>> there is a lot to light. it all comes down to the resiliency of the economy. >> we expect the u.s. economy to continue to expand and grow with solid momentum. >> we do eventually think that economic contraction plays out and overall it doesn't really get impacted by the swings. >> the bond market rally and the equity market need to happen in tandem and they need to make sense rationally for what's going on in the economy. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. >> let's get your trading day started. good morning, good morning for

audience worldwide. bloomberg surveillance starts right now. slightly negative were down 1/10 of 1% this has been a grind. just about squeezing out the 41st all-time high of the year so far on the s&p 500. you can thank nvidia, consumer confidence falling by the most in three years the share of people saying jobs were plentiful declining for a seventh month the share of people saying jobs would get the highest since 2021 the difference between the two continues to narrow. >> a lot of people focusing on this as a sign of how weak the labor market actually is. coming up pretty much on cue for citigroup talking about this. we are getting so many mixed signals. maybe this gives an opening for 50 basis point rate cut in november. good for risk. this is where we've been for quite a while. bobby: now used --annmarie: it's

the longest streak we've seen this narrowing since the great recession. so there's a lot of concern about this exact connection. then you look at some of the details and consumers are worried about inflation but are still spending especially on services. part of the economy that has been harmed -- hard to tailback. jonathan: this is consistent with recession type conditions. then you hear from the conference board sing the deterioration across the indexes main components likely reflects consumer sentiment about reactions fewer hours, slower payroll increases, even if the labor market remains quite healthy, that word healthy still getting knocked around. lisa: we heard that from everybody, pretty much anyone who watches labor market this doesn't look like some massive downturn like on the brink of an significant recession. what does the fed do with this and at what point to further rate cuts and up igniting i

don't want to say inflation but something kind of like that. i don't know if it's actually a preeminent concern but there is a feeling we do not know where it will stick and there is a feeling in markets that there is anxiety but maybe we have overlooked that and underscoring that saying inflation is still very much a concern and maybe giving some life to the steepening of the yield curve, gold at a new all-time high. bobby: or it is politics and paul donovan talked about this in his note ahead of the survey saying when it came to the michigan sentiment that was due to democrats optimism. getting a better economy more likely it represents political polling. a lot of criticism is that it depends on what side of the isle you sit on. >> things are super polarized for this company. the curve has been steeper, much steeper over the past week. we start to see some action in

the likes of rio yesterday. off the back of rate cuts with china. dollar china the offshore yuan dropping below seven for the first time in 16 months. another rate cut out of china overnight. >> obviously assigned there is an attempt to stimulate the economy. what this is an how you describe it very much contentious depending on who you are. coming out saying in no way is this a bazooka of any kind saying more likely this is actually a recognition, official recognition by authorities that the q3 gdp probably is can a come in somewhat weak and acknowledge that in real time. jonathan: a lot of people expect more out of chinese authorities in the months ahead. just recovering just a little bit. in the bond market yields across the curve particularly yesterday, today little bit higher up to basis point sprayed the 10 375. >> to me this question of how

far can the fed cut and will they respond to some of the data we've seen including that differential the labor market you were talking about is really interesting. the factor of more than a 50% chance of a 50 basis point rate cut in november when a lot is yet to be determined is fascinating to me and shows how you give them 50 they want another 50. jonathan: don't you think what separates the bulls and bears is jobless claims at a lot of people who think maybe it shouldn't be long risk looking at the labor market to deteriorate. the people who think you should be long risk the labor market will hold up jobless claims. it all seems to be down to one data point which means we wonder how vulnerable we are. the conversation is whether we are vulnerable to another august for taking place. >> the nonfarm payrolls will end up being incredibly volatile and a moment catalyzing for markets between the bulls and the bears. this will be the determining nonfarm payrolls report. until it comes out and it's 142.

and then wait for the next one it's good to decide everything. jonathan: coming up on this program deep cut at the macro risk advisors on the risk of another august 5. oecd on with the u.s. economy can avoid recession and former senior u.s. intelligence official norman rourke in tel aviv paid we begin the hour with stocks off all-time highs. thanks to another boost from nvidia. recent gains with some vulnerability in the u.s. economy is consumer confidence found by the most in three years. joining us around the table, good morning to you. you've written the risk of another august 5 how big is that risk. >> these are always tail type events but we saw what i try to do is learn from what the market tells us and that was just quite an asymmetry and i think gapping out of prices is something we see time and again in markets. i tend to really live and

breathe these anniversaries of events that are volatile and so forth and 10 years ago in october the treasury market had this famous thing called the up crash, the inverse of the flash crash. in the most consequential market for assets the u.s. treasury market you not supposed to have prices cap out even if they gap up. that was 10 years ago. 34 trillion now. so it took us 220 years and 10 more to get the next 17 trillion. i think that mean something. i don't think you can look at the treasury market as a stabilizer as you once did. it it's self is sort of part of the risk dynamic of the market. jonathan: it's a source of risk. >> it can be. the fed is kind of coming to the rescue. your wirp page on bloomberg i can imagine how my times it's being summoned. you've got 1.5 fed eases priced

