>> the market is now only embraced not just the fed has finished the hiking cycle but that we are going to see deeper and deeper cuts next year. >> the fed is effectively putting fiscal policy on autopilot. >> we think the fed is going to be slower in terms of cutting rates than what the market is pricing in. >> right now, markets are priced beyond for perfect landing. >> we are in the rocky landing camp at least for now. announcer: this is "bloomberg surveillance" with tom jonathan

ferro and lisa abramowicz. jonathan: good morning. alongside tom keene and lisa abramowicz i'm jonathan era. your equity market just about positive on the s&p on a three-week winning streak on the s&p 500. thanksgiving just around the corner. we're going to start with a soft landing hopes and dreams. we have to begin with a weekend full of alice intrigue over at openai. tom: just amazing. like on a friday you figure out you're going to lose your job and that is what happened to mr. altman. ed ludlow, all night or friday, saturday and into sunday as well. about 2:00 this morning, microsoft 1, everybody else 0. jonathan: the adults are back. this is what evercore have got to say.

it remains to be seen how much brain drain there will be over at openai. the fundamental risk to microsoft is largely contained with altman and team on board. lisa: they are creating an independent ai group headed by sam altman and his peers. here's my question. openai was founded almost as a nonprofit. the board is a nonprofit. and there was attention. is this a commercial business or if there something bigger about creating new technology that can innovate for humanity? how does an independent agency that has the focus of making money polices sell at a time of really uncertain looks? tom: i would suggest that people like me who are saying can the giants and the jets be disbanded? the reality is there with three or four soap opera's going on this weekend. one is the incredibly narcissistic idiocy of the

broader sense of silicon valley. two, is this something really going on here? i've got a brother who says chatgpt is the second coming of christ. great, and microsoft got that. microsoft got the guy that started this. making happy tonga with openai about three hours ago, early east coast morning. again, i'll see how it works that -- out. the bottom line is i the adults going to do this, or are people looking to philosophical, cosmic garbage? jonathan: i've got to think about what happened on friday. was this about safety concerns, with this about him going off to try to build a venture that can with nvidia? what was it? lisa: i actually don't know. how much within these developments to create some sort of hardware around this that was

not involving the board or anyone at openai? we haven't answered any of those questions. what is microsoft going to do? tom: i would say mandeep singh, i want to know who has the code, who has the copyright, who has the line by line knowledge of this pixie dust that microsoft thinks is worth $30 billion. i don't know the answer to that. jonathan: we will be covering the story this morning. equity futures on the s&p 500. the scores look like this on monday. yields a little bit higher by a couple of basis points. lisa: i'm just going to talk about the shortened week and what we can expect. we do have an auction today, funny that you mention that. i actually think this is going to be fascinating on a week that

is shortened for the holiday people are trying to eke out some volatility, some stability in the bond market after real whipsaw moves. to be see that where do we see some real pushback? nvidia reporting earnings after the bell and this question of other sam altman was trying to come up with his own ships to with video. how isolated is nvidia? how much do they have a competitive advantage? i think that is going to be a real question. tom: are they up to record highs like microsoft? lisa: they are all going to the moon because the hope for artificial intelligence. jonathan: i wish i had. lisa: we also get meeting minutes tomorrow, pmi's on thursday and friday. just to continue to see if we observe the deceleration of economics.

jonathan: she that goni strategist, -- chief equity strategists, do you have more confidence that yields fall from here or that stocks rally from here? >> i've got equal confidence in both, but we've got a deceleration in economic activity. our chief investment officer has been instrumental in putting together this soft landing, rocky landing thesis. we think the next couple of quarters are going to be decidedly slower than we saw in the third quarter. as a result we are all in on this equity rally. 4100 about a month ago, the federal reserve is stoned in terms of raising interest rates. they are going to be on hold until the back half of next year so we expect that on yields are going to ride lower.

we think that stocks are going to grind higher, from 4500 4100 and we think that is a trend that has got legs. tom: always good to quote the dow on a monday morning. back to 1977, we had the first leg of a bull market and some real -- not malaise, but just some angst. and then in '77 it began. is this the second leg of a bull market? >> we think it is and we think the federal reserve has done everything it needs to do in terms of creating that positive relationship between where is the upper band of the funds rate and where is nominal, annualized cpi inflation? so the fed has finally achieved what it needs to do it on top of that, the bond market has on the heavy lifting for. since last rate hike in july, benchmark 10 year treasury yields have gone from 3.75 up to

5%. that gives the fed the luxury, in my view, to say we don't have to hike anymore, we can just sit here on the sidelines for the next year and allow the gradual slowing of inflation will curve. tom: i want to talk about the doing of a portfolio. i assume you guys are on speaking terms, but you say to steve, are you going to widen out and go from rep next year. is it going to be the magnificent seven again or do you see brett? >> the answer is breadth. we took our equity overweight, up to 557 domestic, large-cap value, those are areas that are trading at very modest multiples

. we started to see those stocks play catch up and we think that plays out over the course of calendar 24. lisa:lisa: do you care about all of the artificial intelligence talk and the palace intrigue around openai given how much that trend has driven dean so far this year? >> we do, and we were resisted in the first seven months of the year because they simply got ahead of the cells when we got that 11% correction over the august, september, october timeframe, and a lot of these growth names came down by 20%. but that gave us the opportunity to close what had been a significant underweight in those technology names. we've come from 5% underweight to 1% underweight. these are great companies, we just felt the and gotten ahead of itself and we look at them in

july. lisa: when you talk about grinding higher when it comes to equities and grinding lower when it comes to bond yields, how much does this actually lead to outsized gains vs. just basically not losses? >> we think there will be outsized gains. i gave you a little snapshot of the target from this year. but as we look out the next year, we think the s&p 500 could hit 5000 by the end of the year. and depending upon how the economy plays out next year and certainly, the result of the election next november, a year from now are going to be critically important. the potential prospect of more business friendly, warm market from the fiscal policies could allow that rally to continue up. so we could have a really nice couple years here but obviously there's a couple of shoes that need to drop and fall into place here in order to be able to make that are cast with a higher

degree of confidence. jonathan: jobless claims have been climbing from very, very exceptionally low levels. are you focused on the level still come or the change? >> i'm glad you brought that up, that is the one data point we are focused on this week. the october survey week, 200,000. it was a nine month low. the number we get this wednesday is the november survey week. the number that's expected is 225,000. that is a 12%, 13% in. when we look at the payroll number last month with the revisions, the worst number we saw in three years. the household survey lost about 370,000 jobs. we think the labor market starting slow. the rate of unemployment has increased by half of 1%. the labor market is something we are watching closely. this week's job report or the survey data for the initial weekly jobless claims we think is going to be a deadly

important variable. -- critically important variable. jonathan: happy thanksgiving, looking forward to the holiday later this be. lisa, this is the question. lisa: second time. jonathan: can i make it three? it's become a very special day for me. jobless claims. what is the difference between a welcome loosening an unwelcome deterioration? that's going to be a huge question in the weeks to come because at the moment yields dropped, you have that constructive tone around equities. at some point it starts to turn. lisa: if you look at history there's always a nonlinear increase in limit rates once you have a half percentage point increase in the benchmark jobless rate which is basically what we've gotten over the past six to eight months. so is this time different? a lot of people are saying yes it is. and then others are saying both of the worst words to ever say

in finance or anything else. you go on history or the fact that we are in a unique period/ tom: i would listen to somebody who had the courage in december of 2018, 2019 alone at hsbc. just shut up and buy. he was really alone. to your many comments, he is adamant it is fading away. jonathan: he is still bullish. tom: not really bullish, but he reaffirms why he is bullish year in the season where he literally made his modern career. jonathan: at we said happy birthday to the president yet? tom: happy birthday mr. president. jonathan: nbc gave him a gift, the paul over the weekend. lisa: that's not a gift. tom: what do you give the president for his birthday? lisa: approval rating. jonathan: just 33% of all voters approve a biden's handling of foreign policy.

lisa: and how much is it related to his 81st birthday? kind of an operative of ration when it is the biggest liability against him in this particular election. tom: what i find fascinating, the cumulative effect of inflation is his biggest problem. forget about all this modern political stuff. lisa: you think that's it? tom: people are looking back to the fall of 2019 saying, better off, and the answer is no. look with that artificial tree cost you. it was lifted. jonathan: that was home depot, like $150. that wasn't too bad. tom: you need a charity christmas tree. move the decimal. jonathan: from new york, good morning.

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i've heard people say microsoft is just going to buy openai, you are just making big tech figure. >> companies not for sale. i don't have to be more clear than that. we have a great relationship with them. these big major partnerships between tech companies usually don't work. jonathan: so well he is now working there. former openai ceo sam altman speaking earlier this year. ousted from the company friday, now joining microsoft in leading the new ai development team. big weekend, story developing for that weekend. welcome to the program. good morning to you. your equity market on a four day winning streak on the s&p. three-week winning streak on the benchmark here in america. equity futures just about positive by 0.04%. yields pushing a bit higher on the 10 year by a couple of basis points. a big move lower last week.

