>> this environment was clear from early 2022 that we could be back in a four by six environment. >> we need stability. rates don't need to go down from here. underlying fundamentals are still good. >> is this is are looking at the fact that underlying cost of capital is rising when they pull back of investments. announcer: this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. jonathan: good morning. this is "bloomberg surveillance" on tv and radio, alongside tom keene and lisa abramowicz, i am jonathan ferro.

5% on a 30-year yield briefly. very close to 4.90 on the 10-year yield. tom: mathematics is important and we do not do methods early in the morning. from a careful analysis to looking a vector down freefall. something changed yesterday and mathematics went out the window. this is a warning of price analysis and fixed income. not to be inflammatory but it borders on freefall. jonathan: our price has been hammered, particularly over the last few months. 4.8146 on a 10 year maturity. lisa a: what is the circuit breaker? it is not coming from washington, d.c. this not look like there will be a resolution without leadership. job openings are coming out stronger than expected and manufacturers are also better than good.

what point do you get a circuit breaker from something other than people who start to buy? jonathan: over on a speaker liz house, he had to say, this is wholly consistent with the broader structural concerns regarding american local dysfunction and the country's trajectory. those two stories are now separate. tom: i try to explain this to the shares at the dining -- herubs at the dining room table last night. this goes back to my grandmother on the couch who knew union soldiers and was inflamed by the phrase "civil war." to set it was the war of the rebellion. the washington post this morning led with the historical word, rebellion. jonathan: check out the equity market on the s&p 500.

closing yesterday at lowe's we have not seen since early this morning. we will do this this hour. citi and bank of america over the last few months have not pretty charts. 4.8 one on the 10-year yield. the dollar seeing some weakness after really dominating the last couple days. the euro-dollar is 1.0496. lisa a: and dated he was coming in stronger than is one of the reasons why we cannot stop this. it is terrible but at the same time is not. the u.s. adp jobs report, people discount it, but maybe not if it comes with upside surprise. then to 5 a.m. factory data and durable goods. yesterday, this turbocharged the move. job opening surprisingly entries, not decrease, as expected.

today, the coalition is due to hold a meeting of the joint monitoring committee. they keep cutting their production or will they increase at a time when crude is still one of the inks pressuring inflation and some yields. it seems to be the opec-plus members like this. fed speak today includes fed governor michelle bowman at this morning as austan goolsbee later in the afternoon. do they start pushing back? tom: seven to ellen was beginning -- to talk of monetary policy -- secretary yellen was beginning to talk up monetary policy. secretary goolsby can take a more behavioral construct. we are all going in search of the put. it was good to see john and wave at lisa at jackson hole, but --

and there will be a change. jonathan: yesterday, job openings exploding higher end row risk coming into you for. there was two way whisk -- risk. also the risk we reseller rate coming into 2024. that was pushed by andrew hollenhorst at citi and also neil dutta. when you plaster that in, you raise the risk of thinking it is on the table and you have to grapple that risk can cut both ways. tom: andrew hollenhorst with us later this morning. that will be fascinating. all of us with the disinflationary factor. i spoke to annmarie hordern after her exhausting day and she has an interview. jonathan: can i say, this was a better time to do the interview?

a bit later. 5:00 p.m. eastern time, balance of power. tom: we are going to focus on washington and the history made yesterday. right now, it becomes about price and not yields. marty patel. honored to have her with us. you know all the bowties go out and they spout about yields. there is a point when price matters. what do we do about a lower price in bonds, notes, and bills? >> i think over the last year, we have not seen this ever. that is i expect the spread of treasuries over corporate and high-yield bonds a much narrower then we with the big increase the fed made with short rates. that is one thing puzzling people. and i look at treasuries and say they are 4.5 or 5% with

inflation, that does not seem to be restriction at all. i would expect that corporate bonds or high-yield bonds will stay in the narrow trading range. tom: i will go back to 1988. with felix smith, dan haas and a younger margie patel. it was about when things begin to sweat. do you have a sweat about the banking system? i am not saying do you own the banks or want to own the banks, but are you worried about the financial integrity of our different capitalizations of banks? margie: i think the banking sector is in good shape because of the increases of quality and regulation. they have not been going crazy making vallow those the last few years. corp. -- companies have extended their maturities. i think the banks are ok. jonathan: why citi and why is

bank of america trading below the lows of spring? margie: i think it is because people are expecting they will not have the net interest margin that they hoped. and also the loan demand is not there. banks don't want to make loans and do not want to make aggressive loans so it is hard to see where the earnings risk -- where the earnings rate will come from. jonathan: any buying looking into where jp morgan comes next friday? margie: it is hard to see that they can have a breakout and on the upside have above average earnings, but on the downside, loan management is new, so it is hard to see there will be attractive either way? lisa a: at what point do these higher thesis yields challenge the issues of stocks? on a relative valuation, you are getting more in deals on 10 year

treasuries then you have in the s&p 500 going back to 2002? margie: this reflects reply -- this reflects supply and demand. there is an enormous supply of treasuries. high yields are down and investment supplies are down some people are looking for securities that will be narrower. at the same time, i think no. lisa a: ok but there is a growing amount at hsbc who disagree and are saying the relative value of credits in the u.s. government is getting much more attractive relative to the risk and volatility of stocks, especially if you strip out the magnificent seven. why do you pushback? why do you say that even if you are getting more yields in bonds, that will not shift from equities? margie: there is no guarantee that treasury rates have peaked

or will go lower. there is a chance they could stay at this level or go higher because of the enormous supply. when you look at the stock market and exclude the hand full of stocks trading very high, there are lots of sectors trading very reasonably and have a cast yield competitive -- a cash flow yield competitive with treasuries. jonathan: there is so little conviction as to what is driving this bond market. i have said over the last five months, five different people and five different reasons. qt, rates are higher. pick your poison. china? the deficit in the u.s.? the dysfunction in the government of the u.s. over the last week? margie: we have seen a big increase of deficits from governments around the world and u.s. is a part of that trend. it was only a couple years ago that 15% of bonds outstanding had negative yields.

now they have moved to the positive side. i think interest rates were abnormally no -- low and now maybe average and even can go to abnormally high. that does not reflect the fundamentals of the stock market. they are very cautious about capital expenditures. tom: margie patelfor sharpe raty superior to your peer group. you are a bonds person who has been hugely skeptical in recent years about bonds. what do you say to people that bought the bonds story and are looking at nominal returns wiped out for x number of years or

inflation adjusted returns wiped out for a decade? what should people who have been clobbered by bonds do? margie: they should examine why they accepted the ideas about what determines bond prices and bond prices versus equity prices . the supply and demand factors come into play even on the bond side. we have an enormous flood of inflation. this makes a return from other asset classes whether they are high-yield, investment-grade, or stocks to be more attractive because they don't have a huge supply that will keep hitting the markets and needs to find buyers at higher prices. jonathan: margie patel of allspring global investments. data from columbia later this hour. policy response, baby. i say maybe because we are not sure.

the dollar-yen briefly reached 1.50 -- reach 150. all of a sudden, the gap is lower on the currency pair. the japanese authorities refusing to confirm or deny whether it is off the back of this. i suggest you all pull up that chart you have seen already. the dollar-yen at 150 and then getting lower. tom: i am editorializing but they made a massive moves from 140 down to 149. it was a bold move. you have to monitor it. jonathan: intervention? maybe something else. tom: there is a whole history that is fraught here. the answer is, it does not work.

jonathan: maybe you can do something about the pace or perhaps slow things down and change the trajectory. lisa a: it means we are going to get to 149.99 again and again and again. though maybe it is not intervention. wink week, -- wink-wink. jonathan: coming up, jay pelosky of tpw advisory. ♪

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>> on this vote, the yays are 216, the nays are 210. without objection, the motion to reconsider is laid on the table. the office of speaker of the house of the united states house of representatives is hereby declared vacant. jonathan: historic day in washington as the house voted to vacate kevin mccarthy. equities just about positive on the s&p 500 after a deep day of losses taking us back to the lows of early june. nasdaq 100 down 11.25 overnight.

the 10-year yield briefly through 5%. up by a single basis point currently on the 30 year at around 4.93. the euro trying to make a comeback and show strength, facing the potential of a 12 week of euro weakness of dollar strength after 11 weeks closing out last week. 1.0510 on that. maybe the stress of the bond market starting to get people to think about the end of the cycle . 88 with craig. down 1%. tom: you can't imagine if crude goes the other way. other than the calming influence of crude, 90 seven dollars at brent crude. just under $90, $89.92. you have to wonder what meetings are being "taken."

with these supervised regulations but also these banks. there is no year and a plan. there is an october plan and they better. get to it. jonathan: jp morgan is two fridays away. we are trying to figure out what the bond market is. is it an extension of the cycle or recipe to end it? sources feel like it may be the latter. in terms of where the market is leaning and high-yield spreads and discretionary stocks. great year but struggling recently. and looking at bank stocks, the likes of citibank and bank of america trading lower than they were at the spring of lows earlier this year. that is quite something. tom: the fancy bowtie work convex to means you were in control. were we in control yesterday?

lisa a: depends who you mean. maybe the bond vigilantes. tom: we are going to turn to washington. annmarie hordern and joe mathieu on "balance of power." we thank invesco for letting us speak this morning with their head of u.s. government affairs. because yesterday, the vote tied one got up in the house and said we will continue forward. his name is henry and he is in north carolina, an interesting guy. the head of u.s. government affairs form invesco -- from invesco is here. has worked in a number of positions. who is this guy?

