-- who is elected. i think the market is headed higher into next year. >> we are in an environment where there is much less leverage in the equity market. >> we have huge levels of debt, and we don't want to get into a debt trap. >> it is clear that we are going to see downward revisions in many businesses. the question is how strong they are. >> the called a double-dip, but it is all the same recession. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. jonathan: from new york and london, for our audience worldwide, good morning, good morning. this is "bloomberg surveillance ," live on bloomberg tv and radio. alongside tom keene and lisa abramowicz, i'm jonathan ferro. with six days to go, and equity market the bricks down 48 on the s&p 500, more lockdowns and restrictions on the horizon in europe. tom: we are down 6.7% spx. i would also note, i know you are going to do it in the data,

but the breakdown of oil today on global demand is really significant. under $40, not only but well on to new lows right now, $39.71 on world oil. it is much more about the pandemic than it is the epsilon off the american election. jonathan: a breakdown on the equity benchmark in frankfurt, germany, the dax suffering. what is new about today? the dollar bid through g10 against e.m.. you mentioned the turkish lira this morning as well. the dollar strength returns with a bit of a vengeance this wednesday morning. tom: let me triangulate again here -- triangulate yen here, folks. you throw the dollar out and look at euro-yen, and euro-yen clearly indicates

weak euro. lisa: teladoc a.m., german chancellor ashtead :00 a.m., ,erman chancellor -- 10:00 a.m. german chancellor angela merkel discussing new restrictions to stave off the rapidly increasing number of cases of covid. also at 10:00 a.m., ceos of facebookalphabet, and are testifying to a senate committee on restrictions of political messages to fact heading into the election, also ahead of when anyone reports earnings tomorrow after the bell. fed's robertas kaplan is moderating a panel with ex-beckelman lynn governor mark carney. basically -- ex-bank of england governor mark carney.

jonathan: over to the politicians, another culture that i expect. we shape up as follows. if you are just waking up stateside, the last few hours really quite ugly in europe. the feedthrough, the followthrough, s&p 500 futures down by 1.4%. the story out of germany, a proposal to shut bars and restaurants for one month. france, reports suggesting macron might go for some kind of one lockdown. what that looks like, i have no idea. in the fx market, a weaker euro. euro dollar, $1.1739. it is a 180 from last week in the bond market. 10 year treasury yields 75 basis points. -- treasury yields back to 75

basis points. tom: the real yield is really important right now, back to a -0.96%. it will be fascinating to see within the nominal yield, the breakeven, disinflation, inflation how that real yield plays out through the trading day today. jonathan: let's take the nominal. i think it is going to be really difficult for the nominal to escape too far to the upside with bunds pegged where they are right now, down four. the 30 year bund right now, -34 basis points. tom: the message yesterday was yields in europe were actually pretty quiet. they are not today. the two-year-10 year, as lisa mentioned as we were going to air while you were in makeup, the twos-tens has really become more narrow. lisa: the most since march since that description. jonathan: do we like my makeup today? lisa: it's beautiful. jonathan: is it working for you? tom: it's very good.

jonathan: it's good? it is 7:04, and you haven't mentioned mr. betts sliding into home plate for the dodgers last night. jonathan: give me a chance. i'll get there. tom: ok, thank you. jonathan: troicki -- troy gayeski joining us now, skybridge capital cio. how are you processing the news this morning? is bad.early it from the standpoint of the -surging re in europe, which during the first surge, led the u.s. at the time. there has been significance resurgence above expectations, coupled with potential for no more fiscal stimulus. up until today, most of the selling we have seen from the tops we had in late august and

september have been tied to the fact that fiscal stimulus is being priced out of markets, and monday was the day where we expect to be priced out fully prior to the election. equities are only off 6%, seven present from the recent high. there could be more downside into early next month, and then hopefully close to the election, we will get more clarity on the stimulus side and the pandemic will be somewhat under control at that point. tom: your charm is to know what people are doing with their money. what are alternative investors doing right now with their money? are they loading up on growthiness? are they making rotations? is anybody making alpha? troy: risk on was very much the mantra of the day for hedge funds. there was quite a bit of risk being taken in broader beta.

