Sunak Fallout | Bloomberg Surveillance 10/26/2022

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I think the UK is the canary in the coal mine for everybody. Well, even for the US. For Janet Yellen, for the Fed. You don't want to do UK seems to be the conclusion from talking to foreign policy makers when it comes to budgetary constraints. Don't push it. You want to do a UK and Jordan Rochester that the G10 effects strategist over at Nomura. Things are never gonna have to sag ace as a brett futures right now and S&P negative three quarters of one per cent on the S&P 500. We are lower off the back of weaker than expected earnings after the close yesterday. Yields are lower two on treasuries, down 3 basis points on a 10 year, just not the 4 per cent close to four point one per cent. I say on treasuries because they're not on gilts. Year to year in the UK is up 11 basis points to a 10 year up about five further along the curve.

30S, 40s and 50s, a whole lot softer and least off the back of a series of headlines this morning suggesting that the UK government will delay the fiscal statement. They are going to delay that fiscal statement. That new date is November 17th. And what's the implication here that basically the Bank of England does not have any space to really pull back from a 100 basis point rate hike or something more aggressive in the face of inflation, and that is going to bleed into this whole rate structure to structure higher. It's unclear why they're doing this, as you pointed out rightly, John. Why not come out with some framework, some bones and say here, this is what it is. You're going to hear more deal details and it'll be our assessment on November 17.

I think the chancellor is trying to do that right now. So let's get over to Lizzie Burton, a Westminster. Lizzie, the chancellor is speaking just moments ago. Walk us through what he had to say. Well, he's trying to reassure us after Mohamed El-Erian has said that this delay could reawaken the bond vigilantes, who says that there will be a full forecast from the Office for Budget Responsibility. He's spoken to the BBC governor, Andrew Bailey. The priority is restoring economic stability. Debt will be falling in the medium term.

They are willing to make politically embarrassing choices. This is what we've heard so far from the chancellor, Jeremy Hunt. He's kept his job. Ultimately, he wanted to press ahead with the original Halloween date. But what we've heard behind the scenes is that Rescue Sue not wanted the delay because, of course, this is premiership defining. In answer to your question, why did you not want to delay? He used to be the chancellor. Remember, he's going to want to delve right into these books. And as homeowners puts it, these are eye watering, difficult decisions that need to be made. Although former VOA and OMB are official, Charlie Bean has said that he expects the fiscal black hole may have shrunk from 40 billion pounds before to now just 30. Still, they are going to want to look closely at which levers are pulling Joe Weisenthal. November 17th feels like a lifetime away. Let's get to November 3rd. First of all, that's when Governor Bailey has to make a decision at the NPC with the Bank of England. Can you walk us through what the decision is going to look like now? Well, you have to take into account that we're now into double digit inflation. Back where we were in July.

But given that we're not in the space of trust, genomics investors had pared back their bets from hundred to 75 basis points. I think you'll probably see you've still got the hawks on the committee who are worried about this getting out of control. And it wouldn't have taken at the last decision many more to join them, to push them towards a bigger hike. Well, they want to front load.

Will they have less of a need to do that now, given that we seem to have someone who is desperate to reassure us that they've got their hand on the tiller, that they couldn't calm the markets. That is the ultimate message that Jeremy Hunt is making here, that they will balance the books in the medium term. So you have to wonder, will the GOP be reassured by this message from Jeremy Hunt over in the United States, Lizzie? They're starting to become some pushback against the Federal Reserve.

And how quickly they're raising rates is very similar feeling in the United Kingdom right now. And on the margins, politicians coming out and accusing the Bank of England of moving too quickly given the deteriorating growth prospects. Is that something that's in the Zeit Geist? Well, swing of the pendulum. That would be after the whole summer. Andrew Bailey took flack for not acting fast enough on inflation. The BNP even being threatened with mandate review, although that seemed to drop by the wayside as soon as troops got into office. There may be criticism, of course, because this is hurting ordinary Britons. And one of the big criticisms of Russia soon, OK, is that he's so personally wealthy, he can't understand the plight of ordinary Britons in the cost of living crisis and then to have the Bank of England making it even harder with a massive rate hike.

I'm sure that there are many people who don't want that. But you've seen mortgage costs coming down because markets have been reassured by Rashi not taking over. So I'm sure that many people have their views on the Bank of England, but at the moment it seems like they are leaning towards 75 basis points. Risky to DAX hurting his reign with popular support, that is sufficient. Should there be some sort of general election in two years? Look, he's got a huge mountain to climb here. All the latest polling shows that I think two thirds of people from from in a YouGov poll said that they thought he was out of touch.

He's really going to have to make an effort to convince people that he's genuinely empathetic to their cause. He said a lot in front of Downing Street yesterday about how he's fixing the mistakes of his two predecessors. And yet if you look at his selection for cabinet, he is reappointed. The biggest names of trust, his cabinet, the three great offices of state cleverly brought him back and brought him. And of course, the home secretary supported this policy of shipping asylum seekers off to Rwanda. Does that look like the compassion that rushes soon? CAC was promising. I'm sure that this is the question that Labor's opposite the opposition leader let armor is going to be asking at prime minister's questions today, Braverman.

They're seemingly because, you know, it's hard to do a deal with the Tory right in order to get into office, a complaint that the deputy labor leader until Arena has been making. So, you know, there's hope that this is the new era of boring versus boring and a calmer time. But getting into office is probably the easiest bit fresh U.S. Dollar Index. I think we'd all like to get forward and quickly. In the UK. Lizzie, thank you. Lizzie Borden in Westminster. PM's queues in the UK starting in about 35 minutes time. Lisa, I have to say, in normal times this is pretty straightforward. You've got a new prime minister. He wants to go through things and make sure that a fiscal plan is it and he's onboard with it. So you wait a little while. These aren't normal times.

And I think this makes it very complicated for the Bank of England. I don't go too far with this, though, because there is an opportunity now for the chance from the prime minister to really lay out what they plan to do on November 17th. And if those plans, they spooked this market too much, maybe you can get back to, dare I say, business as usual. My issue is and this is where I'd push back just a little bit. If they pulled it over Liz Truss and came out with some sort of plan that did not actually become feasible and some sort of economic level, they had to walk back, that would be so damaging for the United Kingdom yet again. So that's my one pushback. That seems like maybe it's in their best interest to wait a little bit longer. I think yield curves a bit of a mess.

I have to say, it's up nine basis points that are front and 10 years not doing much then that the longer end on a 30 year, 10 basis points as well. This market's been a bit of a mess over the last month. From New York. This is Bloomberg. Three days of big gains on the S&P 500 colliding with negative news after the close yesterday. Let's go straight to our futures right now and the S&P down seven tenths of 1 percent. Guidance from Microsoft, weak numbers from Google, not great matter. Coming up after the close, the Nasdaq 100 futures down one point six percent. A rally in the Treasury market. The House price growth data yesterday.

And the United States not great at all. Yields lower, much lower and lower again this morning by three or four basis points on a 10 year to just north of 4 percent on a two year, down three basis points of 444. Bear in mind, we had a look at 460 in Friday session on a two year. We've backed away from those levels in a big way in the last couple of days, including in the session on Friday as well. What a finish of foreign exchange. What you do see right the way through G10 this morning is a much, much weaker dollar.

And even with the concerns in the U.K. that pound strength, it sticks 115 60 in a high recession, bromo 116 20 on cable at the end of September, 1 0 350. So we've gone from what, 350, which is a generational low in a currency. And now we're back at 115, 60. And some people might say this is very much a Britain story. There is leadership. And Rishi Snack is thought to be coming out as a more conservative plan of austerity. This markets also could be very much a dollar story. I mean, there are reports that China is selling its dollar holdings in order to support the yuan, that we see that kind of intervention coming from over in Japan. How much is that also a big piece of what's going on more broadly? This is what the rest of the world wants to see right now. Japanese, Chinese, the Europeans, you'd imagine this is what they want to see. Well, I mean, this makes it easier for them to not import inflation to such a big degree. At the same time, how sustainable is it if it's just a matter of selling dollars or selling affects reserves and there is no structural change in either the economic outlook or some of the monetary policies of the likes of Kuroda. If you'd like the update on the United Kingdom, the sequencing before today looked a little something like this at the end of October. You were set to get a fiscal statement from the chancellor and the British government, and then on November 3rd, you would have a Bank of England rate decision and ultimately the BSE, the NPC, would be able to sit around a table that have the fiscal plan and they could make a monetary policy decision. Well, we understand from this morning it's that plan will be delayed. That statement from the fiscal side of things from the U.K. government will now come on November 17th. So when the NPC gets around a table, Lisa, there were half those plans, I guess will have a decent idea of the direction of travel from the British government because we'll hear from really soon at the prime minister in about 30 minutes time.

OK, but you raise this and I think it's a really important point. The market moves now. They're not going to wait until November 17th to move. So how much are they going to adjust their plan depending on where the market is? And if they do see some sort of being moved, they pull that up. I mean, this is the issue when you have a vigilante market. How much do they pressure a really soon act that's trying to be deliberate and methodical and playing both sides here? Because I'm not sure the right answer, but it shows a real tricky bind right now that the U.K.

Isn't. I'd say relative to the moves we've seen in the bond market, specifically the gilt market over the last month, a move of 70 basis points that are front end is not a major, major move. I mean, we were talking about 50 basis point moves several weeks ago. Absolutely. I would agree. Well, what happens if the Bank of England says, OK, we've got to go 100 basis points? We have no idea what they're going to do with Cheryl concerned about what's going on with inflation. Does that change the equation for that and what comes out November 17th? Do they start to feel pressure? I'm just. Right now, you're right. The moves aren't that major because pretty soon act seems to be the controlling kind of, you know, status quo and bringing things back on the rails. How long can that for now at least sooner can hunt seem to have the credibility that quiet saying and trust did not have to? Your point was that how long does that stick? I guess we get to first test in Qs in about 27 minutes time and then we'll get reaction from Lizzie BURDEN from Westminster to.

Joining us now is Asa Linnaeus, the global head of ethics strategy at RBC. So I'd love your reaction to what we're hearing from the British government and ultimately what it means for pound sterling with cable singer high. The session are 116 20 this morning. Sure. I think, as you said, a lot of this is dollar weakness rather than sterling strength. But on the UK side, some interesting developments because I think soon I can hunt probably right to actually delay that statement suddenly from October 30 first. I mean, the tabloid writers would have had a field day with the Halloween headlines. And yes, it makes the Bank of England's decision a lot harder on November 3rd. But I think what's so lacking, Hunter hoping is that if the current momentum continues, you can see global bond yields actually coming down everywhere, that the whole they have to fell on November 17th will actually be smaller rather than larger.

I have no idea. Lisa, why was ever October 30 first? As soon as I saw the headline is exactly what I said. Why are they doing this somehow? Oh, my gosh. I always feel like I kind of wanted to be October 30 first so that we can see those tabloid headlines. I mean, is that really a reason to delay? A lot of people talked about the incompetence of the former leader. I always had a problem with the October 31. I think it's great timing, major particulars. So we do have a meeting of the NPC, the bank, giving that the decision will come on November 3rd.

Does this complicate things for them? And to what degree? I think for this meeting, probably 75 and then wait and see further out the curve. That's quite a lot in the price. And actually we're looking for, say, you know, June 23, Sonya's to rally a little bit, but they don't need to make those decisions right now. They suddenly don't need to give any forward guidance. No, they'll be very much guided by what comes out on November 17th and the save the market as they make each and every decision. So, yes, they're not in an easy position, but I think that position is a lot easier now than it was a few weeks ago. Also, as you said, this is also very much a dollar weakness story. How sustainable is that dollar weakness? And that's a critical question is, I mean, we had on Friday that apparent shift in rhetoric from the Fed right before the blackout. Then over the weekend, developments in China made markets a little bit risk averse on Monday. Now appears to be timing again. Now we've seen near a dollar break, some pretty big levels, not just parity, but the downtrend that really started in January. And so if we see a combination of lower yields, slightly higher equities, I think the dollar will be in a little bit of trouble the next month ahead. Longer term, structurally, like you said, it doesn't change anything fundamentally.

But for now, I do think there's a little bit of profit taking and a relief rally for other currencies. John, also, as you're saying, on Friday, we got hints of something different from the Federal Reserve. Is she talking about a particular article in The Wall Street Journal? Is that really what people are hinging this on? I don't think you need to read the article in The Wall Street Journal. I think Mary Daly said it for South over the San Francisco Fed. I think other Fed presidents have said the same thing. This whole idea about a step down, though, can you have a step down without the CPI confirming a deceleration in inflation a much bigger way? Now we can all identify falling prices. And I've heard the pushback and I'm sure I'm going to get it any minute now. Mean, all messaging lights up.

I get all of that. It's not about what I think the Fed should do is what they're going to tell us. They will do what they're telling us they will do is that they need a convincing, convincing several months may be worth of core data that tells them that they're on a trajectory back towards a 2 percent inflation target. Well, and there's this other question of, let's say the Fed does have a step down. Right. And then they keep rates at four and a half percent for a prolonged period of time or else. Is that going to mean that the dollar is going to be weaker or does that mean that it will be stronger because it will be a more persistent higher yield and it means that the rest of the world isn't catching up necessarily at the same pace? Right. And that's what I wanted to come on to. You know, the structural comment, because to your point, Lisa, if they are going to keep rates at 4 and 1/2 percent and yes, other central banks are hiking, but they're also beginning to slow down, the dollar is going to maintain that yield advantage and that's going to maintain effectively the status of the highest carrier, one of the highest carry currencies within G10 and even relative to several emerging markets. So, you know, I think you've got to distinguish the kind of short term tactical repositioning from the longer term structural moves at the moment. We've not yet seen that turnaround in U.S. inflation that will really get the Fed to actually cut rates rather than just pause the hikes.

So bear with me. This isn't exactly a butterfly theory. But how much is the UK getting a reprieve from what Japan and China are doing to try to support their currencies? I mean, it's often been said that politics is all about timing and you can't exactly feel sorry for less trust, but you can look at mobile developments and feel like. Had she not had such terrible timing, she perhaps might have lasted longer than that. Let us know. What I'll say is that, yes, there is a bit of a reprieve here for the UK, but secondly, they have their work cut out as well. It's not going to be straightforward sailing, especially the current count as it is at the moment.

Did you remember when F1 got really excited about step down and rate hikes early this month? And it was because the RPA over in Australia didn't go 50. They went 25? Well, we had CPI data out of Australia overnight for the third quarter and it's surprise. Big time to the upside. ISE. I know this is a lagging indicator of things and I'm sure the RBA has got a lot of tightening in the pipeline. But is that a warning shot to this Federal Reserve? Hard, but I think Causa will be interesting to see how the Bank of Canada reacts today. If you recall, the Bank Canada hiked in March just a couple of weeks ahead of the Fed, and at the time they were very much seen as, you know, leading things. The RBA was still very much stuck in its forward guidance. So let's see what the banks can do today. Very finely balanced decision between 75 and 50. I think a lot of people will be looking at that as a sign perhaps of things to come. So wonderful to hear from you, as always. As Alan OSTER of RBC, thank you very much.

On the situation with the Fed and beyond, including the UK. The headlines from the chancellor in the last 50 minutes or so were willing to make politically embarrassing choices. Many changes affect our forecast even in the last 24 hours. The accuracy in the forecasts is, quote, very important on the sequencing. And I think the sequencing is problematic for many of you, I'm sure. Would it make much more sense to have the fiscal plan than the monetary policy decision? We're not going to get that. The chancellor said he discussed the new timetable, Lisa, with the Bank of England governor. So he's had that conversation with Governor Bailey in. It's over to you, Governor. Baby. Now, next week, November 13. So how does he handle this rate, especially given that inflation is still considerable and that there is going to be some sort of likelihood of an austerity kind of plan? Do they raise by 100 basis points and kind of come out of shock? And are I keep going back to the fact that Bank of England is underwhelmed with respect to rate hikes? Again, without a doubt.

So how much do they need to regain a sense of credibility on that side to say, look, we see that inflation as the foremost problem, we're not going to get involved in political games? This is our view. I'd love to know what they're going to do with Q2 and for how long. I keep bringing this up an affair and do it again. The ECB had to come up with its own little mechanism, which hasn't been activated yet, typically to deal with spreads TPA.

Typically the transmission protection instrument, whatever that is that the O'Jays had to intervene in the affects market. The Bank of England had to intervene and the gilt market and the Federal Reserve's doing KUTI But many, many people. Do you think Kuti is going to make it to 2023? We've had the financial stability concerns in the likes of the U.K. We've had them in Europe before they even got going. We've had Japan had to step back in. The reason I ask this is because we caught up with Mohamed El-Erian yesterday and he said if this Fed backs away, it's going to be for financial stability reasons. And that's not great. And if they have to do, it's because of financial stability reasons, he thinks they get stuck in a quagmire of stagflation. That's a big, big problem. A major issue I have with a lot of people. The moments to come on the program. They say the pivot, the pause, the step down, it's really, really, really bullish. OK. It might be in the short term, but it's not if it's for the wrong reasons. And that's what I think Mohamed El-Erian and others are trying to say. And this is what we heard from some of it yesterday. He was saying it's not clear and 10 year treasuries aren't necessarily screaming buy here because of just that fear, which is very much on people's minds. Futures on the S&P right now down seven tenths of one per cent more tech earnings.

Still to come, we'll catch up with Ashok Matt Miller, the deputy CEO CIO of fixed income over at Neuberger Berman. From New York, this is Bloomberg. Keeping you up today with news around the world with the first word. I'm Lisa Matteo. New British Prime Minister Rishi Sue NASDAQ has delayed an economic plan that was due to be delivered on Monday. It will now be released on November 17th, according to Sue Next Office. He wants more time to make the, quote, right decisions on managing the British economy. Our number one priority is economic stability and restoring confidence that the United Kingdom is a country that pays its way. The government wants to close a fiscal gap that could be as much as 46 billion. Europe is running out of time to act on natural gas before winter. The bloc's still can't agree on what a price cap should mean. Policymakers have gotten a break.

There is a surplus of gas in Europe, thanks in part to warm weather, but that's cause a sense of urgency to fade. New York still the most expensive rental market in the U.S., but Boston has now passed San Francisco for a second place on the list, according to rental listing companies dumper. The median one bedroom rent in New York now three thousand eight hundred sixty dollars. Boston rose almost 6 percent this month, three thousand sixty, while San Francisco is forty dollars less. Google parent Alphabet appears to be preparing for tough times as the economy slows. The company reported earnings and revenue that missed expectations. Advertising sales also were less than expected. Later, Alphabet said it would slow hiring and control expenses. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Lisa Mateo. This is Bloomberg. The risk of a U.S. recession uncomfortably high.

I don't like it where it is. I don't think it's a done deal. I don't think it's 100 percent. The labor market is still strong, but it requires a Fed that has a lot more skill and a lot more luck because it no longer has time. The brilliant Mohammed Al Shery Ahn, blending opinion columnist and president of Queens College, Cambridge. If you just tuned again, futures recovering a little bit on the equity market. The S&P 500 down by six tenths of one per cent. The underperformance, of course, on the Nasdaq, where the big weightings are taken by big tech and big tech, disappointed after the close yesterday. We'll get to that in just a moment. You oughta lower by four basis points on a 10 year just north of 4 percent. The dollar is a whole lot weaker. Euro dollar with a one in front of it for the first time in a long time above parity here. A total positive, about five or six tenths of one percent.

Lisa, going into the ECB tomorrow and I said this a few times this week, I never thought we'd see a week where the PMI ISE were in the 40s and we'd see the ECB, never mind hiking, but hiking 75 basis points. And how far away are we from politicians pushing back and a much more meaningful way? You've got hints of that in the US. You also get hints of that from the Italian prime minister. How much are they going to start pushing back and saying, ISE, maybe you don't need to do this. It's not the right way to go about reducing inflation hints of that. I think you're being quite comfortable reporting yesterday. I felt that the Senate Banking Committee share Sherrod Brown has written a letter to Chairman Powell that said we must avoid having our short term advanced and strong labor market overwhelmed by the consequences of aggressive monetary actions to decrease inflation, especially when the Fed's actions do not address its main drivers.

Chairman Powell in Jackson Hole talked about pain. I keep going back to that speech in Jackson Hole at the end of August. He talked about the amount of pain we'd have to go through because the greater pain was not dealing with it. Well, we're about to see some of that pain potentially in the labor market. And the political pushback you're going to get is starting to build down in Washington. But it's on the margins, right? Yes, we have heard that from Sherrod Brown. But how much is this becoming the mainstream, this sort of drumbeat? Is this just basically ahead of the midterms to try to shift the blame or is this something that's sincere, where people think that the Fed is actually going too fast at a time when inflation is the highest that we've seen in 40 years? I'm not sure about that. I think it was a politician. It's definitely politics. But I imagine it's also a bit of both. Yeah, I think that concern the Sherrod Brown House is a concern that many economists on this program have politically when he's talking to tech earnings. After the close, we get Facebook.