he was like butch cassidy last night. most of our audience, particularly our international audience, who was the southern mchenry? >> he is the chairman of the financial services committee and has been in congress for almost two decades. he is an institutionalist and policy belong and politically savvy. it is not savvy that mccarthy chose him on his short list of members to succeed in time of emergency. tom: they lead with the word rebellion. that has a heritage, a tenor, and tone south of the mason-dixon line. parse the distinction of southern republicans like french hill of little rock or mr. mchenry of the carolina. part of their distinction from people who have rebelled?

jennifer: these are members who mostly came in after 2018 and really represent a different thinking within the republican party that made very clear after -- -- that was made very clear after donald trump. due to such small barges in the house, a vote of basically five, eight members were able to unseat the speaker for the first time in history. lisa a: i was reading a story, interviewing congressman gates in florida. they were supportive of what he was doing and set the system has not worked for us, take it apart. why are there so many voters who want to disrupt the whole system? what is the galvanizing force behind that? jennifer: there is a frustration and washington is basically just

a reflection of that. these are members of the house to come to washington to reflect their constituencies. there is a frustration and sort of a distrust in washington. yes, matt gaetz has decided to come in front of that in his expression to try to lead that. but it does actually reflect a concern over a $33 trillion debt and $1 billion of interest being paid every year. this frustration is real. whether matt gaetz is necessarily the best to be the voice and leader of this is an open question. lisa a: the irony is the longer the government does not make a resolution, the more bond yields are going up and the greater interest expense. from a political standpoint, at what point can you bridge the gap to try to communicate that

sometimes dealing with the frustrations and any efficiencies of the system is may be a more efficient way of getting to the same and day? how do you communicate that politically active jennifer: we will see that as they negotiate the process over the next 43 days. they have until november 17 to either pass another stopgap resolution or agree with the senate on appropriations. right now, they are still very divided. whoever is the next speaker will have to bridge that divide. i think that is an open question. over the next week, these republican members of this congress from the center to far right will have to grapple with this question. jonathan: do you have a base case on where we will be on november 17? jennifer: last night was very concerning.

i think there is an understanding within the conference that there needs to be unity among the republicans. if they are going to move forward and have any leeway with the senate going forward. but it is clearly going to be difficult for any new speaker to work with the senate. which quite frankly, has a bipartisan position on corporations. i am concerned how we are going to move forward and i think a government shutdown is probable in the near term. jonathan: thank you. jennifer flitton of invesco. the base case is just to read between the lines. basically said at the end day, shut down. lisa a: we heard from jordan that there does not seem to be any resolution. people are not happy with the

way the system is working, but if you just throw it out, you get further away from a solution which is just bigger interest rate payments. jonathan: even the administration came out and said, what dysfunction? the way it is playing out. jean from columbia threadneedle coming. at the moment, quite well behaved. your 10 year is 4.80. from new york, this is bloomberg . ♪

jonathan: yields of, stocks drop. equity market pullback on the s&p 500. futures about unchanged. s&p 500 at 42666.00. tom: -7% or -8%. what is surprising is the nasdaq. i expect it to be -10 or -11, but no. it is holding up because of the profit machines which are not going down like the others. jonathan: back-to-back double-digit gains on the

10-year yield. monday, tuesday, thank the manufacturing guy. you can maybe think job openings or every thing. yields higher by two basis points this morning. it's call it 4.82. came very close to a look at 4.90. this is a 150 basis point news from -- basis point lift from the post svb failure. here we are, 150 basis points above lows. lisa a: it defied all expectations including those who said something would rake at this point. maybe things are starting to break but it does not seem like it really. i was laughing when you said, here we are, at move of 4.82. yesterday, you said bumping up against 4.90.

gives a sense of how fast we are moving. tom: the bank rate 30 year, i was shocked, 7.88%. what is amazing is the 30-year yield bonds. earlier this morning, it was at 5.009%. the role changes. jonathan: just a few minutes ago, we were discussing how the story it was to get yields back into the .40s. -- the 4.40s. lisa a: it is interesting because margie patel so we could actually see more material losses because of the supply issues and dysfunction in washington, d.c. which could still allow risks in the bond market to keep advancing.

is that the case? jonathan: let's wrap it up with foreign exchange. the dollar against the yield -- the yen. the dollar was stronger against everything yesterday with the exception of the japanese yen. we can talk about why. the dollar-yen is 149.15, which breached 150 recently. there is a lot of suspicion that the government stepped in but they will not confirm or deny. lisa a: confirm or deny basically also confirming it. jonathan: confirming is what happened once they reached 150. tom: i looked at the canadian-dollar which is extremely well behaved reagan from 135 out to 1.42. we are now at 137.

it is usd-cad which is different from cad-usd which is a taurus dollar. but we are not out to panic yet. jonathan: the underappreciated, unprecedented removal of kevin mccarthy this morning. the next deadline is a little over a month away. mccarthy losing his boat -- his post after republicans revolted at his idea to compromise with democrats. the next shutdown is looming on november 17. amh is around the corner to weigh in on this. the bond market moves, some might argue they are connected. treasury secretary janet yellen casting doubt. saying, people are trying to figure out what exactly it will take to keep inflation moving

down. and the economic resilience that they see and suggest higher for longer, but we will see. when i heard this yesterday, i thought, is this a wish, prayer or hope? tom: a put. lisa a: at is not a put because she does not have that power. she maybe can go to the fed that they will not listen unless they want to be accused of political interference. the question is, what point is there a role problem washington recognizes as they watch things -- a real problem washington recognizes as they watch yields go higher? jonathan: the adp report at 8:15 our time. calling for jobs to rise 130 thousand. it was really high yesterday, much more than expected. speaking to resilience. tom: some pople expecting some

stability in the jolts. all of this including the speaker battle, the jobs report, tune in. it is like the speaker -- the super bowl. jonathan: lots in the jobs opening data. the way they survey that, responses, and the fact that it is easier to post a jobs opening. you put this together with the ism manufacturing and we get services later and the data is there than anticipated. tom: there is a new voting member at the fed. michael barr. he is a new voting member as of yesterday and how we went from control to the beginning of the freefall. the policeman at the fed, michael barr. he is a new voting member and will say, you have to be kidding, let me show you the evidence we see out there. jonathan: looking at the banks?

tom: yes. bernanke 101, look at the banks. michael barr is a voting member as of today. the global head of fixed income at columbia threadneedle is here. he is surviving the wars. gene tannuzzo. there is a point where it switches from yields analysis to price analysis. are we there? gene: it feels like we are there. you were talking recently about the selloff we see. it is equal to the front end of the curve all year. they have only raised interest rates through the course of the year. the risk premium we have put through the long end of the curve has taken investors by surprise. it does not seem to be driven by the fundamental data. the most important fundamental data of the last couple weeks of

the bond market is the fact core pce nation, the fed's preferred gauge, came in below expectations and is trending towards the 2% target. yet we see this steepening that should give investors pause and really there is a physical rest back into the treasury market. jonathan: have you changed your mind on that the last couple months? gene: we have been trying to focus more on what we call the belly of the curve, where the points, where he think we have priced in more than a fair path for the fed funds rates and more than a fair share of the higher for longer situation. then you have all the way to the 30 year point sitting right around or just below 5%. we would rather put our money in the 5-year point we are more looking at what the fed with you and less worried about the risk premium. we learned last year inbut juste

looking at what was going on in the hay at the budget dynamic created a scare over the market. there are some similarities but the debt from the treasury market is different. lisa a: when we talk about the rest of the market, aside from treasuries, you can look at stocks which have been resilience and credit which is starting to show concern but largely holding in. does this indicate the rest of the wrist complex consisting yields rising at this pace to these -- the risk complex consisting yields rising at this pace? gene: we are starting to see this in liquidity and credit

starting to deteriorate. it is a little bit of the unfavorable dynamic we saw throughout 2022. this week, it has started to reemerge. credit investors are getting nervous and realized a belong or variable that you exist -- and realized lags are variable. lisa a: are we seeing this as a catalyst or just more fear that causes more caution in estimates? -- in investments? gene: i think it is fear over all. the cash flow profile is stronger than it was before the pandemic so i don't think there is anything that will disrupt that from yields going up a quarter. when we think about higher leverage companies and look at the triple c, highly leveraged

companies that have returned over the course of the year, they will be susceptible to higher borrowing costs. i think that raleigh will be hard to sustain. tom: let's go back to minnesota finance a few years ago. there is a chapter that when it gets like this, look at the banks. you have columbia threadneedle. you are not represented a major bank directly which is our advantage this morning. are you stressed about the banks either too big to fail, the regionals below them, and commercial real estate below them? gene: mostly we feel comfortable with the global systemic banks, the big issuers in the u.s. we have been adding exposure from march to now to adding that complex and we think they are exceptionally cheap relative to their industrial peers. as you get down into the regionals and some of the tier

below, they do have a real estate exposure. i think you have to be nervous. there is a degree of rates going on in the bank, but frankly it has been orderly in terms of investors trying to land that capital. i don't think we should be as -- jonathan: how are you doing that? gene: we are writing in the initial market and the secondary. looking at the big jp morgan and bank of america type capital structures where the capital profile is already been fortified post-financial crisis, unlike the super regionals having to add the capitol now. these are names that over the last six months, we have been adding to portfolios. they are a good alternative, relative to cyclical corporate expenditures. jonathan: thank you.

