>> there is a lot of participation going on right now. >> it could be more volatile at the beginning of the year and then slow down. >> we are going to see a slower economy. >> our base case is still continued slow down. >> we have to get a soft landing not only in inflation but in the labor market. >> this is "bloomberg surveillance" with tom keene jonathan ferro, and lisa abramowicz. jonathan: good morning to our audience worldwide. this is "bloomberg surveillance ." i am jonathan ferro.

on the equity market, up on the month. the s&p 500 up by 8.5% and .40 biggest monthly gain of the year so far -- and poised for the biggest monthly gain of the year so far. the 10 year yield down 64 basis points in november. lisa: when you look at the u.s. aggregate index of bonds, if a percent gain of the year. the biggest gain going back to 1985. is a disinflation or the economy is rolling over? do we hit a threshold where the pond rally is not good news for the stock rally? it has been a wonderful goldilocks story. does it start to shift? jonathan: deutsche bank sounds conservative based on this move. 5k. 4200 price target with the downside bias. lisa: i was looking at the

analysts who put this out and it is a team that has been wrong two years in a row. they are talking about what i would agree with which is the elephant in the room, how quickly is the economy slowing on the others that is fueling disinflation we are seeing? that is what -- that is the mystery. right now people are in a goldilocks period where people don't have to think about that but the rationale is not outrageous. jonathan: current valuation is rich. "the market is assuming a near-perfect landing with inflation without a demand to pricing power. we expect a more challenging macro backdrop for stocks next year with softening consumer trends when positioning and sentiment has reversed." a lot of that has reserved -- has reversed the past month. lisa: i would agree with that.

i know tom is off today, he is going to spend the whole morning -- it pointed to this weakness. these anecdotes seem to be driving a lot of fed policy in a much more significant way. people are feeling concerned. they bought during black friday and cyber monday in part because of the discounts. jonathan: things are slowing. demand for labor continuing to ease. most districts reported flat to modest increases. next week, the payrolls report expected to come in close to 200 k. lisa: this is going to be a question of labor hoarding or we are all getting it wrong. the diversions between goods and services continues to spread people are still flying around, going to restaurants, getting manicures and whatever services they prefer. this is the quandary heading into next year.

do we see ongoing disinflation without a service rolling over? jonathan: i love you but you might not get a job at china international capital corp. russ: i know -- lisa: i know. jonathan: analysts are barred from sharing negative stories on markets in public and private discussions. do you like that? an analyst in china unable to offer negative analysis on the economy? lisa: are you trying to bait me? i love this because what does it mean to be negative, to be skeptical? isn't that the goal of wall street rigor to look at the facts and question where there could be holes? they say employees should avoid wearing luxury brands or revealing their compensation because of concerns about -- jonathan: hedonistic lifestyles.

that is china. what about wall street banks? can they offer any analysis on china? lisa: controversial point. a lot of people would say there is self-censorship and when there is self-censorship, there is other censorship. there is a lot of confusion around the chinese economy. i don't know the answer to that. we heard from bill lee that there is a lot of self-censorship. it is a tough time to get a clue read on an economy that is struggling. jonathan: we will get the view in a moment. russ koesterich wilderness. equity scores look like this on the s&p 500, positive on the session. the month of november throughout this morning and look ahead to december. bond market yields are higher on the session, lower on the month. 4.2955 on the 10 year.

in europe, inflation, downside surprise, now we are talking about rate cuts at the ecb. lisa: the ecb and the fed got it wrong in terms of how quickly inflation was accelerating and how long it would last. are they getting it wrong with how quickly it is coming down? that is a question for the ecb, the fact that it came down dashcam in lower-than-expected. that is our new benchmark in terms of slowing inflation. does it come with a more significant slowdown like we saw in france? we don't know what we are on the precipice of. jonathan: they are conditioned by the first mistake. they were nervous on the way down. lisa: which raises the question about if they're going to be skeptical about how quickly to cut rates. we are going to look at the ongoing story of inflation, personal income and spending and core pce.

we will talk about the jobs market leader. core pce may come in at the lowest pace since early 2021. how much are we looking at inflation that has legs versus year-over-year of comps? opec+ is going to meet virtually. a lot of the delegates are cap 28, an interesting test position as the top -- interesting juxtaposition as they talk about decreasing fossil fuels and talking about emissions. i am curious how much more they're going to cut production. john williams is planning to speak. i went to see if he gives any indications of the parameters for rate cuts. jonathan: the language has changed, just a subtle shift. let's see if we hear it from williams and powell tomorrow. lisa: all they need to see is inflation going back toward target and they can be more aggressive with rate cuts. jonathan: joining us is russ

koesterich. we are focusing on things stateside. massive fire in the equity market. update 15% on the s&p 500. big move lower in bond yields. talk about how you have participated and made some moves the last four weeks. russ: we have been raising equity data and this has been an extraordinary november. if you look at other parts of the market, if you look at small caps, semiconductors, early growth, they searched even more -- surged even more. the rate environments change from where we were. the snapback is coming after an exceptionally week period in august and september and october. not only for stocks but also bonds. a lot of what we are experiencing is a reversal.

broader equity allocation higher after being close to neutral for much of the summer. you have got an environment where rates are coming down, inflation appears to be moderating but there is not a lot of evidence the economy is going to slow so quickly that you have to really be concerned about a recession in early 2024. our view is the economy is slowing but it is relatively stable and we can see growth into the first half of next year. jonathan: what is your bond market call? russ: the bond market is trickier because you had this massive adjustment in yields and there are two things you have to watch, the first of which is short-term rates have come down an incredible amount. two year real yields are down from their peak earlier this summer. you had a significant move. a lot of people think it the fed is going to have the desire to

cut in early 2024. a little more skeptical about that. i think cuts are more likely in q3 than in q2 -- q1 or q2. we still have an environment where bond issuance is at a record. even if the fed does start to pull back, they are not as worried about inflation. you have to think about the effect on the long end of the treasury curve on that supply. lisa: is this a good scenario for risk assets? a lot of people would say you don't have this tailwind from federated cuts but you have a hangover of generally slowing growth and people reassessing how much potential there is in the economy. russ: it is any remnant that can produce decent equity again but it depends on what part of the market you are looking at. it is hard to argue that the economy is not going to slow, particularly from the growth we had in q3.

the consumer is starting to moderate, we don't think we are looking at prerecession. we are looking at the labor market and modest consumption. the question is what is going to do well in that environment. it may not be the deep value which does well when growth is accelerating. it probably is a continuation of the small-cap rally. i think some of these quality names generally do better -- generally do better, in a slow economy, i think they can go higher. lisa: if you don't think the market is getting it right in terms of how much the fed could ease, how much are you bending against the bond rally? russ: it is not so much if they're going to these, but when they're going to ease. if they go quickly into easing mode, that could be optimistic. you will have an environment that is more friendly. we have been bringing ration up, much closer to benchmark that we

have been in a long time. a lot of that was in the intermediate part of the curve. you are going to get back up in yields, you will see these episodic meds in the bond market. can you use backup in yields to add and slowly bring back towards a neutral level? jonathan: if i'm setting t-bills right now, a lot of our audience is, is six to 12 months time, how do you think they're going to feel about that decision? regrets because they did not lock in yields in the longer end or are they going to be happy because they can allocate to the equity market when the opportunity presented itself? russ: you start to put that money to work. it is never the case that the market signal is all clear and you go from 100 percent cash to 100% invested. the reality is we have inflation

running above the fed's target is for real yields is not as good as it has seemed. there are opportunities and equities and i think it is fair to say a year from now if all you are doing is rolling t-bills, you will be getting a lower level of income. put that money to work whether it is in parts of the bond market that look interesting or slowly buying back into equities. think about the parts of the market, whether it is health care, technology that are going to be more resilient as the economy does moderate into 2024. jonathan: i was asking that question just for tom keene. lisa: i know. jonathan: thank you, mate. let's talk about the big move yesterday, gm with a move of almost 10%. they since january 2021. a $40 billion name and they, with a $10 million buyback. this stock is surging. lisa: your interview with beriberi was interesting -- was

very good. she was talking about the balance of giving back to the workers and giving back to the shareholders. it was an uncomfortable question but she painted it as an existential question. do they want a stable company? how do this you've that -- achieve that with sales growth in an area that needs to be a more cheap vehicle in the electric vehicle space? jonathan: exactly. investors were excited yesterday. next hour, john lawler. good morning. ♪

you can't buy great conversations or moments that matter, but you can invest in them. at t. rowe price our strategic investing approach can help you build the future you imagine. t. rowe price, invest with confidence. 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 jonathan: live from new york city, good morning. the scores look like this come equity futures positive by 0.2% up on a session.

up a month daytime, not just on the s&p 500 come on the nasdaq. double-digit gains on the nasdaq 100 for the month. lisa: this is coming off double-digit losses but not by much. it has gained more than a last. there is a question about how this is underpinned by the bond market move versus technological advances and the fact that these companies will own our lives. have you seen how much you have spent in the apple store and to say they are going to will the world? jonathan: that feels personal. that was not last weekend. the fx market off of the back of the bond market, much weaker dollar. yields lower. i wonder how much their position went from the federal reserve to the ecb. lisa: greater weakness than expected isolated to the u.s., now it is not. the ecb has been saying we need to do more and everybody is saying no you don't. does that change the dynamic and

make it more witty in the next few months? jonathan: the market tells the fed when they're going to cut, the market tells the ecb when they're going to cut? is that how it plays out? lisa: if nobody has a full understanding of where we are, if you think about the democracy of markets and there is enough free price discovery to create that, isn't that a logical way to look? jonathan: yeah. janet henry of the hsbc is going to join us soon. the conversation of the evening, secretary of state in the 1970's henry kissinger has died, aged 100. we can catch up with norman roule, an advisor at the center for strategic and international studies. i know your new secretary kissinger. can you help us understand how his approach to for policy changed everybody else's

approach for? the decades after? ? norman: henry kissinger was a titanic figure that brought a balance of power. he was a creature of an interesting time, a jew in nazi germany, a military officer, a scholar during the dangerous days of the cold war. his background in the congress of vienna gave him a sense of importance of ensuring key powers found were less palatable than engagement. he brought together a sense of the u.s. would triangulate, would be closer relations with key powers than they would with themselves to enable the process to continue. since that time, every secretary of state has attempted to emulate dr. kissinger's approach but no one has achieved his successes. lisa: henry kissinger was a polarizing person. people point to the fact that he

rejected idealism and was a pragmatist and talked about the goals you achieve rather than the methods to achieve them. where does that play in the strategy of for policy today in america? norman: henry kissinger's quote on that issue -- a country that pursues more security and its for policy will achieve neither that nor more security. there are lesser interests that can be discarded or put aside for the moment. i think that is how the biden administration is approaching the world. china, climate change, avoiding contracts -- conflicts that would disrupt the society. lisa: did take society has drifted enough to not go along with that equals like they would in the 1970's? i was good to say how much does social media change the picture,

the immediate imagery? is there a shift in the population that makes that difficult? norman: it is a different world but the late 1960's were an actual maritime in u.s. and european society with the protests against vietnam, the protests against actions in cambodia, the u.s. actions in july -- in chile. he was able to never through that period to achieve successes with the soviet union, china, and the arab peace disengagement's. jonathan: we now need to talk about modern war and 2023. let's talk about israel and hamas. hostages have been released, trucks are going in to gaza every day. what is the argument against extending the cease-fire? norman: the argument against extending the cease-fire would be it allows for the survival of hamas which continues to state

it is interested in the eradication of israel and those who live there. if you believe the phrase never again as a driver, you must eradicate hamas, if only to move to a peace process that is legitimate. the idea of a two state solution is everyone's goal but no one is looking for the palestinian state to be led by hamas. hamas must be removed from this situation if we are to move forward with peace and security for the israeli people. lisa: do you have a sense of where iran is? there is a report to saudi arabia was talking about giving aid to iran if they would call back proxy fighters, hezbollah or hamas, to create more stability. do you buy into any of these things getting traction? norman: saudi arabia and other gulf states have tried to achieve it it can't with iran -- a did count with iran.

