Surveillance: Hawkish Fed Sparks Recession Fears

and of course on the Bloomberg terminal. Right now, I am so pleased to say we can head over to the New York Fed Bloombergs Kathleen Hayes there with one of the leadership members of the Federal Reserve of New York FED, President John Williams, to answer some of those questions. Kathleen, Lisa, thank you, President Williams, thank you for joining us this morning on Blombrig Television. So happy to have you here.

We are in the New York Fed Museum in a year when the Fed has been making a lot of history. So let's start with the meeting this week and what came out of it. Because we got the you know, the move up in the to the restrictive rate that was even more restrictive than people thought, and inflation has stayed high. It's hard to get down, probably harder than you thought it would just a few months ago with these dots, with this position, Now, do you think you

finally caught up to where you need to be? Well, I think we're well on our way there. And I think when you look at the kind of the central tendency of the dots, Uh, my colleagues expect the Fed funds rate to get to say five to five and a half percent next year. I think that's a that gets us into that hopefully sufficiently restrictive stance of policy that we'll bring inflation back to two percent. So I am getting increasingly confident that we're getting closer to that point.

But obviously we have to watch the data. The inflation and other data have surprised this and we need to be on the lookout for that. But I do feel we're getting to a better place now. Just about two weeks ago, you said that the dead funds rate has to get above the inflation rate to bring down inflation. How far above inflation does it have to get? Well, that that's the question, right, And why we talk about this is in terms of sufficiently restrictive to bring inflation

back to two percent. So to me, it's really about getting in high enough and of course keeping it high for a while, for enough time to really see clear science inflation is moving back down on on the way to two percent. You know. My view is you have

to think about real interest rates. As you said, if you look at again the median dots, if you will, in the in the economic projections we just put out, you see the real Fed funds right, say, the Fed funds right minus the core pc inflation around one and a half percent. I think that's a reasonable view restrictive. Again, whether it's sufficiently restrictive, we'll have to watch the data

and see. But I think that's to me basically where where I'm thinking right now, there's many top economist, former Fed officials even who are saying, you're look, it's looking more and more like you are going to have to go higher even than where you are now, maybe something like six maybe something heading towards seven percent. Uh, can you see the happening and what what circumstances, what would be happening for that? Do you have to go ahead

like that? Well, that's definitely not my baseline, is I just indicated. I don't think we'll need to get real interest rates that high, But of course things could happen differently than than we expect and would have to especially around inflation, but also how how strong is the economy

even with higher interest rates? Does he do we still have these imbalances between supply and demand right now, I mean PC inflation is six percent or less twelve months, and we have clear science and demand exceeds supply in our economy and our labor markets. So to me, the question of how high we have to get to is really get to pend on what we see in inflation and the supply demand in balance, and in my base cases,

we don't have to get that high. I think we have some favorable developments underway, things that we've been talking about for a long time. Supply chains definitely are getting better around the world. We're seeing that in a lot of different data. And we're also seeing, you know, some of the goods prices and import prices come down, a reversal of some of those of pandemic era thing that pushed up inflation. So we've got a few factors. I think you're gonna bring inflation down to three to three

and a half percent next year, um. But then the real issue is how do we get it all the way too, of course is but right there though, is the message from Wednesday that and and this ties in with you maybe if you we might have to go higher. Is the message that if it's not coming down as we expect, then we are clearly open to going higher.

Taking the next step, well, we're gonna have to do what's necessary against sufficiently restrictive to bring inflation down to two percent, and it could be higher than what we've written down. And we have had to increase our interest rate projections as the data come in. The inflation has been stubbornly highest, you know, many people have said, and we've seen the economy remain very resilient to higher interest rates. Remember,

the unemployment rate is three point seven. Some signs are slowing demand for labor, but still a very very strong uh imbalance between supply and demand right now. You know, there were two surprisingly good CPI reports going in to this meeting, and so a lot of people thought, well, that good news for the Fed. You know, maybe they're not going to be quite as aggressive. Um. But at the same time, what happened inflation forecast boom goes up.

How did this happen? What's guiding your view on inflation. Again, two good surprises on CPI and yet the the PC core core and PC overall still can expected a rise right and again relative to say or earlier projections in September. The you know, I think that you really have to think about what's happening in the inflation data. So we are seeing good news. I like good news on inflation reports.

