>> there is a real risk the fed is falling behind the curve. >> they are watching with the rearview mirror. >> the loosening suggests there is a possibility for overshooting. >> it's about next year and the year after. >> it's not just we don't know what the destination is, we don't know what the journey is. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. >> live from new york city this morning, good morning for audience worldwide, bloomberg surveillance starts now. your scores look like this. equity futures on the s&p 500

just about positive coming into monday on a five-day winning streak on the s&p 500 after posting the best week of the year after posting the worst week of the year. this market's been all over the place going into a major week of finely balanced federal reserve decision this wednesday. it could go one way or the other. >> basically last week risk assets got what they wanted a greater chance of a 50 basis point rate cut without potential pain in the market, in the economy and that has led to this surge with two-year yields lowest since 2022. a deep emphasis on the retail sales considering the fact this could tip the balance. the last data point of major economic data for that key knife's edge 50 basis points on wednesday. >> a real feeling they could tell things one way or the other. 25 basis points, andrew at 25 versus 50, the cut remains a

close call. lisa: deutsche bank leaning into the point you were making last week, which is how much will it matter the exact pace of cuts tomorrow or next week considering the fact ultimately matters if they signal 50 basis points after that if they cut by 25 basis points they would except a median of 75 basis points this year. if they cut by 50 that ratchets up the chance of 100 basis points of cuts or more for the entirety of this year. >> we have a chest we get some forecast in the news conference as well. that news conference will be a big deal. to call this a chaotic election i think is the understatement of the year. take another turn over the weekend. gun fire on donald trump's palm beach golf course. sunday afternoon. another shocking turn of events. bobby: the fbi sank -- and re-: the fbi saying this is an

attempt at assassination on the president in more than two months and the questions now will be about is the secret service doing enough, is there enough protection around the former president who is the candidate on the republican side. this is what the sheriff had to say. if trump was the sitting president we would have this entire golf course surrounded. what did happen is the secret service individual was almost an advance team, he was ahead of trump and saw the but of the rifle coming through the bushes and that's how they were able to then chase this man down who was fleeing, apprehend him and in a neighboring county but a lot of questions about how potentially this may change the course of this protection as we head towards november 5. >> what exactly was the motivation was on a man who has been apprehended but a real question what else can happen. this is dan rees point about how tumultuous is election season to call that the most understated

comments of the year can't really imagine much else. jonathan: welcome to the program. a snapshot across asset for you. equity futures on the s&p 500 just about positive in the bond market unchanged on the 10 year. in the fx market the euro bit stronger. the dollar near the lowest in a year and dollar-yen making a below 140 just briefly for the first time in 2024. >> it comes as the long positioning on the japanese yen rose to the most back to 2016. talk about a whipsaw in position. we saw the short position just completely dominant and all of a sudden now overwhelmingly raising the prospect of the potential dollar weakness heading into the election and the rate cuts as well is versus some of these. >> coming up this hour we catch up with rob casey of cigna global advisors following a

second assassination attempt former president trump. lori calvo seen of rbc capital markets after stocks posted the strongest week of the year, ahead of the fed's big decision later this week. we begin with our top story, former president trump is safe after with the fbi's calling and apparent assassination attempt. secret service opening fire at a man with an assault rifle in west palm beach just yesterday. into the market the second attempt by their public and presents a candidates life in only two months. jeff fitzpatrick joins us for more. what's the latest this morning. >> first the basics, a number of statements from congressional leaders, present buying an vice president harris saying political violence is wrong, at the very least there are the usual expected statements on that front. after that there's plenty of work to do at this point. there's plenty of scrutiny on the secret service because of

the july assassination attempt on former president trump and that will only be ramped up, there's a bipartisan task force in congress created to investigate what happened in july, they have called for further investigations into this event, the build to give a budget to the secret service had already been delayed as senators looked into if they need more resources for the secret service or if it's just a matter of oversight and accountability. this will likely complicate the efforts to determine if they need more resources or if something needs to change organizationally and of course there is the question of how this affects the campaign which is very unpredictable and we look to july, it was only eight days later despite the spotlight on the assassination attempt in july eight days later the president biden said he would no longer be the nominee so it's difficult to predict exactly

what will even be talking about a week or so from now on a chaotic campaign trail but there is work to be done in terms of scrutinizing the secret service on capitol hill. annmarie: they created that bipartisan task force after the first assassination attempt on the former president. what can we expect from that task force now? >> first, the secret service director at the time stepped down and so we are past the point of simple accountability. as i mentioned, there are questions about if the secret service needs more resources in the short-term, more money and more people on the ground, they said to senators in a letter just last week that the issues in july, the failures in july were not because of a shortage of resources, so again there's going to be a short-term and long-term look at what needs to change at the secret service, but the question if there was a

shortage of ability on the ground was answered with a no. this can be a lot of scrutiny on capitol hill and demands for answers, this is an agency that initially last week had said they have enough resources to do their job. jonathan: appreciate the update, any more details when we get them we will bring them to you. let's bring this conversation. rob, good morning to you. another most tragic event over the weekend. two very lucky escapes for the former president. does this change anything at all? >> i don't think it changes a whole lot. certainly not as much of the first assassination attempt were we saw photo after photo of donald trump bleeding and standing raising his fists. i think it points to the fact the tovar surprise could be an example of political violence. annmarie: does trump need to change how he campaigns now? >> maybe we will see him play a little bit less golf but probably not. as the sitting president he

liked to travel to his golf courses. as a candidate he's done the same thing. how he campaigns i think this really only plays to his advantage. we are all grateful he is safe. up to that point where he's not safe this rows up his base and ensures republicans will turn out in november. annmarie: they are still investigating what happened two months ago. how quickly can congress move on this protection. we heard from the palm beach county sheriff saying it was the sitting president potentially would be a bigger perimeter around west palm beach golf course. >> it's not really up to congress how good trump's protection is, a question of the secret service. present buying them vice president harris of shortness over the weekend drums protection is good, as much as needs to have. but that being said i wouldn't be surprised if they beefed it up pretty close to essentially what is sitting president receives.

i'll trump is not the sitting president but is six weeks away from potentially being reelected so i would not be surprised if president biden frankly came out and said we will give donald trump more. >> you said the october surprise we may see could be an act of political violence, what makes you say that? >> we seem to attempts on former president trump's life. the second is our country is horribly divided and i think to a certain extent politics or playing into that and will in november. trump and vice candidate jd vance talking about these illegal immigrants and in ohio, haitians eating dogs and cats of that nature. but it's rhetoric like that that i think frankly could incite this violence is so hard to defend against. >> has there ever been a time where any other election cycle

that you can think of at this type of risk versus a new and heightened risk that requires a different type of security and campaigning. >> in the modern american era we haven't seen in attempted assassination's like this in my lifetime. going back to the civil war to see when our country was most divided. and the hope is the secret service is able to protect obsolete the sitting president, they are doing their best and it's important to say none of these attempted assassination's of been successful. the first one was very close and very scary. the second one not so much. jonathan: the first time we have the biden campaign and the criticism of the time was it was a one-dimensional campaign centered around characterizing trump as an existential threat to democracy. there's a lot of criticism about that in july. does the harris campaign have

enough facets to it that they're not relying on the single issue. that they can back away from talking about this more. >> the issue with the question of democracy is a campaign issue is 100% of are worried about it. republicans are worried about how democrats look at democracy, so the first attempted assassination against donald trump we are not really sure, who knows. the motives of that remain unclear. but as a question of can harris campaign do more, they better. i'm not sure if they will win on just the single question of democracy. there's more messaging around middle-class economy, opportunity economy than we saw from biden. so harris is doing more. i think she has to do more to win. jonathan: talk about her address on the u.s. economy. we saw that interview over the weekend. some very simple questions that weren't really answered. what is the opportunity economy?

what are the policies behind it. >> the housing policies she wants to highlight first and foremost. after that it falls off. what's important about these policies and what many of us know is not a lot will get through congress so it's not as if she can promise huge reforms or changes. if she sits and wins the election she is very likely going to have a divided congress. i would agree the interview on friday, i think it's probably why we haven't seen her do a whole lot of interviews and we probably won't see her do a lot of interviews between now and november. on the one hand she's a candidate who absently turns out the base, on the other hand they want to do their best to insulate her and maintain the momentum they have. certainly that she won the debate on tuesday night. >> base case for you and the team does remain the same. >> 65% chance of harris win. with the divided government per

the senate goes red and the house goes blue. >> good to see you, thank you sir. rob casey of cigna global advisors. if you just joining us, equity futures totally unchanged. let's take the opportunity to get you an update on stories elsewhere with your bloomberg brief. >> the israeli prime minister benjamin netanyahu is warning a who the militant group that there will be a heavy price after hypersonic missile landed over the weekend. evading interception by israeli and u.s. forces. no deaths were reported but it marks a setback for israel's air defense system. a string of misses from economic data out of china. especially industrial production. the calls continued to mount for chinese authorities to increase stimulus if they want to hit their 5% growth target. the pboc has indicated there's more monetary easing ahead. oldman ,citi and morgan stanley

have downgraded their forecast for china this year. boeing's credit is at risk of being cut to junk by moody's. on friday the ratings agency placed the plane maker on review for a downgrade. boeing has been bleeding cash after paring back outlet following that near catastrophic air alaska event. moody's announcement comes as workers strike further and that threatens production cash flow. jonathan: more and about 30 minutes time. betting big on big rate cuts. >> as we see more loose confidential conditions that's got to be helpful for equities broadly. jonathan: that conversation around the corner. good morning. ♪

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streak on the s&p 500 the longest since the middle of august pretty close that on friday. this morning we look like this just by positive on the s&p. the op performance on the russell, the small caps last week a gain of 4.36%. a nice week of gains on the week last week. under surveillance, betting big on big rate cuts. >> the point is we are starting on a journey. as we start to see more loosening of financial conditions. assuming we don't have a recession, slightly higher than that. jonathan: stocks off the back of the best week of the year as investors gear up for the fed's big decision on wednesday. the central bank expected to cut rates by 25 basis points with some preparing for a larger 50 basis point move. lori calvo seen a joins us for more. and of the house he was 25.