you don't empower your adversary but create conditions by which the adversary is not interested in war. with saudi arabia and the emirates, there is the issue of u.s. sanctions. there is a limited amount of engagement which they can put forward. iran has multiple incentives to continue its current efforts. very few drivers for involvement in the conflict. over time, we are watching the iran is not a winner in this conflict. its allies have not been able to change the military balance and risks losing its primary proxy partner. jonathan: eradicate hummus, what does that -- eradicate,'s, what does that mean? norman: it means destroying the senior leadership but not destroyed 30 -- 30,000 to 40,000 fighters that will remain armed. those fighters and their

indoctrinated families and culture must be dealt with if we are to prevent the rise of,'s 2.0. in the arab world, they have a concern that this conflict could produce exactly that not only in gaza put in places ranging from asia to africa. lisa: you said these fighters are going to be there and heavily armed, some of the sentiment and education has to be dealt with. what do you mean? how is that accomplished? norman: there is a track record for this. saudi arabia and the emirates have a record of the d radicalization and we have learned from them. this requires giving the palestinian people a sense of hope, a sense of security, and dealing with the witches brew of multiple splinter organizations

which are dedicated to violence and the destruction of israel and the united states. jonathan: how do you expect the nature of this war to develop, to change in the coming weeks and months? norman: this remains a likely long-term conflict although it will play out unnecessarily in terms of a traditional war. there are so many factors that need to be put together. the u.s. will focus on the return of hostages, preventing expansion to the conflict, laying a groundwork for the future. beyond that, we are off the map and we should have a lot of patience and look for a lower conflict that saves lives while eradicating a terrorist organization. jonathan: norman roule there. eradicating hamas comes up all the time. in practice it is more complex. there is a lot of work and

effort that has to go into that for a long period of time. lisa: and talking about how it is important to get rid of senior leadership, although there are different factions within the leadership. you are going to have heavily armed individuals who have been fighters. how do you transform a society doritos? it is -- a society into a new ethos? it is unclear to me. jonathan: more to come on this program, including advertisers on x. we will be talking about that, not with janet henry. she will be talking about the economy. stocks are just about positive. ♪ we always thought that whatever we did here would be an emblem of what small communities can achieve. trying to give a better life to people that don't have the means to do it. si mi papá estuviera vivo, sé que él tuviera orgulloso también de vivir

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jonathan: here are the scores this thursday morning, equities positive on the s&p 500. a list come up .2% on the nasdaq 100. take off for the month on the nasdaq. double-digit gain for the nasdaq. lisa: how much is this a retracement of the declines we saw the previous three months on the heels of the bond market valley -- market rallied? we are going to try to hook into that. jonathan: best month since july 2022. first month of gains since july 2023. i forgot how bad it was before. lisa: in quotes, this is the

amazing thing. everyone was expecting this to be a dreadful year led biotech, repricing, downsizing, all of the enthusiasm and it is the opposite. can it continue? what i find adjusting about the outlooks, this is going to be the leader. jonathan: what it chris kise a? skate -- what did wayne gretzky say? skate to where the puck is going. some rate cuts, maybe and a bond market supportive of in equity view. it is that simple. lisa: goldilocks that can continue forever. jonathan: jp morgan has set 4200 on is a b 500. that is quite a call after being wrong two years running. to say 4200, going up really against the grain. lisa: they are not going against the grain as much when it comes to what is behind that. jonathan: the logic stacks up.

lisa: this is where you can get a market call and be right and yet completely wrong. you can see it will pull back on spending. does that mean losses for equities or continued gains because rates are lower? forward, we are going to have a lower pace growth that is more sustainable. jonathan: let's talk about this bond market. your two year has come down from 5.2 five in october to 4.65. your 10 year has come down from north of 5% to 4.29, even with a basis point move on the day. yesterday was like the day before, selective hearing. certain fed officials suggesting we might have to do more. others suggesting maybe we are done and there is more disaffection in the pipeline. i suggest we continue to listen to the ones who occurred his bond market view and ignore

those going against the grain. lisa: partly this is because of disinflation. partly because this is what people want to hear. what you feel more confident in? i am surprised the 10-year has participated as quickly as the two-year. is has been a big surprise. if inflation is coming in more aggressively, this makes sense. longer-term, dozen accents if the issuance picture is the same? the bank of japan is signaling they're going to relax yield curve control. there are concerns about who the buyers will be in a higher yield environment. jonathan: further along the curve, too many variables. think about the logic for the move to 5%. that was, the go it here we are. we have guests on this program saying there are reasons to drop into the trees when we have people talking about reasons to go up towards the sixes. has that much changed?

lisa: there is this issue, what causes it to change back? whether it is the options or something else that is higher than expected. jonathan: let's finish on the commodity market. most people got november wrong. october, down by 10.76% on crude. november, we are down around 3%, even with this move. what a surprise after we saw take place in october. lisa: people thought that the sick apply -- the supply constraints due to the israel-,'s war -- israel-hamas war. now with opec+ meeting virtually, there is this question about if they're going to cut further and whether they can get angola and nigeria on board. jonathan: opec+ meeting and cop 28. lisa: that is essentially what it is. jonathan: let's move on. henry kissinger, the former

secretary of state who played a key role in soviet and china relationships in the 1970's had died. he spoke to bloomberg earlier this year about the debate now and in the 1970's. >> in the present period, the theory of america first, which is applied on both sides but in such a way that it focuses too much on american interests and not on global interests. jonathan: henry kissinger was 100. antony blinken arriving in tel aviv as israel and hamas agree to extend a truce another day. antony blinken sing the pause

has been successful and they wanted to continue. this government is under pressure to make sure it does. lisa: this is the problem, as we heard, the objective is not close to being accomplished. both sides have not shifted in their view. fundamentally, as you and i have talked about, nothing has changed. here is an incentive for a pause. when norman roule was talking about a more surgical type of incursion in gaza, what does that look like? how much can the u.s. get on board? how long does this last? these are the questions people are asking. jonathan: i don't know how the biden administration balances contradictory views. they are contradictory because you want to stand shoulder to shoulder with israel who has one aim to destroy hamas. we know because of the nature of this work, destroy hamas will mean a loss of civilian life. at the same time, your tunic a

statement that says we want to limit the loss of civilian life. those two things are almost incompatible because of the nature the way this war is playing out in gaza. the pressure will continue to build to extend the cease-fire. we know at some point there will be a b engagement. the war will restart and the truth will end. we are is happening within biden's party. the clock is ticking toward next year and this is becoming a big election issue. lisa: this is why a lot of people think when it does resume it will look very different, it will not be the same kind of large-scale bombing. jonathan: shall we finish on a letter story? elon musk sing the antisemitism -- the boycott of x could -- he apologized for the incident but what he said is it is

particularly company and the world will know the advertisers killed the company. companies including apple and disney have been distancing themselves from the platform. bob iger is there on the stage. toward the end of the exchange, and a lot of people have only watched those two minutes where finishes with hi, bob, he finishes with how much good has less than for the world. he talks about the virtue signaling of corporate america who seems in elon musk's mind is more interested in the perception of doing good then doing good. people of what tesla has achieved but the problem is that is not the man they want running the company. elon musk pushing back against that. he pushes back aggressively against it. lisa: i am not sure people are going to be talking about that in part because of how he was

messaging. entries what he means when he says the world is watching and if you kill x by withdrawing advertising dollars, everyone will know. what does that mean? they're going to sue them? you can say what you want to say. he can be right in certain aspects but at the end of the day, what it feels good might not actually have. legs jonathan: -- not actually have likes. jonathan: janet henry joins us now. don't worry, we are not going to talk about that. downside surprise, similar stories emerged in the u.s. do you have confidence the next move from the head -- the ecb is a rate cut? janet: i am confident that the next move will be downwards from ecb. it seems to be there is a 50 to chance of a rate cut as soon as march. i think that will be the

reassurance across the ecb that they don't have to continue to tighten policy. it was only the last few days that there was talk of bringing forward investment of the program. i think the next move is down but more than likely it will not be on 91st half of 2024. lisa: do you think that is because inflation is not going to come down enough or because of the conditioning of ecb numbers getting it so wrong in terms of how quickly inflation accelerated? janet: i think inflation is still too high. we got a 2.4 improve on inflation from the eurozone and a downside surprise in core inflation. core inflation is still running at 3.5%. we know that november is the trough. headline inflation is probably giving the base effects going to start rising again from december. we are optimistic core inflation

does continue to edge somewhat lower over the course of the next few months. it will still be too high and ecb numbers are still watching those rage numbers -- those which numbers. -- wage numbers. that stickiness in the eurozone is levy to keep fresh is likely to -- is likely to keep elevated. inflation has been above target for over 2.5 years. they know which way the risks are still skewed. they can cut interest rates aggressively. we would expect that we don't expect that. -- we don't expect that. inflation is still too high. lisa: the economic trajectory seems to be downgraded significantly as we get incoming data, even as the labor market continues to seem solid. if the labor market not for same indicator it used to be -- not

the same indicator it used to be? janet: it depends which country we are talking about. there are concerns about the u.k. labor market data and even policymakers are grappling with that. what we have seen in europe and out of germany was a rise in unemployment. germany is in more of a traditional recession, the economy has been contracting. in the u.s., the labor market is very tight. the u.s. has seen some downside surprise is on inflation as well. i think the markets react to the activity data, anything weak on the labor market, they bring forward their expectations for rate cuts. likewise for the bank of england . every week service sector pmi. the bank of england will have to cut. what are the markets are struggling with is the inflation

activity data at the moment that the activity data is not reviving even if they are not deteriorating as fast as people would expect. jonathan: sometimes we talk about the central banks as if their machines, you plug in some data and it spits out coal. their recent experience was to be wrong on inflation. do think that almost guarantees that they are going to be very late when they have to move the other way? janet: not so much necessarily that they will be late, you have to decide what will be a policy era on behalf of central banks. a year ago people were saying is the fed going to make a policy era and they meant is the fed going to cause a recession. 40 central bank that has an inflation mandate, a policy era would be the tighten policy so much that inflation falls too much. inflation falls below their target.

