>> the failure of both monetary and fiscal policy is that the money isn't in getting to the right people. >> i think we will be stunned by the degree of earnings upgrades. >> monetary policy looks like it is on hold for a long period of time. >> we've never had these kinds of numbers before. we've never had these trajectories. >> it all comes back to the fed. the fed is very concerned about the outlook, whether it is l- shaped or u-shaped. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. day.i day -- what a

5, 6, seven major stories, are driving us forward. simply an open question with all that is going on, what has your eye this morning? jonathan: the italian bond market. i know that feels a bit off the beaten road, but right now rallying aggressively over the less capital weeks. look at the spread of btp's to german debt at the moment. it is about 20 basis point. that was about 280 earlier in the year. that is one to watch in the debt markets. tom: bond price up, yield down. what is the why? is it a flight to quality? jonathan: reduced redenomination risk, i am not sure we are completely there yet where we can say that this market now trades like a proper sovereign. what that means, we used to question how long some of these

countries would play into the euro zone. the risk of redenomination, moving out of the euro and being repriced in a different currency. the fiscal backstop of a couple of months ago, even though it has not been fully implement it, i think that gave people some confidence that we have that -- we have have at least taken a step forward. 21 of just see, from day the election today 20 today, boy, did it heat up in the last couple of hours. lisa: and markets are responding in tandem with the different headlines. you see stocks vacillating here. this bidalking about into credit, even though it is uncertain what the future has with with back to the economic prospects. credit in the u.s., spreads, the extra yield to own high-yield debt has fallen to pre-pandemic levels, even for the lowest rated junk bonds in the u.s., even as we have a lot of clouds overhanging here.

even though the situation arguably, and frankly, if you look at the unemployed it picture, is much worse than earlier in the year. how much of this is fundamentals, and how much is just a matter of the central bank's firehose of cash? tom: a debate tomorrow is not there. the data red and green on the screen. higher earlier, but we have come back to a turn to the markets. i am not going to spend a lot of time on the data. dollar weaker a little bit. comes intens spread from 61 basis points. goldman sachs out with quite good earnings, popping over to present. there's been any number -- popping over to percent. there's been -- over 2%. there's been any number of bank earnings. right now it is about survival and the reconstruction of the san francisco bank. sonali basak joins us, our chief all street

correspondent, on wells fargo. where are they in that process? sonali: slow and painful, and the middle. they have a lot to do in terms of cutting costs. we already know they are cutting jobs. they are cutting people at every rank, the highest ranks of the bank. you have charlie scharf, a former did you morgan the same -- former jp morgan same, and that change is slow. investors seem to be try to giving wells fargo time. there are the bukks and the -- the bulls and the bears for the wells fargo story. jonathan: what is the theme so far? sonali: i would say costs because if you think about it, they have all been helped -- and charlie scharf even said so in the press release -- we have been helped by monetary and fiscal stimulus. how long does that last for? costs are bloated, and bank of

america, morgan stanley have committed to keeping people on through the end of the year. , wheree do they reduce did they add changes to expenses, and where does that go into next year? are we going to see a massive pain in terms of headcount reductions next year? lisa: read, layoffs. that is what headcount reductions will translate into. there's also a question about whether some of the banks will increase lending, given the fact that there is so much support on the fiscal side. we know they have been tightening standards, reducing credit available to some smaller businesses. any sign of what the future holds on that front, given some of the pressures we are seeing? sonali: i am glad you asked. when you look at the loan officer surveys to the fed, it shows you that they are planning on writing and lending -- planning on raining and lending. we will see charge-offs at the end of next year. tom: 10 year return, wells

fargo, 1.9% a year. what a train wreck. sonali basak, thank you so much. andrew sheets joins us of morgan stanley. always wonderful to have him on come on the dynamics and correlations of the market. is the equity market alone here, or is it other markets adapting and adjusting to the expectation out there? andrew: good morning, and good to be with you. i think it is pretty fascinating about the equity market, and a lot of different markets, is that the headline levels speak to quite a bit of optimism. we are back near the highs in the s&p 500. that would clearly suggest a quite optimistic outlook on the economy and even's. and yet come across a lot of these markets, you still have the micro relationships, the intermarket relationships that reflect a lot of growth pessimism. small caps still trade at a historically large discount. yields are still very low. the curve is still very flat.