We've had the outspend disappoint over a snap. It's disappointed over at Google. We get Switzer potentially in the next hour or so. Mandy Hang Seng joins us right now, senior technology analyst for Bloomberg Intelligence. Mandy. What are you learning about ad spending, some of these big tech companies? Yeah, I think alphabet results show that not everything was priced then. You know, we talk about negative revisions and how we've seen, you know, SNAP top line being revised 30 percent for next year. In the case of Alphabet, the estimates have come down by 10 percent. But guess what? They came out with a disappointing brand and the guidance doesn't seem to be very optimistic. So right now, you have a combination of slowing top line growth. And I think the part that was the most disappointing was on the margin side. Their structure continues to go out of control. They talked about lowering headcount for the next quarter by 50 percent. But still, it's just, you know, the fixed costs continue to rise. And that is what is showing up in alphabets margins, which were down almost 300 basis points below consensus expectations. Let's pass Jason Kelly.

We've heard a lot of tech layoffs talk add. There's questions about how much more they have to go. Man Mandy, are you saying that there need to be very deep cuts to Google's staff in order to become more efficient the way that stock investors would like to see? I think it's more about why are they growing headcount by 25 percent when they could see that the top line was decelerating. And granted, you know, there was some pull forward last year. I mean, in the same quarter last year, they grew 41 percent. Tough. Come get it. But at the same time, you could see the trend line in terms of, you know, the advertisers pausing and, you know, slowing down. Why did they have to grow the headcount by 25 percent? And I think that is what is baffling in terms of how they manage the cost structure.

I mean, this is not the first downturn that alphabet is going through. So clearly, I think some answers around what is it that will be the next leg of growth because they talk about cloud and how, you know, that will be the next leg of growth. Clearly, that's dilutive to the overall margins. And I think in the case of YouTube, there was a marked deceleration. So the headcount growth really is concerning when it comes to outlook. But this isn't just an ad spend issue. Right. Because we also got Microsoft and those shares are also falling because of the disappointing forecast for the issue for the cloud computing unit. How much does this indicate a broader pullback in even some of the services that people thought as essential and in a structural shift higher, that's going to lead to further and deeper cuts abroad among the big tech complex. I think in the case of cloud, you're going to see a digestion phase. Clearly, you know, we saw above trend growth when it comes to digital transformation and just IPO spending overall. So you're going to see a pause.

But in terms of secular growth in cloud, nothing is changing. We still think as cloud will grow, you know, high teens and it's it's a pretty large addressable market at this point of time, 400 billion plus. So I think in the case of Microsoft, specially on the cloud side, that will be more like a quarter to growth, normalization more than anything else. But ad spend, you know, you really have to think about is search saturated.

And granted, YouTube is going to grow, you know, at a healthy 25, 30 percent clip once we come out of this downturn. But the real concern is around the search cash cow. And, you know, how much room does Google have to grow over there? Google Alphabet. I hate calling Alphabet down hard in the free market, down about 5 or 6 percentage points. Microsoft, a similar move, slower a little bit later mandate we get meter high. Calling it matter to conquer is to this and everybody Facebook our mandate. We get Facebook after the close a little bit later. We've talked a lot about how they have different different clients, different customers when it comes to outspend, mandate, the price of the story. It's been battered this year. You know that. Wow. What are you expecting for Facebook a little bit later? More pain, more estimate cuts, post earnings. And look, I think in the case of Facebook, you're going to see ad pricing compression.

I mean, clearly they are the worst hit when it comes to their Apple's privacy changes and the fact that they're not diversified. In the case of Alphabet, at least you have got top line diversification, although it's dilutive to margins. NIKKEI of Facebook, this is 98 percent, you know, advertising revenue. And people are complaining about, you know, their Oculus reality labs and how it's a big drag on free cash flow. All these companies have to think about capital return. Even the alphabet didn't mention a word about capital returns, buybacks. And you're not thinking about why would a shareholder be in these companies that they're not getting that return because the share count isn't going down and the margins are going down. A free cash flow margins are going down.

So I think that is the answer that Facebook has to think about. But clearly there will be a lot of top line pressure in print. It's a different world mandate. Let's catch up tomorrow. We've all had a little look at Facebook after the close a little bit later. Matt Miller is down by about 4 percent. Google is down by five point nine per cent in early trading. And later, I think what was interesting about the earnings yesterday is just the broad sweep of things. It was I.T. budgets, it was digital spend, it was machinery, industry, autos, the concerns all over the place after the close yesterday. Everybody saying that there's a lot of different differentiation within the tech complex, kind of got a dose of cold water on that because shell differentiation is being beaten up in different ways. How much is this going to lead to further job cuts in the tech world? And that's really going to be the theme, I think, throughout all of these earnings, those tech names dragging down the S&P 500, we're down by about seven tenths of one percent on the S&P.

There is a rally in the Treasury market. Treasury yields are lower on a 10 year in America by 4 basis points. And this dollar is a whole lot weaker from New York City. This is pulling back. The volatility, the fear that capitulation has really not been there yet. We do have a recession in Pennsylvania. I suspect it may not be as bad as some of the more extreme forecasts that are out there. Have the markets seen their bottom? We're all talking about the risk of recession, but markets sell to me. Don't have it priced in. I think it's very hard to see something that's going to be a smooth landing in any way. The financial strains are going to become more severe because right now the Fed is on the way to go from 3 towards 5 percent. This is Bloomberg Surveillance with Tom Keene, Jonathan Ferro and Lisa Abramowicz. Three days of gains colliding with negative news after the close yesterday, live from New York City this morning. Good morning. Good morning for our audience worldwide. This is Bloomberg Surveillance on TV and radio alongside Lisa Abramowicz some Jonathan Ferro. T.K.

Back with us tomorrow. Equity futures down six tenths of one per cent on the S&P. We've had three big days of gains, Rameau, and we get some bad earnings, I would say, after the close Satya Nadella. Especially given that this is in the big tech world and there already had been such beaten up expectations considering that they'd failed to meet that bar raises some big concerns for some of the other tech earnings that we get today and tomorrow.

It's earnings from Google, the disappoint. It's the gainers from Microsoft that disappoints. And this was always going to be about the guidance. Never mind 3Q. It's tell us what you think for for Q and beyond. We've got a decent picture of that just yet from these big names. It's not good. I mean, I know it's through Texas Instruments in there as well.

I know we don't talk about them as much, but as you pointed out, this is a broader swath of the tax fear. This isn't just a small electronics and things like iPhones or other things. This area, just the broad industrial complex, as you point out. So how can this be positive, especially when it's broad based? It's not just ad spend. It's also with respect to the investment in the cloud. It's outspend its I.T. investment. It's beyond that. It's machinery, it's industry. Let's talk about house price growth as well. That data point, I have to say, typically at 9 a.m., 30 minutes away from the open, about that data comes out. And for years, I would just ignore no one cares. For years now, all of a sudden, it moves the bond market and moves equities to what you saw is these fastest deceleration in the increase year over year in home prices ever. And just now, we're seeing that 30 year fixed mortgage rates are topping 7 percent for the first time in 20 years, according to MBA data. Clearly, home mortgage rates are putting a huge chill on housing. How much does this actually bleed into the CPI? People are actually excited to see this because they think, oh, this is great. This means a deceleration in inflation.

And other people come out and they say actually, prices are still rising. It's going to take a while to go into CPI. Oh, and guess what? Wages may also be increasing at a faster pace. We'll wait to see that on Friday with ECI, the Fed decision coming up next week. The ECB tomorrow, the Bank of England as well. Next Thursday, we'll get to the U.K. in just a moment. Equity futures right now on the S&P down six tenths of one per cent on the Nasdaq. A whole lot lower off the back of some disappointing tax numbers. More Facebook tech after the close. Brad ISE gonna go through that for you in just a moment. You to lower the bond market on its own year by 4 basis points, just north of 4 per cent on a 10 year treasury. Big moves in the affects market, though.

Tons of dollar weakness against the euro. Euro dollar positive six tenths of one per cent. I'm struggling to get used to parity now, Lisa, but we're back above parity on euro dollar. Do you think that you have to get used to it? I've got no idea. I mean, that's really the question. Can we get used to this? Is the dollar weakness a story that is more pervasive having to do with the rest of the world? Or is this an issue of arguably, perhaps intervention by some major Asian banks? So what's coming up in just a moment, we're going to hear from U.K. Prime Minister Rishi Sumac.

He's taking his first prime minister questions. How much can he give us some insight into what that plan will be that they plan to unleash on November 17th. They want to get a full assessment of it. That might be a good thing in terms of prudence, however it does. As Sharma was mentioning, put the Bank of England in a little bit of a difficult, difficult situation. We are seeing a slight bit of pound strength. Tony Abigail Doolittle. This may be the moment of the day. The Bank of Canada rate decision, they tend to be the frontrunner. If they decelerate the piece of their rate hikes. How much does that set the tone for a step down at the Federal Reserve? And I'm sure that people like, why are you doing that? But it's I mean, I think that that's actually feasible. Right? They have set the tone. Sure. And we'll see what they do. I mean, I'm laughing because if I step down stuff just really quickly, I know that you're laughing. And this has been a conversation for about a month, maybe longer. I know it may be too much.

But I think people are getting hopeful that perhaps we're getting to that point and maybe we'll even get some market disruption in the meadows as we were talking about after the bell Facebook. How much does there confirm this feeling of advertising really decelerating and how much do they sort of add to the gloom that we're hearing? And what point does this lead to layoffs? And I really that's what I'm gonna be listening for. How much is Facebook A cut its staff and how much is this really setting the tone for others? How much is Twitter going to cut of stuff once Elon Musk gets hold of the engineers? You know, so evidently he's going to buy it, right? Friday he's going to close.

We'll see Carlin on the banks. You're skeptical. No. I just think, you know, I remain open minded about this story. You're not alone. Because I got this message on the Bloomberg has said, imagine a world without an obsession with a most Twitter deal. UK politics and Fed speaker diarrhea. What would we talk about? The weather, how beautiful the world is. Joining us around the table to talk about the weather and how beautiful the world is is an umbrella.

The global equity senior research analyst over at Invesco. And a great catch up with you. We've had a big rally in the last three days. We often do this. But I've got to ask the question, how do you know the difference between a bear market rally and something more durable? Good question, Jonathan. And the answer is you really don't until it's well behind you.

But here are a few things that we do know. We know that investors obviously skittish as the Fed pulls away the punchbowl of easy money. And that's going to lead to a lot of mispricing and unsold. As people position for this new world and in these situations, historically, you've always seen that when we're through the worst, the biggest gains off the next leg of the cycle usually come in the first third of the cycle when the fundamentals are still deteriorating, when there's still gloom and doom, when sentiment is still negative. So we know that whether this is a bear market rally or the real deal. You don't want to be sitting it out till someone blows the all clear whistle. And so we are still judiciously bullish on equities.

There's a lot of long term forces to be excited about. Once you look beyond the short term noise and all the headwinds that you've been talking about, equities ultimately are a claim on human progress. And there are so many forces pushing GDP higher over the next five, ten, whatever years that we believe that, you know, mass affluence, new technology, aging, restructuring, these big forces that we call mantra will continue to drive equities and compound them over any long term. What did you say? A claim on human dominance or progress? Progress. Do I really want to buy into the player on human progress made like ISE about? I mean, I have to say, I'm just wondering. I mean, I'm not going to get into that. We don't have to go access DAX. I am curious, though, of whether the recent earnings cause you any questions or pause about what kind of claim on human progress we have at this moment? Well, existentially speaking, these are just for a second. The one tree that has never, ever worked in the history of mankind is to be short human progress that has never worked.

Right. And as Jeff Bezos said, stands by dogmatic human beings have an immense ability to innovate themselves out of a hole. So moving on from, you know, high falutin human progress to what happened yesterday. It's in the headlines that you've put up this morning, right? It's not positive. It's not a sure thing. But we're not having any data points here that suggest the bottom is falling out and that things are effectively negative. We're seeing a slowdown in budgets. We're seeing more scrutiny. Decisions are being pushed out. It's like turbulence on an airplane and put on your seat belts. But the oxygen masks on, dropping it. So are you buying big tech? We are always buying any stream of cash flows where the net present value is higher than the stock price. And with big tech, the larger case for tech or these stocks is extraordinary. Right? I mean, we're living in a world delusion with data. These business models are a thing of beauty. You know, there.

Hi there. Low capital intensity. They're very high. Returns on equity investors would be unwise to ignore big tech. But at the same time, in light of the environment that we've been talking about, you want to be judicious. You want to be in places that have a strong position on the value chain, that have some kind of pricing power and margin sustainability, clean balance sheets and copious amounts of free cash flow. Everything you've said, we could have said at the start of the year, can we? We could have, but the valuations would be a lot higher.

So this, you know. Sure. But that's my point. Everything you've said is true and could have been true at the start the year and we're down by more than 20 percent on the NASDAQ. Haven't we got to reappraise each how much these companies are worth the multiple we want to pay on them? Now we've just blown up 10 years worth of central banks boost in bond buying, leaving rates at zero C negative rates elsewhere. Isn't that the ultimate challenge for us now to work out the price of the risk free asset and the price of risk? And for me, that's an ongoing process. Isn't that an ongoing process for even a team as well? Yes. The one difference between the beginning of the year and now is that valuations are significantly different. Right. So that changes the entire calculus for an equity investor, because at some point everything at a price and at some point when things do get priced in, the risk reward becomes asymmetric. So on a case by case basis, some things are starting to look attractive.

The part that I think we've had, you know, sort of a sobering moment on people who played on the speculative end of the spectrum, the jam tomorrow stories where it was all about taking in free money, growing gang like gangbusters and, you know, having some in the dominant business model manifest at some future date. That story's definitely gone out the window. And I mean, wonderful to catch up with you. Let's do this again. I'm not going to die there at Invesco, but a tough day for equities after a big three days of gains. Only S&P 500 ISE say tough, weighed down by seven tenths of one percent. Not a major move, but lower on the Nasdaq. We're gonna catch up the man with the crystal ball. It's my full Senate block. And Stanley, the CIO and chief U.S. equity strategist, would do that in the next town. This is a man has called this market pretty well over the last year and just last week came out and said you could get a short term tactical rally and leave.

So I guess what, we got a very big week of gains. Yeah. What did he say? Forty two hundred. But we could get up to 4000, those kind of levels. So we're getting there. And then bottom falls out. But, you know, I like nine years idea of a claim on him, a product. So you can sue me. I mean it's like keeps me going after Nouriel Roubini yesterday. But this issue right now of how much do we have to price in a new valuation structure, as you raised is the question. And it's unknown because people don't understand what the end point is and what this inflationary regime is. And it's a really important point that underpins a lot of the volatility we've been seeing. Still trying to figure that out, trying to figure out what happens in the UK. Well, we know that we'll get a fiscal statement on November 17th where reporting, Lisa, some of the ideas that are coming about from the U.K.

Government coming in into that fiscal statement, the U.K. seeking to plug a 35 billion pound fiscal hole on November 17th. According to officials, the Treasury has drawn up 104 options to cut spending. 104, 104. Very specific stuff. Exactly. I love it. But this is going to be painful. It's going to at a time where we have high prices, a cost of living crisis, and we're going to see some austerity from the British government. And how much is Reckless Eunuch who has been in the business world and is a wealthy individual? How much will he target some of the businesses with taxes and things that really Liz Truss tried to move away from? How much does he double down on that in order to plug that gap? You know, I talked to the day off to watch PM chiefs and take his message to me right now. A joint PM Q's question time with the prime minister and Lizzy Burnham is going to give us some insights to what they're talking about. I think he's practicing his his role playing with jury duty. Know he's trying to figure out. It's like, you know, in the quiet. I've actually got no idea what a gang banging on the table features on the S&P down seven tenths of one per cent.

We'll catch up with Lizzie over in Westminster in just a moment. The prime minister in the U.K. spending does need to be paid for. This is Bloomberg. Keeping you up today with news from around the world with the first word. I'm Lisa Mateo. New British prime minister where Sue Nak has delayed an economic strategy announcement that was due to be delivered on Monday. It will now be released on November 17th. According to Sue Next Office, he wants more time to make the, quote, right decisions on managing the British economy. Our number one priority is economic stability and restoring confidence that the United Kingdom is a country that pays its way. The government wants to close a fiscal gap of more than 40 billion. Bloomberg's learn that Elon Musk is promising to close the acquisition of Twitter by Friday. Musk made the pledge in a video conference call with bankers helping fund the deal. They're providing 13 billion dollars in debt financing. The European Union's executive arm will lay out plans to drastically cut pollution levels across the bloc today. That could potentially eliminate more than 70 percent of the 300000 premature deaths annually over the next decade.

Overhauling air pollution will bring the EU closer to guidelines laid out by the World Health Organization, and Deutsche Bank is signaling that it may exceed its full year revenue target. The German banks traders kept taking business from rivals and rising interest rates fuel income from lending. Deutsche Bank saw fixed income trading jumped 38 percent in the third quarter, beating most of the U.S. investment banks. Global news 24 hours a day on air and on Bloomberg Quicktake, powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Lisa Matteo.

This is Bloomberg. Prime Minister and I have decided that it is prudent to make that statement on the 17th of November when it will be upgraded to a full autumn statement and I've discussed this last night with the governor of the Bank of England. He understands the reasons for doing that. And I'll continue to work very closely with him. Over to you. Governor Bailey, the bank having the decision next Thursday. That was Chancellor Jeremy Hunt in the U.K.. The prime minister really soon asked, declining to say just moments ago in parliament if benefits will rise with inflation. Brahma, we're going to find out what these spending plans look like in about a month from now. And this bank of him, it's got to anticipate that with their decision next week and the likelihood is there will probably strip back a lot of the benefits. They probably won't spend as much.

I mean, that's basically what needs to happen, saying that you have to spend four, you have to cover some of what you spend. I do wonder, though, how much the Bank of England did Andrew Bailey is in the hot seat and you see this column from a former Fed official coach Lakota coming out and basically saying that Marcus didn't oust trusts. It was the Bank of England that dead by not plugging the gap in the regulatory hole. That was some of these pension plans, the pension schemes. How much is this going to be a political issue for Andrew Bailey to try to do the least damage at this next meeting? Look, I know it's a sport to beat up on central banks. I'm happy to participate. Know that. Of course. Of course.

Made a career of doing that. I'm not saying this. I'm saying it becomes this Bank of England. Yes. I have a certain. Just a little dose of sympathy. I think they were incredibly concerned about contributing to fiscal dominance or perceived fiscal dominance. And if they had done so, we would have had a much, much bigger problem in the United Kingdom. Having said that, they do have a responsibility to make sure that financial instability, does it make things even worse? And there was clearly a financial instability concern in the United Kingdom. I would argue that is getting less and less clear how central bankers move themselves in the political discourse, how they remove themselves from offering up either some fiscal discipline or offering up, you know, some sort of fiscal stability to basically say you guys can do whatever you want, because at this moment their policies are directly moving total in tandem with what's going on fiscally. This is the irony of this.

If you try to avoid the politics, you become a part of the politics anyway. There's no way to avoid it. That's another way of saying it. And that's what we're seeing. And so, you know, at what point does Andrew Bailey try to stay out of politics at this tenuous moment with a rate decision that's really important from an economic perspective with inflation. But you've now got governments worldwide, including the central banks in the politics. We've talked about this operation Independence for a long time and developed markets. But look at what's happening in the United States. We've had Senator Warren with at Senator Sanders, and now we've got the Senate Banking Committee chair, Sherrod Brown, writing a letter to Chairman Pound, according to Punchbowl News just yesterday, complaining about rate hikes. We're going to see so much more of this, so much more of this. And what's amazing to me is that the people in power. Did you hear much complaints about zero rates at the Federal Reserve when those people were in power taking advantage of it? And this is the the other edge of that sort. Where is the political responsibility at a time when you need to come up with long term plans and you've got short term election cycles? And what's expedient from the election cycle might not be what's expedient for the economy.

You've got problems worldwide right now. Let's talk about some of them with Bloomberg's Burton over at Westminster. Lizzie, you've been hearing the prime minister speaking in parliament in the last 50 minutes or so. What did you hear? Well, John, if you saw the grown ups back in the room, maybe think I can request where see my press. The reset button sounded a lot like the responses that we heard at the dispatch box as his predecessors, Keir Starmer was using the same old same attack lines that we kind of thought he would. He accused Russia of making a grubby deal with Sue Ellen Bravo Moon and putting her back as home secretary. By grubby deal, he means that he's had to negotiate with the Tory right in order to get back into office. Then to Keir Starmer attacked Ritchie, sued for his wife's tax status. He asked when the non Donnelly is going to get closed. He referred to a video that showed Richie Sealock saying that rich constituencies are going to get more funding. He's really trying to show that message to DAX out of touch in a cost of living crisis.

