LONGER-TERM. MEANWHILE, CRUDE HEADING LOWER MARGINALLY, BUT STILL IN THE $70 RANGE. TOM: NO QUESTION ABOUT THAT. IN FOREIGN EXCHANGE, WE BARELY MENTIONED. SOMETHING AS IDIOSYNCRATIC AS TURKISH LIRA OUT TO 29.00. THAT IS NOT 30, BUT IT IS A HUGE, ODD STORY THERE. THERE ARE SOME OF THE EM STORIES -- THE ARGENTINIAN PESO HAS UNRAVELED SINCE THE ELECTION OF 10 DAYS AGO, BUT I GUESS, STILL IN CONTROL. THE DOLLAR, I WILL CALL IT WARRING AT $1.104 ON DXY. LISA: THEY ARE KIND OF PUSHING BACK AGAINST THIS IDEA THEY WILL ABANDON NEGATIVE RATE POLICY AT THEIR MEETING NEXT WEEK. TOM: THIS IS A JOY. KATE MOORE JOINS US, TRYING TO GET THE THEME FOR NEXT YEAR. MY HEAD IS SPINNING ON THE THEMES. HAVE YOU EVER SEEN IT LIKE THIS? HOW FAR CAN YOU LOOK WITH CONFIDENCE OR CONVICTION? ARE YOU GETTING OUT TO MARCH OF NEXT YEAR, OR ARE YOU WITH YARDENI WHERE YOU COULD GET TO 2025? KATE: NEXT YEAR WILL BE A YEAR OF MANY DIFFERENT PHASES, LIKE 2023 WAS. IT IS NOT A SET IT AND FORGET IT THEMATIC YOU WILL HAVE TO STAY ON YOUR TOES AROUND THE MACRO, AROUND SHIFTS IN EARNINGS AND CONSUMPTION. I AM ACTUALLY VERY EXCITED ABOUT HAVING TO BE MORE TACTICAL IN 2024. THAT IS A MUCH MORE FUN ENVIRONMENT THEN WE HAD OVER THE LAST DECADE. TOM: IS CASH TACTICAL? KATE: CASH IS TACTICAL. THERE ARE TIMES WHEN YOU WANT TO OVERWEIGHT CASH IN YOUR PORTFOLIO. YOU WANT TO USE IT, WHEN YOU ARE -- AT THIS POINT, WE ARE SPENDING A BIT OF OUR CASH IN THE PORTFOLIO AND PUTTING MORE MONEY TO WORK, BECAUSE WE HAVE MORE CONVICTION IN THE DIRECTION OF THE EQUITY MARKET. LISA: WHAT CONVICTION IS THAT? YOU THINK THINGS WILL IMPROVE FROM HERE? KATE: YEAH, WE THINK THE DIRECTION IS UP. THERE'S A LOT MORE ROOM FOR PEOPLE TO PUT MONEY TO WORK. IF THE DATA WE ARE ALL TALKING ABOUT COMES OUT IN A POSITIVE WAY THIS WEEK, CPI SHOWING A CONTINUED DISINFLATIONARY TREND, THE FED INDICATING THEY ARE WAITING, PERHAPS PAUSING -- ALTHOUGH I DO NOT SPECK THEM TO SAY THEY WILL PAUSE -- AND THE RETAIL SALES DATA YOU WERE TALKING ABOUT, WHICH IS CRITICALLY IMPORTANT. IS THE CONSUMER HEALTHY, AND ARE THEY CONTINUING TO SPEND? WE HAVE A GOLDILOCKS ISSUE HERE WHERE WE DO NOT WANT THEM TO SPEND TOO MUCH, BUT WE WANT TO SEE ACTIVITY. LISA: WHICH IS THE REASON WHY THE TACTICAL ASPECT OF THIS IS INTERESTING. ARE YOU BETTING LONG-TERM THAT THIS GOLDILOCKS IS SUSTAINABLE, OR ARE YOU BETTING IT CAN KEEP GOING FOR ANOTHER MONTH, MAYBE EVEN TWO, AND YOU MIGHT AS WELL RIDE IT WHILE YOU CAN. KATE: WHAT ARE THE THINGS WE HAVE HEARD ON THE SELL SIDE IS THE LIKELIHOOD OF A RECESSION IS STILL HIGH FOR 24, AND WITH THAT MAY COME AND EARNINGS RECESSION. OF COURSE, THERE ARE OUTLIERS WHO ARE MORE CONSTRUCTIVE ON THE MARKET, BUT THE POINT I WANT TO MAKE IS THE EARNINGS RECESSION HAS LARGELY HAPPENED. WE HAD ROLLING INDUSTRY RECESSIONS. EVEN IN A SLOWER GROWTH ENVIRONMENT, I DO NOT THINK WE ARE LIKELY TO SEE ANOTHER BIG HIT TO EARNINGS. THERE IS A LOT OF GREAT, RIGHT FRUIT TO BE -- THERE'S A LOT OF GREAT, RIPE FRUIT TO BE PLUCKED NEXT YEAR. TOM: IN THE FINANCIAL TIMES -- THIS IS WHY WANT TO GO. PORTFOLIO CONSTRUCTION. WEI LI -- THERE IS NO LANDING. WE ARE JUST CLIMBING OUT OF A HOLE. HIGHER RATES ARE HERE TO STAY PURE WE CAN EFFECTIVE SEE GREATER DISPERSION OF RETURNS. SEIZING THE OPPORTUNITIES FROM THIS TREND REQUIRES BEING DYNAMIC WITH PORTFOLIOS -- THAT IS WHAT KATE MOORE SAYS -- NOT RELYING ON STATIC CLOSURE TO BROAD ASSET CLASSES THAT WORKED SO WELL DURING THE SUSTAINED FULL MARKETS OF THE PAST. HOW STATIC IS INVESTING IN THE MAGNIFICENT SEVEN? KATE: I DO NOTHING GET IS STATIC AT ALL. ONE OF THE THINGS PEOPLE FORGET TO TALK ABOUT WITH THE BENEFITS AND SEVEN IS THEY ARE NOT JUST INTERESTING THEMATICALLY. THESE ARE NOT JUST COMPANIES IN THE RIGHT AREAS AT THE RIGHT TIME. THEY ARE ALSO COMPANIES THAT DID THE FUNDAMENTAL WORK. YOU WERE TALKING ABOUT LAYOFFS AND COST-CUTTING IN TERMS OF THE FINANCIAL SECTOR A MOMENT AGO, BUT A LOT OF THESE COMPANIES WENT THROUGH THAT TOUGH DESIRES IN THE FOURTH QUARTER OF 2022 IN THE BEGINNING OF 2020 THREE. SO FUNDAMENTALLY STRONG AND THEMATICALLY STRONG. I THINK THEY ARE STILL FUNDAMENTALLY AND THE MEDICALLY STRONG. TOM: LET'S BRING IT DOWN TO RETAIL, DOWN TO 401K. I'VE BEEN TOLD HAVE TO BE IN A TARGET FUND, OR WHATEVER THAT BALONEY IS. OR HAVE TO BE IN 60/40. WHAT ARE THE PARTIAL DERIVATIVES OF A STANDARD 60/40 APPROACH, GIVING YOURS AND WEI LI'S VIEW THAT WE NEED TO BE DYNAMIC? KATE: IN GLOBAL ALLOCATION, THE FUND I HELP MANAGE, WE ARE MODESTLY OVERWEIGHT BUT WE ARE MOVING A LOT UNDER THE SURFACE. WE ARE USING OUR CASH TO ADD INDEX EXPOSURE AS WE GO INTO YEAR-END. I THINK THAT WILL BE A CONTINUED