10 year yields down by something like 22 basis points to the lowest in september. tom:tom: with all this madness over the weekend, let's focus on the data right now. the dynamics we are looking at, futures up to the vix 14.16. the dollar weaker maybe is the lead story that no one in america is looking at today. jonathan:jonathan: worst week since july? tom: illegitimate rollover. kit jukes commenting on a weak dollar, lower dollar changes things. lisa: how much does this have to do with rate hikes being taken off the table and rate cuts being increasing priced and even by early as may of next year. and is this just an orderly unwind of a superhot market, or if the something more pernicious that has legs that could lead to a more protracted downturn? jonathan: we are at that stage of the cycle where you focus on

claims. tom: and that's the differential, is the labor. jonathan: when you start to get these conflicting narratives that may be your at a turning point in the cycle, that is something that jp morgan made saying. lisa: we've been seeing this for quite a while which is part of the problem. at this point it is clear there is a downtrend in the data. the question now, just how far will that go? tom: do you retire with 110, is that good for you? we are not there yet? jonathan: 95 on euro-dollar and you can retire me. lisa: [laughter] tom: joining this right now from london, and it is good to get his perspective, and a lot of different perspectives on the festivities over the weekend. mark bergen observe what we saw in california and gives us a

cultural overlay today. mark, i was sort of dumbfounded and i love what denies or wedbush said that the adults won. we saw that four hours ago where these guys joined microsoft and they are going to be a folded in research group of microsoft and that. is it going to be a brain drain from the children of silicon valley over to the grown-ups? >> that's one way to put it. certainly we've seen the announcement, the other cofounder of openai is now also joining microsoft and posted on x, tweeted that there is at least three other research scientists from openai who are joining them. sam altman for probably his best quality was to be this diplomat and recruiter. he was going out approaching these top talents from google and now he can do the same thing presumably from microsoft. tom: i know you did this in

chicago studying public policy, it is about a public image and private conversations. altman was basically a wonder child out of st. louis. one year at stanford, and he is a people guy. explain how he works in dialogues between corporate types and some high strung genius ai guy writing code. >> he is pretty masterful at this. he spent his formative years at the incubator of startups inside silicon valley and he built these relationships in part because you have a lot of venture capitalists, ceos, all the big tech companies looking at what is coming next and innovation and here are the startups we might want to wire or you might want to fear. he did a globetrotting tour this summer with openai and he came to visit london and ucl.

he is treated like a rock star. after his event you couldn't get near him, he was just mobbed by developers and fans. i think people who are wanting to grab onto this revolution that they see as sort of the next wave of feuding and he really leaned into that in a way that -- who runs deep mind is a much more sort of prototypical engineer, a little more quieter, contemplative, not as comfortable being that sort of figure that i think altman can be. lisa: so is this basically an example of how the behemoths in the tech space are going to own artificial intelligence, to either buy or destroy the fact of some of the startups that are coming up with the key software, and really the dominance is just going to continue to consolidate? >> it's hard to argue against that. this is clearly for microsoft a big boom for the cloud business, challenging amazon and google for the developer business. their relationship with openai,

it was a little unclear which one they were going at. openai is obviously trying to commercialize this and microsoft is selling the same thing. the tension is only going to increase. we certainly seen the gains so far go to nvidia, microsoft and google. the one exception was openai and that will be over the coming weeks, we will see the engineers who actually build and maintain these large language models are the key radiance. whether they're at this mass exodus will be able to answer that question. lisa: in the past hour, sam altman has retweeted two different comments. signaling some of this exodus or foreshadowing it just a bit. there is this key question about what actually happened. what is really driven by concerns about a lack of ethics or a lack of understanding of the potential dangers of artificial intelligence, or is this a personality battle but had to do with some of the side

dealings that sam altman was working with? >> a lot of it is coming from reporting in part because the board of openai has not put out a statement, has not put out anything really clarifying beyond their initial comments he was not candid in his communication. reporting showing that altman was out there raising capital from investors in the middle east for both a new ai chips business that would challenge nvidia, potentially a new hardware, a device famous for deciding the iphone. that seems to be an issue. the other one is the debates around ai safety. some of the other founders of openai believe fervently in this idea that they are trying to build an artificial general intelligence and the new ceo they brought in, from twitch has also been part of this philosophy that believe that ai

poses this exigent threat to humanity. and if you believe that and you believe that the co was leaning in an opposing direction or something to harm that risk, i think that would make sense, justify it perhaps. but i feel there is something else we haven't heard. jonathan: thank you for your perspective on things. here's another tweet. the circus show four person border, they thought they one until microsoft took this all over in a poker move for the ages with wall street watching nervously sunday night. microsoft now in a stronger ai position than ever before. tom: long ago and far away a gentleman from middleburg college, he enjoyed some prison time off of that. really challenging. on a conference call, i heard him say we take out for the engineers. the only reason they would buy an acquisition was to buy the

brainpower which you just heard. lisa: you can come up with whatever narrative and the circus of the adults, you can make a beautiful story. we don't really know what happened but the bottom line is the consolidation among the dominant big tech names is almost that much more absurd. jonathan: let's put it this way, and we've got no idea what actually happened. if the board was concerned about safety, given what has happened with microsoft in the last 24 hours, having they just heighten that risk by the move they made on friday? lisa: 100%. is it a commercial organization or something else? jonathan: microsoft is a commercial organization without a doubt. lisa: correct. jonathan: good morning from new york city. a lot of code. if an application needs to be modernized then you'll need time, resources... and caffeine.

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♪ jonathan: cointreau days of gains on the s&p 500, could become day five. advancing by 0.04%. three weeks of gains for the first time since july, believe it or not. things have been that rocky, the narrative switching back and forth. james athey, keep courting him from months and months ago. narrative table tennis, or ping-pong. pick your version. 10 year yields down more than 20 basis points last week. lowest level since september,

yield a little bit higher. two year yields last week down around about 18 basis points. the whole curve shifting lower, two-year at the 30 year. lisa: soft landing, that has been the hope, the dream. hoping that he can continue landing this thing in this fantastic way that can give the fed confidence which makes me wonder what they can say to make anyone think that is not how they are feeling. jonathan: i was going to the numbers for the week and i was thinking cpi was this week. not even a week ago? it feels like a month ago. lisa: but it single-handedly changed the narrative. jonathan: enough to engineer a monster move in the bond market. the worst week for the u.s. dollar of the dollar index going back to july. the euro at the moment, 1.09. tom: and saved japan as well. i take your point that cpi was

ages ago but it is a forward data that is going to matter here into the jobs or for november. jonathan: looking ahead to claims, we've got some fed minutes as well. under surveillance this morning, fired by openai on friday, hired by microsoft on monday, openai cofounder sam altman joining microsoft to lead its ai program just days after being dumped by his former company after he " lost the trust of the board of directors." microsoft holds a roughly 40 never since taken openai but the co failed to have altman reinstated that the company. writing "we remain committed to our partnership with openai and have confidence in our product roadmap." what a messy weekend trying to follow this one. lisa: i'm not sure i've come up with anything conclusive in terms of understanding what actually happened. jonathan: nobody can. lisa: the bottom line is the winner. all of the big tech names are

going to be the winner as they consolidate some of the power and also technology is moving faster than any agreed-upon code of ethics as to how they should move forward. to me, the question is what is going to come from this is profits are prioritized? tom: i agree with everything except one small detail. i'm trying to figure out how amazon and even google are involved in this, how they win if the cricket player from microsoft takes the talent. to me it is all about the talent. i've got to believe that the margin of the engineers at microsoft would migrate to stock options on microsoft jonathan: microsoft and the driver seat, that is for sure. the other one, libertarian outsider hobby air milei pledging's include ditching the pace for the u.s. dollar and shutting the country's central bank while undercutting public spending. inflation in argentina soaring toward more than 40% of the

country living below the poverty line. clearly they wanted something different. lisa: clearly. did you see some of these videos? health ministry out. department of education out. he doesn't want to keep anything. is going to keep the u.s. dollar and talk about being eccentric and let's see. jonathan: the peso's outcome of the dollar is in. tom: he has got a blue backdrop behind them. the peso is at 3.53, and the real free market black-market blue dollar is a little bit weaker, 8.69 per u.s. dollar. jonathan: so did jay powell wake up this morning chairman of the argentinian central bank? tom: -- woke up as chairman of the bank. lisa: that's a good point, what is going to happen with this country especially given the fact that fed chair powell is central banker to argentina but is not representing them in any

way, shape or form. jonathan: i think i saw a line that the imf congratulated him which is good news. let's finish with some sadness. rosalynn carter, former first lady and wife to jimmy carter died. she was known as an influential advisor for her husband during her time in office, attending cabinet meetings and leading efforts to improve care for the mentally ill. she was 96. entering hospice care in the last month. jimmy carter of course has been in hospice care now since mid-february, i believe. tom: a rich and full life. what is so important is she and a compendium of first changed the dialogue. right around her time, betty ford with the same way. they said no, we are not going to this traditional, we are not worried about china in the east room of the lincoln library. let's do something different. lisa: a great story from the human perspective. married for 77 years and jimmy

carter met her for the first time when he was three years old and she was just born, delivered by his mother and he saw her in the cradle because she was the newest kid on the block from their neighborhood. 18 years later when they met and then they grew up together in a very real sense, it is a pretty fantastic story. tom: really wonderful to say. let us continue with economics, finance investment and international relations. joining us on the shortlist to be the new minister of the economy, the chief u.s. economist at citigroup. before we get to the serious stuff at hand, how do you save cultural -- citigroup with your incredible latin american experience? no other bank has that experience. how do you save argentina? >> what we are seeing in argentina is what we seen a lot of places which is this antiestablishment, anti-institutionalist trend that we are seeing in policymaking.

when you look at the inflation rate in argentina you can see why people are looking rate change. tom: you seem so alone now in the constructive policy out of the pandemic. how alone will american policy be in 2024? >> one thing that really strikes me when you look at u.s. policy relative to the rest of the world is the deficit in the u.s. this is a country where we are running 6%, 7%, 8% of gdp deficit. there are very few countries that can do that, the u.s. may be the only one. maybe some other examples that can just consistently run a large deficit like that and continue to provide generous fiscal support so that it is a very different situation for the u.s. jonathan: jobless claims, let's go there. at some point this is an unwelcoming deterioration in the data. are we close to that on jobless claims? >> we may be.

we are getting some conflicting data here. the unemployment rate, if you just look at that data series in isolation and don't try to kind of explain away what you are seeing like we tend to do as economists, that is what you seen before every recession that looks very much like the path into a recession. jonathan: this great phrase than the last couple days, a lot of people are embracing that soft landing or vona. are you still anticipating that this dual mandate is going to be in conflict in the coming quarters? >> more likely than not it will be just taste on the history of what we've seen in cycle after cycle. it would be great for the fed, great for the fed, pray for the economy if you just had this wonderful nerve vona scenario where everything kind of slowed on the same schedule.

