when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. >> we could be in this previous session, things could get much worse from here. >> the economy slowing but it is relatively stable into the first half of next year. >> it is clear there is more disinflation despite that growth. >> what i'm focused on now continues to be the inflation data. >> inflation is still too high even if moving in the right direction. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: hello, december.

this is bloomberg surveillance on bloomberg tv and radio. i am jonathan ferro. the s&p 500 is totally unchanged for november. a massive move. up 8.90 2% on the s&p 500. on the nasdaq 100, up by 10.67%. bank of america -- lisa: the 60/40 portfolio had the biggest monthly gain going back to 1991. if you're talking about everything rallying together this is great. michael had a note of caution saying, just letting you know, it typically is met with a drawdown. jonathan: how modelo area and with a -- with something to say this morning. compounded by four key factors. goldilocks, goldilocks compounded data, falling yields, falling oil prices and cash on the sidelines. extrapolating all of this forward is subject to important

qualifications that might well be underestimated during a period of understandable euphoria. lisa: at what point does the rally in bonds become problematic for the rally in stocks? i don't know if we are there. we will get dated today, speaking from fed chairs, we will be able to get a sense of what economic data will come out next week. when will we find out the compass? do you just buy until there is a reason to not to? jonathan: chairman powell coming up a little later. does he speak once or twice? chairman pauly speaking twice. any pushback to what this market is beginning to price off the people like president waller? lisa: he set the tone basically coming out saying some of the most restrictive policy going back more than two decades and yet we will stay restrictive for some time. he was basically trying to push back not really pushback on some

of the euphoria that chris waller set off. i imagine that he is reflecting what we will here from fed chair jay powell this morning. jonathan: in about two hours time, talking about tesla, cyber truck. the speed of this thing, forget the turbo s. 2.6 seconds to get to 60 miles an hour from zero is superfast. lisa: i was looking at the ad on where you could get 450 hours or 450 miles before you have to recharge. the key issue to me, and not to be debbie downer, there will be a real question around when this will be available. the cheapest model won't be available until 2025. does that matter given the fact they are trying to compete with the f-150 and the cheapest model is coming in at a price point a little above that? i'm more focused on price after a discussion with ford yesterday and your discussion with gm the day before.

does price matter? in this next phase of ev development? jonathan: it does but margins do too. compare the margins of tesla over the other two automakers. gm, the labor contract that adds 575 to each car that they produce. ford is up to maybe 900. tesla right now, right now, doesn't have that problem. do they have the opportunity to squeeze those guys even more on price because they have bigger margins? lisa: a great point raising another question why they didn't come in with a lower price for their cyber truck. it is a good point. how much is the structure of cost going to determine the winners and losers in the next phase of electric vehicles? jonathan: can you believe it is december? lisa: i can't on one hand. on the other hand, it feels like every month has been a full year. jonathan: the biggest bond move, yields lower since march. march was about hard landing.

november was about soft landing. march doesn't feel like that long ago when we were talking about bank failures going through spring. lisa: except that the narrative is opposite. soft landing, everything is perfect, they actually accomplished it. have we change the narrative in a more concrete sense that can last for more than a month? i don't know the answer to this. one thing that we saw yesterday that people didn't talk about was continuing claims went up in a material way going back a number of months. the signs around the edges that people point to and say that we had more coming. there were warning signs everywhere. they might also be false starts. these are some of the things that i'm kind of getting concerned about. jonathan: are we pricing perfection? your equity market is totally unchanged. futures going nowhere. yields unchanged. it is like everyone is exhausted after november. the fx market, the euro going nowhere too.

lisa: coming out of deutsche bank saying the ecb may cut rates before the fed. watching manufacturing, this will be really important considering we had more than a year of steady contraction in the manufacturing sector, continuing to contract going back to -- or later last year. do we continue to see that going out? throughout the day we will get auto sales in the u.s. to the discussion we just had about pricing power. what we can see, how much we are seeing disinflation as well as movement of cars off of the lots. at 11:00 a.m., fed chair j pauly speaking in atlanta for the first time. he will be speaking later in the day at the same event. does he pushback against the goldilocks euphoria that they will cut rates early next year by saying that there are stickier factors and the data we are getting could be a potential head fake? jonathan: good morning. any pushback whatsoever from

chairman powell today? >> i think that's a market is expecting pushback. the number of times over the last 48 hours colleagues have been asking, do you think that governor waller meant what he said tells me that there is not really that much confidence that governor waller meant what he said originally. that means that the market, yes, they are trading risk-on and de easing and financial conditions, but the buyers better take some trades off right now. jonathan: what did governor waller -- governor wallace say that he would go back you would edit? geoffrey: contingent on data continuing to evolve, going back to data dependency. if it ain't broke, don't fix it. that point should have been elevated rather than forewarning that potential data or whatever they're seeing in the fed data is starting to come off and may be hinting, i know something you don't know in terms of the market. there could be that confusion in

terms of the forward outlook and given his overall credentials on the spectrum, all of that as a package he could've rolled back. for chairman powell it is his chance to set the record straight. lisa: could he set the record straight? the market is saying that you are data dependent, so are we. the data we see is a lot of disinflation in the pipeline. is that going to be the message that the market is sending regardless of what jay powell says? geoffrey: the second most comment that i've heard over 48 hours is that markets are hearing what they want to hear. i think that we will get that reaction function today. if the market is less biased towards easing financial conditions and risk-on, they will be -- markets are going to prefer more wondering if they're going to go back to some degree of caution and fed higher for longer than they are going to perhaps hear the comments from powell more and be reflected in asset allocation accordingly.

lisa: from a positioning standpoint, do you think we've gone as far as we can go and are set for some read trace meant -- retracement in december? geoffrey: if we look at our custodial flow data, dollars selling, a good barometer for risk appetite, that reached the strongest levels on a monthly basis this year. that to me, not pushing back on the dollar view valuations per se, but when you get to that extreme it is time to dial things back. if you had a good rally, managed to get back year end, it is time to square things up a little bit. jonathan: take the rest of the year off i think is the message. the 60/40 portfolio, up 9.6% in november, the best months since december 1991. when you say dial things back, what does that mean after everything has rallied? where do you go?

geoffrey: if i look at the fx market and broader asset allocation, you go away from euro. where can you actually recover a bit of risk off dollar on sentiment? i would focus on what is going on in the euro zone. you mention one of my counterparts noting the ecb will cut before the fed and i agree with that in the following order. ecb than a quarter later the fed and up to a quarter later the boe. the consumer, services inflation side come the key difference between the three is for school. one is cutting, one flat, one expanding. jonathan: the sequencing, the ecb goes first, how early and what will prompt it? geoffrey: i'm looking at q2. i wouldn't even rule out in march -- let's look at the forecast for december. when they announce them. if there is a clear path towards core inflation even heading towards 2.5% or lower you need to start changing your bias and

looking at easing already. what is euro-dollar doing up here when you look at the data in and the fiscal situation in europe? if you look at euro-dollar strengthening, that accelerates disinflation in the euro zone because import prices start to come off. the higher the euro is right now the more likely the ecb will move earlier. a combination of things but i'm looking at forecasts into december forecast around. -- the december forecast round. i see parity next year and then we can move on from that. lisa: parity next year is definitely something that is quite a bold call and i would love to follow-up with you in a little bit on that.there is a question on how much there is going to be cut in next year. how far is the ecb going to cut, the fed going to cut? geoffrey: the ecb, at minimum when they start cutting they will start in quarterly

increments, a lot having to do with what will happen with qt start in that context as well. from the fed, with the fed needs to look at is where does the data take them from there, and their balance sheets at a stronger pace. i think overall is going to be one cut per quarter to start off with. jonathan: headline, the euro, back to parity. you told us what your client conversations sound like. what did they say back? geoffrey: not too much pushback to be honest. if i had that call may be six weeks ago before the constitutional court ruling on the budget, i would have expected more pushback in terms of valuation of where the dollar is. considering that the dollar has fallen quite a bit and people are probably dialing back there dollar views, plus the fiscal situation in germany and the data not picking up, i'm not

seeing too much pushback. in switzerland, they are not using the euro, but i don't get the sense there's too much disinterest in that view. the franc is worried about weak euro because the ecb may start to reverse. jonathan: kicking off december covered with a massive call in the fx market. negative on the session just a touch. lisa: three things. number one, -- very good for gets down to parity. number two, travel. that is fallen off of a cliff in the recent months. three, what does this mean in terms of how far that these economies contingent -- can continue to divert? -- diverge? is this causing some sort of retracement by the ecb? we don't understand inflation,

we don't understand why it rose as much as it did, we don't understand why it is coming down as quickly as it is. people come up with narratives to explain it. i've not heard one consistently that gives me confidence that we have a sense of how quickly things will come down. jonathan: to the people that -- do the people that control the twitter at the white house understand inflation? lisa: i think not, but there is a community note on joe biden's comments to give you eight cents. jonathan: i'm thinking that the president did not write that. just about unchanged through most of the morning on the s&p 500, going absolutely nowhere after a massive everything rally in november. hello, december. from new york city this morning, good morning. ♪

jonathan: good morning to all at home. the price action, what a month of price action for november. we are totally unchanged across the board on the s&p, the bond market, and foreign exchange. yields go nowhere this morning. wow, did they go somewhere last month. the 10 year yield in november, lower by more than 60 basis points. the two year yield ended the month lower by more than 40. this whole curve shifting aggressively lower. lisa: i'm glad that you put it this way, talking about the

whole curve. there are aspects of the rally that makes sense like people pulling back expectations for short and deals come the idea that the fed won't hike again and may cut rates next year. the long end i am less certain about. i'm not sure we understood that inflation will come down aggressively over the next 10 years and the auctions don't matter. i know that tom would be rolling his eyes saying here she goes again talking about auctions, but the u.s. is selling more debt and someone has to buy it. at what price? jonathan: inflation pushback. the president out with a tweet yesterday. i don't know who wrote a tweet but it has a president's name on it so we should read it. let me be clear to any corporation that hasn't brought their prices back down even as inflation has come down. it is time to stop the price gouging, give american consumers a break. apparently, he doesn't know the difference between prices

rising at a lower pace and falling. secretary yellen knows the difference. lisa: it is not great when the president needs community notes beneath his tweet to explain why he is not exactly getting it right. does he or his people understand the difference between slowing inflation and deflation, or is there a sense that he is trying to cater to a certain political anger that has created a real negative draw on his polling? it feels very political and yet i wonder if anyone said, just letting you know, it will seem a little off considering it is economically wrong. jonathan: without doubt it is not the former. i refused to believe that someone like janet yellen doesn't understand the difference. they know the difference. this is pure politics and nothing else. lisa: it comes at a time when he was talking about price gouging with gas prices and now they are the lowest going back to

january. this raises the question of, what is the coherent policy going forward if the inflation reduction act was more geared towards certain infrastructure building? what is their plan to message this? jonathan: did you get a coherent policy view last night in that debate? lisa: i got one very clear message. gavin newsom said that pretty directly that neither he nor ron desantis would end up being the 2024 nominee for president. jonathan: let's get another one. the managing director at eurasia group and formal policy advisor to senator mitch mcconnell. let's start with the debate yesterday evening. the governor of florida against the governor of california. sean hannity of fox news in between. surely sean was the only winner last night. >> it was painful to watch the two governors shouting over each other trying to insult each