gene tannuzzo of columbia threadneedle. financials are really struggling, some big bank stocks. kbw bank index cannot get off the match. after a failure of svb. what do you take away from that conversation, bramo? . physical risk premium you have to start thinking about. for people like columbia threadneedle, we talked about gene tannuzzo who for years set it is fine problem, but now it resonates with people in fixed income. lisa a: which raises the issue of windows washington start to look at the treasury market? there was a survey where they increase just from it in july, the increased expectation for the deficit in the u.s. is $100 billion simply by the move in yields by 2025. jonathan: how close are we to politicians waking up in d.c.

with a tar and 10-year yield after the moves we have? lisa a: they should be. tom: they will. jonathan: congressman french hill is. lisa a: maybe others will join. jonathan: coming up shortly, a really sensible and sober voice for the natural stress earlier this weekend here. chris merrimack. from new york, this is bloomberg. ♪ ♪ ♪ explore endless design possibilities. to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™.

and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com >> the point of view is it may take a longer period of somewhat higher interest rates to control inflation to keep it down. but medium-term, interest rates will go back to more normal levels. it is also possible that longer-term interest rates will

be higher than we bought. jonathan: secretary jerry yellen desk secretary janet yellen. maybe this is the return to normal, the old normal. what kind of normal are we talking about? tom: anything she says, she gets second-guessed all the way down the wall. what did you think of that? jonathan: we need a row conversation about the physical debt issue in the u.s. but if you are the treasury secretary, you are in a tough spot. if you start to entertain that, you start to lose credibility. tom: the people in the theater yesterday know the people don't vote on fiscal policy. they may talk about it but they get to november and walk into the booth and are voting about something else. jonathan: there has not been a prize for dysfunction in washington in a long time. and given the privileges they have had in finance, they have

had the privilege of recklessness for a while. it feels like very quickly, just quickly, slowly and then asked, you are seeing the privilege be stripped away. i said this earlier to a congressman from arkansas and congressman who thought they were losing the privilege to act recklessly and have to do something about it. tom: i am thrilled that congressman french hill will be with us in a bit. lisa, did you see moving from convexity to freefall in spreads? lisa a: a bit of whitening. the cost of capital is becoming a concern not only for the u.s. but also work companies. tom: lots of different voices we can speak to here. jenny montgomery of philadelphia. chris marinac joins us.

you know the charts. i will bring it out. it is the wild group, citigroup and the train wreck known as their immense boom. all the love in 2008. now at $3.90 a day. when do they stand up and say, houston, new york, we have a problem? chris: i don't think the credit losses are enough to get us there. it has been a confidence issue end management team and game plan to execute. it may have been to far-flung which is the issue the past 30 years. i don't think the credit losses are wide enough and it is a same issue for domestic banks. don't have credit problems to warrant this level of fear. tom: in real estate, just as one of the year's out there.

confidence, liquidity, and solvency. link those emotions of 1998 into where the financial system is now. chris: the banks have pretax and pre-prevention earnings. what we look at as investors and analysts. this cash flow involved -- allows banks to build reserves and we think this will continue to happen. it has been strong year to date. we think reserves will rise for commercial real estate and seeing eye loans and everything -- cni loans. there will be much higher in 24 then they were in 2018 and 19. we are going to retrace all charge-off levels which will be healthy. we have to recognize risk and loss. i don't think we have anything

close to what we had in the great financial rises. we just have higher loans which banks have to 54. the theory for financial real estate is somewhat overblown but we have to reserve for that. citi has their share of that and so do other banks. jonathan: can we talk about policy response to the banking stress earlier this year? there were unrealized losses in the treasury markets and those are even bigger. do you believe with the policy response of spring even with the bigger moves in treasury markets now? chris: the banks can still contribute to the bt ft which have not done too much. it is 25% of the incremental borrowings of the industry year to date. i think the liquidity is perfectly fine. the challenge is, the losses continue to go up. we think there is another 2% to 2.5% mark on every banking

portfolio. this will make a net negative. we estimate today that the values will probably fall about 1.5% for industries in the kre or nasdaq bank index. the dot is still somewhat of a nuisance. the banks will still be somewhat profitable but the profits will not outweigh the mark they have at the end of september. they will find the stars to reverse at the end of next year because we had a reverse in the treasuries. do not have the fed making policy because to see the start reverse. i think they will start reversing shortly because banks have a love for year and five-year -- have a lot of four year and five-year liquidity's that will start to burn off. lisa a: the risk is in some reserves with the safety assets and things are supposed to be liquid. you have to think the banks are

incredibly estranged when it comes to real loans. they have a huge book of treasuries there are trying to cordon off and keep from any actual training. chris: correct. you will see the loan growth slow down in the fourth quarter. we don't see them going negative but for some companies, they well. a lot of this is simply machinations about what they will keep on their balance sheet with mortgage lending or other loans that have better risk rates. we have seen some companies like sonoma self that office portfolios because it is a way for them to adjust returns and their weighted assets. i think you will see other regional banks do that. lisa a: are you saying we have seen all the bank failures that will not see anymore especially in light of the big moves and constraints on lending? chris: i agree and if we have a

bank failure, it will be a small family run bank you have never heard of. it is unfortunate but we do not see anything big happening. we think the drama is behind us. deposits are stabilizing. they are simply struggling with the perception issue about how bad credit is or is not. it is a lot more tamer. we have losses which are now becoming normal. tom: we have been here before. we are going to get a markdown or rework or restructuring. the new money will step in with a distressed price. who is the new money that will step in? are we going to see foreign money stuck in, sovereign wealth step in, policy and equity? chris: i think there is incremental dollars in family offices that have a fair amount of cash.

family offices have become very powerful. a of advisors that used to be at first republic are now at family offices. in addition to private funds and other private equity funds, those are the new players. re-think investors who run sidelines will change what comes in. the leaders will be the family offices and other private equity and funds. it will be domestic but also foreign. i don't think it is u.s. trade at the moment that the interest is there and they are looking for better pricing and opportunities including where the kre is below 40. jonathan: a much more constructive view of chris marinac from janney montgomery scott. citi down almost 12% year-to-date. they could of america down close to 22% in 2023 -- and bank of

america down close to 22% in 2023. lisa a: suddenly they have a lot of losses on their reserves and that is what they are grappling with. i just wonder how many loan constraints they have and how much things are eating their lunch as they pulled back. jonathan: bank earnings kicking off of jp morgan and jamie dimon on october 13. unlucky for some. tom: on the beach use gearing -- on the bq screen, bank of america, zero point 01. citi at 0.41%. jonathan: a lot of pressure in leadership over the next moment. coming up, congressman french hello. the coverage continues. ♪

>> this environment was clear from early 2022 that we could be back at 4-5-percent environment. >> we need stability. right still need to go down from here. we are seeing underlying fundamental still good. >> businesses are looking at the fact cost of capital is rising when they start to pull back on investments. >> the higher for longer is starting to come back when markets have been in denial of that. announcer: this is "bloomberg surveillance" with tom keene, jonathan ferro and lisa abramowicz. jonathan: live from new york

city, good morning. this is jonathan ferro alongside tom keene and lisa abramowicz. bond market looks like this. tenure at 4.80. the 30-year briefly was 5% today. tom: i have been doing some that stuff. the emotion. liz goldenberg, legendary on bloomberg at fixed income. i don't care what all the tv, bowties, fancy british ties say, price matters. we do not talk price because yield is something you can grab. this morning, price matters to everyone coming up. jonathan: we can talk about the price at the long end. we have talked about this a few years ago at -- we have talked about this recently at bloomberg, lisa issued this a few years ago. there has been brittle and

realized losses. lisa a: for the first time in my career, people are talking about the yield price dynamic and what this means for washington, d.c. for the first time, suddenly, the cost of capital matters with respect to how policy is issued in washington. this is the very new story behind yields racing alarm bells across washington, d.c. and wall street. tom: 2053, not as long as the austrian piece, but a 30 year u.s. bond. would you enjoy it? you bought it in 1990 eight and were loving it in 1997. jonathan: i think trading in 30's or something like that. tom: it is like $101,000. jonathan: -- columbia

threadneedle, gene tannuzzo talking about a fiscal rest premium in the market seriously. these have been on the fringes for a while the two would always get people in ivory towers saying it is nothing to worry about. i have used this quote before, ousting the speaker in this manner is wholly consistent with concerns regarding american political dysfunction and the country's recent debt trajectory. it is not the only reason. lisa a: if they get house speaker and start moving forward and the government does not shut down, there's the bond market react to what is happening in washington, d.c. are the first time? how many years have we talked about something big going on in washington and market participants say ignore it? jonathan: maybe it is based on the economy. you get some bad data and people buy bonds again. ab is they get data and do not

buy bonds, that will be an ugly day and hopefully that is not what we see. the s&p 500 shaping up with futures a little negative, a touch lower by 0.05%. the are up by two to 4.8125 on the 10-year yield. the euro-dollar here is a 1.0506 . lisa a: it is the rest to upside surprise and economic data we are watching because we have seen that the one of the most disruptive part aspects of market. 10:00 a.m., i sector. yesterday, the jolts sector. we were talking about that. the fact there was a surprising and jolted the bond market because you saw a real response. what is the outcome when it comes to the proposed supply cuts on a monthly basis?