A lot of that's in the goods areas and some of the areas we've been long expecting those inflation rates to come down, so that wasn't so, you know, that's something that we've been expecting to see as part of the baseline forecast. Where inflation is still high is in these core services areas, the areas that you know are probably going to be more persistent and really reflect the imbalance between supplying demand in the labor market in our

overall economy. So sure, we're are seeing some good signs on goods and some other categories. I'm also seeing some good signs in the in the rents for new leases of apartments and houses, So you know that inflation should eventually start coming down later in the latter part next year. But again in these other core services that inflation rate is still high, and that really gets to how strong

the labor market is. So sure, some good news, but the underlying issue of core core services inflation is still very much there. Well, you know your your forecast for unemployment next year is a big jump, right, you see it much much weaker, up to almost full percentage point from what you're looking at September to four point six percent. You're looking for GDP to be much weaker than you thought three months ago, down to zero point five percent um.

So is this the kind of forecast that is consistent with UH a soft landing. Is it a consistent with something maybe not quite that good? Well, I think it is. It's an economy that's continue to grow. As you pointed out, the median dot is a half her percent growth for this year and for next year. So as economy that's growing, UH, it's an economy where the unemployment rate is is rising somewhat. As you mentioned, the meeting will be at four point six percent of the end of next year. So I

don't see this as a recession. We're clearly not a recession right now based on the data. It is an economy that is growing only modestly, and I think it's an economy that's really seen. Uh, the imbalance eats between supplying demand diminishing inflation coming down. Is the retail sales. We're weak across the board pretty much. Uh. Is this a canary in the cold mine for where the economy is heading and a part of the colom you want to get filed demand down? Is this maybe an early

sign that you're succeeding. But we have to look at all the data on that. And obviously where we're seeing the science of the economy slowing is in the housing sector and now in manufacturing. Consumer spanning has been kind of jumping around a bit months and months and months quarter to quarter. It's actually been more up until this latest data, more resilient perhaps, and I was expecting. So we just have to, you know, go through all that data and really the kind of the underlying strength in

the economy. That data doesn't change my basic view that we're going to have an economy growing modestly over the next year. You know, you're talking about the services ex housing right course, services X housing is that it seems like it's the key indicator. Now we have to see that coming down for the pad to be convinced that inflation is moving in the right direction. Well, I think that is it is most closely related in many ways to the state of the labor market into domestic price pressures.

Some of these other categories, which of course are part of the inflation index. We don't ignore any of them, but they really are about the special factors our prices that skyrocketed, transportation costs and things like that. And then I think the housing market, we're always seeing some good indicators eventually of that coming down. So this is the area that that's not coming down, and we definitely needed to see it coming down to get to that two

percent inflation goal. So a lot of focus on labor and wages in that part of it, right, That's that's what's important. That's what Pow pointed out this week. So, uh, do you think that there are signs of a wage price spiral right now? Is that one of your concerns again? And when you look at cp C guys coming down, that's good news, but boy oh boy, that the trend is still too much up for us. So I don't see any signs of a wage price spiral of the

kind that we saw in the seventies. A couple data points at point to one is UH inflation expectations have been coming down. They've been really well anchored for longer run expectations. But we've also seen in New York Fed survey and in the Michigan survey shorter term inflation expectations coming down. So I think that we're not seeing that kind of dynamic kicking of people expecting higher inflation demanding

higher wage increases because of that. The other is, you know, I really see wages is kind of the barometer, one of the barometers of the strength of the labor market about demand and supply. I think wage growth has been very high because labor demand has been really strong relative available available supply. Is labor demand and supply get better and better balance, I think, you know, the wage gains will be more inconsistent with will be more consisting and

with longer term trans and or two percent. What do you make of the the Southwest Airlines contract? It was just signed. They're going to get increase in wages over the next when is it five years? Four years? Excuse me? Uh? Is that a concern? Well, you know, we're seeing a lot of adjustment and wages for around the country. I'm not going to point to any specific one. I mean again, wage increases right now, given to where inflation has been, given where the labor market is are, are still quite

high um, and so we're watching those indicators. To me, it's really what tracking how the economy does over the next year labor demands, supplying wages, not focus on financial conditions. Chairpile noting that the markets and the feder seemed be working at cross purposes all the time lately. Are you concerned about this push pull between the FED and where it's trying to lead and h where the markets want

to go? Well, I, you know, I think we need to be and we are being clear on what we're trying to, what we're going to achieve, uh, and how we're going to achieve it. I think that you know, the economic projections and the dot plot we put out provided a nice roadmap of how we're seeing the economy and Monte policy over the next couple of years. UH. And obviously financial conditions depend on a lot of other

