>> welcome to bloomberg markets. >> let's take a quick look at the markets at this hour. not a lot going on in equities. the s&p 500 down 1/10 of 1%. 4411 is your level. u.s. 10 year yield barely budged at 4.6419%. bloomberg dollar index at 1264. the only mover on this screen is nymex crude which is up $.89. it does feel like we are waiting

for some data and we are going to get that this week in the form of cpi. jon: we will talk about it in a second. when you go under the hood even though broadly speaking it is a challenging day for technology stocks, within the magnificent seven group, you see a couple of standout names today. right now nvidia shares are up again. nine days of advances. could be the longest streak since 2016 providing more high-profile ai chips seems to be keeping the ai rally alive. tesla is up today around 3.5% in early trading. helps when we look at what companies are saying. the outlook from tyson somewhat soft. we have seen that food giant with stock performance today that has been more mixed. tyson shares off close to 4%. it is going to be a busy week on the retail front including home depot as we move into tomorrow's trading session. you have to wonder how this

interest rate environment is going to impact the kind of business they are getting. we'll find out when home depot reports as numbers. matt: looking forward to those reports. let's move to the broader economy. strategist at ubs are saying the federal reserve will cut interest rates by 275 basis points. nearly four times what the markets are pricing in. abigail doolittle is here with the details. abigail: this is a pretty dramatic call. this is almost saying rates are will be 3% lower around this time next year than they are now. the justification ubs is using is they see this as a normal rate cutting cycle. they expect 275 basis points by the end of next year. they think we could start to see cuts as early as march. they are saying one of the reasons inflation is down -- i don't know this is a justification but they see a recession starting by the second quarter of next year. what i have thought about why the fed will cut as soon as the

fed is saying they would cut if there is a recession around, that could be one reason. we put the joint to 75 basis points against the market which is at 75 basis points by the end of next december. it is a wide divide. . . the widest divide might be markets and strategists versus the fed itself. the fed at least on two occasions has said they are not cutting anytime soon. if we go into the bloomberg terminal and take a look at a chart that shows the two yield and the 10 year yield, here's the two yield. the uptrend is in place. the 10 year yield, the uptrend is in place. that you your yield, firmly from a number of technical chart perspectives like it is going to continue to go higher. the 10 year yield, maybe less so. if the two yield does hold that it would suggest the fed is less likely to cut. we have lots of strategist talking about big cuts to the fed funds rate next year. matt: you have morgan stanley as well which thinks the fed will cut to two spot 375%.

between two and a quarter and 250 at the end of 2025. ubs looking at a terminal rate either forecast of one and a quarter percent on fed funds by early 2025. that is very bearish. earlier jp morgan's thomas kennedy explain why wall street sees a slowdown in economic growth which could lead to those rate cuts. >> we are expecting a gross slowdown pretty much like the rest of wall street at this point. it is relatively simple and intuitive. you have the cost of capital above expected revenue in this economy. if you think about america is one big business, it is very odd to see the cost of capital to be above expected gdp. it should force investors to say maybe i will just save instead of borrow money and invest in my business. we have seen this four or five times. every time you see a gross slowdown.

matt: let's bring in ey parthenon city economist. there is a lot of bearishness especially can saying the fact we sell a 4.9% print. we are looking at consumers spending more money even when you remove inflation than they were in 2019. why are we so worried? >> the economy is facing some strong headwinds. we have seen a lot of resilience in economic activity over the summer. as we look ahead, we are in an economic slowdown. the environment is turning less supportive. the consumers are going to turn increasingly cautious with their spending. they are still facing elevated inflation but also the pressure from higher interest rates. we are also seeing -- we have seen a rapid drawdown in excess savings. we are seeing erosion in the consumer balance sheet. we are expecting to see the downshift in consumer spending

has been a key pillar of strength for the consumer is also going to soften. some deterioration in labor market conditions are expected. as you head into 2024, we are in the camp growth is going to fall below trend for a number of quarters. we are seeing growth below 1% throughout the first half of next year. and we are also seeing a modest rise in the unemployment rate as of this rebalancing in the labor market continues. matt: what is the fed going to do to respond? ? in the university of michigan survey, consumer see inflation at 4.4% out one year. i imagine you don't think inflation is going to surge back up again. how can the fed deal with the slowdown in the economy? lydia: we are looking at -- our outlook is for inflation to continue to moderate going forward. we do think the conditions are in place to continue to see that

inflation process. we see core inflation ending figure slightly above 4%. we see headline inflation continuing well into 2024. we think the fed is going to be well-positioned to remain in wait and see mode and on the sidelines. we think the fed is done with its hiking cycle. it is not going to say so. it is going to maintaining the hawkish bias and keeping interest rates higher for longer. at this stage, the bar is high for any rate cuts. you mentioned some aggressive calls for rate cuts next year. we see a more gradual process. we see 75 basis point rate cut next year. the first rate cut happening in june of next year. and extending into 2025. jon: just to build on that because the inflation story will remain elevated through the first half of next year?

