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00:00From the financial centers of the world. This is Bloomberg Markets with Alix Steel and Guy Johnson. We're 30 minutes into the US trading day. The shortened U.S. trading day. It is Friday, November the 25th. It is Black Friday. And here are the top market stories that we're following for you at this hour. As I say, shop till you drop. Black Friday is back. Stores are open. Tills are ringing. We are going to be live in a moment with one of New York's city's busiest shopping districts, Herald Square. Covid concerns growing in China's case. Numbers reach fresh records. The BBC cutting the triple R by 25 basis points. We'll be on that story as well. The kind of transatlantic trade war be averted? France and Germany meet to discuss Europe's response to President Biden's Buy America Inflation Reduction Act. EU trade ministers warn that time is running out. From London, I'm Guy Johnson Alix Steel has their well-deserved day off. I understand that she's doing some shopping. There is a rumor that she may watch the football a little bit later on England vs. the USA. It's kind of a big game, but it is Black Friday. Shopping for the time being seems to be taking precedence over everything else. The holiday shopping season now officially under way. More than one hundred and sixty six million shoppers are expected to dig into their wallets this weekend, basically pushing through pre pandemic levels. Bloomberg's gritty gutter is live in Herald Square, one of New York City's busiest shopping districts. Is it busy? It was busy, I think. Look, there's plenty of holiday cheer in the air. There was a massive line at five thirty this morning outside of Macy's. Now it seems that kind of wash through. There's certainly a lot of trying on shoes and perfume inside, a plenty of stock that they have to get through. But I would say it's not as busy as Black Friday as I've seen in the past. So there is this dynamic that I've seen where a lot of people are going in trying on clothes, trying on perfume, but they're not coming out with the merchandise. They're gonna go home. They're going to shop online now. They really tried it out. So it's almost like these department stores are less for shopping and more for the experience. OK. Does that mean that this is a pandemic hangover effect or is this just e-commerce continuing to eat into traditional bricks and mortar? It's going to be a little bit of both, and I would argue that the pandemic legacy essentially is feeding into the further easing of market share between the e-commerce side over brick and mortar. But remember, there's also this idea not just of clearing inventories but of returns. That has been the major issue. If you are shopping in person, you also more likely to return in person. It seems like now there are a lot of companies I'm not going to say Macy's, but a lot of other stores and lot of other retailers that are now charging for those returns. The idea that if you're trying to get rid of that excess inventory, you're going to do it through higher markdowns, gonna throw it into promotional items. How do you make up for that lost profit while you charge for those returns that has become so easy and such a natural part of the e-commerce shopping experience? Chrissy, the consumer is starting to feel a little bit stressed, but unemployment levels are still relatively low. Consumers still have money in their pockets. Are they looking for bargains? Are they actively now trading down? They absolutely are. And here you mentioned, Guy, that this is one of the most active shopping districts in all of New York. Look, we're right by Macy's, but around us are more less wealthy income clientele. For example, there's an H and M nearby. There's an Abercrombie and Fitch nearby. And, of course, Times Square just a few blocks over. Not all of the stores around me serve a higher, wealthier client telling if you actually look at the foot traffic, just anecdotally, I don't have the numbers to support this. But Macy's is still getting far, far more foot traffic. And I think that really speaks to the idea on this wealth effect and this divergence that you are starting to see from Macy's, from its peers relative to the likes of Wal-Mart, the relative likes of Dollar Tree, even H now, which I would put in that lower income category, more affordable, but perhaps not the designer items, the perfumes that you're gonna find in this particular store. What was it like at 5:00 a.m.? I got to remember, as you say, I blank Fridays past. We've seen people almost beating the doors down. What was it like? Yeah, I mean, that's what I was actually expecting. I was bracing myself for it. Instead, we'll have to say we actually had musicians here playing Christmas carols. And on top of that, you did start to see a little bit of a lineup now about five thirty. You didn't start to see a card to form around the block. There was a big line. Then as soon as the Macy's doors opened about 6am, they all kind of flooded through. I mean, remember, this is a six story building, so there's plenty of room for shoppers. But I would say it is not the chaos that we've seen in Black Fridays past. In fact, like I said, a lot of people are just looking and then going home and buying online. Great stuff. Kitty, thank you very much indeed. Kitty Gupta joining us on the Black Friday story. Let's talk about the U.S. consumer and the health of the U.S. consumer and the impact that it's going to have both on the Fed and markets. Joining me now, Maria VIX, State Street Global Market senior multi asset strategist. Maria, the U.S. consumer still seems to be in fairly good health. The U.S. employment