other. most of these debates these days are framed around politicians trying to get their talking points in and get one-liners out. both guys achieve that for sure, but i don't think either helped their case that they should be the next president of the united states. as mentioned, gavin newsom is not going to be the nominee because by then is blocking his lane. this is a preview for 2028 if desantis can find a way to still be relevant in four years. it was painful. i don't think it did anyone any favors. lisa: are you saying that the nail is in the coffin for ron desantis' bid to be the republican candidate for president? jon: it is unlikely that anyone not named donald trump will be accepting the nomination in july. his polling lead is so massive and he is so dominant inside of the party in most of the key states that really matter for the primary. nikki haley is having a little bit of a boom right now trying to consolidate the report of the donor class of republicans who

are key to making sure that she can make a deep run into the primary season, but the donors are not the ones who vote. the voters vote. the voters are telling pollsters that they strongly favor president trump. desantis' window may close. we have seen this before. chris christie was the hot thing in 2012 and by the time tony 16 came along the world had moved on. -- 2016 came along the world had moved on. lisa: let's talk about president biden. you said that he was blocking gavin newsom's lane. let's talk about his reelection bid and the tweet that we dread. how he is messaging the inflation story. what you make of the fact that he put out something that was economically incorrect in terms of disinflation versus deflation? jon: i don't know who is running the white house' social media account but they are not big surveillance watchers. this is complete nonsense. i think that they are looking

for someone to blame. they know that inflation will be a drag on president biden's reelection and by creating bad guys out of american corporations not lowering prices they can point the finger at someone other than themselves. consumers are still deeply upset about inflation. inflation, unlike economic growth, is really something that consumers see every day and the prices of the stuff that they are buying. they know that price levels, even if the growth rate is down, price levels are much higher than they were two years ago. they see it in all of the consumer goods when they go out to eat at restaurants. people are mad about it. it explains the disconnect that i often am asked about about why the unemployment rate is low, jobs are created, but people are unhappy. prices are higher end the american people know it. jonathan: they are frustrated. people at home feel like politicians are gas lighting them every time they talk about

prices in america. the cumulative inflation over the last three years is real and people notice, as they should. prices are higher. lisa: especially because it is things like rent that is more than 20% higher. things like groceries. how do you challenge someone's feelings with economic data that is confusing? it is not on an economic perspective when you take a look at it and what disinflation is manually, the trajectory and what it means and how it will filter into how people feel is more complicated. jonathan: this story was more true in the midterms last year. it did not kill the democrats. why will it next year? jon: i think that biden carries the blame for inflation in a way that the congressional democrats do not. the big issue -- one thing that really matters looking at trying to understand who will win the campaign is what are the top issues that people care about? last year for sure inflation was an issue. the over arcing issue that drove

democrats to the polls last year was access to abortion. this has been a tailwind for democrats in every election since the overturning of roe v. wade. it will probably help biden next year as well and is one of the reasons i think that he can overcome some of the major deficiencies that he faces in his reelection campaign, including the bad vibes around people's feelings of the economy. people vote for complex reasons. inflation is one of them. abortion is another one. republicans will vote on immigration and crime. a totally different set of issues. inflation is only one part of the mix that will be weighing on biden's reelection. jonathan: you're one of the best and it's great to catch up. the inflation story in america and politics of next year. great tv last night. i get the feeling gavin newsom and sean hannity should have a show together. i've seen several of their exchanges and is brilliant. lisa: they both enjoy the game

of it. jonathan: we want to see more debates. you may not be happy with the tone of the debate but i prefer to see people on stage talking about big issues than hiding on twitter saying nothing. lisa: i would agree. at the same time the problem is the former president donald trump has not attended one republican debate and hasn't needed to. at what point do debates become liabilities for people more than anything else if the candidate is most a lock? jonathan: from new york city this morning, good morning to you all and welcome to the month of december. on month left in 2023. from new york city, this is bloomberg. ♪

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when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. jonathan: good morning, december. what a november. the final scores for the month of november financial markets worldwide, let's start with the s&p. stocks of 8.92%, the best since july of last year. amazing. heading for a fifth weekly gain, the longest weekly winning streak since june. we have to talk about the month for the nasdaq, but let's talk about the next week as well. the best month since july of last year. down slightly on the week for

the first time since october. a massive move, but things are starting to stall out more recently for the nasdaq's run. lisa: which is a reason why michael hartnett at bank of america was saying usually after incredible rallies like these you get a pullback.the question is, from where ? i like to look at flows to understand where the sentiment is. we have been talking about, what will it take to get cash off the sidelines? people are pouring money into cash over the next week. we saw $75 billion of additional money flow into cash. finding out when people are done with that trade, not so fast. how much conviction to people have versus just jumping on a train and -- who said i am a fomo guy? jonathan: brian. he was right not to miss out. what was peculiar about the month that has gone by is it wasn't just stocks but bonds as

well. michael hartnett from bank of america, we have seen the best return for 60/40 mix going back to december of 1991, close to a 10% gain because yields were aggressively lower across the curve. the tenure down 60. monster moves, lisa. lisa: the last time that we saw this kind of move was december 1991 when the ussr was dissolved and there was a lot of questions internationally. it wasn't just that people were suddenly coming to the realization that everything was fantastic and we would achieve the soft landing that the fed sought out to achieve. jon: how'd we price imperfection -- in perfection? the rates get cut, equities do ok because we don't go into recession? lisa: how do we understand what has been priced in? one thing that we wonder about is when you talk about big tech what do you say when artificial intelligence is a moonshot and

will yield incredible productivity gains and profits will surge because they will be the only game in town. how do you understand valuation, if people have gotten over their skis if it is a technological advancement people are betting on and the monetization of that? then you bleed into the rest of the market that is still lackluster and money is going out of small-cap companies? i don't think that there's an easy way to dissect what priced to perfection means at this moment. jon: let's push the bond move through the fx market. the dollar is weaker, the euro is stronger. we have pulled back more recently, but that was the best month for the euro of the year so far. we have had the call of the morning so far from geoff yu saying parity is on the horizon and the ecb cuts first. lisa: deutsche bank agree saying the ecb will cut first. euro parity is a bold call considering a lot of people are saying we are seeing the beginning of a protracted dollar

decline. does euro parity with the dollar mean that there is global weakness that continues to put the rest of the world on the back foot and the u.s. in the center? jon: making a china call has been so tough over the last 12 months. israel resuming fighting against hamas after a week-long truce between the sides ended. jets were striking targets in gaza shortly after the cease-fire ended. it is thought that hamas is still holding around 130 hostages after taking 240 when the war broke out. we were talking about how fragile the truce was. lisa: it is not a complete surprise. it is deeply unfortunate in many ways, but not a surprise given that it was getting increasingly tense with every hostage

negotiation.their questions about how this evolves going forward. qatar says that it is actively talking about negotiating additional truces, but we have to keep repeating that the goals haven't changed. israel still says that it needs to eradicate hamas to have a country and the hamas leader came out over the past couple of days and said that this is just a beginner, a teaser as what would come and that there would be many worse things than october 7. these are some of the talks on both sides that highlight how neither side has given up their underlying objective. jon: that is some shocking rhetoric. joining us from washington to talk about this, two years behind schedule, congratulations to tesla launching its new cyber truck but sing the cheapest model will be available until 2025. production delays have held back the truck with elon musk saying that it is insanely difficult to produce. the cyber beast priced at almost $100,000. that will begin delivery next year. lisa: you think it is attractive? jon: when it came out i said

it looked like a child had drawn it. how wrong was i? the order book went through the roof. lisa: one reason why it is insanely difficult to make is it is stainless steel on the outside which is difficult to create into components that are easily placed together. to me, this raises the question, will this be the new look? is this going to be back to the future? what was it called, the delorean? with the doors that went open? the fictional car that came out of the 1980's movie. there is a question of the tone that it sets, if it competes with the f-150, whether it is for commercial use or people just want big vehicles that look like their kids drew them. jon: do they want ev's or tesla's? do people just want tesla's in this country or do they actually want ev's?

four-door gm come you talk about their numbers. i don't hear the same thing -- ford or gm, you talk about their numbers. i don't hear the same thing from elon musk. lisa: there is the ability to price things more highly. the people who sought out electric vehicles were looking to be early adopters. now, it is a different kind of equation i will say is someone shopping for a car. you are looking for cost, you are looking for the ease of refueling, being able to keep going. sure, you are thinking about the environmental factors, you put those together and you get a different car that people gravitate towards that some of the teslas, the price points and the margins that they have been selling them at. jon: we are talking about the lack of advertising on x, but it is getting free marketing the world over this week. the focus is on this brand. there is a great video ad on twitter of this truck towing a porsche, beating a porsche in a

drag race. what does porsche do in response? lisa: i don't know. it's a good question. this is something that all of the legacy carmakers have to deal with, including the luxury ones. luxury has not been immune to this as we are hearing from bmw and the like. jon: marketing genius, absolutely. cheers falling after morgan stanley downgraded the luxury retailer to equal weight from overweight expecting the company to face a difficult start to next year given spending out of china. all of this as china's biggest celebrities flock to the louis vuitton first fashion show in hong kong as they look to boost in the region. the college china has been difficult the last 12 months. let's have the conversationwith the head of europe and america's research at standard chartered. europe and the dependence on china, what moves can we expect

from the chinese economy in the last 12 months. what do the last 12 months mean for the european economy going forward? sarah: in terms of china, clearly the situation has been challenging. growth has performed better than expected. we have always had an above consensus outlook on the chinese economy and we've seen consensus move toward us. clearly, the real estate market is going to be struggling for some time, but what we are seeing is consumer spending recovering gradually. consumers are drawing on savings even though income growth is relatively weak and consumer confidence is a great. we are seeing a pickup in consumer spending. of course, china has huge strengths in particular industries. we are seeing really strong growth in ev and other

technology-related productions and exports. growth likely this year, but not dramatically so. the official target will probably be continued at 5% for next year. in terms of europe, real challenges. the domestic economy, we've seen growth across individual countries in the region and we see policy tightening taking effect. interestingly, unemployment stays relatively low so far, and that probably is going to be the final leg to fall for the european economies. lisa: what you think of the call from geoff yu that next year we could see parity for the euro versus the dollar? sarah: we would agree that the

ecb looks likely to ease rates before the fed, and the data on the economy would suggest that the u.s. economy is in much better shape than the european economies. inflation is coming down very rapidly in the euro area. it is coming down in the u.s. we have some questions about how getting from 3% to 2%, the final leg for the u.s. inflation, how well that can be achieved or how quickly that can be achieved while you still have a pretty solid labor market. we would expect the ecb easing ahead of the fed to point to a weaker euro. once we get clear signs that the u.s. unemployment rate is rising, that is the point at which the dollar starts to come under more pressure. our forecast is the euro over

the coming weeks and months would be weaker than it is currently. lisa: is next year deja vu? getting the u.s. being the cleanest shirt in the laundry been or whatever cliche will put out there getting goldilocks soft landing and the rest of the world in a world of hurt? sarah: we are thinking that the u.s. is going to -- the economy is going to stall later next year. the impact of policy tightening is clearly coming through. that impact will intensify over the next few quarters. although employment, the jobs market is relatively solid at the moment, it is likely that we will start to see hiring fading, unemployment rising. consumers have been an important part of this recovery over the last couple of years. consumers are starting to run short on savings for the lower

income quartiles. the impact of higher unemployment will undermine sentiments such that the consumer starts to fade away. for the u.s. economy next year, we think that growth is going to stall in the second half. it is not a particularly great outlook for any of the major economies. that is sort of what you would expect given the extent of policy tightening that we've seen over the past year, 18 months or so. jon: and the fact that we've had growth in the third quarter. i really appreciate with standard chartered have done over the last few weeks. a lot of people put canada-based guidance for the federal reserve . they put out some threshold-based guidance that basically indicated that they think that this is where the fed will cut. if unemployment gets to four point five, core pce comes down to three, that should allow the

federal reserve to pull back. that is more useful to me than taking a guess on the calendar, june, first half, back half, early march, whatever. lisa: this is why chris weller made such an effect on the market. he set loose parameters about how inflation comes back to target it makes no sense to keep rates where they are. people look at what is in the pipeline in terms of disinflation over the next couple of weeks and months. they say that we are going to meet those thresholds. jon: a big if. fantastic exchange on this program the last one he for hours. you can find that on bloomberg.com. from new york city, good morning. her equity market just about changed on the s&p. this is bloomberg. ♪