TREND. INVESTORS WILL RECOGNIZE THE DATA LOOKS GOOD, THE BOGEYMAN IS NO LONGER HERE, AND IF YOU DO NOT STAY INVESTED IN RISK ASSETS, YOU WILL UNDERPERFORM YOUR PEER GROUP. LISA: THE BOGEYMAN WAS SUPPOSED TO BE HERE THIS YEAR. LOOKING AT SIX STRAIGHT WEEKS OF GAINS OVER THE PAST MONTH AND A HALF. WHAT KIND OF RETURNS IN YOUR PORTFOLIO ARE YOU LOOKING FOR, ARE YOU TARGETING IN 20 34? KATE: OBVIOUSLY, WE ALWAYS WANT TO BEAT THE MARKET. IN TERMS OF RISK RETURN FOR S&P NEXT YEAR, I DO NOT ENVY THE SELL SIDE THAT HAS TO PUT OUT A TARGET. WHAT I WILL SAY IS THAT IS LIKELY GREATER OPPORTUNITY UNDERNEATH THE SURFACE. WE HAD LEADERSHIP FROM THE MEGACAP, BUT OUTSIDE THE MEGACAP, YOU LOOK AT SOMETHING LIKE THE S&P 500 SOFTWARE INDUSTRY GROUP. MOST OF THOSE COMPANIES HAD OUTSTANDING PERFORMANCE, SOMETHING LIKE WHAT HE PERCENT OF PEOPLE FORGET THAT. THEY GET SO FOCUSED ON THE TOP COUPLE NAMES THAT THERE IS A LOT TO DO UNDERNEATH THE SURFACE. LISA: THE REASON I ASK WHAT KIND OF RETURNS YOU ARE LOOKING FOR -- I AM LOOKING AT A GNOSTIC YEAR RETURN -- THE OPPORTUNITY LOST IN CASH OR THE OPPORTUNITY COST IN BEING IN LONGER-TERM BONDS GETS GREATER IF YOU ARE EXPECTING A 10%, 50%, 20% GAIN ON STOCKS. IT IS A LOT LESS IF YOU ARE EXPECT A 6%, 7%, 8% GAIN ON STOCK SPLIT HOW MUCH BIGGER IS THE GAIN ON STOCKS THAN JUST HOLDING AND CLIPPING COUPONS ON SOME OF THESE BONDS THAT ARE OFFERING TRUE REAL YIELD? KATE: I BELIEVE STOCKS CAN AND WILL OUTPERFORM CASH IN 2024, BUT THE IMPORTANT PART IS FOR THOSE OF US WHO MANAGE A GLOBAL ASSET ALLOCATION PORTFOLIO, USING BONDS, USING BONDS AND CASH AND USING ALTERNATIVE INSURANCE IS A KEY PART OF OUR RISK MANAGEMENT. IT IS HARD TO SAY WE WOULD GO ALL INTO EQUITIES AS A RESULT. TOM: A MINUTE HERE. CHINA IS GRIM. IS THAT THE ULTIMATE GLOBAL ALLOCATION CONTRARY TRADE FORWARD? KATE: IT FEELS THAT ARE LESS INVESTORS SPENDING TIME ON CHINA. I WILL TELL YOU I'VE BEEN SPENDING TIME ON -- I WAS IN INDIA LAST WEEK. THAT IS A PLACE A LOT OF GLOBAL INVESTORS HAVE TURNED THEIR EYES, NOT JUST FROM GROWTH OPPORTUNITY -- THERE IS SO MUCH INCREDIBLE ENERGY THERE. TOM: WHAT IS YOUR GDP NUMBER AT BLACKROCK ON INDIA? KATE: WE DO NOT PUT OUT AN OFFICIAL FORECAST -- TOM: LARRY IS NOT WATCHING. KATE: HE MIGHT BUT 6%. TOM: WOW, VERSUS 3.5%. LISA: INDIA STOCK MARKET IS ABOUT TO SURPASS HONG KONG'S. KATE: THERE IS A HUGE AMOUNT OF OPPORTUNITY THERE. I AM NOT JUST TALKING ABOUT THE FIRST QUARTER OF 2024 BUT LOOKING OUT THE NEXT COUPLE OF YEARS, WHICH IS WHY WE HAD A GROUP OF OUR SENIOR INVESTORS THERE. TOM: KATE MOORE, THANK YOU FOR JOINING US, WITH BLACKROCK. REALLY INTERESTING NUANCES THERE. RIGHT NOW, QUIET. SPX DOWN 5, ALL OF 0.1%. LISA: WHY WOULD ANYONE TRADE WITH ANY CONVICTION TODAY, ESPECIALLY GIVEN WE ARE GETTING CPI TOMORROW, THE FED WEDNESDAY, AND YOUR RETAIL SALES THURSDAY? THAT COULD GIVE THEM A LEG UPWARD. IT SEEMS LIKE PEOPLE ARE MORE INTERESTED IN THE UPSIDE SURPRISE THAN THE DOWNSIDE SURPRISE. TOM: I AM DOING SOME MATH HERE. AN IMPORTANT STUDY -- I AM JUST DOING THIS TO IMPRESS KATE MOORE -- LISA: YOU'RE CRUSHING IT. SHE LOOKS REALLY IMPRESSED. TOM: ON THE HPC12 FOR KATE MOORE -- OK, THIS IS BORING. THIS IS A GUY WHO WAS IN THE NEW YORK METS. STEVE COHEN. GREAT BLOOMBERG ARTICLE TODAY. I WILL PUT IT OUT. SINCE THE PANDEMIC, UP TO 16 COME 17, UP 9, UP 10 -- BORING, BORING, BORING. GUESS WHAT. UP TO 64% SINCE THE PANDEMIC. THAT IS HOW YOU MAKE MONEY. YOU DO IT EVERY YEAR. LISA: ARE YOU TALKING ABOUT STEVE COHEN? TOM: STEVE:. THE METS HAD A BIG LOSS. LISA: I THINK THIS IDEA OF BEING TACTICAL IS REALLY INTERESTING. THE IDEA OF THE FACT THAT PEOPLE SEE MORE UPSIDE THAN DOWNSIDE TO PLAYING AROUND IN STOCKS, EVEN POTENTIALLY OFFSETTING SOME OF THE INCOME OF BONDS GIVES YOU A SENSE OF HOW MUCH BULLISHNESS IS OUT THERE. TOM: UNDERPLAYED AS WE HAVE A NEW COST OF MONEY. WE WENT FROM NEGATIVE RATES TO POSITIVE. THE POSITIVE REAL YIELD IS UNDERPLAYED SECTOR TO SECTOR. LISA: ALTHOUGH THE DIRTY SECRET IS IT MAY HAVE MORE OF A STIMULATIVE EFFECT IN CERTAIN SECTORS RIGHT NOW THEN PEOPLE HAD EVER EXPECTED. IT WAS SUPPOSED TO BE PUNITIVE. TOM: WE ARE TALKING THREE YEAR OR FIVE YEAR. I THINK IT IS A HUGE DEAL. >> THINKING ABOUT THE CUMULATIVE INFLATION, THAT IS WHAT A LOT OF CONSUMERS ARE STILL FEELING. THE FACT YOU HAVE SEEN THE PRICE LEVEL RISE CLOSE TO 20% IN JUST FOUR YEARS, SO YES, WE ARE SEEING INFLATION SLOW, BUT CONSUMERS ARE NOT REALLY FEELING THAT RIGHT NOW. THEY ARE STILL SEEING A HIGH LEVEL OF PRICES, WHICH IS CONTRIBUTING TO SOME OF THE CONSUMER FATIGUE WE ARE SETTING TO SEE DEVELOP AND WE THINK WILL CARRY ON. TOM: SARAH HOUSE, WELLS FARGO. OUR