that was a battle for the last half of the decade when they were trying to get the 2% target and keeping policy loose because it was one point 5%, trying to force it higher. all of their reaction function is conditioned by the recent past. but also longer periods of history. ultimately, even the central banks with the dual amended, the fed is getting toward balancing the risk between activity in inflation and more expose it invasion target. mesh inflation target. jonathan: -- inflation target. jonathan: janet henry there. coming up, much more on elon musk and x. ♪

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>> stock prices to move higher as technology feeds all sectors. jonathan: trust office of oppenheim or asset management. if there is a panel i would love right now it would be him on one side and the team from jp morgan on the other. talking about the prospect of pushing 5k on s&p 500. that is quite a spread. lisa: how much does this hinge on tech? people are saying the market can stay in purgatory as long as tech continues to trajectory upward. this has been the story all year. if you start to get some reckoning we understand where we are in the cycle, it can continue more. how much is this an ai discussion without being an ai discussion? jonathan: would you like in the auto discussion? gm and ford, gm yesterday, big

move yesterday, stock buyback, all of the good stuff. by .7 5%. ford green sitting its forecast from $10 billion to $10.5 billion. the number that jumps onto me, the labor pact cost. expected to cost $8.8 billion. gm was around $9 billion. the cost effect is about $900 per vehicle. that is a contrast from gm, a few dollars more -- a few hundred dollars more. lisa: they are either going to visit in margins or be charging more for vehicles. gm was saying they could offset it. here is the question, is this going to a limited competitiveness when they're facing off with vehicle manufacturers and -- manufacturers in china and

elsewhere. how much is the price point increase in the question? does it come with margins or with pushing the consumer more? jonathan: they put a number on the margin, $1.7 million. that is a punchy number. lisa: i find interesting they reiterated their full-year forecast. next year is the question. if we get a softening in the economy and they have higher charges from existing labor contracts, where does it come from if they are struggling to move those cars and they cannot finances with sheep money? dish -- cannot finance it with cheap money? jonathan: we will catch up with the cfo in a moment. we were talking about a run from elon musk talking about x and advertisers. let's get to alex webb in london who joins us and to watch all of that exchange. i want to talk about one specific angle. i want to talk about the walt

disney company. when elon musk looks into the audience and says hi bob, if you are at disney and you are running corporate relations pr or whatever, what are you saying to bob iger about what the next move should be? alex: don't say anything. you do not want to find yourself embroiled in this hullabaloo around antisemitism which is the case why disney and others have pulled advertising from the platform. the thing that is wild about this is the users of x are not its customers. the advertisers are the customers. can you imagine any other company and it world -- imagine you said that about buying tesla's. if you use this turn of phrase, which i will not repeat. he said that to tesla buyers, he never would. it is wild he is saying that about his customers. lisa: there was a veiled threat

basically saying he will kill our platform and we will track it, we will documented. the application is some accountability. do you have any understanding of what that looks like? alex: twitter and x has never been the key platform for almost any advertiser. it is a nice to have, a second-tier in the pyramid of social media platforms. awareness among a particular cachet of users, social media types, people actively engaged in the news. that audience has dissipated in recent months. not as appealing to those people anyway. it is not the sort of thing that facebook, meta, instagram, tiktok provides and google provides which is hyper targeted advertising to people who are like me to spend money on our products. the fact that they're pulling back, the numbers their spending

don't appear to be massive anyway. the pullback does not seem like it is going to damage these companies. if they are pulling their business from deplatform leads to his bankruptcy, that is not really -- it is hard to see why that is repurcussions -- has repurcussions. it is not as if you're pulling from public infrastructure. this is a private company. a very strange threat. lisa: does this have applications for tesla given elon musk is an increasingly polarizing figure? alex: we have seen reporting about appetite for tesla, their products taking a hit because of their ceo and shareholders' behaviors. you are not necessarily sing massive impact on the company's numbers. you see plenty of examples of companies where perhaps

perception of leadership where the perception of the company is not brilliant and yet it still does exceptionally good numbers. the biggest concern for elon musk is his investors in x, whether those people start to ask questions behind the scenes which could affect the way humans the company. jonathan: lisa had a conversation in the world economic forum with morgan stanley. you asked direction the about that. lisa: are you good you end up owning twitter? jonathan: what did he say. lisa: no. if you are not going to, what is the ramification for you? jonathan: i remember that conversation. he referred to elon musk as a brilliant man. in many ways he is a brilliant man. will the banks end up owning this platform? alex: i was having a similar thought this morning, to think

through what they remove vacations for twitter bankruptcy might be. key banks have a different game because there are other companies controlled by elon musk that at some stage could be looking to ipo and there are banks who will be wanting a piece of that business. they do not want to be getting on the wrong side of elon musk. he is one who can be no to very grudge. it is a tricky task. there is an heard value in twitter irrespective of the fit gets driven into the ground with advertisers pulling ads. namely, its user base. people will pay to acquire users and i'm sure there is a list of companies that would queue up to try to acquire twitter and embedded into its own network of products -- embed it into its own network of products. they will always be appetite for this business. i do not envy that position

because they clearly see a huge amount of potential from the elon musk universe. jonathan: alex webb, thank you. i would love -- thoughts. lisa: on the record he would say he's a brilliant man, he is unconventional in the way he goes round things, assessing the value of this company. i imagine off air his expletives might be similar to the expletives we heard last night. jonathan: there is some business to be had elsewhere. there might be any ipo around the corner. lisa: sure, with starving, etc. maybe this is a token to get that business. they cannot be happy. linda carino put on twitter her perspective which i think is interesting. "here's my perspective, x is standing at a unique intersection of free speech and main street and we are here to are you to our partners who believe in your many for work." jonathan: that is a tough seat.

let's turn to ford, the latest a moment ago, reinstating their guidance, a range of $10 billion to $10.5 million. they suspended guidance in july, that was previously $11 billion. ford is up in the premarket by 2%. lisa: it is interesting their improper guidance. would you rather lower margins having to charge more to consumers? that equation was different to six to 12 months ago. now are we going to see them take a hit in the margins to gain volume and get a competitive advantage? jonathan: high labor costs at about $900 for each car. margins shaving, as much as 70 basis points. we will be catching up with the cfo of ford, john lawler, in 20 minutes time. coming next, michael shaoul. that conversation around the corner.

equity futures are positive. this is bloomberg. ♪

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year for the stock market. good morning for our audience, this is "bloomberg surveillance ." your equity market is up a touch , .2%. almost 9% through the month of november. lisa: it did not feel like it. jonathan: 60 basis points on a 10 year. lisa: equities rallied into weaker than expected economic data. this is the question we have been asking, is this inconsistent in some capacity? does this have to break down or is this what we are going to see? if the bond market going to rule the world? jonathan: it is ruling this month. let's see if it rules next year. we are talking about the fastest growth we have seen in two years in the economy. just after guest -- guest after guest having a conversation about recession a few quarters away. lisa: basically saying we are just not seeing the weakness.

that is what beige book fed into, that there is a weakening in the labor market and you are seeing a weakening in spending. if you noise this -- this does not scream recession which is why people are single deluxe. we don't get inflation, back to transitory. we were one your delayed and back to it for 2024. jonathan: at the surface, things look decent. jobless claims are still near 200,000. friday, record holiday shopping. sunday, busiest day ever for u.s. airports. by now, pay later exploding. credit card latencies are going up -- deliverances are going up. consumer confidence is improving, ghastly prices are lower. ultimately the consumer has not felt good about this economy, not felt good about it at all. tom skin --. tom keene has nailed it. . this is about the commutative

inflation of the last three years. lisa: it hurts when you look at average prices rising more than 20% in those three years. given that, the sentiment indicates they are going to do some thing about that or the continue to diverge with what they actually do? the labor market report is the key indicator that if we see a weakening on that front that we can say the strength is backward looking, bringing forward some of the spending and that we can pick up something else. that is a big if. jonathan: we look at jobless claims later this morning. visible go through it. your equity market is positive by 0.2%. the s&p is flying. double digit gains on the nasdaq 100 for the net of november. yields are done aggressively.

for basis points this morning come on, their we were talking about 5% on a 10 year yield. lisa: it is mind-boggling, coming with aggressive disinflation which makes sense on the front end of the yield curve. today we get personal income and core pce. . curious to see if we see the same bigger than expected disinflation in the u.s. similar to what we saw from europe. the jobless claims, very much in focus with the labor market. opec+ is meeting virtually. the reason there meeting is because the delegates are in cop 28 talking about removing the dependency on fossil fuels. the irony is not lost. the discussion will be about demand coming off and hoping to effectuate better cuts to production. why have will prices gone down so much at a time we are talking about geopolitics and north of 5% of gdp growth? jonathan: we are not going to

get the oil embargo we might have gotten in the 1970's. the u.s. is less dependent on crude. 75% of crude export coming out of places like the uae. asia has a very different view on this conflict. given that, given the fact we saw aggressive diplomacy to make sure this war did not spread, if you woke up on the morning of october 8 after that tragic terrorist attack, there was a believe this could spread and that deteriorated and accrued trading lower -- and crude is trading lower. lisa: it shows how much harder it is to get it right in an environment changing quickly. john williams is planning to speak at 9:15. does he lean into the discussion we heard earlier this week from chris waller in particular saying all they need to see his inflation get down to target for them to start aggressively cutting? it is not have as restrictive

available given how quickly you are seeing prices stabilize. jonathan: we get chairman powell tomorrow. you will hear from the chairman in the next 24 hours. michael shaoul joins us here in new york. jp morgan, 4200 price target on the s&p. they say valuation is rich, the market is assuming a near-perfect landing without a significant impact to demand. are you on the same page? michael: i never like s&p targets with the idea of everything where you wanted, it does not stay that way. the economy is still okay and strengthening in which case i don't think the 10-year staying at 425 or this prerecession period and we will have a weaker economy would probably people want. that is not compatible with the s&p going to 5000. jonathan: when you say what people want, what you mean?