if we had had a different inflation print last week we would be having a very different conversation now and i think that just shows the extent to which this market is focused on the very recent data. software inflation print, jobless claims coming up a little bit. that looks like something that can be consistent with a soft landing, but are you going to get some data that starts coming in different directions? probably. lisa: just to build on that, is their inherent conflict in your belief of a growing chance of a hard landing, of a recession, but also sticky inflation? >> i think that is the real difficulty and we haven't seen really in decades where you have inflation that is still running above target and you have growth that is weakening, maybe they are going to happen together, maybe they happen together in just the right quantum so you get a soft landing the more likely scenario is that we will have these going in different directions where inflation probably stays stickier and

higher. one issue with inflation and the way the fed is conducting policy is inflation is going to lag what is going on in the rest of the economy. you will still be running inflation that reflects for the economy was six months ago for a year ago and that is very strong. lisa: i you saying that the fed won't be cutting rates as much of people expect because they won't be able to justify it given where inflation is? >> back in happen a couple ways. you can have a scenario where the activity debt is weakening but you still have inflation that is sticky and high. on the other hand even if we are on something that looks more than a soft landing trajectory eventually, there wouldn't be a lot of urgency for the fed to cut rates in that scenario. theoretically if inflation comes down, they agree at some point the fed will be cutting rates, that could take a very long time before we actually get those fed cuts. tom: i need to ask you -- who

was a student of and stanford eventually to you, which is the risk-free rate. you absolutely nailed the increase in rates. do you have any clue what the risk-free rate is in 12 months? >> like we were just discussing it will depend on the economic scenario. you have to be open to economic scenarios here. we do know we are in a world where inflation has been higher, has been more volatile. we know that the correlation between equities and fixed income has flipped. essentially you have equity prices falling at the same time bond prices are falling. that means probably more premium, probably a higher interest rate, all else equal. so if anything, that rate is probably going to be higher. jonathan: what changed about the fundamentals to lead this different outcome now relative to pre-pandemic? >> the single biggest thing you can point to is what is

different in goods inflation and i think that is what we are all not looking at enough right now. we've had a big disinflation in goods so it is easy to kind of look at that. in some ways we return to this goods deflation, what we had pre-pandemic. goods prices went down over time and i think anyone who has been out buying things over the last couple of years, certainly the experience is not that goods prices are down. some of that was specific to the pandemic and is not going to continue, but what will continue is this kind of topping out of globalization may be going the opposite way in terms of globalization. that stream of low-cost goods is just not going to be there in the same way that it was putting downward pressure on goods prices. i think we can expect goods inflation going forward. jonathan: so this is a secular call for you. >> that is a secular call, yeah. the idea that inflation is higher, more volatile. the economy is more subject to supply shock than demand shocks.

these are structural, secular changes. jonathan: thank you, buddy, good to see you. tk potentially seeing the dual mandate in conflict going into a new year where growth gets weaker, unemployment many climbs a little bit higher. you see that in jobless claims at the moment and inflation remains a sticky in and around 3%. tom: he's auditioning from governor of the fed. he's migrating back to something new, as simple as that. is there a new regime out there? lisa: at what point does the fed not really cut rates as much as people expect because inflation will justified? this is really the key question, i they necessarily to factor going to be so late to the party to necessitate some sort of your downturn anymore stagflationary type field for at least a bunch of month and the next couple of years? jonathan: that wasn't that

gloomy, was it? the bulls are publishing this morning, out with a very nice note. and of course he's always modest and never taking a massive victory lap but he says we are going up not on stimulus and not on public policy. granted, the damage is done. but we are going up because we are going up. that is the john stoltzfus 600. jonathan: looking for a big, big year next year. coming up, eurasia group conversation just around the corner. equity futures on the s&p 500 just about positive. yields higher by three basis points. 4.47 on the u.s. 10 year.

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terms of having this sufficiently restrictive stance of monetary policy to bring inflation down to 2%. i think the recent economic readings reinforce my view that is probably correct. jonathan: that was michael barr, the federal reserve vice chair for supervision and tracy alloway at an event here in new york city. here in new york, welcome to any trading week. he equity market looks like this, positive 0.04%. yield a little higher by three basis points. in the market, the dollar weaker once again and all of last week as well. went positive hereby 0.07%. tom: there is no question about it, 7.17. a huge, huge plus for all involved.

jonathan: can china turn it around here? tom: i think it really has to do with medicine. the idea of covid and what many critics in the west would say the arrogance of aching you've solved covid by constraint and sequester. jonathan: you have this revenge spend as consumers in western europe. the confidence of the chinese consumer shattered, absolutely shattered. tom: somebody brought it up late last week. i can't remember, but the basic idea of the hope and prayer of a building consumer. not up to 70% of gdp like here, but something that moves beyond a totalitarian regime to a free, open consumer has once again postponed. tom: heartwarming changes to the business environment coming to a government near you, did you know that? lisa: i actually didn't know, which was interesting.

i'm not your habit was for you. the dinner in san francisco with sam altman, was he at the dinner in san francisco? jonathan: i don't know the answer to that question. someone said a minute ago that the edge of gloom sounds like bramo's solo album. tom: right now on china, particular after the statement of last week, corporate affairs of u.s. ratio group. i want to get beyond the festivities last to just simply the now what for beijing. what is their next step? >> i think an interesting next step that isn't exactly directly related to u.s. china is the fact that they are hosting arab leaders right now to talk about how to bring the conflict over

gaza to an end and i think underscoring their role as an emerging leader in moderating international disputes and trying to bring about peace. so that's interesting. certainly flexing muscled medically. in terms what is next for the u.s. and china, this was an important meeting. it capped off a year of back and forth between the two sides trying to set the stage for some progress in the relationship and certainly trying to stabilize the relationship. i think there is a lot that has been accomplished here, the deal being a particularly important one for the united states perspective but at the end of the day, both nations fundamentally are distrustful of one another. the u.s. sees this as a competitive relationship and we are heading into 2024 where we know there are going to be speed bumps, the taiwan election which

could trigger reactions from china that i militarily bellicose and trigger reactions from u.s. congress and make it hard to maintain that stability, then there is an inauguration, and the u.s. election and all of the political rhetoric that comes with it. jonathan: everyone was smiling for the cameras, that with the take away week. the points of military tension in the middle east and ukraine, where they addressed last week? >> not substantially, no. there certainly wasn't progress on those things and we weren't expecting there to be progress, but that underscores the point that this is a relationship that has been at its lowest place in 40 years, and there is a long way to go before this relationship becomes one where

cooperation and -- can deliver really meaningful, tangible benefits from a global perspective. it's not a sure thing that we get there. lisa: how much did the chinese representatives reassure u.s. businesses that it was safe to come back? >> that was a key message and it was a key message when i was in china the last couple of weeks as well. it's very clear that there is a deep desire to reassure the business community and attract foreign investment back to china and there's pretty clear economic reason for that. there's a lot that china would like to do to stimulate its economy that really kind of requires foreign investment right now because that situation of local governments and the pressures of the central government, there's not a whole lot of room monetarily to deliver the kind of big stimulus packages and things that have

been delivered in the past and no certainty that a big stimulus would even work in's the goal is to improve consumer confidence and we have yet to see china deliver stimulus package focused on putting money in consumer pockets. they really do want direct investment back and they are trying to track it but at the same time there are these regulatory and compliance concerns that the foreign investment, perform business community has operating in china that hadn't necessarily been assuaged. lisa: that is sort of what i gathered last week, that essentially china with making a big pitch and companies were saying i'm not really hearing any and that is going to make any difference. what the takeaway may have been is how much the leverage has shifted to the u.s. over china. how much does that accurately represent the situation economically can do during that china does one foreign direct investment which has gone negative for the first time ever in the data going back to the

1990's? >> it's important to remember there are other sources of foreign direct investment. the u.s. is an important one, but china has other partners they can turn to. it is leverage here, but it is not limitless. and of course to the extent that the u.s. is able to anti-e.u. and other major trading partners aligned with u.s. policy with regard to china and economic relations as well as tech sharing, it matters more but the u.s. position is because the u.s. position will influences other trading partners. but i think that china is looking that the u.s. political situation and sees lots of potential for things to shift this time next jonathan: year. jonathan:i think that's what we all see. tom just went through a list of things on the calendar for next year that can reshape this

relationship and top of mind here of course, the election taking place 12 months from now. tom: the election has got to be there. the debate on the eurasia group. it is going to be bipartisan pylon of china. that the dialogue than the american debate. but my basic thing and it was hilarious over the weekend to see the pitch and the outlook for next year, i don't have an outlook for the s&p. i certainly don't have an outlook for the dow jones industrial average and anyone with an outlook on china is out of their mind. go read a book. jonathan: the lesson with this year, wasn't it? they are going to reopen, it is going to be great, and then it just wasn't great at all. lisa: which is why i wonder what the chinese government could possibly say. if you can create an outlook, how can you make a big bet? tom: the way i look at it, i

think team surveillance out there and get a good way to have important interviews. jonathan: we could send you. you would be good out there. tom: yvonne, man and i. a very cool balcony, actually. jonathan: never been. you make that pitch. we will continue the market. global wealth management coming up very shortly. looking forward to that conversation on the equity market. talking up rates, coming back down to the ones which is like nothing has changed. sat around the table with us moments ago and talked about what has changed. and what has changed? he doesn't think anything has changed. one of the biggest deals that you can get, back to stagflation, back to no inflation. jonathan: without a doubt. is the tree in the house yet? tom: the tree is not acquired yet. we are trying to finance.

lisa: you know, it made it less cold.

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♪ >> the market has now fully embraced not just that the fed has finished its hiking cycle, but that we are going to see deeper and deeper cuts next year. >> the fed effectively, and a sense, putting fiscal policy on autopilot. >> we think the fed is going to be slower in terms of cutting rates, the market is pricing in. >> the rate cuts that market is pricing in right now, markets are priced from beyond a perfect

landing. >> we are in the rocky landing camp at least for now. announcer: this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. jonathan: let's get your week started. good morning for the audience worldwide. this is bloomberg surveillance on tv and radio alongside tom keene and beat abramowitz, i'm jonathan era. your equity market positive 50.05%. the week ahead looks a little something like this. the fed minutes, jobless claims. looking to make it week four. tom: equities lifting right now, futures up better than they were an hour ago. but this morning, the world changed here and you wonder, does microsoft, thus nvidia this week, does that lift up the market given the different rate scenarios that we are getting?

jonathan: let's separate the stories for a moment. sam altman out of openai on friday. the questions being asked about him maybe returning then all of a sudden, rehired except this time to microsoft. microsoft basically up in the premarket because some people say the adults have taken over and microsoft wins. lisa: we don't have any idea what is actually going on except that this was a start of that wasn't for sale and all of a sudden they got it without even buying it to me, this really points to consolidation among the biggest tech players and at this point, what does that mean about how much they are going to diverge both in valuation and just consolidation from the rest of the market? tom: i don't have a slogan for it yet. the basic idea here is i'm going to go with "the magnificent seven" continues for 2024 and when you steal sam under the soap opera, the bottom line is,

as you say, all the big guys win. that is all there is to it. jonathan: get to the magnificent one. nvidia of my close to 240% year over date. reporting from the team at bloomberg, sam altman was looking at maybe launching something to get people within video which raises questions about what might happen next over at microsoft. lisa: he's going to have a much bigger checkbook working for microsoft to create a competitive chip. although haven't we been told again and the been that the -- and again that the barrier to entry is significant. tom: we did some great work, i thought mark bergen was great in london in the basic idea is microsoft is working on two chips. speaking as an amateur, they are inventing two chips, they are not nvidia killers but they will allow them to compete with nvidia and what you need to do here, you've got to hire the talent.