welcome to the program. how vulnerable like the small caps are? >> i think it's a great question and we were watching the small caps surge on friday as the renewed optimism around the 50 basis point cut came up as well. i think small caps have a lot going for them but the reality is valuations are full and positioning is also full. they looked cheap. and now we have a lot of fed optimism baked in. in the short term at least it for think about the week ahead i do worry a bit if we get the 25 rather than the 50 propelled small caps to these rate heights on friday that there could be a bit of a reversion in the small caps. we really have sort of one of the fast money crowds from driving that trade right now. if you look at the flows into small-cap they have been passenger driven and that passive money tends to be very fickle. you've a nuanced view with

respect to not only how much the fed cuts would also the economic data behind it to keep this going. there was this feeling the fed was on track to cut by 50 basis points without real pain visible u.s. economy. how much is any kind of weakening even if not a recession, the bear case right now for small caps question mark lori: the small caps need this to be threaded. if you go back and look at past cutting cycles, small caps do well and embark on a longer-term performance cycle. if you get a recession, it small-cap 101 to say you smell -- you spell them and you tend to see that pivot midway through. if we do not get that, i do think it depends on what kind of growth we get and if you look at the other side of the equation we do need a hot economy above average gdp for small caps to really keep going if you look at the trading data since 2015 or 2016. if we are just, i think it comes

down to what do you mean by soft landing. something like 1.5% type gdp growth. i don't think that quite cuts it for small-cap i think you need something more like 2.5 to 3%. >> you say you remain neutral and the s&p 500 as we get closer to the year-end target. you talk about sentiment, can you explain why investors sentiment is a red flag. lori: if you look at net bullishness i think that's the best barometer. it's been doing the best job in the last few years: short-term inflections in the market and it's flirting with danger, it's been kind of hovering around at one standard deviation mark poking above it on certain weeks but not quite on the four-week average and that similar to what we saw in july and what we saw in august of last year. if you look at cftc data which will be more of an institutional look, that data makes new highs

and that's above levels we were at in early 2018 and early 2023 covid and it's well above the highs we've seen marked the peak in that post-covid era. positioning is not the only thing that drives stocks. we can stay overbought -- we can stay overbought for quite some time. it tells me we are not really sitting here we can absorb any kind of bad news easily. those are just those free, keep me up at night. >> d.c. connection from a trump win in small caps rallying. >> it is a great question. if we look back to 2023, 2024, we really just haven't seen that linkage trump is doing well in the betting markets in small caps are outperforming and seeing trump more closely aligned with large caps and growth. things are starting to change there. i would say we will have to watch the data. one of the things we mentioned in our piece is if the harris

corporate tax increases raising the rate from 21% to 28% we will go through. i don't think it's negative signal for small caps. if you go back to the 2016, 2017 small caps were one of the big beneficiaries of the rate cut and that's not just to simply say the historical playbook flips on its head. we have to go back to the why and what we found was small caps were more direct payers of the headline rate. they had a tougher time managing their taxes lower than large-cap companies did. that issue may come up if we see harris win and those corporate tax hikes are on the table. that really only happens in a democratic sweep scenario which is not our base case. lisa: -- annmarie: i saw you a trump economic speech in new york city, what big questions are still missing as you think about and put these into your models? lori: i think it is really parliament area for both candidates. they have both taken some heat for lack of detail, maybe my

expectations are just low all around. i'm really just looking for kernels of where they are leaning and what their wish lists are, what their impulses are. i think when i looked going forward i think may be on the tax aside for corporate taxes we have more clarity on the harris side. i left the speech confused about what exactly trump wants to do in terms of further tax cuts, to domestic production, i don't know how that shakes out in the s&p 500. we've a lot of companies producing things overseas. what i'm looking at my earnings model to just bake in a 15% corporate tax rate. i think it's much more complicated than that. jonathan: thank you, lori calvo see no. it feels like we are staring at the sun. november 7, allies it so important.

looking to believe that we look at september 18 is the relatively easy decision. november 7 is the next after this week. ideas of politics and policy of 2025. could be quite challenging. lisa: what is the policy can it be if they have to pass legislation. how can they extrapolate out some of the promised proposals versus what's in a come to pass and how politically motivated are they accused of being if they move in accordance to what they expect may or may not happen with respect to inflationary or deficit increasing in 2025. annmarie: the composition and the backroom dealings when it comes to tax cuts trying to get them through what will they allow intentionally to just sunset when it comes to the former president's tax cuts, but then if you look at the white house and whether or not it's trump or harris, the fed will have more answers on tariffs and whether or not they will be used

potentially as a carrot and stick approach or will they be almost immediately walls up which is inflationary. jonathan: adam things we need to get ahead of this conversation. a big week ahead third coming up next, nina richardson saying don't take disinflation for granted. but conversation around the corner on the s&p 500 we are basically unchanged the s&p 500. best weekly performance so far on the s&p 500 this is bloomberg. ♪

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jonathan: quiet start to a big week ahead. good morning to you all. equity futures turning negative just a touch on the s&p. the small caps up at 0.6%, the run of gains on the s&p impressive, five days of gains on the s&p 500. best week of gains so far in 2024. lisa: it was driven by the big tech names, it wasn't just small caps, it was everything pretty the best weekly performance for this year for the s&p and nasdaq. banking on a 50 basis point rate cut for the right reason which is the feds will do the right thing according to one luminary

on wall street because ultimately it doesn't seem like there was real weakness behind the feds seeming shift or the markets perceived sense of the fed shift with respect to how big the rate cutting will be on wednesday. >> doing the right thing on wall street, that's doing the right thing on wall street. lisa: is that what you're saying about michael at jp morgan? jonathan: suggesting if your forecasting 50 probably believe 50 is the right thing. lisa: i'm going to deflect completely. in an editorial on this talking about how it's the right thing to do a time when the baseline rate is too high for the overall economy. the question will be how much more does the market move if they do go by 50. is that can be effectuating some kind of 150 basis points of rate cuts for 2024 if you go by 50 on wednesday. jonathan: it felt like the everything rally. ally financial there feels a lifetime ago.

given again it had to close out friday. lisa: if you take a look at some of the other lenders in a similar sphere they didn't see the same kind of selloff. it seemed like the market view them as an outlier with respect to its risks and didn't give guidance in terms of how much they specked us to increase. people saying consumers. >> let's switch over the board and turn on the bonds. the front-end the market, the two year yield was down last week by around six basis points. the climbing given we already have hot cpi and ppi indecent jobless claims. kind of surprising it was a bit of a front end which i think speaks to the bias by in this bond market. lisa: are you suggesting people were baking and rate cuts without necessarily economic data to justify it? jonathan: i might be knocking on the door of that suggestion. lisa: essentially you are

correct, we saw the lowest rates going back 2022. entirely because people said of basically a regurgitation of some point in the wall street journal and financial times that hinted it may be this being an active conversation about a 50 basis point cut on wednesday. the bottom line is it has to do with the projections out. i want to lean on what deutsche bank is saying. it doesn't matter as much 25 or 50 it matters the trajectory and the dot plot we will talk more about that and some of the guidance in the press conference. jonathan: how wide the range is on the fomc. dollar-yen broke 140 for the first time this year. dollar-yen down to 140 flat, so some japanese yen strength on the screen. there some euro strength on the screen. lisa: how much is this baking

and a 50 basis point cut adding to this dollar weakness. how much is it that you have a japanese economy moving in the opposite direction, of the bank of japan on deck potentially on friday to hike rates again. but they are to again. are we at peak dollar weakness for the moment or do we see more . note after note dollar weakness is probably knocking to be that much more pronounced but it might be the gradual trend going forward. jonathan: under surveillance this morning, the fbi investigating a second apparent assassination on former president trump. secret service agents opening fire at men with an assault rifle just yesterday. suspect identified is in custody. donald trump is safe and unharmed. annmarie: we would be having a very different conversation today if that secret service agent inside the golf course did not see this rifle poking through the fence. what kind of conversation we be having.

this individual about 300 500 yards away paid its coming into focus is how to protect the former president given this is the second assassination attempt on his life. the fbi is involved. what came into thorpe -- focus is the palm beach county sheriff's said potentially the parameter by which the secret service has in terms of protecting the president would be bigger. joe biden saying he wants to give every protection and precaution necessary. jonathan: we will be in touch with the takedown of washington all morning. any updates we will share them with you. jeffries sang possible volkswagen plant closures could pave the way for 15,000 job cuts bring the could close production facilities without needing approval from the supervisory board leading to possible revisions in the fourth quarter. this is going to the analysts over jeffries. lisa: heightening concern in the

german manufacturing sector. you increasing pressure from chinese manufacturers. i spent some time with mario draghi's memo in this idea he wants europe to embrace a u.s. type of model in order to avoid some sort of stagflation stagnation. the difficulty in that with all the red tape and pushback that we've got, what is the logical outcome if they cannot. that's what you see a lot of these automakers struggling with. annmarie: how much is the negotiating tool. jeffries citing comments from vw made during a roadshow. units should feel pressure for new agreements while vw will be in a position to force layoffs are potentially the springs more people to the board because we know the union is on the supervisory board. >> a lot of excess capacity and how that gets resolved and reconciled over the next year or so could be pretty brutal. investors preparing for a week

ahead with the fed taking center stage on wednesday. fresh economic data in the pipeline with retail sales tomorrow and jobless claims on thursday. writing it would be easy to ignore the incoming news this week compared to wednesday's federal reserve vote on interest rates. even with a fed meeting on the calendar there will be much more important data news to watch. good morning to you. let's start beyond the federal reserve decision. dobler's claims thursday, a retail sales tomorrow morning. what are you looking for? >> what's unique about this potential cutting cycle. the fed hiked rates 11 times so this could be a really long game. it's not just a one and done move and we don't know how long it will take but it is going to depend on the strength of the consumer. when you look at retail sales and consumer spending, the bulk of the economy. if the consumer still holding on

what that means is the fed will be heading to the good economy. and we don't have a lot of benchmarks for what that looks like. jonathan: how would you characterize where the economy is at. looking at the levels and how important the changes but the levels are still pretty decent. jobless claims in and around 230. some of the consumer facing companies we been warning about a weaker consumer, a an example of that. how are you seeing things? nela: if the fed was in this economy 15 years ago i think we would have a different conversation. this is a pretty good economy. yes there are some things to be concerned about. i'm concerned in the jobs market about how segmented the concentration of hiring is and how weak manufacturing is, for the consumer side i'm concerned about the low savings rate, a very much much lower than historical averages and concerned about housing in this economy because it's a driver of inflation. when you look at the jobless

claims that come out on thursday i think what you will see is pretty moderate low levels of initial jobless claims signal layoffs. what we are not seeing is big job losses. that's unique in a fed rate cutting cycle. lisa: some might argue that a lagging indicator and we don't see the indicators until it's too late to act. it is one of the big argument why doing the right thing means cutting 50 basis points on wednesday. the note of caution in your recent writings is household wealth as well as housing prices and how that indicates a very different consumer in terms of resilience than some of these other weakening data points people .2. why is that? nela: the criticism of the fed is they always act too late. in other times we have seen this huge increase in home equity and we have homeowners sitting on record levels of home equity because of rock-bottom mortgage

rates before the pandemic and superhigh house prices. that's immediately driving a big explosion in household wealth. in previous times when equity was high but households did was they tap that equity out and went on vacations, paid off student loan debt, they did all of these things could leads to more consumer spending and gives a pop to the economy. will they do those again when mortgage rates come down when it's less costly to refinance. you are sitting on a lot of wealth. that can be an atm for futures especially savings rates are down. housing markets are easier to tap into than stock market wealth, more households have access to housing wealth. homeownership is around 65% in this country means a lot of people are sitting on some money and the may want to access that to fund their spending purchases. lisa: some people might argue it's already priced in more than 50 basis points of rate cuts and

what you see in the benchmark rates that are the borrowing costs, of the pegs to a lot of borrowing costs for consumers currently they already reflect that so why not just do it and allow things to evolve from here. do you see real reflationary type of pressure building in markets which nela: pushback. nela:one comment during the jackson hole meetings that may be ignored this week is president harker -- the comment that the fed needs to commit. it's about the commitment that they illustrate over the next several months. if they commit to a moderate rate cutting cycle i think that will give some ease in terms of the markets ability to project the next move. if it seems that we will be data-dependent we will watch each month. next month of the month after, maybe we pause. if there someone certain to think that will cause a gyration print -- gyration.

