>> welcome to bloomberg markets. the s&p hitting a record high one day after the fed starts to cut. we will have an all-star lineup for you. later, we will talk fintech.

luxury and commercial retail would be impacted. big tech, bigger rally. the nasdaq 100 up 2.6%. these moves holding into the midday. russell 2000, interesting part of the market. it is still up today. the 10 year yield, 3.73 on the day. the movement in the bond market has been drastic. midday movers. abigail: one of the areas lifted

by the 50 cut is the risk on mood, animal spirits being stirred. crypto etf's sharply higher 5%. liquidity now going back in suggesting this rally has more. it is also the banks. yields up today. that would help. maybe something else is going on here if investors are thinking the fed is lower for longer. that could help lending activity. it might hurt the interest income. technology not up as much as crypto. nice rally for the s&p tech index. communications services,

consumer discretionary. tesla is in. chips, the real winner of the day. all these areas having the best day in a month. sonali: that historic cut by the fed, spurring market bets for more despite the chair saying the fed has not committed to further cuts this year. jason thomas, the carlyle group. a long career in washington. you are close to the matter. the white paper you put out today, you make the point that before we got into this cutting cycle, there was a complaint,

the idea of unnaturally low interest rates. many investors believe we are sitting with unnaturally high interest rates. jason: right now the sense these rates remain after the cut unnaturally high is reminiscent of 2012. you had prominent investors insisting we were in the midst of a massive bond bubble. 0% base rates, 2% bond yields. the price of some long-term government bonds were nearly two times face value. they insisted this would collapse once the fed stopped buying bonds. the following year, chair bernanke surprised markets with the suggestion the fed could taper. the fed followed through winding

down qe. surprising thing. 10 year u.s. treasury bond yields were the same after the fed ended qe than they were at the time when bernanke surprised markets. people turned to fundamentals to explain low interest rates. concepts started to enter the lexicon. we may experience a mirror image of that the next 12 months. i still think rates are too high. i think there are two more cuts coming. after that you could see the reemergence of price pressure, backing up a bond yields and people are forced to change fundamentals, fiscal deficit, changes in trade policy, they fixed industrial investment boom tied to ai/green industry to accept that 4% base rate is the

new normal. sonali: interesting. 4.5%. how fast do we get there? what are the risks? jason: it's important to note the fed has done its job. when inflation declines, a central bank that does not cut is effectively tightening policy. no one today could think tighter policy is appropriate for the u.s. economy. this is reasonable. there are more cuts in store but i suspect the room to cut is smaller than currently implied by the futures, the yield curve. if you look at the decline in

the forward curve, the decline in mortgage interest rates, you could have a over 200 basis point decline in 30 year mortgage rates from the peak in october. if that is the case, one could imagine a pickup in transactions, fixed residential investment. some sectors depressed by rates could pick up. all of a sudden the end of the year, the fed will not be positioned to hike. this enthusiasm for incremental cuts could slow. it could happen faster than many participants suspect. sonali: there are factors that could complicate the cutting cycle. fiscal pressures, trade. you've talked about this capex boom, this industrial spending,

call it a manufacturing renaissance particularly driven by ai enthusiasm. how does that play into the inflation and rates story? jason: when we look back at this inflation we observed that allowed for base rates to be as low as they were, first, the fiscal deficit this year 7% of gdp, roughly the same as 2011 when base rates were zero. the difference is deficits after the gsc were so large because the economy was depressed -- the gfc. if you adjust for the state of the economy, the deficit today is 2.5 times larger. after the 2010 midterms, there was no appetite for additional fiscal stimulus in the u.s.

the fed was called the only game in town. today the situation is the opposite with the treasury injecting $1.5 trillion of incremental liquidity in the economy relative to then, the fed is in more of a reactive posture having to keep rates higher than would otherwise be the case. as relates to trade, it is self-evident. if you restrict imports of chinese ev, solar modules, this is understandable. it's unreasonable to think there won't be trade-offs. there will be less disinflation than would otherwise obtain. as it relates to this fixed industrial boom, you have a change during the decade after the gfc, corporate savings, cash surpluses were so high because reinvestment rates were relatively low. companies moved to asset like business models.

