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. >> there is room for inflation to come down without growth to slow. >> inflation has bounced around but it is on a glide path down. >> for the moment, this is perfect. >> if the fed doesn't start -- cutting we will have a hard landing. >> we will see what the second half brings. >> "bloomberg surveillance this is" -- this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: good morning. i am jonathan ferro.

your equity market on the s&p about unchanged. dollar-yen, a break of 145, big moves. tom: this is macro macro, one big so what. there overcome by events we see today, claims we see tomorrow, jobs, the japanese financial world, the economic world is adjusting to what we have seen the last number of days. jonathan: ecb, because out there, 150 basis points of guts. -- of cuts. you have the boj, seemingly overnight laying the groundwork to hike interest rates. lisa: the deputy governor saying if you abandon negative rate policies, that could be good for consumers. and then for the kicker, you had the governor saying it is becoming even more challenging heading into next year to

continue with negative rates. the response is a plunge in the dollar versus the yen and increase in yields in japan. this is supposed to be the armageddon moment for u.s. rates. yields were supposed to go to the moon when this happened. not that big. jonathan: we are in a very different spot in december then maybe where we were a month ago. tom: the fed meeting, it is going to be fascinating. usually the december meeting, people are packed up, powell is doing his shopping, yellen was way out front. you go to the next meeting and there in the opening talking about the certitude that we are not going to see rate moves until the second half of the year. says who? i do not have a clue what the parlor game is. jonathan: crude in the 60's, the

10 year at 4.1%. what does it mean? lisa: bad news is bad news. this is what people have been talking about. there might be something behind the oil narrative. tom: jonathan ferro on twitter with a nice set up of the two narratives out there about slow down or not. i do not think we are any different this morning. i don't think we will be any different the first show of the year. february 1, march 1, it is going to be the same thing. we don't know what the narrative is. lisa: -- jonathan: i think i know with the bears would say, i think i know with people's would say. the bulls would be -- the bears would be -- lower energy prices is going to be accelerate growth. lisa: once we get the landing. if you never get to the landing, that is the problem.

we need a recession, it just needs to be mild and then we can get past it. can you price in a recession before we even get it? that is the extent moment for these balls. jonathan: s&p 500, totally unchanged. futures going nowhere. lisa is going to run you through some of the data you can expect on payrolls. the bond market, yields higher. 4.14 on the 10 year. crude, $70 10 -- $70.10. lisa: u.s. production, we can talk about that and how it is offsetting cuts. today is the drumbeat before the jobs report. we will get initial jobless claims at 8:30 a.m. continuous jobless claims have continued to climb. can we pay attention to this and get a sense that softening is accelerating. we are also focused on consumer

financial health. last time we got a read on this, it surged to a record. we also get consumer credit at 3:00 a.m. this will -- three 4 p.m. -- 3:00 p.m. we get a lot of earnings today, including lululemon, restoration hardware, broadcom. some of these i have closer affinities to than others. jonathan: lulu? lisa: i would say both of them. let's move on. jonathan: then joins us now -- ben joins us now. we started to hear this in the past week, the fed put us back. you told us that and lisa and i started laughing. has that been normalized, everyone is on the same page as you? ben: a little bit.

it has all arrived a little bit early. santa is here in november busting the doors down. it has pulled returns forward a bit. put that aside, that is the detail on the timing. i think the direction is absolutely right and we have all been given a prelude to what is coming in 2024 which is interest rate cuts and this big rotation from everything that worked in 2023 to everything that did not work in 2023 and it is going to get a revisit in 2024 which is rated sensitive, which is real estate, all of these cheaper assets which you struggle money on and become more bearish on and they fly -- sprinkle money on and become more bearish on and they fly. tom: almost at the anniversary

of one of the great good calls which is been labeler saying -- ben ladler saying get courage. what i find fascinating are the narratives out there, the cacophony of opinions and the idea that we redo 2023. we just keep going with the good news bull market. ben: i think that is right but different starks -- different stocks are going to perform. we have rate cuts and accelerating earnings growth. a different set of stocks i would you do well. the leadership will be different. big tech and hugging those defensive teddy bears. next year we are going to be reaching out more. it is going to be rate

sensitive, it is going to be a different group of stocks. it is going to be europe, it is going to be overseas, it is going to be small caps. the headlines may not look as green but where you get that from will be different. tom: are you going to sell teddy bears to go into other nonperforming areas or hold on tight to the vermont teddy bears as you go into small caps? ben: you hold on to most of that for now. the story is next year as we get confident moving through the u.s. slow down, as we get the catalyst rate cuts, you ease off on the teddy bears and get courage and by the other assets. i think the u.s. in tech is going to do fine, you will see good earnings growth. a little bit of money goes a long way. tech is 10 times the size of

real estate and the u.s. is five times the size of europe. we don't need reallocation for these assets to fly. lisa: -- fall into the lowest it has in five months? ben: i think it is a big tell. lower oil prices, weaker out of china. bmi in -- pmi in recession. this is telling you underneath the tech coated surface, things are not great. rate cuts are good for stocks. this is a long-duration stock market. it is much more sensitive to inflation and interest rates than it is to the real economy. that is why we have double-digit earnings growth next year despite an acceleration in the u.s. economy. lisa: we are seeing german stocks rise to the highest level ever let even by auto manufacturers. mercedes valuation surpassed

lvmh. even as output in europe is falling, including in germany and we are likely in a recession. how do you get optimistic about buying shares in these valuations in the face of declining output and the potential of bad news to be bad news. sectors headed to recession are already in recession. ben: germany has been in recession at least six months. european job valuations are 30% to 40% lower than in the u.s. i think that is the story here. the ecb will probably get the courage of its convictions of being the first major central-bank to cut interest rates. tom: the commercial banks, are they attractive here? ben: i think so. thanks have been some of the best-performing stocks in europe and some of the worst in the

u.s.. it depends on where you look in the world. the lesson from the u.s. banks has been -- the is a narrative is high interest rates are good for banks. the opposite happened. i think banks will do very well in the u.s.. jonathan: great call over the last few months. ben laidler. let's turn to crude, $70 right now, briefly into the $60. i'll catch up with sophia of sofi -- her headline is this is a market of massive contradictions. look at crude, didn't stockpiles fall yesterday? lisa: they did. jonathan: how does this have to do with weaker growth in america? lisa: which is the reason people are looking to supply saying this is the u.s. reaching record highs and forcing the hands of opec+ members to cut further to

maintain the price they are offsetting and then some. other people saying some of the cuts to production in the opec+ nations were voluntary. they are not going to actually do it. that is the other speculation. jonathan: i want to pretend to know that i know what is going on. just a highlight, some massive contradictions in the past day. tom: like 1986, that is the fear of the saudi's and traditional opec. they have lived this before. i would suggest the plus part is removed from that. there is inbred sobriety in opec about the of oil slips away at all the sudden you are $50 a barrel. lisa: i am not sure where sobriety is right now. i don't understand oil prices and people saying there are weird things going on means no one knows where this is headed, whether this is a bullish signal

or a bearish signal or a return to the future. jonathan: inactive is based on the price of the moment -- the narrative is based on the price of the moment. tom: i totally agree. i thought your tweet was brilliant about someone has a narrative about global slowdown and someone has a narrative about the beneficial effects of the interest rate. sloppy economics within macro where there are other moving parts. thursday, today, and friday, today matters for tomorrow. it is about jobs. jonathan: jobless claims into payroll on friday. two months ago we were talking about the potential of triple digit crude and we had multi-decade highs. we were asking the question, is that a reflection of an

extension of the cycle or ingredients to end it? we are in the 60's on crude, yields going lower. are we reflecting the end of the cycle or the ingredients to extended? lisa: this is why it is increasingly getting confusing in the narrative. i looking at earnings specific companies of consumer sentiment, of consumer credit. this is not making sense. tom: do you know vermont teddy bear? vermont teddy bear was a boom start a few years ago. they went private in 2005. look at that, under jonathan's artificial tree, vermont teddy bear on sale today. jonathan: you need to give them the news, this is how this works. ♪

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>> 800 left comes after her, the media comes after her. >> you have reid hoffman finding lawsuits across this country against donald trump. we discovered he is one of nikki haley's largest supporters. >> i have known her 12 years, this is a smart compass woman. you should stop insulting her. >> i love all of the attention. jonathan: nikki haley in the firing line. the former president still the favorite in the gop race. terry haines warning this, this

is a real race. "6/10 of the gop early primary voters don't want to trump. they are a resistive electorate and it is likelier than not that it shows in the primaries. the race will feel different." tom: huge statement and it goes to the heart of the panic i see right now in neutral press. joining us, terry haines of pangaea. every timely discussion. -- a very timely discussion. a republican nation, a republican presidency, a republican senate and now a republican house, maybe, maybe not. are we heading to a republican sweep? terry: i think where we are heading is what like you see today.

whether the president is democratic or republican, i give -- in a biden-trump race, i would give trump an edge. you have a senate more likely to be republican majority and a house more likely to be marginally democratic majority. it is another version of the same thing. people will spend the next year winding themselves up. the reality is unless you have a sweep of all three parties plus a 60 foot majority in the senate which nobody has had for decades, not much changes. tom: do you see a trump-haley ticket? is she running for vice president? terry: no, i think she is running for president and she is doing reasonably well. six out of 10 republican voters don't want her. even the trump numbers in primary states, one third of

those people are soft, willing to entertain other options. iowa has a history of surprising. she is very much running for president and she might well get denomination. that is the case, polls show today she would do better than biden would do. there is a path for her and she sees it. lisa: can you develop more what that path is given trump is pulling 60% of republican voters? is she at 15%? terry: throw out the national number. at no point during the president to raise is a national beauty contest number ever relevant. it is about getting a nomination, about primary states. iowa and new hampshire, trump is that 40% to 45%. you have 55% to 60% that don't

want to trump. one third are willing to detain any alternative to entertain an alternative -- to entertain an alternative. quick consolidation plus a trump underperformance. a lot of people decide what i heard from chris christie is right. trump is not going to be able to govern. and make a break. what you have in the first race or two is a real race where trump looks like he is underperforming and the non-trump field is coalescing. that is the race haley sees. there is a much bigger chance of that than most people are willing to entertain because they are blinded by the national number. lisa: there is this question around the ability to govern before that, especially given kevin mccarthy is stepping down, the former house speaker who is going to leave at the end of this year.