the ratio between high-yield and investment grade spreads is still pretty wide. all of those things are what you would expect if investors were less confident about growth, not more confident. i do think it is a pretty nuanced picture. the headline indices are high. it is easy to read that as an anonymous -- an enormous amount of growth opportunity, but i think that would suggest there's a lot more confidence that there is a lot of liquidity in the market. there's a lot of high expectation that growth is going to rebound strongly. jonathan: did you just say that spreads are still pretty wide? andrew: yeah, i know. it might have sounded like a misquote. if we look at the relationship between high-yield and investment grade, that relationship is still pretty elevated. high-yield spreads have come in a lot less relative to higher-quality spreads, and even

within the high-yield market, you still see pretty average levels of valuation gaps between single b credit and double be credit -- and bb credit. yes, it has rallied in. yes, there's a lot less value than there was over the summer. but i think this is an asset class that rarely trades at the average. i think we are moving from spreads being too wide to probably the next phase being they need to be too tight. lisa: jon ferro its setting me up because he wants me to ask you about the incredible amount of money that has poured into whether wece, and have seen the end of the bankruptcy cycle. are you saying that spreads are going to tighten because credit quality is perhaps underpriced right now? that investors aren't giving the benefit of the doubt to the

likes of carnival, delta, and these other companies that have yet to get back on board? or are you saying that liquidity will overcome all of this concerns, and they won't be an issue for creditors? andrew: i think it is a little bit between the two. i think it would actually be a pretty common, pretty normal credit cycle to see the market they and improve ahead of peak in the default rate, ahead of the worst of the downgrade cycle. we saw some of that in 2009, 2010, where the market had largely recovered in 2010, even as there were still quite a fugue -- quite a few downgrades to happen. the credit market does have some precedent of moving well ahead of those factors, so i guess what i would see it more consistent with is that kind of normal cycle. you will still see downgrades,

you will still see defaults come up at the credit market has been a reasonable job of some differentiation there, that those events won't be enough to derail the broader high-yield market. jonathan: andrew, you are so constructive you are making lisa depressed. [laughter] can you tell me what would make you bearish? when you read that sunday start that everyone wants to be on the distribution list for, what makes andrew sheets bearish? what changes it? case for do think the credit is better than other asset classes. we have less upside to our u.s. equity targets. we have less upside to our emerging market equity targets. i think those are markets that we do think are more fully valued than the credit market is. i think if we think through u.s. election outcomes, and i think there is a lot of focus on what is the immediate market reaction to different combinations, but there are certainly combinations where you could inhibit further fiscal stimulus in the u.s.

i think that could be quite problematic. if you had to ask me what is the broad scenario that would worry me most longer-term, it is that we have a little bit of a "groundhog day" with 2010, 2011. we were coming out of a recession. there was a lot of stimulus in the system. then the stimulus just kind of stopped, and the markets focus shifted to balancing the budget, fiscal austerity, and those kind of things really slowed down the recovery. my concern would be that you go through that again. you've had this very sharp recovery off the lows in march and april that policymakers take their feet off the gas next year, and the recovery isn't as strong as we expect. catchan: andrew, great to up, and congratulations on the calls so far in 2020. far more constructive than the consensus through this year for economic recovery.