today when you see the big increase in capex budgets, the hyper scalars, mega caps stocks, this boom in green industry, battery plants, ev, this has required societal resources. it is changing the inflation dynamic. you have construction employment. compare it to overall trends in payrolls, it's up 20% relative to the economy. that is surprising given there is little office construction. there has been a downturn in residential investment. that is all explained by data centers and other industrial facilities. these are big changes. to think we are going to return to 2019 levels of interest rates really requires one to ignore

the scale of changes since then. sonali: what does the rate cutting cycle mean for future investment? m&a in particular? there has been a market waiting for years for this buyout market to return at scale. jason: it's good news. when you look at activity, m&a, you saw a clear increase in sponsor share of m&a. most of the decline in the overall volume is attributable to a decline in strategic acquisitions. companies have been sitting on the sidelines. a big part of that was many management teams were prepared for a recession that never happened. starting in 2022, there was a degree of conservatism among teams.

when the recession didn't occur, there was an increase in earnings widening of margins because of the conservatism from the prior year. now to continue the earnings growth, they will have to look to acquisitions. the fed has finally cut rates. there is more comfort about finance costs. i think you will see a pickup in exits. i think it will be led by trade sales, essentially selling the sponsored business to strategic acquirers. sonali: thank you. jason is out with a new white paper on all this investment and his view on rates. breaking news. the wall street journal reporting two sigma is in settlement with the sec, they are likely to pay $100 million to settle an investigation into

a trading scandal at the firm. the firm would likely face blame for having oversaw an ex-employee at the center of the misconduct. the jetblue ceo joins us coming up, amid headwinds in the travel industry and a check on airline stocks. stick with us. this is bloomberg. ♪

sonali: jetblue out with plans on operational revamp in an effort to turn to consistent probability for the struggling

carrier. lisa abramowicz is at the travel industry conference, standing right by. lisa: thank you. i'm across the street from all the cruise liners. i am sitting down with someone who has seen a transformation, the ceo of jetblue. you became a ceo in february, previously were chief operating officer. incredible transformation. describe what that has been like. joanne: our mission has been about bringing humanity back to air travel. we continue to do that. we have had challenging items. a failed transaction, actually

two. we are focused on getting back to our roots. being that carrier for so many customers who want to fly from the northeast to the caribbean. at the heart of what we do, is deliver great service. lisa: you made news today. you talked about opening lounges at jfk and logan. some plans to open up others in orlando, fort lauderdale. the idea of lounges caters to a premium customer. joanne: most don't realize jetblue, 25% of seats are premium. customers have been asking for this. we are dipping our towing the water. boston, jfk will be designed around a personal experience. how do we address what our

customers asked for? transatlantic customers can go into the lounges as part of our ticket. our customers who will sign up for the new premier card later this year, we are focused on making sure there are no long lines. lisa: how many lounges are you talking? 15 around the world? london, new york? joanne: if you look at mint, when we introduced it years ago, we were thoughtful. we wanted to make sure it was what customers wanted. we wanted to make it affordable. lounges are expensive. low fares are an important part of what jetblue delivers. lisa: i think about lounges, premium seats catering to a

corporate customer. how do you cater to the leisure customer with these perks that cost money at a time when you are for catering to value? people like myself who have gone to the islands with the kids, it's exhausting but they can get sun chips, so everyone is happy? joanne: becoming the mosaic four , is actually accessible. unlike some of the carriers where you have to be a road warrior to take advantage of perks, that is not the case with jetblue. just a few vacations a year would qualify you. that sets us apart. there is a huge population of people who fly a lot but not enough to qualify to be in the top top-tier. we want to be there for them. we do it today. you can stream, play games, snacks, legroom.