as we move closer to the election, managers have the risked modestly -- have the isk -- haveave de-r de-risked modestly. the problem is that no one really knows when that reversal will come. will be by higher interest rates? willoughby driven by a more significant reopening in the economy? hard to say. meanwhile, growth is still favored over value. that has started to change a little bit. with regard to alpha, in general, the hedge fund industry has had the best alpha year since 2013, if not before the crisis. you've had so much dispersion in the equity market in particular, which is still a very heavy focus. you haven't had big sector winners and sector winners. on top of that, many of the credit managers that got hit back in march have made a significant portion of their

losses back. it has been a fairly strong alpha year for the hedge industry. lisa: david einhorn of greenlight capital yesterday going on the robinhood conference, said that tech was in a bubble, that it probably already peaked in september, and that he is shorting certain overpriced ipo's, as well as other more peripheral tech companies. are you getting on that train? troy: we don't have a lot of tech exposure right now. is really not a bubble, per se. it is nothing like the late 1990's. we are in a period where the strong tech names are very good businesses and continue to grow margins for the most part. but you do have very elevated valuations. when the s&p is at 23 times forward earnings and the nasdaq

is multiple points higher, that sets you up for near-term weakness. but in terms of having some significant bear market over the short term, we think it is unlikely. with all the spec to mr. einhorn, we could be in for a prolonged correction, but nothing like we had in 2002. we just think that is very unlikely. you have to be very careful if you are over your skis in terms of tech exposure. the next two or three months could be really painful. jonathan: i think the point einhorn is making also, the 1990's shouldn't be the benchmark for whether we are in a bubble or not because it was so crazy. the question he is asking is whether or not we are moving in terms of sentiment from greed toward complacency. you are looking across fixed income right now. can you identify the shift from greed to complacency? what would that look like? troy: in terms of fixed income,

you are starting to see prices adjust on worst probability of stimulus, and that is why you're seeing the curve flattening with dependent. hadst was a month where you very frothy behavior in markets. you had parabolic behavior not only in broader indices, but also some of the larger cap tech names in particular, many of them tied to the pandemic. that was arguably the peak for off -- the peak froth. now you are starting to see some of the froth come out. we just don't see complacency in terms of managers being comfortable with the risk. riskinghave been de- modestly going into the election. the froth that was built up in august has not quite come out, and we might need to have 3% to 5% more downside in the s&p to clear out that excess. jonathan: getting about half of that right now. troy, great to catch up.

appreciate it, sir. equities break lower here, down 53 on the s&p 500, off by a little more than 0.5%. we started the program by talking about treasuries. jp morgan in premarket trading down another 2%. coming into wednesday, jp was down 4.3%. it has been a tough week for the bank. tom:tom: i know you are only on an hour or two a day, but in the blur of my day yesterday, i was struck by the year-to-date performance of the good banks, let alone talking about the bad banks. you can only do that for so long. you can only get away with that for so long. i should point out as well, microsoft not bad. deutsche bank not bad. the stocks really did not drive higher. jonathan: i am going to brush off the insult this morning. for listeners and our audience that might not know what tom is

talking about, i am here for the european open. i'm also here for the u.s. open. lisa: you are here all the time. tom: you are doing this for matthew miller. jonathan: i'm not complaining. lisa: but your makeup looks great. jonathan: that's all that matters. [laughter] tom: i thought i was your best friend. jonathan: not anymore. it's lauren from makeup. that to my best friend is. from the city of london this morning, good morning. this is bloomberg. ♪ ritika: with the first word news, i'm ritika gupta. president trump appears resigned to waiting until after the election to get a coronavirus stimulus bill. the president told reporters he will end up getting the "best stimulus package you've ever seen." the white house blamed house , who putancy pelosi the blame on senate leader mitch mcconnell.