picture still looks fairly good. Does that mean the Fed's going to have to go further? Yes, that's it, guys, that's exactly ours, is it? Is that us consumers? People have jobs. People should still have savings. Those those are mostly represented in the higher income consumer. People hold wells. A lot of those wells is potentially in housing market. House prices are still very, very high, very elevated. And then, yes, you can fairly easy to extract like home loans. So so, yes, there is wells are money to spend. Consumer spending consumer is willing to spend. Maybe they're trading down a little bit in terms of what they buy, but they still buy a lot. And that means that the Fed needs to push. Heart. Find out what we feel, we still expect that terminal rates total to get higher. Maybe potentially get about far above 5 percent. Definitely not expecting a cop next year. Maybe a pause. OK. Let's talk about what's happening in equity markets and maybe you can solve some of the the head scratches that I've got at the moment. Let's start with the first one. Why are European equity markets outperforming U.S. equity markets? If, as you say, the US consumer and the U.S. economy still looks in fairly good shape? This is a very difficult question. And so the way I'm trying to square that circle is. I mean, US stocks are dominant. I mean, they have huge, huge chunk of US stock market is our technology stocks. They are long duration. And there's the ones that suffers the most from our increase in interest rates. So that's that's actually to me is quite a very substantial part of explanation. What is happening in Europe? Europe. I mean, a lot of the index has cyclical industrial and exporters. So they benefit from weaker euro. They also benefit. I mean, particularly like in the last week, like months or so, there is kind of this whole year that potentially Fed is not going to hike as hard as we expect. And that's helping cyclical cyclicals to do better still. Europe obviously on the front foot in that trade, but its kind of duration expectation about how hard how far a central bank fed has to go. You mentioned the euro just a moment ago. Let's flip it around and talk about the dollar. The dollar has been coming down. It is a weaker dollar positive for European stocks. So a weaker dollar. I think I think first and foremost now as a lot of assets are trading very much together, all the correlation gone to war. So it's very much inflation, trade and inflation. Fed policy tightening. So we called a weaker dollar was a stronger dollar was really kind of kind of for very strong representation of this trade. So even now as the singular weakening and financial conditions are easing and all stock markets like it, but particularly European one, given that high beta, it's a very cyclical socials that Europe does benefit from it more than others. Which side of the Atlantic do you think benefits most from falling oil prices? Because that's the other thing that we've seen this week. We've seen oil prices continuing to track lower. Now you get a more direct read through. You could argue in the United States is less tax. And as a result of which, it feeds through to the consumer very quickly. But Europe at the moment has an energy crisis. So I'm just warning which side of the Atlantic we should be looking at to get the biggest beneficiary from be the better biggest beneficiary of that. Yeah, those those ISE, that's an interesting question as well. I mean, we will probably fall on the European side of benefiting more because a big, big scare in Europe was energy crisis and I mean slightly warmer. October already kind of helped Europe a lot as those kind of a dangerous or far even higher kind of inflationary pressure, building an expectation that may be a kind of sideline to little bit that doesn't put extra stress on government financing, trying to kind of protect protect domestic consumers. So we had I think to you, Europe is probably more direct benefit. I think all the kind of effects you mentioned are maybe a little bit like second order effects on Z. Yes. It's it's helpful when oil prices are not that high. It helps everyone. But I think Europe is probably more sensitive. The holiday season is now upon us. Christmas is coming. The Santa rally has been rallying. Does it continue to rally? Do equities continue to do well into year end? Do you think, Maria? I think it's absolutely critical. I mean, the way a quick read equities started to rally, that was that CPI print that's really shaken. Markets have given us hope that kind of that we're seeing the beginning of the end of this hyper inflationary environment and that really given markets a lot of hope. It has been kind of one one no, a very, very critical number and always had inflation is very, very paramount. But I think in order to see a continuation of this rally, we would love to see another weak inflation print. We would love to see some signs, more signs of weakness in the labor market. And that will really set that sad Santa rally on. I'm slightly skeptical that we'll we'll we'll see it. But having jury's still out. Yeah, we'll wait and see. Bells are beginning to ring. Holidays are coming. Maria, thank you very much indeed. Maria Wedeman joining us, senior multi asset strategist at State Street Global Markets. Coming up, could the EU be heading for a trade war with the United States? We'll look at how the U.S. Inflation Act. The IRS is causing tensions across the Atlantic. That conversation next. This is Bloomberg. EU and US share a strategic partnership, and I would say it's especially important in current geopolitical context when we are dealing with Russia's aggression