>> there is some built in resilience that we are starting to see from the economy. >> i think we are just globalizing more slowly. that is an issue because that

suggest a bit more permanence. it looks like a cycle the fed lent get out of control. jonathan: it is election day in the united states of america , live from the nation's capital. i am jonathan ferro. takei, our rally into this one. this tuesday morning, 4/10 of 1%. tom: it is not about the inflation report, may be disinflation, it is about the good news of gridlock. maybe it means no tax left, maybe it means some not plan but lack of damage from fiscal spending. jonathan: i think that is the point here. is this a one-day event or could this take another four weeks? tom: my reading over the last

four hours is this is possible. i am not going to predict it we are going to roll into next week and december, you have to believe that for 45 house seats, i believe it is one that is dissuaded, that way or the other. the math is there where you are going to have a couple of seats in the house and maybe in the senate. jonathan: once we get past this quickly, we will be focusing on cpi. lisa: i think they are focusing on the election outcome. tom: 1.9 billion. i believe. ana is going to be with us. tom: really?

lisa: i do wonder going forward once we get past this, whether it would be a reality check in terms of the number coherent with the action on the screen. i know i sound do me, i know my --doomy and my monologues are always the same. we are also seeing downward revisions. we see a more hawkish spend. i am just saying, at what point will this translate into price action. jonathan: jp morgan talking about international. i think that is the international story in the u.k.. equities look like this on election day in america. lyft equity features, up.

yields are lower by a basis point. it feels like that is how it is meant to be now. lisa: this turn and a lack of conviction one way of another is just flatlined. midterm elections. i'm curious about which seats are up for grabs. tom, what did you say, 60? jonathan: the real ones in the middle. tom: i think your number was more of the real ones in the middle. david westin will be looking at it too. it is going to be a long night. lisa: torture perhaps will be the 33 basis that the political report is a tossup.

we do have auctions today, 40 billion dollars. i am curious about what we are going to see with perspective yields. it it comes at a time where it is this growing expectation of pressure of the federal reserve and how much pushback it is going to be to take off with yields climbing back going back to 2007. the earnings do triple to -- trickled to a close. disney and amc among those that are going to be reporting. amc is going to be interesting. it doesn't matter what the earnings are or is it going to be if there are -- does it matter what the earnings are or is it going to be --. jonathan: i have been back to the movie theater for a few times. lisa: you have? to watch what? jonathan: top gun.

you made it to the movies? tom: i have not been to a movie theater in 14 years. jonathan: you do not get it? what is there to get? equity strategist at wells fargo saving us right now. great to have you with us on the program. talk to us about the views your clients expect in the outcome you think will be for the midterms later? anna: what is more bullish for the market or what the most likely outcome here? they do not go hand and hand, but we may be looking at a ideal scenario. you guys were discussing earlier, gridlock. we like gridlock because it gives us certainty. these are the kind of things that help earnings stabilize.

it is going to help on the earnings boost on the equity market. tom: i have been dying to talk to you. he is one that brought physics to economics a good 34 years ago. he talked about the moments, the tensions within the economy, bring it over right now to the cross moments in your equity space. what do they tell you, variance, kurtosis, the rest of the skew, what do they tell you about the unusual moment? anna: what lisa mentioned earlier, the conviction. we are lacking strong conviction. that adds the variance of the volatility of the market. in these current times it is very frustrating and easy to be lost. what we want to do this position what we think on average you can perform best. right now that style has been

momentum. rather than get to held up in one sector or to concentration in one portfolio, we look at more of a style we are looking for. high moments are tempted to be more up reasonable growth. that is an approach we will put our money for. lisa: longer-term, is gridlock really good for stocks? with the draw of fiscal spending, regardless of what happens in all of the contested elections that we are getting today? anna: you have a great point. when we look back historically at previous gridlock score what we called split elections, we noticed that there has been some good performance in the 1, 3, six months, once you start getting outside of that, we

start introducing is more of the economic status of the economy at the time. that is when you start interest introducing those variables in the outcomes. in that kind of scenario, where we are today is generally consensus as we start see that slowing down on the tightening policy. eventually, we will start seeing cuts. in a recession, what kind of economic stains you want to take. you can take that more volatile approach, it is going to be the struggle of finding growth to continue to put out numbers, especially what looks like wicker earnings season. jonathan: thank you. i think we all heard the same lines. lisa, when you speak to people about that, it just feels different because what the fed is doing this time around.