moste has reported the deaths from coronavirus since april, and president emmanuel macron is preparing new measures to control the spread of the disease. in germany, chancellor angela merkel reportedly will propose posing restaurants and bars to the end of november. she's also expected to urge citizens to keep private context to an absolute minimum. booming cloud demand is driving microsoft sales. the company's quarterly revenue rose a better-than-expected 12%. microsoft's 13 straight quarter with double-digit gain in sales. wonlos angeles dodgers have their first world series in 32 years. the dodgers beat tampa bay 3-2 to win the best-of-seven series 4-2. the series was held in

arlington, texas. 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 ritika gupta. this is bloomberg. ♪

mr. biden: there's been so much pain, so much suffering, so much loss in america. more than 220 5000 dead

americans because of covid-19. pres. trump: on november 4, you will hear we are doing extremely well, and you will see. they used to always say, look at europe. first of all, they count their cases totally differently. but look at europe. they have a big spike. and you know what? it is going to go down. jonathan: that is the story this wednesday morning. the president of the united states and vice president joe biden on the campaign trail with just six days until the u.s. election. from london and new york, let's get to the price action this wednesday. equity futures lower, around about three hours ago we add to that. we are down about 47 on the s&p 500, off by 1.38%. europe is where the pain is. $1.1739, down 0.5%. in the bond market, 76 basis points is your yield on the 10 year, down around about a basis point. you mentioned crude.

in 4.6% on coming the day. tom: brent crude, $39.62. dollar-yen out to new strength. this is really critical to see how yen dynamic moves. 4.16 --t now at one of at 104.16. kevin cirilli now. boom, it is don farrow -- it is jon ferro. on fire at axios this morning. they have a single line in the report looking at the stunning mathematics right now of an idea unimaginable, which is we don't get more conservative as we age. some of the nation is screaming

a new liberality as they age. do you see any indication of that? a great think it is unknown. i think the older you get, i don't know. i guess i will have to live it in real time hopefully. but i think it is difficult to point that out. i can tell you that based upon my reporting, joe biden's campaign has really been trying to hammer home the issue of seniors and the constituency of seniors, especially in a battleground state like florida, and the president has struggled with seniors as a result. tom: we got the ceremony yesterday in warm springs, georgia, which resonates frankly years before me on the death of fdr, and that resonated across the nation. is that symbolism resonating florida?an elderly in kevin: that is the precise dynamic. one could make the argument that

the reagan democrats or the kennedy catholics are really the coalition that joe biden is trying to speak to, especially when he is invoking some of the historical nature not just of fdr and polio, but also his own personal narrative, his own personal experiences with loss, and that he is trying to make that a part of his eco-'s -- his ethos appeal to the electric. but also covid night -- to the electorate. but also covid 19 has really been a different experience not just in terms of geographics, but also a different experience based upon your demographic and your age. senior citizens have had a different experience with the covid pandemic than younger people. i am not saying that from a medical perspective. i am saying it from a day-to-day perspective. that is what the biden campaign is trying to tap into. about whicht's talk

image resonates more positively right now. the president tweeted out a side-by-side image of his campaign, packed with lots of noise, with a biden rally, socially distant. that is exactly the same contrast biden wants to draw as well. which one is more effective? kevin: to your point, precisely from the republican perspective, they feel they want to have this issue of momentum. they are trying to drive turnout for republicans to show up to the polls on november 3. should note headlines crossing late evening yesterday on the bloomberg terminal where you've got 50.4% of the ballots cast in in6 have already been cast 2020, something like 70 to 80 million americans already having voted in this election. that is shattering records across the board. what we don't know is they are first-time voters.

we do know some of where they are voting from, and that typically liens democrat, but if they are not first-time voters, we don't know whether it is going to be turnout. speaking of turnout, very much on my radar in the battleground state of pennsylvania, where the president held multiple rallies this week. in philadelphia, the governor had to send in the national guard to stop some of the racial unrest that has bubbled over in the past 48 hours. what impact will that have in terms of turnout on november 3? unknown variables really could have multiple getcts, including when we the final result, whether it is in the days or weeks after next tuesday. jonathan: i am glad -- lisa: i am glad you brought up the protests in philadelphia, involving the police killing a 20 very rolled -- a 24 you will black man who they say had a