in, it's good to be an interesting meeting and, in two days after the election. trump wins and for the consumer confidence numbers will flip. so we will get that economy all of a sudden. but when i step back and look at the sources of vulnerability i do think august 5 is consequential because of 3% down moving the s&p doesn't happen all that much but a 65% up move in the vix on the back of that should tell us something about the fabric of risk-taking. you talk about the economy. they are going to sync up. over the long term. but look at china we obviously have a very weak economy but they goosed asset prices quite a bit. look at jd. gigantic amount of call buying yesterday. huge rally in etf sprayed and so over short periods of time for

me the financial economy matters quite a bit. positioning matters quite a bit. i just try to take what the asset prices tell us and i look at things like gold and to me, gold as a it occupies a important place in the portfolio. it is scarce, it is in demand by central banks. and it's got this i would call anti-correlation aspect or characteristic to it which is on the worst days for the s&p gold hangs in there. that's a very important property to have in your portfolio right now. >> there's a lot i want to unpack about the fabric of risk and help bonds are part of that in a new way they don't ask is the same kind of stabilizers. is there any way to quantify how much and how this is that risk lies with bonds as much or maybe even sometimes more than an -- in the equity space. >> let's first recognize in a true pinch bonds will take on

their risk of characteristic. if you got an absolutely systemic shock with the s&p was down when percent, i think bonds will rally. in the non-truly systemic event you've got a couple of things that are problematic for bonds. i think we are largely passed this since 2022, the rate hiking cycle we had to do something about inflation, they had to go fast, we had this joint drawdown in stocks and bonds and the second as i was alluding to with china was the sheer size of the debt outstanding. and sadly no business. if the u.s. government is a company and you've got this debt outstanding you really hope the politicians would be talking a little bit more sensibly and you guys ran the story yesterday about some of the stuff trump was having out there. i think with letting the tax cuts continue to go and then no taxes on tips and so forth, you've got another 11 trillion.

is throwing a lot of stuff out there as is harris. there doesn't seem to be an adult in the room with respect to them credit we consequential asset class. >> are you saying heading into november the big risk potentially for markets is a wake-up call about this. we've been hearing a lot about the deficit and it hasn't really mattered. i'm not can use liz truss's name but there is this fear may be you do have some sort of reaction in the bond market in a real way on the heels of the election. >> the u.s. is still the global reserve currency and it's not going away. so the trust moment was a big deal. i think we should look at it and certainly at least try to learn from it. i don't think it is that but i do think the buyer base of the u.s. treasury market has evolved quite a bit over the last decade or so, the fundamental owner is not necessarily the chinese central bank in the way that

those holdings are down. you've got basis traders, forecast trading this arbitrage between cash and futures i don't think you want to lean on relative value hedge fund traders as the key chief component of the demand options. so it does worry me. inflation is coming down the cost of debt is coming down. these interest costs are punishing and it's just hard to me to imagine a scenario in which we grow. maybe there some gigantic piece from ai but i certainly just can't help but look at i am a deficits gold as paul krugman used to say. i think it's something with the pay close attention to. >> where you think the volatility will come in around the election. everyone's nervous ahead of it. but after you have places like georgia saying they need to hand count every single ballot it may be days or weeks until we know who wins this election. >> so interesting to look at the

chicago board options exchange and their voracious appetite to make more money have given us more options listings so you have options that expired november 5 election day and november 6. such granularity that you can look at the differential in prices and so we look at the volatility. it allows us to score the price and the different between november 5 expiration or six effectively implies that the s&p could move 2.5 or more percent on november 6 the day after. i think there's a couple ways to look at it. if you go back to 2016 you will remember when trump was ahead and was coming to everyone's recognition but he was going to win the s&p was down four or 5% and then rallied strongly the next day the people came around. this guys can cut taxes, the chaos might be good for markets. when i look at the differential and price is now my conclusion is a learning experience from

episodes like brexit. john will remember quite well liquidity just dries up. no one wants to be short volatility in this convex insurance contract downside puts us. ahead of something you just can't price. this set up i think on both sides is to call foul on this thing. it's not a good thing. when you pull back liquidity from a market the clearing price goes up. this could be less supply of insurance of options to the marketplace and that's can drive up the price. i just think that's another thing we are supposed to worry about in this theme of the gapping out of prices. jonathan: you're already questioning the risk mitigation of treasuries. going into the election. are you saying for the people coming on this program right now we should be pitching something else? >> i think we should be looking at gold, gold is this trending asset. it doesn't have the same consistent correlation characteristic to treasuries.

again in a true risk off i do think treasuries have been around. but i do think this supply is an overriding issue especially for the back end. the front is coming down. we've already priced out sort of eight more cuts to the end of 2025. but the back end the 10-year in the 30 year i think the supply dynamics are going to be a headwind for the traditional risk on risk off the shock bearing characteristics of treasuries. >> gold all-time highs. good to see you. let's get you an update on stories elsewhere this morning with your bloomberg brief. yahaira: unicredit ceo says he won't seek a board seat at commerzbank. the italian bank has made a major stake in the german lender staying a full takeover is an option as the german government strongly opposes the move. amid the intense battle for the future of commerzbank the lender has appointed a new ceo.