that is what sam altman does. end of discussion. that is a skill set. jonathan: that is what he has done in the last 24 hours. the earnings report that comes tomorrow, huge for this market, massive. think about what it into this equity market when it came out without revolutionary quarter. do you remember that? all thought it was too soon to monetize ai and then nvidia are out with a massive forecast. tom: or facebook, same idea. everybody is like this has to change, we're going to switch. i'm like, what if it just carries on? it's very british. carries on. jonathan: usual suspects. in the surprise number three on the s&p 500 year-to-date, royal caribbean cruises up 113% on the year so far. that is not the name i would've picked.

remember that lisa, we got the mail from john were you can see the port and the star board. another one of the townhouses on 63rd street. jonathan: precisely. i would probably stay in the room. positive 0.1%. yields are up by four basis points. >> destined for some excitement. nvidia reporting earnings after the bell. keen to see if they give another blockbuster projection going forward of what they expect from earnings and this week on the economic front we do get meeting minutes tomorrow. are they really going to try to make it sound more hawkish to damp down some of the expectation for a soft landing? i don't know. initial jobless claims even mentioning.

the economics of price index in the u.s. has been rolling over but not anything negative. is that this sort of soft landing look. doesn't roll over further, that is really what i'm watching. >> i will be really focused on those global pmi's. so focused on that. >> i am not saying they are not important, they are. totally checked out on thursday. jonathan: 4500 right now on the s&p. soft landing for the economy. the very limited upside in the equity market, 700. can you help us understand that? >> there's a couple of things. first, we do prefer bonds to stocks because we think that interest rates are going to move lower and that will help the bonds. on the stock side, we are in a new world and i'm not sure you necessarily want to focus the s&p 500 in both bonds and stocks

for next year we are looking for quality, we are looking for those companies that get that high return on invested capital. you were talking about the text, and about two weeks ago we upgraded the u.s. tech sector again, in part because that is where we are finding quality, and there certainly is over the longer-term this kind of big is going to do better theme that we want to play on. tom: this is really important. when you look at the income statement of the dynamics to cash flow on the balance sheet, what is it about tech? where on the income statement will be see that reaffirmation of quality? is it sales off nominal gdp or off the plan? is it down the income statement gross margin or is this of cash at the bottom? >> i think it started sales. even though a lot of these firms

are becoming more consumer-facing, one of the things that has changed so much about tech's you have more of the current revenue models intact could speaks to stabler earnings and earnings that can maybe grow as we get that slowing overall gdp growth. lisa: i just think about this article talking about automated capitalism which is essentially the revenue streams you're talking about for some of these tech names like apple. you talk about how big is going to be better going forward. does that mean that you can basically leave the russell 2000 for data after one of the worst underperformance is going back at age this year? >> we think we are going to have a soft landing and then i think in that scenario, some of the more dire predictions for what happens with small caps and that they can't refinance and things, that goes away.

i'm not making a super dire production on small caps. i think the point is in the past , you would think these large tech companies in ai can't keep growing, but what is so interesting is that actually, these firms that own such a large portion of the value team now and get those insights that can train these ai models may have an enduring advantage despite the fact that they've been up so much this year. that is one of the reasons that we upgraded the u.s. tech a few weeks ago. lisa: and are you leaning more into the ai names? tech is not all the same in terms of whether it is apple or whether it is microsoft. are you bifurcating some of these bets or are you just saying all of them are going to be winners regardless? >> there's a couple of slices of this depending on your time horizon. over the longer-term, one of the

most exciting things is that the ai will broaden out beyond the tech names and could potentially lead to certain disruptive companies having stronger margins and so we are on the look for that. the very short-term, i think one of the things we are looking at is that actually chips can do better here as well. we are looking beyond just software, but also at hardware at this time. jonathan: does this remind you of the internet boom and do you see it playing out the same way? this sort of frenzy. >> i think about that a lot. i think that was somewhat different in the sense that what we are specifically talking about now is quality and we are talking about free cash flow. and free cash flow was not what we were talking about in the internet boom. that was about eyeballs.

i'm old enough to have lived through it and make this comparison and worth the team to look at this a lot, but i think we are finding some real differences. tom: i want to know what we are going to do with this wall of cash. mark, we all know there's a ton of money out there, but doesn't just sit like a brick or does it finally did put to work? >> we are urging our clients and i think they are starting to understand that right now you can get these tremendous yields on cash and so it is hard to move that cash. but at the rate start to come down i think that that will start to move this wall of money. some of it can go in supporting the equity markets and some can go into supporting the bond markets and some can go into private investments in alternative investments as well. and that is why we think this is a great time to get your portfolio and balance back to

what your asset allocation is. navy forget about rates going negative again and really think about what is the proper asset allocation? jonathan: i think we all are going back there anytime soon. the outlook for 2024. a top line from then, sawfish landing, -- softish landing. 4700 next year, not this year. the euro, 112 against the dollar. tom: great scenario analysis, a very productive 72 pages. i only read three of them but i got a 72 page outlook and the answer is scenario analysis here i think is valid based on what any individual leaf is. my belief here, add up the wall of cash. i believe we saw a $13 trillion statistic. don't quote me on that of the wall of money out there, what happens? jonathan: i don't know, what is

the opportunity cost of staying with cash? at six months time will you be happy you have dry powder or upset for not locking in is currently available on the curve? looking at that conversation later today but the other question you got to ask, if you're just joining us, welcome to the program. the s&p 500 looks like this. positive by 0.07%. that is not what we saw last week. what we saw last week was yields aggressively lower after this very tiny, small price on the inflation report. lisa: what will it take to unleash cash? if a deal gets down to 4.25% on cash, people suddenly see perhaps a greater opportunity cost for not going into other assets? this is the interesting push and pull for that one. >> it is going to be marginally a little bit here and there.

there will be excitable moments which we will talk about, but just deploying marginal cash -- i did the math today. when is microsoft a $3 trillion company? a share price of like $400 per share. we are not that far from that. that is the marginal cash coming in based on relief. because the adults won. jonathan: the adults won, as he said. openai was playing at the kids poker table. something like that. jonathan: we are going to wish the president a happy birthday and the gift we've got is that nbc poll that anne-marie is going to break down for you next. from new york, good morning. ♪ (sfx: stone wheel crafting) ♪

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hostages freed in the coming days. we are talking about pausing the fighting for a few days so we can get hostages out. it is not a cease-fire because we will continue to push against hamas but we are willing to go for a pause for a significant number of hostages if we have a deal. jonathan: that of the latest of israel. at with the israeli ambassador to united states speaking on abc over the weekend on the state of hostages negotiations between israel and hamas. this story is starting to become a bigger and bigger issue for the president of the united states. the latest poll from nbc, another low for the president, just earning 3% of all voters approve of biden's handling of foreign policy which is down eight points from september. tom, there was a very specific demographic that is worth looking at more closely. among voters aged 18 to 34, in september, 46 percent of these voters said they approved of

ayden job performance now. now, his approval rating is 31%. tom: i am be numbed by polls but an actual adult in polling says this was a stunner. and i think that is the key thing. including within the margin of error, the former president beating him, granted, within the margin of error, but it is a stunner. both continue on this. a weekend brief as we are distracted by silicon valley. annmarie hordern brisas now, bloomberg washington correspondent. what a weekend and all of it wrapped around a birthday for the president. how will the president celebrate his 81st birthday?

lisa: he's pardoning a turkey, he has a whole rose garden, the turkeys come out, and he's going to be going off to nantucket to enjoy. tom: do they really take a room, do they really do that? anne-marie: i think so. and then for a nightcap at the bar underneath. tom: but it is like politics from another time, and this coming up on the 60th remembrance of john f. kennedy's assassination. that's all old-school politics and the president is part of old-school politics. how does an 81-year-old dude become new politics? annmarie: his issue, the fact that his birthday is today on the heels of this poll where 16 surveys have been conducted by nbc since 2019. this is the first time you see that trump is eating biden in this poll within the margin of error but also how low his polling number is. and to jonathan's point, he has a real issue. the youth does not like how he is handling this israel-hamas

war. and one note about his birthday i would say in our poll, we have this open-ended question that can write in all these candidates. and by and large we have respondents continuing to write in that biden is just too old. his age is a much bigger problem than it is for the former president, even though ron desantis this weekend on cnn said if trump were to be president in his inauguration in january 2025, he would be older than biden was when biden took that inauguration in his first term. jonathan: any indication that the white house is taking these polls seriously, because they shrugged a lot of them off. annmarie: outwardly they will say to you that we have 11 months left, biden will always say the polls have been wrong before, but internally there's a lot of reporting that the new york times siena poll really shook the white house. you actually see a little that of a rift happening with david

axelrod and the white house who apparently called him a p-letter word, and marine dowd wrote about this in the new york times because his urgent message to the white house in the campaign is potentially you look at the poll numbers, maybe biden needs to pass the baton on it to a younger generation. lisa: is there anyone they are coalescing around to try to replace potentially president biden? annmarie: no, biden is still the lead democrat when you look at poll after poll. there are people who are jumping in like dean phillips in minnesota and he is coming out and he is a democrat who is bashing the administration on some of their handling of issues, but his big theme is that there needs to be a passing of the baton, but there's a number of governors if you look around the united states who could easily jump in. biden joked about it at the apec summit i was just at in san francisco. he said clearly this guy wants my job, talking about gavin newsom.

lisa: how much are we looking at a scenario where he could see himself losing and then he can get somebody else? how much is this going to affect his policy heading into later months of a very difficult war both in israel and ukraine? annmarie: you are already seeing it affect some policy in the sense that you do see the administration really pressing for hostage deal. my sources have told me that this deal has been on the tail and number of times but at the last minute gets ripped apart. if there was to be a hostage agreement and a pause in the fighting that the potentially help biden in the polls because the youth vote, muslim americans do not want to continually see palestinians die and this is hurting his numbers. but americans normally do not go and vote on foreign policy. we are still 11 months out from the election, even though it is poll after poll that is looking pretty dismal for the joe biden campaign. tom: what is your debuted to january 3?