knife. when you start to focus more online order, when we start talking about the national guard going into a city, that has in the past really been a divisive issue and has been something that has motivated people perhaps on the trump side, as well as others. at this stage in the game, given how many of the votes have been counted already, can anything move the needle? kevin: in terms of the data, according to "the new york times," president trump is over performing his level in the philadelphia region compared with his level in 2016. what i mean by that is turnout in philadelphia, which is where the biden campaign is headquartered, is going to really be what decides whether or not joe biden can win back pennsylvania. all the early polls would indicate he is on the path to do that. i've got some fresh reporting to answer your question directly. yesterday i spoke with a republican source connected to the president's reelection

campaign who told me one of the options on the table is, and you heard the president allude to this yesterday on the campaign trail, is to have a series of aslies after the election folks are sorting out and counting the totals. that could also be a strategy joe biden deploys. we could have rallies and events and public speeches well into late next week or next weekend, and that could provide some confusion obviously, in terms of as the results are getting -- exactly, and it would also drive media cycles. i say that not to get into hypotheticals, but to kind of rep for what we could be seeing next wednesday, thursday and friday. jonathan: kevin, thank you. appreciate your time this morning. kevin cirilli, bloomberg chief washington correspondent. alongside tom keene and lisa abramowicz, i'm jonathan ferro. past the little

chit chat and get to the price action. just don't want to go there. lisa: good luck. [laughter] jonathan: equities down on the s&p 500. ofing up next, megan greene harvard kennedy school, senior fellow. this is bloomberg. ♪ ♪

♪ jonathan: wednesday morning worldwide, a classic risk off set up. that's the price action. it looks a little something like this. well, lisa, it might be on a daily basis. [laughter] -4.1%. keep an eye on the banks today. down in europe, down 7% on euro banks. this week alone, we are off by 6.7%. euro weaker, yen stronger, dollar stronger. it is just that risk aversion really getting behind a dollar bid. euro-dollar down to $1.1745. the u.s. 10 year, 76 basis points. going into the ecb news conference tomorrow with christine lagarde, it is what is happening to italy, or rather

what isn't happening to the italian debt market. yes, btp's are softer. italian bonds are lower. yields are higher by almost five basis points. but eight or nine months ago, i think you would have seen a much more vicious move off the back of what is happening in europe this morning. tom: as we look at the data right now this morning, gold out of bed and right back to support $1894, down $18. it is a goofy chart. nevertheless, it will be interesting to see how gold breaks here over the next number of days. megan greene is at harvard kennedy school with a very nice global sense, particularly even though her work is in the united states, with a very continental ense.e s why don't you bring up the observation you just made on sustaining the price for italian debt. jonathan: i wonder if her now, that is the one piece of comfort for christine lagarde tomorrow in the ecb news conference. it might change, but for now, we

are holding up on the periphery. megan: i think that is right, though i think the jury is still kind about on the eu recovery side, which is the reason anyone had faith in the euro zone. the recovery is kind of stuck in the plumbing. saidple have come on and that they don't want to take on the loan portion of it, which effectively reduces the size of the recovery fund. as we have seen a resurgence of new cases across europe, i don't think they will do anything at this meeting. i think they will just set up for further easing when they come out with new forecasts and when they have a better sense of how bad the second wave in europe is. i think christine lagarde will to stand pat for now, but will have a bearish tone so that the ecb can go ahead and ease further in december. tom: i want you to link pandemic news into the observation jon

has been making all morning on the banks, not only beleaguered eu banks, but even u.s. banks underperforming. statement, is the system unraveling now with this pandemic news, or can there be a bit found out there? megan: i think the resurgence of the virus shouldn't have surprised any of us, but i think it is surprising a lot of investors, particularly as we are seeing some country's lockdown again. it is generally consensus that no one has any appetite for further lockdowns after what we experienced in march and april. we are seeing ireland and wales, for example, who locked down pretty severely, now france and germany talking about measures. i think there is this new realization that things could get quite bad this winter. we might have to take fairly extreme measures, though i think