things than just Monterey policy. So I always look at a broad set of Monte Poulse sorry financial conditions understand how that feeds into our outlook right now. I know that you know a lot of some market participants clearly are more optimistic about inflation coming down. I look at the real interest rates implied by that. I think pretty much everyone understands that real interest rates need to get

restrictive and stay there. Is that an issue for the Fed though, when you're trying to um you're trying to move policy in a certain direction, right, you want to tighten and if the market's rally and then findtional financial conditions softened for whatever interpretation the markets are taking, is that an issue. Does that make the job harder? Doesn't make the job hard harder. But it's just another one

of those factors like that. You know, what's happening in the global economy, a lot of things that have to feed into our view of where the economy is going and then what we need to do. Clearly, to the extent that you know, financial conditions have tightened quite a bit, consisting the past year, consistent with our moving to towards the restrictives or to a restrictive stance of policy. That's an important part of the transmission of Monterey policy of

the economy. In keeping with that, I want to ask you one last question, because there's this We're hearing this a lot, that the FED let inflation get out of control for whatever reason, and that this may have eroded the credibility that fed with the market. So how do you respond to that. Well, we're absolutely committed to getting inflation back to our two percent goal, UH, and we're acting in that way. I think we're communicating in that way.

So I don't think we've lost the credibility, of course at all. I do think that, you know, we are completely united in our focus on getting inflation back to two percent. We've taken extraordinarily strong UH policy actions over the past year, and as we've shown, we're going to continue to take the actions are needed to get inflation back to two percent. Price stability is absolutely essential for a strong economy in the long run. We need to get that done and we will. All Right, Well, here

it comes President John Williams. Thank you so much for joining us today. Thank you, Okay, Lisa, back to you. Great Where Kathleen Hayes with John Williams of the New York Federal Reserve. Ye're joining us now. Embody Rodman Co Chief investment strategist that John Hancock Investment Management. Embody fantastic to catch up with you, always is. I just want to pick up on a theme that I know you're dridding down on the equity bond performance this week. Emily,

you've picked up on it as well. What's it telling you? It's actually pretty refreshing to see the diversification is working again. You have stocks down on the week, bonds up on the week, and that's the type of reaction that makes sense to us. Markets have almost been in this state of being comfortably numb, given the fact that central banks are implementing the most tightening that we've seen in the generation. The economic data are suggesting that the global recession is

likely into three. The yield curve is wildly inverted to the tune of seventy eight basis points, and earnings are starting to come off. Those are all things to us suggested a recession is likely, and we've seen cyclical areas of the market showing leadership. We've seen European equities having their best quarter. They're they're one of their best quarters in years, and a lot of that cross asset performance to us just hadn't been driving with the macroeconomic backdrops.

And we're starting to feel a little bit better that things are working as they should. But Emily, this goes against this idea that perhaps we have to have a different playbook this time around. And this is what we've been talking about for a number of weeks now that we're not necessarily going back to the pre pandemic investment thesis where if something goes wrong, central banks lower rates

and that fuels a risk rally. So does it make sense to you that the relationship between stocks and bonds is reverting back to something that has been traditionally at a time when nothing about this moment is traditional. Yeah, I mean we think that the playbook is really you know, you can't be that are still rely on history here, and we do think that given the fact that the economy is likely to contract next year, central banks ultimately will be cutting in the back half of next year,

so we want to be positioned for that. We want to lean into bonds here. We like the idea that bonds are working in a portfolio. And you know, Matt MSK and I have been talking a lot about the fact that income is very attractive and very competitive versus other parts of the market. So we do think that that playbook comes through again into next year, but it's gonna take some time. The FED has been incredibly just

dogmatic in their approach to fighting inflation. We've heard it time and time again, but we know that the FED is looking at lagging economic data, employment inflation, especially services inflation. Many of your guests have talked about the fact that it's very, very sticky, and it's probably going to be too late for the FED to really sort of reverse

course quickly into next year. They're going to cause this economic slowdown and then they're going to have to cut so soft the supermaan and this is something that John has been talking about really pointed out that there still is this feeling that if that is the playbook, then go into big tech, and that's what so many people