do we go to thanksgiving and wrap up or do we go to christmas and ramp-up, new year's and ramp up? when is the ramp-up? annmarie: probably january. also, president biden spending this week with his family. if there's any doubt that he wasn't going to run, it would be this week that he has that conversation with his family. jonathan: i even heard some reporting suggesting they were only going to allow them to make shorter walks. have you heard these things as well? annmarie: there was even a report that the secret state -- secret service are making sure they have flashlights out to make sure he doesn't ever trip. tom: they do that for me. annmarie: we do know that on air force one they changed the steps to make them shorter, easier steps to climb and come down to help him if he's going to fall. they want to make sure that the president is safe at all times but also that he isn't making a fool of himself and that is why

the age issue for biden is such an issue. you think about the fact that he has fallen, he has had a number of gas. -- gaffs. when you question if he is fit or if he is too old, people remember this. tom: you are a great student of this, jimmy carter, the death of his wife. had to be get to this geria -talk receipt -- tocracy? how did we get to this faith in ancient people? annmarie: i don't know because you see it in the white house and in congress. it's everywhere. tom: why? annmarie: i think is a few reasons. it is very expensive and difficult to run for office and you don't make a lot of money when you are in office you either have to be older and have accumulated some wealth in the private sector -- also, a lot of younger people are just over it. they are apathetic.

they are not in the fight the same way you see some of these old-timers. jonathan: final question, what is a p-letter word. annmarie: it was a prick. jonathan: i think we are allowed to say that. annmarie: i just thought it was rude for monday morning. jonathan: that is what it means. annmarie: this is not my reporting. this is report out there, politico and new york times but that is apparently what biden called david axelrod. jonathan: so he got angry. lisa: calling for other people -- annmarie: to take these polls seriously. tom: has he ever gotten angry you? annmarie: no. jonathan: so he gets angry. annmarie: he has a temper. tom: i know that. jonathan: you don't have a temper. thank you, good to see you. thank you very much. equities on the s of the stacking of us follows. futures unchanged here in the equity market. in the fx market, 109.25 on the

euro. positive hereby 0.1%. the dollar with the worst week going back to july. we are going to catch up with foreign exchange and just a moment on the stall or weakness of the back of this bond market move. lisa: we've actually seen some real breakouts and new levels on the euro. it has been so exciting. tom: and actually moved one figure. lisa: it's amazing. not just talking about the same figure again and again. jonathan: bramo excited about the week ahead. thanksgiving just around the corner. lisa's heart is warmed. we will do bedtime stories. tom: ferros around the mayflower. jonathan: [laughter] ♪ . cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

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jonathan: i just want to apologize for anne-marie's language. but what i expected from anne-marie. lisa: my god. what is that word? tell us, please? jonathan: equity futures on the s&p 500 just about unchanged. nasdaq up .1%. three weeks of gains on the s&p 500. four days of gains going into the shortened trading week because of thanksgiving holiday. tom: we loaded up on wednesday.

back to anne-marie, i think this really shows up, the generational gap. the people that are migrating away from conventional american politics are not worried about the niceties of former media days. they are weaned on youtube, tiktok. all the articles about the tiktok generation and there are no leg which bear beers there. jonathan: the language of politics has changed. the politicians in the seats. tom: reacting to try to garner that youth vote. it is not like they went to the university of wisconsin to pick up the liberal vote, it is a broader thing, more latino thing, what is the youth of america going to do here, and critically, will they show up at the voting booth? jonathan: what i will say is

this is about being antiestablishment and going against the incumbent, using language that is not necessarily modern-day politics. this is modern-day politics. look at what happened in argentina. look at how that leader addresses the electorate, talks about the establishment, the incumbent. this is the change we are seeing in global politics. lisa: it is too complicated for me to understand whether it is a lack of understanding nuance, the way things are covered, the inability of people to be honest, having the proposals analyzed in real term, but let's just do it to everything. forget it. tom: you call that liz truss. jonathan: she wanted tax cuts and now this government is considering tax cuts going into the new year. let's not do you take politics

-- u.k. politics. that is another level of crazy i don't want to talk about this morning. futures unchanged, coming up on a tangent about establishment politics. under surveillance this morning is, is working to release a large number of hostages. axios are going it would allow 50 women and children to be released in exchange for a positive military attacks and the release of some palestinians in jail. the events of now pushing further into south with the possibility of more troops. lisa: it seems like there could be a deal with a hostage release, and how much because israel is coming under additional pressure for additional pauses, that they have made enough progress to do that, at the same time, appeasing the unrest at home because of the lack of focus on the hostages. we are going to be focusing increasingly on what happens after. jonathan: developing story.

your next story from friday, openai co-founder sam altman joining microsoft. he was asked by the board of openai, claiming that he had lost the trust of the board of directors. the move sent shockwaves through the industry. microsoft's ceo saying altman and greg brockman will lead a new development ai team. the conclusion for people following the story is that microsoft won. lisa: and will keep on winning. what is the question, what will stop them from it all? he is betting on the big tech names because they are dominant. bigger better theme will continue. it will raise questions of not just tech leadership but also our economy. jonathan: microsoft winning,

hard to say the same thing about twitter. elon musk defending himself among rising claims of anti-semitism. he posted, this past week there were hundreds of bogus media stories claiming i am anti-semitic. nothing could be further from the truth. i only wish the best for humanity and an exciting future for all. a growing list of advertisers have pulled their spending after musk endorsed an anti-semitic post last week. there were posts that others were under pressure. apparently staying on. tom: it is the speed of sam altman. what i would focus on this morning, there was some fleece thing for sale on twitter. i happened to google it and it is a total scam running through the twitter site. those are the allegations. the bots and sex bots are exhausting.

twitter had become a garbage feed for me. that is a fact. it is much, much worse. i would be embarrassed if my kids were on twitter. it is just that simple. no other way to put it. bramo will bring in jane foley, exciting that we had a one-figure moving exchange. why don't you bring in jane with big moves with foreign-exchange. lisa: we did not fall asleep, it just seemed to be range ground, now going up to 1.09. 1.0467 on october 3. this has been a big move. jane foley, that's my question, are we going to see more protracted dollar weakness? jane: i think this is really exciting, at a pivotal point.

it started with the cpi data. now we have a question, was this overextended? one thing for certain, the dollar has a pretty good inverted relationship with risky assets. emerging-market stocks. what that says to us is that when interest rates in the u.s. go down, risk appetite globally go up and people move their money out of dollars. what we don't know is if the market has the timing right about the interest rate cuts coming from the federal reserve next year. are we going to get more pushback about that? is the data going to be more choppy? that is probably what will happen, we will get some choppiness there. not on a straight line but it appears we are at a pivotal point which may be a little more protracted than people hope it will be. tom: with the multi-decades at rabobank, is there a bet within this round paint market that will allow for acceleration or

convexity of moves, ability to be surprised by big figure moves? jane: always inability to be surprised. we know the central banks are data dependent and therefore we don't get the forward guidance, and maybe there is more scope to be surprised by this. you mentioned the elections, huge amounts in 2024. countries with a collective population of more than 4 billion go to the polls next year. not just the u.s., elections in the eu, taiwan, so many pivotal places. there's a lot of scope for excitement to be injected. tom: give me your pair where i can make a bramo-like six-bigger move into next year. jane: the swedish krona is starting to turn around. huge weakness the last couple of years.

that is turning around. tom: against what? jane: even against the euro. if the risk appetite does pick up, and that is the big if, this could be a protracted time of the market trying to pick out. perhaps if we go toward the latter half of next year, the aussie will do quite well. fundamentals in australia are quite good compared to other countries in the g10. that necessitates a pickup in china, too. china will be an important part of this risk appetite story. tom: that is where i wanted to go, ozzie of pacific rim. i don't know how you play that, i will leave that to adults. but australia always has a modest surprise. and they won in cricket. if they are long in cricket, go long aussie. lisa: sticking with the pacific

rim, maybe a real surprise, japan could be the way to go. pimco expecting some softening with the fed and rate cuts gives an opening to a move away from yield curve control. are you buying that? jane: i think it will happen but i'm not excited about the pace. the real story for 2024 will be, yes, more unwinding of yield curve control, but when can they hike interest rates? i listen to the comments a couple weeks ago. they are still cautious. then we had some disappointing gdp data from japan. if we had better growth in japan, we would all be a lot more confident they could move away from negative interest rates. we need to munch the economic data. as long as that is disappointing, it is difficult to get too excited about the pace that this is unwinding. japan has started the process of

this unwind from very accommodative monetary policy settings. the question is how fast they can really go. jonathan: let's get away from g10, finish on this. how does a country experiencing more than 100% inflation get rid of its currency and replace it with the u.s. dollar? how is this going to work in argentina if this is the road they want to go down? jane: that is what he said, dollarization. i think they will just use the dollar a lot more in trade, price things in the dollar, piggyback off of the fed's much more credible interest-rate ability. it is that piggybacking off of the fed, but this will not be an easy dynamic. jonathan: nothing easy about this. thank you. how many times have we done this with argentina, back and forth? tom: to that point, it is

cultural. i think it is an immense challenge for the people in the imf, which is very rules-based and agreement based when they make these agreements. how do you make agreements with what we are witnessing the last couple days? jonathan: the century bond, remember that? if there was a poster child, we have to mention the austrian century bond, but once upon a time you wanted to buy, just on the idea of argentina issuing a century bond. lisa: it was funny given the fact that they had defaulted five times before, could be heading for number six. tom: away from dine are some constructive use, not a uniform opinion, but that turkey may actually get this done. trying to clean up. there are some scenarios that the adults have year of the lira, 28, 29, perhaps going down

to 24. jonathan: i believe macri was going to turn around argentina. this was the establishment view at the time. what happened? here we are saying that this guy will destroy argentina. that is the establishment view. seems to me nothing works in argentina. tom: this is dangerous ground for me, but with great respect to the argentinian people, there's a question about, they have their own rulebook that they played by. jonathan: the equity market just turning negative, 0.04%. yields higher by four basis points. we need to talk about politics and policy. we will do that with terry haines in about 30 minutes time off the back of that dreadful pole, another one from the president of the united states. lisa: which raises the question

will they take it seriously? the whole david axelrod tit-for-tat was interesting because he supported president biden in a massive way when he was vice president, talked extensively about his connection, saying that you have to pay attention. these polls hold a significant message. tom: i don't remember when he stepped aside, but his bowling, the tone with the american people in vietnam was grim. is this any different? jonathan: a conversation on openai and the big win for microsoft. microsoft up in early trading by 1.4%. what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most.