governments will go out of their way to make lockdowns regionalized. tom: where is the dialogue? you are very good on this at kennedy school, getting from a assistance outl to what we are hearing and selective interviews, which is gdpneed for a 5%, 6%, or 7% fiscal package. are we nudging toward that shock amount? megan: with a lot of the support measures in the u.s. expired at the end of july and august, the longer we wait, the bigger it is going to have to be, particularly as we go into winter, where we are going to see further headwinds to growth. i think the longer we wait, the bigger that package will need to be in order to carry businesses and workers across to the other side when the weather gets warmer, or when we get a vaccine or treatment. think that envelope is increasing every day. lisa: as we talk about delays in fiscal policy, people turn to

the fed and say, what more can you do for us? bill dudley, former new york fed president, came out today in a bloomberg column and said, probably not that much. do you agree with that assessment, the idea that the fed has offered pretty much all it can to stave off what could be potentially escalating bankruptcies and consumer insolvencies as the virus continues to spread? megan: i don't actually agree with that. they would have to do some really unconventional stuff, but there is something people are banging on about, which is dual interest rates. you have one interest rate for borrowers in a different interest rate for savers, so you can cut the borrowing rate deeply negative. you can increase the deposit rate so that you can benefit savers. you can subsidize borrowers and savers at the same time. that is an unambiguous stimulus

across the entire economy. central banks are reticent to implement this in part because it is sort of fiscal policy. i don't think it is the best scenario. it wouldn't be my first k solution. but given that fiscal authorities aren't doing their job, stepping in with fiscal support, i think it is the second-best solution. it is something the fed can do. they are just not there yet. jonathan: just want to bring some headlines coming out of boeing. the workforce at the end of 2019 was 160,000. by the end of 2021, 130,000. boeingn looking -- looking at a reduction of an additional 7000 employees. ende they are looking to 2021 is a real mark on their workforce at that company. tom: we can fold this into our discussion with megan greene. reduction% employment since the peak of 6, 7, 8 years

ago. in the 20 year chart of boeing basically is the give up of the boom. megan greene, is that what we are doing? i understand airlines is the heart of the pandemic, but are we framing out the giving up of the boom? megan: i think boeing is a special case. it was already in trouble when dependent kit -- when the pandemic hit with the 747 max. i don't think we can take those numbers and flesh them out across the economy. what we do know is we have had this precipitous decline, and we saw the implications for the labor market. then we had this massive boom, and we saw the locations of those for the labor market, too. now we are stuck in this period where we have seen many more jobs become permanent losses rather than temporary losses. the number of long-term unemployed set to triple over

the next few months. it is going to be harder and harder to get these workers back into the workforce. so i think there will be scarring from that. jonathan: megan, that was the least constructive view, and now arguably is not anymore. things have changed in the last month. risks now is the second wave turns into a second dip. how do you read that at the moment, looking at the caseloads in europe and the united states, and how you think consumers and companies will respond to it? megan: this is driven entirely by the virus, and i think it will be driven more by confidence then government policy. they are just not going to do it, with government officials tell them they cannot. , we are alsospike seeing deaths increase. i think it will be a huge .eadwind on the economy it is sort of a perfect storm

for another dip, so it is certainly possible, but it depends entirely on the virus and on policymakers' ability to bridge the gap. tom: what happens after the virus? do you perceive a jump condition or a level of two back to where we were, a percentage of back to where we were? what happens when this is over? megan: i think the economy will look fundamentally different after this is over. certain industries are just never coming back. certain companies are never coming back. that kind of dislocation takes a while to work its way through the economy, especially as workers have to retool and reskill for new jobs. have a vaccine or a treatment, we will still be below where we were when this crisis began. the only thing that can change that is if we have a new stimulus package with tons of innovation and infrastructure spending, and things that fundamentally boost potential

growth. tom: that's great, but i didn't care about the american economy. i was asking what happens when this is over about the red sox? over at espn today, there are 60 to one odds in 2021. the worst pitching since 1932. what is your prescription for the red sox? megan: can't get any worse than they were this season, so it is only up from here. that's the good news. tom: see that, jon? nailed it. jonathan: i love that. why did you let mookie betts go? megan: don't get me started. jonathan: megan greene, harvard kennedy school. that's all you have to do. lisa, it is so easy with these people from boston. lisa: it is true. jonathan: just mentioned mookie betts and they break down. tom: who is the red sox of the premier league? is there an equivalent team? jonathan: have to think about an established club, with long time

