jon: i am jon erlichman. welcome to bloomberg markets. . sonali: and i am sonali basak. the s&p 500 is down 0.2%. the two-year yield you are seeing cooling almost two basis points lower.

we are still moving around. jon: you have to look at the earnings story as well to make sense of the broader equity story. we can do a retail roundup and a busy shopping week. the commentary from best buy and lowe's has not inspired investors. best buy is down half a percent. more selling pressure for lowe's as we are keeping tabs on how much home activity we see if consumers are feeling more pinched. we also got quarterly results overnight from zoom and questions about the grocery directory for the company seem to be in focus -- questions about the growth trajectory for the company seem to be in focus. and we are tracking the news around openai and microsoft. microsoft shares are down 1.5% but that leaves the stock up on the week. it has been doing quite well

recently in part because it seems to be in this pole position when it comes to the ai story. sonali: remember that bloomberg has learned in the last hour that sam altman and the openai board are in talks about returning him to the company. that after microsoft said they were bringing sam altman on board to leave their own in-house ai team. we spoke earlier with the microsoft ceo. >> we are leading in this ai technology. we are committed to sam and greg and the team no matter where they are. sonali: we are joined by mandeep singh. when we think about sam altman's place and microsoft, help us make sense about what it means for him to be working at one company or the other. mandeep: there are talks of bringing him back to open ai. it will not be the same.

clearly, there was lack of communication between him and the board members. the good thing for him is the employees have voted in his leadership and that is where it kind of helped the negotiation. i cannot imagine openai having the same kind of leverage they had in terms of the ecosystem laying the foundational model for chatgpt. sonali: what is microsoft with sam altman and what is microsoft without him? mandeep: for microsoft, they will definitely have a bigger say in openai going forward. clearly, from that perspective, they have more influence. i don't think it helps them bringing all the employees over to work for microsoft because microsoft is a behemoth. they have so many businesses. they just bought activision.

i cannot imagine them devoting their resources to -- and for sam altman and the guys that worked at openai, the culture is different than microsoft. i do see some cultural issues. in the end, you have to build an ecosystem for a technology like genai. putting everything under microsoft is not going to develop an ecosystem. jon: i want to build on those comments and refer to a report you put out through the bloomberg intelligence team on the terminal today on the subject of replicating product success. we actually have not had a huge conversation around that yet, but if chatgpt had not been as explosive out of the gate as it was, maybe we would be talking about the pros and cons of which team is strong at which company and which ai technology is showing the most promise. but the idea of being able to

replicat chatgpt and with this future situation might unfold, what you see in front of you? mandeep: for microsoft, let's say sam altman and the guys that come over make something equivalent to chatgpt in six months. what does it tell you about check gpd -- chatgpt? anyone could do the same and getting access to resources and the talent pool. i do not think it is possible. i think for something like chatgpt to come to the scene, it is going to take a lot of iterations. there is a lot of human feedback building these llm's and that is where microsoft may find a tough situation. yes, they have access to chatgpt and openai, but they cannot pour

over everything for microsoft and the ip belongs to openai, which has other investors. from an r&d perspective it might take longer for microsoft to replicate something like this even with sam altman and all the folks who work at openai. jon: it sounded like you said -- sorry about that. i was going to ask about the timeframe of how quickly we have to get something together to avoid the lead they already had been building. mandeep: it is all about ecosystem. it took years for openai, chatgpt to develop that ecosystem. there are four versions of chatgpt. it requires iterations and that is where microsoft will be going. sonali: coming up we get a preview of what to watch the

latest results from nvidia after the bell. before we had to break, i want to bring you breaking news. we have that big breaking binance story. zhao is agreeing to plead guilty to anti-money laundering charges and personally pay a $50 million fine. binance had already agreed to plead guilty, according to people familiar with the matter, and pay a $4.3 billion fine on top of that. we will bring you more as it comes. coming up, we talk more about nvidia with david bahnsen, chief investment officer of the bahnsen group. this is bloomberg. ♪