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i have heard people say that microsoft will just buy openai, you are just making big tech bigger. >> the company is not for sale. i don't know how to be more clear than that. we had a great relationship with them. these being, major partnerships between tech companies usually don't work. jonathan: such a fascinating exchange looking back, the former ai ceo sam altman speaking to emily chang. he will join microsoft to lead a new ai development team. what a turnaround. the face he pulls when emily starts asking him about micro soft eventually running openai, no chance. this relationship is great. it is great for him and microsoft. it has broken down between openai and microsoft over the weekend. tom: frankly, i don't understand it all, but it was an incredibly

naive nonprofit board made up of nonprofessionals and one legit computer guy who joined the dark side, if you will, versus people who can constrain and hire engineers and keep them happy while they work. lisa: there is an and comparable tension right now between idealism and capitalism. openai has been talking about ideals, altruism that you heard with some of these people. talking about nonprofit, bettering humanity. now we are talking about nuts and bolts, massive profits. how do you compare those two withdrawals to make sure it doesn't become problematic in a bigger way. unclear. it is moving faster than any of these factors can get a handle of. jonathan: they were nose, elizabeth holmes. -- theranos, elizabeth holmes.

whenever i hear like this things, that is what i think. i just don't buy it. tom: this is really important. i will give you some visibility here. there are people like mandeep singh and others who walk into offices and sit down at desks and work. there hallmark, guidepost, is a guy named dave cutler. he was legendary at digital equipment years ago. they stole him to the west coast at microsoft. he was one of the founding forces kind something that we all do, windows. mandeep joins us now. this is about dave cutler. all of this is about is whether this kid, altman, can bring the meat over to microsoft. mandeep: it sounds like the ceo

was overconfident and didn't talk to his executives in the board. you come to a point where he was making all of the decisions about the future of the company. no doubt the market israel. i don't think you can compare it to theranos and those other companies because there are so many trying to do the same. the ceo wanted to move fast in this case. the board and the executives were not in line. tom: there will be 40 bone calls me today. -- phone calls made today. what are the attributes they will used to sell one of these was kids. what are the attributes that they sell to say join us at microsoft? mandeep: microsoft is the compute infrastructure powering all of the openai -- tom: stock options, mariners

tickets, what gets these guys to move their sliderule over to micro soft? mandeep: i cannot imagine microsoft really going out of the way to attract talent. they hired sam altman and they will in on him to figure out which of the engineers he really wants at his team on microsoft. tom: how much do they make a year? mandeep: over a million dollars for all of these engineers. jonathan: why is the sky so important? mandeep: he was the face of openai. think of chatgpt, when it comes to generative ai, that is why it got so much traction. he was the face of the company. clearly there were engineers behind the scenes that were part of the development, were not on board with his approach, concerns about ai safety. that is something everyone needs to think about for the roadmap

of when this technology is deployed. there's a lot going on in terms of developing it, but in terms of changing your production environments with generative ai, it could be a few years. jonathan: if they were more concerned about safety on friday, are they more or less concerned this morning now that he is at microsoft? mandeep: clearly the talent loss is a big concern. that is where the board got it wrong the way they went about it. from all that we know, openai could lose half of its value based on the fact that they lost the ceo. lisa: does it raise a question about policing some of these developments at a place that is just focused on the bottom line, when expectations are pretty high in the market? mandeep: look at the development of chatgpt, these language models. it is pretty expensive. for any started to sustain themselves, right now we are talking about billion-dollar r&d budgets. i don't blame sam altman for

trying to be ahead in terms of monetization, thinking about it, but not having your executives on board with your thinking, that is where he got it wrong. lisa: from a humanity standpoint, if we are going with some of the ideals they are talking about, the fact that the board was concerned about bots that could take on a life of its own -- we are already seeing some emblems of that. how much gets magnified with a move to microsoft that does not necessarily have a nonprofit board trying to espouse these values? mandeep: the google approach so far has been they are very protective on what they release, have been very conservative. a lot of people have blamed them for not releasing their gemini large language model, but this sort of validates the approach. you have to take a measured approach when it comes to releasing these models.

even though openai is a nonprofit, everything is proprietary. this brings into focus what should be open source, what can the community work on collectively? that is on the table now that sam is moving to microsoft. i wouldn't be surprised if they go within openai approach. satya nadella's approach has always been on embracing open-source. jonathan: we have had this conversation a few times this morning. we reported that sam altman was trying to create a rival to nvidia. how seriously should we take that now that he is at microsoft? mandeep: microsoft announced a new chip of their own, so they have clear ambitions in terms of developing their own chip. now they have to think about what is the ip that sam can create over the next six months. can he create a language model like chatgpt? that is proprietary, you know it is not coming over.

he even if they hire the engineers, they have to build it from scratch, and they cannot get the same amount of data that they had before. jonathan: microsoft is up about 1% in the premarket. if openai was in the premarket, where would it be right now? mandeep: at least 15% down. there ip is gone. with sam coming over, microsoft had to do everything from scratch, until the board resigns. if they have to build it from scratch, we are talking about a long timeline. google is ahead in terms of developing their model. jonathan: everyone is saying microsoft have won, but have they? mandeep: i think talent acquisition is one thing. when it comes to large language models, there are a couple of open-source models, that you could use that to build yours on top of it. i don't think you could replicate what chatgpt had.

i go back to the analogy. everyone thought generative ai and chatgpt was anonymous. jonathan: gripping stuff over the weekend, everywhere i looked. twitter, wall street journal, financial times, obsession over this story. lisa: it has been the obsession of the stock market, anyone who mentions ai. it is the new blockchain. jonathan: remember that long island blockchain iced tea? lisa: it was a long time ago. jonathan: the frenzy around blockchain. tom: it is conflating the social of this with actual substance, like we just heard from mandeep singh. jonathan: keith lerner of truest is joining us shortly. the market turning just a touch negative.

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>> i think we are in the early stages of a classic year-end rally. >> the resilience of the

functioning of the market has impressed me. >> we are seeing huge procyclical lead he pricing and capital markets. >> moderate gains in the equity markets the coming 12 months. >> the equity market has hit an all-time high each of the last five times the fed has paused. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. on radio, on television, we welcome all of you to bloomberg surveillance. it is a holiday workweek. wednesday, we will be over the river and through the woods with some economic data, and maybe sam altman will all be through training at microsoft. jonathan: jobless claims data as well. you don't have pumpkin pie? tom: we do. usually the way that i cook, i go to a restaurant. jonathan: jobless claims on

wednesday before we get thanksgiving on thursday. claims are really important. if you have confidence yield will fall further from here, much confidence do you have that equities will rally off the back of it? a question that we will ask all week, when you look at jobless claims creeping higher, what is the difference. what is the difference between an unwinding and deterioration of the labor market? tom: i look at the four-week moving average, durable goods, but to me it is just a data dependent fed. there are eight different narratives out there. 4.902, your yield, is anyone modeling that we revisit 5% of the two-year yield? lisa: all i'm saying is stability. we saw that at the end of last week. this week, four basis point is nothing, when you look at the last couple weeks, you'll moves.

but when does it shift? when do we get a move from a soft landing to something more pernicious. this is difficult to call when it come to the narrative that people cling to. what will be the trigger point for people to feel bad? i don't know. i am always sort of cynical, which is not always a good thing. over the holidays, why should people feel cynical? jonathan: last week was a classic example. to see the small cpi, a few days later, talking about walmart, goods deflation, prospect of a hard landing. tom: all of these disparate narratives, the confusion of year-end outlooks, and the fundamental issues, neil dutta's insight, that if inflation comes down, real incomes go up.

are we a more beneficial nation with higher salaries because inflation comes down? jonathan: show me your unemployment forecast. which makes it tremendously difficult to reading this election 12 months from now. where is this economy going to be 12 months from now if we don't know where will be three months from now? tom: we are getting to the point where we are having the politics intrude. january is not far along. lisa: how do you craft a message? tom: do we know who the candidates will be? we expected to be biden-trump. jonathan: remember how 2023 started, soft landing but we will get a recession. whatever that means. february, no landing.

march, banks start to collapse, we are talking hard landing. by the end of the summer, coming into q3, gdp growth was close to 5%. what is that? tom: let's start the data check. nasdaq 100, up 26%. jonathan: that was not consensus at the start of the year. equity futures slightly lower. in the bond market, yields aggressively lower. september low on the 10-year yield. this morning, higher by three or four basis points. donna weakness. euro against the dollar, 0.1%. worst week for the dollar index since the summer. tom: thank you for the perspective from jane foley a little while ago.

right now keith lerner joins us from truist advisory services. there are a set of narratives out there. we have to do something with what we have. we have to asset allocate, believe in strategy. is there believe right now in a strategy or do we make it up week by week? keith: great to be with you. there are lots of crosscurrents creating all of these different narratives. now is not a time to be aggressively on offense or defense. we had been joking around on this program that we were strongly neutral. at the end of october, when we hit 4100, we thought that was a buying opportunity, and there is some left in the tank. i think it will continue this way into early next year, this broader, choppy range, and the narrative will shift from day-to-day to week two week.

there will be more tactical opportunities, as we saw, when things go too far to one side. jonathan: a lot of people listening to the program right now are sitting with cash, 5% yield, all of that good stuff. in six months time, are they happy they have dry powder or regretful that they have not locked in what is available for now for longer? keith: we have gone from 5% to 4.40, so a little more challenging, but people will be happy to use pullbacks to invest. everyone loves 5% until the market moves up 10% in a week, until semiconductors are up 18%. use those tactical opportunities because the opportunity to have about 5% gains will happen. the other thing with that statement, you look back historically, i know the reset has been strong, but we went back to 1950. the average 10-year yield has

been around 6%. the average s&p return has been around 11%. automatically, that 5%, best place to be, overstated. lisa: although the time was different with valuations and a decade of zero rates. you are saying you can get better than 5% in big tech. is that what you're saying with all of this ai discussion we have been having over the past 12 months? keith: we are overweight tech, communications, just had some big gains, some consolidation. the big number will be driving after the bell with nvidia. tech was the last to come down, came back the strongest. what is notable, the technology sector just made an all-time high on a technical basis, five-months i over the market. the old leadership is still the new leadership, tech. jonathan: i have been looking for a phrase.

tom: that is royalty approved, don't you think? jonathan: how much do you want to pay for it? tom: keith, why are we not going to see breadth? why is the old leadership the new leadership? keith: i don't know if we are not going to see it but we are not seeing it yet. everyone is trying to force a narrative onto the market. we look at valuation which is a condition, not a catalyst, relative price trends, relative earning trends. right now tech is expensive but the earning trends are stronger than the overall market. price trends are still positive. we can debate about how slow the economy will step down, but more than likely it will slow down from where we have been, a strong point. investors will continue to gravitate toward these big balance sheet companies that have cash flow regardless.