against Ukraine. So it's important that we are cooperating and we are united. And that's indeed why it's so important under this inflation reduction act is being addressed. And it doesn't become another irritant in our relations and irritants. The European Commissioner for Trade, Valdis Dombrovskis, speaking a little earlier exclusively to Bloomberg's Maria Tadeo at the EU trade ministers meeting in Brussels. Judy's all of Schultz is also worried about the fact that this situation could descend into chaos. He's been speaking with his French counterpart a great deal about this manual macro. He's worried is stoking a new trans-Atlantic trade war as he heads to Washington next week. I've got a meeting soon. Emmanuel Macron. And Joe Biden. Bloomberg's Maria Tadeo joins us now to discuss all of this. Plus, we need to talk about what's happening with the oil CAC story as well. Maria, let's start off on trans-Atlantic trade tensions. The Europeans are worried about Joe Biden's inflation reduction act. Walk me through why. Well, guy. Where to start? Because there's so many issues happening here and the essence, essentially. And you mentioned the German chancellor, you mentioned eminent Michael Barr also mentioned at the head of trade for the European Commission. What they worry essentially is that the European Union has been hit by what is a perfect storm. You have an energy crisis, of course, that is pushing up energy costs for companies for meat in Europe. You have the United States coming in strongly with the Inflation Reduction Act, especially when it comes to subsidies for the green industry. And on top of that. Don't forget, you have the Chinese with their own industrial policy. You put all of this together. They worry. And they really do worry, in fact, about this idea that the space for meeting Europe for European Union products is becoming so small to stay competitive and attractive that we could see a real decline. And we're not just talking about the short term, but the medium and long term and made in Europe. That is a concern. And you heard it there from the head of trade, Mr. Dombrovskis here. I spoke to him. He did not mention the trade war, but he did say, quote, There are serious concerns or will have to be addressed. And all the European Union is asking for is fairness. However, on the flip side, Guy, you know very well the criticism here is that some would argue the European Union is paying for bad decades, bad foreign policy and energy policy. Nobody forced them to depend on Russian gas. Just talk me through, though, how Europe could respond, how the French maybe would like to see Europe responding. Look, I think that's a very good point, and guy, if I had to give you an answer, I don't think I could give you one because there's a lot of noise, but there isn't really a roadmap. The French eminent my calling in a very French way, of course, was senior. We made great products of the world wants to buy. I'm sure he's thinking of French luxury. Let's really say let's buy Europe. Let's buy European. Let's make it clear to our European citizens that we have a great product. And maybe you should buy that. Why are you buying perhaps a product that is not meet in Europe? On the flip side, you have the Germans who say we do not want a replay of the situation with the Trump administration where there were tariffs going both ways. And I asked flat out to the head of the trade portfolio and now, Mr. Dombrovskis, are we going to see a trade war? And he did not even mention the war, trade, war or tariffs. He did not want to go there. I asked him three times. He said, we have concerns and we hope they will get clear. What I do want to say and I just want to point this is the French and the Germans do agree there needs to be a level playing field. And they had a meeting yesterday in Paris behind closed doors, both the finance minister from Germany and the French. Realist sense of what is going to happen a little bit later on, I understand we can have another meeting to try and resolve the issue of the Russian oil cap. Talk me through where we are and where we could see progress. Well, Guy, I have the impression I've been here for almost 48 hours and we talk about the cap and yet we see no cap and this thing gets delayed and postponed. And we know that yesterday, of course, there was no agreement on the gas cap that's been delayed to December 13th. But the conversation about the Russian oil cap issue make a difference. There's two different caps that are being debated. There is going to be a conversation with European ambassadors to finally nail the price. Remember, the range is sixty five dollars a barrel to 70. Some countries suggest that it's sixty five. That is not good enough. It should be dropped. But I do hear that there is increasing pressure on both the Polish and the Baltics to agree to that. Sixty five dollars a barrel mark. Maria, we will watch with interest. Thank you very much indeed. Bloomberg's Maria Tadeo joining us in Brussels. Still ahead, two of the biggest companies in the United States, Amazon and Apple, are struggling with labor issues. We'll talk about both of them next. This is Bloomberg. So the balance CEO sees his hour, spoke to Bloomberg TV in an exclusive interview on what the FTSE X collapse could mean for the broader crypto universe. He spoke to Bloomberg's Haslinda Amin. We're thinking about setting aside a billion dollars first and then if that's not enough, we can allocate more. And if that's too much, I think we're roughly angling for six months. If after six months, DAX are used, funds still left and there's not that many projects. Hopefully the industry would have recovered by then. If