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jon: this is "bloomberg markets" . i am jon erlichman with sonali basak. nvidia shares having a tougher session today have rallied 240%. stock around an all-time high. the ai play has seen a surge in demand for chips and we will see what is happening under the hood when they report quarterly earnings tonight. bloomberg data suggesting 15% of the rally is tied directly to nvidia. this could have broader market ramifications. sonali: joining us for more insight on nvidia and the tech outlook is david bahnsen, chief investment officer of the bahnsen group. when you think of the nvidia story and how important it is to the market given the belief in ai to really lift all boats, how important is it? david: the math speaks for

itself. it has been about 15% of the s&p's positive attribution this year and the big seven stocks are over 100%. it is a significant attribution for cap weighted index investors, which is to say most index investors. i would say that is an argument against indexing. it is more or less become a significant play on a handful of stocks, nvidia one of them. sonali: let's take today as an example. if you have the s&p down but the nasdaq more so how vulnerable are these stocks? david: i do not think one day's action speaks to any particular trend. i think the overall performance we have seen for a whole year speaks to it. you saw in 2022 as well to the negative side. you got a greater downside

because of the poor performance from some of the technology sector. semis were part of it but not as much as they have been to the upside this year. it is trading about 18 times earnings. it is not cheap but it is not absurd. those other companies are trading at 50 times earnings. nvidia being at 125. there is good reason for high valuation. they are fast-growing companies. some may say this is ahead of its skis. jon: against that backdrop what numbers do you think are going to get the most attention from nvidia investors tonight? if you look at the straight up year-over-year revenue story, we are going to see a lot of growth. david: because i do not believe

it is trading off the fundamentals. i do not believe it is trading off a particular revenue number. i am not sure that would be the most pertinent thing, but it will be some combination of data points that allows momentum to continue or not. this is a pure momentum play. it is very popular and people believe the things that just got done going up will continue going up. it is a very popular fallacy in investing. i think that is the primary driver of this stock. ultimately, you are probably going to hear something about forward guidance that is more important than trailing three-month revenue numbers. jon: it is interesting that we get these results in a week where everyone is trying to figure out the future of openai, which, in many ways, sparked the excitement. that situation reminds us of how complicated things can be behind the scene. people have shown a willingness to invest but if you are looking

at the landscape of publicly traded companies and trying to pick your spots and are concerned about valuations for companies like nvidia, how are you thinking about investing going forward? david: my problem is i am a child of the 1990's. i grew up investing in the.com dotcom boom. sometimes the story can be right. the internet was bigger than people believed in the 1990's but 96% of those companies one away. the ones that made it done quite well, but you still had a nasdaq drop 70%. i the company cisco as a great example to compare to nvidia. not that it will play out that way but it could play out that way. cisco has performed so well the last 25 years it is not even funny. but it is half of what it's 1999 level was because it was just so preposterously overpriced by the

end of that tech boom. that is the problem with nvidia. i do not know if one is buying into a cisco 1999 price, regardless of how well the company's execution is the next 20 years. sonali: speaking of, how much more upside is there to nvidia ? what would investors have to see today in the results to keep buying given the valuations? david: they would have to decide they want the momentum to continue. when a stock goes into a full theory the only thing that matters is investors believe other investors believe it will go higher. i think that is what is primarily driving it. not that the 125 times multiple can become 150. it is really divorced from rational analysis, in my opinion. sonali: our thanks to david bahnsen of the bahnsen group. nothing more to say of the magnificent seven invulnerable. coming up, higher for longer.

interest rates are crushing global real estate. we are going to discuss the state of the market, next. this is bloomberg. ♪ (adventurous music) ♪ ♪ ♪ be ready for any market with a liquid etf. get in and out with dia.

jon: this is "bloomberg markets" . i am jon erlichman with sonali basak. time for today's what it's worth. 3.1%. that was canada's inflation rate in october. a slower pace of growth compared to what we saw in the previous month's data. economists expecting the bank of canada to hold firm and its third straight meeting scheduled for next month. like in the u.s., we are seeing increasing price pressures open the door towards possible rate cuts moving into next year. i imagine we will continue to hear conversation around that. sonali: people are hoping for those rate cuts. it might be wishful thinking but time will tell.