how much more likely given the thin majorities does that make a government shutdown? terry: i think marginally. there is a likelihood what you see either in january or february from house republicans is a shutdown. a vast majority of this is performative. they are wrangling over what was that cuts in 30% of the budget. it is not as if they are taking an ax to anything. what they would like is some backtracking in spending. you heard that from the presidential candidates. haley proposed something to return to pre-covid levels. they want a nod in that direction. tom: the middle of july next year, the x --the yankees will

be playing .700 baseball with erin judge and wada soto -- aa ron judge and juan soto . are these going to be normal conventions? terry: if biden is the nominee, it would be fairly normal conventions. if trump is the nominee in the republican party, i predict mass defections and even a temporary split in the party as people walk out. not unlike what happened in democrats in 1972 were a lot of the traditional coalition refused to support mcgovern and supported nixon. i think you see a lot of that stuff. the other great unknown is what happens with third-party races, whether it be with bob kennedy, possibly with joe manchin. there is a huge restiveness entity electorate and you could

see a third-party candidacy gaining quickly. tom: when do we see the machine we do have a third-party candidate? is that an -- a january event? terry: i think more like a march to april event. that is what the labels people have promised. what no labels has promised is once things begin to take shape and we know whether there is a trump versus biden likelihood, then we will make a decision. you are looking at super tuesday in march and after that you probably get a decision. jonathan: terry haines of pangaea policy, thank you. we just got a new outlook from bnp paribas. still searching for a landing. the outlook for 2024. here is that quote, "gdp growth is set to decelerate in the u.s. and remain stagnant in the euro zone.

the chinese economy has passed its trough but will lack momentum going into 2024." not exactly constructive. lisa: greg over there has been one of the bears consistently and now it is a question of where we write it just came a year late? that is increasing here. with jp morgan, the rationale people can get behind. we have not really connected to narrative with any consistency to the price action. tom: we have the great wall of 4, 5, 6 estimates of where the standard 500 is going. we need the blakey -- blinky wall with different urges up there. jonathan: the distinction between the call on the front end at the long end. we believe higher for longer when it comes to long and yields, but not the short end. i have seen a lot of that kind of thing. lisa: given the fact that people

are expecting great cuts but they don't expect these narratives to go away. think about the debt u.s. is selling. remember when we used to worry about the bank of japan -- i came in today and i was like this is going to be a big move. it is a couple of basis points. tom: thursday, today, and friday tomorrow is about the american labor market. jonathan: this is why i think it is a better time to do it. you can think about hiking interest rates when other people are thinking about cuts. october, drop this kind of language, can you imagine that? very different. equity futures on the s&p about unchanged. from new york this morning, good morning. ♪

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>> stocks on the s&p 500 look a little something like this, positive on the s&p. good. positive by 0.0%. stocks going three days without gains on the s&p 500. there have not been major move slower but three days without gains, baby equities meeting gravity a touch over the last few days. lisa: yeah yeah what is giving a boost to bonds is not the greatest thing for equities. are we reaching the point where bad news is bad news? jonathan: shall be some bad news

-- show me some bad news. productivity was great, payrolls, 180 on friday. robust on the headline, prices paid a little lower. job openings came in lower since march 2021. isn't that what we wanted? lisa: is there indication this is too cute, this idea we would get perfect disinflation without slowing down in the economy? maybe that is the reason you are seeing a pause. a little shift from the everything rally. jonathan: let's hit the bond market up. they will be a moment where the yield drops too much and then people start to say slow down. i don't know where that is. 4.1% yesterday seemed to get people's attention. when we are at 5% or 5% plus -- five or five plus, now we are down at four, at some point you get the bears saying the bond

market is screaming end of cycle. lisa: -- are ported to sub for present as the line in the sand where people start to get -- and say this means something and it is not positive. jonathan: there was a line in the sand in crude, that woke everybody up. he was the price, wti, brent, wti is $70.01. we are positive. today was intriguing. i am not going to offer my opinion on where we are, paul is going to do that. you see crude dropping and to hear the crowd come out and say this is about economic slowdown, what is going on with stockpiles in america? why are they getting drawn if we are talking about a slowdown? stockpiles are being drawn in the u.s.. try to make sense of that. tom: that comics of oil, supply

and demand and a abilities are so tight that little bitty changes really can move price. in brent crude, there is 75 more. can you imagine global oil at $69? does it upset the various apple card's in the middle east? lisa: this is why people are not seen this as bad news. this feeds into disinflation because we have record air travel, record amounts of travel for the thanksgiving weekend. we are seeing a drawdown on inventories. you are seeing these actually slowdown in china and that is showing signs of reversing. is this just supply from the u.s. and the fact that there are more efficient uses of energy? i don't know but this is how people might read this. jonathan: let's talk about the main event. traders increasing bets that the big japan will scrap its negative interest rate regime and hike as soon as this month. the boj governor saying handling monetary policy will get tougher next year while the deputy

governor presented a hypothesis for what might happen if this drawback were to end negative rates. dollar-yen, a much stronger japanese yen this morning. tom: yes, it is there but what is really there is obe. they are becoming overcome by events and overcome by events is what is going on in europe, going on in america. is it a domestic story? i will let robert feldman help you with that. lisa: they are over, the fact that u.s. and europe might cut rates if they do end their negative rate policy, just saying what did the hypothetical actually sound like? they would be a possibility of achieving an outcome. a wide range of houses benefit from the virtuous cycle between wages and prices, especially given their getting income. suddenly this is a whole new world for the bank of japan. jonathan: december 19 is the

next bank of japan decision. that might be fun. four candidates taking to the stage in alabama. nikki haley's campaign receiving a boost with support from wealthy donors. >> her donors, these wall street liberal donors make money in china. they will not let her be tough on china and she will cave to the donors, she will not stand up for you. >> he is mad because those watery donors used to support him and now they support me. >> i don't have a woman problem, you have a corruption problem. that is what people need to know. nikki is corrupt. >> would you like to respond? >> no, it is not worth my time. jonathan: what you think of people writing things on pieces of paper? tom: america is exhausted by this. they see the commutative

inflation and accusative stupidity. they are like, everybody grow up. lisa: that candidate is looking to out trump trump and maybe that is the kind of method. tom: is he a legitimate candidate? lisa: that is a good question. jonathan: he stood on the debate stage. tom: would this happen in england? jonathan: we have seen crazy politics all over the world the past 12 months. tom: america is exhausted by this. half of the nation is fallen by, we don't need to bore people with it. the bottom line is there is any exhausted america from pandemic inflation that is like we don't care. there is only one issue. jonathan: a few years ago we had jerry talking. tom: that is british. jonathan: president biden urging -- urging congress to approve additional aid for ukraine.

by then saying he's willing to consider changes to immigration policy to secure a deal and winning of the consequences of failing to approve additional funding. pres. biden: putin takes ukraine, he won't stop there. it is important to see the long run. he is good to keep going. if he attacked a nato ally -- attacks a nato ally, we have committed to defend every inch of nato territory. we will have something that we don't seek and that we don't have today, american troops fighting russian troops. jonathan: a shocking warning from the president. the last 24 hours, we were talking about two proxy wars for the u.s.. they are in one currently with russia and potentially in another with iran. tom: there are two wars but there is a third war and that is the headlines we are not mentioning by the president which is mr. putin in the middle east.

this is a set of movable parts. ukraine is a cookie-cutter mystic issue, mitch mcconnell is lonely in the senate. the real issue here, two wars and putin on a show diplomacy. lisa: i want to understand what the details are, the border control issues holding up some of this spending. i want to understand where the push and pull is given the fact that there does seem to be consensus that there does need to be something done. at the same time, what is so outrageous that biden cannot get behind it? what would biden be willing to allow to get funding through? tom: we will touch on that this morning. let's get kathy jones from charles schwab. the case for low interest rates is straightforward but the path is likely to be rocky. we expect bond yields to -- but uncertainty about the fed's policy moves will likely be a

source of volatility. we are optimistic fixed income will deliver returns next year." tom: the positive return is the heart of the matter in 2023. kathy jones joins us now, chief strategist at charles schwab. we were with apollo management, they have a multiyear annuity yielding 5.70%. locked in for seven years. how does the rest of the world compete with where yields are right now? kathy: that is a great point. right now when you're looking at investment-grade corporate bonds or some mix of higher credit -- higher-quality bonds, treasury, corporate bonds, etc., you are locking in yields in the 5% to 6% range. if you are in the highest tax bracket, you could be looking at 6% to 7% equivalent yields.

it is tough to compete. the best of the world seems to be competing. fixed income offers some attractive returns for people over an intermediate time period. lisa: why is there a bigger selloff today off of the rhetoric of the bank of japan last night? kathy: that is an interesting question, i was wondering that myself. we have long waited for this moment when the egg of japan exit yield curve control. there are some things i would be concerned in the funding markets and if there is spillover effect. i guess we have gradually gotten accustomed to the idea that japan will do this at a time when yields are falling elsewhere. maybe that is a bit of any of said. i am still nervous about that as a potential source of volatility in the market. lisa: especially given the fact that this is one of the narratives -- one of the many narratives people are putting out there for why 10 year yields

rose. people were saying it is not just bank of japan abandoning yield curve control, is the deficit, the fact that we are dealing with government dysfunction. how much could this conspired to cause yields to go higher from here and not necessarily much lower? kathy: the question you have to ask is yields are 70 basis points lower since the narrative hit in november and nothing has changed. what was really the story that through -- that through yields off? i think there are a lot of contributing factors but i think that was an overreaction. at the end of the day when you run relations between bond yields and various factors, inflation and inflation expectations tend to have the highest correlation. that is what has changed here. we have gotten lower oil prices, we see more in the way of

disinflation on the consumer side, slower labor force growth which would indicate less inflationary consumer spending. those are bigger factors than the others that you cited. tom: have we come so far so fast that we have given up on total return and it is a clip the coupon 2024? kathy: i don't think so. we ran some scenario analysis and if yields stay where they are, you are cleaving the coupon. even a modest decline from here, you are getting a bit added total return in terms of price appreciation. clipping the coupon at 5% is not a terrible thing. jonathan: kathy jones of charles schwab going into people's friday. jobless claims coming out later, 220 is the estimate. the previous estimate is 218.

the estimate in our survey can change. more estimates to come between now and tomorrow. 185 is the estimate curiously. 150 -- 30 k to 40 k coming off of the agreement. it is healthy stuff. tom: everybody has a claim -- has an opinion about where we need to be on claims. jp morgan is split on this, you have to come down under 100,000. lisa: that raises the question of bnp paribas. this is the no lending scenario. this is disinflation without pain that jay powell promised in 2022. if that is the case, is this a good thing for stocks or a bad thing if stocks remain higher for a longer period of time? jonathan: we have to ask the same question about crude yesterday. wti breaking down into the 60's.

the first time we have seen that kind of level since june. what is going on with crude? in underground 70, 69.94. coming up, paul sankey on crude. try to explain the moves we have seen in wti and brent over the last few months. we are talking about 25% moves from september. tom: he is an expert on texas and the permian basin. jonathan: equity futures on the s&p going nowhere. jobless claims later this morning. payrolls report about 24 hours away. from new york, this is bloomberg. ♪