michael: there is a lot of wishful thinking. we have gone through this two year period and we are exactly where we were. the market is where it was in november 2021 and we were convinced the fed could stay at a zero for as long as it wanted. now we are wishing the fed to be able to cut rates aggressively without any adverse impact on the economy taking place at the same time. that is an unlikely scenario. we could be in this prerecession period. the fed could be cutting rates but that is not going to be great for corporate profitability. lisa: how much conviction argue to then against illegal deluxe narrative? -- to lean against the goldilocks narrative? michael: it is good to be about rates. you have got to this whipsaw where the -- now it is a one-way lung bet. we are going to end up with the

10-year back in the 450 -- 5% range. the economy is okay. i don't think we are prerecession, i don't see evidence of the economy getting into trouble. the only thing i could point to is real estate where you have signs of a slowdown in activity. i don't think that is big enough to represent what the single-family home market did in 2007. lisa: if you see rates staying at 4.5% to 5%, does that mean stocks are going to suffer on the heels of a bond market rally? michael: what it means is you need to see much better corporate earnings if the s&p is going to make progress. i do not take the 10 year at 475 is devastating for the s&p. you need to grow into current

valuations in that situation. you are not going to have the same fuel you had over the last four to five weeks. jonathan: who does have pricing power? walmart talking about deflation, we are talking about the auto sector leader. who has pricing power? michael: it is not really deflation. i don't think the u.s. consumer is tapped out yet. you don't need as much pricing power with input costs coming down. if we went back into a world where commodity prices were rising and things were tightening, people still have pricing power. you have changed the efficient psychology summer permanently. the world post-pandemic is not the same. jonathan: goldman sachs says the hard part is overcome, to sufficient retail can continue. it sounds like you might think the hard part is still in front

of us. michael: the nature of economies is there dynamic and exaggerating in one direction and back in the other. the worst q. week and have is we had a near-perfect set of data in october which is be released over the last four to five weeks. my guess is that the november data will be more complicated. either we will see weaker growth that we are looking for or higher inflation numbers. you don't tend to get everything lined up exactly where you want it. you look back in retrospect and say that was so obvious this was happening. in real time, the data does not help you in the way that it has. lisa: i love that goldman said the hard part is over. georgette deutsche bank says the easy part is over or bonds are up at equities are up should be ending. is that your sense?

let's say we don't get what you expect which is a lift to a bond yields and -- continues to go down, are we going to see a divergence where this is bad for equities? michael: yeah, what does it take to get the 10 year to fall back below 4%? it would be clear signs the economy is rolling over. jonathan: two more days. michael: they would have to be two big days. jonathan: carry-on, i am joking. michael: it would require much clear evidence of a problem in the u.s. economy. lisa: you sound exhausted, and i don't mean in a day to day way, but it is tiring to see the same narratives come back. it is not feel like there is a lot of conviction in how to push against what you see as over this as an. -- cs over -- see as over this

yes him. -- over enthusiasm. michael: markets and economies are dynamic and the thing about this business is when it looks easy, you know it is going to get hard. when it gets hard, things will change. jonathan: nothing about this is easy and never is. i despise that easy money has been made. it is never easy. michael: sometimes it is easier than others. jonathan: it is all relative. i think we are all exhausted just by the narrative back and forth. just narrative table tennis, ping-pong, has been the use of our. soft landing, no landing. if you are just joining us, welcome to the program. your equity market positive by 0.2%. a lot to talk about in the other sector, we are going to do that.

we will catch up with john lawler in a moment. earnings in the range of $10 billion to $10.5 billion. the previous range before they had to take it out was suspended, it was $11 billion to $12 billion. the stock is up by 1%. absent is a conversation about a $10 billion stock buyback which is what we talked about with gm. perhaps a different approach from ford. lisa: it is a different approach and we will get more of a sense of why that might be in a few minutes. i find it interesting how much is going to come out of margins and how much in the form of a higher cost for vehicles. you asked about pricing power. is there a difference between different sectors in terms of how much pricing power there is? how much does this rely on the overseas competition and what the prices are? jonathan: who does have pricing power right now? lisa: certain dreams have pricing power -- luxury names

have pricing power. there are certain areas that have pricing power. think of apple, how many discounted iphones do you see? not very many. jonathan: still struggling with my. i am holding on. i thought about tricks and think about it, but i refuse. lisa: it feels terrible when you go in, dropping couple thousand dollars and they come in gearboxes. -- in cute boxes. jonathan: john lawler coming up next from new york city. good morning. ♪ (sfx: stone wheel crafting) ♪

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>> from an ev perspective, we have confidence in the portfolio we have. we are disappointed that we were constrained by the automation to build modules.

we feel we are going to see strong adoption for our products and is charging infrastructure continues to be robust, we think that will drive adoption. >> that with the general motors chair and ceo. in many ways that conversation did not matter, just a number, the $10 million buyback at gm. you have to consider that the market cap was $40 billion. to apple, a drop in the ocean. to gm, that is a monster buyback. a huge labor contract a few weeks previously. lisa: there were a few buybacks, one of them is to suggest there is not a better place to invest, returning capital to shareholders rather than growing sales and revenues might be a more attractive proposition. the second thing is going forward, how difficult is it going to be to have pricing

power? jonathan: the latest from ford, a new page for adjusted interest, 10 billion dollars to $10.5 billion before suspending guidance, $11 billion to $12 billion. we have a lot to talk about with john lawler. where is my buyback? why a different approach? john: we are focused on investing in growth and profitability and rewarding our shareholders with a higher price and paying out 40% to 50% of our cash flow in dividends. we are investing in business. we have three great segments that are growth segments. our commercial business, margins in the mid teens. profits are going to more than double this year and we have a great opportunity to drive significant profitability. jonathan: costs are going up as

well. i hundred dollars is the cost for each car on the back of that contract. gm, who we spoke to yesterday, 575. i am trying to work out how we get from 575 and $900 for the cost of each car? john: we are $500 to start and that he grows over time as wages increase. the biggest increase is gross wage increase. it is significant. our footprint in the u.s. is bigger than general motors. the rest of that, i am not sure why their number is lower than ours. we know what we have done with this contract. we know it is starting point is, 60 to 70 basis points. now what we need to do is we need to work on driving productivity and efficiency and

reducing the labor hours. that is what we are going to be focused on. lisa: it is going to be cost reductions than trying to raise prices for the end consumer? john: no, you have to think about pricing differently in our industry. there's different pricing power across the segments. that is why we feel what we did in segmenting the business and have a transparency is important. we believe there is pent-up demand in pricing power. in the retail consumer segment, you see prices come down. we have been talking about that. 13 point percent -- back in between 13, 13% went up to 20%. -- lisa: when you talk about lower price points, i think about the chinese car manufacturers and the production much more cheaply

of electric vehicles that are making a competitive advantage. how do you compete with them given the labor contracts and the other working operating costs? john: that is something we are very focused on. again, the segmentation, each segment is different. we have seen prices go down in the electric segment quicker than expected. the reason is we are moving out of early adopters willing to pay for higher prices. early majority customers are not willing to pay that premium. we see those come down and we expect them to equalize so it will be about cost and efficiency. we have to get more competitive on cost and that is what we are focused on in our second-generation and third-generation vehicles. jonathan: what is happening for demand in ev's? does this change approach? john: it is the adoption rate, flatter than be expected. 50% of this year from a sales standpoint.

it is coming, they will be part of the industry, eventually we get to higher growth rates so we have to adjust our capital investment. jonathan: that sound to change and execution. john: absolutely. jonathan: let's talk about the numbers, $12 billion in ev related investments. should we expect to see more of that? john: it depends on the customer and the adoption rate. if a grows faster, we will increase our capital. lisa: i have two points-- jonathan: i have two points. you expect half of vehicles to be ev by 2030. do you still expect that? john: no, we expected to be less. we will know more next year. jonathan: do you have to assess how big the margins will be? john: as the industry adjusts, you have to look at that. we think of the right target is around 8%. lisa: you said you are focused

on trying to be competitive, you're basically saying we are going to see with the competitive landscape looks like. how do you plan to reduce costs? is it going to be with job cuts? is it with automation? john: absolutely automation. when you look at this contract, it is important to understand where the battery plants are. that is important for vertical integration. when you're talking about electric vehicles, battery and design is important. the efficiency of the battery and getting the smallest battery in. the second-generation design is going to be critical. overall, we have work to do on our cost equality. we are focused on that. we have made significant progress the last few years, we have restructured, we have moved out of autonomous vehicles and pulled capital investment.

focused on l2, we have the best driving system out there. we are making the adjustments as we go. lisa: when you talk about automation, there is question around job cuts and how much this will reduce the overall numbers of workers who have to be employed to make cars. is that what you are going to see? a team of professionals creating vehicles in five years? john: in other areas, we see growth. the key is driving productivity, more coming out per unit does not necessarily mean you take the labor out. that is what we need to drive toward. jonathan: let's finish in delicate question. is a four f-150 lightning truck really good for the environment? i struggle with the association between heavy electrified trucks and climate change. what is the relationship?

are we kidding ourselves? john: i don't think so. one, moving into electric is important for the overall environment. number two, you have to think about the consumer and what that truck can do. it fills a niche. there are individuals who will not drive an internal combustion vehicle. they never had access to a utility like a pickup truck. now they have that. for our commercial customers, it is a generator. now you don't have gas generators. it is coming from the vehicle itself. is a good step forward in the environment will push and reducing the co2 footprint. jonathan: it is good to hear from you. john lawler there, the four cfo. -- ford cfo. confusing to you that from ford and think about what we heard from gm yesterday. are we see more transparency

around costs from one company may be then another? lisa: we will explore that going forward. this will be key to the margins, key to pricing power, figuring out the competitive landscape. how much of a hit does that mean to each number? jonathan: forcing the numbers are here and gm is saying the numbers i got here. futures on sb 500 positive by 0.25%. yells up by four basis points. yields done aggressively through november. more to come, coming up next. ♪

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jonathan: we are wrapping up the best month of the year on the equity market. s&p 500 pushing 8.5% up month to date. on the nasdaq 100 best month going back to july of 2022. equities up this morning by one third of 1% on the nasdaq. up on the s&p 500 by .25%. regional bank stocks absolutely flying this month. you can say thank you to the bond market. shaping of as follows. two-year come down north of 5%. 10-year come down north of 5% to a break of 430.