we are uniquely situated. lisa: since the pandemic people talk about airlines catering to a wealthy individual, have been more resilient. they have been able to withstand the turmoil. a surprising trend has stuck that people are willing to spend money to have extra legroom and better food. how resilient is that trend? joanne: we have been seeing the premium trend the last 10 years. we want to be careful about it. we don't have the road warrior customer. we have a high value leisure customer. when i think about the girls trip to the caribbean, you want a fun drink, extra legroom, stream on your phone. those are things we can offer. there's a great demographic to do that. some customers don't want those perks. low fares are a priority. we want to balance it.

there are a bunch of things we can offer. you have to be mindful of how many customers you are going to cater to. lisa: how expensive are these lounges? joanne: we are not talking about that publicly but we will do it in an affordable way. it is tied to our transatlantic service, our partners and customers who want day passes at mosaics. lisa: you mentioned the credit card. i have seen this with delta, united. the card has been a key component of their profitability. two airlines now have to be credit card companies to survive? joanne: it helps. a credit card associated with an airline keeps the brand top of mind. when you get a meal and you get points, those points are there to earn travel. we have a great program, a great

partner in the form of barclays mastercard. we know we have the opportunity to grow, tied to our loyalty program. you get points for vacations on jetblue, rental cars. we like how we hav designed the program. lisa: you haven't transformed the locations jetblue flies to in terms of spreading beyond leisure? joanne: right now we are focused on growing our strengths. the best east coast leisure network. boston, new york, florida, caribbean, transatlantic. we have to make sure in this world where we are not growing as much the places we fly earn their way into the network. we have moved some unprofitable flying out. we have pivoted back to the northeast, doubling down on a great schedule. lisa: a number of changes in

february. how many changes are coming because of this? joanne: this is a plan jetblue has had in place. we have been working on it for the last year. the carl icahn board members have been constructive. we need to become profitable and remember we have strengths that we need to drive more value out of. lisa: the spirit deal. a couple deals have fallen through. alaska and hawaiian tied up. are you looking to consolidate? are you saying that's enough? joanne: we have a great brand and organic plan. going through transaction can take its toll. it creates a level of distraction. we are focused on executing our jet forward plan and bringing jetblue back to what it was when

we were founded. lisa: is there a critical mass that is required in a world where the overhead is getting fickle and volatile and frankly people, staff are more expensive? joanne: scale matters. we are trying to build that within our core geography. in the northeast it is building scale, schedule in-depth in the northeast, florida, the caribbean. if we cannot build scale on a national level, let's build scale in geographies with high populations of people, where the brand is well known and where we can deliver a great leisure offering. lisa: there's a question now about how we can remain this long in the cycle. ongoing spending. whether some of the new offerings reflect the fact spending has been strong in the upper income tier and has been tapering off in people looking more for value?

joanne: customers look for value and we need to be there for them. customer experience is valuable too. lisa: do need to increase prices to keep up with the pace of how much things are increasing given the renewed contracts and how the overhead costs have gotten more expensive? joanne: we are seeing labor costs increase. we want to pay our people for the important processes they deliver. we have to be mindful we have to keep costs in check. that has always been a priority for jetblue. how do we do this through data scientist, running more efficient operation? we have seen great progress this summer in terms of operational performance. lisa: do you see demands level? picking up? joanne: demand is solid.

the fall troughs are deeper for the leisure customer. we are focused on rationalizing capacity. lisa: what's your favorite route? joanne: that's tough. lisa: oh boy. all my children are my favorite children. [laughter] the ceo of jetblue. sonali: thank you. great interview. lisa abramowicz and joanna garrity at a time of transformation for the interest -- for the industry. let's get a checkup markets. you still have significant gains here in broader markets and finance and financial tech stocks that would have been closely tied to rates. a lot of the banking sector higher. s&p up, the nasdaq 100 resuming gains.

you are seeing the two year yield around 3.6, down a basis point. coming up, a firm is seeing gains on the heels of a major announcement this week. this is bloomberg. ♪ so, what are you thinking? i'm thinking... (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. ♪ ♪ the answer is with so much great entertainment out there... wouldn't it be easier if you could find what you want, all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock included, for only $15 a month.