>> we have four separate facilities for our strategic reserve. we will be doing at least 3

million barrels and we hope we can bring more capacity online to buy as much as we can to refill to make sure we have that available when we needed in the future. -- when we need it in the future. there are physical constraints. jonathan: that was the u.s. department of energy deputy secretary speaking in dubai. we drop back into the 60's the last 24 hours on crude, the price action looks like this on wti and on brent. 69.92 on wti. we are positive on the session but still in the 60's. brent, a break of 75. up about .9% on the session. tom: what is different is the u.s. dialogue is alluded to. a huge body of americans do not understand our somewhat independence here. we have all of these images from the past that are out there. jonathan: i am looking at the

number, 13.1 million barrels a day. tom: americans don't get that. jonathan: still north ofjonathan: 13 million. tom: -- has an oil rig in the back here. lisa: i am just spewing oil. you know me. tom: the answer here here is that america -- jonathan: there is a specific name for it. tom: the thingy. >> -- jonathan: i know what you're talking about. tom: there is no other issue talk about where we have institutional learned memories which are long to make us smarter. paul sankey joins us now with sankey research, some of the most read notes on the street. i want to go to 1986, opec absolutely blew it with a price plunge.

can we get a redux on that, particularly with new american production of oil? paul: it is not elected six. and by -- not to 1986. and by the way it is a pump check. 1986 is not the right one. that is when opec increased into the asian financial crisis and that is the opposite here. what we have here is the 2014 -- probably not 2020 but when saudi flushed the market because they got frustrated with cutting back and cutting back production to maintain prices, such as 2014. they were losing marketshare to iran which was coming back through sanctions.

you had to growth in u.s. production which was squeezing saudi. they cannot get the rest of opec to agree with them. they flushed the market. we went in a straight line from 110 in the summer to 50 by 2015. in six months we have cut in half and bottomed again. i don't think covid, between 20 marketshare which was more extreme, saudi at any all-time high production which was in april 2020 which was truly crazed because it's made for negative oil prices. you have a situation where saudi has cut production and is facing a strong demand environment. any all-time record demand environment. it must be frustrating for them to lose market share to iran and to a boom in u.s. industry. everybody has turned negative

oil, not least because the u.s. has accelerated into the second half in terms of production and taken more market share from saudi. our concern is that sally said he will push through q1 with cuts -- saudi said they will push through q1 with cuts. you could see saudi dump the market and try to make everyone honest again. jonathan: i want to be clear about where we are now. a lot of people trading equities, colonists making calls. you think this is about supply and not demand currently? paul: i don't know how you can get higher demand than all-time record high demand. we are at over 1200 barrels a second of demand. china has been good in the second half which has always been the balancing item. keep in mind in course -- keep in mind of course it is a seasonably weak time for oil. we are dumping into the

traditional post labor day weakness. once we are not worried about the saudi market share more, the market is strong. it is cold in brooklyn but it is called in europe. we are oversold in oil here. it doesn't change the fact that it is a structural problem in the market which is too much supply and too much spare capacity. lisa: you think we are oversold and you think there is a good chance that saudi arabia flushes the market, increases production , goes away from some of those cuts to make everyone honest again. how low could prices go? paul: what you are trying to do is shutdown u.s. supply growth and that becomes the debate. that is the question. what saudi is trying to flush is exxon, chevron, conoco. it is not euro school e&p's with

a lot of debt. these companies are planned at $60, maybe less in terms of what they're doing and have growth targets they want to meet. it is going to be more an elastic supply side for the saudi's to attack. in 2025, we are adding eight floating storage vessels which are they in guyana and senegal. those are price sensitive. once you have built your huge production vessel, you don't shut it down. it is a fascinating market. the peak oil question is like, what were you talking about? the supply-side has got access at 102.5 million barrels a day of demand. i think a lot of technology -- i think it is a lot of technology and i i. tom: i did not believe he oil for one minute. that is one thing i got somewhat right.

we see mr. pugin on a junket to saudi arabia -- mr. putin on a junket to saudi arabia. do the saudis tell russia what to do? paul: the problem is the russians lie. it is possible they realize there is enough of a problem and they want that relationship with saudi to be good. i think it is that putin is meeting them because there must be some quid pro quo. we suspect that the saudi's have asked the u.s. to site -- to tighten sanctions on iran but also russia because those have been other major problems for the saudi's. the u.s. has been allowing additional oil into the market in an election year. we think the saudi's have said if you tighten sanctions, we will make sure the oil price does not get too high for elections.

the prefer donald trump. i am not sure about that speculation. there is evidence the u.s. has been tightening somewhat the iranian and russian sanctions which would help saudi. jonathan: didn't they try that going into the midterms last year? paul: -- try to get studies to boost output to get prices lower? paul: saudi-u.s. relations have improved and i think to the hamas nightmare we have seen a lot of work from secretary blinken to try to get everyone back on the case. it is said in the press that they kept blinking and waiting for a long time at a time when he was insanely busy which i'm sure he did not appreciate. he is sending messages that the original language of this administration which you will member before the election went by that negative about oil and about the saudi's. they don't forget that stuff easy. they are very pragmatic people,

they realize the u.s. is hugely important and subsequently we have had security agreements between saudi and the u.s.. it is very complex and a lot of people are saying a lot of things. there are a lot of multipolar worlds going on here. i don't know how much they truly love the russians. the history of that relationship is nothing like the history of the u.s.-saudi relationship. jonathan: i appreciate the explanations. paul sankey of sankey research. nodding donkey. guy johnson, thank you. that is not the official term. lisa: that is so accurate. jonathan: that is what i was searching for. tom: i have never heard that. lisa: automated donkey. like r2-d2. jonathan: something like that. if you are just tuning in, there

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>> there is still room for inflation to come down without a need for growth to slow. >> inflation has bounced around but it is clearly on a glide path down. >> for the moment, this is perfect. >> if the fed doesn't start coming in march, they will have a harder landing. >> we will see what his second half brings. >> this is "bloomberg surveillance" with tom keene, and lisa abramowicz. jonathan: live from new york

city, good morning for our audience worldwide. this is "bloomberg surveillance" alongside tom keene and visa remove its, i am jonathan ferro. the s&p 500 about positive. can the growth inflation mix get any better than this? tom: i would take growth in vision mix. -- growth in inflation mix. it is tomorrow's jobs report, claims is as key this morning as it has been. jonathan: the estimate, 220 for tomorrow. 185 in the payrolls report. lisa: this is going to be not terrible jobs market which raises the question, is this as good as you can get? especially with disinflation in different places, including the oil market. this is any audit tailwind to come at a time when there is record of demand. there is record production and more efficient youth -- efficient use of energy.

is this the disinflationary force that could drive a note if? jonathan: bullish flaming from bramo -- bullish framing from bramo. you've got crude in the 60's, crude -- ask and you will learn a lot about them. there is one group that will say that is in the economy that is going to slow down. another group will say we are firming the runway for a soft landing. lisa: you like that. tom: your tweet yesterday on this was brilliant. you captured this, this massive ambiguity we have trying to put together the dynamics of the moment. you say what is the single distinction in that debate? i have to go back to surveillance 101, it is china. if china underperforms, boom. if china is average, different scenario. what if china surprises to 5% or more gdp? jonathan: china underperformed

this year and america outperformed. let's go to crude. wti, 69.69. what is that telling you? is that about weaker demand in our future or is that about boom in supply? i am not going to ask that for you, paul sankey did. paul sankey saying that is all about supply, demand is totally fine. lisa: given the fact it is at a record high, that conversation was fascinating. this idea that saudi arabia is trying to get everybody on board with production cuts to get prices up. they might get so frustrated that they flood the market with supply, abandoned their cuts and say how low -- and say let's see how low we can get these prices. this is an interesting narrative. i imagine the biden administration won't mind it given it is heading into an election cycle. jonathan: they were wistful -- whisper u.s. oil production is north of 13 million a day -- 30

million barrels a day but they will scream where gas prices are going. lisa: it gives a four look to inflation. all of this pans into this rosie glass narrative that besides that meant weakness means now it is okay. jonathan: 69.70 on wti. the price action looking like this. on the equity market on the s&p, going nowhere. yields are higher in 10 year. up five basis points, back to 4.1533. lisa: we get jobless claims around 8:30 a.m. there are signs of weakness that people are pointing to that is sheer out and out weakness. there is focus on consumer financial health.

we get the third quarter house change net worth. net worth was at all-time high when he last came out in september. consumer credit at 3:00 p.m., how much the retail therapy of americans is being fueled by american express. that is something we will get an sense of today. in terms of what people are buying, lululemon, restoration hardware, broadcom, some companies reporting earnings after the bell. jonathan: that is how -- has become deeply personal. tom: it is toward the end of the year. lisa: there are other names. tom: price of yielded down, deeply personal. lisa: i am connected to the americans are -- the american consumer. tom: there is a flat on their back american consumer and this boom economy consumer. jonathan: it is dreadful out there. the head of equity at all sprinkled investments joins us now.