are doing. And she pushes back against that and says that doesn't necessarily seem like the prudent play Where do you feel on the leadership on which are the stocks that can continue to drive upward some of the equity performance at a time. If we're reverting back to a playbook that's familiar, Yeah, I would agree the playbook from a cross asset perspective within equities might be a little bit different this time. It was always that, you know,

we look to growth stocks. We wanted companies that were able to you know, produce that organic growth in a slowing backdrop. And now we're not really seeing that. A lot of the growth in technology stocks was pulled forward during the height of the pandemic. Think about all this stuff that we bought, whether it was online shopping or you know, conferencing tools or laptops for the kids. A lot of that growth in demand was pulled forward. And so we're seeing this period in which the batta on

is being handed over to the old economy. You know, we look at the value side of the house, which is showing some resilience here. So we want to be thoughtful about where we're going in growth. Where we're going in value areas like healthcare one of our favorite sectors, very high quality, great balance sheets, cash on their balance sheets, organic growth drivers. But we also like your kind of classic S and P five hundred tech companies, ones with

a lot of cash. We don't want to own companies that need to tap the capital markets in order to grow. We don't want to own unprofitable technology companies In this environment. But but some areas, carefully selected areas of the technology complex to us still makes sense paired with value. So Emily, one thing that you've said is that for the most part,

equities are not acting like a recession is coming. Can I ask you where you would look for that and why you think we are further along in the adjustment process, perhaps relative to other parts of the equity market. Yeah, it is so amazing to see this rerating in stocks that began at the beginning of the quarter. We saw, Uh, the SMP five hundred started fifteen times forward earnings and now we're trading it around seventeen and a half, which is means that stocks are now more expensive than their

twenty year average. So we've seen this big rerating, especially in more cyclical economically sensitive areas of the market. Energy stocks doing better even with oil prices coming down a bit, pretty notable dynamic here. So we would look to find areas that are already price for a recession. There aren't many.

We Matt and I have used the analogy of there's an equity store and a bond store for your for your Christmas shopping, and you know the equity store, there's not very much on sale areas like MidCap value stocks, we like they're treating at a steep discount already at two thousand and eight two thousand nine levels. But the fixed income store, there's where a lot of the opportunity where a lot of the bargains are. You look at investment grade corporate bonds seeing this big price decline similar

to a weight oh nine levels, we like that. We like the income there, the total return potential. So and favoring the bond store over the equity store during this holiday shopping. When you were a kid and your parents would say, you can't get anything from there, and that's where you wanted to shop. It was the toys, they're expensive, and then your parents came along and said, you've got to get that. You need a new coat. I feel like that's what Emny Rolands telling me right now. It's like,

don't look his stocks, go to the bond store. Who wants to shop at the bond store? No one's wanted to shop there for ten years. What was the most disappointing gift you've ever gotten? When I was a kid, I didn't like getting clothes. It's very against clothes. And I remember my Nan turning around to me and saying, John, in twenty years time, this is all you want. You just want nice clothes. You won't want toys. And it's like, yeah, but I'm not, you know, but I'm still. This is clothes.

God bless her. So please, if you're listening, clothes, clothes now, love clothes. And although I was thinking the other day, you know what, I'd love a toy car for this Christmas, just a remote controlled one. I'd love that. I'm thinking about. I'm thinking about for the apartment. You're absolutely serious. I'm thinking about buying one for the heartman, I want like a toy Ferrari, like a Formula one car with a

remote control you build like a little set. Because when I was a kid and I had a toy car had that cable attached to it, remember that you have to look sort of follow it because it wasn't. I want a proper one, like a really fast one. I'm going to go into Central Part with Tom and play with it. We never said thanks to Emily. Emily, thank you have a wonderful Christmas. Let's get to Savantra Jappa.

How do us rate strategy at so Jen Sapatra? Your quote from your piece last night, Can I say it was great by the way, I had good read of it. Pal stuck to his script of higher for longer after delivering a fifty basis point hiker hawk is shifting the dop plot failed to nudge yield higher. You went on to say, though, and I think this is real pushback from the consensus for you going into twenty three, we expect a modest rise in yields in Q one as

central banks deliver more hikes. Sapantra, can we start there? What do you think other people are missing going into next year? Well, I think the price right now is not reflective of what we should expect next year. You're getting into the r en. Liquidity is very poor. People are paring bad positions. But you're looking at you know, the Bank of England, your poister deliver another fifty basis point rate high. The e c BS, you know, perhaps

gonna deliver another fifty basis point rate high. So global center backs broadly speaking, are still going to remain somewhat hawkish for at least the first quarter to first half of next year. So under those circumstances, I don't see why we know yields can't adjust modestly here. I'm not calling for a significantly higher yields, but I think if you get towards maybe three seventy five or four percent, that's not, you know, necessarily out of the realm of reason.