chet and i -- quite a call from that team to be more constructive on this economy than most. tom: they have been on fire, switching from a pretty negative call to a positive. i am looking at the apple 10 year piece, yielding 10.3%. look at how much room there is now. jonathan: it is just too wide, tom. [laughter] not my view. i never. we haven't talked about the iphone yet. we can do that a little bit later. futures unchanged on the s&p. this is bloomberg. ♪ kailey: with the first word news, i'm kailey leinz. prospects for another stimulus package before election day look bleak. president donald trump and since republicans are at odds. the president is urging them to "go big or go home," but senate majority leader mitch mcconnell is only committing to a vote on

the paycheck protection program for small businesses. house speaker nancy pelosi is demanding that the white house latest offer, saying it is not big enough. concerns about mounting debt should be put aside until the accomack recovery from the coronavirus is complete. the imf is normally a champion of budget restraint, but the fund agrees it is too early to end support. in the u.k., there is growing pressure on prime minister boris johnson to order a circuit breaker lockdown. party opposition say it is needed. there are concerns that new restrictions are not enough. bloomberg has learned conocophillips is in talks to buy concho resources. the company has a market value of about $8.7 billion. the company is looking to make a big bet on shale amidst a historic downturn in the oil industry. global news 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700

journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. ♪

♪ >> we know that the economy is recovering, and we are not certain just yet whether the economy can stand on its own two

feet and continue to deliver these strong credit numbers. jonathan: droid cassidy of rbc capital markets -- gerard cassidy of rbc capital markets weighing in on the results and the help we have had from the government. wells fargo acknowledging that helped and attributing their results to the help they have had on the monetary and fiscal side. many others would say the same thing. from london and new york this morning, good morning. alongside tom keene and lisa abramowicz, i'm jonathan ferro. your price action shaping up as follows this wednesday morning. futures go nowhere. $1.1755.ar, i know i just pulled you in a little bit, lisa. dr. you excited, and then nothing -- got you excited, and then nothing. the question of the morning, does tom keene get the iphone 12? that is the only question that matters. is he a buyer or a keeper of what he's already got? tom: i'm not there yet because

this has a great battery. what i have to say, and i covered this this morning is the a 14 chip is just stunning. the improvement in the underlying engineering of the toy, and you will see from that, that is my take on that. alex webb having his perspective from london earlier this morning. right now on the reality, which is if you are a shareholder of morgan stanley and goldman sachs, guess what? it has been a lousy 10 years. compared to a lot of other things out there, it hasn't happened. goldman sachs, totally on acceptable, under 4% return per year. olu holding court at bernstein, joining us with autonomous research. how do they do better than the terrible performance of the last

10 years? christian: good morning, tom. i will travel to -- i will try to help you on goldman. i don't know if i can help you with the iphone 12. i think there are many different this -- many differences the cycle versus last cycle, in terms of business mix. onerousthe lack of company's affects the lifecycles. you have seen that somewhat this year in a recession, and a somewhat tough environment. for example, this morning pce whichtting out was best in class relative to the other banks that have reported so far. so i do think, knock on wood, that this time is somewhat different.

tom: it starts with management. thatelief over 10 years is they are really in it for themselves. they are really not doing it for the shareholders. what has changed? christian: today's results are a really good example of what has changed. for example, a big part of the strong results is discipline on compensation. business that a is far more geared towards platform businesses versus people businesses, which allows far more operating leverage. clearly, this is still a talent business. you still have to pay for performance and attract the very with the focus on efficiency, like this morning, they can put up decent results. platform business versus

people business and efficiency, it screams job cuts. how big will be job cuts the next year on wall street? christian: i think broadly speaking, you have seen cuts on wall street over the last decade for the most part, and as you see automation increase, digitization increase, electronic trading increase, there are probably still going to be some more cuts. it is inevitable. that said, there are also opportunities that come through. you will see the likes of goldman sachs, for example, recruiting far more heavily in engineering type disciplines and technology type disciplines versus what they would have traditionally 10 or 15 years ago, so i do think, to your point, there will be some , butount rationalization