without winning the league. i would say liverpool. went decade without a title, got a title within the last couple of years. haven't sold their best player, though. lisa: jon, how are you letting tom off the hook of pivoting to london when he doesn't want to talk about the red sox and the terrible trade in february? jonathan: i was going to talk about his next birthday party and wonder if kim kardashian inspired him. i don't know if you've heard of this, but this sounds perfect for you. after two weeks of multiple house screens and asking everyone to quarantine, i surprised my closest is a trip to a private island, where we could pretend things were normal for a brief moment in time. [laughter] jonathan: i'll quarantine for two weeks. tom: we are going to take a left over to roosevelt island and quarantine. jonathan: wonderful. lisa: a tram to roosevelt island. jonathan: coming up on this

island, john freeman, cfra analyst. took us a while to come off the rails this morning. proud of us. equity futures down 1.45%. this is bloomberg. ♪ with the first word news, i'm ritika gupta. tropical storm zeta is expected to become a hurricane as it crosses the gulf of mexico. it is picking up steam after hitting the yucatan peninsula and is on course to make landfall in louisiana today. it would be the fifth named storm to hit the state this year. the national hurricane center is warning of a life-threatening storm surge. coronavirus hospitalizations have risen at least 10% in the past week in 32 states and washington, d.c.. new mexico led the way with a 68% increase, followed by wyoming and connecticut. south dakota, montana, and north dakota have the most current

patients per capita. the surge is putting a strain on the u.s. health care system. in philadelphia, demonstrators clashed with police following the shooting death of a black man. police say the man had a knife and they shot him. according to "the philadelphia inquirer," penciling as governor is deploying the national guard -- pennsylvania's governor is deploying the national guard. according to the department of homeland security, hackers have targeted the u.s., south korea, and japan, focused on foreign-policy and national security issues related to the korean peninsula. jp morgan says a surprise win by president trump next week could benefit u.s. stocks and the dollar. the bank strategists say a trump victory would also hurt asian assets. joe biden is currently leading in the polls, but wall street firms have recently cautioned against assuming he will win the election. 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 ritika gupta. this is bloomberg. ♪

>> we think the second quarter experience has shown us that they households and corporates are relatively resilient, and in

a position to support the economy through this period of uncertainty. jonathan: we will need some of that resilience again in europe. that was the go to bank cfo. from london -- the deutsche bank cfo. from london and new york, good morning. , -46,p 500 rolling over down 1.37%. off-dollar down to $1.1731, by 0.6%. in the bond market, yields down a basis point to 0.7576% on the 10 year. switch of the boarding get to the dax. the dax is getting absolutely hammered in frankfurt, germany. chancellor merkel with a proposal to shut down bars and restaurants for a month. in france, macron suggesting he might go for a one-month lockdown. on the week, off by 7.7%. if we shut things off right here, it would be the worst weekly loss going back to spring

in the middle of march. tom: this is a really important observation. the dax is sort of the roulette wheel of europe, like the kospi is in asia, and frankly the nasdaq 100 at times in america. it is a three standard deviation move down. that takes you back to march, and some real challenges there. we are watching the bond market in europe very carefully, -.79% on the two-year yield. right now, with cfra, john freeman joins us. he covers microsoft, which is pretty easy. strong buy, moonshot. it goes up and up, except there's a lot of strategic interest here. you are an expert in the strategy and placement of these companies within the cloud. microsoft is a winner. amazon is a winner. tell us where that competitive landscape in the cloud will be in two years or five years. john: that is a great question.