they still are used funds, we can we can restore it back. That's kind of the rough thinking about it. A blog post will go out with some more details today. Might you bid for RTX assets? And if so, why? It might look interesting for you right now. We definitely want to look at those assets when they become when it comes to a liquidation court. I think originally we want to engage directly with RTX, but then we found out that based on Bloomberg reports, there are potential investigations going on. So we said hands off. But when those but they they invested a number of different projects. Some of them are OK. Some of them are bad. But I think there are certain assets that may be salvageable and that may be of interest. So we'll we'll look through that when when they become available. We know that you looked at RTX ISE books. What did you see? Was there misuse of customer funds? So we looked at a data room, to be honest. We became very quickly. There was a lot of funds missing, like unto the kings of double digit billions. We couldn't trust any of that information in the data room like, you know, that's a virtual data room, basically like an old cloud drive week. I couldn't believe I couldn't trust any of that information. So I don't believe any of the information we got. It was accurate or precise. That was caused by Nancy ISE is out speaking to Bloomberg's Haslinda Amin. Amen. Let's talk about what's happened in the. The kind of derivative markets around this whole FTSE story this week, one of the best places to look to try to understand how the market is perceiving what is going on here is to look at the BTC ETF as a note. Remember, this would like to be an ETF, but it's not an ETF. This is a product that Kathy would though has been buying. Rumor it can't redeem the underlying. Kathy would have been an aggressive buyer of this. And the reason, as you can see on the screen, is the huge discount that you've got BTC trading. This is the grayscale trust trading to the to the to the bitcoin. And that discount is absolutely enormous. With circa what I can't quite read the number of the bottom down there on the right hand side, circa 40 percent. This is a huge discount. And this is why basically Kathy would have been buying in and accessing the market via the grayscale trust. We'll see whether that turns out to be the right call. Obviously, there's a lot chaos surrounding what is going on. It's been initially to see actually how bitcoin has been relatively relatively stable here. OK, let's talk about what else is happening in the technology landscape. Two stocks that I think are really interesting. Both of them are having quite big issues with labor. Apple shares are falling today. This after we got the reports yesterday. The production of iPhones in November could fall by at least 30 percent due to troubles that we've all seen. The video now of the Foxconn plants in China. Its reliance on China is today's big Bloomberg Quicktake. Joining us now to talk about more and what's happening with Amazon, Bloomberg said Ludlow joining us from San Francisco. Ed, how big a problem could this be for Apple? There's a possibility that we could see a 30 percent reduction at this facility. Yeah, this is high end iPhones. It's interesting because the equity reaction has been quite delayed. Right. These protests happened earlier this week. The facility in question in Young Joe accounts for four out of every five of the high end iPhone 4 teens that Apple manufactures. Right. Is a facility operated by Foxconn. You know, basically what happened earlier this week in the early hours of Wednesday morning, hundreds of workers who were kind of confined to dormitories at the plant to kind of allow them to work during the cold curbs that are in place stormed out. You know, they clashed with guards. There were grievances over pay. And the response Wednesday, the official line from Foxconn was we got this under control very quickly. The problem is at operating as normal. But the kind of longer term issues about labor dissatisfaction and disruption to production have not gone away. And now you see the stock under pressure because of this Reuters report. There's kind of quantified what is already a supply constrained product. Let's talk about Amazon workers around the world staging Black Friday walkouts or downing tools at some of their key facilities. How big an impact could we see here? Yes. So we're expecting Amazon workers strikes or protests in 40 countries. Guy for zero. I think what's very interesting is that this is a globally coordinated walkout, essentially, but it's being led by two of the big unions in Europe. Amazon and the union story has been a big one here in the United States this year. You'll remember that in Staten Island, for example, at a warehouse. The workforce that did successfully unionize, but it hasn't had much momentum beyond that here in the U.S., even though it continues to be talked about. Timing's not great. Black Friday. Absolutely. I guess that from their perspective, the timing is great. And thanks for joining us at Ludlow in Los Angeles there for the holidays. Great stuff. Thank you very much indeed. Coming up, more on the strength of the US consumer. The CEO of the online wholesale retailer Box is joining us next. This is Bloomberg. So we are an hour into the U.S. trading session. It is a shortened trading session. Ed Ludlow is back. Ludlow in L.A. has a nice ring to it. I think it does have a nice ring to it. If only equity markets were excite as exciting guy thin trading volumes. Not much going on because we're following on from the Thanksgiving holiday. Most major indices kind of trading sideways. The S & P 500 