how long will they continue with that? is there a target to crude prices around $90 a barrel? this is the new normal they are trying to get to. fed speak includes governor michelle bowman at 10:15 a.m. and austan goolsbee at 10:30 a.m. are we going to respond to bond moves? tom: i am sorry, dr. austan goolsbee has maybe covid but we don't think so. jonathan: those two speakers talked about differences on the committee and difference in degree. the rightist degree -- the widest degree of difference may be michelle bowman and austan goolsbee. tom: what i see is austan goolsbee with all the social economics of chicago. shall bowman has to be hardwired to what michael barr is doing and the fed is doing.

jonathan: jay pelosky joining us now. principle of safety -- tpw advisory. how, if any way, does a 5.30 percent yield change your world? j: we had a great start to the year. the last couple months have been challenging and we have given a fair bit that. to me, we have had various bonds for two years. we have now had a 40% benchmark allocation of fixed income. we have been running a 10% weighting in fixed income and have had zero treasuries the last few years. sometimes i get accused of being -- but we have been mecca bearish on bonds. 5%? i think we are starting to get interested. we believe the global economy is

in good shape and rx acting and manufacturing -- and we are expecting a manufacturing recovery. we remain constructive on risk assets. the bond market has been wrong about recession, and has been wrong about credit risk, and has been wrong about interest rates and -- so i am not really inclined to follow the bond market. i don't think it has the right reader. right now it is dislocated and fed funds are the most short they have ever been. i think we are much closer to the end of this run in higher rates than we are to the beginning. i don't expect more but the 10-year yield is better to look at. i do not expect it to get to 5% in this run. i expect the next big move in rates to be down.

tom: your global optimism. can you partition all your worries about china and empty buildings and cities and domestic drama with a reality of 4.5% or even 5% of economic growth? jay: you were just talking about paying attention to price, right? i look at it as, what is in the price? i think all the issues about china is well within the price of chinese assets, particularly chinese equities. the real estate story has been known for years. i have set on this show before that anybody worried about chinese real estate is not invested in chinese assets. they are gone and have been gone for a long time. my point is, over the next six months, the next two quarters, the year-over-year cause for china in terms of economic

activity are going to be mega easy to beat. in a world where that will not necessarily be the case. why? a year ago, china was in severe lockdowns. i am just giving one data point to make the point. trip.com, like the expedia of china, reported this week for holidays that they have outward bound bookings year-over-year up 20 times. not 20%. 20 times. china has outperformed the s&p, chinese equities fxi, over the last month and over q3. the turn is already happening. people just don't want to really believe it. but if you are actually interested in price, the price of chinese equity has done

better than the price of s&p over the past one to three months. i expect this to continue. lisa a: i think there are more people coming to your side of the woods when it comes to china because of where the price is. there is more questions around european banks and banks in general especially with the peaks of interest rate rises and how much this affects i committee. why are you pushing back against this on a daylight today? jay: with bank of america, levels are interesting. we do not do individual securities. we are etf only. with the u.s. big banks, not with any exposure to the regional, sls is down for the year as an underperformer but it's not horrible. european banks outperformed the u.s. banks. i think the opportunity is

pretty dicey. we talked about this. i think tombaugh of -- brought up the prices. i think the risk-reward. like i said about china, china has the best risk-reward because the risk is already in the price and the reward is significant. with banks, half a buck for citibank. tom: there we go. david from baltimore emails in, thank you for watching, forget the super bowl. november 11, the victory bell. duke and unc both rated this eccentric and do you we have a chance over the dreaded victory of capitol hill? jay: i was thinking about you when i thought we had notre dame in our pocket. we are going to have two big upsets to start the year.

that did not work out well but it was a fantastic environment for duke antic football. all i can say is, go to hell carolina. tom: did you see manchester united against the team from turkiye? i watched every moment of the highlights. it was fascinating. jonathan: manchester united is dreadful at the moment. i also thought david lived in brooklyn, not baltimore, but good to know. tom: thank you, david, for watching. jonathan: welcome, s&p 500. positive by 0.1%. use just about unchanged. we are below 4.80 now on the 10-year yield. basically unchanged after major moves the last couple days.

gained more than 20 basis points monday and tuesday. on the 30 year, briefly through 5%. dare i say, a little calm after the storm. 4.91 on the 30-year yield. lisa a: at least not an escalating storm. maybe we are getting a sense of buying more towing because -- but it is early days. we have to wait for the data we are going to get and for what happens in d.c. tom: we have further this inversion this morning --further dis-inversion this morning. going all the way up to -34. every process says this is what matters by looking at a plethora of data. jonathan: lee says right to talk about d.c.. you have talked about the

historic nature of washington. typically you think about the majesty of the moment and how devastating something might have been. there is something clumsy about how unprecedented this moment is in washington. lisa a: clumsy because there is a lack of a leader and session in the house as they try to your out who their leadership will be in a time of really serious questions and potentially a government shutdown. jonathan: annmarie hordern joins us next. live from new york, good morning. ♪ ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines.

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>> it is the benefit of this country that we have a better speaker of the house thing kevin mccarthy. he could not keep his word. >> i do not regret my efforts to build coalitions and find solutions. i was raised to solve problems, not create them. i believe i can continue to five a may be in a different manner. i will not run for speaker again. i will have the conference pick someone else. jonathan: it will be difficult now. kevin mccarthy after the historic house vote to remove him from his position as house speaker. equities turning around the last 10 to 15 minutes, just about positive on the snp by a little more than 0.1%.

those turning around. they were higher on the 10-year yield but we are now lower on a basis point at 4.78. we were at 4.90 recently. the dollar is weaker and the euro is stronger. positive by 0.5%. tom: watching currencies. 145 on the dollar-yen. maybe off the radar after the dollar festivities. i will go to the twos-tens spread showing continued this inversion. 8:30 is a big deal with his economic data, will it jolt what we saw yesterday? jonathan: i like the pun. we saw a manufacturing that contributed to treasuries. job openings also contributed to treasuries. it is a lot of people looking at

fixed income but this is not just data but about china, point to japan, point to ut if you want, but also dysfunction in washington. tom: pennsylvania avenue is a lot like sunset boulevard in los angeles. if you were to be at 601 pennsylvania avenue, this would be the capital grille. holding court. you can look out and also see the annmarie hordern billboard. she joins us this morning. ". what was sure insight on the theater as you went to your program last night? annmarie: there was a ton of theater. there was a rural procedure brought to the floor to potentially delay the motion to vacate but speaker mccarthy lost that with losing 11 republicans in that boat and then it set up

potential for a quick ouster. i think he was daring them to oust him as the wall street called it, cut off the head of the republican party. eight voted against him alongside the democrats. the theater is what was happening behind closed doors and in the hallways. i was not there but what you are hearing from reporters is even some individuals were crying. these are people who -- i cannot explain how creon -- chaotic it is for the republican party. they are going on a recess but nothing can get done on the floor until they have a speaker. tom: capture annemarie at the capital bill. capture for me the mood at the capital grille last night as their washington flat on their? annmarie: people are stunned.

the republicans have control of one chamber of one branch of government and yet they have dissolved it basically. it is very chaotic. this is the first time in history that there was a motion to vacate. mark meadows put in motion for john meadows that he resigned. the republican party put pressure on the speakers and their leadership when they don't get their way. this is the first time in history that a speaker of the house has been ousted. we have the pro tem speaker patrick. he comes from a list that speaker mccarthy made. speaker mccarthy made this list that only started after 9/11 in the event of a terrorist attack extremity have continuity of government. we have this one speaker but his

only point of legislation that he needs to do on the floor is healthy republican party elect another speaker. there is a lot of names being thrown around but no one has a hold right now. lisa a: it is important to highlight the procedural power of a house speaker. it is more than just reading everyone together and buying pizza for every body. this is someone who can actually bring people to the floor -- bring those to the floor. annmarie: this is third in line to the presidency. lisa a: give us a sense of what cannot get done without a speaker. annmarie: the government will likely shut down come november 17. if they don't have a speaker, they are not working on the 12 appropriations bills which congress and matt gaetz constantly complains about and calls them single issue. they are not exactly single issue but there is 12 appropriations bills. it cannot send more aid to

ukraine. president biden had a call with allies that said the u.s. will continue to support kyiv. they will not look at more forces and money going to securing the southern border which is not just an issue for republicans but a life democrats and democrat-run cities. they cannot get anything on the floor until there is a speaker. at the moment, this is uncharted territory. lisa a: there is an issue with money too and a life times, many speak. where are -- where are they trying to influence the conversation at a time of great dysfunction? annmarie: it is interesting you bring up money because kevin mccarthy was a prolific fundraiser. he has a lot of money on hand, not for personal use, but for his campaign. if i was these individuals that

voted to ouster him, i would be nervous about where he decides to spend his money next november. jonathan: thank you. annmarie hordern in washington, d.c. a headline that prime minister rishi sunak is set to cancel the northern light of the u.k. high-speed rail project. it has gone way over budget. he says he is bowing to spend 32 trillion pounds in other products -- other projects. the whole issue was to link the south with the north and level up. to do something about why the economic north was so much poorer than the south. to close that, you would have a high-speed real line that would go from london all the way to manchester really fast and cut the travel time tremendously. they are cutting the northern light which undermines the whole reason they were building this

because you can already travel pretty quickly. tom: everyone will have a different opinion. how will this speak -- will this be received by conservatives and liberals in the u.k.? jonathan: how the additional money will be spent will be a big issue going to the next election in the next 18 months. our personal feel -- my personal feel is this goes right next to my mothers house and decimated the countryside, for what? tom: i have taken the high-speed train from tokyo to kyoto. why can't the u.k. do this? jonathan: forget my personal issue, this is another reality check for the prime minister, constrained fiscally again. tom: you go to name six banks and they have refined the deal and you charge your fair feed to go? lisa a: what john just said is

the big takeaway. an incredible example of how the money stops at a certain point especially when you have borrowing costs going up and a real argument for fiscal restraint. tom: is this because manchester lost? jonathan: that's right. tom: they would never do this to southhampton. jonathan: from new york, h is bloomberg. ♪ if you're trying to get a view of the whole organizational financial health and you're trying to do that through multiple systems, that makes it very, very cumbersome. ♪ it's not just tech, it's not just people. it's how they work together to provide