lisa: i could not agree more. if we are talking about inflation we have not seen since the early 1980's. we are talking about the deglobalization we have not seen, ever. we have not seen this pullback in the trade negotiations in modern history. how do you factor that in some sense of normalcy? jonathan: through the first quarter we were basically at zero for the whole of the first quarter of 2022. down to back to getting to three and four. on the next 12 to 18 months down to the room. could you imagine me saying to you, the week of the midterms, the fed would hike 75 basis points. tom: unthinkable.

they are mending on eight expos basis to what they observe. i spoke to david rosenberg yesterday out front with this inflation story. he made clear right now, inflation, a lot of inflation mandates are down 0%, maybe above 0% a little. what is important into the election in the third year as you state, there is a massive unknowns about the inflation. tom: with inflation, it cannot fall as quickly as it rose. jonathan: they have gone from demand, can't make enough of this stuff, to, oh dear, maybe we may too much and we need to deliver cuts, cuts to spending, cuts to the workforce as well. a major change. a problem with the decelerating as quickly as it picked up, we are still dealing with issues

with supply chain. that has not been completely solved yet. jonathan: we solve the issues of the last 12 months and now we have new issues. it has come broader and stickier. the s&p 500 a bit higher also on election day on america, heard on radio, seen on tv, this is bloomberg surveillance. >> give you up-to-date from news from around the word -- world. millions of americans delivering their verdict today, they will decide whether democrats or republicans have the right idea to guide the u.s. through inflation. if possible recession and splits on cultural and social issue. if republicans gain control of congress, president biden's agenda will grind to a halt. donald trump has all but confirmed his lightly anticipated third run from the

white house. he told the rally in ohio he will be making a very big announcement next tuesday at his estate in florida. he is hoping to take advantage of good election results for republicans. when it comes to future sources of energy, ireland is banking on wind. prime minister spoke to you when the climate summit change in egypt. >> it is a wind. it is particularly strong. we are in a position to have all electricity generated by wind. >> there needs to be financial tools to help countries deal with natural disasters. the european union is prepared to impose more sanctions on iran over a deadly crackdown on protests, it will target several individuals and entities. a nationwide protest began in september after a death of a young woman who had been

detained by police after breaking dress codes. this is bloomberg. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo, this is bloomberg. ♪ ♪ we all have a purpose in life - a “why.” maybe it's perfecting that special place that you want to keep in the family or passing down the family business or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how.

just tell us - what's your why?

>> midterm elections are about a

referendum of a party in the white house, most of the time, the party loses seats. when you switch positions. 20 years ago we did not have as much division. jonathan: the director for the american politics of university. equities look like this in the equity market. features advancing on the snp, on the nasdaq -- snp and the nasdaq two. euro-dollar, a small break of parity of 0.990. here is the tweet. tough decision, do i vote for the party who nominate jay powell for fed chair or the party who renominated jay powell for fed chair? thanks for paying attention. tom: i have.

you know the chances of winning the powerball? cash value. someone was swearing to me about the odds of it. perhaps it is worth it. that was from someone on twitter. tom: what does he want out of the election? that has really not been addressed. jonathan: i do not think he has just that. i think they have some uncertainty. the view on wall street, let's go through it piece by piece. i do not want to percent by intuit. there is a consensus on wall street that divided government is good because you will have fiscal policy that is restraint.