TEAM DID A GREAT JOB OVER THE WEEKEND LINING UP SARAH HOUSE THERE ON INFLATION. WE DID ANOTHER FOCUSED INTERVIEW ON THE FED AS WELL, COMING UP WEDNESDAY. WE WILL GET TO RETAIL HERE IN A MOMENT. BUT, LISA, QUICKLY, LIKE YOU SAID -- I WAS MAKING A JOKE ABOUT IT. LISA WAS 100% CORRECT. WOW, WHAT A WEEK. LISA: AND GIVEN THE FACT PEOPLE ARE LOOKING FOR MORE REASONS TO BE BULLISH, NOT TO SCREAM AND HIDE UNDER A MATTRESS. THIS GIVES YOU A SENSE OF WHETHER BIAS IS. TOM: WE HAVE TO GET TO CHECK GRAHAM'S, SENIOR RETAIL ANALYST AT GORDON HASKETT. HE HAS GIVEN US FIVE MINUTES HERE. I WAS THUNDERSTRUCK AT THE HANDLE. IS THAT ALL FOR MACY'S? >> GOOD MORNING. I WOULD VALUATE ABOUT 4.5 TIMES EBITA, WHICH LOOKS AT HISTORICAL FOR THE RETAIL SPACE, WHICH CAN VARY ANYWHERE BETWEEN 6 TO 10 TIMES. MORE THAN 6% OF MACY'S OPERATING INCOME COMES FROM THE CREDIT SIZE OF THE BUSINESS, SO YOU HAVE TO THINK ABOUT THAT IN THE CONTEXT. IT IS NEWS. IT IS NOT THE FIRST TIME WE HAVE SEEN MACY'S GO THROUGH A TAKEOUT. HUDSON BAY TRIED IT A FEW YEARS BACK. WE ARE STILL GATHERING NEWS. WE ARE HOSTING A TWO DAY CONFERENCE STARTING THIS MORNING. WE ARE SUPPOSED TO HAVE MACY'S CFO SCHEDULE TOMORROW, SO WE WILL HAVE NEWS ON THIS TOMORROW. LISA: WE WILL CHECK BACK IN WITH YOU. DO YOU THINK MACY'S WILL BE MORE SUCCESSFUL AS A PUBLIC COMPANY AS OPPOSED TO A PRIVATE ONE? CHUCK: GOOD QUESTION -- RELATIVE TO SOME OF ITS PEERS, REWIND BACK TO WHEN JCPENNEY WAS A PUBLIC COMPANY, MACY'S HAS DONE VERY WELL. THEY HAVE GOT GREAT BANNERS. I AM INTERESTED TO SEE WHAT THE STRATEGY IS BY THESE TWO FIRMS COME OUTSIDE OF THE REAL ESTATE, WHICH IS THE UNDERPINNING ASSET HERE. TOM: CHUCK GROM, THANK YOU. HE IS WITH GORDON HASKETT. I WANT TO DO ONE E.M. THING HERE WITH DAMIAN SASSOWER. MICHAEL BAR, DAMIAN SASSOWER AND SCARLET FU -- IN HIS DAY GIG, HE IS CHIEF ASSET STRATEGY ANALYST FOR BLOOMBERG INTELLIGENCE. WHAT IS THE SIGNIFICANCE OF ETHIOPIA SO INCREDIBLY FINANCIALLY CHALLENGED? DAMIAN: IT IS THE FOURTH AFRICAN COUNTRY TO DEFAULT IN THE YEAR, YEAR-AND-A-HALF. IT IS A $33 MILLION COUPON PAYMENT. THEY WILL NOT MAKE IT TODAY. IT ADDS TO ALL THE STRESS BEING PLACED ON THE IMF AND OTHER MULTI MACROS THAT HAVE TO GET INVOLVED AND HELP SOME OF THESE ECONOMIES WORK OUT OF THEIR SITUATION. TOM: IN THE INSTITUTIONS, HOW THEY RUN OUT OF PATIENCE? DAMIAN: I CERTAINLY HOPE NOT. OTHER COUNTRIES, LIKE TUNISIA, BOLIVIA, PAKISTAN ARE UP NEXT. IT ALL BOILS BACK TO CHINA AND IF YOU LOOK AT WHAT IS GOING ON IN CHINA, THEY HAVE THEIR OWN ISSUES. THEY ARE EXPORTING INFLATION TO THE REST OF THE WORLD. THEIR OUTLOOK WAS DOWNGRADED BY MOODY'S LAST WEEK, TAKING DOWN THE CREDIT RATING OUTLOOKS FOR ALIBABA, TENCENT, ICBC. A LOT GOING ON ON THE E.M. CREDIT SIZE. -- SIDE. LISA: GIVEN HOW MUCH MONEY THEY COULD POTENTIALLY LOSE AND THE DISCUSSION AROUND ARGENTINA AND THIS REAL QUESTION OF WHAT HE CAN DO WITH THE HYPERINFLATION, THE DOLLAR INFLATION, THE CUTTING OF ALL THE BUREAUS OF THE GOVERNMENT. IS THERE A REAL SENSE OF CONCERN THAT THIS COULD LEAVE A MASSIVE HOLE IN THE BALANCE SHEET OF THE IMF? DAMIAN: IT IS ALREADY THERE, FOR ALL INTENTS AND PURPOSES. MILEI WAS JUST INAUGURATED YESTERDAY. HE HAD THE PRESENCE OF A LOT OF -- CHILE, ECUADOR, URUGUAY -- THERE PRESIDENTS WERE ACTUALLY IN ATTENDANCE. HE ALSO ANNOUNCED THE CENTRAL BANK CHIEF, A PROPER SELECTION TO RUN THE BCRA. THINGS ARE HEADED IN THE RIGHT DIRECTION, BUT MORE IMPORTANTLY, THEY WILL HAVE TO SLASH PUBLIC FUNDING AND HEART. THE PAIN OFF THE BACK OF IT WILL BE A REAL ISSUE. LISA: YOU RAISE AN INTERESTING QUESTION, THE IDEA MILEI IS GETTING THE EMBRACE OF A LOT OF COUNTRIES AROUND THE WORLD THAT MAY PAY INTO THE IMF, RATHER THAN, SAY, CHINA. ARE YOU SEEING THE COALITION OF COUNTRIES, THE MAIN ONES, BEFORE CHINA CAME TO THE FORE BEHIND IMF, REALLY STICKING HIM STANDING UP A LITTLE BIT MORE AND OFFSETTING THE FACT THAT CHINA HAS BEEN PULLING BACK AND DOES NOT SEEM TO BE LENDING AS MUCH AS THEY USED TO BE? DAMIAN: INTERESTING POINT. I DO NOT THINK ANY OF THOSE COUNTRIES WILL HELP ARGENTINA OUT OF ITS FUNDING A MESS, BUT THEY WILL BE SUPPORTIVE OF A LENDING CORE. WE ARE TALKING A LATAM TRADING BLOC, NOT FITTING TOWARDS THE BRICKS. IT IS INTERESTING IN THE LONG RUN. IT SEEMS THAT CHANGE IS FINALLY UPON US IN ARGENTINA, AND CHANGES A GOOD THING, GIVEN WHERE WE ARE COMING FROM. TOM: I WANT TO DO A DEGUE HERE, WHICH IS A COMPLETE REPRICING OF SPORTS, $700 MILLION OVER 10 YEARS. NOT SO MUCH WHAT DOES IT MEAN FOR BASEBALL OR THE DODGERS, BUT WHEN MR. OHTANI, WITHOUT QUESTION, THE BEST PLAYER OF MULTIPLE GENERATIONS -- WHAT IS A NEED FOR ALL OF SPORTS? DAMIAN: SUCH A GREAT