And Sue DAX response was to respond to refer to Jeremy Corbyn again, to insult Keir Starmer about living in North London again. And it's a worrying time, actually, because she sulak is polls to be. But two thirds of people think that he is out of touch with the British people. So it's an image that he really needs to turn around. I just want to come into your to pay off benefits raising in line with inflation. The appointment of Mel Stride to work and Pensions Secretary is telling. Even if there's no confirmation yet that benefits are going to rise in line with inflation, see stride wanted that to happen. So perhaps that indicates that it will. And also on the Bank of England. Perhaps what needs to happen? This is what former policymakers say to me is more oversight of the financial stability measures. And perhaps that's a job for the Treasury Select Committee. And it links with the Metal Stride question because he has vacated the chairman's seat at the Treasury Select Committee.

So perhaps a job for his new successor. Let is just quickly here. Are you surprised that the four other the other members of parliament didn't come in hot and what this new plan was and what the contours of the November 17th issue was going to be? I have to say they're still going, so I can't I can't tell you exactly whether any of them have gone in or not yet, but I think really the overwhelming message from the government is that it wants to consider these plans in depth. It is promising to balance the books in the medium term and saying that they are in touch with the Bank of England and the Office for Budget Responsibility closely. And so there isn't going to be a huge surprise, as there was with trust and the mini budget. They're trying to say they've learned their lessons and the bond vigilantes don't need to come out this time.

So when in terms of what it means for the Bank of England, it hasn't really changed the rate expectations for the November meeting. What you might see is 50, 55, 70 debate between 50 and 75 basis points. And given the remarks from some of the NPC recently, maybe some words about a lower set of hikes down the line. Say because they've said that market pricing is too high right now. That was Ben Broadbent just last week. Thank you, Lizzie. Great to catch up. Lizzie Burton there over in Westminster. Futures right now down about a half of one per cent, recovering just a little bit. It's a new world. How many times have we said that the last couple of years and then the world changes again? The prime minister in the U.K. really soon saying this, Lisa, inflation is the enemy. And inflation right now, if anyone in power is the enemy. So how do you counter it? Right. And how do you.

That's the problem. And how much can really the politicians do that? How much are they willing to do that perhaps is the better question, because is it going to be austerity? Is it going to be some sort of investment that they can't pay for right now based on where how high rates are without really cutting back pretty dramatically with the economic growth in every single economic downturn for the last several decades has been met with some form of countercyclical circuit breaker. A different fiscal policy are constrained now by monetary policy makers who are grappling with inflation.

That's a challenge for the economy and it's a challenge for this market to future slow it by half of one per cent. From New York. This is Bloomberg. Two hours away from the opening bell. Here's the price action equities down by five or six tenths of one per cent on a S&P 500, much lower on the Nasdaq 100 down by one point five percent. Alphabet disappoints. I can tell you Microsoft disappoints on guidance. Brammer is going to run you through that. And just a moment in the bond market to stance and 30s. Think about the journey where we've been over the last week on Friday through 460 right now on a two year back to 443 year to lower again the house price growth data out of the United States yesterday, softer, much more negative than anticipated. Yields slowed by five basis points today and much lower yesterday. Two on a ten year down by another five to just north of 4 per cent on a US 10 year. A ton of focus on the UK right now. We've also got to focus on the other side of the story, which is just a much, much, much weaker dollar 3G tent, much, much weaker dollar and pound sterling 115 81.

I said think about the journey. Well, cable's at 115. Earlier on it was through 116. It's up about one per cent on the session today. And at the end of September, it was 1 0 350, Lisa. So that's quite a range on a major currency pair over the last month or so. So how many people have you talked to who say with conviction they're all Emma Chandra, they're buying the pound here they think is a great bargain? Think I speak to anyone with conviction about last year. I mean, how many people do some kind of problem that now I speak to somebody steal and then I have conviction about a think, OK, well, this is what area that's trading like in emerging markets.

How do you deal with that? Right. Tremendously difficult for the governor of the Bank of India as well. Even more so now. They've changed the sequencing. I've only got the fiscal plan out of the U.K.. I mean, you talk about conviction that really comes the stock market, too. It's unclear what the narrative is, how much has been baked in. And this really was highlighted by some of the big tech earnings. We already see a decline of 28 percent in the NASDAQ year to date. And yet some of these disappointments were met with pretty severe downturns in some of the shares you're looking at Alphabet or Google shares down nearly 6 percent at Microsoft, shares down 6 and a half percent. Alphabet came out. Google came out. They did disappoint. They talked about shrinking some of their workforce at possibly trying to crimp some of the costs that they're really seeing with the margin compression. That's not as surprising as Microsoft and a negative outlook, a downgrade to what they expect for those who are for their cloud computing unit.

How much does speak as we were talking about earlier, John, how much does this really speak to the slowdown more broadly within Tech and Texas Instruments? Really speaking to that, to those shares down five point four percent. Well, if those three names are up and look at them, it's the breadth of the story here. It's got everyone's attention. It's the outspend alphabet, the disappointment there. It's the guide when it comes to corporate I.T. budgets for cloud, as you mentioned, over at Microsoft and in Texas Instruments.

We've talked a lot about chips. We've talked more so about iPhone, smart phones, computers, all of that. Now we're talking about something much, much broader than that. And that's what Texas Instruments speaks to. It's about industrial machinery. It's the breadth of the story overnight that I think is of some concern to a lot of people. And it's the reason why a matter of Facebook is going to be so closely watched after the bell today and Amazon and Apple tomorrow. If you take a look, you are seeing the declines in sympathy. There are perhaps not as severe, but three point nine percent decline over at Facebook. Amazon is going to be really interesting because that's even broader, right. You see the declines there as well. But Apple, those shares is actually outperforming the Dow just four tenths of a percent. But how much are they coming under fire from their peers saying you guys are not acting fairly? And how much is this really unite some of the big tech names against them because of their because of their app store policies that have gotten really controversial.

If there is a name that can define an earnings season. It's Apple. And we've been steadily lowering the bar over the last couple of weeks. And some great reporting here at Bloomberg talking about how disappointing some the iPhone sales might have been. That demand might be faltering somewhere at some point. We'll find out. I just find myself talking about that so many different times. I feel like I've I've been part of this movie before and ends the same way they knock it out of the park. So if they don't this time, I think it still will have the element of surprise, even though we have lowered the bar because people are used to lowering the bar and then knocking it out of the park every single quarter. How much is that the reason why the shares of Apple outperformed Dani Burger? They're down only 14 percent believe it. People don't believe that they could be that they could be a victim of the slowdown.

So what happens when they aren't? I think that's really well said for sure. iPhone slowed down a little bit. It's a stock chart and I don't really want to talk about it. We see this. They know I'd say I don't know what I say. They just say they are not part of a conspiracy. Just saying it always seems to happen. They target. You have got no idea. Maybe they target a shop. Battery joins us now. Deputy CEO of fixed income at Neuberger Berman. Ashoka, I won't ask you about whether iPhone slowed down or not. Let's talk about fixed income. We've had some bad news, sir. We saw it in house price growth data yesterday and treasuries rallied. I have to say that's new because typically treasuries are part of the bad news and they don't rally at all. Can you take any signal from that or is it still too early? I think we're going into the zone where like our biggest view is the thing that's coming for the bond market is there's a period of devolved ization. That's a word.

But what's volatility? And the reason for that is we're going to be reaching like the bond markets priced for 475 to a 5 percent terminal funds for a Fed. You know, last Friday seems to be signaling they want to start thinking about that, that pause that has been anticipated all year. But once that happens, you end up you're going to pin the front end of these these bond markets to your yields. And then the 10 year yield is going to start moving a little bit more on expectations of growth and whether or not the Fed will ease in 2023 or 2024. And when that starts to happen, the 10 year yield starts to get bounded by just how quickly the Fed could ease as well as, you know, how strong the remaining inflation data can be. But what that really I think is, is transitioning the bond market from is a market where we've been driven exclusively by inflation and the central bank reaction function to an environment where we're going to be driven more by growth in the amount of slowdown and how that ultimately impacts Asian. We don't expect the 10 year yields.

Maybe we can and we will get back down to seventy five or something like that. But just as long as that's generally correct that we're going to get a bit more of a growth centric bond market and a period of less volatility, it should open up for, you know, a lot of a lot of capital to come back into fixed income and that that's the core thesis we have. How concerned are you? Chuck, we've been talking a lot about political risk and pushback against some of the central banks for moving too quickly and crimping growth at a time of great political risk for the people in charge of the fiscal budget.

How concerned are you that the pressure will push the central bankers away from being as aggressive as they might have to be to crimp inflation, leading to a sort of stagflation area or sort of higher inflation environment for longer? That really pressures yields for longer. That risk is definitely rising and I think it's something that that's going to play out for the next couple of years. But it will be a couple of dimensions because the big the big thing for this U.K. news and then the retracement was this has generally been an environment this year where fiscal policy and stimulus was naturally declining and central banks were hiking and both authorities were going in the same then the same direction. And then the UK comes around and we suddenly have, you know, expansive fiscal policy with tightening monetary policy. And it's just sort of inconsistent.

So the two things that are coming in the coming periods are exactly what you said, whether, you know, there's pushback on the central banks. I think we're at a point where central banks are not going to going to be very responsive to that. They're going to stick with with with tightening, at least for the for the Fed. But the other issue that's coming is whether or not just as the U.K. is course correcting to a tighter fiscal policy, that becomes more of a broad theme and balanced budgets and tighter fiscal policy happens over the coming 12, 18 months in other areas and could accelerate any growth slowdown. So I think both of those risks are there developing either side. What does that mean for a credit cycle that a lot of people still think is pretty resilient, at least as far as what's being priced in? And you have the likes of some people, Nouriel Roubini among them, saying people are missing the forest for the trees here. There's going to be something more significant going on. Well, I think we're in the camp that at least, you know, the next 12 to 18 months will be a pretty benign fundamental environment for credit.

And, you know, I do think the market is is generally recognizing that or shares that view. You know, even when equities were making new lows for the year, high yield spreads, you know, 50 to 100 basis points off of the widest spreads we saw. So credit has generally been holding in better. But I think the main thing for the we're thinking about for credit investing is the whole world is going to have to adjust to this higher rate structure. But issuers that have a lot of floating rate debt in their capital structure, they're going to be adjusting first. They're going to see the higher interest expense, the declining leverage, you know, declining that IBEX coverage. Our sense is generally that that's not a default event. It's more of a risk of downgrade is how we see credit markets. But fixed rate capital structures, you know, they have a little bit more of optionality to see how the rates picture develops. So I would characterize us as a bit more concerned about what the interest rate environment means for leverage statistics rather than expecting, you know, a significant default wave over the coming 12 to 18 months. So just quickly on the index, on a high yield index specifically, can you speak to how much the quality of that index has improved over the last five years or so? And perhaps give us a decent idea of how much signal or lack thereof we can expect from that index when it comes to town? I guess how weak this economy is getting and how quickly? It's a great point. And I think it's something that the market will be a you know, the appreciation of what you said, Jonathan, is rising. So the high yield market has gone from roughly sort of a third double B to over 50 percent double.

She wins, it's increasingly more of a permanent capital structure for four companies than a speculative type of capital structure and other certainly single B triple C issuers. But the overall composition of the index is the highest in terms of rating is the highest it's ever been. I think the other element of it is it's a shrinking market, not supply in the capital markets or in the more speculative capital is increasingly going into the loan market and into the private debt markets. And it's leaving the high yield market in a position that is not the high yield market of 10 or 20 years ago. So I think, you know, as you sort of as you said, you know, reading too much of a macro view into high yield spreads is is it's getting, I think, a little harder to draw that conclusion. Really important stuff. I shall always appreciate your time, sir. Ashok Matt Miller of New Peak at Burman likes that final point that I think is tremendously important to his point. People are slowly starting to appreciate it, but how many people come on the program still and say, well, look, it spreads. They tell you this and things are okay.

You need to be looking elsewhere. Well, especially as people use this or they did traditionally use this as kind of this sort of red flag leading to the case that happened. And it's not anymore. Although what does this mean about private credit? Exactly. And that's, I think, the bigger question. And how much insight do we get into what's happening and how soon before the problems? Already in March, a super tough no test is going to catch up with us from Renaissance Macro, but about thirty Eastern. You two are friends again, aren't you? Best friends? So he believes in human progress. And I talk to you both on the same path. We are on the same page right now. It's a beautiful thing. That's remarkable. Nails coming up a little bit like looking forward to that from New York. This is bling back. Keeping you up today with news from around the world with the first word.

I'm Lisa Mateo. British Prime Minister Ricci's tunic has delayed an economic strategy announcement that was due to be delivered on Monday. It will now be released on November 17th to next, seeking more time to make what his office calls the right decisions on managing the British economy. Europe is running out of time to act on natural gas before winter. The bloc's still can't agree on what a price cap should mean. Policymakers have gotten a break.

There is a surplus of gas in Europe, thanks in part to warm weather. But that's cause the sense of urgency to fade. A new report from the United Nations paints a grim picture of global warming. It says Earth is on track to warm by more than 2 degrees Celsius by the end of the century, despite plans to cut greenhouse emissions. The U.N. says the good news is that projections show emissions won't increase after 2030. Higher prices have pushed consumers to tap the brakes on how much they charge up. Visa saw spending growth slowed the most in about a year. Volume rose ten and a half percent to two point nine trillion dollars in the fiscal fourth quarter. A decrease from the 12 percent growth report in the previous three months. Profit still exceeded analysts expectations.

And New York is still the most expensive rental market in the U.S. but Boston has now passed San Francisco for second place on the list. According to rental listing companies. No. The median one bedroom rent in New York now three thousand eight hundred and sixty dollars. Boston rose almost 6 percent this month at three thousand sixty, while San Francisco is forty dollars less. Global news 24 hours a day on air and on Bloomberg Quicktake powered by more than twenty seven hundred journalists and analysts and more than 120 countries. I'm Lisa Mateo. This is Bloomberg. The kind of crack in the inflation landscape is it's going to take a while to get into the index. I can make a compelling case that we are moving in the right direction, that the opposition wants to take us in the wrong direction. But yes, it's going to take some time before it works its way into the index and people feel that they think more, more noticeably. Jared Bernstein has the White House Council of Economic Advisers a few weeks out from the midterms from New York City this morning. Good morning.

Is the price action negative on the S&P 500? Down about seven tenths of one per cent off the back of disappointing ad revenue numbers out of Google, disappointing guidance for software, cloud spend out of Microsoft and disappointing numbers as well from Texas Instruments. A broad sweep of negative news after the close yesterday. A bit later after the close, we get Mazza Facebook numbers coming up shortly. Rally in the bond market that continues this week. This morning, we're down by about four or five basis points, just north of 4 per cent on a 10 year. Talked a lot about this rally in the bond market. And the weakness is seeing off the back of it in foreign exchange, a weaker dollar, euro dollar positive, six tenths of 1 per cent, 1 0 0 2 3. We have a 1 in front, a euro dollar again counter to the ECB tomorrow.

And looking potentially for 75 basis point interest rate hike. There's some news out of Russia in the last 60 minutes. Vladimir Putin, Russian leader, has speaking, wanted to get me rated out to jump on the phone and get us up to speed on all of that. Maria, can you walk us through what we heard from Vladimir Putin in the last 40 minutes or so, Jonathan? And the key here is that you have to pay attention to what Vladimir Putin says and what Russia is doing, whether you believe what they say, whether they mean what they see. That's a separate story, very clear by now that we are in a propaganda war, too.

But what we have today are pictures on Russian TV. Vladimir Putin is overseeing nuclear drills and the Russians say they have completed this training. Everything was on target and the training has gone as expected. Otherwise, it has been successful. Now, there's a number of things you have to keep in mind. There has been a flurry of calls now from the Russians about this dirty bomb. This is an explosive is wrapped up in radioactive material B.S. Ukraine is planning to do this. Ukrainians deny that. They say take the nuclear free atomic agency. Well, agencies come to Ukraine and check in. This is not the case. But nonetheless, the Russians see this today. There's a drill.

The way that some interpret this is that either Russia is trying to reach out to the west to get diplomatic channels going on or actually each. This is a false flag for what could be a serious escalation in the works. And also, Jonathan, put this in context. This is now very sick war. We're now entering the winter. There's a very complicated to move people to movements of army weapons in the winter. And Russia is in a position where they're not advancing. They're having to stay in position, defending against Ukraine stance or counter operation continue. So the pressure for Vladimir Putin has increased. And domestically, this is the Russian army. The right of the nation technically on the ground is a different story. So you have to read the signals here.

I'm being told it's two scenarios. Either this is a fox like this in the making or Russia. Given the desperate situation on the ground, it's trying to make one communications channel. Now back on with the Ukrainians. Them said that's why they're reaching out to the West under the pretext of this dirty bomb. It's a concerning time, Maria. Thanks for jumping on the phone and running us through all of that. We heard from the president of the United States, Joe Biden, in the last 24 hours on this topic. He said, quote, Russia would be making an incredibly serious mistake to use a tactical nuclear weapon. I have to say I'm sorry. Hey, Max, you're in the room with the president yesterday when he got his booster shot. Can you walk me through what's going on with this administration? Because we have this bizarre chain of events happening yesterday where 30 Democratic progressives wrote a letter about pushing the administration to go towards some kind of diplomatic solution and then retracting it and walking it back.

What on earth is going on? Well, what's the status? Clearly, the White House is saying that nothing has changed in their approach with dealing with Ukraine and that they are not in a moment to negotiate with Russia at this time. And then you have, though, Jonathan, what's happening. As you say, it's quite confusing. A lot of people are shaking their heads and unsure where this is coming from. These 30 progressives released this letter that said maybe now is the time as we pair some of these economic assistance alongside diplomacy, even including potentially sitting down and talking with Russia. There was a ton of blowback on this letter from the progressive wing of the Democratic Party. So then they retracted the letter. And you had the caucus chair familiar dry up, had come out and say it was a staffing issue. They didn't vet it because this letter was circulating in the summer. But at the same time, said as the chair, I take control and I and I and I take that responsibility for this getting out. The issue of, of course, you have to think and I'm hearing from representatives saying, well, I signed it in June and it is a different scenario.

Was it really a different scenario? Yes. There wasn't a talk of a dirty bomb every day making headlines. But what you did have in June was protest President Putin installing authorities in occupied territory. Of course, that led to the annexation, illegal annexation of these territories in October. And then there was still fighting on the ground. But NYSE, that's a political back and forth. And we can get into that. We will get into that. Everybody is talking about that. There's a broader issue, which is that both parties but the Democrats in particular, because they're in charge, are grappling with the economic blowback of this conflict and some of the sanctions. Is there a cohesive message that we're getting, especially after we heard from Sherrod Brown yesterday talking about the concern about the Federal Reserve's actions with inflations in terms of what they would like to see it put into place that could crimp inflation more significantly. What's interesting about this letter from the progressive leases that it was 15 days before midterm election, where what is the number one issue, poll after poll, it's the economy.

And then right behind it is inflation. So you have this pressure on lawmakers across the board about to deal with rising consumer prices. And this is what the struggle is and why people may go out and vote, why many are saying the polls are closing and there potentially could be this red wave at the same time, you asked about a cohesive message. I don't think it's cohesive in terms of how the Democrats are approaching the economy ahead of the midterm elections. You had the likes of Sherrod Brown, of course, he's the chair of the Senate Finance Committee. So he's the one that has to overlook what the Fed is doing, writing this letter to the Fed on the heels as well of Senator Bernie Sanders, Senator Warren, over the past couple of months talking about the Fed.

Are they going too fast? They have to keep in mind the unemployment, but is, by and large, the Democrats using the Fed as a scapegoat. Not yet, AMH. Dan in Washington, Emery, thank you. Good to talk about two things with regards to this letter from the Senate Banking Committee chair, Sherrod Brown. The optics and the content on the content, there will be many people that believe he has a point, including the Wall Street economists that come on this program and have flagged exactly what he's saying, which is the Fed's actions do not address some of the main drivers of inflation. Then you've got the optics through all the complaints about the former administration, about the way they dealt with this Federal Reserve. If this pushback grows from the other party down in Washington, D.C., then they're both playing the same game. And this Federal Reserve, I think, is finding itself in a very, very sticky spot. When I saw these comments yesterday, the first thing I thought often to mentioned, they said this morning with the comments from Chairman Pound in Jackson Hole, the end of August, when the chairman comes out and effectively tells everyone doesn't even whisper it.