intou divide cloud roughly two big buckets, one bucket is cloud infrastructure services, people developing their own applications. providers running their software on your infrastructure. that is amazon eight of u.s., microsoft azure -- amazon aws, microsoft azure, and google cloud. facebook is also a hyper scale provider and operator of data centers, so they could do it, too. i have been looking for them to diversify that way. but it will at least be a three company oligopoly. , thee application layer number of competitors and players are really multiplying, and i think you are going to have a lot more players and a lot less consolidation then you

did last time. tom: beautifully explained. this goes to the margin persistence. you've got a strong buy on microsoft. but the answer is, do you get persistency of their 12% revenue lift and a persistency of cloud growth, and particularly margin sustainability? can you fold that in out five or 10 years? john:john: absolutely, that is a great question. their revenue growth sort of stalled for a number of years, and what that was was what i call the cloud shift headwind. when you first move your applications to cloud subscriptions, you lose that one-time revenue license, and then you take that and you spread it over into the future. now you are over 50%, microsoft is now 50% plus cloud subscriptions, then you get this cloud shift tailwind, which for

adobe, has lasted for four or five years. microsoft can definitely do the same, given the installed base of microsoft office, going to 365. that grew also very nicely in the quarter, so it is not just azure. lisa: a lot of people would agree that microsoft delivered great earnings. it beat expectations. it does raise a question of whether big tech is priced to perfection, whether people have already given them credit for the years of growth they are going to see in the cloud and other services in the years to come. now it is basically just a hold and see game. why would you disagree with that? john: i would disagree with that because i think there is the assumption that the growth tails off again. i don't think that happens. i think they can maintain midteens growth for well beyond three years, and i think relative to the traditional

legacy type of software companies that kind of top out at 40% operating margins, i don't think cloud is like that. the economics are different, and 60%can go up to 50%, theoretically operating margins and some of these businesses. lisa: there's also the question of market share. azure is number two in cloud services behind amazon's offering, aws. how much did that really matter up until now? the cloud services business was growing that much more quickly. how much are they competing against amazon, given amazon's dominance? john: they have one really great card up their sleeve, and that is the way azure is constructed, to move all of those applications that you dote in microsoft with the they have been

pushing for decades, it is more compatible with azure's structure. that is better for customers who do not want to think of the complexity of this transition, so microsoft has a lot of their install base with the dotnet framework, that is a lot easier for them to do that. that is a competitive advantage that is apparent. jonathan: great to catch up. john freeman there. we got to get you some bookshelves on "bloomberg surveillance." tom: i like it. he's got them stacked up there. lisa: it's authentic. jonathan: it's cool. lisa: i like it. jonathan: ok, i don't want to get hate mail about this. [laughter] buy, tom says it's a clear and you say you need bookshelves.

john, you were great. jonathan: big tech delivering tomorrow. tom: and this cloud issue is really important, the sustainability. i don't have any clue what they are going to report. it is not our job to try to front run with the earnings will be. but as a statement of this pandemic, the separateness of these performances is just stunning. jonathan: alongside tom keene and lisa abramowicz, i'm jonathan ferro. already getting the messages. it was just a joke. i like the pile of books. he doesn't need to get a bookshelf. lisa: i thought it was fine. jonathan: don't encourage it, lisa. i can see it coming through the boom blurred desta bloomberg. daniel morris -- through the bloomberg. daniel morris, bnp paribas senior investment strategist. lisa: look at those markets. tom: how about those markets? [laughter] jonathan: i can keep going. let's get to the bond market. tom: never been a problem before.

jonathan: you do need bookshelves, i'm with you. thank you for writing in, that one person. thank you very much. [laughter] flying solo in the next hour, i'm jonathan ferro. fixed is bloomberg -- this is bloomberg. ♪ loomberg. ♪ are you frustrated with your weight and health?

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now it's your turn to lose weight, look great, and be healthy. get off the floor and get on the aerotrainer. go to aerotrainer.com, that's a-e-r-o-trainer.com. >> it doesn't really matter who is elected. i think the market is headed higher into next year. >> we are in an environment now where there is much less leverage in the equity market. >> we have huge levels of debt and we don't want to get into a debt trap. >> the service is part of the economy is really in trouble. >> it is clear that we are going to see downward revisions in many businesses. the question is how strong they are. >> they call it a double-dip, but it is all the same recession. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. good morning, everyone. the fog in new