QUESTION. I HAVE A GREAT STATISTIC. FROM WHAT I HEAR, AND THIS IS UNCONFIRMED, THAT $700 MILLION, 10 YEAR CONTRACT IS MORE THAN THE COMBINED EARNINGS OF KEVIN DURANT AND STEPH CURRY COMBINED. THAT IS AN UNBELIEVABLE NUMBER. HERE'S ANOTHER INTERESTING STATISTIC. OUR FRIENDS IN FLUSHING MISSED OUT ON THIS PRIZE. YOU HAVE TO THINK, 10 YEARS AFTER THIS CONTRACT IS FINALLY DONE, THEY STILL HAVE THREE YEARS LEFT -- IT IS INTERESTING AS I NEW YORK METS FAN. THERE ARE OTHER PEOPLE OUT THERE. YAMAMOTO, THE PITCHER, IS COMING OUT OF JAPAN. TOM: ARE THEY GOING FROM $400 MILLION MOOKIE BETTS MONEY TO $700 MILLION BECAUSE THEY WILL GET IT FROM TV AND STREAMERS? THEY WILL NOT GET IT FROM SEASON-TICKET HOLDERS OR MERCH. DAMIAN: IT HAS GOT TO BE MEDIA. WHEN YOU OWN ANY SPORTS FRANCHISE, THERE IS REALLY NO SENSE THAT GOES INTO SIGNING SOMEONE FOR 10 YEARS AND $700 MILLION. IT IS NOT REALLY ABOUT THAT. WHAT I THINK WHAT IT IS REALLY ABOUT IS JUST THE NUMBERS THEMSELVES ARE UNBELIEVABLE. AND THEY HAVE GOT TO WRITE THE CHECK. AND THEY HAVE THE MONEY TO DO IT. THIS IS THE LOS ANGELES DODGERS. THEY ARE NOW THE FAVORITES TO WIN THE WORLD SERIES IN 2024. LISA: I CANNOT THINK OF ANOTHER INDUSTRY WHERE THE DIFFERENCE IN A COUPLE WALKS OR HITS COULD MAKE THE DIFFERENCE IN GETTING $10 MILLION AND $700 MILLION. DAMIAN: HE CANNOT EVEN PITCH NEXT YEAR BECAUSE HE NEEDS SURGERY. YOU ARE PAYING $70 MILLION NEXT YEAR FOR A DESIGNATED HITTER. HE MAY NOT EVEN BE ABLE TO PLAY THE OUTFIELD. IT IS AN UNBELIEVABLE NUMBER. HOW CAN YOU RECONCILE PAYING FOR A GUY WHO'S A PITCHER/HITTER BUT IS ONLY GOING TO BE A HTITER. TOM: HE IS ONLY GETTING PAID $72,000 PER DAY -- LISA: ARE YOU THINKING OF A CAREER CHANGE? TOM: I CAN'T GET THE INSIDE OF THE PLATE ON AN 0-2 PITCH. DAMIAN: HE DESERVES A LOT OF CREDIT HERE HE DESERVES TO BE THE HIGHEST PAID PLAYER, BUT THE NUMBER IS STUPENDOUS. TOM: THIS WILL ADJUST EVERYTHING WE HAVE GOT. DAMIAN: BASEBALL, BASKETBALL, NBA -- IT HAS GOT TO. TOM: DID JUAN SOTO SIGN TOO EARLY? DAMIAN: HE WILL BE A FREE AGENT NEXT YEAR. TOM: OTHER RED SOX -- DAMIAN: YOU KNOW BETTER THAN I. TOM: I CALLED UP JULIE, AND SAID, CAN WE PRETEND WE ARE BIDDING FOR SOME OF THESE PEOPLE? DAMIAN: THEY WILL SURPRISE YOU. TOM: ALWAYS GOOD TO TALK WITH DAMIAN SASSOWER. LISA: WHAT IS THE BUSINESS SENSE BEHIND THAT, THOUGH? TOM: THAT IS MY QUESTION. HOW DO YOU PAY FOR $700 MILLION? LISA: SOUNDS NICE FOR HIM. TOM: SOMEONE WILL HAVE TO WRITE A CHECK K MAY BE THE SAME PEOPLE DOING ACCOUNTING FOR DISNEY AND DISCOVERY. WE ARE STRUGGLING WITH A DATA CHECK THIS MORNING. RED AND GREEN ON THE SCREEN. I GUESS I CAN GO THERE. THE REAL YIELD, THAT IS ALL TOM: GOOD MORNING. BLOOMBERG SURVEILLANCE ON A MONDAY MORNING FOR THE FRENZY OF THE WEEK. YOU ARE GOING TO GET TO THE FRENZY IN A WEEK IN A MOMENT. JON FERRO ON ASSIGNMENT. IS HE STARTING HIS SHOPPING? LISA: HE HAS HIS DAY OFF. IT IS WELL DESERVED. JONATHAN: I WOULDN'T GO THAT FAR. WE ARE STARTING HERE ON A QUIET MONDAY. THE TAPE IS HALF-ASLEEP. NOT HALF-ASLEEP, I THINK IT IS FASCINATING. THE READING THIS WEEKEND WAS EXTRAORDINARY. A BOMBSHELL SUNDAY EVENING, SAYING, HAVE COURAGE TO LOOK OUT TO 2025, UP, UP AND AWAY. HE CALLED IT THE ROARING 2000 20'S. LISA: EVERYONE IS LOOKING FOR REASONS TO BE BULLISH. JP MORGAN STANDS OUT, 4200. YOU CAN GATHER WHATEVER YOU WANT WITH A SLOWDOWN. BUY STOCKS SEEMS TO BE THE MESSAGE FROM EVERYONE. WE WILL BE LOOKING AT A MASSIVE ONE TODAY, $50 BILLION IN A THREE YEAR AND -- 10 YEAR TREASURY AUCTIONS. TOMORROW, $21 BILLION IN 30 YEAR BONDS AND NOVEMBER CPI ON WEDNESDAY WHICH IS THE FED DECISION FOLLOWED BY THE ECB AND BANK OF ENGLAND DECISIONS THURSDAY PLUS RETAIL SALES DUE OUT ON THURSDAY. YOU THINK THAT IS GOING TO BE THE MOST IMPORTANT. TOM: RETAIL SALES 70% OF THE ECONOMY. IT IS A HUGE DEAL. WE GET A BRIEF HERE, MICHAEL MCKEE HOLDING A COMMITTEE TODAY, A PANEL IN PHILADELPHIA ON WHY THE PHILADELPHIA PHILLIES DID NOT GET OTANI. HE JOINS US NOW. IN PHILADELPHIA, YOU ARE TALKING SERIOUSLY, RETAIL SALES. HOW RETAIL IS AMERICA? MICHAEL: RETAIL IS 70% BASICALLY OF THE WAS ECONOMY. IT IS VERY IMPORTANT. WILL PEOPLE KEEP SPENDING THROUGH THE HOLIDAY SEASON? CONSUMER SPENDING PROPPED UP THE THIRD QUARTER. WE SAW THE NUMBERS THAT WE GOT THERE. IT SEEMS TO BE DOWN A BIT IN THIS QUARTER, BUT QUESTION IS, IS IT A QUESTION OF TIMING? ARE PEOPLE GOING TO COME BACK AND SPEND AS WE GET CLOSER TO THE HOLIDAYS? TOM: WHAT IS THE RUN RATE RIGHT NOW OF GDP? WITH THIS ECONOMIC DATA, DO THOSE DIFFERENT GUESSTIMATES, CAN THEY COME UP HERE AS WE GET TO FRIDAY OF THIS WEEK? MICHAEL: WE ARE AT ONE .2% ACCORDING TO THE ATLANTA FED. THAT CAN COME