at some point i'm looking at small caps at the lowest relative price since 2020, but i need more than that. i will be patient. that also means i will miss the bottom or the top, but if we can get the meat of the move, that is what we focus on. jonathan: given what you have said, the rest of the year, is the fate of this equity market in the hands of earnings data or nvidia tomorrow? keith: the way i look at it, just after having the big thanksgiving meal, you need some digestion. that is likely to happen this week. the four years and, i think we will have a push higher, more based on positioning. a lot of managers are underperforming this year because of the mega cap names. likely to see some more positioning to move to play catch up for the year-end. lisa: we have been talking about the different narratives, so i have to bring up this headline

. ozempic turns thanksgiving into an afterthought. is this going to be the hype of 2023, a trend that we can eat up next year? keith: i think that trend is likely to continue. i thought that was pretty good. [laughter] jonathan: carry on. keith: i don't think that trend will change. with these weight-loss drugs, there is a lot of money in earnings that will flow to the drug companies, away from other areas. we are stil early innings. i heard one analyst talk my krispy kreme, that we may see some impact on that. i think this is a multiyear story that has some legs. jonathan: thank you, keith

lerner. i think about this so much. this economy in america is leveraged to obesity. one of the pillars of this economy is obesity. all of the economic trends around it, health care, food packaging, etc. tom threw some mud at the usefulness of twitter earlier this morning. still some interesting thoughts. what about pensions? what about retirements? if one of the biggest killers on the planet is heart disease, and we are doing something big about that, and people live longer, what about the financial aspect of all of this? never mind krispy kreme. lisa: on the flipside you could say, if people are healthier and they are not getting dialysis twice a week, maybe that will reduce some of the health care costs. i take your point. the implications of people not having, a third of the public

not being overweight. tom: 529 calories for a slice of pumpkin pie, with the whip cream or the ice cream on top. the problem is it is one slice of pie. lisa: this is what we are talking about. tom: there are people in america, not that i know them, but will have multiple slices of pie. three slices of pumpkin pie, you are up to 2000 calories just like that. jonathan: this feels personal. equity futures, 0.05% lower. 4.47 a 10-year. do you have that much product? tom: pecan is how i do. jonathan: pumpkin.

you say pecan. lisa: never ever use black molasses to make pumpkin pie. jonathan: you made a mistake with that? tom: we are doing meatloaf. lisa: gingerbread is better than pumpkin. it overwhelms the pumpkin. it makes it unrecognizable. theoretically it has happened to people in my orbit. tom: her cookbook is coming out next year, "down in flames." jonathan: equities on the s&p just about negative. from new york, this is bloomberg. ♪

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we are not certain about whether inflation is on track to return to 2%. we are unsure about the length of lags and whether they are behind us or still to be fully realized. jonathan: for that reason they keep talking about patients. that was mary daly speaking at the european banking congress in frankfurt. back in america, welcome. the equity market unchanged on the s&p 500, yields higher by four basis points. a quick snapshot of what is happening in the commodity market because it's been a rough couple of months all over the place. wti back in the 70's. 77.40. brent crude creeping back into the 80's the last couple sessions. lisa: discussion about possible further production cuts in saudi arabia at the monthly meeting of opec-plus. if this is demand driven, you get a supply-side response from some of the opec members?

jonathan: is that we will see? the london desk thinks that we will. anticipating weakness that could be around the corner in the economy. tom: that is one of the narratives we have here, maybe the least predictable. i would say many of the narratives are migrating toward the uncertainty of oil, the microeconomics of what the stock market will do, technology. i don't even know where atlanta gdp is right now. to all of these things, are we any less confused than we were 12 months ago when you said wait for the outlook in march? jonathan: i don't think we are. at the start of october, we had the terrorist attack in israel, maybe conflict going through the region and crude is off to the moon. it was down 11% in october. if you want to make a fool of someone, ask them about their forecast for oil.

october made a fool of everyone when it came to the commodity market. tom: right now, can we do the foreignness of it all? there is no perception to what 1975 was. it was when a governor from georgia laundered up north, delusional, that he could actually win an election. at the same time, ricky's skaggs, tony douglas, jerry rice, and others are doing a seminal album in bluegrass, jd crow and the new south, 1975. terry haines members the shift of the old south to the new south. in honor of the first lady, terry haines, what was the battle that the two carters had when they invented the new south? terry: the battle that went on was the idea -- and this is

middle, post watergate -- the idea that an insurgent could actually shake up washington. that was the selling point for carter. he managed to make that case, won by a little over president ford, and then ran into the realities of washington. to neil and others took him aside and said this is the time where we get to make the policy and you get to sign the bills. what ended up happening was basically a three-your democratic food fight that weakened carter greatly, not least because ted kennedy ran against him, that ended in president reagan's election. tom: is this democratic party now any shade or idea of what the two carters knew? terry: some of them are. i think president carter would likely be unhappy with the progressive direction, largely

because he would be at a racially progressive, but the idea that they couldn't win on a particular platform would not be helpful. he would see the politics i think very differently than the current group does. lisa: who do you think will be the torchbearer for the democratic party in the next 4, 8 years? terry: beyond biden, a lot of people will fight that out from governor newsom to governor whitmer of michigan. there will be four or five others that will try to pop up. it will be interesting, the battle for the soul of the party. the problem is relevancy. what you have got on the left and the right is a world where the primary system rewards purists, and at the same time, the money and energy out there rewards purists as well. there is a huge middle in the country that feels unserved on a lot of levels, the basis for a

lot of the tension that you see politically. lisa: is that why president biden has not stepped down, allowing someone to run in his stead? terry: the old order never passes quietly, i think historically. what you have got in biden is, by and large, the old order, somebody there on the promise of centrism, return to normality. and you have the pool and tone between the centrists and progressives. that is not the direction the democratic party is going. tom: who is the nikki haley of the democrats right now? terry: nikki haley, goodness. there is not one on the radar screen. everyone else who is thinking about running went independent. whitmer is maybe the closest to

that but there is no close analog. lisa: talking about president biden and the poll numbers, given the foreign policy consideration, how much is the lack of popularity going to drive some policy decisions on his part in the coming months? does it reduce his support of israel and change any of his middle east policy? terry: i don't think it changes on israel. i think he gets tempted a little bit on china. the chinese have been dangling a great deal, if you are more reasonable on taiwan, we would work with you on the middle east, russia-ukraine much more overtly. i think he is a little bit tented in that direction. but the way the white house sees this, and i was following your comments earlier, the way the white house sees this fundamentally is a race against somebody. they think people will reluctantly end up pulling the lever, as much to avoid the

likely opposition as anything else. jonathan: do you think china would be happy with another biden term? terry: happy? in short, yes. what china likely seizes a lot of muddling through, a lot of pronouncements about new policies, chips, security and the like, but not a lot of follow-through. there's a headline in the south china post saying that america is building all of these factories but the federal dollars have not started to flow, and that is true. that is a year after the chips bill passed. with the u.s. has got in terms of a problem, follow-through, procurement, becoming the arsenal democracy here. jonathan: i appreciate your insight here, terry haines. going into an election year next year, china and the united states trying to dial back things in the last week or so. tom: you wonder what the next

step is. i will defer to someone as competent as leland miller, but i wonder if the surprise here is domestic consumption. lisa, you mentioned this. maybe you get some domestic consumption away from the collapse of investment in china. i am not talking about 7%, 8% gdp, but get it out to 4.5% and maybe that is happy land. lisa: i can say what was clear to me last week was that the power, leverage seemed to shift in a material way. the acceptance of china. we talked about the dictator comment. it was pushed away, irrelevant. china could have taken that up if they wanted to. they decided not to. it shows how much more they maybe need u.s. business interests than ever before. jonathan: got a standing ovation from corporate america. isn't that more important to

him, than whether he is called a dictator by the president of the u.s.? they all want to be there still, though. they want to see changes but they want to be there. lisa: it is the world's second-biggest market. tom: over the weekend, i saw maybe it is not china-u.s. but maybe china, stuffed through mexico. have things really changed from across the pacific? jonathan: coming up, morgan stanley, blackrock, and ubs. that is your lineup coming up into the opening bell. s&p futures totally unchanged. from new york, this is bloomberg. ♪

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thank you for being with us. what a weekend, many narratives. we tried to check all the boxes to get you ready for the holiday. right now, an important tweet on openai. can we move on from the silicon valley soap opera? this tweet is important. moments ago, one of the foundational engineers of ai, he is at openai over the weekend

the simplicity of this, he stayed with openai, i deeply regret my participation in the board's actions. i never intended to harm openai. i love everything we wrote together and i will do everything i can to reunite the company. to me, that is the driving news item since mr. mandela shocked us at 2:00 a.m. lisa: does this mean microsoft is going to buy open i dashed openai out to remake the team or bring back people that they lost? unclear but it is clear that microsoft seemed to win and openai is left scrambling. tom: look for bloomberg technology, we will get much more through the morning. microsoft with a lift this morning. was up, way over record high.

microsoft has pulled out back a bit in the last number of hours. 371 not shabby. not shabby as well as well is the workweek of michael mckee. denver broncos won and mickey is happy area he gets a staggering wednesday of economic data. where will we be wednesday at 8: 31? michael: i will be on holiday. that will be interesting. we have seen yields across the curve fall since the last fed meeting. we had the jobs report and cpi. do they change much this week? probably not read this is the week -- probably not. this is the week a lot of people go on holiday, particularly wednesday and friday. do we get the reaction we might ordinarily get? wednesday, we get jobless claims

and durable goods orders. those ordinarily would move markets somewhat. we will see if enough people will be trading to have an impact. and people will ask whether the fed minutes answer questions like how long are they going to keep rate hike. that is unlikely but it is something markets will pay attention to. lisa: have you ever heard a less excited michael mckee giving us the week ahead? no one will be around. to the fed meeting minutes point, are we going to see pushback against this enthusiasm about a soft landing? that is one of the speculations. michael: not sure. most fit officials that have spoken since the last meeting have suggested that a soft landing is a possibility it may do not want to say it is going to happen but it is a real possibility.