is down four tenths of one percent on the Nasdaq. Tech is a big story in individual movers, but the dollar edges higher along with crude. Look at some of those names we talked about them. Apple softer given the report overnight from Reuters that production in Django could be hit following those protests. A report from Politico that the FTC will come in and take an action with regards to Microsoft's acquisition of the video game maker. That stock down 4 percent and broadly tech weakness. One session a market does not make. Let's take a step back and think about the direction of travel of late. We do see yields kind of edge higher in the last 24 hours or during Friday session. That said, there has been momentum going into equities. If you extrapolate out over a number of weeks, there is some also momentum with regards to the tech sector as well. That said, we are continuing to worry about the economic story in China, top of mind for investors, along with, of course, the outlook for higher rates than the Fed. Ludlow in L.A., thank you very much indeed. Very nice. We got volume down by around 40 percent on the S & P shortened session. As it says, a lot of people are still on holiday. Let's talk about what's happening with the consumer. Consumer stocks are absolutely front and center. It is, of course, Black Friday. This is a Black Friday like no other. Right. Consumer sentiment is at a record low. A lot of people are trying to outpace inflation. Inflation in the U.S. is the highest it's been for 40 years. Likewise, in the UK, we suddenly will be looking at a more value conscious consumer. Is going to be checking out the deals. People are desperate to get out and have some of that enjoyment of Christmas that they've lacked the last two years. That said, the inflation headwinds are so substantial that, you know, price rises are inevitable. The top line would still look pretty robust. The money adjusted for the level of costs, you would see a significant down, you know, downward shift into the margins. Gina Martin Adams, Bloomberg intelligence chief equity strategist, joins us now to talk about the retail sector and what's happening with the consumer. Gina, in some ways, today could be quite a pivotal day in terms of the margin story that was mentioned at the end there. Are we about to see a clearing of inventories that will allow margins to recover? That certainly is the consensus forecast and I think does make activity on this Black Friday weekend pretty critical. Because the real forecast for consumer discretionary earnings is about margins. It's not about sales growth. It's not about volume. It's not about traffic. It really is about clearing out that excess inventory, sort of capitalizing on the price increases that we've seen so far this year, rationalize saying labor force and employment costs going into 2023. This is the sector that's expected to be U.P.S. goods for the S & P 500 and 2023 is expected also to be showing its earnings bottom now with recovery emerging in margins into next year. What's the picture, discretionary versus nondiscretionary? Yeah, I think this is pretty important because we all think of discretionary, we think of retail, but really retail spans across discretionary and consumer staples groups, the food and Staples retail sector where you think of the grocery stores of the world, even the Wal-Mart. So the wealth really come under came under intense pressure earlier in 2022. It likewise is expected to show some form of recovery into next year. You also have a very different feel between the Internet retailers such as Amazon and the rest of retail, multi line and specialty retail. Lots of moving parts in retail. The one consistency is across the board. Margins are expected to post their lows pretty much now with recovery into next year. The other consistency is a very lack of sales growth forecast. These sectors are actually expected to slower growth into next year relative to 2020 to. So it's all about the middle of the piano. You mentioned them, isn't that just talk to me about the difference we're going to see on Amazon versus the rest. Well. Which stocks are really going to stand out? Yeah, I think this is a really good point because Amazon is such the sort of hundred pounds, 500 pound gorilla of the consumer staples sector. Sorry, consumer discretionary sector. It really is about Amazon and Tesla. These two stocks have been responsible for the vast majority of deceleration in earnings growth exhibited by the sector this year. They are together expected to recover remarkably into 2023. So if you're watching one stock in retail, you do have to watch Amazon most closely. Amazon is not only expected to post significant margin improvement into 2023, but also as a single stock expected us to post much stronger sales growth. This is different than the rest of the discretionary sector where I mentioned the growth forecasts are not particularly robust. Amazon's sales growth forecast is pretty strong. So there is an anticipation in the consensus estimates that this stock is going to lead, is going to sort of resume that leadership position that it lost in 2010. Gina, what are the what are the input stories that we should think about when it comes to what is happening in particular with stocks like Amazon? Diesel prices are very elevated at the moment. Gas prices obviously a huge factor for the consumer. But but what should we think about in terms of what could be delivering some some volatility in the narrative you've just laid out? Yeah. So on the positive side, shipping costs are coming down tremendously. We've seen a sort of bulk shipping costs decline fairly significantly, even though gas