also opportunities in areas like technology to bring on new talent. lisa: which bank right now, based on the earnings results we have gotten so far, are you most impressed by? christian: it would have to be goldman, i would say, so far. just looking at the returns today kind of speaks to that. i would say more broadly speaking, if i was thinking about the more broad, strategic election of companies, i really like morgan stanley. i think james gorman has done a really good job changing the business mix in a very clever way, using excess capital to really remix the business via e*trade and very recently eaton vance. fromt 2/3 will come ght businesses. so morgan stanley, thinking about the long-term strategic

direction, is the stock we like the most. jonathan: just on the acquisition option, it is an option not available for many of the other big banks. it is option that could be available to goldman. why do you think goldman hasn't gone in that direction? stanleyn: again, morgan somewhat fares more strategically. your management team less in the way of x ability. so i do think they are somewhat behind strategically to morgan stanley. you need to know where you want to go first and be very clear of your direction before you go out and do deals. what i do think they will be in the conversation for acquisitions. they are beginning to build capital now, and they have always spoken to wealth management, asset management, and digital consumer banking as areas that would benefit from scale acquisitions, so i do think goldman will be in the

conversation for acquisitions going forward. jonathan: looking forward to getting you back on the show soon. christian bolu, autonomous research senior analyst on the banks. ,organ stanley tomorrow morning 7:30 eastern. that is when we round up the big bank earnings. tom: the last five or six days have been amazing, talking about thebanks into this, and in process of this pandemic and how they are doing. i will be honest, i don't know what to make about it, other than clearly, as christian just said, morgan stanley has an action vision, and to be honest, we are all looking for action from the others. jonathan: i think it is still wait-and-see for so many of them. this is the guessing game on the provisions side. of 2021 and the two 2021 -- the trajectory of 2021 hinges on what we see out of d.c.

tom: i am looking for an injury point -- an entry point on apple, but also an entry point on jp morgan. i am just losing as i go. lisa: an evergreen quote. [laughter] jonathan: this show. lisa: you can do this. jonathan: i've got it. this is bloomberg. ♪

jonathan: from new york and london, this is "bloomberg surveillance." we are live on bloomberg tv and radio. alongside tom keene and lisa abramowicz, i am jonathan ferro. your equity market looks something like this. we are unchanged. in the bond market, not much action either, nor on euro-dollar. just slightly firmer as we await the ppi data from america. there it is and here is michael mckee. michael: ppi does not carry the excitement eight used to, but we are seeing a little more inflation at least compared with ppi last month. .4% on ainal demand up month on month basis, that is double what the anticipation was. it was up .3 the prior month.

on a year-over-year basis, we finally get a positive reading in august. the ppi was -.2. in september it is positive .4%. the core rate for ppi is at 1.2%, that is better than the 1% expected and certainly up from .6%. two thirds of the rise in prices .4 increased to a in the final demand services. services change the index. they added services into consideration and it has become less decoupled from consumer prices than it had been. we do get a read on what the services industries are doing, they were up .4 on the month. final demand for goods also moving up .4. four seems to be the sesame

street number of the day. inflation or is it reversion to the mean? tom: everybody used to stop on the ppi and then it became out of vogue. how many months in a road you need a trajectory to indicate in inflation trend out of disinflation we saw in final demand? how may more months of data do you need to say inflation? michael: you have to consider this is the inflation, it is just low inflation. to get accelerated inflation you need two to three or four months of the core rate. you want to strip out food and energy. you have to look at it in tandem with consumer prices. companies have gotten good at squishing prices between the factory gates and the retail shelf along the middle. for, whate looking

you want to figure out is what the inflation rate is that affects consumers and businesses. that would take a lot more than we are getting. tomorrow, no doubt michael mckee will join us for the hugely anticipated statistic. michael feroli came out of chicago and new york university as a fed economist and joined a small bank of new york called jp morgan. he wrote for mehlman, he wrote for katzman and the others and defined in the nation the odd phrase, potential gdp. jonathan and lisa have a bunch of questions on where we are. i want to go back to your initial claim on potential gdp. do you adjust that statistic because of the pandemic? michael: that is an open question right now. normally in a bad recession we would want to lower the estimate of gdp growth because there are longer run impacts on the short