annmarie: you point to housing a menu look at kamala harris's housing plan, how inflationary are potential policies like that? nela: i do not think they move the needle. the demographics are behind the housing tailwind. if you look at the demographics in this country, gen z, millennials wreaking peach home -- peak homebuying age. you don't have to amplify demand. what there is lacking is supplied. that's the issue so you have to have that housing plan, i think there's been some good plans but both meat supply and demand but without inventory increases we are not going to solve this issue of very low vacancy rates. we are at half the historical rate of vacancies, a .8% of all housing is unoccupied. that is super low it means housing will continue to put pressure on prices and

inflation. annmarie: you can get the subsidy quicker potentially than there actually would be nela:. nela:house prices are really high. they are unaffordable for many people. and they are unaffordable because of high mortgage rates we might get some relief on there. they are unaffordable because people cannot save because housing costs are so high so you need a down payment that might be helped by a little bit of money coming their way in terms of a down payment and they are unaffordable. the big reason is because of inventory. that's the big picture solution that has to be solved. jonathan: 25 or 50? nela: i think it is 25. i know, it is controversial i think it is 25. jonathan: 25 being controversial is something this just in from bill dudley, the fed should go big now and i think it will.

lisa: this follows some of his previous comments. he said there is two objectives to the fed's mandate, a price stability and maximum sustainable employment since they may have come much closer to balance it suggest a neutral benchmark rate at the federal reserve. therefore it matters getting there quickly to try and stave off any increase in unemployment and said the goal is to give a better sense of the destination rather than the pace and if you move quickly and you get there quickly that will actually have a much more beneficial kind of effect on the overall economy. jonathan: we will keep returning to that on bloomberg pinion we will come back to that about five minutes time. eckley futures on the s&p 500 just about unchanged. your bloomberg brief, here is dani burger. nela: donald trump is reportedly -- dani: donald trump is a portly safe and well after a second potential assassination attempt. taking a 50-year-old man into

custody in west palm beach florida. secret service agents -- spotted a rifle barrel sticking out of the fence about 400 yards away from the former president who was playing golf at the time. u.s. and british officials are increasingly concerned that russia is supplying iran with nuclear weapons technology. western officials told bloomberg they fear the kremlin is treating -- trading nuclear secrets in exchange for ballistic missiles to be used in its war with ukraine. president biden is set to meet with ukrainian president vladimir zelenskyy at the yuan general assembly to discuss his strategy ahead of the u.s. election. disney and directv have reached contracts the will restore customers access to disney owned networks likes espn -- like espn and abc. they also secured rights to offer a skinnier package of channels for fans of sports, entertainment and kids programming. the channels have been dark since september 1 for roughly 11 million directv subscribers

during those negotiations. jonathan: more and about 30 minutes time. up next, testing dollar dominance. >> much of the world would like to get away from the dollar it's a curious phenomenon with the dollar very dominant in all these respects. jonathan: you are watching bloomberg tv. ♪

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...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management. jonathan: just about unchanged on the s&p. best week of gains on the s&p 500 this year just last week. so the same move on the russell pretty decent week of gains as well on the russell. big tech participating. we mentioned this a couple of times financials i think maybe in a weak spot yesterday -- last

week. in conference season. lisa: the one-two punch under pressure at with questions run consumer credit worthiness. this difficult scenario this hard to reckon -- reconcile otherwise cyclical seem to be positive. jonathan: signals from the broad market and broader economy. looking at jobless claims exclusively. getting those interest rate reductions. bond yields down just a touch and the tenure the moment. under surveillance this morning testing dollar dominance. >> it will be a difficult shift given the dominance of the dollar. every dimension is a medium of exchange and a reserve currency now much of the world would like to get away from the dollar but we are seeing this curious phenomenon where the dollar remains dominant and i think we will end up in a system where

the dollar is still the most dominant perhaps less dominant than it is now and there's a lot more fragmentation which means is no serious rival to the dollar. >> the u.s. dollar fall into its weakest level in a year. gearing up for a trio central bank decisions from the fed, boe and boj. writing the dollar typically weakens at a fed cycles. the move has already been chunky by historical standards. we are still at a stage were bound feel the dollar weakness are likely to large part of the move is probably behind us. scarlet let's pick up on that last line. what he think the bigger chunk of the move might already be behind us. >> the first is shifting massively. we've gone max being oldish long dollar to max bearish dollar. it ticked up a little bit but that sentiment is still certainly bearish. the other reasonable give you his previous historic easing

cycles, we do get dollar weakness of the first cut. after the first cut the market realizes it's a hard landing and that supports the dollar. or it's a growth scare and not as bad as was originally thought. that means you have the growth still strong and that can lead positively to the dollar as well. the soft landings, overestimates how much the fed actually delivers. there's too much dovishness priced in the u.s.. lisa: let's put aside the question that's raised. about what's the alternative, a much could the other whether it's bank japan hike on friday with more hikes indicated later on or potentially some sort of action from the bank of england that is less than people expected. the other side of the trait, how much does that send more dollar weakness. skylar: from a growth

perspective certainly on the other side of the break -- trade. thinking about the u.s. and china the u.s. is the only one that's really chugging along right now. it's not happening in europe, or the u.k. and is not feeding into commodities, i think of the interest rate and the big difference between the u.s. and europe is in giving more priced in the u.s.. i think the issue is because there is that differential, even if you expect more from the u.s. you need a closing of that gap in terms of more dovishness priced in. so we argan a c less from these banks in terms of these are meeting for the bank of england is not likely to cut, with the bank of japan is likely to stay on hold because they're assessing what happened after the hike but the growth backdrop isn't meant or it's not pro having a divergent policy to the

extent the market prices. i think certainly for the dollar it will be binary for this week in terms of the market pricing may be 50 to cut this rapid shift from the data indicating it should be 25 basis point cut to kind of commentary and news saying maybe to the 50 basis points and that means we get to this meeting if a binary reaction where the dollar sells off and of its when he five basis points the dollar rallies. beyond that point more medium-term matters for the landing that it is and that's the overarching theme we are talking about in terms of we think we get to a 4% terminal rate the markets priced in under 3%. it's very hard to price more than that. then you think you're going below neutral into easing territory and that indicates your thinking about a recession which also be dollar positive. it certain matters of the price action the coming weeks and

nothing more medium-term >> obviously everyone is focused on what the fed does but after that and the politics come into focus. what do you make of trump talking about debasing the u.s. dollar? >> trump's call for a weaker dollar but most of the policies are actually dollar supportive. we think the cost of weakening the dollar would be too high. in terms of alley could, there are options, their avenues you can point to fiscal consolidation. it could be eroding and fed independence or you could do direct intervention. on fiscal there's very little political appetite, on monetary policy i think their institutional checks and make it less likely but i think we would also say keeping monetary policy unnecessarily loose would spur inflation select brings down an unpopular option. i think multilateral intervention seem unlikely because you have dollar

counterparts unlikely to take the expert hit from a stronger currency. you look at the direction historically it's not done very well. but it would probably also have treasury selling which again is not something they want to do is an option. so any option you could take to weaken the dollar thing is unlikely is too high a bar to pay. >> scarlet montgomery there, normalizing interest rates on pace of this. trying to understand policy is a most impossible. growth differentials and rebalancing growth differentials the key point skyler is making there. maybe it changes in fiscal policy, don't know. in europe there's nothing convincing happening right there. facing the very real chance they have to face what we went through in 2022 in this country with technology but in 2025 they have to do with autos. if they go through some kind of auto recession. we see that excess capacity get

cut. the outlook for europe is not great at all. lisa: the argument about debasing the dollar is a dramatic way of central banks moving from the currency have fallen hollow because what is the alternative to take its place great people could go to gold, but the reality is a major currency, hard to see. jonathan: dollar weakness again on the page. on the s&p 500. let's call it unchanged. we've a federal reserve decision on wednesday. we retail sales tomorrow morning. jobless claims on thursday to look forward to. terry haines of pangaea policy, like a harrigan and krishna of lafayette college. good morning. ♪

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>> it is almost a certainty at this point that we will get three cuts. >> by the end of this year, we will probably see 200 basis points. >> at the cycle begins to ease, that will take pressure off. >> the risk is the market will say do you know -- what do you know that i don't? >> this is bloomberg

surveillance. jonathan: the second hour of bloomberg surveillance starts now. a five-day climb on the s&p 500. equity futures just about unchanged going into a massive week ahead. leaving behind the best week of the year and looking ahead to wednesday. it is a three-part decision. could this's -- lisa: could this tip the scales? last week i would have said absently not. this is going to tip the balance because we have been settled of whether the weakness is enough for the fed to cut. i keep going back to the former new york fed president, where he makes the argument for a 50 basis point rate cut. annmarie: he talks about the

logic of supporting a 50 point base cut. what we are sticking with -- they will do the right thing and cut 50 basis points. jonathan: everyone has something to say on this decision. steve major had this to say for all the talk around the federal reserve decision wednesday and whether it will be 25 or 50. we really need to know whether the rate will settle in a year or so. you have talked about this. what is the destination here? lisa: i'm talking about federal reserve officials. if they do not want to talk about the neutral rate, how do they speak about a destination when they have not gotten clarity on what this current economy is? are they just going to declare victory over the longer-term and say this is a non-a flu -- not inflationary economy? or are they going to say the neutral rate is 3.5%?