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all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything. jonathan: equities on the s&p

500 positive by 0.1%, slightly elevated. nasdaq up by 0.07% after some big moves yesterday taking us to lows. s&p down about 8%. more than -- back-to-back double digit moves after manufacturing. we will get services later. also, yields are up and away. down the single basis point. the 30 year north of 5% earlier in the session. i want to turn to

foreign-exchange, euro against the dollar, dollar against the yen. the euro is 1.05 10, stronger euro. we do not know whether the bank of japan jumped in but we are back to 148.92. tom: they happen. we will see how it plays out, but sequential interventions are weaker and weaker. it is a nice dampening function. i felt that yesterday, the jolt of the first intervention. jonathan: this morning, the removal of kevin mccarthy as house speaker raises fears of a shutdown with the next deadline a little over an hour away. the house speaker, the house expected to host speaker elections next week. next shutdown deadline looming

on the number 17th. i have got a feeling we are not going anywhere anytime soon. lisa: clock ticking, fewer than 40 days left, no session in congress is the trying to get some sort of leadership lined up. unclear who will win the speakership. where does this leave us? is this bond market responding to that dysfunction? that is what we have been asking -- does anyone care in washington? jonathan: one of those we have spoken to things that is happening. oil, easing ahead of an opec-plus meeting today. individual statements from saudi arabia and russia saying they will stick with production cuts through the end of the year. we will update the latest on already declining crude industries. operational minimums in certain places. that deficit is the reason we are near the 90's. lisa: some of the physics behind

this makes it less efficient. this is where we are at, based on how low these inventories have gotten. the question that i have is in a couple of discussions, the idea of higher yields has led to more weakness down the line, which is put a lid on some oil prices. we hear oil that opec-plus justifying further cuts by saying we could see weakness because you have got strong growth and there will be a yield response. we do not want to oversupply things. tom: as always, you have a wide set of opinions. i will let it play out. here we are. jonathan: we have said that before. if you want to make the fall of someone -- tom: brownlow had two barrels in the living room.

jonathan: forward since it is willing to raise pay by 20%, increase 401(k) contributions, and offer as much as five weeks vacation. the return of traditional pensions and commitments. on the strength front, health care strikes. lisa: this is interesting. this is not a one-off when it comes to autoworkers. this is also something broader. we are seeing strikes also this morning. kaiser workers launched the largest u.s. health care is right across the u.s. 75,000 workers walking out at kaiser hospitals across the country today. at what point does this give rise to a feeling of a wage spiral? there is a whack -- lack of workers. tom: october is considered by

experts a great reset of price change in medicine. jonathan: three-day strike. tom: right now, futures up five. we were thrilled three weeks ago when ian lyngen said to load the boat. i am not going to give you the joke if you loved it then you will love it now. but, ian, take your experience and say how did this price decline fixed income filter into the financial system? how does it alter into our banking system? ian: what has been fascinating about recent pricing is we have not seen the response in risk assets that we might typically. given the magnitude of the back up in 10 year yield, i would expect equities to be off more

than they currently are. to some extent, the market is looking at this move and saying it is temporary. we will have buyers come in and reset to lower rates. i worry about if this selloff ends up being sustainable. envision a world with 10 year yield about 5% for a sustainable period. group rates in the 10 year sector are at 2.4 5%. if it stays there, we will see more curio ramifications for growth consumption and consumer borrowing. jonathan: i asked you if the tenure was screaming by? what have you found difficult about this move since that conversation? ian: the most interesting aspect of one from 4.35 to 4.85 was the fact that there is a buyers strike in the treasury market. it is not a situation where most

investors have changed a fundamental belief in the way that monetary policy functions. rather, the resilience of the economy has left most investors in the treasury market on the sidelines. no one is willing to jump in front of this and grab the following knife. jonathan: do you think d.c. dysfunction is contributing to this? ian: it certainly is not helping. the reality is what we are dealing with at this moment is the fact that up until this week, term premium was effectively zero or negative. we are now to the point where term premium in the tenure sector is at about 22 basis points. in 2001, term premium he at 35 before quickly correcting into the -60 range.

there could be a sharp reversal in the offing. lisa: if you weeks ago, is not it was a screaming by in the 10 year treasury. is it even more so now? ian: a fair characterization is it is the perfect time to be on the sidelines until things stabilize. eventually, we will look back at 10 year real rates at 2.40 or 2.50 as potentially a generational buying opportunity but i am on the sidelines for now. lisa: why? if you liked it up for .50, why not love it at four point -- 4 .80. why stay on the sidelines if you think eventually it will be a screaming buy? ian: we are is a market waiting for evidence that the lagged impact of monetary policy will hit the real economy during the

fourth quarter. we have not seen that. he come out of friday with even a relatively benign payroll, then we focus on wednesday's cpi. we could see five 10 year yield. that would be unattractive entry point. tom: i have not done price since time began. five years is old in bloomberg. going from 100 to 97 underinsured five-year year piece of paper. jonathan: the price of destruction have been phenomenal. can you walk us through how much volume the rest actually is? you talked about a buyers strike. has a liquidity or volume changed in the treasury market? ian: outright volume numbers have not changed. at numbers that we track, we are at about 1.4 times the norms,

but when we see the severity of the price action, the moves suggest that these are transactions that either need to occur or are transactional part of the normal daily flow, as opposed to someone really getting excited about the outright level of rates and taking a shot at going long. at this point, i would say that liquidity is functioning fine. it is not disorderly, nothing that the fed would be worried about. if we find ourselves gapping higher in phenomenal rates, i think yes. jonathan: when does the fed get concerned. they are concerned yet. what would make them concerned? ian: financial conditions above what we saw in october and november of last year, combined with deterioration of real economic data. tom: you work for a bank, but do

you see bank fragility? i got a reverse split at citigroup, $3.90. windows michael barr state we have a problem? ian: i do not think that the banking system is vulnerable for the top 10 or 15 banks in the country. i worry about some of the residual from the banking crisis we saw in march and how that is going to impact small regional lenders and how that is ultimately going to flow through to access to capital for small and medium-sized businesses. that is what we will be watching for is a trigger to a higher employment rate in a bigger hit on consumption. tom: on a speculation basis, the

answer is somebody steps into a 20 or 30 year by off, are we in a mood swing now where you can establish a bet? ian: if the american is coming to grips with the fact that we are at high nominal yields and people will look at the five handle on 10 years as the inflection point the world was anticipating, especially if we start to see more downside in risk assets that is the biggest wildcard. jonathan: good to see you. equity futures positive by 0.1%. turnaround in the bond market, yields lower by about a basis point. something panicky overnight once you start to get 30 year at 5%. lisa: this feels less panicky.

people may say funky things happen in trading. or the liquidity not great. either way, right now, we are looking up more stasis. when ian just said, we are talking strikes in the health care and autoworkers sectors and in the treasury buying sector. that is essentially what it is. even people who like the yields where they are do not want to step in front of a freight train. what will bridge that gap and the circuit breaker? jonathan: it was a screaming buy at 430. not anymore. no one wants to step in front of it. lisa: why buy it at 4.80 if you can buy it at 5.10? there is a feeling in the markets that we will not understand or get in the way of this. tom: this is the pimco zr too. it is a pimco 45 plus u.s.

treasury note. this thing has really worked out since labor day it is 83 to 67. jonathan: have you looked at the 21.20 austrian bond? it is trading in the 30's. were they looksky -- worth a looksy. ♪

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(♪♪) the first law of thermodynamics states that energy cannot be created or destroyed. (♪♪) but it can be passed on to the next generation. (♪♪) >> -- a successor? >> i do not know who is running. >> when you look back, is there anything you could have done differently for those 8 members? >> and a lot of them i hope to

get elected. i probably should have picked somebody else. jonathan: evan mccarthy speaking after being ousted. real turnaround in this market this morning. equities lower but yields higher. yields now downhe word rebellion. there are different kinds of southerners. newt gingrich with sean hannity last night was heated and on fire. now we have french hill.