UP IF PEOPLE ARE LOOKING TO CONSUMERS AND/OR BUSINESSES TO SPEND. WE WILL SEE WHAT HAPPENS WITH HOUSING. IT IS CONTRIBUTING A BIT TO THE ECONOMY. IT DID IN THE THIRD QUARTER. RIGHT NOW, IT LOOKS LIKE THE SLOW DOWN BUT NOT ANYTHING THE FED IS GOING TO BE WORRIED ABOUT. LISA: WE HAVE BEEN DEBATING THIS ALL DAY, WHICH IS THE MOST IMPORTANT EVENT OF THE WEEK FOR YOU? OPTIONS, CPI, RETAIL SALES OR THE FED? MICHAEL: IT IS GOING TO BE TWO THINGS. FOR THE BOND MARKET TOMORROW, IT IS A BIG DAY BECAUSE THEY WILL TRY TO REPRICE WHAT THEY THINK THE FED WILL DO IN 2024 BASED ON WHAT THE CPI DOES. IT IS NOT EXPECTED TO DO A LOT, TICK DOWN A BIT ON A HEADLINE BASIS. YOU'VE GOT THE 30 YEAR OPTION. BACK IN NOVEMBER, THE 30 YEAR TAILED BY FIVE BASIS POINTS, A BAD RESULT. DEALERS HAD TO TAKE DOWN DOUBLE WHAT THEY NORMALLY DO. THEY WILL -- THERE WILL BE SOME QUESTIONS ABOUT THE U.S. SUPPLY AT THE BOND MARKET IS GOING TO HAVE TO DEAL WITH. WEDNESDAY, THE FED, IT IS GOING TO BE THE DOT PLOT. FOLLOWING THAT, THE SUMMARY OF ECONOMIC PROJECTIONS. PEOPLE DO NOT CARE SO MUCH ABOUT WHAT THE FED DOES ON WEDNESDAY AS THEY WANT TO KNOW, HOW ANY CUTS IN 2024 AND HOW SOON? LISA: HAVE WE SEEN A TONE SHIFT FROM THE FED THEY ARE NOT AS CONCERNED ABOUT MORE ACCOMMODATIVE CONDITIONS IN MARKETS? MICHAEL: THEY SEEM TO BE. THE INTERESTING THING IS WHEN YOU LOOK AT WHAT IT COSTS TO BORROW MONEY, SAVE THE RETAIL LEVEL, THE PRIME RATE HAS NOT CHANGE. AUTO LOAN PRICES HAVE NOT CHANGED. CREDIT CARD RATES HAVE NOT CHANGED. THERE IS A LOT OF RESTRAINT ON THE ECONOMY. REAL RATES ARE STILL POSITIVE. THEY MAY NOT THINK THIS IS SOMETHING THEY ARE GOING TO HAVE TO WORRY ABOUT UNLESS WE SEE A SIGNIFICANT CHANGE LOWER IN THE MARKETS. TOM: MICHAEL MCKEE, THANK YOU SO MUCH, IN PHILADELPHIA FOR AN IMPORTANT CONFERENCE OF THE PHILADELPHIA PHILLIES -- PHILADELPHIA FED. HE WILL BE WITH US THROUGH THE WEEK. THIS IS A JOY, PARTICULARLY -- CARL RICCADONNA OF THE AEROSPACE ENGINEERING PERSUASION KNOWS THE GLIDE PATHS THAT ARE OUT THERE. THE GLIDE PATHS IN ECONOMICS ARE USUALLY DESCRIBED THROUGH AD VERBS. IN A PARAGRAPH IN HIS RECENT REPORT, HE NAILS THIS. YOU MAIL THIS STRANGE WORD, SUFFICIENTLY. WE ARE SUFFICIENT. WE ARE GETTING THERE. DISINFLATION IS NOW SUFFICIENTLY IN TREND. DESCRIBE THE SUFFICIENTLY THAT JEROME POWELL HAS TO CONFRONT WEDNESDAY. >> SURE. THERE IS A TENSION THERE, BUT ON THE SUFFICIENTLY SIDE, WE ARE SEEING EVIDENCE OF SUFFICIENTLY RESTRICTIVE MONETARY POLICY AND THAT WE ARE NOT JUST SEEING DISINFLATION OR DEFLATION, IMPORTANT DISTINCTION YOU DREW EARLIER. NOT JUST IN ENERGY PRICES, WE HAVE SEEN THAT SPREAD INTO GOODS PRICES, WHICH DOES SIGNAL SUPPLY CHAIN HEALING. WE ARE SEEING IT WHERE IT COUNTS. THAT MEANS WE ARE SEEING IT ON THE SERVICE SIDE OF THE CPI, BOTH IN RENTS AND FINALLY IN THE LAST COUPLE OF MONTHS, WE ARE SEEING THIS IN WHAT IS BEING CALLED SUPER CORE INFLATION, CORE SERVICES X HOUSING AND SHELTER COSTS. TOM: WE YEARN TO GET OUT FRONT, BOLOGNA, THERE IS NO EVIDENCE OF THAT SINCE THE GOOGLE HISTORY. THEY ARE EX POST. HOW FAR BEHIND ARE THEY GOING TO BE WHEN THEY GET THE SUFFICIENT COURAGE UP TO ACCOMMODATE? MICHAEL: I DO NOT -- CARL: I DO NOT THINK THEY HAVE THE COURAGE YET. THE FACTOR IN THE BACK OF THEIR MINDS IS HAUNTING THEM, THE MISTAKES MADE IN THE 1970'S UNDER ARTHUR BURNS. THAT WAS A FED THAT KNEW WHAT PRESCRIPTION WAS NEEDED, BUT LACKED THE CONVICTION TO KEEP THE BITTER MEDICINE IN PLACE FOR LONG ENOUGH. AS THE FED IS DETERMINING WHETHER POLICY HAS BEEN RESTRICTIVE FOR LONG ENOUGH, I THINK THEY THINK THAT IT IS SUFFICIENTLY RESTRICTIVE. IT IS A MATTER OF KEEPING THAT POLICY IN PLACE FOR EXCEPTIONALLY LONG TIME. WE USE THOSE ADVERTS YOU -- ADVERBS YOU HIGHLIGHTED. WAGE INFLATION IS NOT BACK TOWARDS WHAT WOULD BE A 2% CONSISTENT LEVEL FOR BROADER INFLATION. WHETHER WE LOOK AT THE ECI OR LAST FRIDAY'S AVERAGE HOURLY EARNINGS NUMBERS, WE ARE SIMPLY NOT MOVING IN THE RIGHT DIRECTION SWIFTLY ENOUGH TO SAY, SURE THING, LET'S START ACCOMMODATING POLICY SOONER. LISA: WHY DIDN'T JAY POWELL PUSH BACK MORE THAN? CARL: I THINK HE HAS PUSHED BACK IN RECENT COMMENTS. HE SAID IT WAS PREMATURE TO BE THINKING ABOUT THE TIMING OF RATE CUTS WITH ANY AMOUNT OF CONVICTION. IT WAS A DIPLOMATIC ANSWER. I THINK WE WILL SEE THOSE HAWKISH UNDERTONES IN BOTH THE COMMUNIQUÉ AND THE PRESS CONFERENCE LATER THIS WEEK. YOU HAVE TO THINK IN THE BACK OF YOUR MIND, JEROME POWELL HAS BEEN SOMEONE VERY FOCUSED ON FINANCIAL CONDITIONS. FINANCIAL CONDITIONS HAVE EASED TREMENDOUSLY. THAT RESTRICTS THE AMOUNT OR DEGREE TO WHICH THE FED CAN PIVOT TOWARDS A MORE MODERATE TONE. THEY HAVE TO KEEP SOME VESTIGE OF THIS TIGHTENING BIAS OR HAWKISH CONCERNED ABOUT INFLATION IN PLACE THIS WEEK. LISA: LET'S GET AWAY FROM PRICKING WHAT THEY MAY OR MAY NOT SAY AND DO AND TALK ABOUT THE ACTUAL, ECONOMIC BACKDROP. THERE IS A QUESTION ABOUT WHETHER OR NOT THEY WILL BE LATE AND WHETHER THIS IS GOING TO ESSENTIALLY CAUSE A RECESSION, WHETHER THE BIAS NOW TO NOT KNOW TO THE TRANSITORY DEBACLE MEANS WE ARE GOING TO GET A RECESSION JUST BY VIRTUE OF THEM NOT CUTTING RATES IN RESPONSE TO DISINFLATION AND TO WEAKNESS. IS THAT YOUR BASE CASE AT THIS POINT BECAUSE WE ARE SEEING A TIGHTENING IN FINANCIAL CONDITIONS? WE ARE SEEING PEOPLE START TO PUSH BACK A BIT. THE. IS AT THIS POINT YOU CAN START TO SEE HIGHER RATES FIGHT IN A MORE MEANINGFUL WAY. CARL: WE DEFINITELY ARE SEEING HIGHER INTEREST RATES BITE IN A MORE MEANINGFUL WAY. I THINK WE WILL SEE THAT IN THE RETAIL SALES NUMBER IS ON THURSDAY. WE ARE LOOKING FOR A .5 DECLINE IN THE HEADLIGHT IN RETAIL SALES. PART OF THAT IS LOWER ENERGY PRICES. IF YOU PAY ATTENTION TO WHAT IS HAPPENING TO CONSUMERS, THE EXCESS SAVINGS STORY HAS LARGELY WASHED OUT FOR LOWER AND MIDDLE INCOME HOUSEHOLDS. AT THE SAME TIME, HIGHER RATES, WE MAY HAVE COME OFF THE PEAKS OF 10 YEAR YIELDS BUT IF YOU LOOK AT WHAT HOUSEHOLDS ARE DIVERGING TOWARDS INTEREST PAYMENTS. YES, MOST HOUSEHOLDS LOCKED-IN LOW MORTGAGE RATES DURING THE PANDEMIC. IF YOU LOOK AT CAR LOANS OR HE LOCKS OR CREDIT CARDS OR WHATNOT, THE INTEREST COVERAGE FOR THOSE IS INCREASING PRETTY APPRECIABLY. THAT TELLS YOU FED POLICY IS STILL WORKING ITS WAY THROUGH THE SYSTEM AND WE HAVE NOT FELT PEAK RESTRICTION. IN TERMS OF GETTING THE PIVOT RIGHT, MONETARY POLICY ACTS WITH A LONG AND VARIABLE LAG. THAT LAG IS PROBABLY 12 MONTHS. THAT MEANS IT IS GOING TO BE HARD TO SIGNAL LANDING. TOM: SOUNDS LIKE HE IS FROM CHICAGO. CARL: MAYBE NOT RECESSION NEXT YEAR, BUT I THINK THE LANDING COULD BE BUMPIER THAN PEOPLE ARE ANTICIPATING. TOM: BUMPIER FROM A GDP BASIS OR RACE/ WHAT IS IN THE ZEITGEIST THIS WEEKEND, COME DOWN, DISINFLATION, LOOPS. REVERSE AND WE HAVE A REFLATION? CARL: THAT IS THE SCENARIO THEY WANT TO AVOID AND THE EVIDENCE WOULD BE STICKING WAGE PRESSURES THAT HAVE NOT IMPROVED. TOM: IT IS ALL ABOUT THE JOB MARKET. CARL: IT IS BUT ALSO INFLATION NUMBERS AND WE HAVE GOTTEN USE TO THIS VERY IMMACULATE DISINFLATION OVER THE COURSE OF Q3. TOM: DO WE HAVE AN IMMACULATE JOB MARKET? CARL: I THINK THE INFLATION IS GOING TO LOOK A LOT LESS IMMACULATE IN Q1. Q1 COULD LOOK A BIT LIKE THE MIRROR IMAGE OF Q3 OF LAST YEAR IN THAT WE SEE SLOWER GROWTH AND MORE PERSISTENT INFLATION PRESSURES. I AM NOT SAYING THE TREND IS REVERSING. IT IS MOVING BROADLY LOWER. I THINK OVER THE LAST FEW MONTHS, IT LOOKED MORE LIKE 2%ISH INFLATION AND IT WILL LOOK MORE 3%ISH THE NEXT FEW MONTHS. LISA: A SLOWDOWN IS THE PERFECT SCENARIO A LOT OF PEOPLE ARE LOOKING FOR WHO ARE BULLISH ON RISK ASSETS. IS THAT WHAT YOU ARE POINTING TO? A PAUSE TO ALLOW THINGS TO COOL AND EVERYBODY CAN GET GOING AGAIN, WHICH IS ESSENTIALLY THE BULL CASE WE KEEP HEARING FROM OTHERS? CARL: WE NEED SLOWER GROWTH TO CONTINUE TO REIN IN IMBALANCES IN THE ECONOMY AND TURN THE WAGE PRESSURE STORY. FOR THAT TO PLAY OUT PERFECTLY IN THE FIRST HALF OF THE YEAR, AS A POSSIBLE SCENARIO, BUT NOT NECESSARILY THE MOST PLAUSIBLE SCENARIO. I THINK THERE WILL BE SOME TOUGH SLEDDING, SOME BUMPING IS THERE. LISA: WHAT DOES THAT MEAN? CARL: THE FED MAKES IT CLEAR WE ARE NOT FREE AND CLEAR YET TO START REDUCING INTEREST RATES AS SWIFTLY AS MARKET PARTICIPANTS THINK. I THINK WE WILL SEE SOME IMBALANCES IN THE LABOR MARKETS, SOME CHALLENGES ON THE GROWTH FRONT. AS YOU THINK ABOUT THE OVERALL EARNINGS TRAJECTORY, IT IS ULTIMATELY A FUNCTION OF TOPLINE GROWTH AND PRICING POWER. IF YOU ARE TALKING ABOUT A MODERATING PACE OF ECONOMIC ACTIVITY AND COOLING INFLATION PRESSURES, THAT IS STILL A CHALLENGING DYNAMIC FOR EARNINGS. TOM: THIS WAS A SUFFICIENTLY GOOD INTERVIEW. THANK YOU SO MUCH. I HAVE ALWAYS GONE NUTS ABOUT THE SUFFICIENTLY THING IN ECONOMICS. I THINK IT IS ADVERBS SOUP. TRYING TO GET AROUND CLARITY, CLARITY IS TEACHERS NEGATIVE FOR. I GUESS WE WAIT FOR CPI. LISA: CPI IS A BIG DEAL. SO IS THE FED AND SO ARE THE OPTIONS -- AUCTIONS. I AM WATCHING THOSE. TOM: DO WE KNOW IF ANYTHING HAS GONE DOWN ON PRICE? THE ANSWER IS NO. FEATURES ARE NEGATIVE FOR, DOW FUTURES DOWN .1%. LISA: I THINK THAT IS THE S&P FUTURES. TOM: EXCUSE ME. LISA: 47,000, I CANNOT GET THERE. TOM: THE CALL IS MIND BLOWING. LISA: WHAT IS MIND BLOWING TO ME IS TO BE ABLE TO EXTRAPOLATE OUT TO TWO YEARS, THREE YEARS, AT A TIME WHERE THERE HAVE BEEN DIFFERENT ECONOMIES MOVING AT PACES. JUST