What we gonna do is cause some pain, but if we don't describe the pain for not dealing with it. So ultimately, what they're telling you and it's in their projections is that the objective is to get unemployment up. That's part of the goal, to get unemployment up, to get inflation down. And we said repeatedly on this show it's going to be very, very difficult to convince people in Washington and across this country that higher unemployment is a price worth paying to get inflation down.

And this is going to be a very difficult thing, because how does the Fed chair, Jay Powell, continue to reinforce that message when the political blowback starts to get that much more intense? And it does get more intense, particularly ahead next week when this Fed is set to go again, potentially by 75 basis points. Coming up in the next hour, do not miss this is Mike Wolfson of Morgan standing next. Right now, all central banks are playing tough and talking tough and acting tough. I think that the Fed is highly aware of what they've done to financial markets. This is a world where we're going to see a very significant slowdown in activity in this economy. The recession risk that we're seeing are by no means uniform. Everyone's waiting for this Fed meeting next week. But I think the message will be, nope, we're going ahead.

We're still staying hawkish and the dollar will rally and Christmas. This is Bloomberg Surveillance with Tom Keene, Jonathan Ferro and Lisa Abramowicz. No Fed speak all week, it's been wonderful. Bless, folks, I have to say live from New York City this morning. Good morning. Good morning for our audience worldwide. This is Bloomberg Surveillance on TV and radio alongside Lisa Abramowicz. Some Jonathan Ferro came back with us tomorrow. Futures right now down three quarters of one per cent on the S&P. We've had a nice run, three big days of gains, bromo and then the earnings set up around the head yesterday evening.

I really think it's been blissful for the last couple of days or we really should share Blair's period now. It is the quiet period definitely creates more focus on the actual data. And the data has been softening on the macro level, which was bad news was good news. And then you got the earnings, which perhaps changed the scenario and really raises the specter of how much has actually been priced in, given that any messes were heavily punished in the aftermarket. We've talked about this a million times. Can you make the argument we've priced in a bulk at a rate hike in cycle pricing of 5 per cent terminal rate? I think you could probably make the argument better now than you could three, four months ago. Fine.

Have we priced in the consequences of that rate hiking cycle? Most people in this program say no, we haven't. So we start to see some weakness of the earnings. And it was a broad sweep of earnings too. It was ad spend at Google. It was I.T. budgets, corporate I.T. budgets in the Microsoft projections that got people's attention. But concern there. Texas Instruments as well. Just speaking to the story that it's not just about smartphones are computers. This slowdown might go beyond that. And you talk about how we haven't necessarily priced in the ramifications of higher rates for longer. We don't even understand what the ramifications of inflation themselves are on some of the consumers. Right. So how much is it because inflation is high, consumers are pulling back. We don't know where the economy is going to be, just in a broader sense. The issue is if you get an economic slowdown sufficient for a step down or if some sort of slowdown in the pace of rate hikes, is that good news or bad news? You've been asking that all year. And right now, at least treated by the earnings, the way that they've been treated in after market hours.

It has been bad news. Bad news is bad news. And how much can that continue? Well, it depends why they're doing it. NASDAQ going from 75 to 50 to 25 percent because the economy is slowing down. It's not great news. If you're going down from 75 to 50 to 25 because you get this positive supply side response, that's good news. That's bullish. That's great. They've got to back away of rate hikes because you got the supply side solution to the inflation problem. But if they've got to destroy demand problems, if it's because of financial stability, big issues. And that's what Mohamed El-Erian had to say on Bloomberg yesterday. Here's my issue. And this is really highlighted by Google earnings yesterday. You heard the CFO come out and say that it takes time to move this ship rate, that they're trying to pare back some of the headcount, trying to pare back some of the expenses in order to have bigger margins. But it takes time. So they have to get those plans in place.

If the Fed turns around and stops raising rates as much, how much but actual factors that have an economy that's already turning around that already will lead to higher unemployment was pretty bearish stuff. I'm just I mean, look, we listen to, you know, Nouriel Roubini and he made some good points. I said to Mohammed, I caught up with Mohammed after he caught up with. I said to Mohammed, it's good that Nouriel came before you because he set the bar so, so low that even Mohammed was standing constructed. I was right.

Relative to nearly a hundred downright optimistic. It's not a done deal that really recession Jason Kelly. When, boss, since when was this optimistic to say it's not 100 percent a done deal that would get a recession? NASDAQ NASDAQ these days, especially for Mohamed NIKKEI. That tells you a lot about sentiment. That tells you something about also following Nouriel. Ratio is down three quarters of one per cent after say I start the book last night. If I come in. Day after day. Increasingly bearish. Why don't you come in looking haggard? A message Neri had last night sort of stayed the book. And let's see how you can follow me and say what I sound like in the next next line with Nouriel Roubini. Futures down three quarters of 1 per cent on the S&P. That's a rally in the bond market. Yields are lower by 4 basis points. We're just about 4 per cent on a 10 year. That rally in the bond market continues. Interesting to see some dollar weakness out there as well. Euro dollar back above parity. Back with a one handle on euro, Donna. There you go.

Euro dollar positive, about a half of one per cent. But Lisa, I think that barometer in the bond market is curious off the back about news. We finally started to see the risk mitigation characteristics return to the bond market in response to negative data, particularly specifically off the back of that house price growth data in the United States. And will it all be killed with the CPI report? Right. I mean, at what point does the proof really come in inflation that isn't coming down in certain areas? People think that, yes, housing prices are increasing at a slower pace. You're seeing retailers discount certain items. You're seeing car prices, used car prices, not new car prices come down. How much will that really bleed into broader lower inflation versus simply kicking the ball over to imply higher costs and other issues? I keep saying there's a man on Wall Street with a crystal ball and the fortune teller joins us right now. Mike Wolfe to the CEO and chief U.S. equity strategist at Morgan Stanley. Might want to catch up with you, sir. I say this because you come out last week and talk about the short term tactical call of a market is going to mount up a little bit, maybe through 4 K again on the S&P 500.

And here we are, massive week of gains last week, first couple of days this week, pretty tidy. Well, what is it about the short term? Michael, we could talk about the longer term, but what is it about the short term between now and maybe the start next year where you become a little bit more constructive? Yeah, you know, it's a it's a tough gig, right? Making predictions is a tough job, especially about the future. But that's. The life we've chosen. And we have to try and make these tangible calls and we feel like they're actually tradable. And we do feel like we got to a point a couple weeks ago, mainly for technical reasons. But there are some fundamental things that are changing, too. Now, this summer, we didn't actually try and pivot into a tactical move because we didn't have all the elements.

Let's talk about them one at a time. The first one is, you know, sentiment positioning is extremely bearish, probably as bearish as we saw back in June, the last time we had a tactical rally. Secondly, though, we got to the 200 week moving average. It's something that we did not achieve in June. And that's a very important a level that a lot of people don't talk about. We look at it very closely. It is your long term support level. And when you break that level, you typically need a recession. OK. Now, the ISE recession are very high as you were just speaking. But what we haven't seen the whites of the eyes of that recession yet. Until you get that, you can usually hold that 20 week movie. That was a big factor.

And then probably the most other important factors, we think rates are top rates. Rates are looking very choppy, are rate strategists who've done a great job here. They've gotten more neutral. They're now calling for no longer bear flatness, but actually steep winters. And that's going to be mostly the front end. But nonetheless, the back end and come down to as the market starts to think about the Fed pivoting.

And then the last thing is the earnings story, as you guys know. I mean, that's what we've been focused where we're probably more bearish than most on the outlook for next year. But, you know, we've got earnings this this quarter. And where we just don't think we're going to get, John, is we're not going to get the full capitulation from companies two thousand twenty three. We think it's just going to take longer. We've written about that quite a bit. You our research. So you know how we're thinking. We're still bearish in the intermediate term. We don't have the bear markets over, but we do think this tactical rally is going to be big enough to try and pivot and traded and traded for those kinds. You can do that.

How far along, Mike, are we in this tactical rally? You know, all rallies and all the Dow Jones are about the time and price. Lisa, as you know, I would say in terms of price, we really talked about 200 day moving average now is an achievable level. It's sort of 40, 150, but it's coming down. So depending on when you get there, that will determine the level.

I think in terms of time, it's probably into the holiday period, maybe Thanksgiving. You know, they will get the Black Monday results from, you know, from the holiday shopping season. And we'll see if it is going to be a black Monday or a red Monday. Do we get the sell through? We're pretty we're pretty discouraged. You know, in terms of what we think we're gonna get through on holiday, sell through, mainly because what you just mentioned, there's gonna be a lot of discounting moves in that extra inventory, something we've been highlighting for a while. And so that's when we'll get the next chance to perhaps see the fundamentals, overtake the technicals on the downside. And then we think ultimately the bear market will be over probably sometime in the first quarter. Now, all of this is subject to revision. Right. So make it perfectly clear if the market starts to trade off again and the S&P breaks down and blows through thirty six fifty on the downside will be bearish again. But this is our job.

We we think and we like the price action last couple weeks notwithstanding, you know, some some negative earnings reports last night. We think maybe the market will hold up and there'll be another positive countless, because if stocks don't go down on bad news and the market has been up bands and fundamentals, then what do you have? Mike, you talked about this difference between technical factors and fundamental factors in the near term. What's the optimal way of paying that tactical rally in the equity market? And you want to do that for the index of the S&P or somewhere beneath it somewhere else? Yeah. Good question. I mean, first of all, the call is really going to help our clients who are consorts DAX rates are the main goal is just get out away. And because when you get these kinds of rallies, the shorts usually got the most. And that's what that's what's happened so far. Associates, a low quality rally so far.

You know, the shorts are rally the most expensive kind of gross DAX. Some of the low quality stocks that small caps, if not a little run here, that will probably persist. And then I think ultimately it'll morph into probably NASDAQ leading because rates are going to come down. Right. Part of our call is that rates have to come down if rates don't come down. John. And we won't go below 4 percent in a meaningful way. The rally will peter out probably around these levels. But if that's if that happens, as we suspect, if rates do come in, then you'll see these gross DAX probably a pretty meaningful move despite the fact that maybe we're getting some bad earnings reports. We're going to talk a little bit more than the fundamental stuff in just a moment. But just a little tease, Mike, if you can. Twenty twenty three.

Twenty three. It's earnings season for Q4 and maybe some guidance for the rest of the year. You said we haven't had it yet. We haven't had that overwhelming negative guide from corporate C suite management, all the rest of it in America. My count. Know what that looks like. What does that look like? What do you think that looks like? How will you know when you see it? Well, those are trade secrets. I. No. I mean, look, I know we'll know it when we see the forward estimates really come down. OK. In other words, so far. Let's just check out some numbers. Makes it easy for people to kind of follow what we're looking at, which is so we think we think markets trade on next twelvemonth CPS. And the S&P 500 case that got to 40. That was the peak in June.

And we're down to about 233, 234, which is only about two or three percent off the highs. Know, we think that ultimately as we go in about. So when we see that forward, estimate it down about 30, 40, 50 percent and it's way to the ultimate destination, then we'll feel like, OK, it's there. We're not going to wait for one ninety five. By then the market would have definitely discounted it to 33 to 34. That's not anywhere near where we need we think you need to be to say, okay, the market gets the joke and that's something like two 20 to 25. John, that's kind of what we're looking for, an MGM, U.P.S. for those who. Mike, that plan to say they want us to go. So we're gonna continue this conversation in just a moment. Mike, stay right that Mike was in there of Morgan Stanley. Equity futures down 7 cents on the S&P from New York.

This is pulling back. Gotta love that music keeping you up today with news from around the world with the first word. I'm Lisa Mateo. New British prime minister wishes to NASDAQ has delayed an economic strategy announcement that was due to be delivered on Monday. It will now be released on November 17th through next, seeking more time to make what his office calls the right decisions on managing the British economy. The government is seeking to plug a fiscal hole of more than 40 billion. Former Treasury Secretary Steve Mutation indicates the Federal Reserve's fight against inflation will show results soon. Matthew Chance spoke at Saudi Arabia's Future Investment Initiative. You are going to see inflation in the US begin to come under control. Now, it will probably be a two year period, but you're going to begin to see that, I think, relatively quickly.

And I think people are overestimating the Federal Reserve's actions just as they underestimated it and also said that China faces a significant slowdown that will have an impact on the world economy. Bloomberg's learn that Elon Musk is promising to close the acquisition of Twitter by Friday. Musk made the pledge in a video conference call with bankers helping fund the deal. They're providing 13 billion dollars in debt financing. Global news, 24 hours a day on air and on Bloomberg Quicktake, powered by more than 20, 700 journalists and analysts and more than 120 countries. I'm Lisa Matteo. This is Bloomberg. Right now, all central banks are playing tough and talking tough and acting tough. They tried to get to 2 percent inflation because of recession and this recession is not going to be short and shallow is not going to be gone. Ben Bernanke is not going to be clean, but he the two quarters of negative growth, then inflation collapses.

And the is again. Nouriel Roubini, the CEO of Roubini Macro Associates, out with a new book in the last week or so as well. Pretty depressing stuff. But on the short and shallow stuff, I have to say think about how the consensus shifted through the year. Well, we were never going to see a 50 basis point hike. Then we were never going to see 75. Then we'd never see 275 basis point hikes. And surely rates wouldn't go through four or five handle. Absolutely no chance. Here we are. And now it's all recessions, short and shallow. The overwhelming consensus, as you've said, is it's the new transitory. The interesting thing is Nouriel Roubini, I asked him, you know, dude, a lot of pushback.

You're always bearish. So why should anyone listen? And he said from people who actually are in the know when they read, they're still laughing at me. Laughter. I feel like you're asking a friend, did they ever push back against you because they pushed back against me all the time. Were you asking for your have a guest yourself? I'd forgotten, Michael Barr said. He said like people agree with him, which I think is interesting. He has some good. Okay, cool. I'm going to get to Mike right now. Good. Mike, you just won. And I'm happy to say you were just rank the best portfolio strategist in the latest Institutional Investor Survey. Mike, I know your well, you'd share that price with the whole of your team. Mike, can we start there? Can you walk me through what is ready given you in the team, the edge this year as you've worked through a really fast moving economy and a tremendously difficult market? Thanks, John, appreciate that.

And you're right as a team effort. I mean, a lot of effort goes into this. This ranking, a lot of it has to do is his client server the of anything else or calls have been right. But your client pays for it with clients really want from us. It's critical thinking and holding their feet to the fire on kind of what's happening. And I think what's allowed us to maybe get ahead of the curve a little bit is I go back to three years ago and you know, our research well, we first started talking about the recession itself. It was going to be really nasty. But then to be shape recovering, we said the next cycle will be hotter and shorter. And so having that framework right this cycle, analysts are a little different. And psychoanalyst, but we're cycle analyst and we look at history. Yeah, it's similar.

And it really helps us understand kind of what does this period look like whenever the same. Exactly. But having that context of historical context, we spend an enormous amount of time on that, plus a little bit older. So some of what I lived through and we understand when we see something, OK, it's different this time and that helps us sort of stay ahead of the pack. Not always, but I think in this year in particular. Right. We saw early on and it's going to be a shorter cycle, then we're going to have to move faster than people expected. And that was going to, you know, curtail expectations on profits. Ultimately that fire, a nice narrative is played out in it. So just being willing to kind of get in front of the pack, I think is has really helped us, not just this year, but in years past as well. And of course, when you do that, you run the risk of being wrong and we're wrong occasionally. You know, that's not always right. But generally willing to go there and be willing to take a shot and get away from the consensus.

Mike, given the historical perspective that you do bring to this, where are we in terms of the ISE and short and shallow? And this question of, OK, if it is deeper, how long will it last? And how long can inflation remain prolonged? When you take a look at when you start to find optimism in the equity markets perhaps early next year, is that predicated on this idea that we are not going to be in some sort of high inflation environment for a very long time? I mean, here's a great example where, you know, we're just we have a view that is not consensus and we have more conviction and that we've been actually thinking about this for four or five years. If you go back and look at our research, we did just pull it out of left field. We think we're entering the end of financial repression, the end of secular stagnation. And actually the pandemic is was the catalyst to kind of break us out. Now, first, we're experiencing this first wave of inflation, which was spectacular. And, you know, more than people expected, but we think we're into what we think is a boom bust environment.

It's very similar to the post-World War two period of 40s and 50s where we had more frequent recessions and inflation was volatile. OK. So wasn't higher and then stayed there. It was high, low, high, low. And the trend is up. OK. So we have no sort of, you know, naive belief that we're going back to the way the world was lower for longer and the Fed can continue to keep rates at zero or lower. That's not we're never going back to that to be something different. But we also don't think it's the 70s. We're gonna cost push inflation.

We've always said that we think it's a demand. Paul, inflation and that demand is waning now as supply picks up. And so that will create the ebbs and flows. And what we really think we're seeing is a volatile economic outcome which includes inflation and includes nominal GDP, includes all the factors. And it's just gonna be a lot more volatile. And that's just a different environment if you understand that. If you do, it could be quite profitable of interstate and it traded on both sides. Mike, just final question from me then. Does it tell you anything at this point and how does it influence your thinking about future leadership in this market after a decade of growth, dominance on the S&P? Yeah. We're not looking at that. It's just gonna be one or the other, we think it's gonna be a broader kind of market where you get broader participation like 2020. And, you know, it was it was broader small caps land, right? We had growth and value working together. I can tell you, it is the days of ridiculously priced gross stocks. That's all.

OK. And that was done to begin with. So that's good. You take that stuff out and then. But that doesn't mean all growth stocks are doing. It just means you can't overpay for the way that you could when rates were negative. Okay. So we're no, we're not going back to that environment, which means you have to focus on companies that can actually operate efficiently in this more volatile economic environment. Deliver the goods on earnings and then pay a reasonable multiple kind of back to basics.

You know, it's kind of the way it was my first start in the business, you know, getting out, get the training wheels off the bike and learn how to ride again. Mike. Just wonderful to catch up and send our best to the team on you. Congratulations. Mike Wolfson of Morgan Stanley to Lisa Said, the best portfolio strategist in the latest Institutional Investor Survey and some tremendous quotes over the last 12 months and beyond. He didn't show us his crystal ball. He did. He did get the SAT. He didn't play my hand, though. The goal. Look, you having me? Exactly. Please don't. It's really it's red. If I don't look, he's gotten it right. And I think that the really interesting thing is he's not afraid to talk about a tactical rally to embrace something that is going to happen even if it doesn't cohere with a neat narrative.

And I think that right now that is one of the most difficult things, is it's easy to get caught up in a narrative. But sometimes the positioning can can rip against people. And I think that right now we're in a period where there's been a lot that's been baked in. And the short positions, as he said, are what potentially could hurt people. Right. So you want to basically say, get out of the way. So I thought that was really interesting. I think we've said it a few times. I've said it a million times in the past. It's not about being right or wrong, just about working through the process sometimes and understanding the framework of the individuals that do have the success. We can all get lucky and say we're going to be here, going to be that the source of their success is the framework and the framework they've had. It's just a deep understanding of how the cycle would materialize through the pandemic and how the other side.

Yeah. And there's also an era of self questioning and still ongoing, you know, really, really? I don't know. He said that's absent elsewhere. I'm just suggesting that that's successful. That's just great. If you say anything about the bank to have, you know, OK. All right. A lot of therapy friends coming up. No, no. ISE macros next. This is playing back. I can tell you as the next twelve months, we spend a lot more time looking at housing takes and I'm going to do that in about 10 seconds time. Good morning to you. Your equity market looks like this going into that economic cycle in America. On the S&P 500, we are negative.

We are down eight tenths of 1 percent after some disappointing earnings after the closing bell just yesterday. Mazza Facebook coming up after the close a little bit later on, market rally in yields low by 4 basis points. Mike NIKKEI around the table with that data. Morning, Mike. Good morning, John. Well, we've got some interesting news for the markets and for economists to try to figure out how this fits into third quarter growth because we got the September advance. Good trade balance. It's a lot worse than anticipated. Ninety two point two billion dollars. And that is down. Well, I guess you'd call it down.

It's wider than the eighty seven point three in the month of August. Retail inventories come in up four tenths. Wholesale inventories up eight tenths. Both of those are much lower than they were the prior month. But there's still a gain. And when you look at retail and wholesale inventories, you see they're running way, way, way ahead of where they had been in pre pandemic years. And that does suggest that we're going to have some more growth added to the third quarter numbers. But it also takes away from the future and it may give us some brake on inflation if we see retailers cutting prices as they have been to try to get rid of their stocks.

And the number John was referencing in terms of housing, the Mortgage Bankers Association's mortgage application index falls one point seven percent in the month in the last week. That's down from four, four and a half percent drop the week before. And when you look at the overall index, it is now the lowest since 1997. So people are really bailing out of the housing market. It's hard to say that this is comparable to that period because we saw rates higher in those days than they are now and people were still buying houses. But it does look like the housing market is really kind of fallen off a cliff here when you look at sales to the mortgage rate. We will get new home sales, guys, a little bit later this morning. Let's talk about that tax for 90 minutes. Then new home sales.