let's talk about equities and earnings. look for where earnings growth can be more easily achieved, where did you go for that? >> health care is a place but there are other places in defenses. health care screams to me the place to be when you look at where earnings growth could come in 2024. tom: you are too modest. and milady -- ann is an 80 9/5 percentile one year, the 90th percentile five year. it is as if the brewers won the world series, you are killing it. you are killing it with magnificent seven, big ugly growth stocks. does that story change next year? ann: i cannot take credit for mentioning that find anymore -- for managing that find anymore. i used to. our managers have not been overweight the negatives and

seven, they have not ignored it, but those stocks have done fairly well this year. the earnings growth for those names 2023 has been 7%. across the s&p, 0% or worse. as we looked at 2024, can those large cap names repeat that same growth? tom: that is the money question. ann: the comps on that are tough. if you look at health care where earnings growth has been sanguine and you see multiple compression across the defensive sector of more than 11% relative to those other names, that area screams good risk reward to me. tom: huge money question here. lisa, john, and i, what was bnp paribas? jonathan: 4300. tom: you are in the 90th

percentile doing what everybody is talking about but you are doing it, own apple, own amazon. you are telling me to get off of that gravy train? ann: take some dollars off of that gravy train and start to reallocated them interfaces that may be the market does not care about right now. one of the things i have always learned in my career, you have to go there before the crowd does. you want to be there before everybody else does. the first 25% is probably the most important. you don't want to sell too early. the fundamentals really are much better in these other areas that people do see. lisa: how much of the health care bet is on weight loss drugs? ann: that has been the multiple compression we see in the area, a good part of it. whenever you see the baby being thrown out with the bathwater, all health care has been

discounted because of what these drugs are going to do to the system. it is going to do some good to the system long-term. not all devices, not all health care companies in general will be heard from this. there will be some benefit. is it going to hurt near-term? 2024 earnings appear to be strong, multiple compression has been discounted. lisa: what companies have been throwing out the idea of illnesses that get remedied that you are saying, pump the brakes, people want to get healthier more quickly? ann: from what we know, these drugs definitely help diabetes. that is what they are designed for. all of the other illnesses and comorbidities that go along with that, it is challenging those companies. the glucose monitor companies

and all of the other things. i cannot talk about specific companies, but those are the companies that have been heavily discounted. all of the companies across the health care sector have been impacted. it actually will drive growth in some other areas. when i'm talking to our portfolio managers, they are excited about that. although, not ignoring. the market is probably not wrong about the direction of these drugs long-term. i think that is the where do you get it right? don't ignore the long-term. jonathan: s&p 500, modest upside. small caps bottomed at the end of october, a double-digit percentage point move off of that bottom north of 10%. what you like about small caps? ann: you have to dig deep into small caps. now is not the time to on the index, even in 2024 you don't want to on the index. small caps are acting like a leopard play on the treasury

market. jonathan: is that the regional banks and it index? ann: they are and i think that is what you are seeing. i would suggest investors need to dig deeper. when you go into the numbers and the data, they are not all leveraged bets to the treasury market. there are small and mid-cap companies, companies that have free cash that have margins above 20%. those companies are trading at 25% discounts to large-cap tears. that is too great of a discount. those are signs that signify quality. they don't have turbo balance sheets. jonathan: let's talk about those bets. we have had a 20% move off of the low from the end of october. it is a monster move. am i trading banks for high yields or lower yields? based on his performance, i think it is the opposite from what we were told. ann: i think our managers are

overall underweight the banks. it is because they like to focus on the fundamentals and not just play this swing in yields. although the fundamentals are good for some of the regional banks, it is not great across the board. depending on the macro conditions, things can swing heavily for the banks. it is some of the other defensive areas i like a little more. jonathan: including health care? ann: yes. jonathan: thank you. this run in the banks has been unbelievable, in line with the rally we have seen in treasuries. lisa: which raises the question, is this the idea that yields are stabilizing or is this something else that has a counter narrative to what has traditionally been higher costs in terms of borrowing costs? they tend to do better for the banks. everything has been turned around. jonathan: the whole year has been upside down. this was look like this on the

s&p 500, equity futures going absolutely nowhere. we are one hour 18 minutes away from jobless claims. -0.01%. some price action dated my market, yields up five basis points. 4.1552. productivity was the store yesterday. mike mckee did a wonderful job covering it. to perform mix for this federal reserve. tom: if we sustain productivity is the money question. that goes into the proponent of productivity, under placement for 20 years. i go back to the polarity six weeks ago of goldman sachs versus morgan stanley. the one distinction is what does the labor market to do? that is why the next 25 hours are important. jonathan: a push back at goldman . we tried to highlight this, we will catch up with this young on the contradictions in the labor market.

the cyclical's are starting to look better for market growth. we are pricing in rate cuts next year, trying to reconcile some of those forces. lisa: it reminds me of the beginning of 2023 when people were saying you have to trade the recovery because we are going to get a recession and you don't want to get in too late. it is looking at what happens after the downturn. jonathan: we have not had it yet. we kept a saint you want to trade the recovery into the recession we have not had yet? lisa: and we said yes. jonathan: david is going to join us of city global wealth. looking forward to that. from new york city, good morning. ♪ (sfx: stone wheel crafting) ♪

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>> do you think there is any -- that will defeat trump other than you? pres. biden: i am not the only one but i will defeat him. >> who else do you think could defeat donald trump? jonathan: president biden answering a question about the 2024 election the day after he said he probably would not have run if trump was not running. we have this cleanup and i think we have cleaned that up. it will be interesting to see if the former president is not the candidate where that would be the president after the comments he has made. tom: and the comments terry

haines gave us in the last hour. if you dovetail is decades of perspective on what republicans and republicans in name only, but do they do if the former president is the former candidate -- is the candidate? lisa: there is this mystery within the democratic party, i was looking at a poll conducted throughout november that showed 63% of democrats disapprove of israel's military actions in gaza, 60% who are younger than 35. 64% of people of color. this raises this question, does this matter? is this going to fade by late next year? is this pointing to a division within the democratic party that will make it tough for by the? jonathan: -- getup for abiding? jonathan: you expect there to be division in washington. it is healthy.

my key issues, you need some policy continuity. we have two wars that may or may not give support depending on who is in white house. you have republicans questioning going to ukraine and, kratz questioning ada going to israel. that is going to come to get things in those countries engaging in war on the ground. tom: one more thought, we are in a geritol chrissy -- there is a generational shift going on. the polarity within the ones of the eastern mediterranean is a stunning. jonathan: lisa brought the polls , you can see that so clearly in the polls from the president and his own party. tom: to get a brief on this, jack fitzpatrick joins us, bloomberg government and a knowledge of capitol hill. i look at these debates and i have to assume senators at the

house are riveted by this debate. give us the update on the -- we are living in versus the generational divide? jack: it is a complex line to draw if you are making a distinction, especially as you try to pick an issue. generationally, there is some movement as it relates to support for israel, younger voters expressing in polls a lot of concern about their actions in gaza. if you try to apply that logic to concerns about a gerin tocracy, the one person who voted against his party is bernie sanders says he is not supportive of this vote on aid

of their having over concerns of israel's actions in gaza. concerns over the age of our leaders are a major issue in politics in the presidential race and going down the ballot in congress. it is difficult to apply -- to projected that onto certain policy debates next to project -- to project that onto certain policy debates. part of this concern is israel and foreign aid on capitol hill. lisa: what is holding up the ukraine funding? bernie sanders wanted to see israel funding put in there and that is one reason he opposed that. other people pointed to the fact that you have some increased calls in were security and biden has accused republicans of putting certain measures in the bill that he did not want to pass. what are those measures? what are the main sticking points?

jack: the republicans want anything that includes funding for ukraine to include a border measure -- a border measure. they went to get asylum restrictions. they do not just want border security funding, they want a reduction in the availability of asylum claims or cases in which people had to wait in a different country as their claims are being adjudicated. the concern among republicans is if democrats agree to the where the basic numbers on asylum claims and people allowed to come across the border that parole will be used in some circumstances to circumvent that. there is a tricky debate going on in which they discuss not only the availability of asylum claims, but any policies that could subvert an agreement on the basic numbers of asylum claims.

that is very complicated and politically tricky. unless they get an agreement on that, ukraine funding is held up. lisa: if anybody eyes by placing over, they will glaze over more knowing nothing will get done with so much polarity. we talked about the democratic polarity, but within the republican party, we cannot solidify around leadership. kevin mccarthy deciding to step down. how much does that come get the effort to push through these initiatives -- complicate the effort to push through these initiatives? jack: kevin mccarthy leaving does not complicated. the house chose to go in another direction. there are questions about the new direction they are going under the new speaker who is a bit of an unknown. his relationship with the conservative freedom caucus and how we approach is not only for nate which is something there has been a lot of ideological

movement among republicans but also government funding deadlines. that is a big x factor, but it is clear the house republican conference was ready to move on from kevin mccarthy. it was not clear what role he was going to play. they have a twiddling majority but the things they are negotiating need a lot of democratic votes. it was a touchstone moment to see the former speaker decide to leave congress. it does not necessarily change what we know and don't know about the direction of republicans in congress. jonathan: emission to the funding deadlines, remind us of the states in 2024. jack: january 19 for the first four, february second for eight. february 2 would be a tough deadline. jonathan: thank you. jack fitzpatrick there. the 19th and the second. i think we are going to have a big fight next year over big

issues early on. tom: if you talk to wendy at brown, she will tell you physical issues at drift away when you get to an election. will this time be different? does the debt and deficit actually matter at the levels we are at? jonathan: the fiscal issues are part of campaigning going into november. lisa: how much do people actually care? this is the difference between the parlor game we play now and what drives voters to the booth. oftentimes it is something else, where is inflation, maybe they will feel bad or maybe they want. it is things like abortion, border security, education. jonathan: agreed. border security is going to be massive as we push for more for nate. tom: -- for more foreign aid. tom: it is particularly key in the swing states. it is more than just a national issue.

jonathan: more politics later in the program. megan robson of bnp paribas on credit coming up shortly. that is around the corner. the price action looks like this on the s&p 500. there is not much price action. the equity market going nowhere. yields are higher by five or six basis points on the 10 year. 4.1% on the u.s. 10 year and crude in the 60's. should you be concerned about crude in the 60's? paul sankey saying this is not about demand, this is about a supply in the united states. -- about booming supply in the united states. from new york city, good morning. ♪

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reach $150 billion. she said it's clear demand is growing much faster and projects $400 billion in the same timeframe. more than doubling it which gives you a sense that even the reality is outstripping some of the hope and dreams. tom: this is going to be a sequential look for microsoft to come out with chips as well. it is like french fries but they are chips. jonathan: thanks for explaining that. is that what they are in the business of doing? that is a good year, right? nvidia is up 211 since last year. lisa: they are going to try to sort of cling onto that. can they compete in a real sense? this has been the story that has continued to surprise the upside despite all the skepticism from people like myself. jonathan: let's turn to the bond market. 10-year, yields a little bit higher on the tenure maturity

today by five basis points. these are kind of normal move these days. there is something, and it is japan. it is the boj and a signal that maybe they will make a move before the end of the year. dollar-yen gap lower. lower by 1.4%, that is a stronger japanese yen. lisa: i was surprised that yields were not higher in the u.s. the bank of japan overnight was signaling this is maybe going to be unsustainable to have negative rate policies, and then one of the boj officials say maybe this will be a good thing, a virtuous cycle of wage gains and prices. so here is the question, why isn't the move here? kathy jones said i don't know. is this just that the narrative is moving in the opposite direction? jonathan: your pricing in big cuts. tom: it's a busted theory, but

what you've really got to watch as a benchmark to 10 year yield. i will let somebody in japan give me a better maturity. given the inflation regime, that flat doesn't work. they've either got to bring the inflation down, or remember, they wanted to reinflate, where they got to get that 10 year yield. jonathan: as we said a million times, jgb is not in market. tom: it's not a true market. jonathan: quick update, crude dropped into the 60's yesterday. we stay there briefly. head above water again into the 70's, positive on the day by 0.6%. that's jason top stories. former u.n. ambassador nikki haley looking to cement her claim that the gop alternative to donald trump. four candidates taking the stage last night without the former president. taking criticism for her support from wall street while chris christie was the only one to

directly attack the overwhelming front runner. the first contest is less than six weeks away in iowa, and you wonder of those cointreau are left weeks time? lisa: it is becoming a two-way race between nikki haley as well as ron desantis. nikki haley is edging out. love her line to ron desantis when he was slamming her about wall street donors and she said you are just jealous. she had a bunch of singers that she was quite prepared for. thanks, ellis, for all the attention. but there is a real question of whether 15% of the vote can really get her to be the nominee. jonathan: she was sharp last night, that's for sure. elon musk and space x looking for something sadder shares, putting the company's value over $175 billion. according to bloomberg, c-shares and start at $95. it would be one of the top 75 companies in the world alongside names like t-mobile night, both valued at just under $180 billion.