I feel like the market is, especially tenny years are very rich as they stand right now at three fifty. So can we talk about the front end as well? It's just so I can get a better idea of where you think the curve is going to be, how you think that's going to evolve next year two? Right now? How are you thinking about that? Spatra, Well, I don't think the front end has a lot more room to rise unless we expect um the FED to hike beyond five and a quarter percent. But on the long end,

the dynamics are very different. You're going to see a lot of corporate issuants come into the market. You're going to see perhaps you know, more EMN treasury issuance. Typically those tend to at least support a little bit of a bearish momentum to that. Add add the fact that I think burns have more yields, so bond yields have more room to rise. I think that Tenney yields could see a push higher at least in the first quarter before we start seeing yields decline in the second half.

I completely by what you're saying, So does the Federal Reserve. This is what the Fed is basically telling the market is going to happen. Why are so many people pushing back? I think there's a concern about a recession in the US. To me, those concerns are a little bit premature. At SATAN, we have a little bit of an out of consensus view the recession of the US. We think that's early

and then it's not a event. So my real concern is that the market is not fully appreciating the fact that come middle of next year, if the unemployment rate is not heading towards four percent, we're still stuck at say three point seven three point eight, and wages are still pretty strong, the Fed might have to go beyond five and a quarter. I'm not saying that that's our base case scenario, but that's a risk scenario that the

market is not fully appreciating. What's your base scenarios to Badger of how long it will take to get back to two percent inflation? Given with the FED is already signaled. I mean, we've got the summary of economic projections from the from the Fed. The FED doesn't expect inflation to get to two percent. So you're looking at, you know, a very strong trajectory towards you know, inflation remaining sticky after that initial descent. Now we're rejoicing the initial descent.

But what if we get to maybe three percent or three and a half percent and then inflation stays there and it's sticky at that level. At that point, I think the FED is still going to remain somewhat how cash, if the employment picture is relatively strong. And there's a good chance of the employment picture remains relatively strong given the fact that we have such a mismatch in the labor market between job openings and an available employee employees

to fill those jobs. So I'm not saying that the labor market is gonna be asked tight as it is right now next year, but I think it's good could potentially take a lot longer for the employment picture to weaken meaningfully from here on. Emily Rowland was speaking earlier about the fixing income shop. There's a fixing coome shop, and then there's the stock shop, and that the fixing cocome shop has a lot of good things in it, including investment grade debt because of how much it has

been sold off. That has been on rate story, though not necessarily the credit side of things. Given your projection that we might not get back down a two inflation based on what the FED is looking at themselves by, does that default rate kind of expectation, does that premium have to rise substantially from where we are right now? You know, our corporate strategies don't think the default rates

rise in this cycle. I think we're in a very different environment, you know, relative to the two thousand and eight time frame or the Great Financial Crisis. I think companies are in a very good spot. You know, one metric that we look at for recessions is corporate profit margins called for profit margins are still very, very healthy. So for the most part, under the circumstances, it's really hard to envision a scenario whether the default rates are

going to rise meaningfully from here on. So I think the corporate sectors, you know, relatory robots, if we get a lot of supply next year, we're expecting a decent amount of demand from a variety of investors because the yield you get for holding US bonds is quite you know, quite substantial relative to yields in other regions. So I think for the most part, this is going to be a bond story next year, and it's going to be for for yield and return. So bat just one final question,

what pivot? This was the title that came from the team of Sokin the jump out right hikes Rova. But we are far away from a monetary policy pivot. Can we just end on where you see terminal rights? Just around this? I think that's a headline for a lot of people. Where's the terminal? Right? The Fed? Where's the terminal right? The e CP is it basically in line with what's being priced right now? So for the for the Fed, I think the market and the Fed are

well aligned. I mean, I think the market expects the terminal FED funds rate maybe around five five and a quarter percent. Maybe it's a little bit under priced right now for next year, but not by a lot. For the e c B, I think there's still a lot more room for, you know, for the market pricing to

rise higher. Our economists in Europe, you know, now expect the e c B two raise rates the three point seven five percent, I don't think that that's fully uh you know, priced into uh into into into the European bound markets. So that's why we see more potential for the treasury bond spread to narrow. I mean it's, you know, when we put out our outlook we have the tenant treasury bond spread around one, we were calling for it

to come to our one fifteen. Guess what this morning, we're already in one thirty, and we still see more room for that tragedy bon spread to narrow. So I think that that it's it's it's quite you know, harkish for the easyb We see more room for bunnios ries relative to treasury. I just never ever thought they'd go this far, no way, not even nine months ago, six months ago. I never thought they'd go this fast. Patrick, thank you wonderful summary of the last week or so.