lydia: in terms of inflation, we are expecting to see the continuous slow down so by the middle of next year, you're going to be looking at headline and core inflation at around 2.5% drifting below 2.5%. i think what is important to keep in mind looking at inflation is it has surprised many observers to the downside this year. i review is looking at 2024 we are also thinking inflation is going to be surprising many to the downside. because we are expecting to see a rebalancing in the labor market leading to moderating wage growth because we are also expecting to see that softening in economic activity with slower demand for goods and services. more housing disinflation as well which is still in the pipeline. all of these factors are going to be combining to push inflation lower. by the end of next year we are going to be looking at headline and core inflation closer to where the fed would like it to be even if not at the 2% target

yet. jon: what i wanted to get at was if you are seeing the possibility for rate cuts next year but likely not until the second half of the year. what is happening in the first six months of the year that keeps that hawkish commentary coming from the fed in the interim? lydia: we are looking at a labor market that is still relatively tight. we are looking at core inflation that is still quite elevated. the federal reserve still think there is more work to be done. they are committed to keeping interest rates at the restorative level for some time. we are expecting to see in the first half of next year a continued rebalancing in the labor market and moderation in wage growth but also a continued slow down in inflation. until the fed is convinced inflation is moving sustainably toward the 2% target. they are going to be maintaining that hawkish bias and

maintaining the higher for longer policy metric for the first half of next year. matt: what you think happens with federal spending? we are running a $2 trillion deficit this year. maybe that has not got as much to do with the surge in yields we saw at the beginning of last month, middle of last month can the federal government continue to spend that much money? do we need to spend that much money to keep the inflation coming along? lydia: there is renewed concern about fiscal sustainability in the u.s. we also see the risk of -- with the friday deadline. this is an increasing risk for the economy especially in the medium run. there is certainly a need to put the fiscal picture in the u.s. back on the path. this is going to be something we are going to be closely looking at in the coming year and into

2025. matt: thanks so much for joining us. you why parthenon senior economist talking to us about the u.s. economy. coming up, a new study on novo nordisk weight loss drug showing it could reduce the risk of heart attacks. this is bloomberg. ♪

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segment. we have been keeping an eye on shares of novo nordisk. a new study finding the block muster weight loss treatment could also reduce heart attacks. analysts were up beat on the news. we saw some choppy trading. that has been the story of the year for companies like this. shares up in the neighborhood of 50% on the optimism around the potential market size for these type of treatments. matt: this is kind of it in terms of these drugs. novo nordisk is like the nvidia of glp-1. there are obviously competitors in the market with slightly different drugs. others, some likely tides coming out but right now novo nordisk owns the market. let's talk to madison. she covers the health sector. you would expect a drop in

cardiovascular problems just through the share loss of weight because obesity adds to cardiovascular troubles but they are saying this is something beyond that, that it is more heart healthy then just weight loss alone. madison: i think that is the interesting story we are seeing play out. we actually don't know how that is happening. cardio metabolic conditions are very interrelated. obesity is a risk factor for heart disease. it makes sense people with obesity and a history of cardiovascular disease, these are the people in this trial were quite sick. they already have had a heart attack or they have had eight established history of cardiovascular disease. wegovy helps prevent a second attack from happening. what experts are saying is not all of this can be attributed to the weight loss alone. there is something else going on with these glp-1 drugs like wegovy that might have a benefit

beyond weight loss. matt: are there any others that are already in the market people are taking? i know eli lilly has competitors in the pipeline but have they been approved for use? madison: eli lilly had mondrian for diabetes. the exact same drug was approved for obesity two weeks ago. that is nearly on the market. we have seen a lot of off label use with montero and it is the exactly same drug. it seems to be more effective than wegovy. there the number one competitor to novo nordisk right now. jon: we are trying to figure out the ultimate size of market. it is early in the cycle. historically people thought about weight loss treatments. they were not necessarily committing to that for years. as more of this research is coming out about improving your odds about a heart attack, how