prices are still high, diesel prices are still high. Global shipping prices are back to levels recorded in the pre pandemic era. So that should enable some degree of margin improvement for the retailers that are fairly reliant upon shipping. On the other end of the spectrum, you've got still very high employment costs. And unless these companies can manage to lay off workers or see some wage price deflation or disinflation at the very least into 2023, you could still have pretty tremendous wage pressures on the margin line. So it's kind of a mixed story, frankly. A lot of those input costs, sort of food costs, energy costs should come down a little better. At least the growth rates should slow into 2023. But there still is a tremendous amount of stickiness in the labor markets. We haven't seen enough excess labor emerge on the market or enough cuts in jobs to really Dow Jones to really pull lower those ultimate wage costs. And that certainly will lay on some of these retailers. Gina. Great stuff. Really appreciate the. The really incredibly useful analysis as we think about how these sectors are going to be performing into next year. Enjoy the rest of the weekend. Really appreciate it. Gina Martin Adams, Bloomberg Intelligence chief equity strategist. Let's stay with the retail theme. Stay with the consumer. Take one. Co-founder and CEO of the online wholesale retailer Boxed joins us now. Jay, what do you think they can see? Where is the consumer? Where is your consumer right now? Are they trading down? What are they doing? Yeah, it's really interesting. You know what Gina just said before about consumer staples, so as a reminder to most folks out there, you know, we sell mostly essentials. So we're not seeing the wild ups and downs throughout, you know, 21 as well as 22 that you might see if you were selling for more discretionary items. With that said, though, what you just mentioned about trading down. There's also trading up as well. So in previous kind of environments, whether they're inflationary or recessionary, what you basically see are folks with the wherewithal trading up, thinking that, hey, if I'm going to have 18 seltzer waters this week, that I might as well by the bigger pack so I can save some money. But folks without the wherewithal will actually trade down to hard discounters and dollar stores. What do you think the pitch is going to be looking like next year? What is your expectation for next year? At the moment, the consumer seems to be sort of hanging in there. Yes, at the margin we're starting to see people changing behavior. But next year is where potentially we could see unemployment rising. Some of the savings that people also have will be used up. Yeah. Elizabeth, we're thinking about it or how we're thinking about it is that there's a real big disconnect between kind of the headlines that you see in terms of companies laying folks off and companies cutting back on spend and actually what we're seeing in the consumer. Maybe it's because that we sell mostly essentials. But we've seen our consumer, especially our businesses that we sell to rather resilient. So I think it might be the year of the disconnect where the headline say employment is suffering. But at the same time, the consumer with so much pent up demand over the last few years continues to spend especially into the service economy. Let's talk about what Gina was was just focusing on at the end of the conversation we had with her just a moment ago, and that's input costs. You have to make deliveries. Diesel is a factor. You have to employ people. I appreciate that there's a lot of automation. But nevertheless, the cost of hiring human capital remains elevated. What are you seeing on the input side? So the input side's input side continues to rise. So I know Gina was mentioned in kind of shipping costs and bulk shipping starting to to kind of moderate over time. But with regards to last mile logistics, those costs, we still see rather kind of, you know, heightened over over this past year, next year. I don't know if that changes or not. This will be a really important season to see how much capacity is all these last mile shippers have, because at the end of the day, if they're kind of under capacity and they can't get everything to everyone's home in time for Christmas or the holidays, then I think they're going to have more leeway to continue to raise prices. I think for us, we've done a great job this past year of actually kind of foreseeing that a little bit, going mostly in with one of our favorite carriers, FedEx, and thereby reducing our shipping costs over the last few quarters. But with that said, you know, it's still it's still pretty murky out there where shipping costs go. With regards to last mile in this coming quarter and this coming year. So so you don't have very much visibility on your margins then from that perspective. So from that perspective, you know, we are usually in longer term contracts. The one thing that does modulate is the fuel surcharge. And so, yes, you have your base rate kind of locked in. But at the same time as you were just mentioning before, if fuel goes up, you get hit with this fuel surcharge just like everyone else does. So that is one thing that almost no one has any visibility over. And if they do, they should play the oil market instead of being in retail. Fair enough. Yeah, I think it's a tricky market to cool right now. Let's put it that way. Just in terms of the fun, just to kind of wrap this up. What are people buying differently now? Are you seeing anything different in terms of the shopping basket? The surprising him. Absolutely so. You know, what's really interesting over these