jonathan: could you imagine offering no forward guidance? lisa: that would not work. that is what people are saying. they need to provide guidance. so why not go 50 basis points and just to say we are going to cut by 100 basis points unless there is some big shock and frontload it to get there more quickly and that gets head of arguments that might say if you really thought the destination was 100 basis points lower, why not cut now? jonathan: 25 or 50, you will have plenty of arguments. equity futures just about unchanged and bond market yields going nowhere. the dollar going somewhere, and that is south, the weakest u.s. dollar of the year so far. earlier in the session, a brief break for the first time in 2024. lisa: the net longs from cmt see

futures have gone to the highest level on the japanese yen going back to 2016. to me, the whipsaw is shocking. we went from a massive short position to suddenly the biggest long position since 2016. this is a market that is position driven. you have to wonder how much this creates these whipsaw's that do not create clarity. jonathan: coming up, a warning for big tech. michael harrigan on the foiled assassination attempt on former president donald trump. we begin with the big issue on wall street, u.s. stocks looking to add to the best week of the year. the fed will kick off the easing cycle. we have made underweight information technology despite arguments. the concentration risk introduces the risk of passive

selling, pressuring mega cap names. good to see you. 25 or 50, what is the house view? savita: house view, 25. we are all knowledge and there is risks of 50. our view is the terminal rate settles around 325, 350. that is what we are tethering our market expectations to, the idea that rates are going down but not to the lows we saw pre-pandemic. so we are not going back to that disinflationary environment where you have zero interest rates forever and that puts pressure on tech and areas of the market that are still very crowded. jonathan: so what should be more doubted? savita: i think you want to be in a safe dividends. i know this is the most boring call, but sometimes boring is good and when you think about where we are today amount we are in an environment where short

rates are coming down. think about all the money that is moved into money market accounts, retirees looking for investment they can live off of as the fed cuts to wherever they settle. that income goes away, but inflation remains high. retirees need real yield and where we see that is in utilities, financials, real estate, areas that might not seem safe but today i think are higher quality than they have been. lisa: how did you make that argument when we were seeing in the baking -- banking sector some difficulties? savita: the banks are always taking a hit for anything that is going on that seems bad in the world. the yield curve is steepening. you have the fed telling us their next move is a cut rather than a hike. we have an environment where financial services companies have levers to cut costs. i think generative ai is a big

transformation story for financial services. i expect to be replaced by a bot or process. this is an area where we have not seen efficiency gains in a long time and we are now at a point where maybe we are at peak regulation, at least for the big banks. we have this new tool that allows us to analyze reams of data quickly without having junior analysts sit around overnight. i think this is a transformation for the sector, so are arguments for financials besides the fact that the big banks are the only area left to lend. if all these politicians want to the economy to keep going, who is left to lend? private sector is starting to show signs of fraying. regional starting to fray. the only area in the u.s. economy that is left to lend are the larger regulated banks. jonathan: do not replace savita

with a bot. is that what you're expecting? i hope that does not happen. lisa: how many floor people are they going to end up handing? push a bank put basically the wall street journal and financial times articles in and it spit out what the bias was in terms of fed forecasting but it gives a sense of how much banks are doing with it. how much do you expect staff to shrink over the next couple years? savita: i think it is a good thing. we are always -- we are all going to be more productive, but i think, like any technology places some jobs but creates new jobs and it is exciting. when i look at the labor to sales ratio of financial services, it has only gotten worse. every other sector has gotten more labor light. i think this is an area that is ripe for cost-cutting cutting

and efficiency gains. i think real estate is an interesting area of the market. we have dividends. we have income. my dad used to own rates. now he owns mega cap tech. i think we are going back to an environment where retirees own rates and utilities. that is not one of the core holdings of the average retiree's fund at this point. lisa: you have not mentioned energy. savita: energy i worry about a little. we are heading into an election where the outcome could be different in terms of supply, oil supply. when you look to free cash flow, it has started to creep up and i think we are in an environment where we want to be buying takers rather than spenders. that is one of the areas where we are seeing free cash flow come down a bit.

we are seeing earnings revisions. our energy team is more negative on oil prices over the next 12 months because of supply and demand, so there is an argument to be made that it is not time to buy energy. in might be too early, but wait and see how the economy shapes up and stick with utilities forgetting exposure to commodities. annmarie: were you surprised how well fossil fuel companies did under the biden administration? >> this is fascinating about energy. under the trump years were actually quite bad for energy stocks and under bite and under biden we saw energy really rally. part of it is the fact that energy and oil was being assigned a terminal value of zero and then we realized we are not going to get off of fossil fuels that quickly.

there is this manufacturing renaissance in the u.s. that puts demand under commodities and oil, but let's say for the short-term i think oil and energy stocks look a little bit risky because the reason they looked cheap is that prices have fallen faster than analysts have downgraded earnings expectations so that is the classic value trap. lisa: there is a question about whether this market has fully priced a soft landing and whether the fed can keep that going. with potentially a 50 basis point cut as well as forecasts. can this market rally given even with the soft landing that you do not see big tech as a participant and other high flyers either? savita: our year end target is 54 hundred, below where we are today. the idea is you see some giveback in stocks with high

expectations that may be will take longer to deliver, but you do see a re-rating in other areas of the market. when i look at the landscape of size and style, i think large-cap value looks attractive now. when you think about where investors are going for income and yield, they are not going to buy small-cap value. large-cap value is banks and energy. it is real estate. it is companies that have not really had access to capital for a long time and now they are trained to survive in a higher interest rate environment. the idea of navigating a soft landing is probably more feasible today because inc. about where the excess is in the economy. we are not seeing an environment where consumers are sitting on massive levels of debt. corporations have taken

advantage of low interest rates and locked in fixed rate debt. the public capital markets look higher-quality. maybe risks have shifted to private lending and areas that are less liquid, real estate. i worry of the fed starts cutting and we see mortgage rates come down that the reset for home prices might be lower rather than higher, because we have been stymied by an environment of no price discovery in housing. nobody is willing to walk away from their mortgages. it is a weird growth, but we could be in an opposite environment of the typical easing cycle. jonathan: utilities are up by more than 20% year to date on the s&p 500. it seems like this odd sector where it is everything to everyone. what is this trade? savita: utilities is the steady eddie.

we have this chart that shows the total return of the s&p utilities index versus the nasdaq, almost always in. it is really the idea that if you get this dividend and reinvest in boring companies -- right now maybe they are more exciting because of this story but i think you still have the sector where you know what is going to happen. they are regulated. you reinvest that and you do just as well as he would in tech stocks over the long haul. it is an interesting analysis and that is where we see a catch up. jonathan: it is good to see you. i will not interview the robot. i promise that. let's get you an update on stories elsewhere with your bloomberg brief. >> donald trump is reportedly safe and well after a second apparent assassination attempt. authorities took a 58-year-old man into custody at trump's golf

course. secret service agents spotted a rifle barrel sticking out of a fence about 400 yards from the former president, who was playing golf at the time. people familiar tell us a hedge fund has lost about 10 money managers in recent days. the departures include people leaving voluntarily and those the firm has dismissed. returns at a hedge fund have been stalling as it attempts to transform itself away from its roots in macro trading. fx's "shogun" won 18 any awards, including best drama and best actress, the most for a series since 2008. other winners include baby reindeer winning best limited series. "the bear" won individual acting awards. that is your brief.

jonathan: "shogun," nothing better. absolutely brilliant. lisa: it is sort of "game of thrones" consolidated with more intrigue. jonathan: and we get a second season. lisa: but marco is gone. annmarie: no spoilers. lisa: sorry. jonathan: next on this program, another attempt on the former president's life. >> he is unsafe and unharmed. the secret service did exactly what they should have done. jonathan: another shocking twist in this campaign in 2024. from new york city, good morning. ♪

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jonathan: thisjonathan: is an apology on behalf of the whole team as lisa abramowicz single-handedly ruins "shogun" for everyone who has not watched it yet. lisa: i own it. sorry. i am so excited. if you had not seen it already, you already got spoiled. basically, this is -- you're welcome. jonathan: annmarie did not see it and now she is probably not going to. lisa: i am already getting emails. jonathan: five days of gains on the s&p 500 and the bond market yields down. the dollar at the weakest levels of 2024. dollar-yen around 140. another attempt on the former president's life. >> donald trump is safe and unharmed following an incident

shortly before 2:00 p.m. sunday. u.s. secret service personnel open fire on a gunman located near the property line. the secret service did exactly what they should have done. they provided exactly what the protection should have been and their agent did a fantastic job. jonathan: the fbi investigating an assassination attempt on former president donald trump at his west palm beach golf course. the incident plunging the 2024 race into further chaos just weeks away from election day. it is another shocking twist in this campaign in 2024. what does it change, if anything? >> i do not think it changes anything. we have precedent for this. about two months ago was the attempt on trump's life and i said then and turned out to be right that i thought trump was not going to get any lasting benefit out of it. i think that is still true today

because trump has a hard voting ceiling. in other words, everybody that is going to vote for trump is already saying they are going to vote for trump, so i do not think this makes much difference. annmarie: when you look at what happened in pennsylvania and you have the palm beach county sheriff saying maybe if there was a bigger practice -- protective perimeter this individual not have been able to get in, why is he not being secured as if he is the sitting president? but being secured on someone who does have these attempts on his life? annmarie: -- terry: i was involved in a lot of discussions about the capital perimeter after 9/11, but that is another story. i am not going to be mr. expert here, but congress needs to get to the bottom of this. i mean that the relevant people on the committees need to come

back and immediately get briefings and figure out what the secret service did and did not do and they need to do all that in the next week or so. throwing more money at the problem will not help if you cannot figure out what the best parameter is going to be. congress has an oversight responsibility and so far it is not taking it up. annmarie: do you think this task force is doing a good job given it was built on a bipartisan basis from the first assassination attempt? terry: i am sure they are getting a lot of briefings and gathering a lot of evidence. i think you get two months past the event, you better know all the notes. and be ready to act on it because we are in the middle of a presidential campaign and in a situation where heightened security, any incumbent president is going to need to

respond to threats and anticipate those threats, apparently better than has been done in the two trump attempts. i think the institutions of government here are not acting commensurately with the threat and peril involved here for anybody, not just president trump. lisa: how does this change the narrative, not necessarily for donald trump's campaign, but for kamala harris's campaign? terry: i do not think it changes the narrative much. i do think what ends up happening is harris continues to grind it out in the swing states and keeps enthusiasm high. if there's any adjustment, they may adjust a little against personal attacks on the president or hyperbolic themes that may overstate his case. i would bet at least in the

short term on a subtle adjustment in that. we saw that in july, but afterwards everything ramped up as if normal. those adjustments may last longer this time. annmarie: given that we have congressman and women heading back to the capital, what is your expectation in terms of them getting a cr through congress and keeping the government open through the end of the year? terry: i think we will see the familiar scenario where very few members see it as in their blue club vantage or in the party's political advantage to have some sort of performative shut down. i do not think it lasts long or is a big deal. markets i think ignore it, but underneath i want to point out to markets that it emphasizes the un-seriousness of what is

going on in washington. you have two applicable parties, one of which wants to spend fiscally and the other things the idea of bravery is to cut 1% off of 30% of the discretionary funding. neither is addressing the fiscal deficit problem that markets are concerned about. jonathan: terry haines with an important point. whoever is in power has a different view when they are not in power and whether we should be disciplined with the pursestrings in washington. lisa: which is a reason why gary cohn came out and said there is little political appetite increase the deficit. there is always political appetite increase the deficit. this is the reason people are watching why the bond -- when the bond market will push back. annmarie: what they are fighting in washington, d.c. is a small sliver of the pie. until they decide to go after

what is going on with social security and medicare, there is no way to fix what is going on in washington. jonathan: we are down two basis points on the two year. coming up, we will catch up with michael harrigan as officials investigate a second attempt on donald trump's life.