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you can't buy great conversations or moments that matter, but you can invest in them. at t. rowe price our strategic investing approach can help you build the future you imagine. t. rowe price, invest with confidence. >> the lesson of 2022 and early 2023 was that you cannot control what happens in the rest of the

world, especially as it pertains to the supply of oil and natural gas. from my perspective if we get another shock in that market, and it doesn't have to be because of a war, although in the past two years that has been the case, it could be simply that opec plus decides to curtail supply. we get it going back to the low 90's because of that. that is the biggest risk right now. jon: that was on wednesday. thursday that is what opec plus it did. brent crude, 81 dollars $.11. we will get into opec-plus a moment. a big day today. chairman powell's closing outfits be going into the quiet period ahead of the december federal reserve meeting. the last word on a big week for a lot of fed speakers. we talked about the selective hearing and bond markets who seem to be listening to the likes of waller and bostic and ignoring the rest. bostic says that our research

and input from business leaders tells me the downward trajectory of inflation will likely continue. governor waller says that something appears to be giving at the pace of the economy. that line to me, what is giving in the u.s. economy? lisa: there's a sense that people are looking for discounts. that consumers are trying to push back on the margins to high prices. a sense that certain consumers are having a difficult time. i think about the walmart ceo talking about deflation, saying that over the last 90 days they have seen a market deterioration in demand. maybe that is some of it. you look at small businesses, they are not doing well. if you look at their stocks and look at their capital objectives and how they will achieve them, this is a tough moment. they employ a lot of people. jon: the data that they get in the beige book, it has been telling them this for a while. august, we heard this in jackson hole, the same thing about

things getting more difficult. stop hiking. lisa: he said that anecdotes have been a better guide than traditional data. mary has been thoughtful about this and focuses on the anecdotal data that she calls qualitative data. jon: it sounds fancier. lisa: it sounds like a more scientific approach, which is how she views it. she says she is not even thinking about rate cuts. she pushed back more aggressively than some of the others. our people seeing different anecdotes depending on the region? is this reliable? this is such a confusing moment and fed officials are just as confused. jon: did he tell you? when things start to conflict and you get more contradictory evidence it means that you are at a turning point. lisa: always. we just don't know what the turning point is to. this is normal, but it's been a while.

if we don't know where we are headed how can the fed give true guidance? jon: next year and beyond? lisa: opec-plus, i found that also confusing. as you can say i'm confused on a lot of issues. they said that voluntary cuts may be trying to placate angola and nigeria. how much is opec-plus basically a leveraged vehicle of china? how much do they give a sense of chinese demand more than america? how much are they leaning into the idea that that economy is slowing more significantly? jon: markets in asia becoming increasingly important for that group of oil exporters. nadia, the word voluntary. how important is that word, voluntary, at opec-plus? nadia: i think that the market finds the word voluntary problematic, because it means that the group did not manage to agree but this is what we have

to do and this is why the oil price has not strengthened since it was announced. jon: what follow-through do you expect off of the back of the announcement? we note the market is preoccupied with, a single word. what are you telling clients? nadia: on the margin we see that there is around 300,000 barrels per day coming less from the uae, less from kuwait, 100,000 barrels a day from saudi arabia. that makes q1 look better. call it a balanced market. it is only q1 cut and it doesn't change the picture. what was different about this opec-plus meeting is that it is not a long-duration cut. last year, they made it a long-duration peer they are only looking at three months forward. the expectation is that we will start to see demand pickup and we will see draws especially into the second half of next year. but we saw throughout this quarter is a lack of draws does

not make the oil price rally. we will see the same in the first quarter. lisa: there was a story on the bloomberg talking about how algorithmic traders are confusing this and we can't get the same kind of signal from oil prices because of this. you think that oil prices are sending a strong signal about growth, particularly in china? nadia: i think that oil prices are ok. it is not low or high, it is a healthy oil price. we have to get our heads around is the fact that china has changed as an economy. we aren't going to see the levels of gdp growth that we were use to. where we are this year, things will continue to go on year-over-year. this year we saw 1.5 million barrels per day year on year growth in oil demand. we will seat 600,000 barrels a day next year slightly higher in consensus. it is not only china.

it is also india. in contrast, the u.s., even though the u.s. economy are firm believers in a soft landing, the problem is the rise in fuel efficiency every year in the u.s.. this is why the driving season disappointed this year and will probably disappoint next year. add tesla and ev purchases that is a headwind. lisa: if that is a big driver of why prices, as you call them healthy but not as elevated as people would expect, how much can we expect to see prices decline as ev adoption and some of the other types of nonfossil fuel economies build up? nadia: i think that the main difference -- on the demand side we will see slow demand. already for next year the demand growth in our view is 1.4 million barrels per day year on year for the whole world global demand growth, but some

estimates are calling for less than one million barrels per day. the other aspect is the supply-side. right now, we are in this shale boom that will continue for another max 2 million barrels per day. we will see peak u.s. production at 15.5 million barrels per day. when we think about the balance in prices, we will still have strong oil prices. these long cycle investments are not happening at the pace that they have in the past, given this relatively healthy oil price. i don't see a long-term negative price path for oil and i to strengthen over the coming years. we just have to get through the u.s. shale boom growth period. jon: imagine if the central

bank came out and said we are hiking rates, but it is voluntary. how would the market and crude respond? lisa: completely confused. that is basically the response in crude. jon: pfizer stock is dropping, dropping development of its experimental weight loss pill after half of patients had to stop taking it due to side effects like nausea and vomiting. down four in the premarket. lisa: we have been waiting for this to some degree. we hear anecdotally about some of the side effects of some of the others, and there's the question, at what point is it problematic? it seems like pfizer has reached that threshold. one, is there going to be similar types on some of the more established drugs as people take them for longer, and how high is the barrier to entry as everyone in the industry tries to get in on getting weight loss to happen? jon: they had a massive boom off

of the back of the pandemic that has faded and now they get to get back to work and catch up with eli lilly. lisa: are you saying that ozempic was the new covid vaccine? jon: no but it was mandated in such a way that it benefited that company more than other pharmaceutical companies and that era. if the stock drops, if you pull up the chart of lily, it starts to reflect the other way off of the lows on the session on both of those names elsewhere. lisa: they have more established footprints and maybe less height to fall from. pfizer really did benefit so significantly. i wonder, are people really going to take this for the rest of their lives? jon: i don't know. i just find it fascinating. more questions than answers. this subject right here, i have so many questions about. it is absolutely fascinating, what it could change, and all

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>> we could be in this recession period. >> the economy is slowing but relatively stable. we can support it into the first half of next year. >> there is more disinflation despite growth. >> what i am focused on is inflation data. >> it is still too high even if it is moving the right direction. announcer: this is "bloomberg surveillance" with tom keene,

jonathan ferro, and lisa abramowicz. jonathan: let's get you to the weekend. live from new york city good morning,, good morning. this is "bloomberg surveillance" on tv and radio. alongside lisa abramowicz, i am jonathan ferro. good morning, december. equities unchanged on the s&p 500. equities rip, bonds rip, yields plunge. will jay powell disrupt the party? lisa: probably not. all of the questions i have about everything -- and i keep telling you about how i do not understand anything -- someone sent in led zeppelin's "dazed and confused" so i can vibe. jonathan: the bond market supported this massive move. to see 60/40 deliver the best

month since when? 1991. lisa: december 1991 when the ussr was dissolved. jonathan: what happened? lisa: is this the beginning of the reprisal. can bonds and stocks continue to rally together for a longer period of time? i don't know the answer because we do not understand where inflation is going to settle. some say it could be longer. some say it has gone too far, too fast. others are saying we are going to get re-inflation next year and then you get this real concern where bonds lose value. are the opposite. we go back to 2% and everything is goldilocks. jonathan: that is the bet, right? the soft landing. the bet jp morgan are pushing back against. they think it is too perfect, too good, and will disappoint. if you wonder what will break the correlation between stocks

and bonds, it would have to be bad data. bad data is going to push this bond market the direction it has been moving and maybe push the equity market a different direction. lisa: it strikes me this cycle is so different. there was some sort of crisis and then a massive increase in on the limit, massive increase in defaults. we are not looking at that kind of recession because the u.s. economy is in pretty good shape and the labor market is strong. if that is the case, how do you price in something that is not catastrophic? it goes to mohamed el-erian's price about perma crisis and how you get into something that looks different. jonathan: great piece this morning from him. the risks of extrapolating understandable euphoria. a lot of risk around the story. i want to pick out a single name -- pfizer. down for percent in the pre-market and now down 3% and change.

dropping development of its experimental weight loss pill after more than half of patients had to stop taking it due to side effects. not very pretty side effects. lisa: we do not have to get into it. yes, how much of a lift did they get from the pandemic knowing they were the forerunner with the vaccine? but the fact an experimental drug being pulled from the experiment causing this type of move in a massive stock shows the hopes and dreams around these weight loss drugs and what they can do. jonathan: it is why lily is up. it is why novo nordisk is ripped. here are the scores. december 1 equities going absolutely nowhere on the s&p 500. i get so excited about christmas. lisa: how is the tree? jonathan: looks fantastic. lisa: mariah carey? jonathan: going on later. i have not played mariah yet. i waited. you all had a go at me for

putting the tree up. lisa: you felt ashamed? jonathan: absolutely. i would sit at night crying, upset, looking at my christmas tree lights. lisa: if you want to listen to mariah carey, you should enjoy it. jonathan: tk is putting up the tree today. lisa: he is not. he puts it up december 21. jonathan: he dropped a significant amount of money on a tree and then puts it in the corner of the living room and does not do anything with it for three weeks. lisa: it is the spirit. jonathan: i don't think there is much spirit. big mover last week. yields down 40 basis points at the front end. yields up a single basis point. lisa: i know you are going to be excited about this. at 10:00 a.m. we get ism spending. that sub 50 read.