before i started playing basketball, i was kind of quiet. i wasn't really that confident or outgoing. but now, with basketball, i feel like a leader. yo, cayden! sport for good means to me that i'll be able to give back to my family and my community. goals can be accomplished, dreams can be accomplished, but dreams are just dreams if you don't go out and try to achieve them. learn more about sport for good at laureususa.com.

sonali: let's get a check on markets. the s&p hitting records after that rate cut by the fed. nasdaq 100 almost 3%. the russell 2000 up almost 2%. the 10 year, a rise in yields of

three basis points. interesting moves under the surface. one stock really moving the past 10 days, affirm 15% higher over that timeframe, the highest since february, announcing u.s. apple pay users can buy now and pay later for as low as 0% apr. the new agreement on the app and online. max, how does this change the game? a lot of users use apple pay. it's been a massive wonder of the industry. now the addition of buying now, paying later, what is the expectation? max: really exciting.

it's great to have integration into a best in my biased opinion digital wallet out there. it has been live three days. the implementation is wonderful. very excited about the possibilities. it's going to be great for consumers that love their digital wallet. it will be amazing for retailers. it is in time for the holidays. you can use this to get gifts, all the things you need for your loved ones. sonali: you and i are old enough to remember when i was bothering you about what it would mean for apple to get into this. now they are partnering with you. there was a time when people would worry about whether that

would create a significant competitive force. the way the landscape is shaking out is partnership. how do you expect that to extend? it seems like a massive change. max: it is a young industry. partnering well is what we have become known for. the largest retailers/platforms, some of the best known brands among our partners. it's always for the same reasons. we treat both sides of the customer ecosystem right. we don't charge late fees, we don't hurt consumers. we are careful to say yes and no when we don't believe someone will pay us back. we deliver value for retailers. we increase their average sales. we help them drive conversion at the point-of-sale. those things combined make us

the ideal partner. it helps to be built by serious computer scientists which means we can scale in volume. the spikes you can see during the holidays are significant challenges. we are good at it. that is why we are picked by the best to be partnered with. sonali: you've seen retailers, some have had knockout numbers the last couple months. others have faced weaknesses in the consumer. the path forward with that rate cut, how does that change the game? do you expect consumers to be this bifurcated? do you expect significant weaknesses until we see more significant cuts? max: if i could predict macroeconomic events as well as that, i would have a different job.

affirm consumer is buying and shopping. we are forecasting a great growth going forward this fiscal year. cautiously optimistic. u.s. consumer is shopping, buying and paying the bills. that seems to be going well. the fed lowering the rate suggests the fed is worried about too much of a slowdown and their war on inflation has been all but won. i am cautious relative to u.s. consumer. we are seeing great demand. sonali: what are you expecting for the holidays? you expect people to pay for their holiday shopping on apple pay, with you guys. what do you think will happen this season relative to the past? max: this may be easy. i'm sure this season will be the

greatest number of people affirming their gifts ever. a significant amount of ai curated gifts. there will be attempts to drive people's buying with a more curated experience which can now be done with genai. i'm excited about that. i see early in the season retailers saying we would like to subsidize the interest consumers might pay in these loans and they choose to offer zero interest loans, financing plans that we power for everything from four weeks to four years. i see a lot of that coming, which will be amazing for consumers. sonali: glad to hear you talking about genai. the last time we talked about

it, we talked about limitations and the more boring use cases. what is changing? you dovetail with e-commerce. max: it is becoming more user-friendly on the consumer side. shopping assistance, various things retailers are pouring resources into are pretty great. we don't talk a ton about it because we want to be careful to bifurcate. we do not use genai for underwriting. that has to be predictable and cannot hallucinate. we stay far from that. we use it for productivity enhancements with wonderful effects. really cool ways for consumers to get to the right answer when they are contacting us for customer service. we are looking at acceleration in development schedules. we are able to use these tools.