What are you looking for, Mike? Can you frame just how bad it is in U.S. housing at the moment? Well, new home sales are going to be a little odd. The consensus is we're going to see them drop, but we have seen housing starts hold up generally well and building permits actually rise because builders have backlogs. So new home sales are based on basically when you sign contracts. Now, contracts are going to be canceled in some cases as mortgage rates go up and people decide they can't afford them. But it's the existing home sales numbers that will really give you an idea of where housing is. And existing home sales have started dropping tremendously. Those are based on closings. And that was mortgage rates a couple of months ago. So we should probably see further declines ahead. You gonna stick around with us around? Stick around. I mean, you have a guest that I haven't seen in a long time. Let's catch up with now. Anxious to see if no tax reform.

Nice macro joins us around a table. I was told by Joe Weisenthal to ask you about your sterling talk it out of the UK. And I said to Joe straight away about 30 minutes ago. Joe, what are you talking about? Just a fax. Tom Keene. Now, what's Joe Tom Keene? I don't have a sterling target, but I can tell you that my kids have convinced me to go as the Prime Minister of the UK for how your time is really soon. I definitely am. It's really soon. Not coming with good things. I mean, I as I was joking with Joe. I mean, I told him very clearly that, you know, I have a habit of betting on Indian and I told him as a result. It's time to go along, Stirling.

He's got the credibility back in amount. Exactly. That's more than a joke for a lot of people. Let's talk about the credibility. This Fed chair as well known and it's wonderful to have you with us around a table. The politicians are pushing back now the usual suspects, Warren Sanders, but also now the Senate Banking Committee chair as well. In a letter, according to Punchbowl yesterday. How did you in the team respond to that? Well, I think it's it's amusing.

You know, look, if the prediction markets are right, they better get in their jabs right now, because the likelihood is, is that the Republicans will sweep the both the House and the Senate. If the prediction markets are right, and I can tell you right now that if the Republicans are playing this right, they will not have any political interest to tell the Fed to back off from hiking. So threats to the Fed's independence from higher interest rates, I think will be dramatically coming down once the Republicans take over the Congress because they want the Fed to keep hiking, to slow the economy down, to improve their own political fortunes going into the 2024 election.

This is actually really important because it also suggests an unwillingness on the fiscal side at a time when we're heading into a downturn. Does this mean that any fiscal impulse from Washington, D.C., based on the outcome that you said is most likely is going to be that much more reduced and going to be that much less of a countercyclical balance to what's upcoming? Well, I think that's the case going forward. I mean, the next time we have an economic slump, given where interest rates are and given the recent experience with inflation, I think it's highly likely that we'll have less countercyclical policy, both not only from the monetary side, because I don't think the Fed will be going as aggressively next time round.

But also obviously from the fiscal side, because the fact that interest rates are higher means that the government spending more on interest expense, which will limit their ability to. Backstop the economy, growing issue coming out of the election. If the Republicans take control, is the presumptive speaker of the House, Kevin McCarthy, saying that they will hold the economy hostage to the debt ceiling, which would come up theoretically sometime in the first half of the year. And they are basically willing to go up to the line and maybe fall over and see the U.S.

Downgraded or and or default. How much of a risk do you think that is? I think it's a risk. I don't know that it's any more than previous years. I mean, remember, we've we've had this happen with, you know, Democratic president back in 2011. Republicans just got into power. We pushed up to the limit. The debt did get downgraded. And what happened with interest rates actually declined at the time. So maybe this time will be different. But I have a feeling that they'll push up to the last moment. And if it wasn't for the last minute, nothing would get done. So I hope we're not doing that again anytime soon, Mike. I share your fears that we might be pretty soon as well.

Neal, the pushback that we often get on this show when we have guests come on and talk about runaway inflation is just to open your eyes and look on the data, look at freight rates, look what's happened with supply chains. Look what's happening with house price data, with rents in certain cities. Real roll over a little bit. When does that start to show up? I mean, is there a statute of limitations on those arguments? I mean, that's my issue. We've been talking about those issues for for the last six months. And that's not to say that those things aren't happening. But during that time, core inflation is actually accelerated and underlying inflation is actually accelerated.

So I think there's a statute of limitations on those arguments. I think ultimately what we're talking about there is just relative price shifting. If, you know, let's say people are getting paid and they have their jobs and their wages are growing at 5 percent, OK? And now the rent burden is becoming too onerous. So everyone who decided to go out and live on their own decides to shack up with a roommate. What did you just do? You gave yourself a tax cut. If you don't lose your job, you're not paying as much on rent. That frees up dollars to go spend elsewhere, driving up the prices for those other goods and services upon which you are spending money. And so I don't know where the money is going to go, but I can tell you, absent a sort of spontaneous increase in the savings rate, it's highly unlikely that, you know, I mean, at all they're talking about is really relative price shifting.

I don't necessarily think that's the way the Fed is thinking about inflation, rightly or wrongly, for whatever reason. OK, it might not. My job is not to tell people whether I think it's right or wrong. It's about it's about trying to tell people what I think is going to happen. And rightly or wrongly, the Fed views the labor markets as the conduit to achieve their inflation objectives. And that means you need to see higher unemployment. And if that's the goal, they are failing miserably. Okay.

I mean, we just learned that, you know, despite all the sort of chatter about tech layoffs, I mean, Google still hiring lots of people. I mean, all these large tech companies are hiring lots of people. Consumers still feel very confident about the jobs market. Claims are still very low. Even if you look at regional manufacturing indicators that have been slowing down, the employment components within them remain relatively strong. I wanted to ask you, though, about big tech. That's exactly why I wanted to go, because it's perhaps we haven't seen the job cuts yet, but perhaps they're coming based on the rhetoric from Google, based on the rhetoric that we've heard from matter or Facebook, based on the rhetoric that we've heard pretty much across the board today. Seagate Technology Holdings says that it's going to cut 3000 jobs. I mean, we keep hearing anecdotally, yes, this is happening. So is it too soon to say that we're not going to see those broad based tech cutbacks? I mean, I think you are seeing those cutbacks.

But I think what also is happening is that there are lots of lots of job openings. And so those people are transitioning relatively quickly to new employment opportunities. And one of the things we find is that, you know, the median spell for unemployment is like very low. I mean, I think I mean, maybe less than 10 weeks. So so I think a lot of those people may be getting laid not to say that the news is fake.

I mean, but they're just you know, the fact that continuing claims remain low tells you that those newly laid off people are transitioning into new jobs pretty quickly. What do you make of this step down argument that the story that The Wall Street Journal, 75 to 50 to 25? I think that's implicit in the Fed's dots plot. Now, the issue is for the Fed is that if every time they hint at a mini pivot, the market, a market rips and break, even rates go up 10 basis points. That's a problem. And it makes the pivot less likely. So I do think, you know, the risk is that they end up doing more than what they've already signaled in the DAX plot. I wouldn't be surprised to see a Fed funds rate, you know, well north of 5 percent. I think we're actually on a glide path to that. And the fact that, you know, to me, the most notable thing that that that Chair Powell has said was at the September meeting when he had that kind of moment where he said, I don't know what the path will be. I can just tell you it'll be enough.

That to me tells you that relative to whatever they've they've put into their dots plot, it's likely to be higher than. They want to put a lid on markets, Lisa, and I'm financial conditions. That's a problem, right? The sort of self fulfilling prophecy. He just said they're then they're on a glide path to well north of 5 percent. They're going to have to get there because they can't signal anything close to a pivot unless things are so bad. There's room that things may even improve. You know, in the equity markets between now and year end, I mean, they think that's the interesting thing is that, you know, from our Michael Barr now, I don't follow Europe closely, but, you know, I was just in London not long ago. And I can tell you that people are feeling a little bit better about the European energy situation.

The weather's we talked it. We talked about the Ricci Ricci snack rally that's going to take pressure off the U.S. dollar exchange rate, which will breathe life into cyclical stocks like industrials, which, by the way, have been outperforming. So, you know, you can see a potential melt up into into the end of the year. I've got the final word here. If you guys, Ricci, need one of these, since I was about to say Scarlet Fu Tom Keene got a call about limiting, I was thinking, I think I have to buy the Prada shoes first. I've got no idea where that suits from, but I'm sure I can't afford it. Erik Schatzker. DAX. Macro nail. Just absolutely awesome. Thank you, sir. Coming up in the next hour, looking forward to bring you the opening bell with Jim Keenan of BlackRock Premises of TB and Troy Majeski of FSS Investment Solutions. This is Bloomberg. Keeping you up to date with news from around the world with the first word. I'm Lisa Mateo. For the first time in more than two decades, mortgage rates in the U.S.

Have gone over 7 percent. That's according to the Mortgage Bankers Association. Its survey found that the contract rate on a 30 year loan rose to almost seven point two percent last week. That extends a string of steep, steep increases that have really cool the housing market. President Biden congratulated new British Prime Minister Ricci soon back in a phone call. The two discussed the Russian invasion of Ukraine and challenges rising from China. They also talked about the unresolved issue of the Irish border after Brexit. A new report from the United Nations paints a grim picture of global warning warming. It says that the earth is on track to warm by more than 2 degrees Celsius by the end of the century, despite plans to cut greenhouse emissions.

The U.N. says the good news is that projections show emissions won't increase after 2030. South Africa has set more ambitious targets to stabilise public finances without having to raise taxes. It's also revealed the broad outline of a plan to tackle the state's power utilities unsustainable debt. The utility Eskom Holdings has more than 22 billion in debt. Harley Davidson posted third quarter profit that beat estimates. The motorcycle maker saw sales rebound from a temporarily. Production showed it shut down. Harley was able to raise prices enough to offset higher inflation that padded profit, even as sales in its core U.S. market declined. Global news 24 hours a day on air and on Bloomberg Quicktake, powered by more than 20 700 journalists and analysts and more than 120 countries. I'm Lisa Matteo. This is Bloomberg. I think it's very hard to see something that's going to be a smooth landing in any way. That's true for the economy, that's true for the financial markets. In this context, that's why, you know, we think we're in the clear path towards over tightening of monetary policy.

But it's going to be very rocky. The job of an investment institute head at BlackRock coming out with a bit of a gloomier view, although not necessarily seeing treasuries as a haven. They are perhaps a haven today. You are seeing yields lower. Kind of amazing what a round trip we've done over the past few weeks with now 10 year yields in and around 4 percent 4.0 0 7 5 percent after having reached up to about four and a half percent, a pretty market shift downward. Whether it can last and how much it can really give fuel to stocks, we saw a three day rally and today you see the Nasdaq underperforming down nearly 2 percent on the heels of some of those tech earnings. Microsoft shares down nearly 7 percent now ahead of the opening bell. Joining us is someone who's been bullish, tactically bearish, long term, kind of a Mike Wilson page.

Perhaps he's got the same kind of crystal ball. Peter Shear, macro strategy headed Academy Securities. Peter, I want to get your sense of what we've been seeing with earnings, whether they confirm your view that we can sit, continue to see a rally in the short term, even though they have been somewhat disappointing. Yeah, I think we have to make it through this earnings period, obviously, overnight. We're not reacting well yesterday's earnings. But as we get through this, I think the attention focus to stock buyback is there are still real you get that quiet period. I think people are still too bearish. And for me, more importantly, this Treasury rally I think continues. I think we get to 370, maybe even 360 on the 10 year, and that could push equities higher. So it's a little bit short term positive. There's a lot of technicals at work.

I think longer term, this is my first real signs of my year for a hard landing is that people aren't going to fire employees. They're going to pull back on their services and disrupt their companies in particular, have to pull back on the services technology they're buying. And that might be what we're seeing leaking in earnings. OK. There's a lot to pass through here. And I want to get to all of it. I want to start with your call in treasuries, because that's pretty noteworthy that we get back down to three point six percent on a 10 year treasury, given where we have been just recently, just days ago. What gets us there? So one on Friday. Go back. There was so much lost in the news, but daily, basically, he kind of backed off a little bit. NIKKEI Wall Street Journal sent a message. Backing off a little bit.

Markets reacted very well to that. I think you're seeing geopolitical pressure placed on us by Japan in particular, but also the U.K. and the ECB saying, hey, we need you to stop this currency devaluation are going through. So I think there's a lot of reasons to expect that. And now with the quiet period, we can start looking at the data. I think we're gonna see data coming in weaker. Oil is down every day. We're going to have easy comps. I think the whole inflation fear is way overdone and it's starting to leak into the data.

And with the Fed being quiet, we can respond to that. So you think that the Fed is going to respond to what's going on with Japanese, with the yen, with the yuan over in China, with what's going on in the United Kingdom and try to address the dollar's strength? I think some of that will come from the Treasury Department, cause that's really their responsibility. It's going to be subtle. It's not going to be, you know, overt because we just can't do that. But I think they're going to start saying, hey, we already said we're going to do a lot. And this isn't a pivot. We got to our plan. It's getting time to watch and wait. Right. We have done so much. We follow what we said we're going to do. So don't consider this a pivot. This is just part of our original program was to stop at some point and see how it plays out. So I think that's the messaging we're going to start seeing as soon as the Fed is allowed to talk again. Do you think that's right? Now, going back to your other point about cutting around the edges, basically cutting ad service, cutting other issues that you don't know, that's not necessarily the core of the personnel of a company.

Do you think that perhaps the big tech earnings are not as well of a bellwether type of signal for the rest of the economy as some people are making out? Yeah, I think that's really too right. They're adjusting to this specific shift writers, other areas of the economy, they're doing well. I think you can see autos, you can see places do reasonably well. So I think this is a unique factor as part of this pullback. If the Fed keeps pushing on companies and then they start having to lay off, I think this follows through even worse for CAC and that gets us to the hard landing. But for now, I think we can make it through this and start bouncing back up again. A lot of these companies are down anywhere from 30 to 50 percent year to date. So even with these weaker earnings, there's still some upside. OK.

This is a really frustrating part about this market. And I was struggling with this with Mike Wilson, and I could tell that he was, too. And I'm curious, from your perspective, how do you communicate to people short term technical rally? But don't worry, I'm not actually optimistic about anything. And we're going to crash later on. How do you understand the pivot point in markets about when things bad news becomes bad news? We start to understand some sort of hard landing that is divorced from the Fed's response mechanism. That's a great question for myself personally. I was trying to think in terms of, you know, the next 20 bits on the 10 year Treasury or the next 5 percent on equities. And unfortunately, now that means I'm a day trader almost as the move so quickly.

So I'm trying to avoid that and really make sure that I'm explaining to my customers, okay. This is short term tactical. This is medium term markets and this is what you have to be doing for your firm's your company's longer term, like exiting China, etc.. And it's just it's a big struggle, I think, to figure this out.

And you have to have conviction, you have to be smart. And I think that's, again, one reason everyone's pulled back on position. So if we get any sort of rally, I think that can feed on itself a little bit easier than a sell off can right now. Yeah, especially because hedge funds have really pulled back on leverage. You've had people really retrench with that bearish positioning that we've been talking about for quite a while. Peter, when you talk about the hard landing going forward, it's always interesting for me to hear people's world views and whether we're at a structurally higher inflationary regime or as you say, you think that the inflation story is overblown. How do we get back then to a low inflation 2 percent type level, especially because you're telling companies to get out of China and stop doing business there because of some of the geopolitical concerns that the generals that worked for your company talk about all the time. So I think we have to take a step back and think about the starting conditions. Where did this inflation started? It happened because people were buying two of everything.

Right. People were so worried about their supply chain issues, they went and bought two things. Then you looked at companies themselves. They were ordering more in their supply chains. You had all these supply chain issues. The supply chain issues are dissipating. The consumers overspend. They're slowing down. I look at autos, for example. Right. You go back a year ago, every email you were getting with someone looking for your used car, then it was like, oh, buy this used car to get a new one. Now there's new cars again. This thing has shifted rapidly. Prices are declining. People are responding to the wrong metrics of inflation rate. The Fed kept talking transitory, transitory, transitory.

They got it wrong to some degree. But some of these things are going away. And look, right now, all the fears for Europe, energy, energy prices are coming down their oil despite OPEC plus cuts coming back down. There is a real problem in the economy and that's what slows us down. And that's why I guess I'm so bearish about a hard landing.

I think we've already done too much and we've set a chain reaction in motion that is going to lead us to real problems later this winter. So you don't think that there's a wage price spiral in any capacity? I don't. I think you've seen some great headline numbers about the wages. I think companies have still been reluctant to hire. But your last guest, I think, made a great point. So tech companies are letting go. But tech is such demand that they can find jobs. But I think as these services cuts start coming through, if that's what we're really seeing, the next step is cutting your employees. And that to me is a real risk. We can't get through some of the inventory hangovers, the things that we have.

People are just thinking about the wrong problems are all right about the situation we are facing last year. And it's a very different end if we step back. That idea of starting conditions matter, supply chains gone. Consumer overspending is done. It's shifted heavily towards services, overspending. But I think even that starts to go away. So January could be a little bit bleak. Just real quick here. Peter, do you see zero percent Fed funds rates in the next five years? Well, I don't think I see that. I think they're going to be very reluctant to ever pull back.

I think they've also realized that QE is really a nuclear option and we treated it like a pea shooter. So somehow we have to extricate ourselves from QE and we'll be lucky to use that. So I don't think we ever go back to this easy money because behind the scenes they probably will admit that it does blow bubbles, but we will see easier policy over time, get share of academy securities. Thank you so much. And coming up, we're going to be speaking with Sam Zell, founder and chairman of Equity Group Investments. That is on balance of power with David Westin. Right now in markets, you are seeing a bit of softness after disappointments in big tech. This is Bloomberg..

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What A Beautiful Name (Oh Quão Lindo Esse Nome É) English/Portuguese Mashup (Hillsong Worship)

https://www.youtube.com/embed/E9LR335izx4

Oh, quão lindo esse nome é O nome de Jesus, meu Rei Oh, quão lindo esse nome é Maior que tudo ele é Oh, quão lindo esse nome é. O nome de Jesus You didn'' t desire paradise without us So Jesus, You brought paradise down My sin was wonderful, Your love was better What might divide us now What a wonderful Call it is What a remarkable Name it is The Name of Jesus Christ my King What a remarkable Call it is Absolutely nothing compares to this What a wonderful Call it is The Name of Jesus What a terrific Call it is The Name of Jesus A morte venceste.O véu Tu rompeste A tumba vazia agora está O céu Te adora. Proclama Tua glória Pois ressuscitaste e vivo está És invencível, Inigualável Hoje e pra sempre reinarás Teu é o reino Tua é a glória E acima de todo nome estás Poderoso esse nome é Poderoso esse nome é O nome de Jesus, meu Rei Poderoso esse nome é Mais strong suit que tudo é Poderoso esse nome é O nome de Jesus You have no opponent, You have no equivalent Currently and for life, God you rule Yours is the Kingdom, Yours is the magnificence Yours is the Name, most of all names What a powerful Call it is What a powerful Name it is The Name of Jesus Christ my King What an effective Call it is Nothing can stand versus What a powerful Name it is The Name of Jesus What an effective Call it is The Name of Jesus Poderoso esse nome é O nome de Jesus Hi every person, thanks so much for tuning right into our Network. You simply viewed What a Gorgeous Name from Hillsong in Portuguese as well as English and led by our fantastic relative Gabriel.Hey men! yep he ' s. from Brazil so he'' s seeing us as well as we determined to videotape this together and we. had a lot enjoyable. Yeah and also this tune is so remarkable we love it so much as well as we really hope. that you liked it, and also if you did leave a like down below, remark, you can share. with your buddies as well as sign up for our channel as well as click on the little bell. button to make sure that you can get notified whenever that we publish something.yes, thanks a lot for seeing once again. God bless you!. Cristo, em Ti se revelou Oh, quão lindo esse nome é. Oh, quão lindo esse nome é O nome de Jesus, meu Rei Oh, quão lindo esse nome é Maior que tudo ele é Oh, quão lindo esse nome é. O nome de Jesus You didn'' t want paradise without us So Jesus, You brought paradise down My sin was fantastic, Your love was higher What might separate us currently What a wonderful Name it is What a fantastic Name it is The Name of Jesus Christ my King What a remarkable Call it is Absolutely nothing contrasts to this What a remarkable Call it is The Name of Jesus What a terrific Name it is

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Thunderstorms 101 | National Geographic

https://www.youtube.com/embed/zUNEFefftt8

(appealing music) - Off in the perspective they roar. Moving throughout the land, they dim the skies to then spark fire in the darkness. Discharging an unmistakable holler. Electrical storms are shower accompanied by lightening and thunder. While fierce, these weather phenomena prevail with around 2,000 occurring anytime worldwide. There are 4 major kinds of electrical storms. Single-cell, which are tiny, weak, and separated tornados. Multi-cell, a typical of sort of storm that includes a collection of electrical storms. Squall line, a collection of tornados that form a line hundreds of miles long. As well as supercells, the most extreme sort of storm with the ability of generating tornadoes. All electrical storms create when cozy air in the lowest layers of the environment rises. Called an updraft, this air triggers water from the earth'' s surface to evaporate and also lugs the dampness In some cases as tall as 10 miles high. A phenomenon that produces thunder. While electrical storms are required for preserving equilibrium in the ambience,( alarm blaring) they can also be harmful.( thunder roaring). Thunderstorms are rain showers come with by lightening and thunder. Occasionally as tall as 10 miles high. A phenomenon that produces rumbling. While thunderstorms are essential for maintaining equilibrium in the environment,( alarm blaring) they can likewise be dangerous.( thunder roaring).