he has been a good friend of the program. he is linked to american finance through banking in little rock. help you link this moment -- how do you link this moment to confidence in the banking system? rep. hill: good to be with you. i do not like the dysfunction in the house. i was opposed to what happened yesterday. if we want to build confidence in the u.s. and global capital markets, we have got to show leadership on the fiscal side of the hoe. in the midst of an appropriations fight and a fight over federal funding and less than 40 days until the government shutdown, to be shut down in the house without a speaker for the next week is not contributing to that vote of confidence. they are linked. i hate to say that, but this

rebellion has comedy poor time. tom: the rebellion has a tinge of geography. we have the from montana and the rest. i look at this as a political contest. it is not just about what we are doing at surveillance or the cable tv theater we are seeing in washington. jonathan: will feeling that the republican party shot itself in the foot. how can the american public have confidence in your party's ability to govern? rep. hill: under kevin mccarthy, we demonstrated that successfully. that is why i am disappointed in 8 people, 4% of republicans in congress. they voted with the democrats yesterday to take down kevin mccarthy. but under his speakership, we passed an energy strategy to

make america energy independent. we passed border security, reform to the immigration system that failed and border security. it was kevin mccarthy who crafted a historic debt ceiling deal, which resulted in $2 trillion of spending reductions and a 1% cap on discretionary spending. just last week, he offered a stopgap spending measure so we can finish appropriations work, which also included a debt commission which i think is critically important if we want to get a handle on what really drives our deficit. lisa: yields continue to rise. you look at that 10 year yield every day and watch it climb in tandem with interest payments of the u.s. government. goldman sachs is estimating that yields claiming where they are

at about $100 billion to the deficit come 2025 versus expectations in july alone. do you think other members of your party realize that the longer this dysfunction goes on, the more they contribute to that deficit? rep. hill: such an important question, but i want to turn it around and say, yes every day in the last few weeks we have talked about the impact. but this is a fundamental issue that goes back to both pre-pandemic and certainly during the pandemic, when the democratic house budget committee chairman at the time said there is no limit to what america can borrow and spend and deficits do not matter. that went on steroids during the pandemic. but we did five or six times what that output loss was. we did not take our foot off the accelerator.

president biden has compounded that. lisa: to be fair, the deficit did rise by about $8 trillion during donald trump's time in office and a lot of the aide was accelerated during that point. isn't this both parties? the complete dysfunction now just exacerbates the inability to address these issues. rep. hill: i said that during the pandemic -- that is the trump administration, absolutely . spending was out of control with nria toward trying to offset output losses, but we overshot. plus a prophylaxis monetary policy for -- a too lax monetary policy for too long. sure, both parties bear

responsibility, but what i have seen in my 40 years in private business and government is there is no consensus that large deficits are bad in the democratic party and some in the republican party. that has got to change. tom: i would suggest that you and former speaker gingrich are sorted on the same page. this is embarrassing. let's fix it. the way to fix it is an anointed speaker of the house. how long will this take? rep. hill: i would have hoped we could have started that process before we left this week, but we did not. we will meet either monday night or early tuesday morning and start the process of selecting a new speaker. i want to have that concluded next week. very important that we get on with our work in the midst of this appropriations fight and a shut down looming november 17.

jonathan: this is a difficult question, maybe somewhat emotional. as your party left you behind? do you get the feeling this is not the party you joined? rep. hill: i think the republican principles of balanced budgets, strong defense, international leadership, the largest open market in the world, these are core principles. loyalty to the bill of rights in the constitution, these are fundamental tenants in the party, but we have lost our way tactically. we are throwing overboard a successful speaker who shares those views and was guiding us through the stormy waters of a dysfunctional presidency led by joe biden and the democratic- controlled senate. not easy to do with no plan. those 8 people who voted to throw mccarthy out do not have a

plan except they are complaining about the physical conditions of the country. that is shared by all republicans. tactically, they have failed. strategically, the individual principles of the government -- of the republican party are still intact. we have just got to move forward, regroup. jonathan: it is shared by the majority of republicans in congress, but is it consistent with the views and the beliefs of the dominant leader in the presidential race for your party? i think the answer is no. rep. hill: i think president trump believes in a lot of those principles. we saw him do good work as president, but we need him to help rebuild this and not run counter to it. we need to have the republican party on the same page with regards to our role in the world. president trump had some

challenges on the spending side also but he was good on other things. we have got to get a house leader that republicans can back so we are back in this game of countering biden's failed agenda on the border, internationally, and fiscally. jonathan: is he helping or hurting you now? rep. hill: who? jonathan: the former president. rep. hill: he does not come into play in this issue in the house. these 8 people are not doing trump's bidding. they are concerned about the fiscal affairs of the u.s. they did not trust mccarthy. this is an internal matter that we need to solve in the house. we need a leader we can get behind to counter the mistakes of the biden administration. jonathan: concord french help, appreciate it.

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top rates will be, we do not know where the market will be.

>> spreads will move wider, but we are forecasting a more narrow range. >> potential for an accident is there but higher rates will bite. >> the market only now starting to price it in. >> this is bloomberg surveillance with tom keene, jonathan ferro, and lisa abramowicz. tom: good morning. historic morning. in 14 minutes, once again we are data-dependent with bonds priced lower. jonathan: manufacturing better than expected, job openings higher than expected. adp report just around the corner. tom: all the stuff michael mckee talks about, he will be with us.

another guy is expected to show up. secretary yellen yesterday was very chairman like. jonathan: hiring for longer is not a given. given the bank drop, talk about the context. those con -- commas are coming when you have a bond market selling author aggressively you have a real concern that this is not just about the federal reserve, not just about economic data, not just about japan or china and the difficulties they have got but also about the dysfunction in washington and the budget deficit and the inability to get a hold of it. tom: and within the financial valet, it is about yields. we have tried to give you the price analysis. lisa abramowicz is the expert.

what is the price analysis of the two movable parts of the spread this morning? lisa: price down, yield up. you see that with credit spread as well. when you have the risky aspect of the company go up, you see credit spreads go up. right now, people are looking and saying, if borrowing costs go up this quickly, you have a fundamental concern about what kind of price you will pay to refinance. if rates of borrowing go out enough, it becomes a credit risk. it does not make sense to borrow money and refinance at those rates tom: i was looking at real estate across the island this weekend. how about a 7.88% 30 year mortgage? jonathan: i have not seen at numbers like this in 20 years.

looking forward to catching up with him later. we have been talking about mortgages in america. the problem is not just that rates are high, but prices have not come down. that is the issue right now. you pay 8% mortgage rates for that would not be too bad if prices went down 30%. but that has not happened. supply is an issue in a lot of places, including new york city. this is the thing about long variable lags. the housing market, superlong, dirty years. the high yield is only a rise in the near term, but a lot us companies need to refinance and they refinance at rates that look nothing like the rates they refinance at a couple of years ago. tom: is that american irish?

jonathan: that is a stereotype. i will take her to a diner to have breakfast. tom: he was not really here yet. speaking of ireland's, i looked at irish crisis. as of the next-door to bono. real estate prices in ireland are insane. this is a global moment. we have been focused on america, but the german 30 year or u.k. guilds, they are all in the same disarray. lisa: there is a lack of supply of homes and an increased demand as people come of age to move out of their parents basement. at a certain point, you wonder where it breaks. there is a theory that when rates start going lower, uc supply come into the market and that is when you see housing prices fall, because you actually have a market. tom: it has been a little better

in the last hour. we had continued this inversion, early surveillance morning now -37 basis points. tom: let's talk about where that this inversion is coming up from. it is coming from 10 year yield and 30 year yields going aggressively higher. that is not the steepness we expected. what people are looking for this year is economic downturn and yields falling at the front end, rallying off bad economic data. have not seen much of that this week. price action looks like this -- s&p 500 turning higher. in the bond market, yields lower by a couple of basis points. tom: crisis over 19.76. an expert in crisis management is keither lerner.

you have so many competencies. which chart speaks volumes to you this morning? keith: as far as what speaks volumes, we are focused on the 10 year. it means to stabilize. everyone is watching that believe it or not, we have been more in the correction camp since late july. i am becoming more positive. we had all these concerns but we got good correction. we have now 8% of stocks above the 50 day moving average, down from july. everyone is watching this 200 day moving average. i would prefer to be below that. all in all, all these negative

things are right in front of us. if you get any relief on any of these things, you can at least have a bit of a catalyst for the market. tom: to swing from technical to economic, we have andrew from citigroup. but the basic shock moment will be some form of communication from our central bank. keith: it is premature. we are not close to a fed put. they have scar tissue from the inflation of the last year. also not likely to cut rates anytime soon. really, what the market needs and what we have been lacking is upside catalyst. we have all these different headlines. we have to get procedure earnings season. at the atlanta gdp number is still at 4%. earnings season should be ok.

that could change the mindset of all these other things. lisa: you are getting more constructive on stocks, but what about bonds and treasuries, given how quickly yields have moved up and that they live people think it is truly compensating you for inflation risk? keith: the bonds have moved further than anyone thought. at this point, we are at 4.80. there is a band of historical resistance. as far as someone with a six to 12 month and longer, we think bonds are becoming more attractive. even if bonds go up, because of that high yield, you will more than offset any losses and still have a positive total return on a 12 month basis. at this point, i think 5% will be attractive. lisa: this is fascinating.

ian said the same thing you just said. the sidelines are a beautiful place to be where you wait for it to get to percent but at what point does this become disruptive outside of expectations, simply because these are losses we have not seen before in the bond market? keith: it is the biggest risk. within our last allocation, we are more neutral, but if we were looking for more of a pullback and now we are getting it and the flow is negative, -- and the point about waiting, it is better to look at things from a risk reward standpoint knowing you will not hit the top and bottom. the final point is there is a high cost. if everyone is waiting for that moment, it will happen quickly.

you have to move in when the risk reward becomes more attractive. tom: i did some work on a blended bond portfolio this morning. the name does not matter. recently, bonds are breaking down to new price lows, but when you inflation adjusted total return of bonds, it is an unmitigated disaster. i am going back to january of 2009. is the great moderation fractured? retirees in america cannot catch up. keith: folks about bonds at lower yields, they will still have a coupon. they are just not getting the adjustment you mentioned, but hopefully those bonds will ensure they can reinvest in higher prices. looking forward, you think of a balanced portfolio, on a

five-year historical basis, it has been up 99.6% of the time. the outlook for more balanced portfolio is better than it has been for some time. somebody who but yields at lower prices, not great but you can reinvest. lisa: when it comes to the stock market, there has been a real question about where the leadership will come. a number of guests on the show have talked about how tax will retain its leadership. others said it will broaden. what do you think is going to be leadership? keith: that has been one of the problems. we have been cautious because there was no leadership, but two areas we would focus on and as we still like energy has the strongest trends in the market. valuations are cheap. we all know there is a supply reduction cut supporting those prices.