there's a lot to be excited about. like every new technology, you have to be careful. sonali: we talk about this a lot, the credit card uptake in the country, people have been maxing out. we are near record levels. you also have rates above 25% apr. how fast is that come down? if you can't tell me then what is the relationship between people who use buy now pay later and mass credit card debt? max: you know i am biased. we are the right alternative to credit card debt. if you are borrowing to pay for things over time, which all of us to, from education loans all the way to holiday gifts, you are better off not revolving,

when your interest compounds, you are paying on next financial basis. i am generally concerned. it is less because of the absolute number balances and more because of the type of debt they are generating. they cannot run away from it. the reason affirm in particular is in our case, not just that there are not any fees, there are no penalties, the interest is not compounded into principal if there is any interest at all. it's reasonable to stretch your budget by paying overtime. it can be dangerous if you revolve on debt and have no idea how you are going to pay it off. we are safer alternative. sonali: this is a much longer discussion. this will change quickly this world and the next year or so. coming next, thanking.

the changes at the top of td bank. who is in? who is out? the details next. this is bloomberg. ♪

it's a smart move to get a second opinion. you do it when you're looking for a contractor. you definitely do it with medical advice. so why not with your stock market investments? we can help you see opportunities you may be missing. at hennion & walsh it only takes a second to schedule your free second opinion. so what's there to lose? speak to hennion & walsh.

the second opinion people. sonali: toronto dominion bank said the ceo will retire in april. the bank grapples with investigations by the doj in the u.s. and regulators in lapses of money-laundering controls at

branches. let's talk about what got us here. significant regulatory challenges. the outgoing ceo takes responsibility. does changing the guard help? >> it's being debated in the market now. there have been questions swirling for months. they are based in toronto. this bank has grown a footprint in the northeast u.s. with a big retail presence. they are navigating through these money-laundering investigations tied to u.s. branches. august, they put a price tag on what they think this will cost.

it is into the billions. there was this question of who will be the next leader? bharat has been in this job for more than a decade. succession was already on the table. we are still clear when the investigations will wrap up -- we are still unclear when the investigations will wrap up. he issued a mea culpa. their successor is an internal candidate. he has been running their canadian operations up until now. he will have a chance to tell his story to investors. there's a handful of banks in this country compared to the u.s. there's a lot of attention at all of the senior leadership. sonali: td bank has a massive

u.s. branch network. over one year ago they closed the acquisition of a u.s.-based investment bank. what does this mean for their presence in the u.s.? jon: when you are busy covering the uncertainty in the regional banking sector, there was a deal on the table between first horizon and t.d. they were hoping to come together. that deal fell apart. they said it wasn't because of worries happening at the time, they just didn't have a timeline for when the regulatory approvals would come. given they had that misstep, now they are navigating this one, there was a question about what their footprint will look like over the next decade and what regulators would allow them to do. immediately some thought if you are taking someone with canadian

operations and putting them as the successor, does this shift away from the u.s.? bharat was asked about that today and he said that is not the plan. people will be curious to know what the long-term plan is when it comes to their operations in the u.s. sonali: thank you, jon. a real estate developer behind new york luxury condos is setting sites on miami beach. we will take a check on markets. the s&p is at session highs, more than 100 points higher than where we closed yesterday. this market has been on a tear since we have seen the fallout from that rate cutting decision by the fed. the market closing lower yesterday. firm and lasting bid through the day on this market. this is bloomberg. ♪

sonali: i new york city real estate tycoon has set his sights on miami beach and a change in interest rates. we are talking to you from new york. let's talk about the key issue on the table. the moment is here. that 50 cut. how long do rates need to go to create a significant lift? miki: i think we are there. we were expecting to see the cuts for a while.