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ISOC Q1 Community Forum 2016

https://www.youtube.com/embed/tOy-5lhKVr8

This is Ted Mooney. I'm the senior director for community services here at the Internet Society and I would like to welcome you all this morning. So thank you all very much for joining us this morning. I see that at this point we have over 100 participants, and I'm very gratified by that. At this point what I'd like to do is turn it over to our chief executive officer, Kathy Brown. Hello everyone. Good day to you wherever you're coming from. I am noting in the box that we have over 100 people from almost every continent in the world. I find this day when we get to talk with you one of the most exciting days of at least my year. Thank you for being here. First I want to say Happy New Year. I can't hardly believe it's going be February, I feel like we're still in let's go, let's go mood for the new year. Importantly in the new year we wanted to speak directly with you and hear directly the activities, the concerns, the urgent issues that are happening in your worlds. That'll be the structure of this chat with you.

I'm going to have Sally, since she was so effective last time in making sure you all got to speak, to moderate the conversation with Olaf and Raul and others who are here to join this call. I wanted to just say thank you to you also for the work that our members and chapters and organizations have done over the last year. It was a very impactful year for the Internet Society. We were involved together in what has been in essence to me and involved together in some enormously important governmental struggles and processes. We have been involved together also in many technical conversations in the form of our work out in the regions. And I know that Raul will discuss that as well. And at the IETF we had, the number is 21 ambassadors to the IETF this year, taken from the regions from around the world. As you know from the annual report or the annual message to the community, we have a plan this year that concentrates very specifically on the need to connect the unconnected around the world and to address the trust and security issues. I am firmly of the belief that if we don't tackle these two big issues, the next phase of the Internet will look very different from the principled vision that we have for ensuring that everyone everywhere has access to a trusted Internet.

To a globally connected, open, trusted Internet. If we stay with that mission, all of us together, we know there is work we have to do. There is specific work we have to do around these two issues. So that is our focus here in the staff part of the Internet Society. We know that there are urgent issues for chapters in their regions and in their countries that we would like to hear about as well to support. And we also know that our organizational members have some policy issues that are really on their mind as they seek to remain, frankly, global operators, providers and content providers of the Internet around the world. So today's the day to have that conversation as we start the new year.

I'm delighted that you are all here with us. I want to thank you again for your presence at the WSIS. We had fabulous help from you there. For the policy papers that you all helped to get us ready for last year, I think we put ten out. I believe we have three more now coming and we need your input for those. And for the regional IGFs, without you there wouldn't be. And we see that as a hugely important part of your movement, if you will, to make sure we have involved our grass roots, our bottom-up process in insuring there is a globally connected, open, trusted secure Internet. With that I'm going to turn this over to Sally to give us an overview of where we're going and I look forward to hearing from you.

Hello everybody. As Kathy said my job here is to keep us on time and also to make sure that we get a chance to hear from a you will of you. I see now 140 people on this call from around the world. I just listed or looked at... Togo, Tunisia, Chad, Guatemala, snowy Canada, and the Congo among others. I know Geneva is on and many others. Thank you all for joining. This is tremendous. What we want to do is give you as Kathy said an Overview of where we're going for this year and get your... get the conversation going that we hope will continue throughout the year as we embark on a very ambitious agenda. So my first task is to turn to James Wood, who's going to... our director of communications and he is going to give us the overall direction for the campaigns and the brand and try to get into your minds how all these things tie together. James, over to you. Many thanks Sally and thank you to Kathy as well.

It's nice to see so many of you in cyber space, 140 or so people seems like a very respectable turn out . So just making reference to our focus again, connecting the unconnected and building trust. We really began to do more around these themes in a concerted way earlier on last year and certainly at IGF where a lot of our messaging and activity really came together. I think together these themes reflect our deep-seated belief that the Internet is a fundamental tool for empowerment in the 21st century and that it will be the catalyst for positive change in people's lives through the creation of social and economic opportunity. That opportunity also transposes itself to an opportunity for us. We have an opportunity this year and in subsequent years to forge the Internet's future and, as Kathy has pointed out, to connect billions, or the next billions, to a globally connected, open, trusted Internet. Before I get to the campaigns which Sally has referenced, I did just want to take a few minutes just to talk about some of the core characteristics of our work this year.

We obviously have this opportunity to shape the debate around access and around trust. We're looking to create that impact by collaborating, by coordinating, and cooperating in more efficient way and in a more effective way. What we're doing through our plan, our action plan, and of course the campaigns that amplify our work around the organization is integrating for impact. That means we're taking an integrated approach to our work, where we'll look to intersect our project activity across departments as much as possible and wherever it makes sense to do so, so that we continue to work together to common objectives. So our collective efforts are really going to feed into our strategic objective and everyone in the organization and within the community will really own a piece of this and play a role. So as we align, the community will be involved in a number of levels, we hope to engage you on several things, and really your effect on our work will be to help make us more relevant around the world, define us better, and demonstrate the impact of our work. Secondly, also in reference to Sally's introduction, I did just want to put some of the identity work in context, and to reinforce the crucial role of that in the scope of the plan, our action plan and with our campaigns.

It really is our defining framework for our activity this year. As you know we're focusing on our identity to help us speak with a stronger voice, become more visible, and be better known. We've already come a very long way in one year, one year ago almost to the day, in drawing our organizational DNA to reassert our beliefs about the Internet Society, about our purpose, and about who we are as a community. When now, at this point in the life cycle of our identity work, in the process of applying these beliefs to our work, and we're seeing how key elements of that reenergized or renewed identity which we brought to the surface are helping to steer how we speak, how we act, and how we look.

So identity is really what is binding and connecting our work and is keeping us focused on our mission, and of course that hasn't changed, that is constant, nd as a reminder, it's to promote the open development, evolution and use of the Internet for the benefit of all people throughout the world. In the context of 2016, our identity work is the engine that is powering what we do in those two areas. It's guiding and informing how we go about telling our access and trust story. It's giving us the confidence to act. It's helping us to be recognized as a beacon for progress in those areas, and it's helping us determine the actions that we want to see as well. And at this point I'll give you a real example of what I mean by that. Some of you may have seen it in the flesh, as it were, some of you may have heard about it. But I'd like to just draw your attention to the advertising activity that we undertook around the WSIS+10 review meeting in New York last month, in December.

The catalyst, and engine for that, was our identity work. The result of that activity was that we had I think a very impressive set of digital display and print ads in prominent locations including John F Kennedy airport in New York. We also had some advertising up in Washington Dulles Airport. We had print ads in the Wall Street Journal, in the New York Times, coinciding with the UN General Assembly review meeting. And combined with our media exposure in a number of prominent outlets, Kathy was interviewed live on BloombergTV, we had coverage in Forbes, we had an opinion piece in USA Today, as well as Kathy's physical presence in the UN General Assembly itself, meant that we really, really made an impression.

The identity work that we're driving, is really behind that as the pillar, of representing the pillar of our beliefs. So, as we strengthen our identity further, there is going to be more opportunity to maximize our reach, visibility, and influence in that way, including around access and trust. So that brings me on to the campaigns. And simply speaking, the campaigns are communications campaigns around access and trust, and they are a vehicle. They are merely a way to tell our story. They allow us to keep our focus on these themes and they're made up of all the various pieces that we touch from a communications perspective across the year. So they help to inform and guide our presence at external events for example, across the many speaking engagements we have throughout the year, through our flagship outputs, reports, such as the Global Internet Report, and our whole ecosystem of content production and outputs, including blogs, articles, specially created materials.

It goes to the news that we announce, our media relations work, our social media engagement, and increasingly, as I have mentioned, advertising. So our campaigns are defined by all of those components. We have two campaigns that map to our two themes. The first of these is our Internet Changes Everything campaign, which is designed to promote and increase the availability of affordable, reliable access to an open Internet. And through that campaign we really have the opportunity to show that the availability of infrastructure is not necessarily the only driver for getting people connected. It's what the Internet enables them to do that matters.

We can show the positive impact that the Internet can have on people's lives, and in so doing we can tell a more human story. In short, we can shine a light on the Internet of opportunity. That campaign also has a natural affinity with our continued focus on women in technology, and promoting the voice of women in the future of the Internet.

At a tactical level, we're using as many opportunities as we can to thread our access story across the year through multiple touch points. To give you an idea, they include the Mobile World Congress, a mobile industry exhibition, which iscoming up in February. We will be present there at ministerial level talking about barriers to access, and women in technology. They include ICANN events. The ICANN55 event in Marrakech actually coincides with International Women's Day. So our ISOC@ICANN event will have a women's theme that underpins it, and we'll be doing some activities around that.

It goes to events like RightsCon, where access and human rights converge. Also some regional events, Africa Internet Summit, for example. Of course our second InterCommunity event later this year, and INET conferences as well. So, those are just some of the opportunities where we hope to have an impact and move the thinking on access through our campaigns.. The second of our campaigns is Building Trust in the Internet, designed to encourage actions that build belief and trust in the Internet as a secure platform for open innovation. Our trust-based campaign is there to tackle the issues of the moment. It's focused quite heavily on Internet security as an extension of the collaborative security model in thinking, that Olaf and Sally pioneered successfully last year, and it's really there to tackle issues that fall out of the trust question including cybercrime, privacy, encryption.

So we can really move perceptions on illustrating the problem and mapping out solutions. Again, a number of touch points there... some of them are the same as our access campaign, Mobile World Congress, African Internet Summit... but there are other opportunities too where we can make an impact, including the OECD ministerial meeting later in the year, IGF, and the Global Internet Report that this year will incorporate the strong trust theme. But, of course, there are many more ways to promote our thinking, and to expand on our projects and activities further, and to elaborate on how they are interconnected this year I'm going to turn to Raul to give you a more in-depth look at development. Raul? Thank you very much James. I'm very glad to have the opportunity to speak to all of you.

We have at this moment more than 160 locations connected, probably more participants than that because some places there are more than one people. That is very exciting having the opportunity to be in communication with all of you. As you know the development and connecting the connected is one of the priorities for the Internet Society, has been one of the priorities last year, and continues being one of the prorities for 2016. We have designed a strategy that is based on four pillars that we have already talked about. I will go over very quickly through those pillars as some of the things that we will be doing in 2016. One of the pillars is the availability of infrastructure.

You know that we will continue doing the work that we do usually with the African connection. Supporting, building forums, probably promoting together with other stakeholders the creation of new peering forums in regions where we don't have today, these kinds of activities. We have been very successful in that in 2015, supporting the LAC peering forum, the Caribbean peering forum, and also organizing the African peering forum that this year, the past year, accounted with more than 260 participants, being really an incredible forum for having all the community together, the African operators and the content providers, and big companies from outside of the African region, coming to renegotiate with the, peering with the African operators. We will continue doing that. We will continue promoting IXPs. At this moment we can say that we have been involved with an incredible number of the existing IXPs in different regions, and we are working in Eurasia, central Europe, central Asia, besides the Middle East, beside the world. It's well-known that we have already done work in Latin America and Africa on IXPs.

This is an incredible work because it's not only the opportunity to create new IXPs but also with building partnerships with other stakeholders, global, and regional and local stakeholders that, and with this showing effort, we can really make a difference and introduce changes in the way that the Internet works in different places. One of our other projects for this year is the globalization of our Wireless for Communities program that has been so far focused on Asia. We Have connected a lot of isolated villages in different countries, in Pakistan, India, Nepal by ourselves. And also supporting existing programs by other organizations. We are globalizing this program and we will see efforts, similar efforts in all the regions in 2016. This is a very incredible project because it's fascinating, because it is not only developing infrastructure but also developing the communities, working with the communities on how technology can improve their lives.

So it's going through all the pillars that compose our strategy. The second pillar is the building capacities and developing new leaders. We'll continue with our learning efforts. More focused. Trying to align our learning efforts to our priorities and establishing objectives. And also we will continue with the excellent work that our team has done so far in developing new leaders. With the Next Generation Leader Program that is very popular, but not only with that. In 2015 we had an opportunity to develop with other partners, to work in a youth program on Internet governance that has been very successful. We will continue working on that direction in 2016. The third pillar is building communities. One of the most outstanding projects in this area is Beyond The Net. That is the opportunity not only to empower communities, working with the communities in finding ways to use the technology for fitting their real needs, but also developing projects that can be used as Examples for other communities to show how the technology can change their lives. Beyond The Net is a program that is a, we supported an incredible number of persons in 2015.

We have already committed hundreds of thousands of dollars in the projects that we are supporting. We will continue with these projects which are focused in chapters. So it's important in both aspects because it's a way to reach the communities, to empower the communities, to show how the technology can be used for improving the way that they live, but also to give tools for our chapters for being relevant in their communities. And so it's the chapters act as the component of the Internet Society, that is involved in the real, in the local environments, and so they really know what is important for the local communities. And speaking about chapters, and I will just in between brackets. The chapters are very important for expanding the regional Internet Society work. We are a small organization of less than 100 people, and so the chapters and our members have been important for increasing the impact of the work of the Internet Society. We are working a lot on the...

I think I can say that we have changed in the last couple of years the way that the chapters interact with the rest of the organization. In the last two years we have organized 11 chapter workshops for developing capacities, this experience has been very successful but we're changing that now to a different, different initiatives. We are launching in 2016 an initiative, an e-learning initiative for supporting the chapters, the functioning of the chapters. We will be organizing meetings with the chapters in every region, but at meetings that we call Advocacy Meetings, for discussion of specific topics, for involving the discussion of specific topics that are of importance for the whole Internet Society. We have now the Chapter Advisory Council, the Steering Committee. There is a new vehicle for strengthening the work between the chapters and the other components, the other members, and the staff, and the board of the Internet Society. So I think that the chapters will continue increasing their importance, their relevance, within the Internet Society organization.

And the last pillar is increasing our ability to influence the public policy debate. And for that I think the main initiative, the main is that we will organize some regional conferences, focusing on the debate about the development and policies around development, trying to bring together different agencies and organizations working on the topic, that are currently working in an manner. The other initiative that is the serious study and report that we will be producing in 2016 trying to inform the process of policymaking. I would like to defer to Sally to add some comments. The policy, the public policy perspective. So Sally, please? Thanks Raul and I'll be very quick because I'd love to get to the discussion.

So I hope all of you are thinking of comments or questions that you would like to make as part of the discussion. Of course, the ability to access the Internet, there's a role for public policy and whether one can do that or not. Whether costs of access is affordable or not. So from my perspective one of our objectives in this goal of connecting the next billion, is to ensure that the policy, policies are in place that facilitate access and don't act as barriers to access. So around the world you will have seen in the past, we've done a number of reports related to barriers to connectivity, and we will be continuing that. Particularly this year we're going to focus on small island developing states and see if we can learn lessons between the regions on this particular issue.

In addition, the notion of landlocked countries. What are the specific and different conditions that they face when they are dealing with how to get access and reliant upon their geographic neighbors. There's also of course, there's the supply side, how do we get more infrastructure into countries and how do we do it in a way that is affordable and open and interoperable and all those things that ISOC stands for. In addition we have to look at the demand side.

We're starting to observe in some countries that even when the access is available, there isn't the takeup that we would like to see, snd so we're looking at issues of local content, again affordability, what does the submarine cable market look like in certain places. So all of these policy factors contribute to the overall environment for access to the Internet in countries. And finally, I think many of you would have observed if you were following the World Summit on the Information Society last year, that a lot of the debate remains focused on connectivity and access, that people who aren't enjoying the benefits of the Internet want a voice on how the Internet is governed going forward and how they can participate.

So there is a big aspect of our Internet governance work that is tied to our development agenda in this regard. So we will continue to build on the Sustainable Development Goals that were developed last year and incorporate that into our work on Internet governance at the multilateral level either globally or regionally. So that is a snapshot of the policy and the development work related to access.

I think then I, oh I'm supposed to turn to Olaf very quickly on the technology piece of access and I'd like to open it up for questions and comments? >> Right, Hello, this is Olaf from Amsterdam. And I would almost say sunny and warm Amsterdam. The support that we try to give from a technology perspective is that while building out that access, the core infrastructure relies a lot on local communities, on the community spirit that comes with the Internet. Our work is mainly in supporting the build out of NOGs, the network operator groups, supporting the information that helps technologists to Do Internet connectivity in the right way. We do that through our BCOP program. We do that through our ION program, and our Deploy360 programs. That is one aspect of technology, helping to support the access agenda, community building. I would also put in this our support for building community with respect to the mindset of open standards development where we try to... I would say bring the world to the IETF and bring the IETF to the world.

This year is a landmark in that sense. In my top left hand corner I believe I see Christian O'Flaherty from the LAC region. The IETF will be going to Latin America for the first time. I think that is very important. It's an example of how a local, a local community has developed itself and showed an interest in the IETF whereby the IETF also showed an interest in that local community. I think that's a very important example and one of the things that we're undertaking in the coming year is to see if we can replicate this in other regions, specifically in Africa. So a long-term agenda to get more involvement between those communities. And get... build a local community.

That is sort of where I want to stop talking because I want to provide the opportunity for Q and A. So back to Sally. Thanks Olaf. There are a lot of questions that I'm seeing in the chat and Ted, if there are others that you see that I miss, please, of course, let me know. I apologize in advance if I don't get the names completely correct.

We have a very big and diverse audience here. Arsene offered to give us insight in her, in his experience with the leaders program. Arsene are you willing and able to speak? Yes. Hello. I would like to comment the work ISOC is doing for the NextGen program, there's a lot of Indian people interested in IG that we are supposed to be able to. My experience with the IGF in Brazil as an ISOC Ambassador was very valuable because it help me not only be a part of the discussion but also learn live from experts, all those people who are, who are working in IG matters.

It's always good being, following events remotely, or participating online, but when you are able to go first, I mean to be there live and physically into meetings it helps you get a different sense of what the IGF is, and helping you to get more engaged in the work. So thank you so much to ISOC for the NextGen program. Thank you. Arsene. Thank you so much for that. It's one of our flagship programs, we're immensely proud of it. We hope you can take that good experience and replicate it in your own country. I saw a comment Coppins, from London. Hello. You've had some comments in the chat about your experience in Burundi and deploying broadband and some of the other challenges that you're experiencing.

That might be an interesting food for thought for the rest of the group. Are you able to speak? Okay. Go ahead. Ok. Thanks to World Bank, we have deployed around 1,250km of fiber optic, and now we're on the way to deploying another 4,000. And you understand when you consider the state of Burundi, the density of fiber in Burundi will be very high in Africa. The other thing I was talking about, the challenges and issues for connecting the unconnected areas was about energy and electricity in Africa. Another thing was to deploy enough fiber optic in rural areas. And with that, if you can deploy some more community centers in order to use the Internet in local communities will be very important.

That is my comment. Thank you. And I'm leaving, as my country is in some program and I have to go back home. Thank you. Thank you, Mr. Coppens. It's great to hear from you. There was a question and maybe, Raul, this is to you or if Dawit is available. Question on the progress of the access partnership project in Africa as related Let me say something Sally and I will de-refer to our African colleagues. The AXIS Project has been much more than just building IXPs, and we have been providing training, developing capacities in different aspects, so it has been a very comprehensive process.

But, in terms of IXPs in Africa. I understand that there is at the moment around 33 IXPs in the continent and we have been involved with, the Internet Society has been involved with, always in partnership with other organizations, local, regional, and global organizations. We have been involved with 20 of them. So, in the last few years, we have done really a good job in this aspect. And together with other things like the African Peering Forum that I mentioned before, we have contributed to change this situation in the traffic exchange within Africa.

In August last year I heard from our colleagues from the African team of the Internet Society that, at that moment, the traffic that stayed within Africa was about 160 gigabits. We departed from a situation 7 years ago when we started to work on IXPs in the region, a situation where almost zero was the traffic exchange within Africa. So the change has been very huge. But besides that, I was thinking could what does 160 gigabits mean? It's a huge amount, it's no - how to express that in a more tangible way? With the help of our technical colleagues, we realized that if we could show that another way, saying it is almost equivalent to 1 million movies per day.