run of that recession. however, i think it is early to say. this recession was so short and the recovery so far has been robust enough that it is an open question. for example, normally one would say the slowdown in capital spending after a recession would lead to slower productivity growth. right now it is not clear how much capital spending is slowing. bad second had a quarter but a good rebound in the second quarter. the jury is still out. it is something we've been considering quite a bit. right now we are leaving our estimate unchanged at one point 5% for potential gdp growth. since an increasing number of people are saying what you are, the recovery has been more robust than expected the recession shallower, does that mean there is a greater chance of bigger inflationary pressures given the amount of money the federal government has thrown at this? michael: at the margin, yes.

better growth should lead to firmer inflation outcomes. it is still the case unemployment looks like it will be elevated for several quarters. while we may revise towards higher inflation, it will still be inflation we think will remain below the fed's 2% objective for pce inflation. generally i would agree with what you're saying, but i would not want to take it too far. jonathan: we talked about this before. i wonder how polarized the conversation is with clients on this issue, on inflation? michael: it is interesting. few weak months around the worst of the pandemic, we have had strong months since. a lot of that has been reversing the categories that were week during the pandemic but it has kept the discussion alive. are in ae

ininflationary environment the discussion is polarizing, as much as it was in 2009 when we were first experimenting with expanding the fed balance sheet, but people definitely are interested in it, given the importance and prospect for a future fed rate hike. jonathan: we cut up with catherine mann of city and she was talking about the gap between consumer perception of inflation, statistic measures of inflation come and financial market pricing of inflation. what does that spread look like at the moment? financial market expectations are closer to what you are seeing in the fiscal measure. i would say consumer perception on inflation are higher. one of the reasons for that is consumers tend to put more weight on prices that are more salient.

seem tople, food prices carry more weight in consumers perceptions than they do in the actual basket of goods and services. food prices may be one factor leading to expectations and market -- or the actual measures like core pce, which is also -- tom: how does real estate play into our guesstimate of new inflation? how the rents play in, owners adjusted rent, how does owner of home played into our guesstimate? michael: this is an interesting issue. renttenant rent and owners -- the rent people who own their homes would be paying if they

had to rent their homes. both of those have decelerated sharply in the past three months. some of that may be due to a phenomenon similar to what we saw nearly 2000, which is when there is a very hot house market and everyone is rushing to buy a house, what you see is weakness in the rental market. it may be a bit of a statistical maras, but nonetheless it will feature prominently -- a statistical mirage, but it will feature prominently because those figures are core pce which the fed looks at so carefully. a byproduct of a hot housing market may be depressed rental measures. lisa: how much does your unemployment forecast very depending on whether there is a support plan passed in washington or not? michael: it could vary quite a bit. the growth outlook could vary quite a bit. some oft something --

the numbers have been coalescing around $2 trillion. that is 10% of gdp. that will still have a pretty significant effect on gdp growth. as gdp growth, so goes the unemployment rate. clearly the markets -- focusing so heavily on where fiscal stimulus negotiations are going. tom: i do not get much bloom, but you had the chart on the trade deficit and weekly prospects this week. tell me about the twin deficits. do you linked together our trade deficit and our new and enlarged fiscal deficit into something you need to think about, study about, right about, and we need to understand? michael: one of the interesting things is normally in recessions the trade deficit tends to contract because u.s. demand for imports tends to contract more