jonathan: how much hate mail are you going? lisa: a lot. i'm sorry. it was sincere. i recommend still watch it. i feel really bad. jonathan: and a second season coming, enjoy it. future negative by 0.4% on the s&p. i rustle up by 0.6%. odds of 50 basis points are increasing. they certainly are going into wednesday, looking for the first

interest cut since the pandemic. the 2-year yield declining last week in the face of a hotter cpi, hotter ppi, not a bad jobless claims point, and still bonds rally. annmarie: buy the news basically. lisa: there was an article that came out, a series of potential officials, former officials coming out in support of 50 basis points rate cut on wednesday. either way, the market fully pricing it. at a time where the data doesn't show weakness which is basically nirvana. jonathan: the bond market is phenomenal. buys to ignore weakness every time he get data. we will catch up on the subject in about 30 minutes time.

lisa: without a real answer to what the destination actually is. that will be the key question on wednesday. there is an issue of how much bonds can yield and a time when people are raising back to the bottom even though people say we are still in an inflationary environment. it is a question of that neutral rate they are trying to get back to and the fact that we don't know what it is. jonathan: the u.s. dollar starting this morning at the weakest levels for the year so far. dollar-yen breaking down to levels that we have not seen since 2023. briefly south of 140. euro-dollar, 1.1121. lisa: this is frontloading a lot of the rate cuts in addition to a soft landing scenario that allows trickling out to other currencies. also comes with a potential bank of japan rate hike on friday.

there is the issue of how far it can go given there are economic problems, when we are talking china or europe. jonathan: under surveillance this morning, donald trump's running mate jd vance says trump's plan to increase terrace would help to offset tax cuts. along with a 10% across-the-board tariff that could spike up to 60% from goods on china. annmarie: basically, i left the economic speech that trump gave with a lot of questions on exactly the plans for tariffs and when it comes to his tax policies, whether or not the 50% corporate tax rate would benefit all u.s. companies or just those with a domestic component at home when it comes to manufacturing. when it comes to tariffs, trump said, i am so confused why so many are against tariffs. it is good for negotiations. will this be a blanket around

the u.s., ring fence the u.s., or will this be a negotiating tactic? maybe 2.5 percent on chinese goods for 24 months until you get to that 60%? lisa: is there more clarity, with respect to policy, the answer is no. can you back on anything from you decide to create an economic narrative? for a lot of analysts, not so much. jonathan: there are many reasons to introduce tariffs, protecting domestic industry. if you want to influence behavior, when evidence is there that tariffs in america across six axes administrations have actually influence the behavior of the chinese, particularly when the chinese are failing to get in line on key foreign policy issues? have we displayed any success whatsoever in influencing chinese behavior? i would suggest very little.

lisa: especially because there have been backdoor ways to avoid that in particular having to do with the chips sector, certain technologies in auto manufacturing. the question will get more difficult when it is not just blanket tariffs on consumer goods, but talking about these high security aspects that are recently increasing their crackdown on. jonathan: i had no idea this existed. white house officials alone will cost goods to import goods tax-free. the previous limit was $800. i didn't know there was this loophole but there you go. lisa: i was a shock and there was this loophole, and why does it exist? as much as people even in my own household have gone to different brands to try and knock out some of the luxury players for

cheaper goods from china, as much as they may lose out here, why is this in existence? will it be difficult to get through at a time when it is a no-brainer? it just highlights the point from earlier. whether these tariffs have been effective. there are so many different apparatuses and please do make it easier for chinese manufacturers selling into the u.s.. annmarie: the reason you don't know these exist as you are not targeted by these cheap products by shain in the fashion world, on tiktok, instagram. this is where they are picking up these teenagers who want fast fashion. jonathan: that is why we are not jumping on temu. no tiktok account. lisa: i would be a lot hipper. jonathan: still apologizing, for those of you tuning in. lisa: are we going to do this all morning? annmarie: you ruined it for me. jonathan: the fbi is

investigating a second assassination attempt on donald trump at his golf club in west palm beach, florida. secret service agents reportedly starting a rifle barrel sticking out of a fence before opening fire and apprehending a 58 to suspect who is in custody. joining us as michael harrigan, a retired fbi firearms training chief. unhappy to be speaking about the same subject again just two months later. from your perspective, why is it was so difficult to provide security for the former president? michael: mr. trump moves around as he likes. obviously, he is under secret service protection, but he likes to get out there. he is known to love golf, outdoor venue. you have to look at each threat, attempt to, look at the background.

both of these seem to be, whether it was planning, and it was a point where he was vulnerable at the moment. it is a tough one. to have two so close to each other, on one candidate, that is unheard of. this points to a very high threat level for the former president, one that may call for rethinking his security, mr. trump, potentially rethinking about he goes about his daily life. annmarie: when you look at the near term protecting the president, is it about changing his schedule, changing his habits, what he likes to do, or changing the secret service? michael: that is a two-sided knife. both sides need to be assessed. the number one thing for vulnerability, if you are not available to be attacked, that

is your primary defensive measure, not to be where you could be attacked. secret service took a very hard look, congress and american people have been asking questions about the secret service, but on the situation we don't know enough yet. from what we can see, it sounds like the secret service performed phenomenally in interdicting this threat before the man could take an effective shot at the president. so secret service did well here. but you have to look at the overall structure of where he was, public street. anybody can stop a car and jump out. this guy crawled into the bushes where he could be concealed. both sides have to be looked at. the primary thing here is for mr. trump to consider changes to his schedule now, however uncomfortable he may find that to be, remove himself as a potential target. annmarie: this individual was

300 to 500 yards away while he was golfing. if he was the sitting president, we would have this course surrounded, said another republican. should they start expanding the perimeter? michael: it is a duality, again. the secret service may need to make some changes in how they protect him now that he is on a call course. i can guarantee that he will not be in this position anymore on a golf course, secret service will stop up when needed. there are major roads in that area. to shut it down while he is playing golf is a huge inconvenience to the public. a reasonable cost to be paid, though. both sides have to be looked at. frankly, mr. trump may have to listen closer to his secret service advisors and just make those changes, at least in the

lead up to the election. only a couple months away. he has to get out there and go to his rallies, engage with the public, something he enjoys doing. they are taking good measures at public events, but private events where he is on his own time, now we see how vulnerable that can be. it is a lesson to other presidential candidates out there to reassess how they go about their personal lives. it is a very frustrating time in this country to see this happening. it is a critical time for us to maybe make some changes. annmarie: given your prior work at the fbi, do you think this individual was watched? according to his twitter account, which has been shut down, has gone over to ukraine, claimed he was fighting on behalf of the ukrainians. do you think this should have been flagged previously by the fbi? michael: he could have been.

but when you look at the breadth and depth of people that travel overseas, have political views, it is a staggering amount of person that could potentially be looked at by the fbi. nothing substantive can be found because it is first amendment speech. then it is moved on. they move on to other more relevant, current threats. just the fact that he traveled overseas is not a point of the bureau looking at him, more what he is saying, his footprint on social media, may be what he said in the public arena in other ways. whether he is a threat or not. jonathan: are you surprised how little we know about the motive behind the first assassination attempt only two months ago, the lack of detail between then and now? are you surprised about how slow

this process seems to be going? michael: to a point. the primary thing is to find out if these individuals had connection to a foreign government or a larger conspiracy. unfortunately when you see in these lone wolf actors, they may have minimal communication with others that could become a red flag, a chance to report in interdicting these threats. these individuals are out there. same for the individual that shot at the republican congressman on the hill. he was unable to be interdicted before hand because he was on his own, decided to do this on his own. may be difficult if they are not having conversations with others, talking about their plans. you lose that opportunity. or if they are part of a group under surveillance by the government, then the government has the opportunity to look at those communications, stop these threats before they materialize. jonathan: we have to have this

conversation again. michael harrigan, thank you. after a second attempt on the former president's life in two months. let's get you an update on stories with your bloomberg brief. dani: in the yen is around its strongest level in over a year. the currency appreciating for a fifth consecutive day. it did briefly fall below 140 this morning but now it is just about back at 140. the fed decision comes on wednesday. the boj's on friday. intel shares higher in the premarket by 1%. people telling us the chipmaker has qualified for as much as a $3.5 billion federal grant to make semiconductors for the pentagon. that would add to a possible $19.5 billion in grants and loans awarded to intel. as of the friday close, the stock has fallen some 61% this

year. those eight dollar lattes may become more commonplace. the premium of copy arabica beings have surged to the highest level in 13 years. there has been shortages of the cheaper beans, and that has boosted demand for the premium variety favored by coffee buffs. there has also been concerned about harsh weather in brazil that has fueled around the. currently they are grappling with their worst drought indicates. jonathan: thank you. two very different takes. earlier this morning, the former fed president bill dudley making the opinion that the fed should go back now. moments ago, steve englander, good reasons not to cut by 50 basis points. it is so finely balanced going into wednesday. lisa: real question of whether it matters going into the destination, whether they can telegraph that. they will have a statement of

economic projections. jonathan: up next, a split decision. >> we are looking for a 25 basis point cut but for them to signal that they are doing cuts here. 50 basis points suggest they are more worried about downside risks to the economy. jonathan: that conversation around the corner. you are watching bloomberg tv. ♪

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(speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management. jonathan: you are going to get this all week doing this from steve englander. good reason not to cut by 50 basis points. the economic data has not made the case for a 50 basis point cut at the upcoming meeting. cutting by 50 and being wrong is worse than cutting by 25 and being wrong. what do you make of that argument? lisa: the exact opposite of what others are arguing.

you can pick the argument you like. the problem for me is how much does it matter if you understand the path, understand how much they will cut this year, but the second question is if you think that 50 basis point will be the bigger mistake, does that mean that you think inflation is still very much a risk lurking beneath the surface ready to rear its head once more? jonathan: you have to think that is what he means by being wrong. that may come up in the fomc debate. equity futures unchanged going into all of this on the s&p 500. in the bond market, the 10-year, 3.64. the dollar near the lows of 2024. euro-dollar, 1.1123. under surveillance this morning, a split decision. >> the federal reserve should be focused on moving policy rates back to neutral. the question is how quickly they get there. they will probably revise down their own estimates for the rate that in september.