So, when we say that's the number in that way, it's really huge. It is creating a huge impact in the local communities, in the ability to develop new business in Africa, and also in the prices for access. This is the situation. And the answer to the question is, yes, there are still some countries that don't have IXPs in Africa. We're working with some of them but the achievements so far has been great. I would like to defer to the African colleagues, Dawit, if you are there to add something to that. And I can come back later and answer other questions? Yes, very quickly I would like to add to what Raul said.

We have been in 30 countries around Africa under the AXIS project. That project is almost completed, at least that period where we are involved, but we are going to go to two additional countries this year, the Central African Republic and Guinea Equatoriale, Equatorial Guinea. But, outside AXIS we have too many projects in capacity building. So, we have been to Zimbabwe and we will go to other countries as well. We'll continue to help IXPs that need expertise, and we are also going to continue to give equipment, wherever is needed and make sure they get all the support they need. So, if you are in a country that requires kind of support. just e-mail me, talk to us and we'll try to find some way to help you. Thanks Raul and Dawit. I hope everyone heard there is a lot of progress on the AXIS project. And if you want to know more I know Dawit would be thrilled to answer any further questions. I apologize the chat is going crazy which is wonderful but I'm trying to keep up.

John had a couple questions I think about communication, if we're going to... one line I caught is if we're going to reach the next billion, do they know who the Internet Society is? And do our chapters have the capacity to reach the folks in their communities in terms of communications and outreach? John, I hope I'm not totally mis-paraphrasing your question. Do you want to add anything to what I just said? I guess what I would say is that, I just typed this in, as you know, if we look at the number of current, of ISOC current membership versus number of Internet users globally, that ratio needs to be much higher. If we're going to be able to have the kind of broad-based public outreach that we want to achieve our goals, we have to get people on board who have never participated in something like this. And I know from building chapters in other parts of the world that it's hard, and we don't always have the tools to do that, but it's essential if ISOC is going to be able to achieve its goals. John, I think you're speaking to the converted here.

I couldn't agree with you more. I would say, you know, as of this year I think we have 113 chapters at the end of 2015, which is wonderful, and we've seen several more come online even in the last month. 80,000 members. It's really in all of our hands to make sure that we bring more people into this community that can do what John is talking about. It's a new way of working, a new set of tools, but I think, John, you're absolutely correct.

If I can chime in, we have 80,000 members. I'm not so concern about the chapters. If we have 80,000 members and Facebook has 1.5 regular billion users, that's a problem. Yep, yep. We've go a long way to go. And part of the problem is we've been around longer than Facebook has. We shouldn't be in the position that we're in now. We're playing catch up. James, I wonder if you want to weigh in, do you have comments on this in terms of the campaigns and communication strategy? >> Just briefly, as you pointed out Sally, to John's question, to a certain extent you're preaching to the converted here. I couldn't agree more with you.

I have mentioned in the chat, everything we're doing from a communications perspective is to be more outward looking. We're not going to achieve that broad base or that sense of appealing to a much larger group of people or community, when, more of those billions of Users around the world, if we only talk to ourselves. We need to take our work and amplify it in the right places to attract more people to our cause, to join us in promoting and reflecting our thinking in what they do, and in the conversations they have, so that cumulatively we can continue to have more and more of an impact as we go through every year. Everything we're doing in communications is geared towards that. We're focused on building our relationships with media that will really move the needle for us and make a difference.

We're focused on building our identity as really the springboard that will allow us to do things in a new way, and to get to that point. But, of course, it is a process. It's going to take a little bit of time. But you can rest assured this is absolutely the direction we're heading in and bit by bit I'm sure that we will achieve it Together with the rest of the community? I guess I would add one last thought. And that is, our legitimacy as an organization rests in part on our membership. We can't go to these policy talking shops and venues and point out we have 80,000 global users, we represent the Internet. That is not going to cut it. That will call to the question our legitimacy as an organization. If we're talking about representing the everyday Internet users, that's just not going to work. We have to get our membership numbers up. Thanks.

Thanks John. I think your point is extremely well taken and I think we look forward to talking to you further about how we can all do that together. James has a plan and we're all I think fully committed to that. There was a question in the chat about the wireless for communities program, and Raul maybe you can give us a bit more information about your vision for how to take that global? Yes. Our work on this project has been focused so far only in Asia. We're expanding, we will in 2016 connect at least, we will have one experience in each of the other regions. We're speaking about Latin America, Caribbean, Africa, and probably eastern Europe, central Asia. This is not just connecting the people, it's finding partners for deploying the wireless network in the proper communities, building with ISPs for them to provide Internet services using that infrastructure that we develop at affordable prices, partnering with the local organizations, for working with the communities in training them how to use the Internet for improving their economies and way of life. Doing, starting new businesses, buying or selling things, interacting and using the e-government services.

Promoting their products and their local products, local production. So it's a complex project, it's not only just connecting the communities, it's all the, the whole package we could say, but also learning from those experiences and as I said before, trying to inform the public policy debate. So we are collecting that data from before we start to work with those communities and monitoring how the technology impacts, the program impacts in those communities. Thanks, Raul. We're reaching the end of our discussion on access. There are a number of comments in the chat that we will capture, as Ted promised There are questions about fellowships for the MENA region in particular that I noticed, and how to up level the IXP in Kinshas I think I saw.

There is a lot of great dialogue happening in the chat and we'll be sure to capture that. I wanted to turn quickly to our leaders of the Organizational Members Advisory Council who are on the call. Scott Mansfield, Cheryl Miller, and Christoph Steck. and see if there are comments or questions that you would like to add to this discussion of access and the role of ISOC. >> This is Scott Mansfield, can you hear me on the line? Scott, we can hear you, go ahead. Great. Excellent. I'm on a dodgy hotel network. Always good to check that it's coming through. Thank you Sally very much and I'll have to say that I'm very excited about the opportunities that we have, and we have been given, as the co-chairs of the organizational members and I'm looking forward to this year and helping to advise the ISOC leadership.

I also want to say this has been an extraordinarily enlightening opportunity to hear from the community as well, and the one thing I would like to highlight is I think it is important that we consider that access provides these opportunities, but once we provide the opportunities through these connectivity options, then that is really where a lot of hard work begins, because now we need to have the support, the affordable devices, the accessible technology, the education, in order to actually use this, and create opportunities around the opportunities provided by the network. So that's one of the things I would like to continue to explore. Now, thank you very much, and I will turn it over to Cheryl Miller from Verizon who will provide her comments. Thank you very much. I realy appreciate the opprtunity to participate, and I think that so far everything that ISOC has laid out is quite impressive, and it's very exciting to get started and hit the ground running in 2016. I just wanted to touch on a couple of the broad themes that I heard really quickly, and provide a couple of inputs.

I think the overall theme of access and trust is spot on. We picked up the theme of connecting the next billion at last year's IGF and I'm glad to see that work is continuing. The way that ISOC has sort of structured both the development plan and policy plan under moving the bucket of access forward I think is very good. Within that I think from a business standpoint it is really important, I think the business community will be focusing on education around policies that help to better facilitate investment and also infrastructure. I think another broad theme that will sort of, sort of ties in with this, and it's not exactly related to trust, but I think this year it's going to be important to further build trust in the multistakeholder model and ISOC has always had a key role in this. I think a great example is the role you played as a convener with respect to the WSIS and the IGF, and I think that that separate bucket of trust plays into the work we'll do as a community moving forward.

I really loved hearing the focus on regional IGFs, I think that they can continue to be strengthened. Many of them had provided inputs into the connecting the next billion project that we had at the IGF, which was great to see. Also the youth IGF program was great to be a part of. Verizon was a sponsor and I hope you continue to build that. I think it's going to be crucial because, whether or not we want to admit it or not, the younger generation at least in my case grew up with this technology in a way that not even I did, and so it's going to be really important to continue to have them be a part of the conversation.

And I just note with respect to some of the comments around communication and membership, and how do we improve that and build on that - I do think we need to think creatively. I think it's really every member of ISOC's job to be an embassador, and to kind of spread the word about the good work they're doing. And maybe we can maybe look further to see how we can build out that with respect to perhaps global public schools, colleges, et cetera. Because I think there's a lot of energy there we can tap into and move forward with respect to education and getting the word out.

I'm sorry, I talk too much. I'll stop there. Thanks Cheryl. Christoph, did you want to add anything from an organizational member perspective. We've heard a lot and I think it was really interesting and it's fantastic to be part of that crowd and to see all the ideas flying in on the chat. I just would want to stress maybe two or three issues on the connectivity part and how we can get people to use the Internet. I work for Telofonica, so you might imagine that we're quite involved in that and we are trying to give access, and broaden access, to people in the markets where we operate. And what we experience is that first of all, when we speak about connecting the next billion, we will have to speak about mobile access, and of course we will need parts of networks built by fiber, and there might also be roads of satellite, and other technologies, whatever you have, but it's mainly going to be mobile technology which is going to connect this next billion of people.

And then the second part and that was mentioned already and it's related to the supply and demand side issue you mentioned Sally, as well, is that we believe the demand side actually in a lot of cases is where we have to work more with other stakeholders, with governments, to make people aware that there is actually use of the Internet and they also have the skills to use it. I think that ISOC has published interesting studies., Michael Kende has done that, from Brazil, where you see that actually the connectivity in itself is not the issue. It's rather that people say I have no interest or I don't know how to use the Internet. And I think this is really where hit a wall in getting the Internet road out in the sense that it's used by people. So the first step is connectivity but the second step, of course, is getting people to really use it. I think that is where actually we would want to reach out as ISOC to other partners, and there's many people involved not only governments, other institutions, a lot of companies like mine and others. And I suppose we should try to combine here the efforts to make the Internet available to everyone.

That would be I think a key role for ISOC to play. Thank you. >> Thank you Christof, and thanks to our advisory council leaders. We have a new advisory council this year and we're thrilled it came together. The Chapter Advisory Council. I'm going to turn to Richard Hill and Avri Doria to give us their insights on how Chapter Advisory Council is thinking of these issues and other comments you want to make with regard to the discussions so far. Hi, this is Richard. If Avri's there, I'll defer to Avri. Ok, Avri, over to you. Thanks. Ok, so basically, the chapters advisory is just getting started, and we're finding our footing. We're still in the process of figuring out how we work. But one of the things that I think is very certain, is that we do plan to get the chapters more involved, both in helping to sort of communicate with the broader community of users, but also to bring their input in.

Haven't quite figured out how that happens yet. Haven't quite figured out what the priorities are, and looking in terms of the priorities that ISOC has already set up for this year, and going forward, how we actually blend into that. So, very happy to see many of the initiatives, very happy to see the focus on rights that ISOC has taken and is becoming very much one of the leading voices in that. That is a very good thing to see. And such. So I think we're very supportive. We don't quite know how to be supportive yet. And what we can actually do to affect things. But, you know, we're very excited to be part of all this and to be moving along. I'm going to jump in and say how delighted I am that the Chapter Advisory Council is up and running. I think there's a lot you can do and I hope we have a long and deep dialogue about that. But also the reason I'm jumping in is to publicly again congratulate Avri for her statement at the WSIS. It was quite moving and quite impactful, and just gave me one of those fabulous moments when I know that we do come together as a community to voice where we are in that community in ways that are very impactful. Avri wasn't speaking on behalf of ISOC but you sort of want to claim it.

Thank you. Back to you, Sally. >> I'm going to turn directly to Richard Hill to give his thoughts on the Advisory Council. Yes, actually I was right to defer to Avria because she said what I was going to say much better. But I just wanted to add two points. From, as Avri said we're just getting off the ground, very early days. But from some of the initial feedback that we're getting, that is actually I think one of the reasons why the Advisory Council was created, it echoes what's been said earlier in this meeting.

It would be good to involve the chapters more actively in various activities. For example, when I was listening to the activities on connecting the unconnected maybe it would be possible for ISOC to coordinate with the local chapter leadership when making local visits and doing localinitiatives and so on. I realize that doesn't always work but it's worth trying. And then on the trust area, and by the way I share what most people have said, I think we all agree that the key objectives you have outlined, connecting the unconnected and building trust are exactly the right ones. So I strongly support that. Now I have a personal view on the trust issue, but I think it's shared by a large number of people. We know that we have to kind of have some proportionate activities with respect to surveillance, collecting private data, retaining private data and so on. And I think we're seeing increasing adoption noe, or endorsement of the necessary and proportionate principles, which ISOC itself has also endorsed at a very early stage. And I see that now in the Council of Europe documents and the resolution from the Interparliamentary Union, and so I think maybe it's worth keeping that in mind as we go forward, and really make the point that yes, we do need surveillance obviously, but it has to be under law and with appropriate safeguards and due process.

So thank you, very much. And we are, as Avri said, looking forward to really getting rolling in the advisory group. >> Sally. May I say something quickly? Yes. And then we going to head into the trust agenda. Go ahead, Raul. But just a very quick comment on what Richard said, and I already wrote it in the chat room. We fully agree about the importance and need of involving the chapters more in all of our programs, including the access projects and programs. Just that. Thank you Richard for saying that. We fully agree. Thanks Raul. There are several questions in the chat that we didn't get time to address. But we will try to get to all of them either through the chat or here. But we don't have enough time to get to everybody. So Richard kindly helped us shift the debate or the discussion to the trust aspects of our agenda.

This is a perfect time for me to turn over to Olaf, the Chief Internet Technology Officer to give us an overview of our work this year in insuring and rebuilding trust in the Internet. So Olaf, over to you? Yes. Thank you Sally. I'd like to start with a quote that I, or just point attention to something I just read in the chat. It's a little while back by Syam Madanapalli. I hope I Pronuonce his name right. Syam lives in India, and his taxi account, apparently there is some value in an account that is associated with the taxi, got stolen, and transferred. And looking for readdress, he couldn't find that redress. Syam has been active in the IETF, and still feels that the Internet is not a safe place. And I think that sort of touching upon the core of what the trust agenda is about. What we need is an Internet that we can trust to do our business, to bring us economic opportunities where people feel safe.

And there are multiple aspects to a trust agenda there. There is a trust agenda with respect to how people can find redress. So there is a, you know, how does your loss, and how does your safety or continuity in normal life depends on an environment so to speak. On the other hand, in order to create an environment where those hacks don't really take place, we also need to do technical implementation. So, a trust agenda is a whole broad context going from policy measures all the way down to technical measures. Last year, in 2015 we launched a piece called collaborative security. And collaborative security is a set of values, is a framework to look at cyber security and Internet security, from a perspective whereby policy measures that we take to address the issues that Cyam runs into, so to speak, do not impact the value that the Internet brings. It is also taking into account that security is not one... cannot be achieved in one place by one actor and by one principle or one action. It's intrinsically on the Internet, multilayered, multifaceted, and the responsibility of all. So that is sort of what we try to convey with the collaborative security complex.

Implementing that in a trust agenda, we're sort of looking into a number of things from the Society's perspective. Having trust means you need to have policies for trust. And for us the collaborative security model is one of those building blocks, so to speak, for looking at individual policies and bringing that debate forward. You need to have an understanding of the economics of trust. Trust needs to be interoperable, so to speak, for lack of a better word that pops to mind, with values, with human rights, for instance. So trust of the Internet and human rights go hand in hand. We want to make sure that the technology bits that allow users to trust the Internet are in place.

So now we're sort of going more a little bit more into what is the future technology that can support users in looking at trust. We want to advance those trust technologies. We want to make sure the public core of the Internet can be secured. So then we're talking about things that we try to progress, like routing manifesto. And then, of course, we want to get a feel of how secure is the Internet anyway? How can we measure that? So, there's a bunch of activities that we undertake and from the technology perspective we're really looking at enhancing use trust, advancement of trust technologies such as encryption, such as TLS, that's where, for instance, our Deploy360 program creates a lot of material, and we are looking at online courses to support that.

But we're also doing work in deploying DNSSEC, the MANRS initiative where we try to create a set of operators that subscribe to those values of let's make that Internet interconnection more secure. And then on the higher layers there are a number of policy actions that we try to take, which I alluded to. But Sally I think you can probably talk a little bit more about that. I want to keep this short so we have a little bit more time to get into a conversation. Sally. Thanks, Olaf. One of the things that we observed in the WSIS, there was a debate over language related to security. And a number of governments suggested that, while the technical community could go off and do the technical aspects of security in whatever fashion, multistakeholder or otherwise, that the policy aspects of security really were the domain of governments. And that they should make those policies on their own, and in some sort of multilateral context. And we pushed back on that concept in line with the collaborative security framework that Olaf mentioned, because we really do believe that, that security, to create a secure and trusted Internet environment, these pieces have to work together.

The policies that were created, and we're having a debate in the world around encryption. If there are policies that relate to Encryption that emerge from that, they will affect the technical layers. Aspects with how the technology evolves with respect to privacy, or doesn't, will impact the policy layers, and what governments think they need to do. So we believe really firmly that this, our notion of multistakeholderism really comes to the fore in the discussion around security. Because no one person's going to push a button somewhere and make us all secure online. We know this. We have to do this as a collaborative endeavor. For us on the policy side that notion that governments do security, and technologists do technology, is very pervasive in the government policy discussion, and we as a community really need to push back on that and show our value, that we can bring to the conversation from a technology or industry or end-user point of view. We are looking this year to build out from the collaborative security framework what are the policy building blocks that lead to a trusted Internet environment.

And what are the pieces that need to be in place. We hear this a lot particularly in developing countries. You know I can't do everything all at once but if I can do five things related to security from a policy perspective what would they be? And we would really would love to hear from you, in your vantage point, what you think some of those building blocks would be. And we'll come back to you for dialogue on that this year. And of course any discussion of security and trust is not complete unless we keep the human rights aspects at the forefront of our minds. That our goal here is to create an open interoperable Internet where people can express themselves freely, and express themselves securely. So the human rights component of all of this is quite important, and we're building partnerships with the human rights community that do the human rights pieces very well, but are keenly interested in understanding the technology aspects for themselves, for their own personal security in their own countries, but also for the freedom of expression concerns that they're advocating in their countries.

So, there's a huge policy component that is emerging and has been emerging for some time related to creating a trusted Internet environment. and that's what we want to pursue very strongly this year in 2016 and be a leading voice on that. I think my job now is maybe to turn to Raul to Talk a little bit more about the regional dimensions of the trust agenda before we open it up for further questions. Raul? Thank you, Sally. Yes we have a lot to do from the Global Engagement perspective. The Global Engagement teams that includes all the regional teams and also the capacity building activities, and the relation with the chapters. One of the things that, one of the ways in which we will be collaborating to the, contributing to the security trust and security objectives in 2016, is through our activities supporting the work that is being done by the policy group, and the technology group. But also, building the discussion through our regional work to the technical community, througt the network operator groups and the regional debate, bringing, trying to feed the debate with our expertise and, again, trying to combine the work that is being down by Internet Society in terms of policy and technology, trying to feed to the regional debate.

And using our engagement tools, and networks in the regions to promote collaborative security. And also to use the collaborative security approach for specific discussions, and specific cases. Finally promoting the multistakeholder discussion at the regional and local level. Those are some of the things that we will do in 2016 for supporting the work that the organization is doing in collaborative security and trust agenda. Thanks, Raul. Olaf, do you have any other concluding remarks or questions you want to raise before I turn it over to the group? Well No.

But I saw a question in the chat room from Dr. Shahid Siddiqui about how you handle a situation when the government itself puts regulation on the name of the Internet security. So, if that happens, how does that fit in the collaborative security model? I think what is very important is that understanding what type of impact proposed regulation has on the values, that we want to preserve with the collaborative security model, is very important. In essence what we say is we want to preserve the values that the Internet, has made the Internet grow. Permissionless innovation, end-to-end connectivity, global reach, those type of things are captured in the Internet Invariants paper. But also values like the human rights. So taking that perspective back and specifically looking at Internet Invariants and your technical competence, and building your technical competence into that discussion, and assess whether the regulation will impact any of those values.

That, of course, is always sort of a local and a very targeted discussion that is relevant to your sphere. But taking that overall look, I believe that our collaborative security framework might help in taking that... in taking an approach there. I hope that sort of gives you a little bit of context on how I think of how it could be useful in that context. Thanks Olaf. I want to come back to a comment Richard Hill made earlier on necessary and proportionate, because that's a big deal in this discussion.

Richard, maybe for those who aren't as familiar with that phrase in the security and trust context, do you want to elaborate further on what you mean by that and why you think that's important? Sure. Thank you for that, Sally There was a fairly large coalition of civil society organizations that got together I think it must have been three years ago now. It was pretty much after the Snowden revelations. And the produced a set of principles, which in their view would be the correct balance between security, law enforcement, privacy, data retention, legal intercept, surveillance and so on. The website is necessaryandproportionate.org with no spaces. Just type that and you'll see it. ISOC was one of the early adherents to that as ISOC central and several ISOC chapters also. That idea has come up here and there. Some governments have, well, in fact actually I think it's fair to say all governments, have shown some reluctance in adopting those principles I think because they felt it would constrain their existing surveillance programs.