last years is that we've seen extreme movements on average order values. And so you can imagine in 20, 20, 2021. A lot of folks with a lot of things that were out of stock were just trying to buy things instantaneously. Oh, my gosh. They're in stock of this thing that I can barely find. I'm going to buy it. I'm going to check out. I don't care what else is in my basket. But what you're seeing now is folks starting to stock up. At least that's what we're seeing. And so it's you know, we love to talk numbers here on Bloomberg. And so, you know, when you look at our earnings, our most recent earnings, we're hitting all time highs on average order value. And that's not just because of higher prices that the manufacturers are passing along to us. But it's also more units per order as well. So we're definitely seeing folks stock up a little bit more, those with the wherewithal again. They know they're going to be using this stuff. They know the prices are going up. So why not save a little bit of money by buying in bulk? A great catch up. Really enjoyed it. Thank you very much indeed. Have a happy rest of the Thanksgiving weekend. Check Kwong, co-founder and CEO of Boxed. And as we mentioned a little earlier, we do have a meeting that is taking place today between there. The French prime minister, as you got the French prime minister born and the German Chancellor Schultz meeting today. There's a number of things on on the agenda that they need to be discussing. France and Germany not necessarily kind of firing on all cylinders right now. This kind of engine of Europe not necessarily delivering or certainly maybe pulling in the different direction. The key thing that I think we want to watch out for here is what is happening with this with the IRS, the Inflation Reduction Act over in the states. But the Germans at the moment saying, I love Schultz. The German cabinet approves the gas and power price break that the German government's been pushing through over the last days. That's quite controversial in Europe. France saying it wants to boost relations with Germany. Yeah, indicating maybe things are a little tough right now. This is Bloomberg Quicktake Yvonne Man. RTS City, Ga, madam, ready, letting go, of course, moving from strong. This is Bloomberg Markets could get her, and you're looking at a live shot of the principal room coming up, Cathy and Whistle of Morgan Stanley private. Well, that's a new time. New York, this is Bloomberg. Keep you up to date with news from around the world is the first word I could get to. In China, the central bank has taken another step to boost the economy. It's cut the amount of cash the bank must hold him is up for the second time this year. The adjustment to the reserve requirement ratio takes effect December the 5th. It will inject 70 billion dollars of liquidity into the Chinese economy. Ukraine may soon be able to provide power to most users up to 18 hours a day. Systems are being repaired after a barrage of Russian missile attacks damaged the grid. Allies, including France and the Czech Republic, are donating power generating equipment. And then the U.K. nurses plan to stage their first ever nationwide strike for two days next month. It's a historic sign of defiance in a dispute over pay. The British government has said that calls for pay hikes 5 percent above inflation. I'm not groping these 20 per NASDAQ. An ad on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and over a hundred and twenty countries which could bring that guy break. Thank you very much indeed. I've had to spend most of my week checking the screens because I keep seeing this number on it. One twenty one. Twenty one. That's the cable, right? I can't quite believe. The pound is as strong as it is. The dollar has had a tough week today. Maybe picking up a little bit, but we've seen a lot of dollar weakness and a lot of yield weakness recently out of the United States. Today may be dollar strength being driven by growth worries out of China. We've had a triple R cut, but I think to be honest, it's Thanksgiving week and whether or not you really going to read too much into the price action. Well, that's up to you. Christine, the kino here, though, to provide some clarity. Do I believe the price action this week? A little hard to trust, isn't it, guy? I mean, I think we're going to want to see a bit more sustainability in this current move at the moment. You know, if you're somebody who's hoping that the dollar finally takes a breather from strength, you'll certainly be encouraged by what we see. But there's a lot still on the horizon toward the end of this year. I can easily. Let's do it next week. So the Fed minutes, I thought were quite dovish. Lael Brainard looks to be in the ascendancy. Looks as if we're downshifting from 75 basis point hikes to 50 basis point hikes. And it was a cautious kind of tone that seemed to come out of it. But Jay Powell speaks next week. I think it's Wednesday. I'm wondering whether or not there is a danger that the Fed chair sounds a little bit more hawkish than maybe the market's anticipating. Yeah, there's definitely that risk guy. And I think it's going to be very instructive for the Fed as well, just kind of looking at the market reaction to the minute and kind of tried to recalibrate our messaging. Right. Because they're going to have time to parse that part of the market reaction. See, OK. Maybe markets are taking this too far and make that judgment and and how Jay Powell come out next week and push back against any, I guess, overly optimistic option that the Fed is getting closer and closer to a pivot here. He's also got payrolls on Friday, first Friday of the month. And