TO UNDERSTAND SUFFICIENTLY RESTRICTIVE IS THIS VAGUE TERM ON PURPOSE BECAUSE WE DO NOT KNOW WHAT THE NEUTRAL RATE IS. WE DO NOT KNOW WHERE THIS ECONOMY IS RUNNING. WE ARE GOING TO CONTINUE THAT CONVERSATION. IN ADDITION TO THE AUCTIONS, THIS IS ONE OF THE BIG QUESTION MARKS UNDERPINNING THE BOND MARKET. COMING UP, ROBERT OF DASH AND MIKE WILSON OF MORGAN STANLEY WHO MAINTAINS HIS TEPID FEELING TOWARDS STOCKS DESPITE THE BULLISHNESS. TOM: IT IS AN ECLECTIC BRIEF BEFORE CPI TOMORROW. IT IS GOING TO BE REALLY, REALLY INTERESTING. I JUST GO BACK TO THE OVER ANALYSIS OF INFLATION DYNAMICS OFF THE PANDEMIC. THE REAL QUESTION IS, HOW FAR BEYOND THE PANDEMIC ARE WE? ARE WE BACK TO NORMAL? I AM STILL NOT THERE, ANECDOTALLY. A PART OF THE COUNTRY IS BENEFITING FROM THE STIMULUS, HALF THE ECONOMY IS FLAT ON ITS BACK. LISA: I WOULD ARGUE ONE WAY TO SEE WHAT YOU ARE SAYING IS JUST NOW IN 2024, THERE ARE MORE MEMOS COMING OUT FROM CEO’'S SAYING YOU ARE COMING IN THREE DAYS A WEEK ON AN OUTCOME IN FOUR DAYS A WEEK. IF YOU STAY HOME ALL THE TIME, IT IS NOT GOING TO WORK FOR US. THINGS ARE REVERTING BACK. TOM: THE MODERN ECONOMY, 10 YEAR YIELD, 4.27%, UP FIVE BASIS POINTS. REAL YIELD 2.04%. THAT IS A STOCK FROM A YEAR AGO, TO SAY THE LEAST. >> THE LOW TO MIDDLE INCOME CONSUMER IS BATTERED RIGHT NOW BY HIGHER INTEREST RATES, EVEN THOUGH INFLATION IS MODERATING. IT IS STILL A HIGHER PRICE THAN IN THE PAST. TAKE A LOOK AT THE LUXURY CONSUMER. YOU NEED THE FEEL-GOOD FACTOR. WITH THE GEOPOLITICAL ISSUES, THE MACRO HEADWINDS AND THE VOLATILITY OF THE STOCK MARKET THAT MAKES IT MORE CHALLENGING. GIVE THEM SOMETHING INNOVATIVE. THEY WILL BE THERE. TOM: DAVID KELSEY, EXPERT IN AMERICAN LUXURY WITH KELSEY ADVISORY GROUP. WHILE NUANCED FAIR ON SOME OF THE HUGE CHALLENGES OF DIFFERENT PARTS OF LUXURY, SOME OF IT IS A GENERAL -- A GENERALIZATION FLAT ON ITS BACK. A BUSY WEEK OF ECONOMICS. FEATURES AT -4%. WE HAVE A VERY INTERESTING CANONIC'S TOMORROW, THE CPI REPORT AND THE 30. THE FED DECIDES ON WEDNESDAY AND FINISH ON THURSDAY WITH RETAIL SALES REALLY INTO THE HOLIDAY WEEK. A NUMBER OF DAYS AGO, TARA PATEL AND ANGELINA OUT OF PARIS DID AN ABSOLUTE TOUR DE FORCE ON LUXURY. THIS STRANGE, STRANGE, ASPIRATIONAL BUSINESS OF WHAT WE DO SPEND, WHAT WE DESIRE TO SPEND, FOR SOME DAY MAYBE SORT OF LIKE, I AM GOING TO SPEND THAT ON THESE EXPENSIVE LUXURY GOODS. WE ARE SO ADVANTAGE AT BLOOMBERG TO HAVE DEBORAH AIKEN WITH US, SENIOR LUXURY GOODS BEAUTY AND HOMECARE ANALYST AT BLOOMBERG INTELLIGENCE. WE ARE THRILLED SHE COULD JOIN US AGAIN THIS MORNING. TO BEGIN, PARTITION, HOUSE SMALL SUPER LUXURY IS AMONG RETAIL SALES. TWO ME, IT IS PAPERTHIN, BUT IS IT BIGGER THAN I THINK? >> THE LUXURY MARKET, WE ARE LOOKING AT $300 BILLION. WHEN WE LOOK AT THE SUPER HIGH-END, WE ARE LOOKING AT 10% TO 50% WITHIN TWO YEARS. TOM: IF IT IS 10% TO 15%, MY GUESS IS OTHERS ASPIRE TO CATCH UP. ARE THEY LIKE THE BIG BANKS WHERE THEY ARE LONELY AT THE TOP OR ARE THERE PEOPLE THAT CAN MERGE TO JOIN THE SUPER LUXURY? DEBORAH: THE THING WITH LUXURY GOODS IS THE PRODUCTS AT THE TOP ARE GENERALLY BRANDS THAT ARE OWNED WITHIN A PORTFOLIO WHERE THERE ARE ENTRY-LEVEL BRANDS, MID-LEVEL BRANDS AND HIGH-END LEVEL RANDS OWNED BY THE SAME OWNER, BASICALLY. IT IS A TRANSITION. WHAT WE HAVE SEEN OVER THE LAST DECADE ARE LUXURY BRANDS CONTINUALLY MOVE INTO BUILDER EQUITY. TOM: I LOOK AT WHAT LVMH IS DOING. WHAT IS PERCEIVED BY THE BLOOMBERG SURVEILLANCE AUDIENCE, THESE ARE VERY, VERY EXPENSIVE STOCKS. THEY ARE TRADING AT 25, 30, SOME OF THEM 40 OR MORE TIMES EARNINGS. HOW DO YOU JUSTIFY THAT AS A SHAREHOLDER TODAY? DEBORAH: WE HAVE CERTAINLY SEEN A TRADE DOWN IN THE LAST YEAR. YOU CAN PICK UP SOME OF THESE BIG STOCKS JUST OVER 20 TIMES. HOW YOU JUSTIFY THAT IN A WAY WHERE WE LOOK VERSUS HISTORY, IF I THINK ABOUT FROM CLOSURE THROUGH 2021, WE SAW FULL RECOVERY OF THESE LUXURY GOODS IN 2021. THEN DELIVERING AN 11% GROWTH IN 2022, 8% GROWTH IN 2023, AND THAT IS FROM A STRONG FIRST HALF AND A DOWN TURN IN THE SECOND HALF. THAT IS PULLED FROM ENTRY-LEVEL BRANDS MORE THAN THE HIGH-END. WHAT THEY DO ON THE TOP LINE, THEY TEND TO DO ON THE BOTTOM LINE BECAUSE THEY ARE GOOD AT MANAGING MARGIN AND PASS-THROUGH PRICE. TOM: WHERE ARE THEY ON INVENTORY NOW? THE ARTICLES IN THE NEW YORK PRESS ARE EITHER THEY ARE UP TO THEIR EYEBALLS IN LUXURY INVENTORY. DO THEY HAVE LARGE INVENTORY AND THEY CLEARANCE PRICE REDUCTIONS? DEBORAH: FOR THE VERY HIGH-END, LOOKING AT CONSENSUS THROUGH THE NEXT COUPLE OF YEARS, THERE ARE OVER 276 DAYS AND THAT DOES NOT GO DOWN MUCH AND EVEN WITH DIGITAL NOW BEING 15% TO 20%, THAT NEEDS TO COME DOWN