we are back to 429.55. lisa: are we seeing stability or another whipsaw move that sets up the next leg of an era? how much can we get confidence? we have seen the piquant benchmark rates with that will lead to an ongoing disinflation back to 2%. that is a straight line that will lead to a very low 10-year benchmark year. jonathan: you don't sound exhausted by this at all. lisa: it is frustrating. it feels like we are trying to justify something in a different way depending on where it is at a certain time. hard to understand of this is positioning. i don't really get what is actually driving the volatility. it is frustrating a little bit to explain it. jonathan: we should clip the comments from october 19. play them out now and ask what has changed in a month, apart from the price action? lisa: the one thing is you have seen disinflation, true

disinflation. the data came in less than expected in the u.s. and globally. we saw that again this morning. that does chip the narrative but how much weakness comes with it. we saw greater weakness than expected in europe. do we see that in the u.s.? how long will this goldilocks soft landing narrative going to apply? jonathan: big downside surprise on cpi this morning. the euro has been stronger this month against the weaker u.s. dollar. before today heading towards the best month for the euro and worse for the dollar for the year so far. we have some euro weakness this morning. that data introducing the conversation we are having on this side of the atlantic on that side of the atlantic which is rate cuts going into 2024. lisa: you put this really well. is there going to be a conditioning of getting it so wrong with inflation on the way up they will be late to the game to cut? we heard push back that earlier.

now there is a question that is not necessarily the case because it is not a policy error to overtighten. there's a question around the weakness of the economy is going to force their hand more aggressively at the beginning of next year. jonathan: we are talking about human beings and not machines. human beings are conditioned by what happened two years ago in a massive way. let's face it. almost embarrassed by it. you are in the fomc and you said for months one thing and something else happened. lisa: the key litmus test is if they use the word transitory ever again. jonathan: that's a good test. we were right. it just took longer. lisa: that is kind of what some people were saying. jonathan: we were right. it just took longer. under surveillance, henry kissinger who defined american foreign policy in the 1970's has died. he's best known for his strategies to end the vietnam

war, open relations with china and bring about the detente with the soviet union. he was 100 years old. he was also a highly controversial figure. lisa: he was someone who thought idealism was out of place in foreign policy. he was behind a lot of policies that were very protested. interesting to see how his philosophies have made their way through the decades and still exist today. jonathan: israel and hamas extending the truce for another day just minutes before it was set to expire. hamas releasing 10 hostages and israel releasing 30 palestinian prisoners. antony blinken expected to make stops in the west bank and the uae to round out the week. the pressure for the truce to continue everyday builds. lisa: given the fact israel continues to want to eradicate hamas from gaza and from the palestinian people. you have the discussion of hamas

having in its charter eradicating israel and the existence of a jewish state. the pressure to bring home hostages is very great. the pressure to get humanitarian aid into gaza so people have enough to eat and they have fueled the power their stoves is also very great. that is bringing them to the table but it's getting more difficult. it was a last-minute decision to get this cease fire to continue for another day. jonathan: fragile but encouraged a couple of days ago when we had accusations the temporary truce have been violated but it held. i'm not sure how encouraged we should be by that but encouraged nevertheless. lisa: it is getting longer and longer to come to some sort of agreement and the parameters of it and there are rumors coming out. it gives you a sense we might be reaching the end of this. jonathan: economic data an hour away. bloomberg economics expecting a downturn in personal spending and income. the fed's preferred inflation

gauge easing with jobless claims thanks to the thanksgiving holiday. president bostic barkin, disinflation likely to continue. barkin leaving the door open to further rate hikes. lisa: honestly it did not really move the needle either way because it's basically what they both have been saying for a long time. for months. that is why chris waller had more of an impact on markets. nobody was listening to anything other than ongoing disinflation and lower rates ahead. jonathan: selective validation of pre-existing biases, which seems to be the way. you cherry pick what backs up your thoughts are ready. kelsey berro joins us now. good morning to you. the world is moving towards you. lower bond yields. maybe a slower economy. how are you thinking about fixed income now? kelsey: yields have moved lower.

what we had is the situation where the narrative can take you much further than what is actually happening in terms of reality. we looked at the move higher in yields in september and october. getting to 5% on the 10-year. we did think that was just a bit too far in terms of a move and we would look back and view this as honestly a great buying opportunity. we've had a positive view on fixed income this year. yields moved back down and that brought us back to where we were before the september fomc meeting. what i'm focused on right now continues to be the inflation data. the inflation data, what do we benchmark ourselves against? it is still above the fed's target. you have people saying we have not done enough but maybe we have. i look at what they projected in september. september was a fairly hawkish meeting for them. they were projecting inflation

of 3.7% on core pce. today's number if it comes in on can say sis that consensus will be done to 3.5% on the year of your right and 2.6% on the six-month run rate. inflation is coming down faster than they expected. we think the fed's last rate hike was july. we've had that call for quite a while. we are sticking to that call. that makes the meuser yields asymmetric. we can move a little higher here for sure. there's a lot of volatility on every given day. we can move a lot lower if next year we are looking at rate cuts. lisa: you said the narrative can take you further than the reality. does that mean we are in a traders market? kelsey: i think the technicals and positioning are very important. you need to understand not just what's going on but the sentiment around what is going on. you had a couple of things ever really fueling that bearish

sentiment in october. one of them was the fact we had a blockbuster gdp report. there was uncertainty about what was going to come next. we have at least gotten to the point where we feel comfortable we are not going to see another 5.2% on real gdp and 9% on nominal gdp. fed tracking has come out. we are normalizing around 2%. we can feel comfortable with that. i think the other thing you are not hearing any words about anymore is the deficit. the auctions. i know you love watching the auctions. they have been mixed. you've had some weak ones and some poor ones. you had the five basis point tail on the 30-year option on november 9. that ended up being a great entry point into the bond market. sometimes the market fixates on something. ultimately, we think it is about the fundamentals. what is our view on inflation? what is our view on the fed? ultimately, it is not about if

people will buy treasuries. it is at what price do they think it is fair. if inflation is coming down in the fed is done -- jonathan: can i jump in? why isn't the deficit part of fundamentals? kelsey: i think it is in terms of the growth and inflation outlook. here's the thing. the deficit was wider than expected this year but inflation came down. when you are a country that can print their own currency and they have their own reserve currency, it's not really about default risk. were not worried about the treasury defaulting. the risk is inflation. we are not seeing inflation. that's because the increase in the deficit this year was because of two factors. one, higher interest costs and lower tax revenue. we are not talking about fiscal stimulus. we are talking about an economy that was normalizing revenues that were falling and a government that has to fund more because they fed is stepping out of the way. lisa: you said the moves are

asymmetric when it comes to the bond market. it makes sense on the short end because the fed is done raising rates. for the long end there are so many variables. whether it is the deficit or the fact that the fed cutting rates sooner leads to perhaps higher inflation over the longer period of time. how much less conviction do you have over your longer-term bond yield call on the 10-year? kelsey: there are multiple parts of that question. the first thing that comes to mind is we are moving into a regime where we should be seeing the curve steepen. the part of the curve we should see the most rally, the most move lower if the fed is cutting rates is going to be that front end. the aces retreat about -- asymmetry is more compelling on the front end than it is in the long end. i think structurally longer-term we are exiting a period of

financial repression. we are at a point -- this is a good thing for bond investors. we are not dealing with negative real yields anymore. we are not dealing with 30% of the global bond index having negative yields. this is ultimately a good thing. higher real yields. it does mean we are not necessarily looking at 50 basis points on the 10-year next time we are in a recession, which is what we saw the recovered. jonathan: that is what lisa complained about it for 10 years, negative interest rate. lisa: i stand by it. jonathan: it was ridiculous. we all knew it was absurd. it was unlike one of those bubbles that people would rationalize and justify. we all knew it was absurd but it was placed there by policy. policy was deliver the anchoring it and that was what was absurd about that moment. lisa: we heard all these people saying the world was going to fall you did not have zebra rates. the fact it has it -- zero rate. the fact it has it is one of the

biggest surprises, the complete demolition of balance sheets. jonathan: howdy people said the longer variable would be 30 years long? hardly anyone did. no one did. now it is longer, much longer. kelsey, good to see you. kelsey berro of jp morgan asset management. we are positive by 0.3%. yields a little higher by four basis points. 429.16 on the 10-year, which is quite a turnaround from the start of the month. lisa: to kelsey's good point, how much is the trading moving so much faster than anything fund a mental? the narrative is shifting -- fundamental? the narrative is shifting. if you have the likes of bill ackman coming out and making these bold rate calls. what is the hedge fund activity or the levered bets behind some of these moves? jonathan: it is the psychology of investing. it never changes.

you get to 5% and people are like sell, sell. 4.3%, buy, buy. lisa: you wonder if things are moving faster with the narrative shift. the markets are the only place where you can buy something when it is full price and you sell it what it's on sale. jonathan: totally. i totally agree with that statement. it is like the sales are on. let's go. markets are like no. coming up in the next hour, neil dutta. why he thinks it is soft landing there vona for this market. that conversation just -- nirvana for this market. that conversation just 60 minutes away. ♪ ♪ (sfx: stone wheel crafting) ♪

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adequate, but ultimate values are absolute because they demand a degree of imprecision on others. how to strike that balance is maybe our insoluble problem. jonathan: former secretary henry kissinger speaking to john micklethwait earlier this year. kissinger, former u.s. secretary of state who defined u.s. foreign policy in the 1970's has died at age 100. joining us now is john from london. good morning to you and great to catch up as always. let's talk about the legacy of a polarizing figure, a man you knew for the better part of three or four decades. what is your take away on that? john: he was a giant. not a giant physically but he was a giant in the sense that it's difficult to think of

anybody else as i walk to the streets of london this morning with the possible exception of the queen, i don't think there is anyone who had been part of public life for as long as henry kissinger and met as many people that had more controversial than the queen but such a dramatic effect on it. i think he was some very obviously in terms of legacy who changed the world through bringing china back into some kind of unity with the west. you look at detente. yes, there were very public and very obvious costs to that but he was a man of many, many parts. it was not just the things he did. it was the breath of his interests. in the end he was consumed by ai. this was a man that was quite a formidable student of history. that is how he first emerged. he had a personal life story which i think kinda captured the

century. someone persecuted, driven out of germany, arriving in america, coming to serve in the battle of the bulge as an incredibly young man. he saw things for the age of 24, 25 that very few people have seen who are currently leaders of the world. lisa: in the four decades you knew him, how did his worldview evolve, especially with some of the shifts going on globally? john: he did change his views but his basic attitude -- that is somewhat -- that somewhat convoluted quote is very true of the way you saw the world. there were a set of values and there was also reality. the two conflicted continually. i think particularly when he was in office there was a lot of trying to compromise in terms of what he was trying to achieve with the realities.