they will take over leading the 150 four-year-old company through one of its biggest challenges. sam bankman-fried's ex-girlfriend and co-conspirator in the ftx fraud caroline ellison has been sentenced to two years in prison. the judge saying ellison's help in the conviction of bankman-fried was remarkable and praised her testimony but noted the case was one of the most serious financial frauds ever committed and that her cooperation cannot be a get out of jail free card. like bankman-fried ellison was ordered to forfeit $11 billion as proceeds of the crime. >> the trump campaign says it's been briefed on real and specific threats by iran to assassinate the former president. a campaign spokesman says a representative from the director of national intelligence told trump about the plot. but there's no indication iran's efforts are linked to the two recent attempts on the former president's life. the suspect in this months

incident at trump's florida golf course was charged yesterday with attempted assassination of a major presidential candidate. that's your bloomberg brief. jonathan: up next on the program taking america first to a new height. >> we will set up special zones of federal land with ultra low taxes and regulations for american producers. these will be ideal spots for relocating entire industries that we've taken in from other countries. >> that conversation up next. live from new york city this morning, good morning. ♪

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even 1/10 of 1%. in the bond market resume declined up by two basis points on the 10 375. the commodity market checkout gold, a winning streak through yesterday. pulling back just to touch just about unchanged on the session. dean of macro risk advisors on the program moments ago if you're worried about risk into the election may be treasuries won't provide you with those risk mitigation characteristics, perhaps you should look elsewhere. >> talking specifically about gold, there is a question here about going forward whether this is the new uncorrelated asset classes pesci was central banks buying i don't want to say concerns about inflation with something you use this morning but a sense that maybe this will be stickier than people think. >> we will talk about more through the morning. whether it continues i don't know but we have to identify the current trend, it is gold, it's things tied to china read we saw yesterday you saw it with rio,

tech firms, things start to turn in china. i was looking at the trend last week trying to work out if it continues. >> china's been exporting deflation. if they start to grow not necessarily inflation but stabilizing that deflationary force. >> gold off record highs paid under surveillance taking america first to new heights. >> the centerpiece of my plan is for a manufacturing renaissance which will be a 15% made in america tax rate. and we will set up special zones of federal land with ultralow taxes and regulations for american producers. these will be ideal spots for relocating entire industries we taken in from other countries they're going to come in at levels that no one's ever seen before. >> donald trump pledging to recruit foreign companies to move their manufacturing operations to the united states

using tax incentives and the threat of tariffs. , harris while on her views on the economy in pennsylvania later on today. joining us from a nation's capital, enda curran and washington d.c.. how different is what trump is proposing from a we already have. >> it's very punchy and goes to another level on the one hand former president trump talked about bringing corporate taxes down 15% and saying if you don't make your goods in the u.s. you will be facing tariffs and that is a new dimension on the trade story that has been developing in recent years thousands of businesses will move here and trillions of dollars worth of wealth as a result, but the economists watching this yesterday when i spoke to the made the point that on paper that would prod more production to come to the u.s., but it could also stoke another round of trading partners retaliate on the inflationary aspect to it as

well. it's kind of a double sword and don't forget it depends on the balance of power in congress whether or not president trump look at the corporate tax rate cut through because that's obviously a big part of this equation. >> he also talked about appointing a manufacturing ambassador who the sole task would be going around the world and try to steal other countries industries. what industries is he going after? >> again we would have to see the exact details and mechanics of this already some industries are fully well protected. there tariffs on industries. having a lot of its production based here. the details of this will remain to be seen. we will see our china is being treated. but i think the broad picture is yes it adds to the idea of the u.s. again will be putting a focus on rejuvenating manufacturing here, that's been a theme in the biden administration through subsidies and grants for green industry. president trump as well was promoting manufacturing. this would appear to be taken to a new level.

the issue when you speak to businesspeople and economists watching this on paper that sounds ok but a big question is how do trading partners retaliate and how will that impact trying to do business around the rest of the world to do so. very much a double-edged sword and remains to be seen. >> still waiting for a lot of details from both sides of the aisle. we will hear from, harris today i imagine she will talk about an opportunity economy. she continues to talk about this idea but what is that. what do you expect her to say in pittsburgh. enda: a lot of anticipation on the vice president's economic policies today the speech to dust vice president will detail on the one hand speak about the need to protect workers, wages and benefits but on the other hand also makes clear the vice president is willing to talk and do business with big company leadership and is making clear she is getting the balance right between labor and capital, the

theme of this speech again will be around incentives, pragmatic incentives or manufacturers but that will be delivered in pittsburgh, that's rbc very symbolic and of course we are told the vice president is planning a lengthy document on the economic policies. a lot of people will be waiting keenly to see what's happening with that. we had detail on her child tax credit on the measures against a price gouging measures to promote a home housebuilding for example but are still i think of you out there more detail than the vice president economic policy might be a first step in getting some of that. >> appreciate the update, think usurping potentially some more detail a little bit later. >> the question i've had and this is been true for both candidates is what will the market cling onto. talking about companies as well, c-suite said are not necessarily taking action. that's where the lack of clarity is. what's feasible. a lot of this is expected to get

left on the cutting floor. jonathan: do these promise into legislative reality. >> if they do what's the bigger risk, potentially the growth profile. >> up next, making a call on 2025. i'm not sure how you do that but we are having a go. the chief economist as the global economy looks to move beyond peak inflation, that conversation just around the corner. equity futures on the s&p 500 slightly softer. just a little bit negative, no drama. 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