we are looking for a 25 basis point cut. but for them to signal that they are doing a sequence of cuts here. if they end up doing it, it suggests to us and they are more worried about downside risks to the economy. jonathan: treasuries gaining with all eyes on wednesday's fed meeting. the debate on wall street, 25 versus 50. christian imani, i hope they set us up for 50 and relieve us of our misery ahead of the meeting. i don't think it is likely. if we are going to have a hard landing, 50 will not stop it. krisna, we all agree with you. welcome to the show. cutting by 50 and being wrong is likely worse than cutting by 25 and being wrong. what do you make of that logic. do you agree? >> the point that steve is not articulating is that the fed is

bound by its mistake in 2021. in their minds, if they cut by 50, you have week celebration, that is a bigger challenge than if they cut by 25 and things continue to slow down david they believe they have more space to cut rates over the next 12 to 18 months. however, if there is a re-acceleration, that is what the fed in dealing with rather than the economic reality. lisa: when is the economic reality? you say that is ultimately what will be at stake in terms of determining the path of risk assets. krishna: dudley today articulated the political reality. growth today is quite decent, 2.5% gdp now, inflation has come down. relative to inflation, short rates are too high. they can cut 50 basis points. whether they will or not is the issue. is there room in the right

structure for them to be aggressive? absolutely. is there weakness enough for them to go whole hog? absolutely not. that is the challenge they are dealing with. lisa: what does whole hog mean? some are saying 50 basis points would move the needle on market expectation the full year. bill dudley's argument is if you think neutral is lower than where we are now, why not get a rapid start to it? otherwise, people will ask do you think neutral is 200 basis points below where we are now, why not move faster to get there? krishna: absolutely. they have the room to move faster. however, dudley also argues that they got a head fake early in the year. they do not want those heady fakes. doing a 50 ahead of an election, ending up with a head fake would probably be far worse for the credibility of the fed than

anything else. as you have been articulating, that is beside the point. they will articulate a very aggressive rate cutting pat. in the end, that matters more than anything else. what we are dealing with is a situation where inflation is coming down, rates are high, economy is doing relatively well, so there is a negativity vacuum. we are trying to create some drama. jonathan: let's get the market call, think about how far bonds have moved. the 2-year just north of 5% earlier this year. in april, 100 basis points move lower since then. round-trip in equities. call it whatever you want to call it in august. given those moves, as you think about the balance of risks into year-end, more upside or downside risk? what is the bigger risk for you? krishna: as far as bonds are concerned, unless you think that

we are really going to have recession, i think the upside, lower yield upside in bonds is limited in my judgment. it is not that we are going up meaningfully higher, just that we sit around here for a longer period of time. having said that, and probability of recession increases, we will not find out until the middle of 2025, whether that is the reality or not. i think the challenge with equities is the valuation. environment is right, but environment is right with the fact along with the fact that we have already incorporated that into our pricing. the downside recession is quite substantial. lisa: so what are you doing? krishna: i am sitting tight from a risk perspective. has been the case for a few months. it has not worked too badly with a special emphasis on bones. if you had some spare money,

investing in bonds makes sense because equity markets are not going to run away from you. jonathan: invest we are in bonds? krishna: the shorter end of the market. cash is yielding pretty good. at this pace, for a reasonably long period of time. if your expectation is that we are going to have a soft landing, which is the case for me, the upside and buying longer bonds doesn't exist anymore. jonathan: i appreciate your input. good luck for the rest of the week. krishna memani. peter cheer also feels the same over at academy. i wish that that would come out at 10:00 so we would have less time to second-guess. lisa: i do want to note that what krishna said there is not what fun mentors want to be hearing, stay in money markets. they have things to sell. this is not working for them. jonathan: november 7 will be

quite demeaning for the fomc. two days after the general election. lisa: i don't know if that will be tedious. they will have to look at what the economic productions will likely be at a time when that is also an uncertainty vacuum. i hope we stay in a negativity vacuum. jonathan: i hope that we know who won the election two days after the election. annmarie: so none these states cannot start counting their mail-in ballots, notably pennsylvania, until november 5. it may take a few days. jonathan: coming up, megan robson bnp paribas. ira jersey. it is a big week ahead. the third hour of "bloomberg surveillance" is next. ♪

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>> there is a real risk the fed is falling behind the curve here. >> the fed is watching with the rearview mirror. >> the recent loosening and

labor markets suggests a possibility for overshooting. >> it's now about next year in the year after where there's more uncertainty. >> we do not know what the journey is. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz. jonathan: for our audience worldwide, the third hour of bloomberg surveillance right snap -- starts right now read equity futures just about unchanged coming off the back of a five-day winning streak and involving the most tedious debate of the year so far. it's become tedious for sure. 25 or 50, of federal reserve on wednesday. lisa: let's examine the tedium we have to examine. ultimately it's not just about 25 or 50. it's about how it is telegraphed going forward. it's about the destination, how jay powell dresses and how he

intimates when he gets the press conference. just ludicrous stuff. things are so finely balanced this real belief that the soft retail sales print or a firm one could tip the scales in one direction or the next. we've retail sales tomorrow morning and then jobless claims on thursday. is that going to be what tips the balance to wednesday? annmarie: the market was pricing and 35 basis points after the jobs report and after inflation after a wall street journal article bill dudley's comments and article in bloomberg opinion now the market is pricing and basis points potentially the next shoe to drop where they change their position is retail sales print >> fed present making the case to go big and he thinks he well. it's that he thinks they will go big on wednesday afternoon. >> he said the articles in the wall street journal and the wall street times as a good sort of sense of how the debate was evolving talking about how they

could avoid getting criticized for not getting to the destination more quickly if they went by 50 basis points. if you take a step back it goes to the question of what is the bigger risk here. inflation or employment. pretty much everyone thinks right now at the moment every -- it is economic weakness or economic potential softening and on the flipside richardson talking about what we see in housing prices, what we see with household wealth and sentiment. it's sort of. >> at the moment there is a belief were more likely it 50 than 25 based on market pricing. coming up this hour this is the lineup for you. markets await this week's fed decision will catch up with greg of ey and why he's expecting 75 basis points of cut before year end. and we will talk about why she's bearish on credit going into the election. with him to the big issue on wall street. 25 or 50. going to the finely balanced central rate meeting. a post-pandemic inflation shock

and rate hiking cycle produced a generational research in bond yields. bringing down inflation to to point something and are poised to begin cutting rates, creating a compelling multiyear outlook for global fixed income. the boss over at pimco joins us for the next 30 minutes or so. >> thank you for having me. >> we are in the camp of 25 but i always say we have a crystal ball and at the end of the day we will see what the market does. it could very well be that it doesn't make that much of a difference and our view is there will be three cuts of 25 and at the end of the day what matters is where we are at the end of the year. >> this is a three-part act on wednesday paid a decision, a forecast in a news conference and a big conversation around this table for the last several months. what's the destination, what are they shooting for, where is this land of the next 18 months. >> you could say that there's

less inflation right now and in the absence of new data the destination will be lower rates and the fed will be very data dependent and i think sometimes one underestimates how careful they are about new data and how they want to be able to change your opinion. so if you use this framework you sort of set it to 25 and that's where we are and then probably 25 to 25. the total sum by how they do that. >> which is a reason my people are looking forward saying may be the neutral rate, the two year yield right now is about 3.5%. back in june when you put up the outlook for pimco there was a feeling that intermediate bonds really had a fantastic investment proposal opposition simply because there was yield. do they still after the rally we've seen? >> we still do think so.

the thing about being at pimco right now is fixed income is attractive. we are in a business of feast and famine so rates are very low it's hard to be that excited than when you can six and a half you become very excited and were very focused on treasury read the reality is there's a lot of part of the segment asset bank being one of them. and we are excited about what we see and at the end of the day the yield on the portfolio is a good predictor of the return that investor will experience. >> and so what i think is exciting about her fixed income right now is you can build a portfolio of 6.5% with a different instrument. lisa: it used to be bonds did better in bad times and there were some good times. are we heading into a worse time. where people go to bonds for

safety or is this on just an absolute basis yields are higher. >> my partner because he actually is a good line. bonds may be the most attractive asset class and i think there's an absolute argument and then there's a relative argument. these are argument is to say you need to build a portfolio, you need equity and fixed income and some real estate, some private assets and at the end of the day fixed income is much more attractive than equity given the valuation of the market. and i think that's one of the arguments for owning a larger part of fixed income and when i travel the world people are under invested in fixed income and a lot of them are looking at putting that into fixed income and whether they do that tomorrow or two weeks from now or two months from now i don't know but the reality is people with underinvested fixed income

market and they're looking to that data allocation. >> do you have confidence with that correlation between bonds and stocks? >> i don't know what i don't know and nothing correlation that fixed income has a role in the portfolio construction and they're there for a reason but of course credit spread in the high-yield market so once again i think one needs to be careful about you frame the question and how you conclude. >> do treasuries have treasuries reestablish an inverse correlation with equities. one of the things we've seen over the past few years given the central focus was inflation is when bonds sold off equities did as well. we left that. >> i think remember we also saw with the pandemic really and unprecedented program of recreation would sort through everything and economic textbook with the correlation so i'm careful about what i say because

the data in terms of what we saw. i think you can make the argument for example the part of the reason why the u.s. economy has done so much better than any other places is the package in terms of the pandemic has been so much bigger in -- and at the end of the day all you can do is cross-section the analysis and try to look at different country but there's so many other values that comes into the picture that you don't want to understate the enormous creation of great company in the u.s. versus europe for example. and so i think we try to always be careful about making definitive conclusions when it comes to correlation and cross-section two different country. lisa: when you travel the world you talked international clients who are underinvested in fixed income in the united states how many of them turn to you and say what about the u.s. deficit. >> my friend and partner use

this very american expression. the cleanest dirt shirt. we have debated quite a bit at a forum about deficit and deficits do matter. they do matter and at some point in time there's a tipping point. the reality is it's a huge competitive advantage. people need to own dollars and the reality is we don't think there's a crisis coming. and the u.s. can have similarly a high level of debt versus historical precedent and be able to function just fine. annmarie: when will the u.s. get there and do you see either party have any impetus to try to rain and spending? manny: the court to my point once again often here on the

show, we see no impetus to reduce the budget deficit. the only real example we have is the united kingdom and i think the united kingdom was quite interesting because you're in a situation where the bond market reacted so violently to the liz truss proposal that all of a sudden they had to change really quickly. and i think this example and how the bank of england reacted really quickly was the pressure in the gilt market and the pension market would be a textbook example of why markets react quite strongly when something outrageous, sprayed desk outrageous comes. annmarie: a victory would be better for treasuries and worse for stocks vice versa for the former president. would you agree with that scenario? >> i think there are so many

unknowns. it depends on what happens in the house and what happens in terms of program, how this is all going to pan out. i would be very careful about making any progress is on this matter. i think when we think about the world, i realize politics is important. at the end of the day, that is not how we invest. we invest because we find value and opportunity and we try to manage portfolio and think about risk carefully and ride a different cycle and deal with many other factors than politics. there's a few exceptions if you look between the emerging-market, emerging-market sometimes things do matter because they're very big changes and different outcomes. >> some have traded over the last few years and mentioned the

u.k. so i don't want the words in your mouth. it does feel like a self-imposed debt break in the united kingdom and i'm wondering whether from your perspective that actually makes the u.k. government debt a little bit more attractive here. >> we think it is very attractive. we like the u.k. and australia. we think the u.k. fits very well in the portfolio. and so when you think of a global globe, the u.k. looks good. jonathan: relative to the united states say in terms of duration risk? manny: certainly compared to european bonds. if i want to sum up things, we like the u.s. or u.k.. jonathan: you will stick with us, more to say about the markets and on the industry as well. sticking with us for the next 20 minutes or so. schedule an update, with your bloomberg brief trade here's dani burger. dani: donald trump are partly safe and well after a second

apparent assassination attempt. authorities took a 58-year-old man into custody at trump's golf course in west palm beach florida. secret service agents have spotted a k style rifle barrel sticking out of a fence about 400 yards away from the president who was playing golf at the time. ft reporting that city is stripping its chief operating officer of his responsibility for a key piece of its compliance work. the paper said the change follows a $136 billion fine by regulators this summer for reporting failures. the responsibility for data compliance will be passed to the chief technology officer. a new report finds new york city's mta transit system needs one at $50 billion of repairs and upgrades. the city should focus on repairing its current infrastructure rather than diving into expansion projects. the estimate far exceeds available funding. the mta must release its 2025 to