high inflation and higher for longer interest rates means less money in the pockets of consumers and the real estate market that is frozen in place. minutes for the latest fed meeting at the top of the hour and here to discuss is patrick clark and bloomberg's chief economist and along -- anna wong. the market is pricing in those cuts in the united states next year but how divided do you expect the fed to be and what clues do you expect from the minutes? anna: at the time of that fomc meeting in november our take from powell's postmeeting presser is he sounded dovish considering they had a third quarter gdp number that was very strong. we thought in today's minutes we were going to see the reason why. it could be that they were concerned that long-term treasury yields were climbing rapidly.

that has returned back to the levels we have seen in september before that surge. that part of the minutes might be a little outdated for today's circumstances, but they are also concerned there are signs the labor market is weakening more rapidly. also, maybe there are a lot of risks hanging around on the horizon, such as government shutdown, and the potential broadening of the middle eastern war. jon: meanwhile, patrick clark, i was referencing the inflation story in canada where one of the biggest sources of inflation right now is mortgage related costs because of this rapid surge in interest rates. when you look at the environment with how quickly rates moved higher and what that is doing within the real estate sector what do you see right now? patrick: pretty much anywhere you look, any housing market in the world has a different version for financing home

purposes. anywhere you go the impact of interest rates picking up sharply is not chaos but, you know, there was bad news anywhere you look. whether it is much higher borrowing costs which are strapping household budgets, or like we have in the u.s., a housing market which is basically frozen shut. almost nothing happening. sonali: interesting you are talking about this idea of the housing market being shut and you had the existing home sales showing softness. anna, when you look at the economic data tied to the housing market is there any relief for the consumer, the homeowner, even the renter as you think about the trajectory of inflation and potentially lower rates? anna: i think there are two most powerful economic forces that could affect the housing market. number one is a federal reserve rate hike. we have largely seen that play out already.

the moment the fed cuts interest rates and that long-term interest rate comes down you will start to see more demand coming back into the housing market. but i think it is the second part that would be most crucial, which is the labor market. if the labor market slows sharply in 2024, if the unemployment rate climbs closer to 5% by the end of 2024 -- as has happened in any recession -- i think there will be a second wave of weakening in the housing market. that largely has not played out yet and that would be regardless of whether the fed would be cutting rates or not.

patrick: the generation aging into homeownership right now, when of they going to get that chance? we have high rates and high prices and even if rates come down, it is not as if we are going back to the affordability levels we had a while back. sonali: but then back to the labor question. at what point does this housing

issue become more of a problem as the labor market starts to soften? anna: the housing market is actually a local market. we talk about the housing market as national but the sunbelt has their own housing supply elasticity. we are seeing weakening in the sunbelt and the supply. most of the housing being built are coming into the pipeline in the next year or two. i think the housing market and the sunbelt would see more softening over colorado and california. i think that we already see some signs of the labor market loosening. in the last labor market report, we are seeing signs we are at a turning point where the unemployment rate should be climbing consistently. jon: before we let you go, in your preview note for today's minutes you talk about the road

to an inflation target, which central banks like the fed would like to see. how long does it take to get to that 2% level? anna: i think in the next six to 12 months we will see core inflation climbing down, possibly below 3%. that will be a moment where everybody in the market will be cheering. just as you were showing. canada has a cpi figure at 3.1%. the moment we get there, there will be a lot of soft landing optimism. but ultimately the difficult thing for the fed is going from 3% to to percent. after the end of 2024, if we are still at 3% in december 2024, housing prices would have stopped -- rents would have stopped declining. we need another force of disinflation. i just do not see that right now unless there is a sticky recession. sonali: our thanks to patrick clark and anna wong. looking forward to those minutes. for jon erlichman, i am sonali

basak, and this is bloomberg. ♪

romaine: live from studio 2 in new york, i am romaine bostick. katie: and i am katie greifeld. romaine: we are focusing on the november 1 fed decision. we know what they did, which was not much of anything, but went on behind the scenes, those minutes are dropping right now. michael mckee is standing by with the readout. mike: the minutes show a united open market committee. the labor market had remained tight but job gains moderated. that jus