long a commitment are people having to make to these treatments as users? madison: that is the thing is that these drugs are supposed to be taken for the rest of someone's life. when people go off of these drugs, what we are seeing as they regained the weight and that might increase the risk for other health issues. ideally a person is supposed to be on it for the rest of their lives but we are seeing between spotty insurance coverage, shortages, side effects, people are not taking them for many years. granted, these drugs are new but we are already seeing some discontinuation sooner than maybe as expected. it remains to be seen what is going to happen in terms of long-term usage with these drugs and how that plays out. matt: i was talking to the ceo and i asked him about the pill form. i don't really want to be injecting myself. he said many patients like the weekly injections. yeah. i'm not sure if i buy that.

is someone going to come out with a pill that works just as well? i know they have right belly us or something but they don't have the same success madison:. that is exactly right. that is what is coming. novo nordisk has already submitted in the e.u. approval for a higher dose version. they are planning to submit in the u.s. in 2024. it is not as effective as these injectable versions. they are testing doses that are two to three times higher dose than the currently approved version to see if that will help. we could have oral weight loss drug soon from novo nordisk. eli lilly is also developing a pill. so as pfizer and astrazeneca. jon: it is a pretty incredible growing market. you do a great job breaking it down. thanks for the insight.

we will continue to track that story. we were also tracking shares of boeing adding a nice pop after a bunch of new orders. we will have those details next. this is bloomberg. ♪

>> every time there is direct dialogue, that is a good thing. we have been in china for 50 years now. we have been with our customers. interestingly, last week, the 95th airplane, the max that was on the ground came back. they have all 95 airplanes flying. we are in the middle of preparing deliveries for the new max's. i am optimistic about the discussions. jon: that was the boeing

commercial airplanes ceo speaking at the dubai airshow and spreading optimism about talks for a 737 max order from china. in addition to that for what it is worth, $52 billion the list. value for the emirates. that includes upwards of 90 of its 777x model. 57 87's. shares benefiting on that news within the dow. also this idea of a freeze in china coming to an end based on some of the bloomberg reporting is another key factor driving the stock today. matt: a lot out from bloomberg news. the bottom line is there is a huge order for these 777's. i am excited to get away from these narrowbody cramped little a320's and 737s and get back

into a big plane that feels more like a 747. let's discuss with julie johnson. she is in chicago. tell us about this order and if i put in an order for a 777 today, when am i i actually going to be able to take a livery of the plane? >> that i don't know. the plane is not in service yet. it has been run through the gauntlet i regulators in the u.s. and europe. hopefully it will start coming onto the market in 2025. so it is going to be a while before enough of those are in service you run into them regularly. that is a huge win for boeing. big endorsement. bad news, the ultra large planes

are a little bit out of favor with airlines. the max. matt: not with passengers. i'm 6'4", 220. i have got to ride in a big plane. >> i love them too. honestly, if the two announcements -- china, they are both huge wins for boeing. if the china deal comes through, this is just massive in terms of getting boeing on solid financial footing. jon: and also, the fact this could be as your reporting would indicate at the center of easing tensions between china and the u.s. as we get ready for the meeting between the president joe biden and xi jinping. what we know about how this started to come together ahead of the key meeting? julie: the u.s. has been working this for at least a couple of

years. frankly, error space is one of the few areas where the two countries have complementary interests. the chinese need our planes. the u.s. has had trade surplus to china up until recently for a very long time. this is a relationship that goes back to 1972i think when nixon arrived in a boeing 707. arrived in beijing. so anyway, it is really significant. china domestically was not traveling until this year on a large-scale. they were still locked down. now they need their planes and by the way, the world is selling out of 737s. matt: thanks so much for joining us. bloomberg's aerospace reported julie johnson out of the windy city. for john, i'm matt miller. this is bloomberg.

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romaine: countdown to the cpi on" countdown to the close." i'm romaine bostick. katie: i'm katie greifeld. it is a pretty quiet day as we await the inflation figures romaine talked about. s&p pretty much unchanged on the day. the same thing if you look at the big tech index, nasdaq 100 lower by .2%. nothing too major. you look at the bond space, pretty quiet relative to the last few months.