does that continue to deepen? does this belie the strength that keeps going in the services spend? we will get auto sales in the u.s. curious to see the pricing points and the sheer volume at a time we heard from ford they are expecting prices to drop. they are seeing a bit of a pullback from the euphoria. at 11:00 a.m. jay powell will speak today in atlanta. will he push back on the market euphoria? will he say we are not going to cut rates? or would he say we continue to monitor the data, we are careful, looking at everything, and let's carry-on? jonathan: maybe the latter? lisa: proceed carefully. jonathan: does he have to clean up with governor wallace and? -- what governor wallace said? lisa: do you think the market moves we saw off the heels of

waller is problematic or is that not affecting the economy to such a degree? are the risks balanced enough he does not really care? jonathan: they have not shown any concern whatsoever about the easing of financial conditions. they could come out and make a statement about the premature easing. i have not heard that from anybody, even from the hawks on the committee. they have not pushed back at all. lisa: that is important to me. that is something that tells me they are not worried. they are more worried about the downside risk and if that is the case, fed chair jay powell does not need to push back is aggressively, which tells you quite a bit about where they see the softening going. jonathan: let's get to the opinion of skylar montgomery koning, macro strategy director at lombard. any different to what we have heard all week from fed officials? skylar: i don't think so. in terms of the last fed meeting we got this very dovish impulse from the market because we had yields rise so much that the fed

said it could not count for a hike. from there the markets had this idea we were at the end of the tightening cycle. i think we are at the end. we have had inflation come down remarkably and it looks like the fed is on the trajectory back to 2%. they do not have to worry about inflation as much. they worry about the economy. if easing supports the economy and it means they do not have to worry about on implant rising, why would it be something you fight if inflation is on the trajectory you want? lisa: what is the bigger risk in your view? that we get some real acceleration in inflation or faster than expected deterioration in the fundamentals of the economy and a true recession earlier next year? skylar: i think the bigger risk from a probability perspective is an inflation re-acceleration. what we have seen the last two years that we did not see the past decade was inflation is more volatile, geopolitics has

come to be more of a risk, and the consumer has been resilient and we are having real wage gains. while i do not think it is my base case that we get an inflationary reacceleration that starts to wear the fed, probability wise, i am more worried about inflation coming back and a shock to the trajectory that i am to the growth side. lisa: based on that risk being greater than recession do you think this market is priced to perfection in terms of pricing out that type of reacceleration in inflation? skylar: if you look at long-term inflation expectations, it is different than breakevens. 10-year breakevens trade with the oil prices doing. they are not giving a huge amount of information. but inflation swaps that look at the longer term trend debt more recently -- dipped more

recently. i think the market is looking for that and it is looking for the cuts that imply a soft landing rather than recessionary cuts. jonathan: the highly correlated moves we have had over the months so far, can you suggest where the audience might go for some kind of diversification given that we have witnessed a massive everything rally in stocks and bonds? skylar: yeah, it is what a hard. this is the issue in terms of the 60/40 on the up and down. the reason you want to be in a 60/40 is because it provides benefits. if you are rallying and selling at the same time, great, you can be allocated in fixed income and equity, but it is not providing you diversification benefits. the only other place to look is alternatives in terms of energy and the gold price. gold is an issue because it is completely decoupled from where yields would imply it is. energy prices are stuck between

the slow and global demand story and then opec+ on the other. it is a very hard environment. you have to look at those alternatives and your real assets if inflation is the worry. but there is not a lot else out there. jonathan: can you get geographic diversification? have you seen any of that in the last 12 months? is time the place to be? skylar: i would not say china. we see exceptionalism continuing. the u.s. is less exposed to manufacturing, less exposed to china, industrial policy is favoring the u.s. and in china it is to the detriment. i think you have seen the magnitude of tightening in the u.s. larger than elsewhere, but what you have actually seen the tightening is not as much as in europe. the final thing is the fiscal outlook. for me when you are thinking about the u.s. versus other

regions the u.s. is going to continue to outperform. on the china point, if you think about the world's global growth engines, it is the u.s. and china. china is in an l-shaped recovery. it is a consumer, domestic oriented rebound and stimulus. the chinese economy is not feeding into the rest of the world in developed markets the way it has in recent cycles. that means the u.s. is your marginal provider of growth. it is hard to beat that if you are getting any growth. jonathan: it is such a great point. the u.s. keeps winning. skyler montgomery koning of lombard. the u.s. keeps winning. lisa: yay. this is why we heard we could see parity next year. i remember the people who went to china first. jonathan: if jeff is right. lisa: maybe we have got to push that out to 2025. jonathan: welcome to the program.

the scores look like this on the s&p. pulling back 0.1%. yields higher biasing the basis point. there is the fx market. v and y mellon looking for -- bny mellon looking for parity next year. lisa: john williams is thought of as the key voice at the federal reserve and said yesterday, i am not losing much sleep over how markets have shifted their views. he does not seem to care which raises this concrete question about what the incentive is for jay powell to come out and push back against the market moved and nobody seems to care about, even though they cared about the other direction. that was a problem and it could be tightening that overwhelms the market in the future. jonathan: they are responding

asymmetrically. lisa: correct. jonathan: no pushback at all. coming up, annmarie hordern in washington around the corner as the war between israel and hamas resumes. that conversation around the corner. the broader price action, equities pulled back 0.1% on the s&p 500. stocks of double-digit percentage point gains over the last month. yields aggressively lower, down 40 basis points plus. down 60 plus on the 10-year. what disrupts this everything rally? chair powell coming up a little bit later. from new york city, good morning. ♪ (sfx: stone wheel crafting) ♪

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>> you are trying to find political games to get attention so you can out trump, trump. how is that going? you are down 41 points in your own home state. >> he is throwing stuff out to see what sticks. this is a slippery politician whose state is failing, people are leaving, and he is trying to run interference. >> if there is one thing in closing that we have in common, neither of us will be the nominee for our party in 2024. jonathan: what a debate yesterday evening on fox news. governor newsom of california

and ron desantis of florida facing off. joining us in washington, d.c.'s bloomberg's and reordering. walk us through what stood out for you. annmarie: i think the first thing is there is mudslinging between these individuals. but the key part of what newsom wanted to drive home and did it at the opening is he wanted to bury ron desantis as being the republican candidate. he was carrying a lot of water for biden and harris, going into enemy territory because he was on fox news. even though he has some special relationship with sean hannity. [laughter] they like each other and newsom is the one i believe a year ago called for the debate saying, i am happy to debate you. when he said neither of us will be the candidate for 2024 that was the first shot thrown. but they covered a lot of topics which we do not normally get because there are so many people on stage and they are all trying

to vie for their moment to shine. here they covered everything from abortion, to taxes, the economy, crime, immigration. did not exactly get a ton of substantive debate. more, i do not like the way you are doing it. potentially we will see more of these and gives more insight of what we can see in 2028. jonathan: credit to sean hannity for making it happen. to your point on governor desantis, what did he get out of that last night trying to take on the former president? annmarie: going into this i really thought newsom was a win-win. he is going into enemy territory so people on his side of the camp will say this is great. he is fighting the good fight for the biden/harris administration. he looks like a winner to his side and he was elevated by the fact governor desantis is not just a governor, he is a presidential nominee.

it felt like desantis was elevating newsom. why was he going on a level with someone who is not a presidential candidate? but for governor desantis this was a moment he was not fighting of the republicans on stage to get his voice heard. he had a lot more time to explain his positions and speak directly to an audience that he wants to vote. it comes to weeks before iowa where he spent of thanh of money and political capital -- ton of money and political capital. lisa: did they speak about foreign policy? annmarie: foreign policy did not come up a lot. i would say this is framed by sean hannity to be a domestic debate. it was about red states versus blue states and i wonder if we will see more. maybe governor abbott debating gretchen whitmore? who knows? but it was really about how do you govern your state and the

policies you are putting in place. it started with -- and i was preparing for this to start because this is what sean hannity started his sit down with gavin newsom prior -- it was about the migration we have seen out of california. people leaving california which, for the first time ever, happened in 2020 and gavin newsom became governor in 2019. lisa: i ask because it seems president biden is fighting in his race much more on a foreign policy perspective. there seems to be a shift in tone and it comes to tony blinken and what he said to israel over the weekend. now what we see in terms of what the u.s. is saying about israel's actions in the reignited conflict between hamas and israel. what do you make of that and how much of that is where president biden is in terms of how he moves his campaign forward? annmarie: this is what the administration has to deal with, less so the campaign.

the administration is dealing with two conflicts in the world right now. obviously, you have the secretary of state in the middle east and you have a resumption of the fighting. the pauses we see, the tactical pauses or truce, whatever you will, where we see hostages out of hamas' control back to israel and prisoners in israel being released has come to an end. this is going to be front and center for this administration and it is a good point. we saw a tougher tone from secretary of state antony blinken. nick said to me yesterday it was like he read the riot act to israel's war cabinet, saying the massive amount of civilians we saw in the north cannot be done as it is widely expected for the israelis to go into the south of gaza. jonathan: let's talk about policy.

outside looking in there is clear division within this government between the president and people within the state department. that is just the government. then you have a massive split in congress within the democratic party. how on earth to become up with any agreement early next year to give aid to israel, aid to ukraine? what is not going to look like in the next few months? annmarie: great question. we heard admiral kirby talk about this because for ukraine, they would need something to be done before january and it starts to become a dire situation. those funds that the president can draw down on are joined to link. we do not have a vote yet in the senate. the senate is working on a package that would encompass all the foreign policy concerns, but it would have to also include something on the u.s. southern border. the thinking here is the way you can get more individuals in congress to sign up for aid to ukraine is to make sure there is

work being done and aid sent to the southern border. but the timeline is tricky. the biggest story for congress today is going to be whether or not they expel george santos, the representative from new york's third district. but they do not have a lot of time left. if this lingers into early next year, it could be quite problematic. the other big debate when it comes to israel and congress is whether they want conditions attached to that aid the president asked to send. jonathan: appreciate the update. more from amh today on bloomberg tv and radio. before we lost in the glitz of a presidential election -- lisa: glitz? jonathan: -- all the headlines, the attention, the crowds, we have to focus on making policy. we have got to find some agreement overspending. good luck. some agreement over sending aid to israel and providing aid to

ukraine, which hardly gets talked about now given what is happening elsewhere. lisa: this is the unspoken secret but very well known by everyone. in all of these campaigns the more contentious they have gotten year after year nothing is getting done in terms of moving forward certain policies. including, for example, coming up with actually good cost-cutting that can reduce the deficit, that comes up with a coherent foreign policy that critical mass can get on board. it raises the question -- especially with the house that has been in disorder -- of what can get through. we have to get things done, but do we because it has not been a problem going back. it is a can kicking exercise. jonathan: the deficit problems do not go away is because the rates have gone from 4% to 5%. lisa: they are less of though. jonathan: they are massive. lisa: and not necessarily going

to be making cuts anytime soon. whether it is democrat or republican any proposal that comes out to cut costs, nothing actually addresses the main cost absorb her's it is -- absorbers. jonathan: it is better that it is not at 5%. lisa: how many billions and trillions have been reduced? [crosstalk] jonathan: coming up, gennadiy goldberg will be talking about this equity rally. equities are down 0.1%. from new york, this is bloomberg. ♪ a few years ago, i came to saona,