Looking ahead to twenty three as well, So Batra Shaper of sock Jen, there's a lot of people bunched around four k, So be thankful that our next guest is saying something a little bit different. Seventy five. It's Sam Stovall A's cfr Ray, So Sam walked me through why Ultimately you're a lot more bullish than the bulk of the street going into twenty three. Hey, Jonathan and Lisa, Well, I guess some could accuse me of being a Pollyanna. I like to say that when life gives me lemons,

I try to make whiskey sours. What I'm looking at is the expectation that we are likely to fall into a recession. I mean, I'm saying right now that like a deflating holiday lawn ornament, the Powell press conference and today's Goldman news have drained investor hopes of avoiding a recession. But I think it's going to be a mild recession.

I do think the Fed will continue to raise rates through the first quarter, but then I'm reminded of history saying that on average, eight and a half months after the last rate hike, we see the Feds starting to

cut rates. So if we do end up seeing this economy getting weaker than is expected now by the street, and also seeing what the Fed responds to, I think investors will be looking across the valley into the second half of three and that's where we end up seeing an upward movement, and the real year end target also depends on whether we simply retest the thirty low on October twelve or we set and even lower low. So what is your down side in the first half UM downside?

I'm thinking thirty five hundred for the SMP five hundred, that is the UM October twelfth low. It is a Fibonacci retreacement level of the prior UM bullmarket move UM. And also I think that that was an area of significant support. Uh. And so that is my first level. So, Sam, if we got down to thirty and you're saying the recession is only short and shallow, why do you think the recovery in the equity market is as severe as the one that you're calling for in the second half?

What does that come from? What drives it? Well, I'm a big believer in history. You know, history is a great guide. That's certainly not gospel. However, when you look to all of the bear markets since World War Two that were accompanied by recession, we ended up coming back into a new bull market, meaning rising in an average of only three months, and in five of those nine times we ended up in a new bullmark after only

one month. Also, what we found is that twelve months after the market was higher by forty seven percent on average, with a low water mark being So basically it all depends on when that actual bottom takes place. Uh. And my feeling is that we are like that and then see this vacuum of valuations be taken advantage of. Sam. When you talk about history and you talk about post World War two, have you ever gone back to? Right?

I mean, is it a playbook that perhaps goes to another era of pandemics and then conflict as well in World War One and everything that was going on. Then is that a better kind of measure of where we could be and this sort of difficulty getting out of some of the issues that are facing not only the market but also just generally geopolitical piece No, uh, And I say that because, like the valuing of crypto today, we didn't really have the required earnings information for individual

investors to make decisions back prior to the nineteen thirties. Also, we never had government supplied economic data since the late nineteen so really you should be looking at data only since nineteen fifty or so. But I go back to World War two some because that's sort of a dividing line. So I would say the reason I don't go back to the nineteen teens is because it really was more of a gambling situation because you did not have the free flow of financial or government economic data. It's China

reopening SAM a headwind or a tailwind tier call. I think it's going to be a tailwind globally. Expectations at the beginning of two were that we were going to see a four point six percent gain in global GDP. That estimate now is below three the only and then when you look to two thousand and twenty three, it's even weaker. But if you look to China, that's really the only country that is expected to show an improvement

in GDP in three UM. To a broader extent, the emerging markets are likely to show and improvement in GDP next next year, whereas the advanced economies are predicted to show a slowdown. So I would think it's going to actually be a tail wind for the global economy. It was so much easier when we used to talk about synchronized global growth to remember that everything over at the same time. Now looking at the twenty three is so so different. You're at recession, US recession chann to reopening

those two things comminding. This is the Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays from seven to ten a m. Eastern on Bloomberg Radio and on Bloomberg Television each day from six to nine am for insight from the best in economics, finance, investment, and international relations. And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com, and of course on the terminal. I'm Tom keene In. This is Bloomer