It's clear that most of these surveillance programs in place, not just the one from the U.S, which is well known, but all the other ones that we don't know about and which are even worse, would not be acceptable under the necessary and proportionate principles in one way or another. But nevertheless civil society has been pushing. As I mentioned, this principle is now coming up in, even in intergovernmental bodies. It was unanimously proposed by civil society in the WSIS review, but didn't end up in the WSIS outcome.

But that's ok, we can keep trying. And the basic idea behind it is just what it says: Surveillance, yes, but it has to be necessary for safety, security and so on, and it has to be proportionate, meaning basically not mass surveillance but targeted surveillance based on some evidence of threats or things like that and under judicial supervision. Thanks for that, Sally. Thanks Richard. It's becoming as you said a sort of core part of the international policy debate on these issues. Nick Ashton-Hart is in there, he had a comment in the queue about, let's not get dragged into this balance that we have to trade off certain things in order to get trust or privacy. Nick, do you want to expand on that point? Sure. If you'd like. Yes please. This is just, this is kind of a hobby horse of mine, because of course I sit in Geneva and listen to lots of discussions about the Internet, mostly not terribly well-informed on parts with many delegates, and even just the public narrative where, you know, law enforcement says well we have to have access to your communications when we need to in order to protect you, and uh, to me this is like saying we need a policeman to live with you, so, in case someone invades your home, we'll be there to help you.

No. You don't get to live in my house. You don't get to live in my head. This is one of the key challenges that we're going to face as a community... it is the law enforcement community has tended to be pretty insular, they hang out together, they work collaboratively together in the past. That worked. They needed some engagement by the justice ministries and lawyers, but they had to collaborate with each other, and I think we need, we need more engagement with especially younger, more technically savvy people from law enforcement, to get them to understand that a zero-sum game isn't the way to a more secure society. And that security issues are not owned by law enforcement, or by security services, or anybody. That human rights is a key component, and this really a holistic, we should want a holistic result.

And I have to say I compliment ISOC, because the messages from ISOC manage to be congruent, as I mentioned in there, confruent, moral, and fact-based, all at the same time, and that's a difficult combination on a technical subject. This community I think has a lot to add, if there's a way to connect more with law enforcement communities, outside of the limelight, not at the sort of level of public discourse where you see so much conflict, but maybe there are opportunities for ISOC at some meetings at EUROPOL or INTERPO, or to convene some sort of small group meetings with people there. Some of the more interested people from these communities could maybe ask questions in an off the record environment, and understand a bit better why the reaction is so negative to what they, what they propose at times. Thanks, Nick. Olaf, I don't know if you have follow up to that. The niche of law enforcement and encryption is a really difficult one. It's happening in many of our countries as we speak. And certainly something the technical community is paying a lot of attention to.

Olaf, do you want to speak a little bit more about that tussle as you see it? Yes, it's a tough topic. As you know there are also technical counter reactions to this. The IETF a couple of years have set in motion I would say almost a policy, butprobably the wrong word, ore encryption. Make sure that all the protocols that are developed in that community support encryption. And, in fact, I believe that we at the Internet Society, we at the Internet Society supported that statement. But we are also working on spreading the knowledge and the word on how to create those security, and implement those security mechanisms through our programs. Support of the DNSSEC, support of TLS in your protocols. Those things do not only protect you against pervasive monitoring, no, the primary goal of that is to protect you against criminals. To protect you against the guy that hacks your taxi account and steals all your money. And I think it is very important to take that positive look, in addition to the defensive posture, that there is a job to do in securing our immediate environment so to speak.

And there is a lot to do. If we only look at the Internet of Things, then we're shipping material and implementations that are not secure, and we Collectively have a responsibility there. So, making that part of the debate I think is very important, a positive and initiative-based stance, taking responsibility for your piece of the security agenda. I think that is important. >> Thanks, Olaf. I'm going to take one more question that I saw in the queue. There is a lot of stuff coming in here. Dr. Shahid asked a question about what he referred to as a double-edged campaign going on in India.

Dr. Shahid, are you able to speak, and do you want to describe that a little further. I actually heard about it on the radio a bit this morning so I think I know what you are referring to. But, could you tell us in person? Dr. Shahid Siddiqui Yes, Sally, I can just give you some example in India what's happening. It's like, you know one side that we call it a India campaign is going on. But, on the other side, if somebody speaks about the situation that is going on in the environment, either on social media, or in any format, so that person is being targeted indirectly or directly through the system, or something like that, they have to suffer.

In every campaign, in everywhere you might be hearing, on the, even actually the celebrities, are just afraid to speak about the things happening. So it's like, you know, one side you tell the is necessary should be connected all over. But what is the reality? The reality is that it's nothing on the remotest area. If you go and still see there are national fiber networks at level. But they are not active. They're not being used, they are not being utilized. But on the other side in the media campaign, you just see that its campaign going on all round going on all around. So I think that it's a very dangerous situation. That you know one side you speak in the favor. But in practical, it's not in the favor, It's like just countering what you want to say, that should be only be the digital, on the digital platform, and others are not getting this, therefore delivering their speeches, or delivering their expression.

So this is what I just want to, in this situation how one can advocate about the rights of Internet or accessibility, or that getting into the Ministry and thosw will all be disconnected. As you know that 60 percent of the Indian population is totally disconnected. More than that, they are even, they are just not having the accessibility, or even the electricity, most of the villages you go and see. In that situation how we can think about the Internet. So that is a question that we talk, we talk, just it goes to 50% or 15% percent of the population, those who have accessibility, those that have the readiness, that's all. So we have to think as you spoke about, Africa.

Africa is going through the same situation. There are all things, going, haywire, like it's not totally connected where we're targeting, we are not reaching to that point. So I am just bringing those into notice. But how we can just work practically and just get in to that, to solve those issues. Because if we start campaign, if I talk about individuality, I cannot do that freely. Because there are lots of things that are blocked. So just I wanted to just basically bring the situation to notice, I just need a solution. You people are expert here so you can just guide us about how to handle those situation? >> Dr. Shahid, I think you've raised a very good point and one that we hear in a lot of countries. And in fact what I have heard on the radio coming in this morning was this, was this tension that human rights organizations are starting to see in countries where, on the one hand, they want access, but they want that access to be controlled, they want it to be on their own government terms, and not necessarily on the terms of the user.

And that is something that we're starting to see, and we're documenting an uptick in this kind of approach around the world, and tt's something that we as a community need to be mindful of. At the Internet Society we believe in access, but we believe in access to a global, open, interoperable Internet where people can express themselves freely. We have to build on these trust components, we have to make it more secure, we have to protect people's privacy but that should not come at the expense of free expression. So I think you raise a really valid point, and one that we are all as a community are going to have to work through and struggle through for the coming years. It is one of the key tensions that we see. I want to turn now, as we did before, to our Advisory Councils to see if you have additional comments you want to make on the trust aspects of the agenda.

So to our, I'll switch it up this time, although we've already heard from Richard, so maybe Avri, with the Chapter Advisory Council, any comments that you have? Obviously you're very active in the human rights discussions around the world, anything you want to say on this piece of the agenda? Hi, Avri again. Probably not too much. I mean I'm really happy to see it taken up. I really do see that tussle as being something we have to engage in, and I'm really quite happy that ISOC is engaging in it, and it is definitely something that we can't let up on, as we see more and more of the problem areas, so, but that, you know, really all I need to add. I think it was well said. Thanks. Richard, anything else you want to add? I don't know if Richard's still with us.

Ok. If you want to jump in, just, oh, the answer's no. Thank you, Richard. Maybe turn over to the advisory, the organizational members, Christof, Cheryl, and Scott. Anything you want to add on this part of the discussion on trust and security? Hi. This is Scott. Obviously I'll jump in real quick and say that I think it's important for the organizational members to exercise their networks, to use that as a way to provide education and outreach to educate everybody about the importance of trust. It's important for people to understand what's available and how to use those tools. I'll leave it at that, and turn it over to Cheryl. Hi, this is Cheryl. I think it's great that you guys are focusing on this because it is a really important issue. It has many different dimensions to it. I think you said something important, Sally, you said Internet on user's terms. And, that's exactly right. As someone who wants to gain access and wants to be a bigger participant in The Internet community, how are you able to kind of navigate your way through on your own.

We do a lot of research just with respect to our own customers with respect to privacy and I can tell you, some of the things that I've learned is there are so many demographic, cultural nuances, to how people feel about many different things in terms of their interactions online. And I do think that there are different sort of dialogues and buckets with respect to when you're talking about crime investigation, or you're talking about broader types of data collection. A lot of the points that were raised by many who have participated in the conversation I think are spot on with respect to encryption. I think routeing security is another bucket of that. There is an overall safety bucket that pulls in items such as child online protection and things of that nature. I look forward to a really detailed dialogue on this. It needs to be ongoing for sure, and I'm glad that Internet Society is taking it up in the way that it is. Thank you. Finally, Christoph, anything you want to add? I think we all agree that encryption might be a key issue around encryption, arorund trust. But I beleive that we have to do much more work on that.

I think it's a very challenging issue as we have just said. There are many different interests involved. When we speak about governments, they of course, depending on who you speak to in government, have different opinions themselves. I just believe that we have to do much more work on that. Of course, not true that encryption will be the only way to provide privacy, and at the same time it's also true that encryption will prevent any security.

So the truth is here very much in the middle and we have to find out where it is. And I think again, I think Internet Society, with its expertise from the technology side, with the experetise from its chapters, should really try to build bridges here, and not you know, being afraid of having an opinion, but rather try to build the opinion of others as well. It's not going to black and white, it's going to be a solution which needs to balance a lot of fundamental rights and interests, and we have to be aware that we should be part of the debate, and not outside. So I think that would be just my point to add to that. >> If I may, Christof, I think you hit the nail on the head. It's something that we recognized when we made our statements.

And something that we've tried to bridge during the last year, specifically for instance by co-organizing a workshop to look at the technical implications of security, of encryption, for instance in mobile networks. There are many aspects to that and it's important to look at those. And, as a comment back to Cheryl, the various perspectives that people have, the local pockets of interpretation of values, of approaches with respect to the security and privacy, and the social components of that, I think that is a case for the subsidiarity nature of this discussion. The multistakeholder type of discussion that takes place. And I think that lessons learned could be transferred between the chapters. I saw Richard mentioning in the chat room that there is a, the Swiss chapter has organized has organized something around the encryption bills that are being introduced.

And I think that translating those examples, and perhaps informing other chapters, might be one of the things that we can do in this debate. So those were my sort of final observations from this debate. Thank you. >> Thank you, Olaf and thanks for summarizing. That's very helpful. I'm just going to put a plug in for one last project that we hope we can get the community engaged in. We've spoken a lot so far about what we need to do in 2016. We have a critical agenda ahead of us. But one of the roles of Internet Society is to be looking further out, and what does the future look like. So we are going to embark on a project this year to update, revise, reconsider the scenarios that are facing the Internet. What are the directions that the Internet could be going, and how do the decisions that we make, either in policy or industry, or as users, or as engineers, how do those decisions affect the ability of the Internet, ability of all of us to experience the Internet that we want to experience.

And we want this to really be a community brainstorming session so to speak. So, as we walk through the process of building these scenarios, we'll be coming out to many of you to get your sense of what are the challenges facing the Internet, what are the uncertainties, what are the things we don't know but we think are on the horizon, and then how do we translate those into recommendations for what we should all do as a community going forward.

This isn't going to happen over night, this is something that will unfold over the coming year, year and a half. But we really do want this to be a community engagement project. And so we hope that you're ready to jump in and put your creative hats on and think about the future, particularly from where you sit. When we've done this in the past we get different perspectives from different regions based on the challenges that they're experiencing. So that's a plug for looking ahead, looking into the future. And with that, I'm going to wrap up this discussion portion and turn it back to Kathy, to conclude.

Thank you Sally. So thank you all for participating in my morning, in your day, morning, afternoon, and night. It's very motivating to sit and listen to the views of our members around the world. And to keep, for us to keep in mind the meaning of this word "society." I have been always been quite enamored of our name, the Internet Society. And I, I think I have said this before, but this idea arose from Vint back when this whole thing started, about this society is going to emerge from this idea of the Internet, and it has.

It has. Someone said earlier, yeah yeah, but there's so many more people on the Internet than our membership and that is right, that was bound to happen. The issues around an open globally connected, secure, trusted Internet remain for us even more urgent, 25 years which will be our anniversary next year, into the birth of this idea, this Internet Society. And you heard a lot today a lot about what I beleive are the urgent things we need to do in the present time to meet the current challenges. I actually believe if we don't do this, and we Don't do this with some passion, and some direction, and some activism, that we could see a very different world, and a very different Internet, than the one that we believe in.

The core of our ability to do this is not the 90 people who are the staff of the Internet Society. The core of our ability to do this is our membership. So 80,000 members. Have we engaged them all? No. Do we need to? Yes. How do we do that? How do we think about our members, growing those mebers, and activating them to move forward with us, to ensure we have the Internet that we want in the future. There are a couple of ways I think that we're concentrating on and that we ask you to do. Part of this is local organization. It is locally organizing folks to talk about, to understand, to be aware of the issues that affect the Internet. One way to do that is on the Internet. And I just, the reason you are sitting here in little boxes in front of me, is because I'm a deep believer that we need to make eye to eye contact. We need to talk to each other in a way that we realize we're not just names on an email, or voices on a teleconference, but that we are real people, sitting in real places everywhere in the world, and we call ourselves a society.

Together this society can come together, in my view, to take on what are the issues of the Internet in the 21st century. We are trying to here, at the staff level, focus those efforts so that we can be more effective. We are aware there are very discrete issues, on the local and regional level, which we must depend upon our people in those regions to address. We want to give you the tools. We want to give you the policy papers. We're trying much harder to say to you here, here are the things you need, that you're telling us you need, to do the work of the Internet Society. This year you'll see from us an increased snd continuing focus on building the society.

On building our membership. On building the strength of our chapters. On making sure we can communicate with each other. And, by the way, it doesn't only have to be through us, although I think these community forums are fabulous, you can communicate with each other, within the chapters and regions, and communicate across the chapters, and I hope you would do that. There are so many lessons learned around the world. As I go around the world and listen to what people are doing to fight... It's forceful, it's impactful. If it's focused, it really, really gets things done. So, what are we going to do? Keep using the Internet to talk to each other, to organize. This particular application we're using here is a good one. Why? It's cloud based and thus the low bandwidth issues in some of the places in the world get dealt with. So you heard people from places around the world today, and you saw them, that you could not do just a little while ago. Because of the technological breakthroughs.

I don't necessarily want to be the cheerleader for one particular application, but what I'm seeing is an application that we're using that is working. And I'm suggesting to you to do it, to find it, to get online, looking at each other and talking to each other. We are going to again do InterCommunity. Last year, to be honest, we were just holding our breath to make sure the technology worked, that we could move ourselves around the world, from our board, to the 15 nodes that we had, to individuals, to incorporate individual folks who wanted to get on, and it worked. This year we need you to help us think about that community building, to make sure that our InterCommunity this year is really about the community, and that it's community centered.

So you're going to hear about that. This membership drive issue is totally on our minds. And any ideas that people have that are better than ours, or will actually grow on ours, or are local in nature, I would like to hear from you Ayesha Hassan is, she knows she's tasked with this. And it's not just about getting numbers. We don't want a number. We need engaged members. And to engage members, they have to get something from us. It's not just we get something from the members. What are we as a society offering to new people to come and join us? Yes, we are offering them a way forward. We're offering them the principles. What more can we offer them? I believe this lies in the chapters, because I think it's in the chapters where we have face to face ongoing human kind of association, and passion that is grown and then is activated, and actually gets results.

But we have to think about, what do we want to give these new members that we want so much. Finally, I just want to say something about the fellows and the ambassadors in the NextGen part of our absolutely essential work to bring more people in. We must... the Internet is about the future. And we must, must, must have the future which is the present, it's our young people. It is our Internet natives. The folks who have grown up with, and about, and around this technology who will better help us reach other people, and will better help us as a society to articulate why this Internet needs to remain open and global. Why free expression is so important. Why governments need to understand and appreciate that this technology, this network of networks, is not something they ought to be afraid of, but something they need to embrace. Because it is the way that we are going to express ourselves as communities, grow economies, become stronger in both our regional, and our global citizenship. And we need voices in order to do that. In Brazil I add my voice to all of those that , it was fabulous.

And to have that energy, to infuse that energy into the Internet Society, the energy that comes with youth, and with I can do anything, and with fearlessness, is what we need now. And it must be a part of what we want to do this year. So we're going to concentrate on things we need to do in the present, we have our eye on the future. The scenario planning we're going to do is enormously important.

And we are going to speak. We're going to have our voices heard. I think you are experiencing, more and more, that the staff of the Internet Society is out in the world, trying to make a point, trying to have impact. I myself will concentrate on two big things this year. One, getting to new audiences, so that new audiences understand who we are, why it's important that they listen, and that will be part of the dialogue. I go off to Barcelona in two weeks, because indeed the Internet will be on a mobile platform.

We need people to understand that, and see and understand how it is we go forward. I will be at the G7, because it's at the G7 that governments will again come together and decide how they're going to govern the Internet. Well really? We don't need them to govern the Internet, we need them to join with us to govern ourselves on the Internet, and we have to come to some kind of Understanding sound the needs of security and freedom, and the fact they must go together, human rights and security are not one balanced against the other, they must exist at the same time. So we must be in these forums. We'll be at the OECD, we'll be at the African Internet conference. I'm going to Mexico next week. You will see us out there speaking, and I'm suggesting to you, you should do the same. Go to where you will have people that listen to you, and go to where they don't even know who you are, and start to talk about the issues that are of utmost importance.

So again I wanted to thank all of you, and Sally, and Raul, and Olaf, and James, and all of the staff, Gregg and the tech people who put this thing together so we can talk to each other, and ask you to please stay very close to us, let's stay in touch. Don't hesitate to drop me a line. I know we're trying to work out this stuff on Connect. But, by the way I read everything. So I know what is happening. And I know we have work to do. And I know that we have new kinds of things we have to institute and we're getting there. So thank you very much for being here..

african instruments

https://howtoplaythedjembedrums.com/isoc-q1-community-forum-2016/

Mandingue Rhythms For Drum Set: Grooves from West Africa: Varun Venkit: Djembe & Dunun Introduction

https://www.youtube.com/embed/HVrqpCAAvoo

For those of you who are new to the world of. West African percussion, here'' s a little intro. A traditional West African Djembe set comprises. Djembes and Dununs. among which is right here. Dununs, that'' s a cumulative word for three round. bass drums. The dununba which is the most significant one; '' Bachelor's degree ' suggests huge in ' Malinke '. The Sangban which is. the heart of any ensemble, the medium-sized drum. As well as the Kenkeni. Mamady Keita calls the Kenkeni. the '' motor ', the driving pressure of the majority of rhythms. And you'' ll know why when you experience the. kind of parts that are used the Kenkeni. The Sangban is the '' heart ' of every ensemble.. As you find out more as well as a lot more West African rhythms, it'' s the Sangban that distinguishes one rhythm. from the other. As well as the Dununba, Mamady calls the '' Sauce ' since sauce makes points yummy, as well as. that'' s simply what the dununba does. This video clip collection contains my interpretation of the Dunun. tunes on the set. The Djembe presentation in the set video clips will certainly give you a concept. of what the rhythm typically appears like ... Djembes and also Dununs. And the Kenkeni.

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https://howtoplaythedjembedrums.com/mandingue-rhythms-for-drum-set-grooves-from-west-africa-varun-venkit-djembe-dunun-introduction-2/

Shenseea - Blessed (feat. Tyga) (Official Music Video)

https://www.youtube.com/embed/cg3myULHqiE

FALSE:: MISTAKE: UNSUPPORTED ENCODING

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https://howtoplaythedjembedrums.com/shenseea-blessed-feat-tyga-official-music-video/

What's the difference between 3/4 and 6/8 time?

https://www.youtube.com/embed/N4q2kBe82-o

9 8 can be the compound equivalent to 3 4 or it can be a weird time trademark so ideally that'' s boosted your self-confidence with the difference between 3 4 and also 6 8. 9 8 can be the compound equivalent to 3 4 or it can be a weird time trademark so ideally that'' s boosted your self-confidence with the distinction in between 3 4 and also 6 8.

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https://howtoplaythedjembedrums.com/whats-the-difference-between-3-4-and-6-8-time-2/