29 budget october 1 and that's your brief. jonathan: more from danny in 30 minutes time. up next we will get you some morning calls on the 25 or 50 debate. coming up a little bit later in the program. from new york, this is bloomberg. ♪

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the coverage of yelp with an underperform rating expecting competitive pressure to weigh on the growth outlook. evercore cutting its price outlook. limiting upside due to the antitrust concerns. that name is just about unchanged in early trading. still with us is manny roman of pimco. talking about the dynamics starting to really take hold over the last month or so. the two-year, 10 year segment of the yield curve. a bit of thickness, almost back to double figures. as we get the curve normalization can you walk me through how much things change in fixed income where you start see that cache deployed a little bit more. manny: it's that and people come through with the cash they have on the sideline and it's about $10 trillion of money in cash where they will think to reinvest it either by extending duration or going longer or taking more credit risk. i keep on saying this in some of it is cash, but i think people

very much been on the sideline. and how fast and how remains to be seen. the other thing which, if you find interesting is there are a lot of opportunities in relative value in the fixed income market in particular you think of japan, and nothing happened to japan for 15 years and all of a sudden we now have positive rate central bank. it's across the curve, all of a sudden there are sources of alpha as we tend to call them. where basically they did not exist two years ago which of, back to the market. how long at last we will find out but it should be a very exciting opportunity in terms of the whole market in terms of delivering better performance. lisa: how difficult is it to pry

that cache out of people's cold hands given the fact people really do like what they are getting and their 15 other fund managers out there trying to get them to pry that cache out of their hands. manny: it is good for everybody. and at the end of the day there's two things. when the fed cuts rate, eventually the short end of the curve becomes less attractive and juicy cash moving. and from a competitive standpoint we want to do the best possible job in terms of beneficiary and doing a good job in terms of performance and being there for clients. hopefully will win more than we lose but all we can do is try our best and we try very hard. lisa: where is the growth concentrating. or trying to be concentrated with respect pimco in five years ahead. manny: it has been quite exciting lately and is a lot

happening in asia and you can sort of think of our business as being linked to gdp in terms of saving rates and so asia has been quite exciting. the u.s. is a wonderful place. it's a big market and there's a lot to be done. we have a very good latin america business, there's a lot of good things happening but the one value -- variable we do not control is the macroeconomic structure. so if you have a real reversal and you have a recession and let me just say it's not our scenario but if you have a real recession, it takes some money away and at the end of the day we are here for the next 20 years, not for the next 20 minutes. we have very liquid portfolio. people can take their money whenever they feel like it and we understand that. people need money for all sorts of reasons. lisa: there are number of behemoth asset managers. how much bigger would you say you are getting? manny: it's all about

performance and they always say the great thing about not being public and not having to give quality -- quarterly earnings is a focus on what matters, of the circle of truth is if you perform they will come. jonathan: you said this last time. we measure our success by the returns we provide. does it disappoint you, is it slightly off saying people do measure your next -- success by assets because they've been stable. black rock over the same periods is multiplied. >> i think we have different business models. we were talking about. they are a fantastic, but we have an opportunity set where we carefully think about capacity and how much money we can put to work and with the right target return of our investors. and i think that by definition means that we won't be the largest asset manager. so be it. jonathan: private markets, up

all the time when it comes to asset management. where does pimco fit into that big push at the moment. it's a private market. manny: we try to focus on what we know how to do and what we know how to do is fixed income so that includes as a matter of fact everything which has to do with private markets in fixed income and also involves real estate. there is a big real estate cycle that should be exciting. there will be pieces to pick and cheap investment in debt and in equity. and in the private credit market there was quite a unique opportunity in asset-backed landing where my friend grew up. and we have been doing this for 20 years and the one thing which has changed so to speak is that banks need to free up capital and so they need to sell large portfolio of many different

assets and do it fairly quickly, that is an opportunity for us. so if they are good entry point and good asset to pick we should be able to do quite well. lisa: are you talking to a commercial, residential? rental homes? manny: homes and banks. let me focus first on fixed income. in fixed income there's a lot to buy. and a lot to buy because the banks need to deal ever so the banks we can think about what they have on the balance sheet. and they want to get rid of it and so they send to us. that i think is fairly straightforward. in real estate we have a real estate cycle and there will be different things you can do. some will need equity, some will need debt, some will need to buy equity and we need to make sure it is cheap enough that we think carefully about what happens and make sure we have an expected return which compensates for risk.

there's a lot of risk in commercial real estate for example. we had a pretty fast cycle and hopefully we will be on the right side of the trade coming out of it. jonathan: the hardest question of the morning, what's more likely, arsenal winning the title or the federal reserve engineering a soft landing? manny: arsenal winning the title. jonathan: should i read anything about your real views on the economy or his arsenal just that good? >> you should think about arsenal. i think you point out -- people are sometimes criticized the fed did i think they do a really good job with a very difficult hands to play. they don't know what they don't know. at the end of the day. i think it has been a tremendously complicated market to navigate for everybody, none of us thought we would see a pandemic and from an investment standpoint and from a regulatory standpoint from the fed standpoint i think we had to

learn a new playbook. jonathan: good to see you. thank you and appreciate it. coming up on this program the week continues to build, the anticipation continues to grow. when he five or 50 on wednesday. a decision, set a forecast for the federal reserve a news conference for chairman powell paid a five day winning streak on the s&p 500. with equity futures down just 1/10 of 1%. in the bond market yields lower by two basis points with a dollar near the lows of the year so far. from new york, this is bloomberg. ♪

jonathan: it is monday, 8:30 eastern time. i know you are sick of this but it will continue for the next 48 hours. this from andrew hallman horse. 25 or 50? our base case is a 25 basis point cut on wednesday but articles in the wall street journal and ft left the potential for a larger cut on the table. this will come down to community dynamics arguing for the next two days and tuesday's retail sales report. in either case, we expect a dovish fomc implying 150 basis points of cuts, which would mean

150 basis point cut on one of the last three meetings going into year-end. going into the opening bell which is about 60 minutes away. the cash open is just around the corner. equity future down .1% on the s&p. on the russell, some outperformance. small caps up by 0.4. let's get some morning movers with dani burger. dani: a little bit of southside action this morning. colgate-palmolive down 1%. downgrading from neutral to underweight, saying it is not weakness but normalization. the epic run for colgate is over. also doesn't help but there has been this huge equity run that has not the stock market and said. at intel, it's a gain in the premarket, up 1.5%. bloomberg reporting they won a $3.5 billion defensive contract for the pentagon to make chips.

there have been criticism from their peers, saying the white house is too reliant on this one company. nevertheless, shares up 1.4%. apple shares down 2.5%. a strategist saying they have done premarket checks, looked at supply chains, and the orders for the iphone 16 are weaker than anticipated. 13% down year-over-year versus the iphone 15. it's because of competition in china. that ai future, you cannot get it with this iphone 16. jonathan: i am waiting for the goodies. maybe you get the hardware release, and then it makes sense. until done, i don't know if it makes sense for me. federal reserve decision on wednesday, sandwiched in between some economic data. empire manufacturing. mike mckee around table with

more. >> not a major indicator but interesting because going into the fed meeting we see some expansion in the new york region. general business conditions indicator rods to 11.5 from negative four .7, so a large move. new orders, shipments, inventories all up. the only thing that is down is prices paid, a number of employees improves but still negative. there is signs the economy is hanging in. whether you put a lot of weight on the empire number or not, it is a small thumbnail on the scale. jonathan: on the other thumbnail on the scale last week, jobless claims were pretty decent. ok for the last four weeks. this sense that we are so finely balanced, all it will take is a weak retail print to go soft on wednesday. what do you think about this

print going into wednesday? mike: the first time we go into a meeting in years without knowing what they will do. it is a finely balanced decision. people are trying to guess one way or the other. you are basically bring your own biases to it, whether you think the fed should be doing 25 or 50, is what you end up predicting because you don't know. to the extent there were leaks to newspapers last week, they didn't give you any kind of definitive answer, they just raised the question, the possibility that the fed could do 50. it gives the market something to look at if they want to do that and not freak out if they were betting 100% on 25. annmarie: what is the risk of this ambiguous approach heading into the decision? mike: probably more of a risk they have put on the risk of a possibility 50 than 25 because the markets would react to that. you have the other side of, if

they do 50, what do they know that we don't know? bmo put it well this morning, saying the markets will price the next 12 months based on will be cut from wednesday. if you do 50, they will look at 50's looking forward, more rapid rate down to whatever they think neutral will be, which was 2.7 last time. jonathan: lots of bows around the bill dudley piece. the fed should go big now. i would love your thoughts on it. mike: he makes a good argument for his side. the wall street journal yesterday published, made the same case, that the fed may be behind the curve, better to do 50 now and get started on that so that you don't fall too far behind. the problem there, the people that make the case for 25, the wway the market will react to this. you have some countervailing views here.

it was great to be a fly on the mall in the meeting. normally they go into a meeting with the decision pretty much made. babel talk to them on friday, they tell him where they are going to be. in this case, you get the impression that he will let people talk. jonathan: they all may say that every meeting is a live meeting. this is the first time in a long time that it actually feels like a live meeting. if you are wondering where lisa is, she has run up to jury duty. we hope that she is back tomorrow, and not last for several weeks. joining us now is greg daco of ey. this is getting so tedious were so many people because we know not all 25's are created equally, 50's either. what are you and the team looking for? greg: we are still looking for 25. we are not going to change our call. there is a lot of market movement that has come up of

these articles last week. but i think the uncertainty is still quite high. as mike was saying, it's all about how fed chair powell manages to convince or not the rest of the policymakers. there is a strong split within the fomc as to how they frontload rate cuts to catch up a little bit because they realize the economy is weaker than they had been anticipating. most other policymakers still remain extremely data point dependent. the data as of the last few days has not been sufficiently week to convince them of a 50 basis point rate cut. jonathan: let's start with the chairman and then go to the committee. one was from the start of the summer, the other is from the end of the summer, both from chairman powell. in portugal, he said, because the central economy and market is strong, we have time to get this right. at the end of summer, he says we do not see welcome further calling and labor market conditions. given the data we have had since

jackson hole, which chairman shows up to this meeting? greg: the latter one from jackson hole, saying he does not seek or welcome any further weakening in the labor market. i think the main issue from the fed side is the communication issue. we have seen a lack of communication as to a couple of things, one, the destination of travel. where the neutral fed funds rate is. two, how to get there. those are the more important factors, they are and whether they fit was 25 or 50 basis points. there is a symmetry around the fact that the fed was larger or smaller in terms of rate cuts. but what really matters in terms of how monetary policy is going to affect the economy is how rapidly we get to any form of neutral monetary policy. annmarie: when it comes to the communication, are you expecting clarity? greg: perhaps a little more transparency in terms of the timing in pace on rate cuts will depend on the totality.