whatever you think about the man, he's polarizing, but wow. another phenomenal company with a potentially huge market cap. tom: and what is fascinating here, is the basic idea of rich guys doing this, and he seems to have had a much greater impact and mr. bezos and mr. branson. you look at the three projects and it's like, you can have an opinion that this one or an opinion about that one, but he and his team are grinding this out day by day through aerospace failure which is what normally happens. jonathan: entropy talk about mr. diamond? rumor has it that maybe they are exchanging christmas cards this year. it is a big change. tom: i've teared up. jonathan: pushing back against higher capital requirements. jamie dimon and elizabeth warren finding common ground on another matter. >> i've always been deeply

opposed to crypto, bitcoin, etc. you pointed out the only true use case for it is criminals, tax avoidance, and the five of the government, i would close it down. >> of today's terrorists have a new way to get around the bank secrecy act, cryptocurrency. i'm not usually holding hands with the ceos of multibillion-dollar banks, but this is a matter of national security. jonathan: it is a matter of national security. to hear senator warren and jamie dimon almost holding hands killing bitcoin. tom: the curse of cash, everybody knows my opinion on this. jamie dimon wasn't talking to elizabeth warren, he was talking to the chairman of the securities and exchange commission and to his good friend over at blackrock, laurence fink who wanted to do etf's on crypto. i didn't hear that j.p. morgan is sliding into ets for your retirement account. lisa: this is just going to feel more rumors.

is jamie trying to get in? if this is popular outreach to senator warren to get support, this is how you win elections? bold proclamations. he has been one to be taking some of the news headlines in ways that people suggest maybe once a government role. jonathan: it's a shame because this was ever the important hearing and we are all talking about the wrong thing. it should have been about higher capital requirements. the bulk of it was, and yet here we are talking about crypto and not the higher capital requirements these banks are potentially going to face, which could complicate, compromise their ability to fund money can the way that we like to. >> this conversation we are having now i thought we would have at the end of last year were the end two years ago. it's taken a while to get to this point. look to bloomberg and her work on crypto. right now, head of u.s. credit

strategy, a really nuanced pro note on the dynamics of fixed income forward. translated to mere mortals like me, what is the movable part of fixed you are focused on for next year? >> out credit outlook, we think the spread range can hold next year, but within that, we do think reddit spreads was ripped wider. for viewers and listeners, it means total returns are still attractive in credit so you can get a mid-single digit positive total return. it means excess total returns, low single-digit with spreads moving wider. i think the key way to position for decompression. we think higher quality is positioned to outperform in a 2024 because we still do expect the downside risks are in place. lisa: so this really gets to the heart of the question. at what point is no landing a bearish scenario? at what point are rates staying higher for longer, something

that hurts some of the more vulnerable buddies in an outsized weight? is that your base case, that if we do get rates since stay higher for longer because we are not landing and we do have robust growth, you're going to see defaults tick up? >> we expect that we will see defaults higher. i think an important point is that we are in this pause. assuming that we handle last rate hike in july and we have rate cuts next year, credit tends to perform very well in the first half of the pause, and that is exactly what we are seeing. we expect credit will give more fundamentally sensitive as we move closer to rate cuts, so as we approach that, if rates are higher for longer which we expect, we will cease in carnage and we will see some issues for issuers but still have to refinance. lisa: how public it has your job gotten given the bulk of debt that has moved to the private sector. we've been talking about the banking hearings, talking about what apollo is saying, depending

on who you are and how you want to position it. does it make it more difficult to understand the financing runway of some of the companies you cover? >> private credit has definitely been a source of capital for some of their issuers and we've seen public issuers be able to access refinancing and capital, but it has mostly still been higher quality. i think a lot of her lower quality issuers, private credit is still very selective and we haven't seen them be able to access that market. at the data on private credit markets is not nearly as robust public, so it is difficult to track the trends. we do know that growth has dwarfed the public markets, so we do expect there will be problems in that sector as well. tom: take this and distill it down to people with retirement plans. i mentioned earlier apollo global management, some form of multiyear annuity yielding a stunning 5.70%. where are those kind of yields

going to be if i wait a year or i wait six months? >> we are forecasting a steepener of the treasury care. with a long yields will be stickier. tom: i will still have the opportunity. dark count we are calling for a 4% on the 10 year treasury whereas we are calling for a more substantial rally to the rate sensitive policy-sensitive part of the market. it does mean if you are in that part, you can. tom: the absolute heart of the matter, what happens to the annuity stuff if the yield doesn't come down as megan suggested? jonathan: the dollar-yen down to 1.35. that's the call from the team. where are we now? breaking 1.45 this morning? looking for some big names potentially in foreign exchange. >> particularly given the fact that everyone is expecting the

bank of japan to eliminate yield curve control. does that sort of shatter your world at all? >> yes, and we are expecting monetary policy either -- divergence between the fed and the boj. we do think the boj will hike. as that happens, hedging costs for asia-domiciled investors will start to come down. that has been a huge drag on demand, so we do think that we could see hedge the buying return to the market and for investment grade that has been an important source for the 5-10 year part of the curve. jonathan: the boj just seemingly going in the other direction. lisa: and they are doing that intentionally this time around. they were waiting for this so they could do it without too much disruption. jonathan: they never saw this inflation is a problem. it was a once in a generation opportunity to reset something they've been trying to reset for 20 plus years. tom: it's just a busted theory, let's come up with a theory, and discussion.

jonathan: if you are just joining us, welcome to the program. just about positive 50.02%. yield a little bit higher by five basis points. if i can come i want to squeeze in another question. 3.95 is the year price target. her next year for you and the team, that is not much downside from here. for credit, that means carrying was to look attractive on the long end. the technicals will still be supportive. issuers do not want to borrow at those types of levels, so it does mean there is a crowding of supply in the front-end of the curve. jonathan: big distinction between the front-end and the long end. lisa: the bull steepening. longer-term, there still are

these issues of the deficit, of the bank of japan and just structurally, better growth. is it a good thing, a bad thing? we can get everyone's calls and to extrapolate out of the market is another situation. >> all we can do is get everyone's calls. thank you. coming up, just after jobless claims, tiffany wilding of pimco is just around the corner. just around the corner as well we are going to talk about amd with mandeep singh. equity features right now on the s&p positive five not even 0.1% on the s&p 500. in the bond market, yields higher across the curve. 4.16%. from new york, this is bloomberg. (sfx: stone wheel crafting) ♪

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♪ >> we can all see what has changed. people need more computes, they are installing more. numbers for this year are probably closer to $45 billion

and we talk to customers, when i spent time with our partners and what they tell us is the technology requires more computes so we now believe the total market for this is upwards of 400 billion dollars in 2027, it's huge. jonathan: huge. tom: huge. jonathan: huge. the eye-popping forecast on the size of the ai chip industry. and in a conversation yesterday with ed ludlow. that is a big number, a really big number. >> the big numbers, and the beginning of the competition that has been widely anticipated. with the adults are telling us as it is going to come on faster than we would've expected in the normal cycle because of the frenzy to pick up on. the actual doing of ai, not the fancy talk. jonathan: nvidia won't be the only winner if amd has their way. tom: i'm watching microsoft, but the answer is it is a chip war.

lisa: and yet people can't get it quickly enough so there seems to be room for everyone. i want a better understanding of what the barrier to entry is any field that a lot of people say is very complicated to figure out how to make these chips, where to get the labor to make them, and then supplying with all of the potential resources. tom: the perspective on this, mandeep singh, senior technology analyst. senior vice president substrate for bloomberg intelligence. i have the clearest memories in the late 70's of somebody a couple zip codes over bringing in a big hunk of silicone and saying we are going to make wafers out of that. we are beyond that. how hard is this task that nvidia, amd, microsoft and others are doing from an engineering standpoint. how challenging is this moment? >> well, what gpu's have shown is that you can do a large amount of parallel processing,

and i think the manufacturing side is still concentrated. that decoupling has actually accelerated chip design in some way, which is why we are seeing this accelerator cycle. 10 years back, you can't even imagine going past cpu, and that is what we are seeing now with accelerators and chip design. jonathan: i remember germanium. i had to pronounce it, i still can't spell it. that was one of the -- one of the revolution 30, 40 years ago. what is the distinction, the variability, the differences between nvidia, amd and microsoft product? >> when you think about intel and amd, they were standardized on -- architecture. nvidia is entirely on arm. and that to me is the big difference still. because amd was always built around x86, can they make that pivot, because we know arm

architecture is better for power consumption, and even though you know lisa sue talked about expansion, it is in some ways going to cannibalize the cpu and if they are pivoting arm-based accelerators, i think that is an interesting choice, given the history that amd has. so that is one consideration. the other is all their customers are concentrated. it's the hyper scale cloud renders and when your customers become your competitors, that is always a challenge and that is always hanging on your head for all these companies, whether it is nvidia, amd, or anything else. the fact that microsoft, google and amazon want to design their own chip instead of paying $1 billion to all these vendors, it is also something to look out for. jonathan: lisa: which raises the question of barrier to entry. how difficult would it be for microsoft, google, amazon to create their own hyper chip can fuel their cloud offerings? how much is that looking like a

harder hurdle which gives amd a bigger boost and that more optimistic outlook in terms of potential sales by 2027? >> for the cloud companies, they don't want to design each and every chip that goes into a data center. yes, they want to control the cpu or the gpu, the main shift, because that is strategic to their cloud, but they don't want to design every chip. those will be seen with apple. apple controls its ecosystem, it designs its chips, certain parts are still coming from --. and even though they want to get away with it, that is what i expect. even the data center consumption, yes, there are certain to fit our strategic, and we know amazon and google did commit to amd yesterday. at least their names weren't mentioned. the others, that gives you a sense of how these cloud vendors are thinking about it differently. jonathan: lisa: lisa: does this also represent this question around use? you said nvidia has a much

broader use. what are some of the uses that could fuel sales going forward, even if amd sort of tops out with cloud computing, they sell their chips, and then it is all about the software and not the hardware anymore? >> i think for a chip company, it is going to be a hard pivot to software. i do think the use cases by the training of foundational models, more or less all these foundational models are trained using the same way. it is a transformer algorithm behind the scene. from that perspective, there's not much difference. but what nvidia has going for them is their softer stack as well as the networking aspect of it. and that i think is hard to replicate the likes of amd and intel in the near term. tom: i'm fascinated if they compete away profits. let's assume right now they are making general norms profits, but if you have three players,

do they just compete away whatever profit there is? >> i mean look, i don't think any enterprise company wants to spend a lot on ships. it is usually the higher value, the gross market item is your software. and right now we are seeing these chip companies show a lot of pricing power. i do think over time as you have more capacity and other options that gross market is going to come down, but for now, until the time your supply constraint, pricing power remains with the chip players. >> is this the case of u.s. tom and all over again? pc winners coming from anywhere else? >> when it comes to chip design, clearly nvidia and the likes of hyper scale is whether it is amazon and google have an advantage. over time, i do think there will be a few players in china that will try to design their own

chips, and they are all going to --. no one is manufacturing it. manufacturing is that they asset that depreciates very quickly. so that is a good thing. but i do expect competition over time. >> this a good thing for an outfit that highly depends on the geopolitics of the future. thank you, sir. you said chip wars earlier. chris miller, grade book. have you started reading that yet? fantastic. tom: fascinating, his personal story. and i'm reading the woman that just won the book of the year award, i'm reading her book before the one that won the award on leadership and that using fear is not a good thing. jonathan: "psychology of money" is the book and into right now. that is fantastic.

tom: i'm trying to generate a leadership gauze like the joy we have on this set. my book of the year is robert to kaplan, it has been kaplan two years. jonathan: same book? tom: no. i used to do that. the loom of time and what it is about is morocco to the stands, out to afghanistan and the others. and i got lucky in that it was so clearly my book of the year and then they gave me the war in eastern mediterranean which really makes a transient. lisa: just going back to the chips, because i was kind of thinking about that, i could weigh in on books. the reality is i have a stack of books that i pick up and every the first chapter and then i put down and i put down, have a million other things and i'm not gonna lie, i just don't get through them with everything else.

i and every new yorker articles instead and counting that. jonathan: just reading the first page. you ever see matt? it is just pictures of reading the first page of a book and they will ask him about the book sometimes. you don't get much detail. riveting stuff. tom: when we get mandeep singh chips with all this ai stuff, do we stop reading? i can't get the kids to read, can you get the kids three? i mean, they read for school because they get in the timeout chair if they don't. jonathan: they don't read for fun. lisa: it's a different kind of reading. this text on the tiktok videos. jonathan: that's a very low bar. coming up, david balin unveiling city global wealth 2024 outlook. futures turning positive as 0.1% on the s&p. from new york, this is

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>> the labor force is expanding very rapidly. i think there is still some underlying strength in the labor market.

coming into question in terms of how resilient it really is. >> we still have more and more evidence pointing in the direction of a soft landing. announcer: this is bloomberg surveillance with tom, jonathan ferro and lisa abramowicz. tong: jonathan ferro, lisa abramowicz and tom keene on radio, on television in 29 minutes. the american labor economy claims which were the frames out all of our investment believe for next year. jonathan: going into payrolls on friday, still looking for a pretty decent number. the data this week has been good, better than good. let's go through it all. the headline number robust. prices paid, lower. job opening at the lowest we'd seen going back to something like march 21 and yesterday, on activity of, or cost lower. that's what everybody wanted to see. tom: in the narrative roulette that we got, they are lining up out on twitter all the good things, all the reasons to participate in the market. and look at the fear that is out there.

readjustment here, there is so much omg going on, it is a toxic group. jonathan: one person's fear, another person's dream. yesterday in the 60's on crude. framing matters. we talked about it repeatedly so far this morning. do you view that as the ingredients needed for this economy to be accelerate or a sign of impending doom? tom: speaking of impending doom, we met -- welcome lisa abramowicz. 1.99%, that is again one of those specters for all these narratives become a jumble. lisa: i can't be a vector of gloom right now with this kind of ingredient just because i do hear what we heard from paul sankey earlier, that the issue with oil prices is not a lack of demand, it is simply a real war in supply were the u.s. is producing record amounts. there is a concern that is too

cute, you can't give immaculate disinflation without some shoe dropping and we have seen signs of weakness in the labor market, and people are trying to sniff that out. that is valid and that of the reason why i think sums of the downsides of prize in the economic data could have an outsized reaction. tom: the heart of this is on china because bramo is a vector of gloom. to me, this is the huge mystery into q1, is we really don't have a handle on the totalitarian political and economic experiment of china. jonathan: so any moment we will get city global wealth outlook. we see equity risk being skewed to the downside in the u.s. and balanced in europe and china, the positive in japan. it is the china piece of this again. we got china so wrong in the 23. it was going to reopen. we would underperform in america and outperform in china. turn it upside down completely

the other way around. tom: to me, the other mysteries all the cash. trillions of dollars of cash. the owner of the story out there i think. that is part of this narrative, is the cash this year. lisa: especially if short-term rates come down so all of a sudden you are not talking about 5%, you're talking about 4% or maybe 3.5%. then all of a sudden is there a gravitational force out of cash and other assets? again, all of these unknowns. tom: gloom statistic to get the data started. he's looking for a secret. 13.16. jonathan: i think david is doing what every other guest who has come on this program does, trying to work at the first question the tom is going to ask because no one has got any idea. >> i thought he was going to wrap the what the fix was. jonathan: head of investment that city global wealth with us in just a moment.

as of the as follows, positive by 0.1%. yields up five basis points. tom: audible question, you work with john henry years ago, the owner of the boston red sox. how in gods name is john henry lit one soto go to new york yankee and not the boston red sox. >> i will enter that often, but tell me how it is that john henry is a trend follower winning three world series when the yankees have only won one. tom: very nicely finessed. let's go to cash, it is in your review, the mystery of all this cash. you talked about there is just too much cash out there. what do we do with cash next year? >> you've laid out an incredible introduction to what we are writing next year which is called slow then grow. the idea is that you are going to see a slowing economy at the beginning of the year. a lot of the concerns that lisa just talked about to come to bear which is that the economy slows down but it does not crash. we do not have a recession, we

do not have a v-shape recovery. and because we don't have a clear signal to investors, they sit there with cash. it is extraordinary. and yet when you take a look at all the different parts of the economy, the average stock in the u.s. hasn't done that well. 10 stocks have done currently well. energy is down. you are seeing real signs that inflation is not an issue and that the fed will hit their target with 2.5% by the end of the year. so if that is true, what you then need is a booster earnings in order to believe that all this comes together, and this is where the story is being missed by the average investor, is that in the u.s. you are going to see earnings of five probably 5% this year and then 8% in 2025. that sets us up for an opportunity where a balanced portfolio, you put your money in bonds and in stocks, and you sit there and you are patient, and over the next 18 months you can

get yourself 50% or 20% total return. you are getting this skeptical look. lisa: i'm just interested. >> here's the interesting data point. in 1931 and 1969, the last two times we had stock and bond markets down for an entire year, if you look down just two years later in each of those periods, a balanced portfolio was up more than 20%. and while that is not statistically significant, we've already had incredible negativity in the stock market and in the bond market this year. lisa: ok, he pointed tom, but this to me is really a question of can you bet on the grow before we get the slow? >> the growth is the coming off. jonathan: did you just make that up, because that is great. lisa: can you bet on the expansion before any kind of slowdown? >> so we have to answer the question.

let's take a look along real estate which has already been in a recession. we had manufacturing already been in a recession. we had parted our economy like health care negative earnings for the first time in teen years this last year. lots of these parts of our economy, or a percent or 50% of sectors are going to be having very positive earnings relative to 2023 and than the average stock has the opportunity to rise. one of the things we put into our portfolios is the most boring investment we've added, which is s&p equal weight. if 10 stocks have done well, you want to own the other 490. this is where people are sort of missing it, is that we haven't seen the overall market rise yet, and that is a 2024 is going to be about, those earnings. jonathan: so that is the equal weight, but not the market cap index. >> that's right. i think that the opportunity. you had large portions of the

u.s. economy coming out of a recession now. inventories are down, they got to rebuild. which costs are coming down. it's not about the landing. everyone talks about hard landing, soft landing, forget about it. we are beginning in normalization of markets to back to where they were four years ago, pre-pandemic conditions, and we are going to be coming out of the any grow mode. jonathan: are banks structured well for that moment? >> thanks or clients? jonathan: the equities, the bank equities that have struggled so much. >> i definitely believe that the normalization of the yield curve is going to change valuations for banks is a segment. that is more of a 12 to 18 month trade and a long-term opportunity. i do think that banks are very undervalued at this point. lisa: i'm trying to understand this perfect scenario and how much oil plays into as well, given the fact that that has been one of the reasons we seen this disinflation narrative get some legs. how much does that factor in

that we are going to keep seeing suppressed valuations? >> i don't think the expected whales move down as quickly as it has and i definite it is applied. we have discounted is the fact that globalization is still a major distance visionary force. import costs of goods coming into the u.s. with finished and unfinished goods are -3.7% relative to last year. they are adding to the disinflation story. so between energy and import costs, you have this situation we just don't have inflation on goods, and that translates into a better economic scenario. it seems like you are having trouble believing that you could have a really good backdrop for markets. lisa: what i find fascinating is how much the narrative has gotten it wrong. everyone is talking about deglobalization, how that would lead to inflation. and all of a sudden workers are going to cost more to do the job that need to get done. and what we are seeing is all of

the exact opposite. his neck sort of remarkable? >> it is remarkable. we've hired more people with slower gdp growth in the u.s. than in history, and now that is coming out the other side. the saudi's and opec wanted to keep oil prices higher, they were unable to do so. they were originally willing to cut back production. -- so there's a lot of things with people think they can affect markets. they can't help but to the jonathan: we could do another one, why not? what should be called? tom: bad news is bad news. in. the bet that we have going on.

thank you, good to see you. david looking at the next year. double-digit percentage point gains. >> i think there's a lot of people lining up, and this is where i am personally, just a continuance of where we are. all these narratives of we have to change this, we have to change that. what if on a quarter by quarter basis, we just see this american exceptionalism? that's not a consensus call, but that is last set. jonathan: control room ways in. that can work. lisa: i'm not necessarily the bear. and i will just say honestly, this is to me fascinating because all these narratives that this time is different are being flipped on their head and this time isn't that different, and that might be what may be coming to the floor. >> just a spectator here enjoying it.

if you're just joining the program, welcome, it has been a good one so far. equity features positive by 0.1%. yields higher by five or six basis points. the attention is going to shift now to the labor market. tomorrow morning we get payrolls. $186,000, the previous number $150,000. 220, the estimate against the previous number of 218. tiffany is going to join us later situation on all of this at 8:30 eastern time. tom: i want to editorialize here with 13 minutes to go. excuse me, 70 minutes to go. this is the most important claims reporting ages. it weekly data. the linkage of these two reports is critical. lisa: it's only important if it disappoints. it is only important if it comes in underwhelming. otherwise it is going to start the fuel this feeling that maybe we can get the snow landing and where are we to mark what

economic cycle are we actually analogous? i find this really interesting. jonathan: good news is good news, bad news is good news but super bad news is bad news. what is super bad on payrolls? sub 100? tom: i just thought of something. he has tickets at citi field like no one. he could get tickets for the mets. jonathan: they are not a very good team though, are they? lisa: there is hard. jonathan: the yankees made a big purchase recently. all of that coming up on bloomberg tv. plus, so five. -- sofi. go, mets.

♪ >> nikki haley, she caves anytime the left comes after her, anytime the media comes after now you have reid hoffman, the person who is effectively george soros jr. funding lawsuits across this country against donald trump. we discovered this week that gives one of nikki haley largest orders. >> i tell you this, i've known her for 12 years. this is a smart, competent woman. you should stop assaulting her. >> i'm loving all the attention, fellas, they you for that. tom: how strange. in the first debate over 40 people on stage. down to four.

where will be be next time? in the carolinas, nikki haley. republican presidential debate. chris christie of new jersey to the defense. jon ferro, in the preparation for 9:00, looking at the nasdaq of 3/10 of 1%, i'm sorry, 12 minutes from now. this is jobless claims, folks. this is not the usual thursday claims. lisa: the drumbeat to payrolls we get at a time when there are 70 questions about how long this labor market can withstand some of the measures. ongoing planes, continuing claims. i'm keeping an eye on that. tom: i agree. if the weekly data which has got a lot of noise. there is the continuing claims which i think is hugely valid this time around and then they take the four-week moving average of the weekly number. and i will let mike mcgee tell me which one of those is --, but continuous claims hold some weight here. tom: lisa: we're just trying to understand how difficult it is to get higher given that crits

are falling. we did get job cuts that came out and they were down actually. they came out and you don't really buy those. tom: we used to hang on. the world stopped. i'm going to say 30, 40 years ago. i will let mickey decide. i just don't know what to do with the challenger number. it is like yesterday except adp moved the market yesterday. lisa: it did. honestly a lot of questions are going to be next year as we head into the political season as you would call it. i will some of these conversations evolve? tom: lee says here, we are doing bonds. your yields, 4.62%. 10 year yield, that gets my attention. we are down 4.10% yesterday. lisa: given the fact that people are saying under 4% might signal something that is afoot.

tom: henrietta, on this 82nd anniversary of the harbor, thank you associated press for informing us, there is one survivor left at 102 years old of the uss arizona. what is the budget state of their u.s. navy right now? we've got lots of cereal in the red sea and in the eastern mediterranean. you are on this. his met properly funded? >> is about to not be. it looks a lot to me like we are going to go into this christmas holiday break next friday without any additional funding for ukraine, israel, taiwan, the u.s.-mexico border. does talks have entirely broken down. it will just be sort of the rolling discussion of how out of

step and unprepared congress is to take votes on long-term spending both to shore up any sector of the federal government. lisa: we were speaking with lily cantrell yesterday and she said on a practical level it's unclear with the market impact would be a big government shutdown after the january 19 or february 2 dates that we know are the new deadlines. that said, there is a political ramifications. who is it worse for if we get a government shutdown, democrat or republican? >> i don't think the shutdown is something investors need to spend a lot of time on because it is so bifurcated now. it will be about a halfway point for each one of those rolling dates. the sequester is where i get a lot more questions these days. there is a trillion dollar sequester, excuse me, a couple hundred billion dollars and a lot of investors are worried about that.

no one expects that any of those cuts are going to go into effect, so it is hard to have a conversation with investors and walk to the process because there is not a detailed assets to avoid a shutdown or to avoid a sequester, but it is well- understood on capitol hill that these cuts will not be going into effect either for defense or non-defense discretionary. they don't have the votes to let those cuts go into effect, and they have the will to keep the government open which means neither the cuts nor a is realistically likely, but a shutdown looks bad for everybody. lisa: which raises the question, what is going to matter for voters, is a going to be divided come the deficit, or other issues, inflation? inflation coming down, is not going to play into biden's or some of the vitriol that we keep hearing from some of his challenges? >> i think this two the things. gas prices and the momentum play that we are about to go into on the political front.

the economy is obviously quite strong. you really don't have that same negative talking point that you had during the great recession or in the years after. it is tough to swallow trump saying i will be a dictator on day one just to bring gas prices down. i don't know if i want a dictator for that price. you really have to question where things are going to go from here. what the polling is really telling you is that about 33% of americans, especially those the undecided camp just haven't chosen a candidate yet. for me watching this, i don't necessarily worry that they haven't decided, i'm more interested in when they are going to start to the side and historical data suggest that over three months, they are going to start making decisions and one person is going to have momentum. tom: from your first moment on capitol hill, you have seen the

cycle of retirements. to me, this time is different. how does the white marble of capitol hill change with the character of the retirements we are seeing by republicans and democrats? >> i'm going to say something really unpopular but i don't work term limits for a reason and that is because you need experience. my old boss, my first jobs that you need to go through at least two budget cycles before you can have any rationale to talk about d.c. like you know what you're doing. these freshman members come in and obviously do not know what they are doing. we do not have a way to get to those votes in the house on most of the year for most of that legislation, edict -- even partisan legislation. you need seniority, legislation and experience. i suspect when mcconnell leaves, that will be a huge vacancy that will be felt for the rest of the senate. tom: thank you so much, you've got to run to the economics of the market, finance and

investment. just excellent. we're six minutes away from an exceptionally important weekly number. there is noise, noise, noise every week, but there's others including's lack apollo's at this time is different, it really is. >> even the fact that it is a data for payroll a time of an incredible amount of speculation and uncertainty around the labor market, this is the way that is stacking up. 220,000 is the number of unemployment claims expected to cross about five minutes time. the prior month with about the same. continuing claims expected to actually go down. close to 200, but a little bit lower in terms of 2 million coming a little bit more. there is a question here about how to read some of the signals from the high-frequency data, and when it sort of suggests that we aren't weakening all that much. yes, it is creeping up a little

bit, but not really that much. tom: and maybe here being almost as important as the payrolls of 180,000. lisa: especially given the fact that that is what we keep seeing. we keep seeing that input prices are coming down, labor costs are coming in, productivity is going up. it's a perfect recipe. tom: 25 hours i jobs report. more importantly, michael mckee has entered the building. stay with this, futures up fractionally.

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tom: we claim is bloomberg surveillance. 25 hours on the american labor economy. lisa bonet lift in the market. lisa: this comes after a couple days of slogging this which is interesting because we have seen yields in which typically has given a boost to risk assets and yet hasn't translated into the same kind of boost in recent days. on yields, 10 year yield up about five basis points. again, so surprising that we are seeing stability and light of actual news they could have moved markets much more. >> and abilities with a survey

actually comes somewhat into the vicinity of claims. mickey picking himself up off the floor looks at our initial jobless claims. >> score one for the economist. forecast was for $220,000, we get $220,000. a little bit up from what we saw the week before, an increase of 1000 from the revised level of $219,000. it is a little hard to seasonally adjust during the holiday periods, but we have what we have. we did get a downward revision to continuing claims for the week prior, and last, it was one million, 860 $1000. so all those stories, the nejra cehic jobless claims were starting to send a signal that the economy was slowing down in the labor market was getting loose.. not supportedby this data. >> markets churn with a 10 year

yield, 4.16%. i would write to the four-week moving average, nudging one week, two weeks, three weeks. what are the ramifications of a flat, unchanging statistical labor market? >> it would suggest that unemployment is not going to be rising significant. of course, that is what the fed is using is the basic labor market barometer in terms also. it would be good news in that sense. as a question about what we get tomorrow. 3.9% is unchanged forecast for november, but there are some analysts like bloomberg economics to think what about or, which possibly triggers the rule to get people wringing their hands about inflation. so we will see tomorrow, but right now the overall moving of numbers doesn't suggest any concern for the fed on the labor markets.

lisa: quite the opposite. this is just goldilocks again and again. not just in line with expectations place to continuing claims go down, you see the response in equities. yet, you see yields marginally higher. this raises the question, are we getting the immaculate disinflation at some the people have been expecting? is there anything that suggests otherwise? >> not in this report. the idea that this immaculate disinflation is happening just keeps getting more and more evident its favor but until it is over, nobody is going to take that victory lap. i saw some commentary this morning that said the fed shouldn't be taking a victory lap. well, they are not. they're kind of leaning the other way because they don't want to be cut out again as they were when we were slow to respond to what was not transitory inflation. tom: at 8:30, there's the headline data. is also the mike mckee data beneath it.

what we look for beneath the headline data? >> that unemployment but also average hourly earnings. they are expected to rise month over month which can be affected by a number of different news, but the year-over-year number forecast for the foreperson. ed looks at 3.5% as sustainable. his continued progress in that direction. you also see how many people join the labor force. that has been a big reason unemployment has gone up. if they don't, we might see a tighter labor market number. tom: thank you so much. i'm looking at the real yield out from 1.99 to 2.01. higher yield structure all in all office report. lisa: and maybe that's the reason why the equity pop off the back of this came in just slightly. 4.17%. it is a move. not particularly shocking. tom: right now, i've been out a

few days but i really want to reset here on the american economy and there is no one better to do that than tiffany wilding, economist at pimco. i'm going to go beyond the labor report, we will circle back to that. what is your real gdp growth for 2024? >> we think that the good news from 2023, there is a lien story, 2.5% above trend gdp growth, that is probably squarely behind us. the saying goes you can go to heaven twice and we think some of the factors that led to that were still some of these excess savings sloshing around from the pandemic and other support read and those kind of things under our estimation are going away next year. and when those things go away, what you are left with is still tight monetary policy. obviously we have a federal reserve telling if they going to remain on hold, so this policy drags are continuing to build so overall we think growth is closer to something stagnant.