not sure anyone is going to say it is less likely or we are more likely to have a hard landing. the question will be the need to raise rates again? we have seen market rates fall somewhat. we do not have that financial conditions tightening we had before. that will be the key question. lisa: let's go to 1:00 p.m. today when we get the 20 year auction at a time of thinner liquidity, a lot of volatility. how disruptive could it be? michael: it could be a little disruptive, more psychological than anything else. the 20 is not as liquid and deepest other issues, but we had the issue with the already year last week. that's with the 30 year last week. is there a market for duration? what is the price? we will be looking just before

the option to see where the issue price ends up? are people going to make concessions to get this option through more smoothly? tom: we have got to the view. if we do not, lisa will be going to options for five or six minutes. 20 year auction today? lisa: 1:00 p.m. tom: nikki will be there with bated breath. chris johnson joins us. if i think the movable feast to real gdp and some form of inflation expectation, what nominal gdp describes this phrase soft landing? 4%? 5%? 3%? what animals. it is a soft landing? chris: good question.

we tend to focus on real gdp growth, soft landing. the fed's view would be getting growth below 2% for some period of time, but if you add inflation on top of that, you are looking at that nominal growth that slows below 5%, maybe around 4%. tom: is that feasible? kathy: certainly. i think we saw the strong blowoff of consumer spending and activity over the summer. october data are signaling some real sewing and changing employment dynamics, income, and consumer spending. we will see the consumer spending data next week. we are seeing some slowing and moderation. the question is are we going to have a soft landing? hard landing? that is still there to the point

you were talking about earlier, the question has shifted to whether the fed has to raise rates further. if not, when do they start to cut rates? how quickly? that seems to have shifted. tom: how do they "raise rates" into a 5% or lower nominal gdp? there i say it is 3.9% animal spirit. it is not in the textbooks. you do not raise rates. kathy: we think they are done. if they are right and grows moderates, inflation is continuing to trend lower. but i think that period was the revenge spending, depleting

pandemic savings. the labor market was very strong. it is still strong but some of the robustness is cooling. i think they are going to hold it. i think the market is moving in the right direction. by may or june, they will cut rates. it will be gradual. typically, when they cut rates, they are quick. this time should be slow but by the end of the year, if you get a 4% fed funds rate, the market is fighting -- pricing in 4.5 percent. there is room to rally along the curve. lisa: there is a key question about what that implies for the economy. whether that implies an unemployment rate that is ticked higher. do you think that there is a nonlinearity to what comes next in the labor market? kathy: yeah.

great question with the unemployment rate and what has happened in the labor market. we think the unpleasant rate will move higher, but we see a mild recession, unemployment up to 5%. we think it is largely linear. the reason we do not see it worse is because you do not have the overhang of corporate indebtedness. household balance sheets are in good shape. the issue here is demand outstrips supply. this will pull inflation. if that continues, i do not think we have to have a deep recession. we may get a soft landing. not everybody is confident about that, but you do not see those large balances that would signal a deeper recession. lisa: michael dart out was saying when you get a .5% uptick

in such a short period of time in unemployment, never in history have we not gotten a more nonlinear shift upward in -- in the recession. how hard is it to say this time is different? kathy: you always struggle to say this time is different. there are a lot of similarities. part of what has happened with unemployment is supply has risen. it is not necessarily a bad rise in the unemployment rate. that is been gradual. supplies have come between -- from increase immigration. hefty rise in labor forces comes from increased immigration. i am more encouraged. even if we get a recession, i think the fed declares victory on that. i am not in the camp that we

have to see this nonlinear priest in unemployment this time is different. there are not the same in balances. it is mostly an inflation issue that we are dealing with. one thing i would say is rent inflation, we all took for granted that that would slow and roll over. home rental inflation models suggest, based on measures from zillow and home prices, that rental inflation should come off. we had encouraging numbers in october. i hope that continues. when i look at inflation in core services, it is really transportation services. other readings have come down quite nicely. tom: kathy, thank you. in new york, it is a mess. we have a three zip code reach and that is bidding wars for houses and rentals scooped up within hours.

columbus, ohio is different. lisa: this is why it has been so difficult to get a handle on it. there are any tears of people who have different experiences. you are seeing that play out in some of the retailers. tom: we had some green on the screen, then red, now it is with the spx flat. the vix expands out to 14.13. yield back up. oil at $78 a barrel. churning maybe towards the wall of economic data on tuesday and wednesday. standard is flat, down .01%. lisa: basically not moving. i think that javier millet, the argentinian president who just

got elected, that is fascinating. just reading some of his comments, one just after he won, today starts the rebuilding of argentina. no room forgot -- gradual measures. tom: i do not pretend to be an expert. patrick and buenos aires -- in buenos aires is one of our great team members. having heard this before? i think so. lisa: this is somebody who is rather bombastic in his comments. it is interesting when you have someone who will throw away the currency, ministry of health, education. what is left? tom: can i view my thing from -- fort next year? lisa: please. tom: it is a cumulative 2024.

i say cumulative because of the inflation we are feeling and maybe all of those trends accumulating across four years to a presidential election late in 2024, but to me the heart and soul is the stock and the gloom out there free pandemic. 3.10842514. we have a cumulative lift in the stock market and nobody is celebrating. lisa: type so this from the new york times, automated capitalism, fees we are paying to streaming. tom: netflix sent me a love note, $22 a month. good news. at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most.

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the u.s. is one but china has other partners they can turn to. it is leverage here but not limit -- there is leverage here but not limitless leverage. i think china is looking at the u.s. political situation and things -- sees potential for things to shift year. lisa: anna ashton at eurasia group talking after last week's meeting between president biden and xi jinping. at least they resumed communication. markets right now range bound as people look at a quiet, shortened week in the u.s. we are seeing a stability with 10 year yields fairly moving, up three basis points. s&p futures flat. tom: there is a turn in the market and we will squeeze it all into a wednesday that a dump

. michael mckee will help with that. my head is spinning as much as it was 12 months ago. those are the times we live in. lisa: i agree. i want to highlight microsoft and nvidia. microsoft having given up a lot of the earlier gains after saying they had hired sam altman to head an internal ai program for openai after he was ousted as ceo. interesting to see the giveback after those comments from the chief technologist after talking about uniting openai. tom: i said last week i do not care except i do. with the festivities this weekend, it is a big deal. a temporary will substitute poor -- for lisa abramowitz. mohamed el-erian on fed speak,

is there too much fed speak? lisa: he says yes. read it. it is a good, -- good column, top notch. tom: i cannot say enough about his public service. i remember 15 years ago when the council on foreign relations reinvented themselves digitally. it is one of the greatest successes in anything we do. the website of the council on foreign relations is the foundational intellectual input of richard haass. what do you do when he exits? the joy is, the -- barely describes the miles he has clocked on airplanes for this nation. michael, thrilled you could join

us. congratulations with the new effort with the council on foreign relations. it is busy out there what are you focused on right now? michael: we see a return of rate power politics with russia at war, the emergence of a multidimensional competition with china, and you have got the war in the middle east breaking out and global issues like pandemics and climate change. there are a lot of issues on the global agenda, a lot of demands for cooperation, precisely at a time when there is a lot of fragmentation. it is challenging. tom: there is a bipartisan tone to the council on foreign relations. in this new foreign affairs magazine, you work with president obama, mr. gates, secretary of defense, with an important essay. is it a bipartisan debate in washington? or is our politics so fractured

we are not having a normal cfr debate? michael: the country is more polarized politically than ever. when it comes to foreign policy, national security, there is more of a nonpartisan/bipartisan debate going on with the center- left and the center-right. if they share a fair number of perspectives. and there are wide-ranging perspectives in both parties as well. but right now, whether it is rain or the middle east, the majority of both parties are focused on providing necessary support. when it comes to china, there is a strong bipartisan consensus that we need to be firm and reset the relationship. lisa: taking a look at what happened last week, was it truly more of a success than many are giving it credit for? michael: it was a success in that the goal was to stabilize

the relationship heading into 2024, when you have elections in taiwan, the u.s., where china will play a role. they both achieved that in terms of not just talking -- we should not confuse a meeting or a conversation with progress, but they did make actual progress on issues like military to military conflicts, fentanyl, climate change, and on trying to reset the relationship going into next year. president xi gave a speech it san francisco which could have been given seven or 10 years ago. no all for your diplomacy and evidence, no reference to the challenges and conflicts that have defined the relationship over the last few years. there is a real effort on their part that the chinese want to make sure we have a more benign international environment looking ahead. lisa: they want the appearance

of back to the future when it comes to the business climate, but there is a question about how much that areas through. there was discussion of them putting up with iran, as well as north korea, citing with them -- siding with them with respect to certain issues. today, chinese delegates are meeting with our nations to discuss -- arab nations to discuss israel. do we have a sense of what they will argue for? michael: i think china is trying to figure out what is global role is beyond economics. we are seeing the normalization of relations between iran and saudia arabia, a limited agreement around not bombing saudi oil infrastructure. it has offered help in ukraine but given the fact that it has a friendship with russia, that help is not welcomed by the ukrainians. the middle east, i imagine

parties in the region will be seeking support wherever they can, including china. to the degree that they can play a constructive role, it should be welcomed, and but that means -- but that means playing a role in public good that they have never played. china has been disciplined about pursuing its national interests. if they want to be a global power, they have to provide for some of the public good. tom: you are more identified with tvp than anyone. the failure of the transpacific partnership is something you worked on. we already playing four military bases to the philippines, isabella, and that long, skinny island where the south china sea. is there military doing tpp for us? is it the military expansion of america to the pacific actual tpp?

michael: the more china asserts itself across the region, the more countries in the region one the u.s. to be present and engaged. they are looking for engagement in a military security sense, in a political dimension, but also in an economic dimension. this is the most economically dynamic region of the world. they want the u.s. engaged there, not just as a military power, but also as an economic power. tom: he is the president of the cfr. i feel like it is a soap opera. not general hospital, but more like as the world turns. the magazine, with their good authority, they are always out front. you cannot make it up. openai staff threatened to wit unless the board resides. 500 employees. lisa: which is the reason why people are wondering what is going to happen.

that x post saying he will do everything in his power to reunite the company. what that entails, given the fact that sam altman has been hired by microsoft is another question. tom: curious, i deeply regret my participation. here is the verbatim. the controller miss grambling this morning. the openai staff threatened to join altman at microsoft, " microsoft has assured us that there are positions for all openai employees." lisa: this is basically microsoft not acquiring openai, simply stealing the employees. tom: look for this in the 9:00 hour. 300 men -- citi cutting more

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jonathan: live from new york city, good morning. four days of gains coming into monday. equity market just about positive. the countdown to the open starts right now. >> everything you need to get start -- get set for the start of u.s. trading, this is bloomberg: the open with jonathan ferro. ♪ jonathan: live from new york, coming up, equity markets on a