sometimes they were spectacularly bloody. people ring up things like chile and cambodia. his underlying sense of the direction in which he wanted to go i think never really changed. he continually also -- in some ways psychologically his desire to be relevant, his desire to still be part of the debate. a man who at aged 90 something discovers ai but thinks that is something you should look at through the lens of balance of power and with that can do to the human condition and what they can do in terms of war. the idea of computers fighting each other terrified him. the basic idea about what it meant to be human if you had machines that began to think, that went back to the political philosophy that initially grabbed him. i think the reason he is interesting is probably the life story, both in the sense of a

child whose odds of survival were extremely small ending up as one of the most powerful people in the world. that desperate and rather ingenious ability to stay relevant long, long after he stopped being secretary of state, stopped being national security advisor. but also the sense of having something bigger about the world. kissinger was never someone who ran away from large issues to do with philosophy, science, any of those things. he was a complex, sometimes very intriguing man. he was to that extent one of the most influential people in the time i have been a journalist. lisa: we mentioned how polarizing he was in several occasions. you talk about how he was guided by right and wrong and less concerned with the method of getting there. he's come under primitivism -- criticism about bombing

campaigns in cambodia and pinochet in chile. how directed policy towards russia. how much of his philosophy is consistent today with u.s. foreign policy? john: an interesting question. if you look at american foreign-policy over the past 30, 40 years, different times it was run by people who were extreme critics of kissinger. the neoconservatives hated the idea of rail policy. bill clinton liked the idea of a more worthy foreign-policy. so did barack obama. what america be stronger if kissinger had run it? i suspect it might have been. whether will be more peaceful? possibly it might have been as well. i think he always took the long view. you look at the issue of america and china, the one which sort of dominated a lot of the questions

over the past 10 years, what kissinger repeatedly did was went back to the issue about great nations having interests. you have to find ways to accommodate that. yes, by all means bring up the issues that divide you, but then try to work out what is possible within the parameters of the interests of those nations. the reason was partly to do with history, the people he studied. those were his heroes. they dealt with similarly bloody wars in the aftermath of it. there was a little bit of personal history and that. if you come from the background he did, being persecuted, being on the run, narrowly escaping to london and then new york and seeing unimaginable terror, in a strange way you are looking for some kind of attempt to reconcile these things. to try to bring a little bit of order to the chaos, obviously at

different times he got that wrong but i think that was the underlying philosophy he led by. jonathan: there was something deeply unique about how the media treated him, and other countries as well. china would entertain a recent in ways they would not entertain for some officials from this white house, this administration. what do you think that was about? that was deeply unique from my perspective. i can't think of anybody else quite like that. john: two different reasons. number one was the things henry kissinger new and that in china there is a veneration for old age which is not always true of the media. in his particular case there was that. he had history. he had set their opposite mao and dang. he knew the people the chinese talk about. there was something they understood and saw him as someone who understood their problems and would criticize them in private.

on the other hand, to be honest another big problem, another reason he stood out was because they really were not very many other people like him. you go to beijing, you meet anna norma's number of people who follow the -- an enormous number of people who follow american politics and great to deal. the number of americans who understand china is much, much smaller. he was both in that role because of his qualities but because of the lack of qualities of other people. jonathan: i appreciate your time this morning. john micklethwait, our editor-in-chief on the legacy of a deeply polarizing figure. lisa: how his diplomatic efforts and role continued far after he left office into a very different era. jonathan: more coverage to come on bloomberg tv and radio, including on this market. you will get some jobs data. jobless claims, the appetizer

before the payrolls report next friday. claims were taking higher and then right before thanksgiving -- ticking higher and then right before giving, 209. 209 exceptionally low. speaking to a consumer that is holding on. lisa: it is confusing to me. there are a couple of markets don't have a full clarity on. one is the housing market and one is the labor market. we have been hearing about job hoarding. how this will be a jobfull recession. it will be harder to get hired, which is the suggestion we got from the beige book. history has some merit as well here. jonathan: steven wieting will join us on financial markets. we also need to catch up with amh, annmarie on the latest in washinging. and opec meeting now virtual with the saudi's pushing for production cuts, because crude is in the 70's.

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or expect. >> we do still favor the growth side of the equation. we think there is value in growth. >> the long-term view is still cautious. >> new record highs for the s&p 500 next year. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. >> good morning. this is bloomberg surveillance on. wrapping things up with some choice quotes.what are your november has been. neil saying it was a soft landing. month to date on the s&p, up 8.5%. double-digit gains for the nasdaq. lisa: the narrative shift brings us back to where we were not long ago. it feels like a year of narratives packed into one

month. how much do we see this sticking versus this is the latest phase of table tennis? this will be the key question. jon: you want to talk about the bond market move? something like 60 basis points, encouraged by some choice comments, some selective hearing from governor waller, who is saying something is giving and maybe it's the u.s. economy. there is one chance to push back into the quiet period. that is in the hands of chairman powell. citibank saying powell has the opportunity to push back to the cuts priced in when he speaks friday. they call it a significant risk but if his colleagues are any guide, pushback will be limited and risk on conditions will continue. lisa: it feels unlikely that he will come out and put the kibosh on a market rally. he was unwilling to do that in the previous meeting. people said he was coming out overly cautious and dovish.

that said, the data has surprised to the downside when it comes to inflation. that's why core pce we get in half an hour will be important. do we have the ongoing disinflation that will give them comfort that we are getting back to price stability? jon: should we talk about ford? ford to the premarket looks like this. forward this morning reinstating guidance that was lower than the previous guidance, which was suspended. that was 11 to 12. there's a massive difference between them and gm. gm notably coming out with a 10 billion dollars buyback program yesterday. we did not get that from ford. forward same the costs from the uaw contract are going to come to about $900 to each car, shaving margins by 70 basis points, several hundred dollars more than what gm was telling us yesterday. lisa: they are saying it is ford next year, when a greater proportion of the contract goes

into effect. i cannot make sense of it. there's a component that there is a greater domestic u.s. focus of ford, so maybe it's offset there, but it's unclear, and it raises this question of how much will this cost, how much clarity we are seeing in terms of the costs, and third, how much are we going to see this marching crush and how much are we going to see higher prices? what does this do to the competitiveness of u.s. auto manufacturing? the hours it takes to build a vehicle and reducing that cost. that for many economists is the first thing to look for, particularly when talking about holding onto labor because of the experience of the last three years, so he's not going

to start firing. productivity is one but ultimately pulling back on hours worked is where you will see it first. lisa: that seems to be what's happening. hours worked have been coming in slightly, but to your point, is this a template we will see elsewhere, that the way he will offset extra costs is simply by increasing productivity by reducing the amount people work in paying them defective less even if hourly -- paying them de facto less even if hourly you are paying them more? jon: what is my moving to 2024? this is my move now this morning. here are the scores. the equity market positive .3% on the s&p on the session, on the month up big time. on the session, yields higher, on the month aggressively lower. we have some fed speak for the next 24 hours. some data 25 minutes away. jobless claims around the corner. lisa: are you focus more on jobless claims were core pce --

claims or? jon: i am saying that because i was saying that -- i was surprised last week on the back of some research. neil was saying for the fed the labor market is no longer a reason to be hawkish. so i think the equity market is starting to pivot to this is what i need to think about now. at one point will that be bearish? claims have been pushing higher and now back down to 209. is that just a blip? is this kind of data distorted? i don't know. but claims still down near 200 k, unemployment near 4%, deep into this cycle, it's surprising. lisa: we talk about the disinflation that is the year-over-year comparison. come next year, those comparisons will get difficult to beat. you might see a re-acceleration. it depends ultimately on the labor market. jon: joining us now on that, steve of citi global wealth,

chief and gusman strategist and economist. let's start with the fed speak so far. any reason to believe the message we get from new york fed president john williams and chairman jay powell is any difference what we have heard already? christyan i do not think they can -- steve: i do not think they can micromanage markets around their comments. it's actually good now to start getting the preconditions for the end of the tightening cycle, what it would take to ease these expectations, understanding the fed at some point will have to be forward-looking. it's not going to ease monetary policy when the economy has collapsed. if there monetary policy is restrictive, if inflation is falling to target, i can make the case for that, and employment accelerates. they will want to be careful about having restrictive monetary policy. whether that takes three or two quarters of time, that is the kind of thing they will

determine, but getting this out clear into the marketplace, that their job is also not the force -- not to force down the economy under every circumstance. lisa: are you leaning into what we have seen with respect to the monomeric -- the bond rally? steve: it is too fast but not too far. consider where we think bond yields where we think at the end of next year. 10-year gilts will be 3.75% -- 10 year yields will be 3.75%. the labor market will slow significantly. fortunately, and this is the strange thing giving us a bullish view, a contraction rebound cycle, is a lot of industries have really contracted already, and if we were to take a look at their headcounts, not lower. there have been other areas that have been asynchronous and employment is still growing, but

we think a lot of cyclical industries will find their bond in the coming year and recover while the labor market is slowing, while measured inflation is coming down and bond yields are moderating, so this a pretty -- that's a different financial environment from what we have been in in the last two years. you could run away with that and go too far too quickly. i don't think we overshot where yields will be or where the equity market will be further out. lisa: how do we readjust? if you don't think it's overshot, it has moved fast, does that mean you won't do anything for the next two months and wait for things to catch up and then you will take some action? steve: we have already made a bunch of changes, going back particularly in october. small and mid-cap profitable growth companies. and yet they are outgrowing large caps and the growth companies don't have the highly

-- have the situation small-cap banks would, so we added an overweight there. we think a broadening equity market is the way we will see the markets in 2024. it's not we will get another 18% s&p 500, but most stocks will be looking forward to a broader earnings recovery, so that is one way we can play this. another, again, is fixed income. yields are now the little bit. think about where cash will be in the next three or four years. the fed's expectation for its long-term neutral policy gets exactly to 2.5%. that is where they are. so again, this rally in the bond market, thinking about some of the spread assets for high-quality bonds still more than 6%, this is the way you could still have higher for longer in your portfolio. jon: let's get into next year more. base case for a lot of people, slower growth, lower rates, which screams growth in tech, and to your point, we are

anticipating this broadening out of profits recovery. how does that had of those things compete with each other -- how do those things compete with each other? steve: the magnificent seven has had a good growth year. one company has had massive growth. the next nine do not. so when you think about valuation, i am not taking an active bet against large cap tech to underweight or overweight, but the opportunity, again, a lot of the bond market in the world, is to take advantage of the catch-up. i am leaning toward growth but not in the largest firms. when i think about all the cybersecurity companies that are $9 trillion companies, think about some of the health care companies that have had their first recession, and that is i think an opportunity for broadening the equity market.