all of this is about policy clarity. tom: right now, joining us, he has always been a wonderful support to the show. his name is fred hill. he is -- french hill. french hill, will the victory tonight be like a shock that we saw in 1994? french: great to be with you. i do not think it will be the shock we had in 1994 because republicans had been in charge of the house of representatives for 40 years at that point. we have seen the house flipped before in the last decade. house republicans are ready to lead on trying to control inflation, go back to pre-pandemic spending priorities, lead on unleashing

american energy and focusing on security. security in our communities, at the border and the challenges that we face around the world. tom: how is your party in majority of the house distracted by former president trump, who has every right to run again, but distracted by that moment? french: well, president trump is a fighter. he has strong views of theater there is no doubt that members of congress -- he has strong views, there is no doubt many members of congress follow his views. if he weighs on topics, i do not have any doubt that he would have an influence on the republican party. that is the mission of kevin mccarthy, who i expect to be elected as the speaker of the house if republicans take control tonight. he will have that responsibility to build consensus among a majority of republican members

on how to go forward on these issues. lisa: there's an assumption in the markets that republicans are less excited about continuing some of the aid to ukraine and want to focus more on reducing inflation domestically on keeping natural gas in the united states. what is your view on that? should there be some restrictions on exports if prices do rise beyond a certain amount? french: we do not have supply where we want it. i think the president's proposal of cutting the strategic petroleum reserve by 200 million barrels a down to a 1984 level was a bad and dangerous policy, this is exactly why. strategic petroleum reserve is in case of a major shortage and impact of the u.s.. so you think who is contributed to the energy crisis. lisa: natural gas is a different

story. the natural gas exports from the u.s. is really is in question because that is what europe and germany really need right now. what could your stance be on the threshold to restrict some of those exports? french: i would not restrict exports unless we are in a energy emergency, which we have -- need to be smart about. that is why i raised the reserve on the oil side. europe needs natural gas and a joe biden has been terrible in producing natural gas. he has made a lot of decisions that have made it hard to get our energy back up to pre-pandemic production. with a positive outlook that production route will return in the future because we need to have our natural gas here, but we need to be exporting natural gas to our allies. jonathan: is the damage done, even if we get a republican

candidates in these midterms? isn't this story over? french: i do not think so. i think we have to be forward in all of the above energy policy during this transition whether you are in the united states or asia, we need to be moving to natural gas from coal, we need to be investing in nuclear. we need to have our energy company recognized. it takes 100 million barrels a day equivalent to run a global industrial economy and to prematurely cut that back or injury without the offsetting cleaner alternatives, you are in trouble as an economy. the third world will pay the highest price, but by these policies that details the use of energy in the third world. jonathan: great to be with you.

coming up, the democrat from vermont. looking forward to that conversation. lisa, what did you make of those final comments? lisa: we heard from the likes of a host of analysts that wall street does not want to invest. jonathan: i just struggled with the analysis. the outcome of one midterm election is not going to give the oil producers the outcome to produce for a decade. lisa: i agree. jonathan: the global fx app strategy and td securities looking forward to that conversation. equity futures by 2/10 of a 1%. on election day in america, this is bloomberg. ♪

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jon: election day in america. by more than .1%. nasdaq 100 positive also.

in the bond market, your 10-year yield is down by not even a basis point. 4.218. shortly after the payrolls we got very close to 4.80 on the two-year, then we backed away. 4.72 now. levels we have not seen since 2007. in the fx market, a bit a weakness for the u.s. dollar. euro-dollar back below parity, down one third of 1%. .9991. tom: off the radar after an exhausting three months in the dollar market. we will get a briefing. the election ankle is simply a believe in strong or resilient dollar. we will have to see. jon: over the last three days, euro-dollar, immersed three-day period since 2020? i didn't realize. tom: i didn't either until i

read it somewhere. i steel every day. jon: the secret is that you steal. tom: we should state to people that every day starts at about 2:00 a.m.. global wall street, particularly in london, and we have to keep up. lisa: the dollar has been a headwind for stocks. what is interesting as we get to the end the earnings season, the sense of consolidation among the biggest and strongest players. the strongest continue to do well and the losers are significantly losing. lyft shares down more than 60% after reporting earnings that were somewhat disappointing in terms of how much they grew ridership. how much of that because of the disappointment or how much of it is that they are losing to uber? tom: is that the consensus? lisa: which is the reason why