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jonathan: the rally in yesterday's session i .20% on the s&p 500, pulling back a little bit. down by 0.06%. mastec 100 down by .20%. the russell just hanging in there. 10 year versus 10 year -- two year versus tenure, last positive since june of 2022. 22 basis points on the screen right now. lisa: part of it is because the federal reserve seems to have perceived to buy the market, but the rate cut bar for that is not

that high. representing the mainstream regardless of others coming out to temper the message. yesterday, the details of the consumer conference board just was not good, but as justification for another 50 basis points.potentially jonathan: you read the details for that and listen to what the governor had to say, the hawks and the fomc sound really one-sided. listen to this quote, i continue to see greater risk to price stability, especially when the labor market is nearest a full on labor market. they takes on the labor market are not as constructive elsewhere. lisa: to put details, the consumer confidence read yesterday coming out with a differential of those saying that the jobs are plentiful and that those that are scarce or hard to get fell to 12.6, the lowest reading going back to march of 2021, below where we

were in the pre-pandemic era after 2017. there is a real question here about how much you are seeing deterioration that is not been quantified and the headline numbers. citigroup came out and said this is the reason why we are concerned about a recession. jonathan: typically you see upturns before downturns and people get anxious about the job market. that is what you expect would be intuitive at this point. lisa: that said, we have seen fakes before. it has been challenged in terms of accuracy. confidence is a fuzzy thing. there is a question about what is influencing it. there is a good to have uncertainty in the delta between manufacturing and services, between lower and higher income. these are the widest gaps we've seen in a long time, so it is hard to assess averages and what it reflects. jonathan: the word you used, confidence, what can china do to

restore confidence? check out the currency, breaking seven for the first time in six months following a rate cut overnight. under surveillance, china cutting its one-year loan rate by the most in history as they kick off a stimulus program, cutting the interest-rate program by 30 basis points. with policy moves widely expected. lisa: the key is what are the policy moves to ignite expanding? they have to have confidence in the economy. even with our growing costs that are historically low for china and yields that have fallen to record lows, you are not seen a big uptick in borrowing. this technique is a sentiment shift we have to still see. annmarie: but you said earlier is clearly right, they know they won't hit the gdp target, but is this the bazooka? it isn't unless it is followed

up to the school stimulus needed in the real economy. you have made this point, does china need to wait until november 5 to decide how much they need to use that firehose? jonathan: do you need to deploy based on the november election? we spoke to goldman next yesterday and they said this have a bigger impact on the board of economy. we saw all the china proxies listed here rallying big-time off the back of the moves. lisa: with the protection patrol supporting two equities, there has to be a feeling where everyone wondered why is this administration holding off on stimulus when you've seen growth failing to perform? the point the china beige book was making was the are acknowledging the reality which is weaker than what they've said. if they acknowledge the reality, that may give people confidence that they are looking at the economic side of the mandate

rather than an ideological one, and that may give businesses more confidence. jonathan: i would like to get an update on negotiators for boeing workers. they are maintaining their demand for a 40% increase. boeing said it will go for additional time for the union to schedule a vote among members. annmarie: so they are giving them a lot more time. potentially, you could have this best and final with maybe some wiggle room. what caught my eye this morning was that internal boeing survey and the faa looking into what is going on. many factory workers felt the pressure to prioritize speed rather than quality. so you see what is going on, and then you try to think about who has the leverage? because time is of the essence. lisa: we worked out the problem initially, and i we have a new

ceo, and we're trying to have a sense of how deep the problems go. some of the complaints they have coming out of the worker base -- jonathan: it is a nightmare for incoming leadership. you would like to lay out your plan, and you are patching up leaks. lisa: could you imagine being in that role? jonathan: brutal. lisa: i'm going to be the white knight, but then ugh. jonathan: and the bar is pretty low for the incoming ceo. boeing just a touch negative in the premarket. israel and hezbollah are intensifying attacks. hezbollah -- israel intercepted a hezbollah missiles launched, the first of its kind. annmarie: another redline evaporated, given that this is the first time he projectile fired from lebanon reached tel aviv. the question is whether or not we would see a ground invasion. you have to look at what the defense minister was doing,

posting pictures of him inspecting israeli troops simulating combat in lebanon. potentially this will be the next stage of the conflict. jonathan: to most uninformed observers, this looks like a war, is that the only thing separating this from being an all-out war? annmarie: it feels like it is already a war. it depends on how people would like to characterize it light which. they would say potentially it is a conflict and they are worried about a wider war, but this is a warlike conflict and the next step potentially would be a ground invasion. at that point, you cannot have officials backing off of characterizing it as such. lisa: one of the big distinguishing features is what is the ultimate goal? to push back hezbollah fighters to bring residents back to the north of israel. his eight to have a cease-fire with gaza for hezbollah or is this more significant? to me, that is what is going to distinguish a prolonged conflict

from something that is short on specific. jonathan: let's turn the page to this story, the latest economic outlook released, expecting global gdp to stabilize will continue disinflation. debt sustainability is still a top issue. joining us now is alvaro pereira alvaro pereira, the chief economist at the oecd. i would like to get to your forecast on the gdp. it is expected to slow but growth is expected to be at 1.6% this year and 1.6% 2025. one, why the slow down, and two, why do you think we can actually stabilize around 1.5% gdp in america and not go to someplace worse? alvaro: good morning. great to be on the show. first of all, i think it is important to realize we are

talking about a robust was economy compared to the rest of the world. and other parts of the world are not doing so well. under the circumstances, knowing we had a huge pandemic. first of all, there is a carryover issue. and there is a fiscal carryover, and that explains part of the slow down, so if you take into account quarter on quarter, we would forecast 1.9 to 1.6 but the second issue is why is this happening? first, it has to do with consumption, so a lot of people have savings during the pandemic and they ran out. this is also good for consumption.