that may be a shift in the monetary policy statement, arguing for a framework that is a little bit more forward-looking. that is what we have been lacking all along. data dependency was the main theme. data point dependency has become the norm. it was all right when inflation was rising extremely rapidly and you wanted to make sure you were adopting the appropriate monetary policy steps. it is no longer optimal. you want to look ahead to where inflation will be in a years time, where the labor market will be, and where income will be. i have argued that we are not paying sufficient attention to income trends. income trends are much weaker than gdp data, consumer spending data, and income is the main pillar of economic activity. annmarie: if you think that, should they go 50? greg: i think they should catch up, yes. they should have started using back earlier this summer. you want to go gradual.

when you are uncertain, you are better placed to ease monetary policy gradually and avoid these hesitations, what seems like hesitations, going with larger rate cuts. i think they should have gone earlier. that may be one of the justification that powell uses if the fed does decide to go 50 basis points, that they did not ease in july. it may have been optimal to do so, therefore we are catching up. that is where the dot plot discussion will come into play. how many rate cuts are expected before the end of the year? mike: you said this was a communications issue for the fed. what does jay powell say if they want to do 50? if they do 25, half will be upset they didn't do 50, if they do 50, the other half will be upset he didn't do 25. greg: he has an opportunity to set up a framework.

he needs to acknowledge the fact that we are traveling toward some point, that we will get there either fast or slow. that communication will be essential. if the fed does less than what markets are dissipating, there is a risk of a repricing in markets the other way. a lot of people were asking me what does a 25 basis point cut really due to the economy? not much. does not lower consumer rates much, lower mortgage rates much. what happens if the vent does not cut is much more dramatic. rate cuts have been priced in, so you would see a significant increase in yields that would be much more dramatic. jonathan: there was a real belief for the rest of the rate cutting cycle, i wonder how things different may look on november 18 when we have more clarity on the outlook for policy in washington, d.c. could they turn out to be the more pivotal fed meetings in 2024? greg: perhaps.

we have a lot of uncertainty on the political front as you know. some are arguing that the fed is now just catching up to the first stage of monetary policy. the second stage is what happens to the economy under different presidencies. do we get an inflationary environment next year with more tariffs, reduced immigration, more potential influence on the bed? do we get a sneer and is more status quo, where the economy continues to slow? that is highly uncertain. when the fed doesn't know, it tends to go slow. we are in this environment where there is a lot of uncertainty as to 2025. let's focus for now, focus on the end of the year, on what you know, and i just monetary policy to today's economic conditions. then in november, december, january, start to recalibrate policy. jonathan: great stuff as always, greg. greg's view essentially as we

think they will go 25 but they should go 50. the difference between what they will do and what they should do is 25 basis points. the difference between 25 and 50 for most of you will come down to very fine economic data points. and it could be tomorrow morning with retail sales around the corner. equity futures going into the opening bell, -5.1% on the s&p 500. nasdaq 100, down by half of 1%, coming out the back of the biggest weekly gain so far, five-day winning streak on the s&p. in the bond market, we look like this. on the 2-year yield, down by three basis points. 10-year, unchanged at 3.64. unlocking a little bit of weakness in the dollar. dollar-yen breaking 140 earlier this year briefly. around the table now, meghan robson of bnp paribas.

good morning. we were just talking about how the story may change from september into november, take on more of a political twist be read reading your research on credit, this is heavy on politics. meghan: i review heading into the next six or eight weeks is bearish on credit. investors are under appreciating policy risk. typically when you head into an election, you see volatility rise. given you have a binary outcome with two very different implications, investors tend to de-risk portfolios, reduce positions, and that causes credit spreads to widen. heading into november, we think credit spreads will widen. jonathan: does policy factor into this? meghan: policy certainly factors in. you have two very different candidates. you take an issue like corporate taxes, for example, if you get a sweep in either direction, you could see net income up 7%.

on the other hand, can be down 7%. the inability to predict either outcome drive to the de-risking into the event. following that, depending on what outcome we get, we could see dispersion based on who wins not only the presidency but also congress. annmarie: is your best case for the credit markets to maintain what we have now which is gridlock in washington? meghan: the best case for most investors is a divided government scenario. having a democratic president potentially divided congress means we have status quo, not a lot of new policy. in a trump scenario, a lot of folks assume it will be more prone market, but in our review there could be a lot of macro headwinds should we see new tariffs, potential trade wars. a lot of that policy, you don't need a unified government to get, so that is irrespective of what happens with congress. annmarie: so are you basically saying trump is worse for the

credit markets? meghan: it's a little bit more nuanced than that. you get a tailwind for potentially lower taxes. it would require a ready sweep to get net but there is definitely the risk of a headwind if we get broad-based tariffs as he has proposed. he has proposed 10% global tariffs, 60% on china. whether he can get get that extreme policy past remains an open question. in our base case, if he does that, we would see an uptick in inflation, and that would call into question whether the fed could resume this rate cutting cycle, which is a headwind for credit. jonathan: 25 or 50. i want to spend some time on the 50. the first part is, they go 50, and you are worried about them knowing something that you don't know. the second part is they go 50, they are getting ahead of the curve. do we respond vigorously or blissfully? meghan: i think blissfully if they go 50.

credit is set up in our review for a 25 basis point cut. there is this assumption that potentially the fed knows something that we don't. i think they will extrapolate, while the fed will be aggressive, we will have growth that is ok with aggressive rate cuts. credit would initially react blissfully, tighter spreads. beyond the near term, depending on whether we get a soft or hard landing, that will drive where credit spreads go. it will be data-dependent. initially, it would be bullish for markets. mike: does the market, if the fed does 50, price and 50 in november, december? accelerated pace only along? meghan: it's definitely possible that if we get the initial 50, there will be an extrapolation that we could see further aggressive policy, not only this year but heading into next year. we think that 25 is appropriate. we have 75 basis points for 2024

this year, next year, 125 basis points. that outcome is roughly price into credit consensus. anything more than that in the dot plots will cause credit spread rally. jonathan: couldn't we just get this issue done today at 2:00 eastern time? just get it finished with? mike: i have to catch a plane right now. jonathan: the first live meeting for the fed in years but this one feels tedious. mike: what will be interesting is to see what they put in their summary of economic projections, how they see inflation and unemployment moving. they pretty much got it wrong in the june set. now where do they go going into next year? how does that square with whatever monetary policy decisions they make? jonathan: putting together that e december summary of economic production will be different. thank you, megan.

s&p soccer by 1%. with your bloomberg brief, here is dani burger. dani: bmw took two years to discover the extent of a braking system default. a document shows that customers and dealers began complaining about the faulty brakes in june of 2022, but it wasn't until october of last year that a review was launched. the vix is expected to cause the carmaker over a billion dollars. tiktok is taking its fight against the u.s. ban to the next level. the u.s. court of appeals for the d.c. circuit will hear arguments against the law signed by president biden which bans the social media at unless bytedance sells it. bytedance, tiktok, and a group of users will argue two a pre-judge panel that the law violates the first amendment. the history making polaris dog crew is back on earth. the spacex council splashed down off the coast of florida early sunday morning.

the highlight of the mission was the first commercial spacewalk conducted by billionaire jared isaacman and engineer sarah gillis. jonathan: thank you. phenomenal stock with spacex. congratulations to everyone over there and the team. equity futures, slightly negative on the s&p. up next, setting you up for the week ahead, catching up with ira jersey about how the market is priced going into wednesday. ♪

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just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah. jonathan: 38 minutes away from the opening bell. five-day winning streak for the s&p 500. equity futures just a little bit softer. bond market sustainable. the dollar near the weakest

level of the year to kick off the week, dollar-yen around 140. let's get to the trading diary ahead. tomorrow, retail sales and that that kicking off its two-day meeting. wednesday, federal reserve decision followed by a news conference. thursday, another round of jobless claims and a rate decision from the doe. friday, the bank of japan's turn. joining us now is ira jersey. walk us through what we are looking for, 25 or 50, going into wednesday? ira: the market is leaning toward a 50 this week. this is something that has been missed by a lot of people who are tourists in the rate market. we are price for almost 125 basis point by the end of the year. that implies if the fed goes 50 this week, they will go 50 again in november or december. if the fed were to come out with dots that suggest they would only be 100 basis points, powell

makes that clear, you could wind up seeing something like a 2-year note selling off a little bit, front end yields going higher because of what we are pricing very aggressive fed cuts for the rest of the year. jonathan: you mentioned the dots. do you expect to see the summary of economic production to validate market pricing? ira: i don't actually. i suspect the fed wants to go cautiously. more than what the market is pricing. if the dots show 100 basis points and chair powell is able to make a compelling argument to the market for that, i suspect that we will actually not validate the pricing and you could see january fed funds futures selloff a little bit. importantly for the long end of the curve, the shape of what the yield curve will ultimately do, the end of 2025 dots will probably be more important to the price of bloomberg treasury

index because the market tends to focus on not what is coming up near term, but what the that he thinks it will do, therefore what the market expects the fed will do over the next 15 to 18 months. 2025 dots will be very important, especially if they move that lower from the current modest cuts expected in 2025. if those extend, you could see a more broad rally in the treasury market. annmarie: when it comes to the debate of 25 or 50, do you think politics has any impact at all? ira: probably not. in the back on their minds, certainly has to, policy implications of having one candidate or the other has to be there. if you have more protectionist policies, potentially mixed goods prices go up in the u.s., that has a policy implication. but overall, the fed has to look

at what the incoming data shows. are we more worried about inflation or the jobs? right now they have made it clear that job as their primary concern right now. that is a major shift from where we were a year and a half ago where they didn't care at all about the job market, it was all about inflation and only inflation. i suspect that is something, that politics matters but not that much. jonathan: ira jersey, thank you. particularly after that jackson hole address from chairman powell, and it felt like the central bank was a single issue central bank, but it is no longer about inflation. jobless claims, thursday. tomorrow morning, retail sales. the big win in between, the federal reserve around the corner. avalon it tomorrow, greg davis, katie kaminski, and ashok bhatia of neuberger berman. we are getting closer to

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>> market start the week some dude be with 30 minutes until the start of cash trading. i am matt miller. >> and sonali basak. bloomberg open interest starts right now. matt: there is so much going on this week. central bank decisions, traders divided on how big of a rate cut the fed will deliver on wednesday. the s&p 500 has mostly bounced back from its summer selloff but the recovery is not being led by big tech, instead it is everyone else's turn.