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jonathan: equities pulling back, down 0.1% on the s&p 500. who cares after the november we had? i suggested yesterday equity bulls did not want november to end. lisa: it felt like forever. jonathan: double-digit percentage gains on the nasdaq 100. down one third of 1% after a monster move last month. biggest since december 2022. -- biggest since the summer of 2022. this nasdaq move has stalled. slightly negative on the week. lisa: and i am sure people are

crying because gains on nvidia are 4.98. i love being a skeptic. jonathan: we love you for it. lisa: thank you. there is actually some numbers to underpin this and some of the tech companies seem to have real promised and are cash cows. it is harder to push against this and say it is simply euphoria or a dotcom bubble. you do not hear that type of discussion as much even after something that seemed implausible months ago. jonathan: nvidia is making real money. lisa: exactly. jonathan: this bond market move, what has changed from 5.26 last month, 5.02, down to 4.69. lisa: maybe there was enough stability to get long-term buyers to come back?

it is noticeable that some of the buyers like bob michele were really bullish on bonds but they did not have the technicals behind them. everyone bought yields and then yields came in further. the narrative changed, the mood shifted, we feel better. does it stick? jonathan: prices change quickly now. lisa: yes. jonathan: finish on foreign exchanges. the dollar has had the worst month going all the way back to last year. the euro a decent month but for how long? pulling back recently and bny mellon saying, guess what? ecb goes first and parity all over again. are we doing that again? lisa: i did not have a good response. that is a bold call. what is going to back it is interesting. the ecb could cut first and we had three guests that said they

believe the ecb will cut before the federal reserve. this comes when months ago people said the ecb was on hold until 2025. there has been a shift in the narrative showing faster disinflation than people expected both in the u.s. and europe. that has shifted a lot. jonathan: it reminds me of the conversation 10 years ago, summer of 2014, and we were talking about who would hike first -- the bank of england or federal reserve? we were convinced it would be the bank of england and it was not. sometimes we can be very wrong about these things. maybe will be wrong again. israel resuming its war against hamas after extending the truce failed. antony blinken was in tel aviv looking to extent the pause -- extend the pause. we have been talking about a fragile truce and it was exactly

that. lisa: especially after each negotiation lasted longer and longer and there were questions about how many hostages are still alive. going forward, there will be a key question around where the pressure comes from in terms of global leaders and how they are trying to maneuver behind the scenes. right now it seems like for israel and hamas the objectives are clear and they are to continue this war. but with respect to what the other players want, particularly the middle east, they want stability and president biden wants to get reelected. that is the counterbalance. jonathan: we were in london in september and caught up with old guests. do you remember the calls? lisa: i do. jonathan: and then you get an extra layer of political risk. october down 10.76%. november down 6.25%. crude back into the 70's and even lower. oil traders totally unimpressed by the latest move by opec+.

voluntary cuts failed to boost prices. opec announcing an optional cut of 900,000 barrels a day. saudi arabia extended the current one million barrel per day cut through next year. in the u.s., hitting a record high of 13 million barrels a day for september. this was voluntary -- this word voluntary seems to be what people are fixated on. does that mean they do not get delivered? lisa: i am sure someone can answer that better than i. this meeting was delayed four days and then virtual. and then they came up with language that was highly confusing on their ability and willingness to meet these thresholds. right now the pressure on cuts raises a bigger question which is, is oil spill the barometer for global growth that used to be given that certain modes of energy are shifting? if so, whose energy demand? is this really on china given that the u.s. is becoming energy

independent? jonathan: without a doubt output in america is amazing and the white house not talk about it. lisa: dancing around it. jonathan: pfizer lower this morning, down almost 4%. the latest on that company. stopping development of its experimental weight loss pill after side effects force more than half the patients taking part to stop taking the drug. pfizer has fallen this year as the pandemic fades. the weight loss drugs made by lily, novo nordisk, you can see the gains. lily up 61% year-to-date. novo up 47%. lisa: ozempic is the new artificial intelligence -- it is the new boom. how much can we innovate? people could take these pills more easily. there are potential risks and we have heard this again and again. ozempic face --

jonathan: what is that? lisa: it is when you lose a lot of fat from your face. jonathan: ok. lisa: and there is wrinkling under the eyes. i am not the expert. we will be speaking with one later. jonathan: you said it so i thought you would explain it. [laughter] gennadiy goldberg joins us now of td securities. lisa: thank you for having me -- gennadiy: thank you for having me. jonathan: i get the price change. what has actually changed fundamentally to get us here? gennadiy: i think it is the data. all of 2024 is going to be the struggle. this fight between supply and demand -- which is still out of balance and the market has forgotten that -- but the data has turned. you are starting to see soft data, hard data, inflation data surprising to the downside. that is the big driver and the market has gotten it into its head that no hikes equals cuts. that is not right. speaking as a bond bull we have been long, and i am not

complaining, but you are seeing an overstretch at this point. the market is not really thinking about the data can be less than that. lisa: let's push that further. what would make you not be a bond bull anymore? how far would this have to go? gennadiy: isaac if we got closer to 4%, i think i would take my foot off the gas pedal. you have to play this tactically. for the next year, yes, we expect rate cuts, we expect recession by the second quarter, but not yet. the markets are getting really ahead of itself. that is not something you typically see at this point in the cycle, especially we were talking about who the buyers are going to be. who is taking down these trillions of dollars of treasury supply? i think that is out of whack. lisa: which is why we have been talking about the difference

between the two-year rallying against the 10-year bonds. do you have more confidence in short-term or long-term bonds? gennadiy: i think folks are certainly getting in -- you are seeing this massive repricing. we do have cuts next year but it is going to take time for those to filter through. for that data to actually catch up to reality, you are not really seeing that at the moment. you are seeing something slow down. let's say we get a 250,000 payroll print next month. we could be back up 20 basis points on the day. jonathan: that will be the number one question. what if we get 250,000? you mentioned the deficit. if you can pick out the chart of what has happened with treasuries, i think you can identify what happened in the summer and what happened the last month. treasury refund and was kind of important.

confusing catalyst with the driver. you can probably identify treasury refunding as a catalyst but is that the driver of what we see? gennadiy: i think the driver is still the macro. the catalyst is only paid attention to when there is nothing else going on, when the data is good. supply matters when things are good. when you have your choice of buying stocks, bonds, corporate bonds, whatever you want. when data starts to turn sour people stop caring. it does not matter how much we issue. people want to get into safe haven assets. they are trying to make the macro plate. it is almost supply on, supply off, but we keep getting these prints that say the bond market is not healthy. you are getting these 30-your auctions and it is going to be a problem.

if we get another one or two tails, maybe by february, the treasury will decide not to increase and that could be bullish as well. lisa: we have been talking all day about how exhausting this is felt. how november felt like a year in and of itself which raises the question, do you end up going into next year -- the way chris harvey is talking about it which is treated as a traders market. lean against the momentum trades. try and lean against the flow and we are going to end up in the same place we are now. is that how you are looking at it? gennadiy: a little bit. i would say lea withn the flow. realize there is people on the sidelines and people are piling in last-minute. when you get that perception that things are going too far and you want to take risk off, you do not want to lean into long-term pause. people are going to be getting in late in the cycle and you are

going to be exacerbating these moves. you are now going closer to 4%. that is your signal to get out. keep an eye on the macro and the momentum because those are going to with things around. jonathan: how sticky is that money in money market funds? gennadiy: sticky until something really material changes. i thing a lot of that money will pile into equities, fixed income at the first sign of trouble. right now, it is piling in. if we continue to get really decent macro data, why not? people are going to be earning 5.25%, 5.5% on money market funds. duration is free. you do not have to worry about losses. it is an easy play unless something looks attractive and not a lot of things look attractive. jonathan: if you're just joining us, welcome to the program. the equity market negative on the s&p 500 0.1%. let's continue the conversation

because i think it is important. there is a view, because we have been conditioned by two massive shocks and two nasa policy responses -- great recession, and financial crisis, and the pandemic -- when the fed moves they go back to zero. what are they go back to? gennadiy: we think around 3%. that is a short-term neutral rate. i think that is in their minds as well. that is the next fight for inflation. if they go back to zero, we are going to be in for another huge round of inflation and they know it. they have to almost under ease. we think they go back to 3%. if that is the case -- and they are going to be cautious about it -- they are going to ease but not ease excessively. they're going to get right below neutral in the short-term to just to me like the economy and make sure they are not over tightening. they do not want to go back to

zero. even more than they do not want to talk about rate cuts. jonathan: they really do not want to talk about rate cuts. lisa: they are going to avoid it,. except chris waller jonathan: he set it up. [laughter] i wonder how much she wanted to say. maybe it was what he was thinking. lisa: the fact he is not losing sleep over the market move is important. jonathan: it is. lisa: it tells us the balance of risks is a greater risk of weakness. jonathan: great to see you. jenna did goldman of td securities. from new york city -- jenna did gennadiy golberg of td securities. from new york, this is bill burck. good morning, good morning -- from new york, this is

bloomberg. good morning, good morning. ♪ 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

>> the magnificent seven have had a fantastic year. if you look at the next nine,

they don't. when you think about valuation i am not taking an active bet to really underweight or overweight. jonathan: that was the chief investment strategist and chief economist at citi global wealth. the big winner of the year has been nvidia. everyone wants association with that story. lisa: they are the hardware solution of choice and what people are talking about is how hard it is to get into the hardware side. you might as well be the software side and pare with it and ride the train. jonathan: let's have a conversation. hpe expects softer demand for storage but hoping its new ai venture will offset the slowdown. the plan including a bigger partnership with chip giant nvidia. antonio neri joining us from

barcelona where he has been speaking to customers. let's start with that relationship with nvidia. for our audience familiar, can you describe to us and have benefit is going to be to both of you? antonio: good morning. thank you for having me. we are in barcelona. there is still the show going on. thanks again for having the opportunity to talk. here in barcelona we announced an expanded partnership with nvidia. two weeks ago at the super two computer event we talked about generative ai, using supercomputer capabilities and intellectual property, plus nvidia chips, to provide massive capability for developers to speed up the training models. on thursday i announced an extension of that partnership

for enterprise customers to what we call fine tuned models. using our expertise as well as our services capabilities to be able to work on premises. this is a complete solution for the ai lifecycle and the customer has massive reception. they want to privately find tune the models -- fine tune the models. jonathan: i think raymond james writing you are getting a seat at the ai table. can you talk about the pace of adoption of this technology? many of us surprised by the guidance we had repeatedly from nvidia. this was not just a hopeful story about the future. it was real and present. can you talk about that? antonio: i think there are two components. the story is absolutely real. we see it in the quality of the dialogue with customers, which are now accelerating the model

framing. at the beginning of 2023 we had less than $100 million of accelerator processing units. at the end of 2023 we grew that business in 10 months. the technology has achieved an inflation point. however, our story is not just ai. our story is a combination of a hybrid cloud and an ai data world. the ai needs that data. it is hungry for that data. now we need an ai native to find tune these models and put into

production which will achieve those outcomes. that is what we see tremendous growth in the upcoming hybrid cloud business and now ai. we have a unique portfolio. lisa: we have been talking to so many people who talk about a winner takes all type of trend in tech. amazon's aws, microsoft's azure taking part of the market share. how do you compete at a time where people gravitate toward the biggest players? antonio: there is an interesting opportunity here because think about 2010 to 2020. it was all about the cloud. the cloud for us is for expediency across the business. now is about changing the way

you do business. but that inflection point requires a different architecture. customers are not keen to put their public data -- the data in the public domain and make sure they control that, because that is intellectual property. that creates a massive opportunity for us. we think that hpe can be the fourth cloud. you can take advantage of the cloud or the on premises and do everything you do in a unified experience. that is the value we bring to the table. ultimately, we have every solution in the partnerships to give that unified experience. lisa: we have been hearing about consolidation in big tech. how much are some of the biggest cloud providers trying to get into that market where it is the hybrid trying has solutions for

companies versus having the market to yourself? antonio: the market is big. we are talking a trillion dollar market opportunity. i believe ai opens an opportunity for everyone. there is plenty of market out there. you think about us as a company. this year we grew 5.5%. we believe there is plenty of runway here. ultimately, the winner is about delivering a simple experience. who is going to accelerate business outcomes? it is not just thinking about speeds and feeds. it is delivering that agility. i think hpe is unique with the fourth cloud. jonathan: let's finish on football. are you happy that messi is no

longer in barcelona and we have him here in america? antonio: i am happy he is and check -- argentinian. i had the honor to meet him. i was able to play one time. it was an incredible private having him in the united states gives me the opportunity to watch more often. jonathan: i want to hear that story one day. antonio neri, thank you. just got a note from citi on the pushback we can expect from chairman powell later. not much for pushback. lisa: this is partly because he has not and he basically will say they are not indicating any discussion around rate cuts, but it is not going to be the massive shut down with the markets saying, stop it.

it does not seem they care about loosening financial conditions. jonathan: they did care 12 months ago. i go back to jackson hole, august 2022. we will get inflation down. it might be painful. it will be more painful if we do not and we are sitting here saying, where's the pain? that is what has surprised so many people. seeing inflation come down the way it has done without the pain. what is interesting about the last month -- we had a 60-basis point move on the 10-year since march. march was about hard lending in the last month has been about soft landing. the pushback you hear is that it looks like soft landing until it is hard. it looks like a soft landing when it is a soft landing. who knows? neil talked about a glide path. lisa: as soon as march.

it seems like november was the month we were prized transitory without saying transitory. it seemed like we pushed back a lot of the expectations from the end of last year. to me, transitory is the subtext to the moves nobody will say because it has been dragged through the mud. jonathan: transitory for longer. lisa: that the period of time where inflation was elevated lasted longer but ultimately, we are going to go back to a year-over-year comp basis. jonathan: i get nervous when people say things like that. let's say that is a judgment about the past and not a call about the future. lisa: are you doing the fine print on the bottom? jonathan: absolutely. small disclaimer. coming up, liz young will wei gh in on the market. closing out the nasdaq for a double-digit percentage gain.

good chairman powell spoil the party? chairman powell, coming up later. ♪

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hike was july. >> be careful about having restrictive monetary policy. >> they will tighten policy so much that inflation falls too much. >> the data is lining up. >> the debate now is when. >> this is bloomberg surveillance with tom, jonathan ferro and lisa abramowicz. jon: music to the year of equity market bowls. on a path to rate cuts. good morning. this is bloomberg surveillance on tv and radio. i am jonathan ferro alongside lisa abramowicz. the equity market up 42% on the s&p -- up .2% on the s&p. lisa:lisa: we keep repeating this stat. nine point 6% gain on the portfolio put out by bank of america. the biggest gain going back to the dissolution of the ussr in december of 1991.

gives you a sense of history and how unusual this type of move is. jon: how far can this move go? michael schumacher thinks the limit is 4%. that is maybe a day's price action. the 10 year 4.33%. if jp morgan is right, that's the last hike. in july, three point 87% on the close -- 3.87% on the close on the 10 year. do you see the fed cutting soon? lisa: i thought goldberg put it well, where he said we are being whipsawed between the economic data, which has come in weaker than expected when it comes to economic indicators as well as inflation, and the momentum trades whipsawing things, taking them further and -- further than expected. do we now hear more about levels

and thresholds? it says we will be in this balancing sphere for a while. we will not get back to that direct trade that will last more than a month or two. jon: there's a chance we are confusing a few things. i don't think it's necessary . it's what the stronger economic data did not do. q3 with gdp north of 5% and inflation does not accelerate. you can have employment around 4%. wage growth not going through the roof. you can have this very decent, brilliant, rebalancing of the labor market without a recession, without a big economic downturn. that is what i would argue the market celebrated. whether that continues i have no idea whatsoever. i don't see weak data. i don't see that on the surface at all. economists have seen it being better this year than expected.

if i said you start this quarter north of 5% gdp, what is your cpi call? you would expect inflation to be higher and it's not what happened. when someone came on the program a number of weeks ago, he said the piece of this that is important now is the labor market is no longer a reason to be hawkish based on the fact that you can have 200 k payrolls and wages are not going into the stratosphere. lisa: i think you are right in the sense that people are celebrating the fact that stronger economic data has not caused a resurgence in inflation. at the same time, i don't a guinea one is comfortable with the idea that we will not see that that i don't -- i don't think anyone is comfortable with the idea that we will not see that. on the margins, people won't feel good and are restricting spending. and we do see ongoing recession in the manufacturing sector and

a lot of the smaller companies. so when you look at that, it is masked by a lot of strength in the adoption and these other things. if it sounds like a mush, it feels like it. jon: just remember, it was price gouging. can we get to that statement from the president? who writes these tweets for the president? that is all i want to know. who writes these tweets for the president? there is no way that president biden is writing these. there's no way. what does this mean? let me be clear, to any corporation that has not brought prices back down even as inflation has come down, it's time to stop the price gouging. give american consumers a break. talk about politics and bad economics. jim, apparently he does not notice the difference between prices rising at a slower pace and prices falling. that take implies the president wrote it. i would love to know who wrote

it. lisa: we will try to find out that answer. unlikely that we will but to me the real issue is what does this signal about the desperation to try to push the blame of inflation onto someone else? he has gotten the blame for inflation. not saying that is warranted. a lot of people debate the drivers of inflation, but now, it seems like this is impeding his reelection bid more than anything else and he's not sure how to tackle it. that is what that says to me. a lot of people would just categorically say it's nonsense. jon: x post means something else. but it's a post on x. let's get to the scores. tk would have appreciated that. whatever. s&p -0.2%. coming back. yields going nowhere.

yields going somewhere, lower, over the last month. the everything rally dominating the month of november. let's catch up with lizzie young, head of investment strategy. great to catch up with you. any reason to believe this bond market-stock market correlation continues the way it has done over the previous month over the next three months? liz: well, it is possible. 2023 has shown us anything is possible. it is possible the correlation remains positive in the sense we continue to see yields come down. stocks are celebrating that, particularly growthier stocks, which is rational initially. i think the correlation could stay positive for a little while. what we're looking at here, especially into 2024, is we have been wanting cooling and a lot of this data, inflation -- cooling in a of this data, inflation.

we have seen continuing claims on a move upwards since september. the manufacturing economy is still feeling some pain. we are hearing some data out of the consumer that they are pulling back on spending a little bit. we have wanted this cooling. the question into 2024 will be can we stop the cooling before the economy tips into contraction and makes us nervous? if we start to get data that gets too cool too quickly, that correlation breaks down, where i think you see bonds rally, so yields will continue to fall, but stocks also come down in tandem. lisa: you work for sophia, on -- for sofi, in the investment wing, for younger individuals. i'm wondering what you make from an economic and investment perspective of people who are doing more by now, pay later, increasing their credit card bills, increasing their

delinquencies and defaults. liz: it is certainly concerning and it is something i have been watching for the last few months. we have seen delinquencies go up. so far just in the subprime auto loan sector. you have seen credit card debt get to high levels. it has not broken yet. it has not been an issue yet but the thing about where we are this time of year, we talk about this being a positive time of year for the market. the santa claus rally a possibility later this year. we have holiday spending going on. the data for holiday spending has been maybe a little bit higher than expected. however, what happens in january and february is that, if consumers were doing that spending on credit, on things like by now, pay later or on credit cards, the bill comes due in january and february. this year could be a time where we are seeing that bill come due and delinquencies go up because

consumers have been using that in larger quantities than last year. lisa: how does that affect your business strategy? are you looking to january and february to january and february to see those increasing defaults to get more bearish and say maybe the bond market could rally more but that will be a negative when it comes to equities? liz: the bull case -- a lot of optimists have been hanging their hat on the strength of the consumer and the consumer is strong. there is appetite to spend and travel. we are seeing them spend their money in stores and online, but, over time, if the labor market cools or if consumers are really feeling the pain of inflation and recognizing the idea that inflation hasn't stopped growing as quickly but has not come down, so for consumers to get some relief, you would need some deflationary prints, and we would -- and we have not gotten that. so if the data starts to suggest the consumer is pulling back or

the labor market contracts to the extent that the consumer pulls back, watching that on a sector basis, though, it may not be a wide drawdown. tech stocks probably can still do ok in that environment but you see the pain in consumer discretionary stocks, cyclicals, because now the market is in a place where we are not sure if we will have a cyclical expansion or not. we have not confirmed and we are waiting to see. jon: difficult. let's finish on sectors.what are your favorite sectors year end and beyond? liz: as yields fall, for the near term, tech stocks can still hold up well. this is also a period of time after the last i can before the first cut that stocks tend to do ok. i don't necessarily see a huge drawdown unless there's some exhaustion's stock.

going into 2024, if the bull case comes true, we need some broadening out in the equity market. i am still nervous about a drawdown. i am worried we will get data that cools it too much. i would be cautious in cyclicals. i will be looking at consumer staples. the utilities trade is ok. if you're looking for growth but don't want that rate sensitivity, health care a good place to be. and i think we see a resurgence in energy stocks because supply will continue to be cut. jon: thank you good thank you. good to catch up with you. be careful what you wish for. when the economy starts to slow down, he's going in the other direction. lisa: which is jp morgan's call and they will be pilloried because of how far they are going with the 4200 price target. nonetheless, the rationale is pretty consistent across wall street. it's just a matter of how that

translates to markets. jon: i will get you up to speed briefly. on the s&p, negative .02%. consumer spending, the retailers. let's breathe some life into that conversation. by now, pay later. what is more important to you, how much consumers spend or how? this is data we have been talking about from adobe. the trend of consumers using by now, pay later options reached a record high. that's a 43% surge from last year. there are big changes from last year to this year. lisa: two things. there's a cohort of people that don't want to partake in credit cards. this is a way to not pay interest but also not feel like you are committed. second, this raises a question of when the bills come due and

whether people are spending beyond their means by adding smaller payments to their monthly load that accumulate in a way that can become suffocating. jon: can we buy trucks, cyber trucks, buy now, pay later? lisa: you might have to wait until 2025 for the cheaper option. you can buy a decal that shows a smashed window. jon: i can afford that. i will pay cash. lisa: you will not put it on a tesla truck. jon: don't have the truck. let's have a conversation with dan ives of what bush. what an achievement to finally get some deliveries for this. we will talk about that later. that's the model name, isn't it? that conversation next. from new york, this is bloomberg. ♪ welcome to ameriprise. i'm sam morrison. my brother max recommended you. so my best friend sophie says you've been a huge help. at ameriprise financial, more than 9 out of 10

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>> we have a car experts said was impossible and would never be made. tougher than bullets. faster. so deliveries begin now. jon: that is the pitch. elon musk speaking at the cyber drug delivery event in austin four years after the announcement of the vehicle. when i first saw the design for the vehicle, i described it as an eight-year-old drying the car of the future. jagged lines.

here we are. the thing looks phenomenal and everyone wants to buy one. lisa: you still think it looks like an eight-year-old drew it. jon: apparently everyone thinks this is the car of the future. lisa: dan ives think you are a great candidate. jon: we will have a conversation now. dan ives pitching the cyber truck to me over the commercial break. dan: great to be here. jon: fantastic to catch up. talk to me about how transformational this might be for the company. dan: it's a historic moment. four years in the making. the reason it is important in terms of this could be another growth vehicle for them. it just shows general motors and ford pulling back on the visa little bit and tesla doubling down. they have come out and flexed the muscles. jon: on the point you made

bringing up gm and ford, are we finding out people just one teslas? they don't want tv's? dan: it's a serious question here because wanting an ev versus do you want a tesla? you are starting to see now i moderation in terms of ev demand. clearly tesla has had the movement we have talked about in china. that's left a bit of a stain. but i think from a scale and scope perspective, you will get guidance today, no one can match that of tesla. i think that lead continues to further be there and that is what's happening. a little humble pie may with traditional automakers. lisa: the cfo afford yesterday i was talking about how there's a different audience for initial tesla's because they were the first adopters and they were willing to price premium and

come in and they were adopters. the ones coming in now are looking for price, quality, etc. it's a different pool that can be pulled away more aggressively. and that kind of environment, does tesla's margin story get eroded? dan: i think that is the balancing act now. if you look from a margin perspective, it's been volume over margins. so far, that's been the right strategy. next two or three quarters, you need to see margins trough out, level out. with the cyber truck, they will be losing 30,000, 40 thousand per vehicle for the next year and a half. then it starts to become profitable. but that is the near-term pain for the long-term gain for what they need to do. lisa: to the point of saying people just want a tesla, i wonder how much that is people wanting to ride elon musk's wave and how much that was the

feeling a number of years ago. how much the recent high-profile discussion around elon musk with x, his interview and commentary toward advertisers, does that draw people in or push them away? dan: there is still a question there. because to some it emboldens them in terms of mosque, what he represents -- of musk, what he represents. but on the other hand, you alienate. the problem for tesla investors, when you sell consumer products to the masses, you don't want controversy, but again, musk is musk. you see that. you saw that maybe overshadow a bit what happened at the new york times event, the cyber truck unveiling that's four years in the making, but at the end of the day, he will continue to innovate, and especially when it comes to the cyber truck, historical moment. jon: what do you think about

what happened this week? dan: it's the last thing you want to see as a tesla bull, to see something like that, and ultimately overshadow the cyber truck. but we know musk is musk. when he bought twitter for $44 billion, a mistake in my opinion. now x is worth $5 billion to $8 billion. this is the worry. it adds that tornado factor. if you give him a microphone, you don't know what will happen. that is part of the problem. even on many can say it is great, go get them, there's a business there. it's been taken out with debt. so eventually you will have to pay someone in terms of what's happening with that. jon: you have a dan ives multiple on x on that valuation but we will come back to that another time. there's a massive opportunity if you did not have this truck to keep pushing and squeezing ford

and gm. gm have come out with numbers this week telling us that the labor market contract, the labor contract, would add an additional $575 per vehicle. at ford, $900. does this truck complicate their efforts to put the squeeze on these companies? dan: it does a little because ultimately when you look at the uaw debacle, it's put their back against the wall, and that adds to the cost. i think where they will squeeze them continues to be on that 40 and $50,000 price points in terms of sedans. you see it from farley as well. they have come back a little from the edge, now may going full ev, where tesla is going the opposite. that is what has happened essentially. this is a game of high-stakes poker and i think everyone is trying to figure out what musk's

next move is in 2024. lisa: and he was catered to? the audiences of ford and gm are much more focused domestically whereas elon musk has a big audience in china as well. how much is the cyber truck geared toward american buyers and how much towards international buyers? dan: that is a great point because china is the hearts and lungs of the tesla growth story. i think what he's focused on with cyber truck, first, it's showing from an innovation and technology perspective how far they are, but the opportunity, even though it's starting in the u.s., its international. i think that is the global focus of tesla. you look at ford, there are customers against going toward an ev. dealers have fought against it. they have heard it loud and clear. lisa: do you think it's attractive? dan: the mad backs vehicle -- i

remember when you talked about that. i think we talked about that together. i get it. it is on the edge but i think it's innovative. it's new and it's something where tesla is not going to go down the typical path of other automakers and that is why when i see you driving this in new york in six months, tk in the passenger seat, in the cyber truck, it will be awesome. you could be in the back as well. it will be interesting. lisa: am i the only one who drives? jon: jon: you are jon:. tk and i don't drive. dan: lisa could be driving. tk shotgun, ferro in the back. jon: thank you. dan ives of wedbush. it's neo. that's the real competition. can ford and gm get in the game?

lisa: which? that is the key. they can get in the game of offering a vehicle people would have otherwise bought if they offer a similar price point that economically works out to be less because of the charging stations. it's a different audience than the people who go out and seek a tesla. dan: great to be here. jon: thank you. in the next hour, jay polaski, michael schumacher, servetus subramanian. from new york, this is bloomberg. ♪

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lisa: we are one hour away from the opening day of the first day of the last month of 2023. this is bloomberg surveillance. jon is preparing for his 9:00 a.m. people are sleeping in after a blockbuster month where we saw the biggest returns going back to last year for the s&p and nasdaq. massive rally in the nasdaq in particular led by bonds. the stat of the morning, worth saying again, bank of america pointing out the 60/40 portfolio had its best performance over

the past month going back to december of 1991. fueling this, hopes of rate cuts, doing up the data to potentially back that up, recent fed speak showing some divergence. president bostic and harper saying the central bank has done enough. president bowman and barr. michael mckee focuses our attention on how everyone is uncertain and looking for god's. what are we expecting to hear later this morning from fed chair jay powell? mike: i saw an interesting headline showing the markets -- headline describing the markets as hovering over jay powell. you'll hear the same thing you heard before. that's why i put him on the list of people who think they have done enough for the moment but keeping your options open because that is what he has said this month even after the fed decision of november 1. he said we will be cautious about not getting faked out by

one month's data. we are going to raise rates if we need to. and so i think you will get more of that today if he wants to say anything at all. i assume he does because there is so much focus on it that if he did not somebody would read something into that. lisa: i am more interested in the manufacturing data that comes out at 10:00 a.m. before jay powell. ultimately will be about the data, the trajectory, some of the benchmarks people have. what do you make of the fact that we have been in recession for a full year or so in manufacturing and people are viewing that as an isolated sector that continues to be in a world of hurt even as services continues to chug along. dan: that is sort of the dichotomy of -- mike: that is sort of the dichotomy of the economy at this point. people are buying services, not goods, so we see a decline in manufacturing. this could be an interesting ism. we will have to see how the numbers come out.

remember, we had the uaw strike, and that did not get settled until october, so this november number for ism will probably show a rebound from the workers going back to work on the assembly lines starting again. so we will have to shade that a little bit off. a week from today when we do the jobs report because we will have those autoworkers back on the payrolls. lisa: is data weakening? are we seeing ongoing strength with the fastest pace of gdp growth in quite a while in the third quarter 01 with disinflation that people are saying is enough weakness to create nirvana? mike: that depends on how you define weakness. the data shows things are weakening in the economy. consumer spending is slower than it has been and we are seeing a hiring slowdown. we have seen jobless benefits rise a little bit, but this is all a little bit, on the

margins. the problem is you don't know if that leads to recession and are economists still hanging onto their recession call based on the fact that all of a sudden you get a nonlinear drop in confidence and then everybody stops spending. what would cause that, i don't know, but it is a possibility, so we are seeing rates, the forecast for rate cuts in 2024, pick up steam in recent days. there's two camps of people who think we will have this nirvana thing. inflation will come down and that will bring real rates up and then there are those who still think there's a possibility of a recession because the economy is slowing and historically when it has done that it has not stopped. it keeps going. lisa: stay close as we parse through what we can expect heading into the weekend and next week. i got this message from drew manus at metlife saying we have not had a normal recession and more than 20 years -- recession

in more than 20 years. maybe this is why people don't know what to make of the seemingly disinflationary nirvana, as some people are calling it. lauren goodman joining us now, economist, director of disinflationary of -- disinflationary nirvana narratives. do you buy at? >> i do not. the reason for that is twofold. one is the long and variable of monetary policy, which are on time for an average recession from the first fed rate hike, but second, if we got a cut in march or may and inflation was not falling precipitously, we were not heading towards recession, than i think we would see financial market conditions ease pretty significantly, and the chair powell and other fed members have been very insistent that they do not want to see that. that's a recipe for likely a re-acceleration of activity and that makes the inflationary

environment more sticky. lisa: when we take a look at where you want to play the best returns for 60/40 going back to 1991, do you lean in or against it and say somebody has got to be wrong here? whoever it is, i will move against it? lauren: as much words as we have put out about this offers is hard landing debate, neither side has been the winner for investor -- about the soft versus hard landing debate, neither side has been the winner for investors. the only thing we are certain about is the market is facing uncertainty. landing strongly in one camp or the other is not likely to be the answer. it's quality. we are seeing that over the course of this year, investors leaning into profitability, dividend yields, and to areas of the market where investors expect that no matter what happens in the first half of next year they can build some resilience. lisa: when in doubt, by microsoft. is that what you are saying? that's been the market narrative

so far. this is what people are saying. we don't know what's going to happen. we will just buy big tech and wait. lauren: it's part of the story. one of things that i think will shift over the course of 2024 specific to the tech narrative is excitement around productivity and the new technological develop its we are getting from the artificial intelligence trend have been centered in the foundational layer of tech, not least because that is where consumers spend money. as the consumer experiences the dissidence of high-priced levels that you have covered so well, i expect more of the story around tech will expand to the layers on top of the foundational layer of tech. lisa: that is part of the difficulty of understanding what is going on because there are these secular overlays like artificial intelligence and weight loss drugs that are over a lot of uncertainty underperformance of rank-and-file companies. we saw a pretty big inflows into

large cap u.s. stocks. we saw outflows from the russell 2000 the out again. what do you make of that, that small caps will continue to underperform dramatically even with some sort of settling out of this narrative? lauren: small caps, as the economy slows, tend to over perform -- to underperform because they don't have the administrative overhead that allows them to digest higher costs and rates the way large caps to. it's not a matter of sector but of business model and size. the tech sector is one exception, where profitability can exist in mid and small caps as well, but as we move through into q1, i expect the preference for defensive allocation plays, large caps, defensive sectors, i think they will continue to gaining ground because we will see more evidence the data is slowing. lisa: is in the best defense just cash -- isn't the best

defense just cash? lauren: their benefits to cash when you expect a major fallout in the market but one of the things that is challenging about cash now is we see such a strong opportunity to harvest yield in sectors that even if we see a recession, which i expect, and even as spreads widen, you can still gain meaningful yield uptick in the high-yield bond market. lisa: funny you say that. high-yield bonds had the biggest four week inflow going back to june 2020 according to bank of america's michael hartnett. this highlights to me what you are talking about. we don't have certainty about where things are going. we will pile into cash. we will also pile into income because we know we will get something. are you seeing the reversal of the bond-stock dynamic over the past two decades, where really bonds are your equity drivers in

some ways, your income plays, and you can shoot for the moon on the periphery with equities? lauren: that is what we are seeing. but what is specifically interesting about high-yield is that we see investors, and we are doing the same, taking equity like risk and high yields, because you can harvest a meaningful coupon on these bonds while acknowledging that fed programs early in the pandemic made the credit quality of this sector much more interesting relative to past economic cycles, so even if you expect spreads to widen and prices to fall as the economy stumbles, you can still make up for it with the income you were able to capture from that sector. lisa: is that your conviction heading into next year? can you give us a sense of how you are framing at a time when there is not a lot of conviction? lauren: i want to be clear that even though we have a recessionary call in the first half of the year, i don't think that's particularly pessimistic. that is an ofte -- an

optimistic view. so what we are doing is taking advantage of this sugar rush while we have it to rebalance into things we think will work well. we have talked about a few of them, defensive sectors, infrastructure, equity, high-yield, and i think there is room to run in duration as well. lisa: do you think the cyber truck is attractive? lauren: i will admit i first saw it this morning and i could not disagree with jon saying a kindergartner -- saying it looks like a kindergartner drew it. lisa: lauren goodman, thank you. she will say you have been hiding under a rock because what movie have i not seen? diehard. which i guess is a bad thing. >> it's a christmas movie. >> everybody agrees.

look on social media and put in diehard. you will see this debate goes on every year. lisa: it is a real debate because social media. i will check out social media and i will check out social media and i will watch the movie. we see a bit of a pause after a massive week, a massive year of gains, a massive month of gains. year, month, it feels like the same thing. we have seen a gain of almost 11% for the nasdaq going back to early last year. the biggest gain. s&p futures off a touch, down .2%. 4568. coming up, we will discuss another key aspect of technological advancement, weight loss drugs. we will speak with madison muller and sam fazeli on the latest issues in the industry. we are speaking about pfizer and how shares are lower by 4.7% after they withdrew an early-stage trial for a two day pill, twice a day pill, that

could can with some of the other weight loss drugs. i wonder, michael mckee still with us here, whether fed officials are looking at these trends. i know they are looking at ai. do they look at the weight loss drugs and say how will this transform productivity and where people put their money? lauren: -- mike: all the fed officials i know are in pretty good shape. they don't go hiking. in an abstract sense, you wonder about the long-term issues until insurance companies pay for it. it's not going to be a big deal. there could be some things down the road. i don't know how much it as to productivity but it might change consumer spending patterns at some point. lisa: i wonder how they discuss these things because it is something that the market is at least treating as a potential game changer and it would potentially change economies. think about how big of a proportion of inflation health insurance is. what is that comes in?

these are some of the things they have to think about. mike: health insurance has been inflationary and it will be interesting. we will see how much premiums go up in the next year and whether that adds to inflation. it usually does in january. but i don't think we have to worry about the weight loss drugs yet because it's hard to get insurance for those. jon: we shall -- lisa: we shall see whether that changes and i know there's some debate on that. michael mckee, thank you for being with us. we will delve into the conversation. we can see a pause in yields. massive month. 4.33% rounded up. ♪ ♪ ♪

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>> we saw the market would be $90 billion altogether. now it looks bigger. lisa: that was pfizer's ceo talking to bloomberg on their weight loss drug, the oral application rather the injection. the data has spoken and pfizer following after stopping development of its experimental weight loss pill after side effects forced more than half of patients in the study to stop taking the drug. pfizer following significantly this year as the pandemic phase as you see competitors, weight loss drugs made by eli lilly and novo nordisk with massive gains. sam fazeli, senior pharmaceutical analyst at bloomberg intelligence and madison muller a bloomberg news. madison, i want to start with you. there's a question about how significant of a setback this has been for pfizer. madison: pfizer has been pinning

its help on this weight loss pill. other drugmakers are clearly trying to get into this market. it's the hottest thing in pharma as we keep seeing. one of the ways pfizer and astrazeneca see an inroad into the market is weight loss pills. they are banking on the fact that people prefer pills over injectables and pfizer is struggling this year as the pandemic fades so a lot of its hopes were penned on these weight loss pills and this is a setback for them. lisa: when i heard about the side effects, it sounds similar but more extreme than some of the side effects for the injectables. how closely are these things being examined not only for the short-term but the long-term side effects? sam: the longer-term side effects will by definition take time to come through although these drugs or mechanisms of action have been used in diabetes patients for over a

decade now, starting in around -- the early 2010's. the shorter term side effects, mostly gastrointestinal, vomiting, discomfort, those are common across the drugs. in the case of pfizer, the data suggests it would seem to be higher than we -- than what we saw with the current drugs, wegovy and others. the issue is that first it is an oral drug so you are delivering it to the gastrointestinal tract, and because it is twice a day, it's possible you are getting peaks of drug release causing that. so maybe there once a day drug will deal with the problem. lisa: how much daylight is there between the different drugs that generally target the same thing? sam: yeah, based on the data that we have today, it seems to be the most effective drug, ozempic.

none of them have been compared had see need to go into a randomized head-to-head comparison and the companies are doing that. they are confident of the profile of the drug and they are doing that comparison. it does look like eli lilly's drug is the more effective one, followed by wegovy, and pre-much everyone else comes out with the same kind of weight loss that you see with wegovy at best and potentially lower. lisa: how much is pfizer late to the game in part because they were distracted by the pandemic and focused on developing the vaccine, rolling it out, and being in the spotlight for that? madison: they are late. novo nordisk and eli lilly have the lead in this market and the lead on developing pills. novo nordisk already has a pill version of ozempic. they are developing a higher dose version of that that will essentially be a pill version of wegovy that could be available as soon as last -- as next year.

lilly's drug looks good. the fact that pfizer is discontinuing this drug puts them back even further. but it's important for other drugmakers to enter the space because eventually it will help bring down costs. lisa: the other thing that will bring down costs is if insurance has to pay and if there is some collective negotiating on that front. how much is that in discussion especially with the benefits associated with losing weight in certain patients? madison: that is why these drugmakers are doing a lot of studies, looking at other indications. we have seen this with heart disease. they are studying arthritis, sleep apnea, all these other indications, because we know cardio-metabolic conditions are interrelated and obesity is linked to 200 other conditions. so these studies are an important piece of that in convincing insurers these are

worth covering but so far the landscape is still spotty there. lisa: sam, i'm curious your perspective because you have been covering the pharmaceutical industry for a long time. do you think that is a big part of the game plan, that these drugs have to be taken long-term to remain effective and that ultimately insurance companies will be prompted to pay for them? sam: yeah. the problem is often solved in the single-payer markets because the same people who pay for the drugs are the people who pay for your hospitalization costs, etc. so that is the critical element here in that what the u.s. system needs to do is to look at the longer-term benefit of these drugs, the cardio -- the cardiovascular benefits, the potential effect on blood pressure and even alzheimer's. they are being tested in alzheimer's. it is possible, as madison said, that obesity is linked to 200 other diseases. if you manage that, overall --

i think insurance companies will eventually have to pay for but they will try to get prices down as much as possible and we think the rebates on the list prices you see for these drugs is already at around the 50% mark. that will just get deeper as we go forward. lisa: is it true that you have to keep taking it and -- taking it or all the weight and then some will come back? sam: it is basically the same idea of eating less. it reduces your appetite. if you diet, you lose weight. if you stop, your weight will go back up. it's the same principle. you are not resetting the underlying -- whatever the reason is -- driver of your increased appetite and obesity. that may be over the long-term. if you use this drug for two or three years, you might be resetting that desire level. i don't know how the biology of that would be but that would have to be shown. lisa: how much are people using

this for medical reasons and how much for cosmetics? madison: that is something that still remains to be seen. there is a ton of off label usage happening being driven by hype in hollywood and social media and we know that people who might not necessarily have diabetes or obesity are taking these drugs, seeking out knockoff versions not approved by regulators in the u.s. and outside the u.s. because the demand is so high, but these drugs are life-changing for people with diabetes and obesity who need them and it's important those people have access to the drugs and that is something that is still sort of a challenge. lisa: how much of the pharmaceutical money has shifted toward weight loss? madison: that is where it is going. that is the market that is expected to grow to be potentially $100 billion by 2030, that obesity market, just that, so that is really what the drugmakers are looking at and some of the drugmakers that are

still looking at getting into this market are targeting the weight loss side of it. lisa: from a scientific standpoint, i am curious what your biggest concern is, because someone say it sounds too good to be true. it is something people have been looking for, a pill rather than going to the gym. what is your concern longer-term about some of these pharmaceuticals? sam: i mean, as i said, novo nordisk and eli lilly have been using these drugs, these mechanisms, for treatment of diabetes for several years and over a decade now as regards novo nordisk, so we know at least at certain doses come in the diabetic population, what the risk profile is like, and nothing has really come out of the blue to surprise anybody. maybe over the long-term, when hundreds of millions of people use this, which would be a phenomenal boon for the pharma sector, some low levels of side effects emerge. at the end of the day, you are

introducing a therapeutic, a drug, into the system. just doing weight loss by using diet and exercise, that obviously is the ideal way, but we clearly see that it's not sufficient, so i'm not really worried about side effects given what we already know and you never know what is going to happen. the one drug i do worry about a little bit is the high-dose of wegovy. that's higher than what has been used on average in diabetics but that has also shown no major safety concerns and i do not lose sleep over it. lisa: sam fazeli and madison miller, thank you so much, on an issue we will be talking more about inevitably over the weeks, months and years to come. the markets going nowhere after a nearly 11% gain on the nasdaq, 9% on the s&p. coming up on wall street week tonight at 6 p.m., kathryn keating of bmi, treasury

secretary larry summers, and someone else. this is bloomberg. ♪

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jonathan: let's get you to the weekend, live from new york city, good morning. s&p 500, pulling back a little, down .2%. the countdown to the open starts right now >> everything you need to get set for the start of u.s. trading, this is ""bloomberg the open" with jonathan ferro. jonathan: it was a november to remember for the equity balls with rate cuts