the movement is toward reduction of rates in the next 12-24 months. buyers are starting to be excited. we are excited. we borrow a lot of money to build buildings. it is meaningful for us. abigail: you are involved at the super high-end. you have three projects in new york. one in miami. i imagine you are catering to a high net worth individual. does it even matter if rates go down? miki: the top end of the market, a lot of them are buying cash. we have a lot of apartments we are selling between $3 million and $10 million. those buyers are more sensitive. it is interesting. we see more interest, buyers

start to feel we are going toward the right direction. abigail: what's the real occupancy rate on luxury residential in new york? there is speculation a lot of buildings are empty, maybe even on the upper east side. are you seeing that? miki: depends. buildings might be completely sold out but some of them, most of the residents are either foreigners or people that live outside of new york city and use it. we focus on projects and buildings and buyers that are either true new yorkers or they live outside new york but they spend a lot of time in new york. our buildings are pretty full all year round. sonali: how do you make the

contrast between new york and miami? there has been a lot of migration in recent years. people are paying $5,000 a square foot in miami beach. how does that compare to new york? miki: there is a very narrow segment, when the building is on the sand, this segment, there is a very low inventory. you see three high-end projects branded that get the $5,000 per foot. very difficult to get it in new york. very surprising for miami. it is unheard of. 10 years ago, $5,000 a foot in miami, absolutely not. the majority of the product in south florida is trending more sub $2000 per foot. abigail: there have been talk,

ken griffin told you not so long ago, miami is the new wall street. do you agree? miki: i understand. there's a lot of wishful thinking. it might happen. definitely not, it is not here at this moment. new york is strong. when we spend time in new york, everything is busy. try to get a reservation in a restaurant in new york. miami is great. it is strong. it got to a point of no return. people leaving miami all year round. it is not new york yet. hopefully it will be there. abigail: one thing new york is not right now is hot. there is so much talk, you have experience in converting office building into residential. can you do that at the high-end? miki: yes.

i converted 2004-2007, the famous plaza hotel. it was a hotel, 862 rooms to residential. very difficult. office buildings, usually they are big. they are too big for residential. every bedroom has to have light and air. people need to be able to open the window. it's difficult to convert those buildings. without any additional support, it would be too difficult to do. sonali: you mentioned interest rates make a difference. you are putting so much investment into these buildings. what were you delaying until this point? what can you tell us about what to look for next? miki: i wasn't delaying.

we were selective in the market. it is still difficult to bid construction loans. we were likely to close over $800 million last year and $360 million this year but it is a difficult market. i think it will be easier in the next 24 months. we are always looking for the right opportunities. opportunities are a reflection of our buyers and residents. wherever they want to live, to rent apartments, that is where we want to be. sonali: please come back to us for your next big project. abigail doolittle and miki naftali, chairman. what a day. just that rally continuing on, the s&p. we are now at 5722. the nasdaq 100 up 3%.

two year yield steady. that does it for bloomberg markets. watch these markets through the close. looks like we are holding. man, we have had volatility. this is bloomberg. ♪ [introspective music] recipes. recipes written by hand and lost to time. are now being analyzed and restored using the power of dell ai. ♪ ♪ ♪ with so much great entertainment out there... wouldn't it be easier if you could find what you want, all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock

included, for only $15 a month. where do i begin with our young character? the one thing she was sure of was that she wanted to be a writer but she had no idea how. is there anything new in that notebook? actually, i have been working on a little something and i'd love for you to read it. thanks for being in my life because you've been more than just a mentor. you've been a source of inspiration in my journey to becoming a writer.

>> from the world of politics to

the world of business, this is balance of power. live from washington, d.c. joe: israel calls it a new phase in its original or. welcome to the faster show in politics as israel launches new strikes against hezbollah in lebanon. i'm joe mathieu alongside kailey leinz in washington. welcome to the thursday edition of "balance of power." it comes after israel is believed to have detonated thousands of pagers and walkie-talkies along to members of hezbollah the last two days in lebanon, and now this. kailey: killed nearly 40 people, injured thousands more. hezbollah has called this an act of war. israel has not claimed responsibility for either of these attacks but they have launched airstrikes in lebanon. hezbollah