there will be a slowdown in government consumption which is welcome because we think both the deficit and debt in the united states, we should go back to fiscally driven policies, so we think this is important to go there. there's also an issue regarding exports and investment. we think that one of the main reasons why the u.s. will do well is because it continues to be a dynamic economy compared to other parts of the world, even though the slowdown is explained by the consumption, government and individuals.you make a great case for why we could see lisa: lisa: you make a great case why we could see a slowdown, but why did you have the europe region increasing to 1.3%? i know it is downgraded, but what are the accelerators to get us away from what we are seeing now? especially given the trajectory and the industrial base of germany?

alvaro: germany almost stagnated this year, almost close to zero. we see france doing better, part of it is because of the olympics but partly because of consumption we have italy doing so so, and next year we think there will be higher growth in europe, and we see higher growth because we think the recovery that we see, there is a chasing power, and it will continue because wages are continuing and it will have an impact on consumption. we also think that some investment will take place, partly linked to the resilience fund, so this will help a little bit and this explains better performance of europe but not spectacularly worth rates.

lisa: where's the growth really going to come from? where is the new growth tension in europe at a time when challenges for germany are structural? especially when chinese growth has been unreliable. alvaro: you mentioned something that is essential. part of the problems of germany right now are cyclical. also because consumers in germany have been prudent, so they are saving more than other parts of europe. but there are also structural issues. he mentioned competition with china and manufacturing, and there is less demand from china, as well, so that is having an impact. there is another issue to highlight. we think that germans should

focus first of all on improving their infrastructure, especially digital, but in particular, it is time to go back to reforms in germany. there are many competition friendly reforms needed and there are too many barriers in the general economy, and still too difficult, we think this has an impact. we calculated the impact of all of this, and you see that in order to be with the best practices, economies like germany could profit and increase growth if they would do this reform. so the structural issues linked to china and the structure of the economy, we think it's important to go back to reforms for germany. annmarie: the pboc out with another move today. is any of this going to help spur the chinese economy? alvaro: well, we are forecasting 4.9% this year and 4.5% next

year. this was before the stimulus. i don't think there will be a huge change in the forecast right now for two reasons. we know that their chinese exports are doing fairly well in terms of manufacturing particular. consumption continues to be subdued in china, so this could help a little bit, but we think really the main ailment of china continues to be high debt, private debts. private debt is about 170% of gdp. it is mostly quasi-, but it is private debt, and on top of this, we know there is a large real estate market, larger than most economies and there is adjustment that will have to continue. the question is whether the measures will be able to help demand or not. it is a question we will see in the next few months, but if you

look at historical examples of other countries, when you have a big real estate adjustment, it takes longer than authorities would like. jonathan: appreciate the update, thank you for joining bloomberg. alvaro pereira of the oecd on their outlook for 2024 and 2025. another report suggests u.s. is ok, robust, the u.k. doing all right and germany is the weak spot. every report that looks like this, germany is the weak spot. lisa: when will that change? and if it doesn't, where's the growth engine in europe? you could talk about structural or cyclical but what is on the other cited this and how different does that make the balance of power? jonathan: that is the latest from the oecd. here's your bloomberg brief with yahaira haggis. yahaira: berkshire hathaway sold another $863 million of bank of america stock the last three trading days, bringing the

estate to 10.5%. they need to disclose trades with make america within days for as long as it owns more than 10%. income america shares fell 1% yesterday and are down 10% since brookshire reduced its holding aggressively in july. volkswagen and unions are starting negotiations today over a wide-ranging cost cuts. they plan to close factories in germany for the first time as sales slow. it comes after they scrapped job making productions. they have pledged to strike if vw sticks to the plans. nancy pelosi's has been sold more than $500,000 worth of visa stock less than three months before the company was sued by the u.s. justice department. the doj filed federal and antitrust charges against him yesterday -- visa yesterday, accusing them of modern apple lysing the debit card market --

accusing them of monopolizing the debit card market. that is your bloomberg brief. jonathan: when are we going to do something about all of this? lisa: you mean, have accounts they cannot touch? jonathan: i don't know what happened on this instance, but the appearance of a conflict of interest is a problem. so the appearance of conflict of interest is a problem. lisa: if you knew i had done that, could you imagine? we are not allowed to him we should not be allowed to. jonathan: imagine if the standard is a generalist, imagine congress? annmarie: there is the ethics act, but a bunch of senators did say that they needed to push this through. i don't know if that will ever happen. jonathan: next on the program, a diplomatic solution. >> on each side of the

israeli-lebanon border remains, a diplomatic solution is still possible. jonathan: next from new york, this is bloomberg. ♪