jon: good to get your views. steven wieting of city global wealth -- of citi global wealth. lisa: this will be a key question of how you navigate this. big tech will be everything. why are you laughing? jon: i am not. why would i laugh? lisa: but look, it's exhausting that we are going into this. jon: i love catching you being transfixed by cat videos on your screen. how do you do that and provide world-class bond analysis? i don't know. lisa: i have to say -- jon: one to calm down half the brain. lisa: yeah. jon: love that. if you are just joining us, welcome. your equity market positive by 0.3%. yields are higher by three basis points. lots to discuss. the data has been great. i say it all the time, but he has been. he will join us in 18 minutes. he was constructive on this economy when many were not.

he's looking at the data and if you listen to the guidance from governor waller, and this is probably what you will get into with him, he's basically saying, if inflation continues to trend lower, and neil is looking at the data, and many economists are as well, how big is it? for many people, it is not. lisa: this is the reason why a lot of people are talking about rate cuts even without recession. what i want to hear from neil dutta is how do you pair the idea of a nearly 9% annualized gdp in the united states at a nominal level for 2024 if you extrapolate out the third quarter of 2023, how do you take a look at that and think this will be successful, that disinflation will continue, that you will have enough weakness to cause the nirvana of soft landing to continue? jon: it is the fact that we have had 9% nominal gdp in the third quarter, that we have unemployment south of 4%, claims

at 209,000, yet we still experienced this disinflation. even if you keep it at 2%, you get a slowdown. that is what surprised me, that we have had this disinflation even with everything we are talking about in the labor market and beyond. jon: lisa: which is the reason i wonder how much of this is gas prices, how much of this is a shift that continues, and year-over-year comparisons that are difficult to beat? can we shift the whole narrative once more? jon: if you want. another one. how much of this is not the federal reserve? lisa: good question. jon: i am h&m. from new york, this is bloomberg

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though important at this moment because it's clear from what the u.s. is saying behind the scenes and in the open that they would like to see a prolonged pause to

make sure they get these hostages out. on top of that, they want more communitarian aid going into gaza. lisa: we have talked about how there's been disagreement within joe biden's party with a number of lawmakers who are democrats saying they want conditions put around aid during this war. what's the latest on that? how much is the tide shifting in that direction versus still supporting some sort of ongoing unconditional support of israel? annmarie: at sometimes, it's a hard line for this administration to walk. they had this bearhug mentality with benjamin netanyahu. the president went there it, embraced him, saying they are standing shoulder to shoulder. they maintain that but at the same time are exerting a lot of pressure on israel, because the images coming out of gaza are horrific, of humanitarian the toll this is taking, the civilian death toll of palestinians, and that is why

there's a lot more criticism from the public and within his administration about this policy. so you do see some individuals calling out the fact they want some conditions attached. it doesn't seem like the administration is supporting that yet, but potentially, that is what might be on some of this aid if congress is able to get this through. we could potentially see. it is still a debate in washington and it's something that's looming large over this administration. lisa: more on that on the days and weeks ahead as this evolves. i want to shift gears and talk about the opec-plus meeting, the fact that it's virtual and people are they're talking about how they will reduce fossil fuel emissions while negotiating how much oil they will pump. how much do you see this as a result -- the idea of making further cuts -- as a result of u.s. production, not necessarily just diminishing demand from consumers? annmarie: i see this as a price

issue. the saudis continue to talk about market stability and when you see it's been 10, almost 15% that oil prices have dropped, that's a concern for these oil-producing countries. obviously, when you look at what the first quarter of next year looks like for the oil market, they are seeing a surplus. they want to see a deficit going into next year. so that's what this negotiation is about now. i think it comes down to market stability or, you know, the diplomatic way of saying it comes down to price, although no energy minister will tell you what that -- tell you that is what it's about. they need to work out if they can get the likes of angola and some other countries to lower quotas, and if not, potentially, we will see a rollover of what they established last month. jon: it sounds like a defenseless ceo of a company when they start to say that. the fundamentals of the company.

what to they mean when they start talking about that, it is the murky environment? what does that mean? annmarie: it means they want higher prices. they want to put a floor under this. they don't want to see the dwindling of oil prices around the world and they want to make sure they are putting the speculators in the market. i mean, prince bin-salman has never been shy about calling of the speculators. so i think that's what this is about. but it comes at a time when there -- i don't think there's a lot of friction now. where you will see friction if opec-plus does decide to take this next step in one million barrels cut within the administration because gasoline prices are lower. they could potentially give this one to the saudis. they are helping them in the region now with this war. things are stable at the moment, at least in terms of this has not become wider, a wider

conflict, so potentially they do give them this out and shrug us off where gasoline prices are, but potentially this could look different going into november next year. jon: i know this is slightly unfair but based on your coverage what is the number they want? brent crude is at 84. what are they happy with? annmarie: i think the saudis deep down would love $100 a barrel but maybe something closer to $90. certainly put a floor at $80, $85, but closer to $90 a barrel. the imf for years has said that is where their budget would need to be in line with but around $90 to $100 would be there sweet spot. jon: thank you. the latest down in washington, d.c. annmarie hordern on opec-plus, a virtual get together after canceling the get-together in vienna. manus disappointed.

then talk about oil. not happening. coming up, on bloomberg tv, we catch up with j.p. morgan, christian of lafayette college, stewart kaiser of citi. you have enjoyed his research. a rally and a massive month to date rally on the s&p and nasdaq. stewart's point is this is not just about the bond market. it's been built on good data. he says when it starts to turn, you need to turn away as well, away from the equity market. until then, stay constructive. job claims eight minutes away. lisa: good news is good news, bad news is bad news. the fact that he has to say that tells us where we are, that it is so controversial. it gives you a sense of where we are at in terms of this year. i'm curious to see how he sees that in terms of the tipping point and whether there's any leading indicator, that we are

not going to be able to trade the weakness until it's too late when it shows up. jon: 4200 on the s&p 500. that's quite a price target. we have a 100 at deutsche bank, 5000 have bank of america, 5000 rbc. jp morgan at the bottom of the pile looking for 4200 with a downside bias. there words, not mine. rapid fed easing. we expect a more challenging macro backdrop for stocks next year, softening consumer trends. you said it earlier and i agree with you. put the numbers to one side. when you go through the logic, it's hard to argue against it. lisa: the big question is tech because that's been the driver and a big proportion of overall returns. how much of this is a call on tech? because the russell 2000 has done nothing, banks have done nothing. a lot of the consumer

discretionaries not doing so well. so what are they talking about? how much does that composition shift? increasingly, remember when we did not care about composition? suddenly it matters. jon: everything has gone up. energy has had a tough time. stock market, bond market. lisa: i'm talking about back in the day. jon: reminiscing. nostalgic. equity futures positive at 31%. jobless claims five minutes away. neil dutta will break down all of this with lisa around the table in new york. from new york city, good morning. ♪

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>> from the world of politics to the world of business, every weekday at 5 p.m. eastern time, annmarie hordern and joe mathieu alongside kailey leinz deliver news, insight and analysis. get the latest from an about politics.

lisa: one hour until the market opens, seconds away from some key economic data, including core pce and initial jobless claims. taking a look at markets. you are seeing a pause in the bond rally. we have come in with yields flat on the day. you can see s&p futures continuing with a lift of .3%. the nasdaq has the been amazing -- has been amazing this month. we are getting some of that data coming through. with that is michael mckee. >> jonathan ferro -- we will

start with jobless claims. 218,000 is what had been forecast. continuing claims rose to 1,927,000. so a slight rise in jobless claims after last week's fallback. we have to caution that a lot of economists are noting this could be distorted by the fact that last week or the week in these surveys is thanksgiving so we may see some unusual numbers for that week but it does not suggest that we are having a huge situation with a lot of layoffs and things like that. personal income up .2% after .3% last month. spending up .2%. most of those are what were forecast. .7% personal spending in september. the deflator for pce headline is flat, zero after 0.4, which

drops it year-over-year to 3%. that's the lowest since the pandemic began. core comes in at .2%, which is what was forecast, down from .3%, pushes us down to 3.5%. so basically what we have seen is what was expected. forecast jobless claims, spending, income and inflation pretty much on the nose. lisa: let's take you through some of the reaction. not a lot of drama. you are seeing a little bit of a client in bond yields, a pop in equity markets as they parse through a bit lower than expected although not significantly so. the jobs market did have continuing claims up a little bit, a little bit more than expected, to 1,927,000. when we take a look at this sort of ongoing disinflation and

steady labor market, how much can you pair this with what we saw from the beige book yesterday and the sense that anecdotally you are seeing a tightening of the labor market but it may not be happening in the same kind of way as mass layoffs? mike: what we saw in the beige book is the first indication companies are starting to say they feel ok with doing layoffs or letting jobs go via attrition. that is a new development because up to this point everyone has been trying to hire as many people as they can or hold onto them. we will have to see if that gains momentum. it was not mentioned as a major trend in the report, just something that had changed. claims still low. last week was revised up to two hundred 11,000 from 209,000. we are not seeing a major trend in layoffs but we do see more people on continuing claims for a longer period of time, so some indication of softness in the labor market. we will see what happens with income and spending up .2%.

it is still strong but not hugely so, not like it was in prior months. we will see whether that rebound or not and how companies react. lisa: minutes away from hearing from new york fed president john williams. tomorrow, we hear from fed chair jay powell. someone from citigroup posting has an opportunity to push back on the idea that this disinflation will lead to rate cuts in the first half of next year by the fed as the market seems to be pricing in. based on what we have heard, do you agree with citigroup's assessment that it seems unlikely he would come out and try to do anything one way or the other, pushback on rate cutting claims? mike: i don't think he will pushback. if he gets past, i think he would say we are not talking about that yet. he will not push for a rate increase but they should leave it on the table, which is

where i think the fed wants to be. the interesting thing is nobody is arguing with the idea that the fed will cut rates in 2024. the fed said it was going to cut rates in 2024. we will see what they do, on december 13 but it's a question of how fast inflation comes down. we are not really talking about -- we are not really talking about whether somebody is predicting this or that for the fed. look at what inflation is and how fast that comes down and that will give you a better idea of what the fed will be thinking about. lisa: michael mckee, stay close as you parse the data. we will catch up to get more details. we will get into the details of a soft landing or vona. the words of neil dutta, head of economics at renaissance macro research. does this data underscore the

soft landing nirvana that you pinned over the last few months? neil: hello. thank you, lisa. you have given me too much credit. but i do think that the data is lining up and we are on a glide path to a rate cut probably by march. if you look at core pce inflation since june. it's up just 2.3% at an annual rate and there's a lot of disinflation in the pipeline as we know. when we look at car prices at the wholesale level, that's declining. you see that month in and out. that will bleed into the consumer prices over the next few months. we know rental inflation is moderating. that will also bleed into core inflation over the next few months. and the normalization of supply chains should take pressure off prices for core consumer goods. so i think it's likely that core inflation is running below 2.5%

probably on a six-month basis but by the first quarter of next year and when you think about it, the fed is giving us the playbook. waller told us this week that he's following a standard taylor rule type of framework and if inflation slows the fed will cut. it really is that simple. that is what they are going to do. go ahead. lisa: sorry to cut in but i'm struck by what you were saying earlier in the year when you are saying people underestimated how much momentum there is in the economy and next year we will get surprised by the stickiness of the inflation and what we see in terms of growth. how do you pair that idea and the fact that we continue to get better than expected economic data with ongoing disinflation in tandem with what the fed was hoping for and then some?