again, the labor market front and center. Absolutely, guy. Yeah, I guess the continued question is, you know, can the job market really withstand what the Fed wants to do, which is take those rates, take that peak in the terminal rate much higher than they originally anticipated. To the 5 percent level. And really, the job market is really key to that equation, because so long as the job market is looking like it's robust, then that's fine. But as soon as it starts showing signs of weakness, then maybe that gold toward 5 percent gets a little shakier. Buildings really surprise me this week has been how hawkish European central bankers have sounded. Stephanie, events over at the the record bank talking about kind of he'd like to see things going at a slower pace, but he's he's prepared at this point to raise rates at 75 basis points. Dave Ramsden over at the Bank of England. I thought sounding very hawkish and all of the ECB speakers, maybe excluding Philip Lane, but certainly some of the more hawkish ones sounding very hawkish. Absolutely. And you almost want to think maybe the Fed has given them a bit of an opening. Right. Because I think the part of the reason why a lot of these other central banks have had such a hard time really delivering that message that they're serious about inflation is that just the Fed has really outrun all of them all this year. And we see that interest, the trajectory of the dollar very clearly and everything else in terms of the G10 currency space just falling behind. And so you probably would think that now that the Fed has kind of delivered this more nuanced message, this is the time for other central banks to strike and whether they put their money where their mouths are. That remains to be seen, but certainly an opportunity for them. Thank you very much indeed, Bloomberg. Christine Aquino. Great stuff. The other factor that could influence things next week is the little trip that we are going to see by the French president to Washington, D.C. I say little this could be really quite enormous because you've got this whole issue about the Inflation Reduction Act that is really getting the French hot under the collar. The Europeans can't quite figure out what the united front is on this. But we've got we've got a press conference that's taking place right now. That is Elizabeth Bourne, the French prime minister. She has been talking already about the US Inflation Act, saying that the U.S. Inflation Act must not must not distort competitiveness, that the Germans are taking a more cautious line on all of that. We're going to continue to follow this. It is on the Bloomberg as well, if you want to follow it along as well. But this is this is really important. France and Germany trying to figure out what exactly they're going to do because this, they think, could have a meaningful impact on made in Europe. Is the German chancellor, Olaf Schultz. OK. Coming up next, we are looking at Manchester United is up by 22 percent today. The Saudis are apparently interested in backing any bid for the for the team. This, of course, as we await the big game a little later on this evening, England versus the USA. This is Bloomberg. It's time for the Bloomberg Businessweek to look at some of the biggest business stories in the news right now and wish you could get it. It's a major reversal of Twitter's content moderation policies. Elon Musk says the social media platform or boss expanded the reinstatement of banned users starting next week. In response to a poll conducted by Musk, about 72 percent of participants voted in favor of a general amnesty. The suspended accounts shares of Activision Blizzard are lower. Politico reported that the Federal Trade Commission is likely to file an antitrust suit to block Microsoft's sixty nine billion dollar takeover of the videogame maker. Microsoft said it is willing to address the regulator's concerns. Bloomberg slammed the European Central Bank is imposing high capital requirements on lenders, including BNP Paribas and Deutsche Bank. It argues the banks have ignored warnings to cut risk in the lucrative business of leveraged finance. Deutsche Bank executives have said they don't agree with the ECB and that is the latest business. Really good. Thank you very much indeed. So where we're coming to the end of the day here in Europe, it's light volume. The US markets are closing early. They are open today, though, giving us a little bit of a lift. But volumes on both sides of the Atlantic are very light. Stocks extended down by around two tenths of 1 percent, with trading at 440 on the nose. You are seeing a little bit of dollar strength today. So the euro is down versus the dollar going to one eye for a full handle. But as you can see, certainly a very small move, similar sorry, when it comes to the pound as well. Well, I do want to flag is what is happening with Credit Suisse. The stock is down again. We are trading down by another 5 percent today. I think cumulatively over the last five days, we're down by circa 17 percent. This stock continues to be hit and hit very, very hard. And it's an ongoing worry for. For what is happening surrounding this business. The stock weakness really reflecting the outflows, particularly that we're seeing out in Asia. When we come back, we're going to be talking about a European close, a, B. The European economy. Dean Turner, chief eurozone and UK economist at UBS Global Wealth Management, is going to be joining us. Really important CPI data out next week. We'll focus on that. This is Bloomberg.

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Bloomberg Markets (11/25/2022)

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