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and assisting bank tellers on the edge. watsonx helps you deploy ai wherever you need it. so you can take your business wherever it needs to go. ibm. let's create. jonathan: stocks on the s&p 500 pulling back by .10%. the 10 year, 3.75. a diplomatic solution. >> we have also been determined to prevent a wider war that engulfs the entire region. hezbollah, unprovoked, joint october 7 attack, launching rockets in israel. almost a year later, two men on each side remain displaced. full-scale war is not in

anyone's best interest. jonathan: hezbollah fired admissible in israel -- at israel -- fired a missal at israel earlier this morning. he former senior u.s. intelligence official wrote that israel will seek to avoid becoming embroiled in a long time ground war in lebanon. this could change of hezbollah successfully uses its largest missiles against israeli civilian centers. mormon joins us now. welcome back. i keep hearing the same line that we are on the brink of a now loft war -- brink of an all-out war. and i look at the pictures and say, isn't this what we already have? what is it if it is not a war? norman: good morning. tough semantics if you are catching has villa houthi missles, it is a political comment, not a statement, and

for all intents and purposes, this is a war that will intensify the coming days. annmarie: we see operations on the ground by the israelis? norman: absolutely. they are focused on air strikes cyber activities, and intelligence driven strikes. round operations risks a costly long-term involvement of israel and lebanon. it may follow after completion of major airstrikes, but it is likely too early to say. annmarie: you also say the u.s. and european partners have limited influence over the conflict and they will seek to avoid involvement and are unwilling to employ enabled diplomacy. what would that look like to enable the path of diplomacy were talking about? norman: for israel, it is returning the population to their homes and that means this sensation of hezbollah attacks. we have an international peacekeeping forum that has been of little use, the lebanese

military is unable to contain has villa. in theory, if international forces were able to prevent has villa strikes, that would allow israel to cease its violence, but this would involve foreign actors in lebanon, and they are unwilling to do this. lisa: how asymmetric is the conflict? report about the walkie-talkie and beeper explosions, targeted strikes by the u.s. on hezbollah leaders that have killed a number of senior militants. i wonder from your vantage point, how much does hezbollah have to return? norman: hezbollah probably has lost a generation of its most seasoned leadership. this is irreplaceable experience given their involvement in the syrian conflict. it has lost half of its muscle force but it has thousands of remaining. and this remains hidden in civilian areas.

israel has a strategic advantage, their intelligence remains, if imperfect, extraordinary. has villa placed its muscle commander within one day of the first's death and israel was able to kill the replacement within 24 hours, as well as several subordinates. israel was able to destroy the launcher aimed at tel aviv within minutes of the firing. lisa: do we have a sense of what is behind this? i'm throwing this out there, but is there a sense that with supply chain disruptions, they were tracking devices implemented throughout? do you have a sense of how deep this goes? norman: israel has demonstrated for many months the capacity to find, fix and eliminate hezbollah's most secretive officials and sensitive facilities, and frustrate many of its operations that implies a

pervasive intelligence picture on the country, which must be terrified -- terrified to hezbollah's leadership and demonstrate that israel has done an effective job of marshaling resources of personnel. something that likely took years to develop. annmarie: overnight we heard about the trump camp being briefed from the office of director of national intelligence regarding specific threats from iran to assassinate him. what is your reaction to this? norman: this is a very significant threat, but it comes after many months of iranian threats to former american officials, private citizens, who are warned that they are being targeted, and now we have the iranians in essence moving up to what they think might be the next redline. here's the threat to keep in mind. iran often employs unprofessional actors, criminals, hells angel

personnel, to conduct operations. they don't have great training, and the weapons they tend to gravitate towards our weapons of mass casualty. my worry -- i have no evidence -- is that an explosive would be used to kill the former president, but the best chance of getting to the former president would be a campaign event. therefore, any threat against the president is hypothetically or in theory a threat against those who attend his rallies. this is a significant development that shows the collapse of deterrence against iran, at least in this area. jonathan: thank you for your time, norman roule, a shocking note to finish on. annmarie: absolutely, considering norman talked about how iran would go about this and what that would mean for the former president and his supporters. jonathan: next, tobin marcus of wolfe research, lisa coleman and danielle hale of realtor.com.

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>> i think markets globally are reacting to a fed pivot. >> relationship between bonds and equities could be undergoing a shift right now. >> you are getting rate cuts in resilience economic environment which is good for stocks. >> we might be near the end of a big rotation. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: live from new york

city this morning, good morning, good morning. the second hour of "bloomberg surveillance" starts south equities on the s&p 500 are unchanged after closing at an all-time high for the 41st time so far this year yesterday. the russell positive by .20%. new equity market coming wednesday, very close to record. lisa: how much does this challenge the idea that so many people have been racing that if you see both fall or any concerns, you will see that the negative is a boost. we saw a rate cut coming in november on the heels of a worse than expected consumer confidence data. try to square that with the market. jonathan: i think the bond market will work up to that. the equity market woke up to that, too. nvidia change the story. i would not read into yesterday. bad news is good news anytime

soon. i still think bad news is bad news. lisa: you may have to do it on where leadership comes from but how high is the bar at this point for bad news to have a broader ramification on equity markets that are so skewed to nvidia? one thing that i think people are talking about is how the stock market is not the economy and how concentrated the leader is. the idea that you could see positive or negative returns that are not correlated to the signals and the broader economy. we are seeing terms in this every day yesterday, and that metric who said that jobs were plentiful, and those who say jobs are hard to get rose. that cap it starting to narrow. it has been on a long streak, and this is why a lot of economists are concerned and this is what the fed has been intentionally leaning into. jonathan: the economic data is not robust healthy labor markets but yet you still hear that word, healthy, on repeat.