and also communication services on the tech side. that is where some of the ai companies are. coming out of this, those are the two areas we need to focus on. jonathan: he lerner of tourist advisories on the latest market moves. in a couple of minutes, we will get the adp report. it is like a bad appetizer for the payroll report on friday. your equity market going in is positive. the s&p is 150,000, revious number was 1000. andrew from citi. can we make it 3 for 3? job manufacturing numbers, job openings, this wednesday into friday, are you expecting stronger data? -- more strong data?

andrew: maybe yes you look at job growth, you have some seasonal adjustment factors. you think it will boost a number a bit on friday. you think we will come out above 200,000. the unemployment rate is where i would watch. it could come down to 3.6%, concerning or fed officials. jonathan: do you think this economy is starting to react seller? andrew: -- we accelerate? andrew: that is the risk and concern. we still have a tight labor market. atlanta fed gdp down 4.9%. empirically, we are accelerating. not sure how long that lasts, not sure it is sustainable, but it will add inflationary pressure. jonathan: that is how we started the program. we talked about risk cutting both ways. at the same time, simultaneously

having a conversation about the potential to re accelerate. just a slowdown, why do you not lend too much weight to it -- to the risk of a slowdown? andrew: the economy will eventually slow down but i do not see it from the consumer. it is not there in the data. you see not only consumption that has continued to hold up, but people are buying autos and houses. a lot of strength year you had jonathan: the adp jobs report about to drop. let's get to michael mckee. >> we get a number that is lower than anticipated, just any 9000

jobs created in september. annual pay up 5.9%. that is a drop. looks like a weaker than expected jobs report could be a possibility. always have to add that disclaimer when you are talking adp and its relationship to government payroll numbers. these are private sector jobs. goods producing 8000 jobs. manufacturing loses 12,000 jobs. construction gains 16,000. leisure and hospitality leads with 92,000. 32,000 in professional and business services decline. yesterday we got the jobs report that shared a big rise in jobs in august for professional and business services.

there is some disjointed data going around. one last thing, the change in the establishment size is small with 95 thousand additional jobs. large businesses lose 83,000 jobs. job stairs up -- stayers up. in the quit rate did not move. bottom line, 89,000 jobs created. we will see how that affects the forecast for friday. jonathan: this data goes against the grain. reading than expected data monday and tuesday, downside wednesday. bond market, yields lower, treasuries rally. 8:17 a.m. eastern, already had a trading range. we are back down to 4.70

something on a 30 year. they are down about six basis points. equities spiking higher. this session high is positive on the s&p 500. the dollar, which has been dominating, showing some weakness now against the euro. tom: much more than normal. you look at the blank -- blink of the bloomberg launchpad. there is people adjusting. jonathan: downside surprise, 89,000 on adp. the estimate was 150,000. on payroll, the number we are looking for is 170. previous number 157. after a number like that, will we see some upgrades or downgrades going into friday? andrew of citi with us.

what would you expect on friday? andrew: it does not change anything. look at the scatterplot of adp. not a high correlation between the two. there is a big if. if we get december, -- get this number four payrolls on friday, it is goldilocks. this is about what population growth can sustain. that would be a sustainable pace of job growth. that would be a goldilocks economy. tom: janet yon was out yesterday with some select comments. i am sure your team saw it as well. there is also michael thyssen who has a famous quote about getting punched in the face. everybody has got a plan here. the, we have seen the last week in the bond market, there is a point where the fed poke comes back. are we anywhere near where the

fed looks at the financial trauma and says, we have got to adapt? andrew: the fed is trying to raise interest rates and slow the economy. what controls the pot -- economies mortgage rates, corporate borrowing rates. those will depend on the 10 year yield. the fact that 10 year yield's higher is consistent with what the fed is trying to achieve good like tom was talking about earlier, being at a 15 basis point trading range over the hour or so in the day is probably not the level of volatility fed officials would like to see. fed officials and government officials always tell us they are watching. they will be watching for signs of liquidity stress emerging. if you stop those things, then you could think about with the fed actually react? maybe treasury yields have moved too far you would say but we are still not at that point. we still have 10 year yields.

we are not as inverted as we were. if you are not imminently staring down a recession, not clear why that yield curve needs to be so inverted. lisa: a number of people on the show have said that a lot of the moving yields has not unjustified. do you disagree? do you think that fundamentally where the yield is currently is completely justified in compensating for inflation? andrew: it depends on what you need by fundamentals, but if you are including the fact that we are running large deficits, more treasury supplies coming to the markets, i would say that is a fundamental part of the u.s. economic backdrop. along with that, we are running higher inflation. if we are running inflation above 4%, it is not that surprising to see treasury yields above 4%.

you need that number to be compensated for inflation. jonathan: do you think this number helps the fed's cause? andrew: i do not know if it helps anyone's cause. it does raise questions about whether we will be in a another shutdown november 17. view cell markets trading, markets that have priced out vulnerability in november. i think the fed wants the government to stay open and allow them to respond to economic data. jonathan: well played, very diplomatic. you use my favorite phrase -- we are watching this. we often ask on this program what does that mean? when the savior watching this. andrew: it means they have a bloomberg. lisa: [laughter] jonathan: we will get a final word from andrew in a moment. mike mckee, second look at the

data going into friday, what do you see? >> we compare it to the private sector job creation numbers. if you look at what is expected on friday, payrolls expected to come in at 155. that is down from 179 the month before. adp has got the direction economies are thinking right, but they are still significantly below that level. it will be interesting to put those together with government, since government is still open, seek what we get. market participants seem to be saying a real outline number could have an effect on treasuries. we have not had an outlier in quite some time. lisa: is there an incoherence between the jolts data from yesterday, the fact that things in general are hotter than expected in the direction of these adp figures? andrew: especially seeing that

manufacturing was down in adp with surprising. looks like we will be expanding in the manufacturing sector. i do not think that negative payroll growth make sense with where we are in the economy. tom: you've got to write a paper with your team, in the heart of the matter is the vector of inflation. do you agree receive three-month annualized disinflation? andrew: i cannot state that. i think what we have seen is a soft patch in inflation. a lot of special factors came together some of those sectors will go the other direction. we have a tight labor market. tom: this is the arch debate on surveillance right now. jonathan: unemployment 3.6? andrew: unemployment at 3.6.

regis, ultimately it does come back to wages. are they slowing down? or holding steady? all that data is not the most high fidelity beating on the job market. all i have more to behold mosaic. jonathan: sounds like an addition. stick around. andrew will stick with us. the next hour, we will talk about the bond market and some reaction to the prices. the verge of in the next 90 minutes. once market, yields higher. lisa: they were much lower yesterday.

that depends on services data at 10:00 a.m. does a stability lead to more buying? there is a psychological aspect to this. -- does not like them simply because he thinks he has a better entry point. tom: i just did a great function. dramatic pullback in yields. we are still at 1.9 standard deviations. jonathan: quiet move. jobs down at 89,000. stop fire. ♪ to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™.

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tom: we are data dependent. preparing for any bum for 9:00 hour. vix 20, fear crisis 19.56. the vanilla spread. the two sent spread his rapidly improved. -34 basis points. we wait for the 10:00 hour. michael mckee joins us now to make sense of all of this.

help me out. at 10:00, brahma will be watching. i will not. >> i have some numbers will be most important. very volatile series, depends on boeing. not quite as much weight for people in the market. people may look at the headline, but they will want to see as we did on monday, they want to see the prices paid number in the employment numbers. employment numbers will help people make sense of adp. we will see what prices paid tell us. we had a brig drop in prices paid for manufacturing. economy relatively strong, labor market tight, prices down? or a different story? lisa: in the soup of data we get

this week, i am curious about stripes and the labor government, not only when it comes to hollywood, but also the kaiser nurses. 75,000 nurses on strike. how does that factor into wage increases capital michael: jobless claims will be distorted you on strike, you cannot claim benefits, but if you are laid off or cannot work because others are striking, you can. that will distort jobless claims. we will not see anything in friday's report on strikes. we already got the report from the bls. 17,000 people on strikes and that is overstated.

the uaw strike did not show up and of this month. the nurses strike does start before the new month. if it goes through the week of the 12th and that pay period, we will see a big impact on the overall numbers. the fed will look through that. tom: one more question, the fed has always written on the -- history of the country. really writing about the advent of greenspan. this is just after the mckey play. they said there was a problem and the fed action wise stepped in. are we anywhere near that? michael: that is the open question. do people think the fed will have to do something? the fed is trying to say there is no fed put we are not going

to get involved. the only way they can prove themselves is to not. tom: we will stagger until the end of the half-hour with three gas lined -- guests lined up. ralph will join us in 15 minutes. also, ira jersey of bloomberg intelligence. you are a bond guy. he says, what is going on in america? what do you say to the economist about the price action in you are space? >> a couple of things. first, the fed put, there is a

fed clip. it is just way far out. you have to see some serious market and economic pain for the fed to seriously react. in the rates market, the link to the economy is still strong. even a bigger reason than is been espoused is the better-than-expected economic data that we receive. by our estimates, and we put out a number this morning, about 70% of this move can be explained by better-than-expected economic data. that is important to realize. it is still the economy, stupid. tom: i did the work yesterday on dxy. you've got to do the work about where the stress would click in. amazing when all of a sudden the

dollar comes -- but distant from that, we have got to move up to get action. lisa: post financial market stress and also economic stress, andrew hallman ours is with us. how constrained is the fed to step in and make any actions whatsoever in response to financial market distress? it is the economy, stupid. it is strong. and we are still seeing inflation. andrew: there is a bar in which the fed would come in and stabilize markets. that bar is higher because you have this backdrop of inflation when you have run above target inflation for multiple years and you are trying to get back to 2%, it is an additional constraint on coming in with any dovish action or rhetoric.