BY 7% TO 10%. THE BEST IN CLASS HAVE BEEN IN THIS PREDICAMENT FOR AND HAVE MANAGED THROUGH ON A COUPLE OF. OCCASIONS DIGITAL HELPS THAT, TALKING TO CONSUMERS, AI, SPECIALIST DATA, THAT HELPS THE SECTOR. TOM: DO THEY WANT TO BE IN THE STORES? IN NEW YORK TODAY, TO ENTITIES TO TAKE OUT MACY'S FOR A SHOCKINGLY SMALL NUMBER AT $6 BILLION. I'M GOING TO ASSUME SUPER FANCY LUXURY DOES NOT WANT TO BE IN MACY'S, BUT MACY'S OWNS BLOOMINGDALE'S. DO THESE NAMES THAT WE KNOW, GUCCI, CHANEL, DO THEY WANT TO BE IN BLOOMINGDALE'S? DEBORAH: THEY ALL HAVE A POSITION. THE PROBLEM IS BEING DEPARTMENT STORES. THEY ARE WORKING ON A LOWER MARGIN AND NOT AS REINFORCED WHEN IT COMES TO THE INVIGORATION AND STYLE WITHIN THE STORES. WE HAVE ENDED UP WITH TOO MANY SHOPPING SHOPS. YES, THERE IS A PLACE FOR MOST OF THE LUXURY WITHIN THOSE STORES, EXCLUDING A FEW NAMES WHICH WILL BE ULTRAHIGH INCLUSIVE, EXCLUSIVE TO BE THERE. TOM: I KNOW YOU DO NOT DO BUY AND SELL ON BLOOMBERG INTELLIGENCE, BUT MACY'S UP 15% THIS MORNING. WHAT I THINK IS FASCINATING IS WHAT IS THE OPPORTUNITY FORWARD. YOU DO NOT DO BUY, HOLD, SELL, BUT IF YOU ARE LOOKING AT LUXURY AS THE MOTHER OF ALL OPPORTUNITIES WITH THIS POST COVID PULLBACK. DEBORAH: CERTAINLY. WE HAD A DIFFICULT YEAR IN 2024, WE ARE LOOKING AT NORMALIZED GROWTH 5% TO 6%. YOU DRAG THAT DOWN TO MAY BE MORE DEPENDENT ON HOW STRONGLY CHINA COMES BACK IN THE SECOND HALF OF THE YEAR. WHAT YOU HAVE IN 2025 AND 2026 ARE A RETURN TO HIGHER GROWTH RATES AND THAT HAS SO MUCH SHOULD DO BECAUSE WHEN WE LOOK AT THESE, SO CASH GENERATIVE, THEY HAVE BEEN INVESTED THESE LAST 18 MONTHS AND WILL CONTINUE TO DO SO IN THE YEAR AHEAD. THAT PULLS THIS SECTOR WAY ABOVE MANY OTHERS WHEN IT COMES TO TOPLINE GROWTH TO PUSH THE BOTTOM LINE. TOM: A WONDERFUL ARTICLE, ARE THESE COMPANIES SO PRIVATE, SO FAMILY RUN THERE IS NO REAL DISCUSSION ABOUT DEPLOYING THAT CASH BACK TO SHAREHOLDERS? DEBORAH: THE FIRST THING THEY ARE DOING BECAUSE THEY SEE THEMSELVES AS NOT YET FULLY GLOBAL, SO THE INVESTMENT IS WITHIN NEW STORES. MANY OF THESE SECTORS OF THESE COMPANIES WITHIN THE SECTOR ARE PUSHING NEW STORE PROGRESS AND NEW COLLABORATION, NEW DESIGN, FINDING WAYS WITH E-COMMERCE AND OTHERS. THERE IS A 2% DIVIDEND YIELD ON THIS SECTOR AND NOT MANY COMPANIES ARE PUSHING SHARE BUYBACK. WITH ERROR MAS, IN ORDER TO DRIVE 10%, 12% GROWTH PER YEAR IF WE LOOK AT THE LAST FIVE YEARS, THEY HAVE HAD TO INCREASE THEIR FACTORY OUT OF FRANCE, FACTORY AND MANUFACTURING FACILITIES TO TWO FACILITIES A YEAR. IT IS A RETURN ON INVESTMENT, WHICH IS PAYING OFF FOR HERMES. TOM: WHERE DO THEY GET THE LABOR? ONE OF THE GREAT THINGS FOR OUR AUDIENCES ON RADIO AND TELEVISION IS, HOW DO THEY MAKE ALL OF THIS STUFF? WHERE DOES THE LABOR COME FROM FOR THE LUXURY THAT IS OUT THERE THAT IS SUCH A PREMIUM PRICE AND A PREMIUM EQUITY VALUATION? DEBORAH: IF WE USE HERMES AS AN EXAMPLE AND A COUPLE RANDS WITHIN WATCHES, IT IS ABOUT TRAINING ARTISANS WHICH CAN TAKE OVER A DECADE. IT IS BUILT INTO THE HIGHEST QUALITY PRODUCT REALLY AS -- YOU ARE FOCUSING YOUR LIFETIME INTO THESE BRANDS. IF YOU THINK ABOUT HERMES, THEY COULD HAVE GROWN 30% IF THEY SO WISHED TO. IT IS ABOUT RESTRICTING THIS -- RESTRICTING SUPPLY TO EVOLVE AND NURTURE AND MANAGE THE BRAND EQUITY AND THE INNOVATION OF THE BRAND FOR THE LONG-TERM. TOM: THIS HAS BEEN A FABULOUS BRIEF. THANK YOU SO MUCH, DRIVING ALL OF OUR RETAIL EFFORT AT BLOOMBERG INTELLIGENCE. TRULY EXPERT ON THIS. I CAN'T SAY ENOUGH AGAIN ABOUT THE ARTICLE TWO DAYS AGO, I BELIEVE I PUT IT OUT ON TWITTER. ABSOLUTELY EXTRAORDINARY ON ONE SNAPSHOT OF THE LUXURY BUSINESS AND HOW THESE FAMILIES WORK WITH IT TO KEEP US IN SHIFTS DURING THE HOLIDAY SEASON. JUST EXTRAORDINARY. YOU HAVE SEEN A PULLBACK IN SOME OF THESE PRICES, AS DEBORAH AIKEN MENTIONS. I WANT TO DRAW YOUR ATTENTION AS WE FINISH OUT THE HOUR TO ARGUABLY THE CONVERSATION OF THE DAY. WE MADE A BIG SPLASH THIS MORNING. EURO DENNY LOOKING UP 24 MONTHS, STARING AT 47,000. MR. STOWELL FOR'S REAFFIRMING HIGHER LEVEL, 5200 NOW THE END OF 2024. WHAT ABOUT THOSE WHO ARE MORE CAUTIOUS? LISA ABRAMOWICZ AND FOR JON FERRO, WILL HAVE WITHOUT QUESTION YOUR EQUITY CONVERSATION OF THE DAY. MICHAEL WILSON OF MORGAN STANLEY, THEIR CHIEF U.S. EQUITY STRATEGIST, RECALIBRATING A CAUTION ON A MARKET THAT JUST WILL NOT PULLBACK. IT WILL BE INTERESTING TO SEE HOW THAT MARKET DOES INTO A LOADED ECONOMIC WEEK. PLEASE STAY WITH US ON BLOOMBERG RADIO AND BLOOMBERG TELEVISION.

Channel: Bloomberg Television

Views: 28,178

Keywords: Jon Ferro, Lisa Abramowicz, Tom Keene

Id: iUhgrrzvX-4

Length: 147min 48sec (8868 seconds)

Published: Mon Dec 11 2023