what i worry about is that the market is basically supported by one data point right now, jobless claims, and we hope layoffs don't climb anytime soon. if they do, you will see a lot of those quickly. what we are excited about is acceleration in growth, proctored not just by the rate cut but china. i think you see a little bit of that in the market cross asset. lisa: especially if this is the beginning for something bigger from china, if you end up with a bigger stimulus, could you fueled growth for a number of companies? there's also something that they talked about yesterday, the idea customers investing, so there are cyclical trends and to your point, how big is the gap between a bullish read on the payrolls and a bearish read? that will be a mode of potential

volatility when people are clinging to data points. jonathan: payrolls are two fridays away, and the s&p 500 just about unchanged on the morning, relative outperformance on the small caps on vessel. deals still climbing, the 10-year, 2.7583. lisa: we question how high the yields could go. the bonds are still the ballast of the market as offset of risk and those who say maybe that this was a different time. this is becoming the source of risk. you talk about the fabric of risk and how it has been thought of as equities or riskier bonds, but it is now potentially even treasuries, which is why they are looking towards gold, that there is a question about whether 60/40 could operate in that sphere. it is an ongoing question. jonathan: gold just off all-time highs. coming up, sarah hunt of alpine

saxon woods. tobin marcus and lisa coleman on revenue growth. stocks are coming off their 41st record high of the year. sarah hunt saying that equity markets are running with them all clear ahead signal. if the economic environment remains recently good, we expect the broader market to catch up to include mid-cap and small-cap stocks. good morning. let's pick up on what we talked about, old picking up, all-time highs. we saw a with the minors, as well. do you think something is going on here with a pickup encyclical growth worldwide? sarah: i think the gold move is separate from other metals because old, the central bank has also buckled, and the issues about rheingold because it has stability but on the other metals, it was a signal from china because there has been an

area where those stocks have not really performed on the metal has not performed so you had a run of copper a few months ago and everybody got excited, but the slowdown in china took the wind out of the sales of copper prices and other industrial metals. a part of this is on the back of china stimulus. i think that as we have the combination. jonathan: do you think it will fade? sarah: on the metal side, it depends on the global economy. everything is dependent on the global economy, including big caps and small caps. you need the economy to do well for that to work. if the economy is going to be ok, then you are only going to chase the metals. they will have up and down drafts, but then you can say i feel comfortable. if you think the economy is going to slow and/or it will be very bad, it's harder to look at those things that are economically sensitive. lisa: is what you are talking about very battle very good the difference between 50,000 or

100,000 for payrolls? sarah: that's the statistic everybody is looking at, but it is about consumer spending, and you are looking at the dax with highs. if china can stimulate and get its economy going better, that will have globally seen an economic up trend. i think it's dependent on what the fed is going to do and what the number comes out to be but in the end it's about the totality of the economy and not just those numbers. a slowdown in the labor market would not be a great thing because that tends to not be something that turns quickly. lisa: nobody has an edge. that's what strikes me. nobody has an edge in understanding the economic backdrop, let alone the political and other potential unknowns. do you lean into something that is what a lot of people say could be done on its head if

there is market deterioration that is visible in the market? or do you get more cautious, dealing into other potential hedges? sarah: the question is, what are you doing now? you are keeping your big tech because they are generating fashion. but when you look at things were the valuation has support and when you look at the market, you really need things to continue to do well. then you look at smaller companies and try to find some growth because you are less worried about the balance sheet expect, and used -- aspect, and i think you just need to be looking a little bit more broadly because you had such a high concentration. annmarie: we've seen a lot of false starts with small and mid small caps, why now? sarah: this goes back to where's the economy going? if the answer is that you will see reasonably good economic stats the next year, that is ok for small to mid-cap.

we get into a recession or it slows down, that is difficult. and the labor market could be worried about creating a growth scare. annmarie: the former president talked about bringing manufacturing to the u.s., could these false starts and stops potentially have to do with how he's pulling? sarah: i think it's a combination, but if you talk about managing what you need for ai and everything else, they are going to put manufacturing back and you also have to have great planning, but right now you don't have the power to do it. there are some ancillary issues echo around. jonathan: when you start a nuclear plant to provide power to a tech company, where is this headed?

sarah: that is one of those things where you have to look at nuclear if you are going to say we need all the things we want about how we are going to deal with energy infrastructure. there was a renaissance and then that terrible issue of with fukushima cut that off. with that is telling you is that the demand is there enough that people are willing to do things that would have been unthinkable 10 years ago. you look at what happened in europe and the capacity of what they shut down, and you wonder if that is not something they are thinking? because it is creating problems. jonathan: so these are opportunities unavailable a decade ago, but are you investing in this and how? sarah: we like energy infrastructure. chart industries exelon of the equipment that goes into liquefied natural gas. and other agents like hydrogen or something like that, you have to look at the infrastructure. we went through a time where all of the oil was investable and hydrocarbons were nearly un-investable. now people are coming back to the fact that we need power from

a lot of sources and we cannot rule out hydrocarbons so you see a lot of areas where that investment will continue to take place. lisa: we are talking a lot about investment in the u.s. and the political spirit of the u.s., u.s. stocks. how much do you have to stay in the united states at a time where all these questions are how much growth are we going to get, not going to enter a severe recession? or in the case of china, can we pull ourselves out of an inflationary spiral? sarah: we are very u.s. focused. we stay looking in the u.s., the u.s. is an important part of the economy. you are looking for companies that are in good shape that can return cash to shareholders. you look at capital returns seriously, but the u.s. is critical. annmarie: is it u.s. exceptionalism on its own, or is