the demand for exports. that has not been the case in this most recent recession, in part because it was unusually global in nature. usually the u.s. leads the global recession. this time everyone partook of recession equally. that was one factor that contributed to the trade debt. the other thing is given the nature of the recession, the u.s. runs a surplus in trade in services. trade in services has contracted quite a bit given the inability to maintain social distancing in many of these services, so we think that widening of the trade deficit may partly be due to fiscal deficit concerns, but also partly due to the global nature of the recent slowdown. jonathan: great to catch up as always. send our best of the team. michael feroli, j.p. morgan

securities chief economist. lisa went through the fed speak about an hour and 40 minutes ago. .ow refreshing it is it is an absolute snooze fast. maybe that is the objective. tom: they are waiting for fiscal stimulus. agoon article does go days that presumed fiscal stimulus at the end of february rate we have to get there and so does the fed. you can do this quickly on your bloomberg terminal in your car. fomc . i roll to 2021. you can do this in your car, particularly if you can see the screen. lisa: not while driving. we going to7, are have fiscal stimulus. jonathan: november 5 is the next meeting. tom: you are missing my point. you are focusing on rinaldo. he is doing well. jonathan: that is good to hear.

tom: march 17, next year, is when we are almost certain to have fiscal stimulus, says who? jonathan: says you come apparently. tom: i look forward to march 17. lisa, get it back on the rails. lisa: i want to let this keep going. jonathan: ireland -- tom: island is to the west. irish holiday. lisa: i am looking forward to the fed speak, particularly on regulatory issues and asset prices. the question is how much will the asset prices go up. see? i can bore everybody. [laughter] jonathan: operation get me to the 9:00 alongside tom keene and lisa abramowicz. tom: fed headline just out. we will have it for you in a bit. jonathan: awesome. this is bloomberg. kailey: with the first word news, i'm kailey leinz. president trump is battling

democrats and republicans every stimulus package. he is telling senate republicans to go big or go home when it comes to a proposal. mitch mcconnell is only promising to vote on a paycheck replacement plan for small businesses. meanwhile nancy pelosi says the white house plan comes up short. she is demanding significant changes. anyconey barrett avoided major slips in a day of questioning on capitol hill. senate democrats asked her about abortion rights, health care law, guns, and election and make little progress derailing her likely senate confirmation. the u.k. is signaling it will not walk away from trade talks with the eu immediately. force johnson has said tomorrow is the deadline for an agreement. -- boris johnson has said tomorrow is the deadline for an agreement. johnson and ursula von der leyen adjusted -- discuss the impact on a video call. eli lilly has put a critical trial of a virus antibody on hold because of safety concerns. it is not saying exactly what

the concern is. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am kailey leinz. this is bloomberg. ♪

>> there is a lot of nightmarish scenarios booked into things. if it turns out the reality is better than your nightmare, i

think there is a lot of revision that has to go on, and that revision will be a positive force for the markets and for the economy. jimthan: jim polson -- paulsen there as we count you down to the opening bell in new york. i am jonathan ferro looking head to the market open. jim keenan of blackrock will be joining us in about an hour. david kelly of jp morgan also with us. asha battier, dan -- ashok bhatia, dan ives of wedbush. bankruptcy. tom: these are guys who do not get up early. i get it. jonathan: just flipping that one out. carry on. are we are thrilled you with us early or mid morning. red and green on the screen right now. with aow barry ritholtz

really important conversation. we look at bloomberg wealth and bloomberg opinion, and his skill sets about actually getting through the financial investment storms. i want to talk about product development and the new new. you and i have lived this. .aybe it is esg maybe it is special purpose acquisition company's. whatever it is, you and i know this happens at 11:00 meetings in a skyscraper in new york where six people sit in a room and say what can we do to package a new product to excite people? that is how the game is played, right? barry: that is right come in the history of modern wall street and modern finance has been a sequence of product development going all the way back to mutual ,unds, structured products decimals asian --