whether it is slightly positive or negative is anyone's guess but we are in kind of a stagnant situation next year. lisa: so are you basically saying that we are in heaven and you can go there again, it is over? >> we do think there is a lot of good news this year with the u.s. economy. there's a lot of surprising resilience in the growth numbers of course. so we think the supply picture, at the federal reserve has also pointed out, has also helped that. but if you look at 2024, you have demand which is potentially coming down some of the things that added to by, like supply chain normalizations, we have the labor force participation rate for the prime age folks, it is back to pre-pandemic levels. we are just not convinced you're going to get as much on the supply side next year. course, immigration has been a story here, and that is why we've also seen the unemployment rate rise, because some of the

labor market inflows aren't getting absorbed by just a strong labor demand, but overall all of those signals point to something stagnant. lisa: bake into this is the assumption that you are going to have higher yields for a longer time. and yet it is unclear whether that is going to be the case. there a lot of people calling for pretty substantial rate cut by the fed, by the ecb in response to inflation coming down significantly. do you agree with the paradigm that oil prices stay lower than they have been antique going lower because the production, because of supply? you start to see in the engagement of global trade. we start to get more people coming to the workforce. basically everyone that people use is the opposite of the this time it's different narrative that we heard this year. >> i mean, in terms of labor market inflows and higher participation rate for that prime age cohort, i'm not sure that is going to continue to increase.

i do think there is some potential for immigration flow to stay high in 2024. that has been a story not only in the u.s. but across the developed markets. obviously elevated geopolitical risks and conflicts are contributing to that as well. but overall, i guess what we would say is that the federal reserve has told us that they are still worried about the last mile problem on inflation. in order to really ensure that inflation is back to target, we think you do need to see more labor market loosening. tom: market is coming back here, a little bit of adjustment off the claims. tiffany, one of the great responsibilities you have is to stagger down the rows at --, tripping over the empty traders and looking at people bloomberg screens. what is the short space going to do to the jerome schneider space and what isn't going to do in

terms of the wall of money that is out there? that is off your remit, but your remit is what are the economic conditions that make cash finally move? can you come up with a scenario where cash finally moves? >> absolutely. i do think it is certainly this soft landing scenario. i think that the fact that the federal reserve as well as others central banks have signal that they are at the top of their cycle along with this coinciding shock to term premiums made bond market valuations look really attractive. as a result, those higher yields just didn't stay around that long and you're starting to see cash come off the sidelines and go to the bond market. i think there is a question around the equity market, risky assets. but when we look at valuations, we are more cautious.

equity risk premiums still within the historical range. we don't think we are out of the woods yet. there is still a lot of uncertainty here. the quality tom: of a lower gdp reset off the shock of what happened in 2003 -- listen to me, i'm decades away, 2023. to me, what is so important is the activity discussion of the last 90 days. give us the pimco brief on the efficiencies of the american economy. >> i think if you look kind of more broadly, there was a lot of noise around the productivity statistics during the pandemic because you had unproductive sectors that were effectively shut down, then they reopened. so there was kind of a mixed shift in terms of economic output that impacted the productivity data. but if you look more broadly, it

looks like it is on trend at a low level. and i would say that there is probably good news in terms of the productivity out what is embedded in ai, in large language models and things like that. but if we look at research that just kind of estimate how long it takes to those types of technologies to proliferate, obviously that time has come down, but it is not 2024. the last thing i would highlight as we saw pcs, the internet. it took quite some time to actually see productivity gains in the 90's to come from that. at least from a 2024 perspective we are not as convinced that you start to see that in the data. but there is room for encouragement on a secular timeframe. lisa: quickly, you seem to be pushing back against market expectations for rate cuts next year. do you think that we will get rate cuts by the fed in the

first half or do you think they will be squarely in the second half and not that many? >> look, i do think it depends. the real side of the economy, it does need to slow, interview. it needs to slow and you need to see a little bit more loosening of the labor market, we think, in order for central banks to really feel confident that in elation is more sustainably at their target. i think there's definitely some resilience in the economy and we could see central banks lag worried about that outcome. powell has very clearly stated that he wants to be a vulgar and not a burns, so we think he could be lagging in terms of where cash when they start to cut. the market is going to praise a balance of risks here and the inflation data certainly has been good. tom: tiffany, thank you so much.

it is fascinating. you mentioned this hours earlier, 12 months ago the narrative we had looking back -- i don't think it is tragic comedic, but it is a company certainly how many people got this wrong. lisa: if you are just tuning in if you are thinking that we would get losses on the heels of this kind of number, you were wrong. another thing that probably is wrong, s&p futures reversed up to tens of 1% at the session highs after that unemployment filings report really highlighted there isn't that much weakness the way people have maybe feared. tom: i'm going to go to two americas in the technology overlay. the productivity debate, that started labor day. but the whole idea of the

productivity overlay speaks to the single element in the room which is the technology distinction of america. it's not talked about enough. lisa: tiffany really pointed to the fact that this would take a while to be borne out. we saw the same thing. whether it is technology from artificial intelligence or weight-loss drugs, how much is that really going to alter the structure as we know it currently? tom: out front of tomorrow, we are thrilled to bring you from the school of chicago one of our great financial economists. a perfect time to speak to randall kroszner of the fed. stay with us.

what do you see on the horizon?

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cutting rates. >> the fed put is coming back in the money for the quickly. >> we will have to see next year, that is the question of the fed put. lisa: leaving out the discussion of a fed put, and now there are many others jumping on board as we take a look at a distance missionary wave maybe with weakness, but we are not yet seeing it in the data. the data is today positive. we see unemployment claims coming in pretty much, initial jobless claims pre-much on target. you can see a little lift, yields over tracing from where the reach before. now they are back to about .15. tom: we covered this really, i don't think we need to redo it right now, that there are some percolation and i would say it sent the bank bouncing off other central banks. lisa: before we bounce that off a former central banker, i just want to bring up a couple of names that we've been talking

about throughout the morning. amd after coming out yesterday and sang a new chip could propel their sales of ai chips to 400 billion dollars by 2027, from $170 billion it is estimate, you can see the shares up by almost 3%. alphabet, the parent company of google released gemini, the largest and most capable ai model a company has ever built. this, according to jp morgan, though shares higher by about 3.5%. fueling more gains. tom: mandeep singh really first class on all of this, there is no other way to put it. lisa: does the fed put back? joining us now, do you believe in this idea that the fed will cut rates aggressively next year simply in response to disinflation even if it is not accompanied by weakness? >> if they reach their goal of

bringing inflation down to the 2% target, they will be happy to bring rates down. but i don't think they are going to get to their target anytime soon. tom: i know you had a recent meeting with -- and his work at pimco as well, but the johnston density world is about a global sense of we are all in this together. that has been the hallmark of his work for years. how late now are central banks to develop a constructive disinflationary trend? >> i think that's right, i think he saw that once the fed took off raising rates fairly aggressively, the other central banks in the world did the same so that they couldn't play from the same playbook because they were experiencing ration a similar way which suggested part of it was indeed what central banks were doing, but some of

his broader supply-chain factors. we see inflation come down, we seen the move down together. the fed is the big player, so it makes sense that other central banks would follow with the fed is doing. tom: if we have a big player, the answer is we are dealing with a technological excellence. does the fed colette into the debate? >> is one of the debates about productivity. if you have high productivity growth, it is perfectly fine to add highways growth and not have inflation. but if you have low productivity growth, you can't sustain high wage growth without there being inflation because the costs are going up relative to the outputs.

so that is one of the debates. are we going to see productivity continue to be strong as we have over the last few quarters. lisa:lisa: is that the main reason you don't think we are going to get the fed target? >> there are a whole variety of reasons. expectations that never went out very much for inflation. it never really lost credibility at the fed did the late 70's, early 80's i think it did lose a little bit and people have gotten used too asking for a bit more in wages. and they also have to make up for having lost so much in real terms over the last couple years. not all wage growth is going to be above the inflation rate as it has been over the last few months, and that means at some point it will be less exciting for firms to be hiring and holding workers and employment rate will move up. it will probably have a hard dish landing. -- hardish landing.

lisa: you talk about the nodes of inflation that are stickier, they will not allow them to cut as aggressively as some people are currently pressing in. if there an area of inflation that you are focused on just sort of signal what you are talking about? >> i think the fed is going to be laser focused on services as well as driving services inflation. nominal wage growth was below the inflation rate and now has been above. it is great for workers because they are getting increase in real wages but that means firms are going to be a little more reluctant to hire. lisa: are lower prices of oil inflationary or disinflationary? >> certainly for headline

inflation, it is lower. it helps to lower the headline inflation rate. but as we know, the oil prices have gone up, gone down. that they kind of looks through that as one of the reasons why they look at the core numbers to strip out the more volatile food and energy sectors. tom: you are one of her giants in financial economics. where we are right now, is it out of the textbooks you learn from or post-pandemic is this all original? >> i wouldn't say it is all original but it is at least a little bit unusual the amount of supply chain disruption we had pandemics so far only come around once a century and hopefully it will be another century before we have another one. and we've also seen an unusual resilience elsewhere to very significant interest rate increases, so that is a little bit off of the traditional playbook. is it a whole new playbook? not so sure yet.

certainly it pushes the existing playbook to the edges. tom: thank you so much. but in the midst of the claims and jobs day across thursday and friday, stay with bloomberg. particularly stay with michael mckee for all about reporting on this. i mentioned the technological excellence that is out there, and liam denning was really good at technology, writing for bloomberg opinion. he said to me is made for grandma, and that is the cyber beast. -- bramo. the cyber beast is the enhanced new tesla truck. he says it is the weight of a white rhino and goes zero to 60 down central park west in like three seconds or four seconds or something. i they doing this and asia, are they doing this in europe? musk is doing this in america. lisa: because americans are the ones that want to buy a truck. i just want to know where i can park that on the street. tom: you park it where you want to and anybody else adjusts.

lisa: i just wonder how much this is going to be a piece for people who are tesla bulls in real tesla doctors and how much this is the future. tom: people who know me, i've had the honor of speaking to our technologist and economics on this. we don't understand how unique we are in technology, which is 175 billion dollars of into orbit. where is the stuff coming from? it is coming from america. lisa: for now. it is about the global race to create something better. there has been some pretty fiery rhetoric from the commerce department about how to prevent -- for making inroads in this area because of the concern around not understanding what this technology can do even as

it develops at a faster pace than people can wrap their heads around. to me, that is what i'm trying to get a handle on. tom: it moves the markets. nasa up 6/10 of 1%. 10 year yield was up seven basis points, now only four basis points. lisa: i can't move past the fact that you think i'm going to buy a cyber truck. i don't one a period object, a style statement driving down the street. tom: can you imagine? lisa: people will just absolutely flood it. who is this person, it has got to tom: be a celebrity. tom:we will have to see. important discussion here on the american economy, exports and imports. this afternoon, 2:30 p.m..

tomorrow, jobs day. this is "bloomberg surveillance."

jonathan: three days without gains on the s&p 500 and trying to change it this morning. good morning, good morning, 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: live from new york, as the market prices fed cuts, the be oj considers hiking and nikki haley is taking the