the atlanta fed president said we might keep rates high for longer. lisa: seems like the federal officials are leaning into what we have seen on the longer end of the treasury curve. ira, we have heard one guest after another saying they do not want to catch a falling knife. they want to wait for better levels. do you see the same kind of technical singles in the market? that is where we are headed? ira: 5.34% is the next technical level. you have to go way back. we are at levels we have not been at since before 2007. when we think about where the 10 year yield becomes a value play,

it becomes a question as to what is the terminal floor. the big thing the market has now priced is not just that the federal reserve might leave rates at 5.5%, but more that when they cut, they might only cut to 4%. i think that is wrong. the market is probably being too optimistic, but when these moves start to gain momentum, they keep going until you go the other way. you have not seen complete capitulation by investors that want to belong on the market. the path of least resistance is still for higher yields. near term, there will be an interesting bond opportunity, but hard to say that is where we are today. tom: mo important conversation with citigroup is not jane fraser. it is andrew hallman ours. and we have keith.

the conversation will be about how all of this mumbo-jumbo floats over to the banking system. how do you synthesize the worry across different capitalizations of the banking structure. andrew: keith horowitz is my neighbor. we talk about these things. that would probably happen. we are the only two people who want to be in the conversation. but that is the question we should be asking. large upward movement and treasury yields, fixed show up? that is something to keep in mind. tom: this is gospel at ucla. forget yields and financial media garbage. it is about price. when do people like you at the

equities building start worrying about price and bonds? andrew: there are two separate conversations. look at what the fed has done with bank term funding where you can now deliver the u.s. treasury to the federal reserve. $50 treasury and you get $100 back. the put that in place because they recognize the losses. it goes back to lisa's question -- the fed is ready if something needs to be done but there is no indication that anything needs to be.. lisa: what about quantitative tightening? andrew: that is were going on for some time, going out without a big effect on markets. you have mainly been draining liquidity.

but as the fed drains reserves from the system, quantitative tightening goes down, deposits come down at banks. when deposits are down, banks do not have the liabilities to buy assets. what are they buying? treasuries, mortgagors. that is one natural buyer of treasuries. but quantitative tightening is going on. lisa: decided concern for the fed? -- is that a concern for the fed? ira: the federal reserve is concerned about when will quantitative tightening have an effect on the overall financial system? some think that the fed will continue to run off even well beyond when we think they will ultimately have to ease up on

quantitative tightening. ultimately, how much liquidity does the banking sector need? our work suggests that sometime in the second quarter of next year, we will reach the lowest comfortable level in reserves. then the fed will probably reinvest some of their balance she. that goes down a lot. things like the bank term lending program, that is 100 billion dollars of reserves that immediately go away. next spring will be interesting. -- that does not mean they will immediately cut. they will have to communicate this disconnect. tom: futures up 12. lisa: we are seeing a bit more

stability in the bond market. tom: prices over. lisa: worse than expected jobs numbers from adp. that could get discounted at 10:00 a.m. if it is positive. tom: i am fascinated how you do a q4 report. do you take it from 12 pages down to seven pages? andrew: as treasury yields go higher, what does this do the housing market? tom: citigroup is knee-deep in this. 7.88% 30 year mortgage. it is all about fixed income of the design by the fed. how bad did they scrub our real estate market with the rate of change of the rates? andrew: it is very complicated

now. we saw 7% mortgage rates, came off lower now we are going higher. we could get above 8%. it has been a strange housing market. that is also constrained supply. nobody wants to lose their 3% rate. how supply and demand workout is uncertain. tom: we have got to talk about 8.25%. lisa: and what happens will reveal these rights? but right now, how many people are actually taking out mortgages? tom: thank you to ira jersey of bloomberg intelligence. coming up, wealth in the equity markets. ♪ ♪ discover the magnolia home james hardie collection. available now in siding colors, styles and textures. curated by joanna gaines. lisa: bit of a reprieve in bond

markets as -- of stability after

a worse than expected adp report. this is bloomberg surveillance. i watching 4.73 50 on the 10 year yield. in decreasing by six basis points, this shows volatility tom: it is the bond space but more than that. when data correlates with foreign exchange, then with the red sox that need to improve. the bottom line is we have shifted from a yield analysis where we were forced to look at price. andrew hollenhorse was brilliant about this. we love the convenience yield. andrew hollenhorse said price analysis is different and

discrete from yield analysis. lisa: it speaks to the holders of huge pools of securities. talking price, a couple of names caught my attention netflix planning to raise prices on some ad free services on the heels of the resolution from the hollywood strike some of these strikes are leading to higher costs that consumers will get charged, which i find interesting. those shares up 6%. similar moves from amazon in terms of raising fees. meta coming out and potentially charging $14 in europe for facebook and instagram for people who do not agree to certain information sharing systems. tom: they raise prime $10, am i going to cancel? lisa: they have a sticky base of

customers and pricing power. they have cost that are going up. can they pass them along? what we are seeing at least with initial reports is they are going to. this is one of the underlying fears when it comes to an economic perspective. are we entering something more inflationary? tom: we have two guests that we want to speak to this october. this is away from the bond crisis but we will get his opinion. on the rest that is going on out there. one of them is edward. she is economist of yale. edgar denney sent 12 months ago to get on board this equity market. a legend within my world. ralph, your call last october

was stunning. are we still in the bull market? ralph: yes. thanks for bringing that up. last october, been going for a correction. but that is the good news. the bad news is the market does not like uncertainty. that is why we have had such difficulty. rising interest rates, rising oil prices, chaos in washington. tom: lawrence mcdonald is one of the great essays of 2023 talking to larry mcdonald on the absolute role of money out there globally. this is different from decades ago.

how do you analyze the wall of money that is out there within your technical analysis? edward: we watched that carefully. that flow of funds moves markets. if you recall, at the first leg of this will market, up until june of this year, most of that money was on the sidelines. it came in late. it was chasing stocks. that accelerated movement in june and july. that is a good sign. on the other hand, we have a test right here as we speak. tom: when you were on with kaiser, there was an understanding you had to have quiet times along the way. the modern financial media is addicted to the emotion in the

moment. louise at citigroup would talk about distribution. you have got to have moments where it is distributed. do we have that right now? do we have a point for the equity markets were just churning? ralph: absolutely. i like that comment about distribution. that is what we have got in last month or so. that is the bad news, because it really did a lot of damage to individual stocks. the good news is i am told that it has historically been a bad month for those who like to look at the s&p 500 and where it's moving average is, is read about our 4200. on a short-term basis, we will probably get a bit of a rally but i need more evidence to suggest we have seen the final one. lisa: our stocks and bonds moving in the same way? ralph: yes, at least right now.

there is distortion going on. we are having a bit of a conrod arena. lisa: there is question of whether there is also a feedback loop. there is some reference in stocks valuations to what we've seen on the bond market number of people have said it seems like stocks are ignoring the moonshot. do you agree? or would you say that actually most stocks have reflected that probably? ralph: i agree. and stocks have mirrored that. lisa: do you think there is a technical level on the 10 year yield that seems to be what people are looking for for the full catharsis is the positive silver of this october? ralph: yes.

they are saying that and they are saying that rates are getting overly bullish, which they are. tom: jon ferro emails in. he wants to go back to 1995. back then, we only quoted the dow jones industrial average. you make one of the greatest calls in the history of the market. take us back to the doubt. in 1995, it was down 5000. when you said go along, is it the same equivalency right now? ralph: what we had them and what we have today is different. we had low inflation, low interest rates. that was the spur of the late 1990's. the mark hurd was around 4000. when it hit 7000, raised to 10,000, we look back now and we say that was the dot-com bubble,

but at the time, we do not know anything about.com -- dot-coms. tom: thanks. ralph on technical analysis this morning. like the dow analysis? jon said that with ralph you have got to do dow analysis. that was all that existed back and until other idexes showed. lisa: the dow give up its games yesterday in response to some of the selloffs. the idea of how heavily weighted sum of the gains have been to a select number of stocks. the idea of bonds and stocks moving together is relevant. so many people have been saying that actually stocks can hang in there and continue doing well regardless of bonds.

they can go i've been lower in price, hiring yields. tom: i am looking at the dow in 1995. you can do this on an hp 12 c. 6.97% before any dividend reinvestment. after the low of 4500. -- back to the low of 4500. that was great. 6.97% on the dow. ralph's great call in 1995. speaking of hp 12 c, bill gross is coming up at 2:00 p.m. ♪

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jonathan klein year equity market is just not positive. the countdown to the equity market starts now. >> everything you need to get said for the start of u.s. trading, this is bloomberg the open with jonathan ferro. jonathan: coming up, after a global bond market storm, secretary yellen. we begin with trying to catch a falling knife. >> given the fact that we have seen this precipitous rise.