shares of lyft before this move were down 66% this year. seeing the same story with trip advisor. shares down more than 20% in premarket trading after reporting earnings with disappointing guidelines. even though you see the airlines posting some significant gains. people are still traveling. trip advisor is not getting that because of a host of other things. but consolidation among the strongest. big losers among the weaker ones. disney reporting earnings after the bell. i'm curious to see what the investment is like in content. remember we were talking about peak content? maybe not so much. tom: paul sweeney will be talking about this on radio. he says the gloom crew got it wrong. it is even more gloomy. he looks at warner bros., discovery, comcast and the rest,

and says it is brutal. jon: disney, hulu, i got an email the other day. the price is going up to $82.99 from $75.99. didn't we cut the cord because of cable costs? i cut the cord because i like the look of the tv without the cables. but the price of that is ridiculous now. you throw in some fast high-speed broadband in new york city and all of a sudden you are paying significant amount to get internet and live tv. tom: he is looking for bundling. anyone out there who wants to bundle something and offer you a price -- jon: i don't need the box anymore. give me the bundle, i will pay for that. tom: it is the wild west. jon: it is ridiculous.

tom: i defer to sweeney who is globally known on this. we will talk to others about this. right now on foreign-exchange -- we have paused last couple of days. we take great pride in how we cover the dollar here on the surveillance. we are joined by mark mccormick, head of fx strategy at toronto dominion bank. on election day, do you believe in a strong dollar? mark: we still think the strong dollar theme is in play here. probably until maybe q2 of next year. you think about three things that matter for the dollar, global growth, europe and asia. the fed's terminal rate, which has gotten stronger for the dollar. and the global terms of trade stock, which is something we still have to deal with through the winter in europe. while markets are pivoting away from dollar resilience recently,

especially the last two weeks, most of the things that we are tracking, underlying growth, chinese growth, european growth, these things have actually gotten worse. that along with the fed being more hawkish, our expectations of a 5.5% terminal rate into q2 next year, we still have an environment where we see donna weakness feeding. tom: how has your world changed with a risk-free rate? with the gravity returning to physics, the carry trade's, the mathematics changes. explain that to the audience. mark: most people classify it as dollar, cash is king. sharpe ratio, how things are doing relative to volatilities have plummeted. the front end of the whisker, adjusted for inflation, you are compensated better than you would in other asset classes. the easiest way to think about

the dollar, it offers great risk return profile in cash and is also a great hedge to stagflation, underperformance of equities. lisa: i will ask the dumb question of the day. earlier today tom and jon were asking why the dollar was weakening. why are we having the biggest three days a week and going back to 2020? i rejected it as a trend. do you think there is something that people are buying into that is behind this? mark: i spent the last week traveling meeting clients across europe. the number one thing people are asking about is china. then you have a series of interesting headlines, some of them didn't have much flavor to it, then you have the big news on friday that there could be some movement toward an mrna based vaccine moving into china. the big hope for china is that they can durably reopen sooner

than markets are dissipating. i think it is a bit of a red hearing. we are trying to open very soon. that is a big part of the narrative. the other side of it is the term to trade stock in europe look better than it did months ago. levels are high for natural gas. energy highs have collapsed a bit. trade has improved but that does not get us through the flow concept of where we need to get through for the winter. i think there's been positive news as you look to europe and particularly asia, but it is not strong enough or convincing enough to change the macro economic fundamentals which still favor the dollar, especially on the fansite now. they have gotten even more hawkish last week. lisa: this could be due to the prospect of china reopening. how much could that cause the dollar to weaken? how traumatic of a move, if

there is to shift, toward relaxing covid zero in china? mark: it's a great question. as a risk analysis, we look at our global dollar stagnation proxy. you also look at it relative to stress and stagflation. i would say 6% to 10% overvalued. if we do get the reopening in china, seems like there is the mrna vaccine going, opening the floodgates in q2, that would be a significant decline in the dollar. we are forecasting a 10%, 50% drop in the dollar for the back half of 2023, but we are coming into it from stronger levels. against our base case, that would be significant. i think you would see the dollar drop another 5% in the month if china would reopen. tom: that is a call. mark mccormick looking for dollar weakness if china reopens.

goldman talking about a 20% in chinese equities. i want to spend some time going through something that mohamed el-erian just put out on twitter. a series of important points he is trying to make. conventional wisdom is that a gridlock forecast will keep the government out of the way of markets. he goes on to say, the economic context calls for smart policies for vulnerable segments of the population, policy leadership, etc. to help the economy grow strongly and inclusively. the two combined mean that gridlock would quickly shift attention to the next election in two years, and that the length and depth of a possible recession we have quite an influence. i want to pick up on that final point. a lot of people talk about short and shallow. the reason they say shallow is because they don't believe we have built up enough excess over the last couple of years which

would deliver a deep downturn. on the short side of things, tom, if you don't have any countercyclical circuit breaker from cyclical or monetary policy, the debate is more wide-open when it comes to duration of a downturn. tom: original debate, facet of any other measurement, 2001 mini recession we almost had. to push against what he is saying, i would suggest washington bad likes gridlock because gridlock raises money. to me, that is the beast of where we are. they will be enthused to have gridlock because it will give them a reason to earn the marginal $1 million in donations. lisa: i remember when i was in political science classes in college and i was frustrated because it was so inefficient. someone said to me that

inefficiency is the reason the country works. there is something to be said for some kind of back-and-forth and gridlock. the problem is, when there needs to be a fiscal response, where is the honest discussion on how to achieve the best outcome without having to push some partisan two-your cycle? jon: i wonder how manydigs she was taken at the british system? lisa: i was not talking about the british system. jon: equities up .1% on the s&p. this is bloomberg. ♪ lisa: keeping you up to date with news from around the world, with the first word, i'm lisa mateo. the u.s. votes today in elections that will decide which party controls congress. millions cast their ballots in advance. republicans feel good about their chances to capture both chambers. president biden admits it will

be tougher for democrats to retain the house than the senate. it could be days before the pond result is determined. donald trump says he wants nothing to distract from the importance of today's midterm elections, so he is holding off until next week to make what he calls a very big announcement. the former president expected to declare a third bid for the white house. the former governor of the bank of england says renewable energy assets are set for an era of growth. mark carney spoke to bloomberg. >> there is an absolute wall of opportunity in rolling out clean energy at scale. i work at brookfield part-time. we have gone from 20 gigawatts in our pipeline of renewables to over 100 in just 12 months. that gives you a sense of how fast things are moving. lisa: he is now the cochair of the alliance warner zero. in china, hopes are feeding the authorities will lift a lockdown

surrounding the world's largest iphone factory. covid cases have more than doubled in the city. a lockdown of the area that houses the iphone production base expires on wednesday. the local government may extend the curbs. 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 lisa mateo. this is bloomberg. ♪

♪ we all have a purpose in life - a “why.” maybe it's perfecting that special place that you want to keep in the family

or passing down the family business or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why?

>> it is going to be crucial for this election cycle to go somewhat smoothly for americans to have trust in the system again. inflation is driving the boat but we still have these broader concerns about what this means for the system and if we can restore that faith. tom: wonderful to hear from julie norman. live from washington, equities just about positive on the s&p 500, up .1%. in the bond market, yields lower by a basis point the 10-year.

4.2054. euro-dollar negative one third of 1%. crude is getting a ton of attention in this election. wti, $91.10. tom: it has pulled back, but i would suggest, for a huge body of americans -- from 2019, the price and natural gas, diesel, heating oil, these are huge moves. jon: it is a massive task to reconcile the messages coming out of the administration right now. which is drill more, and no more drilling. that is a difficult one to thread. tom: there have been discussion the last couple of days with our interview with secretary granholm from a long time ago.

people that are pro-carbon, they have not forgotten. jon: i don't think we have. that was a bizarre conversation 12 months ago. tom: both republicans and democrats, let's be fair. the conversation that we have with lisa get bizarre, as well. lisa: can we move on? [laughter] jon: we are just having a moment. tom: annmarie hordern. as usual, on election day the writings are extraordinary. i always turn to the washington post, a terrific essay today, that the democrats have to stop with the naval gazing. for the democrats, it was the cards they were dealt.

>> right now it is in terms of the energy story. they came into this administration with rhetoric that did not match the moment 12 months later, which was the fact that there was the invasion of ukraine. they were taking out a commodity superstore in russia. speaking of elections day, they actually busted out of the 70's. 3.80 average. this is something the white house is obsessed with. this is reflective of the president's poll numbers. tom: what about the republicans, mr. trump is out again talking about november 15 and such. there is really no message for them. they have to live with the cars that the republicans dealt. annmarie: he is still the leader of their party and many want to put that era behind them but they just cannot. he is out there at rallies for these individuals he is campaigning for, that many in

the party would not like to see, and he is going to announce a bid for the white house. tom: the governor of florida is a republican in name only? annmarie: we don't know. he has only said he is desanctimonious. lisa: i am curious about the relationship with riyadh, opec-plus, as prices continue to rise. opec defending some of their cuts now that prices are rising again. howis that relationship , what is the implication for policy? annmarie: when it comes to the oil market, the u.s., after the cut, they said they would recalibrate and review. we had a story that i worked on,

that the saudi and the u.s. were sharing intelligence about a potential imminent threat from iran. you see on some level the communication flow has not stopped, but this has been an commodious relationship between the biden administration, who wanted to make this country a pariah, and the saudi's. the saudi's will depend. the prince yesterday quoted a story that i wrote, when i was there from before the lockdown of all of these governments. he said you could either take a firehose to a house, save the house, but you still have your furniture. or you call the fire brigade, and maybe you ruin everything but you save the structure. that is what he was trying to get at in this cup. they need to make this cut now because china is locked down and there are recessionary fears. lisa: a minister came out this morning, talking about the opec

cuts, saying that opec-plus can respond more if prices do rise. what is the trigger point, what is the pushback that you get internally as well as internationally, given the frayed relationship, reluctance to let prices go to low? annmarie: opec does not think that the physical market reflect what is happening in the paper market. december 5 is a key date for the oil market. if there is no price cap, we could potentially see shut-ins on russian oil. right now russian oil is still flowing. december 5, that could be impacted. you could argue that these opec countries, like saudi arabia, which was pumping at capacity four months, want to take some rest, so they have some dry powder when this happens in december and if prices spike because of this. jon: november will be interesting not only because of energy but also the outcome of those negotiations between the administration supporting the

railroads, a tentative agreement we had a month ago, which has not been signed by all 12 unions. i believe we could have activity in the next couple weeks. annmarie: it could mean strikes potentially. that would mean issues especially for things like food. certain things cannot be sitting on a railroad. one more deal we are waiting on, november 19, this is the grain deal. whether or not that will continue. that is crucial for food inflation. tom: 20 seconds, ar union'se voting republican or democrat? annmarie: i think they are voting for the democrat joe biden. he is a union man. we recently wrote a piece about his inflation advisors, and there hasn't been the kind of reach out that we have c2 unions, like we have seen under joe biden. jon: wonderful to have you on the set. we are in amh's home.

thanks for having us. great breakfast here, too. real upgrade. tom: this is what matters, the food in the washington bureau has overtaken tokyo as the best in the bloomberg world. tom: frankfurt was up there. lisa: can i follow on to the real strikes? tom: you want to talk about something serious. lisa: it is also in canada and the u.k. what is it about the rail system? we can talk about it. tom: futures up .2% on the s&p. from washington, d.c., this is bloomberg. ♪

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