neil: i mean, the economy is holding up, but it's clear there's more disinflation despite that growth and i think the fed is looking at what's happening which -- happening with realized inflation, so the fact that inflation is moderating will pressure them to cut interest rates because they don't want that in their framework unduly high, too high. i think that is what it comes down to. part of this job is not so much what i think they should do but what i think they will do and what they are telling us they will do if inflation continues to come in like it's been coming in. the fed will respond to that. i don't think it's a situation where they are cutting aggressively. part of the issue now is that a lot of people are not used to the fed just surgically cutting interest rates. usually they do a lot or nothing at all. but i think what we are talking about for next year, for 2024,

is a recalibration of monetary policy, not unlike, frankly, what we saw in 1995, where the fed came off a year of aggressive tightening and cut rates a few times, trying -- basically just trying to find tune -- to find tune there monetary policy, which i think they can justify that based on the inflation data as it comes in. lisa: earlier in the year, you were talking about how inflation will be higher for a longer period of time. do you still think that? neil: i do but the question is around the time horizon. i think the economy is growing above trend. that ultimately will have some effects on prices. there is a lot of disinflation in the process and in train and the fed will respond to that. the issue, frankly, is does the soft landing enthusiasm today reignite inflation later? i think that is something the

fed should keep in the back of their mind, and frankly, that may be one reason to put a ceiling on how money cuts they can do, but i do think we have to get through this period of disinflation first, and i think the fed will react to that, which is why i think they will cut interest rates, and they will probably frontload the cuts and get it out of the system. they are already telling you that they are going to cut rates. they were at 4% in june, as mike mentioned. they went to 2% in september and might signal that a pause will be coming in 2024. i think given the glide path of inflation we are likely to get, they probably do it sooner than later. lisa: i'm curious, from your vantage point, a lot of people have been saying it will be the bond market's dream, that you will get an ongoing rally in bonds that will tee off that

rally. do you think so or is it not so simple especially with this question of what the new neutral rate is? basically solid inflation but not overly hot, a central bank surgically cutting. that's positive for risk but not necessarily on the other side for bonds. neil: i think it probably may weigh on longer-term rates, obviously, but again, for the stock market, it's ultimately an environment where companies can make money, which will continue to help stock prices go higher. lisa: neil dutta of renaissance macro, thank you for being with us in the incredible phrase soft landing nirvana, which we keep using again and again, because it does so perfectly explain where we are in the moment where people are piling into bonds and that is supporting the equity market. we continue to see that support to equity valuations after economic data coming out in line with expectations. just to go through the numbers.

initial jobless claims came in at 218,000, bang on what people expected, an upward revision but no drama in terms of the prior month. continuing claims came in higher-than-expected. personal income and spending came in and line. personal spending higher. the pce deflator, one of the key indications that the fed looks at to understand where consumer prices are headed, came in just a tick below expectations, 3% year-over-year from the expected 3.1%, down from 3.4%. that bleeds into the market with bond yields basically going nowhere after an incredible rally, having been up about four basis points earlier. they have gone back to that now, 4.2955. s&p futures up .3%. we do still have michael mckee of bloomberg economics, our correspondent, our fearless fed correspondent. what i you looking at when you

parse through these numbers -- what are you looking at when you parse through these numbers? jon: mike: wages and salaries -- mike: wages and salaries in october are up just 1% after many months of .5% and .4%, so we are finally seeing a deceleration of that. standard caveat, one month does not make a trend, but this is what the fed has been expecting, so will be interesting to see if that continues, because a real drop was in private industries and manufacturing, areas where people get paid more money. those have fallen. manufacturing was flat and private industry is up just .1%. both were up .5% in prior months. lisa: is this basically the playbook? these are the first signs of a squeeze that then get carried out in more aggressive actions like cuts. is this sort of how it typically happens or is there still nothing typical about this cycle? mike: there is nothing typical about this cycle but if we are

going to go into that kind of environment, this is how it would begin. it does not necessarily mean we go down that slope all the way. for example, we have been talking quite a bit about whether or not americans have exhausted their pandemic savings. well, the savings rate went up in the last month to 3.8% from 3.7%, so there's still a lot of we don't know out there. lisa: that's a good way to say it, especially with real personal spending coming in higher-than-expected. coming up, someone who has been a long-term bond bull, made incredible returns during the era of zero rates, now facing off what he thinks is another bond market rally. lacey hunt at huizinga 10 investment management. ♪ ♪

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>> that was the ceo of market field asset management a bit ago as he pointed out what he sees as something more of a trader's market with equities hanging in there as we are not in some sort of recession. equities hanging in after a pretty amazing month, at least when it comes to benchmark returns, certainly in equities. the nasdaq, best returns since we saw earlier last year. s&p futures up, adding to the game we have seen of about 8% so far this month. this on the heels of a bond market rally that has been the biggest rally for u.s. debt going back for a month since 1985, which is the reason why i'm thrilled to speak with lacy hunt, executive vice president

and economist at hoisington investment company in the 54th year of his career, someone who made a name by understanding financial -- low rates based on low growth and low inflation, and who has some unique perspective on where we are now. great to have you on the show. what do you make of what we just saw for november, the biggest bond rally in u.s. debt going back for a month since 1985? lacy: i think it indicates that economic risks -- that economic risks on the downside have increased at a time when most americans are suffering hard times and, in the past, when this has happened, in basic economic theory, the bond market should rally. that is what happened. lisa: we're looking at hard times when it comes to anecdotes, the beige book, sentiment in certain quarters, not so much when it comes to spending. we got real spending that

surprised to the upside, an incredible black friday, record cyber monday sales, ongoing strength in the labor market. where do you see these signs of something that looks more like a hard landing then the soft landing nirvana we were just talking about with dutta? lacy: there's two equally important concepts in economics, what we spend and what we earn, and there's been a massive dispersion in the last four quarters. gross thomistic income is actually down in real terms -- gross domestic income is actually down in real terms whereas gdp is up. we have never had such a wide gap. we had a gap that was similar but not nearly as large in the third quarter of 2007. in the next quarter, we were in a recession. so there's an amazing discrepancy there. another discrepancy is we are

seeing gains in employment but the workweek is being shrunk. if you look at the hours of all persons working, it's declined over the last six months, as the workweek. if you look at how people respond to the outstanding university of michigan survey, they say they are absolutely wretched, and they should be, because for the most part, incomes have fallen badly, it in fact, the university of michigan readings have been below where we enter recessions over the postwar period. there are a lot of problems this economy faces. in addition to that, we have extremely restrictive monetary policy. and fiscal policy is in a nonsustainable situation. if one looks at monetary growth

on a 1, 2 and three year basis, we see the gains in 2020 and 2021 have been eradicated. contracting at 1% per annum over the last three years. in another totally contra- normal cyclical development, bank credit has declined over the past three years. that is totally abnormal because it is a lagging indicator. it typically does not do that until the economy gets into a recession. another monetary indicator is known as the >> cell effect -- is the effect named after a swedish economist that looks at the relationship between nominal growth and market rates. if you look at the average of income and spending, the effect

is the market rate is 100 basis points over the natural rate. lisa: you're talking about a lot of things that i want to unpack. so i apologize for cutting in here, but there's a question here about, when you talk about the fiscal picture and how it feels unsustainable, and then you are talking about restrictive monetary policy, is it clear that the trajectory is back down to a 10-year yield below 2% or below 3% or is the 10-year yield that much more confusing because of the conflicting signals from both monetary policy and a fiscal policy that faces off with a whole host of bond issuance? lacy: i think that interest rates are lagging. i think money supply growth -- i think the trends in these

various critical -- the financial cycle leads the business cycle and the business cycle leads the labor and price cycle. and this is a sequence that's been well worn out over time -- wellborn out over time. the financial cycle peaked in the fourth quarter of 2021. the normal lag is five to nine quarters. that is where we are now, the eighth quarter. these monetary effects are profound. fiscal policy is also nonsustainable. he said that recently and he should. we have created a situation now where our net national saving is negative. the government budget deficit is greater than savings. in fact, we experienced the third consecutive quarter of negative net national savings. without saving, you are not in a position to have investment. without investment, you are not

able to effectuate an increase in the capital stock. without an increase in capital stock, you cannot raise the standard of living. the economy has cyclical and secular problems. lisa: i'm curious what your new projection is, how much further you think the rally has to go that we experienced this month? lacy: we are not in a position to give you an individual rate but we expect substantial declines in rates over the next several years. lisa: do you think this will come on inflation going substantially lower, going back to the same kind of inflation we saw before the pandemic? lacy: one of the very interesting things is that this year we have experienced nearly 600 basis points of decline in the inflation rate while the economy was still expanding, at least in gdp terms. that does not happen. it has done this in the past but

never when gdp is rising. if we get any type of mild recession, if you look at the average inflation rate since the recessions since the 1950's, it averages 1.3%. there's a lot of restraint in the system. restraint is moving into the system even in november. the federal reserve has liquidated $60 billion worth of permanent reserves. we are seeing now a nominal decline in commercial and industrial longs and other critical lending categories. this is an indication that restraint is moving through the system and these have effects, especially in a time when many people are doing poorly. lisa: lacy hunt, thank you for being with us. lacy hunt of hoisington investment company, his 54th year in the bond market at a time when people are wondering how much can this continue to rally? the best, biggest u.s. bond market rally going back to 1985,

at a time when people are talking about rate cuts and what is next for an economy that's been highly uncertain. in markets, we can see a lift to equities as we head into the final trading day of november of 2023, of about .25%. 4570, amazing that would have been a year end target for 2024 for many people if they wrote their outlooks in november. a bit of euro weakness after a weaker than expected european inflation data, looking at the possibility of getting ecb rate cuts earlier in the year and throughout the next year. 10-year yield's creeping a bit higher, up almost six basis points, 4.3 109%, still lower from some of the recent highs. coming up, lisa shalett of morgan stanley as we get through -- get you through this day. ♪

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it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved

and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. jonathan: equity futures are up. the countdowns in the open right now. >> this is bloomberg the open with jonathan ferro. jonathan: coming up, stocks and bonds closing out the best month of the year. saudi arabia pushing opec