decimalization, from fractions to decimals in trading. clo's. all of these new products come out because it is a clever way to try to generate return without ratcheting up your risk. most of them, they all seem to fail. tom: what is so important. fall, defend arthur levin and fractional shares, i think there is a huge value. on the manufactured products, how can our listeners and viewers defend themselves ness of it andrket yet get benefit from investing intangible investment assets? barry: i will take a line from the venture capitalists of the how can youscribe identify a first mover and a pioneer? they are the ones who have the

arrows in their back. there is a reason to rush out and try the latest and greatest anything, whether it is etf or esg or what have you. etf's have been around 30 years now? you did not have to be an investor in 1990. you could have given it a while, let it shake out, and eventually are an enormous improvement on mutual funds, if are no other reason than their tax efficiency is so superior to mutual funds. when we look at spac's, they have been around for just about 20 years. it is a product that has proven itself. the problem is people seem to forget a handful of these products have done well, and most of them, at least in the most recent research, most of

them are money losers. lisa: let's dig into this. has been a rage and we have had a record amount of money is earned for these vehicles which are blank check companies giving a management team of bill ackman, billy dean, gary cohn, and now marcio of softbank. peak spac oris as do you think this indicates there is enthusiasm that has legs to keep running? peak: i would not say spac. i would say you have just read a list of investors, some of whom have a spectacular track record, and some of whom have a spectacularly terrible track record. thenss if you like wework, by all means go by the softbank

spac. that sounds like fun. whosentioned bill ackman, track record is outstanding. you have to mention the man who havee reason why spac's gotten as popular as they have commented that is sir martin franklin, whose track record in rolling out spac's in the mid-2000 was nothing short of spectacular. 1000% returns on multiple spac's. because of his specific track record, because he has done so well, lots of other spac's have come to the fore. fast, but is really that does not mean anyone can grab a pair of nikes and gym shorts and set world records. that is the environment we are in now. everybody wants to be like mike. everybodylikes -- wants to be like martin franklin.

very few can. lisa: i do want to say, honestly, i think people like spac's because all the acronyms. you can do spectacular, all sorts of things. very funny and wonderful. tom: we are running out of time. we have to do this again. barry: whenever you like. tom: barry ritholtz writing for bloomberg wealth and opinion. tholtz management, they manage money and to try to buy more apple. we hardly covered apple. it is a scandal. lisa: i am sure it is going to be a scandal on my bank account after my children watched the 1:00 conference of the new iphone. they seem to be bifurcating it with the high-priced ones. tom: i have trouble with this. i am so glad you bring this up. this is not about buying a $600 phone or a $1000. they have got us into a utility mentality of a monthly plan,

whether it is $50 or $60 or $75. the media does not talk about this enough. lisa: i totally agree. one, 2,nted if you buy 3, 8 phones it adds up. these are not $1000 purchases. 85% are monthly purchases. lisa: i want to sate this is a very important turning point for apple. for three years they have seen their replacement cycle decline. people keeping their phones for longer. i am guilty of that. i believe you are, too. you love the battery. going forward, can they entice people to switch out their phones, whether it is monthly or a $1000 payment, that is a big question. tom: i have heard 14 times apple is done. i sat on fifth avenue listening to all of the gloom and the great lawrence aberdeen said, what? lisa: keep looking for an entry

point. tom: i am looking for an entry point. i need to see it go down one point -- .1% before i load the boat. bloomberg television. good morning. ♪ so you're a small business,

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york for our audience worldwide, good morning, good morning. "the countdown to the open" starts right now. equity futures up seven. we advance .2% and begin with the big issue. a $2 trillion game of chicken playing out on capitol hill. >> markets are focused on stimulus. >> another big round of fiscal stimulus in the u.s. >> you needed pretty badly. >> there is no doubt the real economy needs extra stimulus. >> they are right to expect it will come. >> hopes have ebbed and flowed significantly. >> we needs to be list us through. -- we need stimulus to carry us through. >> markets are convinced we will have some sort of stimulus. >> it looks like it is on life support. >> uncertainty around timing. >> if we do not get stimulus. it will be a difficult recovery. jonathan: