>> inflation is going to get worse before it gets better, but we are going to see the supply chain issues ease over the course of the year. >> everyone thought we were going to get cost squeeze, and what we are getting it is demand is appointment. >> sentiment is certainly shifting more bullish ahead of this week. >> has the labor market structurally changed? >> we are a very long way from stagflation. >> this is "bloomberg surveillance" with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning, everyone. on radio, and television, within earnings season.

lots to talk about. here at 8:00 a.m. wall street time, a lot of smaller companies streaming out. all in all, earnings better-than-expected. jonathan: the prevailing mood coming into earnings season was one of fear, not of hope. here of margins, we have not seen that any massive way this morning. so far, so good. that has been the story of the quarter. there have been some losers, but there have been winners as well. it is big tech after the close. we get alphabet and microsoft. tom: and the real emphasis here on technology, and of course, many now trillion dollar companies. it will be fascinating to see the conference calls of big tech , how they frame out the holiday season and how they begin to get into 2022. jonathan: with the bar getting higher and higher, and that is the concern around jeffe ries' comments right now. tom: i read every word of joe

feldman this morning on amazon. it is real simple. look out at the ratios, and as joe tries to get out to q4, he gets out to a 16% gross margin for ebitda at amazon. jonathan: here's one concern, and it comes from baird. the supply chain disruption, can the supply meet demand? what does that mean for an e-commerce giant like amazon? that is the concern coming into a name that hasn't done much this year compared to the likes of alphabet, up 50%, 60%. amazon has been a struggle. tom: it is amazing here how the conversation i am having with jon is removed from the wide set of other issues this nation faces. it is almost like corporate struggle in the pandemic is discrete and separate from every thing else.

lisa: you mean the k-shaped recovery? tom: well said. where did that go? lisa: you are still seeing it in pockets. my issue is we still see some of the fiscal support, some of the checks we sent out to individuals in the united states, sort of come into the spending. you are seeing people spend down their savings a bit more, which is what people were looking for. what happens next? people are talking about the fiscal drag that will eventually wear off, and than the real economy has to take over. are we going to be there yet when we get to next quarter, when we get to the second half of 2022, and people actually start going back to the labor market in force? tom: what is your estimate of the fiscal drag forward? lisa: actually, there is a two-year auction today, $60 billion of them, and i am really interested in them. i spare you earlier about them. i think it is important, the idea of how much demand is there at the front end at a time when the market is way ahead of the federal reserve with

respect to rate hikes. jonathan: gets us excited about auctions, tom. i'm excited about supply as well. we get the taper decision next week, at a same time most people in the bond market expect the supply to rollover. tom: you want to weigh in here on braves-astros? jonathan: i am wondering how the astros manage to treat, apologetic -- to cheat, apologize for cheating, and still beat the red sox. i'm struggling with that. tom: frankly, i learned so much about how they came to represent atlanta. jonathan: is this market not interesting enough for you that you had to go to baseball? should i talk about cricket? tom: no, please. [laughter] the only time cricket ever worked on "bloomberg surveillance" was i got a massive result, i hope lamp announcing it correctly, from perth.

let's do the data check right now. we have a good guest on what to do with the portfolio. futures up 17. the vix, 15. it is a bull market. jonathan: all-time highs in this equity market, advancing 0.4%. yields in a basis point on tens. a snooze in the fx market. kit juckes calling it a snooze. in the commodity market, $84 handle on wti. tom: vernice capital is in the trenches of what do i do now. they spend a lot of time talking to high net worth people about what to do in wealth management and how to participate scared stiff. the director of scared stiff joins us right now, there director of portfolio strategy. how scared stiff are people in this great bull market? >> i think they are a bit more

concerned with what they are seeing in the economy. when it comes to an investment standpoint, you still have a lot of people looking at the equity markets. when you look at a relative basis, the equity markets are the most attractive place to be right now, especially versus bonds. we have seen a back in yields, but there's nowhere near where they should be given the current economic environment and inflation environment. tom: when you look at what you do every day, are you finding within your strategy that you are going to rebalance the end of this great bull market? or do you let your winners run? >> right now you have to be careful if you have let some of those renters -- those winners run well over what your allocation should be. we are looking at the end of this year to take a look at some of our big winners, primarily because of the fact that we do see a lot of risks over the coming months in the equity markets, and it comes from some of the things everyone continues to talk about. what will happen with margins? we see rising pricing pressures

and labor market shortages. these are things you want to be a bit careful about. so we will be looking to make sure we are not too overweight in considering what our allocation is. jonathan: what is the ultimate call option to fade that story? to say i am feeling optimistic supply-side constraints will ease through next year? where do you want to be present in the equity market? >> the economy is still on very solid footing. we would look at some of those cyclical areas. we would be very cautious around those expensive growth type sectors because those are the ones that will be impacted by higher interest rates, and that is something we think will occur. so you want to be encyclicals. you want to look at financials, materials, industrials. then also small and mid-cap stocks as well. lisa: has the 60/40 folio officially died? >> yes. this is not the type of situation where we are coming off of a 40 plus year bond bull

market, and we are looking at interest rates that should be a lot higher from here, and most likely will move higher from here. so with duration as high as it is in the fixed income market, you have to be very cautious around fixed income. the private market, the alternatives, this is another place to diversify your portfolios, so we would be very cautious around that 60/40. it is not going to give you the same benefit, and it is not going to give you the risk-reward we have seen. jonathan: can you describe a tech stock you would like? i know you can't name single names. can you just describe the business model? >> honestly, i wouldn't buy tech stocks right now. jonathan: there we go. [laughter] >> a little too expensive for me right now. jonathan: that is the easiest way of answering it. i just don't like them. thank you. [laughter] lisa: describe the contours. jonathan: i get the notes, lisa. i know. it is called teeing up the

guest. tom: this is really important, the question you bring up. because obviously, we all know there's different kinds of tech stocks. what they are valuing is profitability, and critically, it is not net income. it is up the income statement as well. we don't talk about nvidia, when example outside the faang picture. jonathan: i caught up with john hancock yesterday morning, and they were talking about growth fading into next year, and as growth gets scarcer compared to where we are, they like those equities still. so it becomes a style story maybe more than a valuation story. tom: to me, that is richard bernstein 101, who i think is fabulous. it is profit that can be measured, free cash flow that can be measured, etc. but can you actually make profit? i just looked at a luxury maker

making $0.40 even on the -- $0.40 ebita on the dollar. jonathan: i just saw that across the bluebird as i monitor the headlines. tom: this is new york city and the resurgence of new york city. fendi moved across madison avenue into the old coach store. jonathan: tom's knowledge of luxury is ridiculous. [laughter] another announcement, this one a little bit more serious, senator joe manchin speaking with david rubenstein at the economic club of washington, d.c., 9:00 a.m. if you want to watch that on the bloomberg, that is one to watch. tom: i got an email from indiana pointing that out to me today. jonathan: does the author of that email support the -- tom: of course. if you are from west lafayette, there's nothing else. jonathan: college football.

what does boiler up mean? does anyone have any idea? [laughter] it is like roll tide over at bama. what does that mean? tom: it is greek to me. lisa: tom, are you lobbying for another day off? jonathan: he's got one. i approved it. it's monday. lisa: i think the person from indiana approved that one. [laughter] jonathan: he always asks me, always. is it ok, jon? can i have thursday and friday off? i will be off thursday and friday, and you will be off on monday. just a bit of separation. tom: and lisa is taking off november, so it works. jonathan: what do they say about love and distance? it makes the heart grow fonder? all of that stuff. tom: we are sensitive today. [laughter] jonathan: equities up 0.4%. from new york, this is bloomberg. ♪ laura: with the first word news,

i'm laura wright. the u.s. and chinese government have made progress in their economic and trade negotiations. treasury secretary janet yellen and china's vice premier liu he held their second call in around four months. beijing described the conversation as pragmatic, candid, and productive. china has repeated that the u.s. should lift tariffs on chinese exports imposed during the trump administration. senate democrats have moved closer to an agreement on president biden's economic agenda. senator joe manchin expressed optimism there could be a deal this week. he has been pushing to shrink the size of the social spending package. still, somehow slum acres raised doubts about the terms of the deal being discussed -- somehow slum acres -- some house lawmakers raised doubts about the terms of the deal being discussed. starting on november 8, singapore is in the open so-called travel lanes with 10

other countries, including the u.s., the u.k., and germany. ubs has joined wall street rivals with a third quarter profit surge. wealth management fees so ared the most in three years. the bank is looking towards asia for profit. >> i am strategic on china. who can't be, right? we are very successful in the country, both in the onshore and offshore business. we have a very good combination of businesses, and we plan to invest. laura: meanwhile, ubs is starting a digital wealth manager in the u.s., targeting customers with less than $2 million in assets. 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. this is bloomberg. ♪ ♪

>> they are very happy with over

$70. i think by the time we had $90 or triple digits, they may get nervous about demand destruction. we are definitely still in the range they are quite comfortable with. jonathan: wonderful to hear from ellen wald. just fantastic, which is why you spoke to her after i left yesterday. thanks for doing that. tom: you were working on another property. jonathan: your equity market shaping up as follows. all-time highs, and we add some weight to that rally. the s&p 500 advancing 0.4%. yields in about a basis point on tens. euro-dollar positive 0.1% to $1.1619. crude with an $84 handle at $84.10. i have no idea if this source is verified or not, but on boiler up, here is the history. coach tiller coached in purdue and was loved by students at the time, but before coaching at purdue, he coached at the university of wyoming, also

known as the cowboys. during his time, joe taylor use the phrase "cowboy up," so he adapted that to "boiler up" at purdue, because they are the boilermakers, or some thing like that. tom: this is coming worldwide and across america and across the great midwest with a british accent. jonathan: that is why they need to go to the next game. tom: that is what i say, road trip. there's like 14 bars on the main street there. jonathan: we could do some great work on digital over the weekend as we go and watch that game. tom: they looked great against wisconsin. how about gasoline, up $0.20 on the month, now $3.39 on aaa? jonathan: do you want to talk about the politics or the economy of that? tom: how about both? damian sassower were joining us. we are not going to talk about

brazilian real or turkish lira. we will talk about how he folds em into the burgeoning price of hydrocarbons. when i say to you, if i say big, higher oil prices, which nation does that affect outside opec? damian: you are right in my wheelhouse here, talking about the reflation trade, talking about reopening, talking about the dominant theme in process at relocation. where are we, 10% month to date, 27% year-to-date? i think oil is up 66% year-to-date. that is good for emerging markets, but not all of them. it is good for south africa and russia. not so good for places like turkey and india. tom: what does it do for something like indonesia? the conundrum provides a huge population. i barely want to call it an emerging market as well. your world cuts both ways for

indonesia, doesn't it? damian: it does. indonesia has weathered the storm pretty well because of its hydrocarbon exports, but the problem is we just effect that they are falling a little bit behind the curve. they have been pretty active in terms of injecting liquidity into the market and using the secondary bond market as a way to do that, which is never really a good thing if you are an emerging market with relatively big fiscal. indonesia, here's the thing about indonesia. quite frankly, the currency has performed fantastically well amid it all. even though yields are with us of lilo, it is still attractive -- are relatively low, is still at -- are relatively low, it is still attractive from a yield perspective. lisa: people are going to try to diversify away with supply chains to other peripheral regions in the area. how much are you focused on china and the fact that they are experiencing the highest pace of defaults in offshore debt in

their history? damian: we are going to talk about coupon payments again, aren't we? evergrande missed a payment on a bond last night, which has the chinese property sector falling off again today. what is interesting is you have evergrande, they have another payment due on saturday. i don't know if you saw overnight, but the founder of evergrande was asked by beijing to use his personal wealth to alleviate the deepening debt crisis. good luck with that. his net worth has fallen from $8 billion. lisa: i want to stop you there because the idea that the billionaire owner of this company is being told by authorities probably isn't going to come to her wish and, but what does that tell you in terms of the political backdrop for corporations and foreign investor going into that region right now to somehow get bigger returns? damian: well, it is not very good.

but i hope you discount the fact that he's going to have to reach into his pockets here. beijing has a way of convincing the billionaire elites that they need to take a pound of flesh here, and that may very well happen. but let's be clear, i don't know if he's going to be able to be coming up with the complete. these hong kong listings, we have had this conversation in the past, this is a way for a lot of local chinese to crystallize their wealth offshore in dollars. that is basically what the argan has done for the better part of the last decade. now the question is, is he ready to bring it back on shore and alleviate the crisis? it is anyone's guess, but certainly beijing will have difficulty bringing those dollars back because they can't really force it back. jonathan: the concept of limited liability here not the same. it is just a little bit different.

damian, thank you, sir. we have seen so many gdp forecasts get cut around china over the last week. citi downgrading global growth next year down to 4.2%. the earnings downgrade is something they are looking out for. they say the following. "eps downgrades are not necessarily fatal for markets, but when combined with tightening and reasonably high valuations, it makes us nervous." some nerves for 2022. tom: earlier with gabriela santos, she talked about the new china. it is a sophisticated look at what the new china looks like after the pandemic, after the olympics. it is an absolute mystery. jonathan: typically getting ready for the production at 9:00 a.m. you have mentioned the winter olympics. can you believe that is where we

are, given the trajectory of this pandemic, the origin of this pandemic, the fact that governments haven't had sufficient access to china to work out the origins of the pandemic, and we are talking about the olympics in china? tom: and davos is scheduled, but who says? we will have to see. jonathan: i am just surprised politically that this is how things have played out. if you had asked me 12 months ago you think we will have a winter olympics in china, given the relations between different countries, i was skeptical. lisa: this goes to the same conversation we have with our guests who come on and say it is getting really dicey between the u.s. and china. there is a new relationship that is much more controversial and much more pointed. you speak to investors and they say, you can't avoid china. you hear ubs say they are full bull on china. the dissidents -- the dissonance

is there as well. tom: you created a firestorm in indiana. they are saying. chocolate shop is a bar. jonathan: is that another stop on the tour, from europe to indiana? from new york, this is bloomberg. ♪ ♪

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jonathan: live from new york city on tv and radio, this is "bloomberg surveillance." i'm jonathan ferro. your equity market is up. yields on the basis point -- earnings from 3m, from ge, and the numbers from them and ups so far so good. that is the equity market story. foreign-exchange -- euro-dollar is unchanged, 0.05%. 8421 -- tom keene in nebraska, 330 on saturday. ask management if we can expense the trip. it will be less than your daily uber's.

that is the official response. i thought that was kind. lisa: [laughter] yeah. tom: i like that, jon. we were remiss on earnings and we like to cover globally. i count five different kinds of people that watch and come in future is come party of italy. -- is compari of italy, they are up each year for the last decade. i am sorry, the gloom and worried that is out there -- and worry that is out there, some brands just grind it out. revenue is up over the year, just another work -- another example of people getting it done. lisa: is this really the same story?

the alcohol companies have crushed it during the pandemic. right? that has been the story in general. carry-on. jonathan: thank you, lisa. this skeptical pushback against campari. lisa: [laughter] i am just saying it is a specific story. tom: gina is joining us right now, a true force at rest university. open question, i really do this. you are so good i am going to ask it. what is your single point of study on hydrocarbons in america? what is the mystery for you in 2022? gina: i think what we are suffering from his prolonged underinvestment in these long cycle projects. we see demand continuing to grow.

others are saying it will be pre-pandemic levels. countries are starting to worry about energy security and companies that can are buying whatever it costs. that drives up the expectation of a cold winter, hotter summers. we have crude oil up over the past six months. 130% over the past six months. i think it gets worse before it gets better. tom: the reality here is that for the past 20 years, technology has saved us. do you and the engineers at rice and kpmg assume there is new and improving technology or this as good as it gets as we reduce oil? regina: i think technology will always continue to surprise us and i never doubt the ingenuity of the industry and the shale players. what we have is investors trapping different kinds of behavior.

your public shale players are sticking to the narrative of we are going to return from dividends to our investor base. opec+ which can release more supply is enjoying this $80 plus rally to rebuild their government coffers because have been suffering from deficits. technology can definitely play a role, but not in the short squeeze we are in. lisa: this is a global story but it is also a very u.s. story and particularly, cushing, oklahoma. i'm looking at how much there is a supply shortage there, how much inventory sevcon depleted and how that is distorting markets. how much does that drive the rally we are seeing globally driven from wti crude? regina: wti is playing a key role because everyone is watching with the shale players are doing. there is a story and all of the global markets.

we saw it in the gas markets, 10 times in the u.k. not too long ago. there is an energy security story there were 40% of the gas supply into the european continent comes from russia. if we look at the high chokepoint like in cushing, in the northeast, those little bubbles create the overall geopolitical story and drive a club model -- a global commodity price that is healthy right now. lisa: what is $100 per barrel of oil do for the end of this year and next year? regina: that is where we start to see significant demand obstruction and probably will restart to see more increases in u.s. activity which can be a producer and we can return to being a producer. i have seen rate hikes up almost double from a year ago. why the public shale players are sticking to the investor

narrative, we are seeing more private shale activity and more island gas development and production coming in the permian and elsewhere. tom: how do you respond to market strategists with a vector to $90 or even $100 a barrel? how do you respond to that as an academic? regina: it is a real economic challenge. that is what the underlying value of the commodity is today. i think that is where we have to look at what is happening in glasgow and cop 26. how do we accelerated the energy situation and how to readdress energy security and ensure the market forces keep energy affordable and reliable? in a planet consuming more and more every day we continue to grow. tom: the overlay has already been gas. the exxon transaction, everybody had to get into net gas.

after occidental petroleum, what will be the synergy we will see in american oil? what is the next combination that has to be done? regina: you are singles combinations already. -- you are seeing those combinations already. there is a lot around shale assets in the u.s. as they say, shale means of scale and that will help from a cost perspective. even if oil comes down below 40, we can be profitable with those larger players. you see the international oil companies pivoting more, a more diversified or in the energy transition. others are betting more on hydrogen batteries, others on renewables. i think you will start to see a bifurcation of the traditional energy company strategy within a new energy strategy. that will help balance the power needs the planet has today as we

pivoted into the energy transition. cop 26 will be very interesting. lisa: before we let you go, there has been a dilemma for investors that want to move towards more esg type strategies and want to see my good guys investing in greener energy and have missed out on a rally that has been dramatic. a lot of analysts have said if you invest in oil companies, you will do great. how do you see that developing in terms of investors getting the returns but also being able to sleep at night without they putting their money to work? regina: the sector took a beating last year that i think was not warranted. so there is any upside. -- there is an upside. what i would say is investors need to have a balance and don't count out the energy. we have to be a key part of driving into a lower carbon climate. if we are not at the forefront of driving that, i don't think

we are able to achieve a two degrees scenario. don't demonize one side against the other. we need a strategy to get to the objective we have together. don't just look for green in the short-term, look at the balanced portfolio because hydro feels and carpets need to be -- hydro fuels and hydrocarbons need to be part of that. jonathan: i have enjoyed listening to you. regina mayor of k mpg. crude is up on brent. on wi -- lisa: you have seen that gap between wti and brent continue to shrink as supplies get beaten down. you wonder about what regina was

talking about, the shale producers as the swing outlet. they are not coming online as they used to. jonathan: how expensive is it not to travel to indiana? how much fuel? tom: you mentioned jetblue earlier, this is a serious issue. with the price of oil, what is it going to do? we need to go to west lafayette sooner than later. first class delta airlines, $499. it is. reasonable. greyhound indianapolis to west lafayette, economy flexible is $76 round-trip. we can do that. jonathan: i can see you in greyhound. have you ever been on a greyhound? tom: may be long ago. the -- jonathan: do you fit in the seats? tom: sort of. if i have a case of beer with me, i don't. jonathan: do you take a case of

beer with you on a greyhound? lisa: [laughter] jonathan: are we going to film this? tom: think these are reasonable expenditures to get a sense of the recount across america. jonathan: how long does that take? tom: delta is quick. are they in the same time zone? i don't know. delta is not the issue. the issue is that greyhound stops at every little town. jonathan: i have done it, a long time ago. wondering if this conversation continues. stick with us, it won't. in the bond market, 160 three on tents. futures up 4/10 of 1%. the earnings have been decent. after the clothes, alphabet and microsoft still to come. this is bloomberg. i am told it is 16 hours on a greyhound. 16, tom.

you have got this. ♪ >> president biden will probably be unable to keep one of his key campaign promises to rollback donald trump's tax cuts. there is resistance among the president's party. the president has acknowledged there are not enough votes to raise the corporate tax rate. ups posted a third-quarter profit and revenue that has beat estimates. the patrick -- the package shipper raised its guidance for the year. earnings were driven by pricing gains. the price per package rose 12%. eli lilly has raised its full-year forecast -- her demands of its covert treatment especially among the unvaccinated.

earnings fell just short of estimates. the company says it is seeking accelerated u.s. approval for experimental drugs china has altered the -- extremity drugs. china has told the founder of ever wealth to use his wealth to ease the crisis. -- the demand -- 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. this is bloomberg. ♪

>> the fact that you see inflation receding towards the target of the second half of next year, i think that will

help the fed be patient and wait for more workers to return to the labor market and that labor market picture to strengthen without being worried that inflation is becoming unbridled. tom: sarah with wells fargo with some good points on economics. we are focused on earnings, futures up 18. the vix is 14.99. lisa: not doing anything. no volatility at a time when people have economic uncertainty. tom: what is so uncertain within the great yield of -- the great move of yields, you can kathy bear market on one hand and somebody who has done that is very with bloomberg opinion -- with barry with bloomberg opinion. at a given bond fund a looked at, i believe if you will -- i believe if yield goes up price goes down.

i had to evaporate 33 months of coupon and in number of quarters. what do you do when a bond investment goes down in price? barry: after 40 years of bonds going up in price, eventually a bottom is being formed. we have seen a lot of false bottoms over a couple of years. if we believe the message of the markets that this economy is starting to decelerate but will remain strong for the next couple of quarters or years, you have to live with it. you cannot make a yield out of nothing. tom: migrated measurement here, and this goes back to ugly bond markets, is people give three statements -- get three statements in a row and their -- and they go, oh, it went down.

barry: i don't know anybody who is paying close attention to the bonds when the equity markets are making up. equities, hence the advantage this quarter and this year, you have to accept the fact that bonds exist to be a little bit of a volatility in the equity. normally if fresh money comes in and somebody says what will i do with rising rates as we normalize the fed? a bond ladder works well. as bonds come up, they are replaced with higher-yielding bonds. that has been a disaster for the past four decades. lisa: exactly to this point. there was a story in the terminal this week that got a lot of attention that talked about the biggest yearly loss we're are seeing right now and global bonds going back to 2005

and potentially poised for the worst since the late 1990's. how much we entering a new terrain with inflation expectations moving up pretty significantly at a time when we do have some new characteristics in the economy? barry: do we want to get into the inflation discussion or do we want to put that aside? lisa: go for it. barry: i think most people are getting inflation wrong. sarah from wells fargo seems to have the right concept as does kathy woods. the dominant backdrop is deflation, not inflation. we have all of the supply chain problems, all of these reopening issues. making a more complex is the fact that we have had a massive bottom half of the labor market reset. you will not see the same sort of wage gains in 2023 people see in 2021. that is a lot of crosscurrents. you are to see inflation?

look at wages. you want to see deflation? look at technology. i am always shocked when people talk about energy and oil prices. here we are at $83 per barrel. i tanked up, $4.14 for premium. we are all the way back to 2015 on fuel prices as the country becomes less energy intensive as a service economy, not a manufacturing economy. the focus on energy is misplaced. stagflation, i don't know what these people are talking about. lisa: putting those assertions aside, there is an issue right now as we talk to fund manager per fund manager saying 60/40 is dead. using bonds as a balance in your portfolio has gone away. you need to go to private

assets, you need to go to alternatives to get the same type of offset of the risks you are talking about inequities. in your view, it has not changed from the disinflationary trends we saw in the past couple of decades. barry: you always have to be careful about reaching for yield rather going on the duration or on the private side, going out on high-risk levels. nothing is safer than u.s. treasuries. if you replace treasuries with some combination of private equity, structured note, real estate, whatever it is, you are assuming more risk. as long as you understand that and that this is no longer the volatility dampener and instead you are focusing on the yield portion of this, then that is fine. recognize that private equity is not a substitute for treasuries. yes, you get the coupon, but you lose potentially some of that balance. good news, they only mark the

market once a year so you are not getting daily volatility but you are still dealing with increased risk. tom: we could go on here for two hours. his private equity a substitute for institutional responsibilities of a retirement plan? what is the downside of private equity? barry: the upside is you are getting this illiquidity premium. especially with not being tied to the market, your some diversification, some lack of correlation. especially if people stay true to their charter and not just become a um machines. that is the risk. they will go down the quality scale. tom: the money is just piling in and what does that do to ir? barry: there is only so much inefficiency in that space.

there is no forever asset class. everything eventually becomes so efficient that the returns relative to the risk moderate. that is what you are seeing in private equity. i don't know if it is at $5 trillion or $10 trillion, but eventually we will hit that number. tom: is a very important conversation. we will continue this, the idea of arbitrage and, the return of private investments. maybe that is a story for next year. barry, writing it up for bloomberg opinion and he has a podcast. lisa, your observation on futures up 17? lisa: you can't keep them down and earnings are delivering what people were expecting. valuations are largely penned to this idea of low yield for a longer environment. that is the story right now. tom: we will look for dynamics in the interest rate market with

a real yield. there is a political debate in washington driven forward by "balance of power." senator of ohio at 12:00. this is bloomberg. ♪

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jonathan: good morning, your equity market with a lift of 18,

advancing 4/10 of 1%. the countdown to the open starts right now. >> everything you need to get ready for the start of u.s. trading, this is "bloomberg the open" with jonathan ferro. jonathan: we begin with the big issue, here comes big tech. >> we have the majority of s&p market caps coming in. >> big tech. >> whether it is facebook, microsoft, apple. >> the earning fundamentals are validating this rally. >> you can point to specific stocks like you did and say it is a crazy market. >> tesla. >> tesla is in its own special bucket. >> fundamentals are good. >>