it for places doing poorly like germany? sarah: i think that with the u.s., with that innovation, that does drive. so however you would like to characterize that, it makes a big difference in execution for capital markets. jonathan: sarah hunt of alpine saxon woods. payrolls are two fridays away. the survey coming together, the median estimate out of 7, 140 is the estimate going into next friday. 142 was the previous number. lisa: if it comes out like that, what do you do with it? that is the number that will leave nobody satisfied. we get to do more of this. jonathan: the highest is 150, the lowest is 100 k. with your bloomberg brief, here is your hire a. yahaira: openai has pitched a biden administration of the need for data centers to power artificial intelligence

development. the tech startup framed the proposal less necessary to compete with china with each data center needing potentially as much power as an entire city. kamala harris and donald trump have no plans to debate again, but the candidates will participate in separate town halls. the broadcaster said undecided hispanic voters will ask them questions and the events will air with spanish-language translations. the trump town hall will be on october 8, and harris will have her turn two days later on the 10th. sean diddy combs and sam bankman-fried may be bunkmate's. the wall street journal reported that they are being held at the same unit at the metropolitan detention center in brooklyn. combs has been in jail since last week and was transferred to bankman-fried's unit. combs is being held on sex trafficking charges and

bankman-fried serving 25 years for fraud and conspiracy. jonathan: more from yahaira in 30 minutes. next, economic policy taking shape. >> under my plan, american workers will not be worried about losing jobs to foreign nations. instead, foreign nations will be worried about losing their jobs to america. jonathan: tobin marcus next, live from new york, good morning. ♪

jonathan: just off all-time highs on the s&p 500, negative by 0.02%. under surveillance, economic policy taking shape. >> we are going to rebuild manufacturing, and it is going to happen fast and beautifully.

and under my plan, american workers will no longer be worried about losing your jobs to foreign nations. foreign nations will be worried about losing their jobs to america. you only worry will be deciding which job to take. jonathan: making job openings great again. the former president of the u.s. and kamala harris announcing economic plans across swing state events. harris makes her case later today in pittsburgh. joining us is tobin marcus of wolfe research. ultimately it starts like this, when you go to the polls, they trust the former president with the economy more than the sitting vice president. the gap is narrow with a slight edge. when you look at national polling, harris has a bigger lead, although we know the economy seems to be the most important issue to the election right now, so it leads me to the question, do think that national polling is underestimating the former president? tobin: i would not bank on the

national polling underestimating trump. there is always a possibility of pulling errors. historically, the predictive polling error, and the numbers make sense. the single most important issue, and 2022, and the midterms, we saw and a time when inflation was out of control at the time, and even more upset and they were not able to convert them the way they were expected. and they have very stark differently -- starc, different agendas. annmarie: in your note, you talk about the suspense of a democratic trifecta, what will be the riskiest parts of a blue sweep? tobin: the reason why i think

markets are probably going to have a worse reaction in other scenarios that we are looking at, is because you get the possibility of retakes that harris is proposed. and harris is very unlikely to have unified democratic control to go ahead and do everything there talking about. trump is more likely to have unified republican-controlled. more importantly, the things he's talking about i things you can do on his own. he is doubling, tripling down on tariffs. i do know how anybody can listen to the agenda he's laying out the way he is laying it out and thinking that it is cheap talk on tariffs. a plays a central role in the way things about his economic strategy. annmarie: you also outlined risks and surprises we could expect before november 5.

which one is more likely? tobin: i think the thing that we have been getting the most incoming questions about this week is the possibility for support strength on the east coast that is coming up. it is nationwide, something you're worried about, economic disruptions, and for the campaign, it probably goes to trump's benefit, our base case is that most are not as sweeping as i think feared. and that is an uncertain situation we are taking day by day. lisa: which state -- annmarie: which state can be most affected in terms of impacting voters? tobin: you have all the coastal states with some concern about it, manufacturing across the upper midwest. and really, we think about what

it means for any particular voter and disruptions they face and the chaos and nationwide economic disruptions, and the sense that the livermore -- the labor movement is overreaching on and harris are not strong enough to manage the situation would be the concern for them. lisa: i love that phrase, atmospheric of chaos. and curious going forward, if you are looking at the potential for house or congress that is for one party a question of what one party can do within itself, the republicans cannot get together to come up with a provision to stave off the debt ceiling limits, so you see mike johnson partnering with democrats, basically saying what is going to happen, regardless of who was at the top of the ticket. tobin: some things will need to be done on a bipartisan basis, keeping the lights on, that is what they are struggling with this week but i do think that if we get -- even the markets will

be very narrow, they will have to pass a big tax bill on a bipartisan basis. so i think there will be a very strong incentive for the republican congress to hold together on something, so i'm not betting on republican disarray to completely stave off the threat of things like partial ira rollback. i think they have to take the risks seriously, even though we have seen a fractious republican contention this year. with trump, there is strong incentive to hold together and pass something and that something to take seriously. lisa: we have heard some of kamala harris' proposals, and you say, what you say -- what you see is what you get. what are you listening for today? tobin: in terms of harris, it is more about with the policies say about the candidate rather than what the candidate says about policies.

she likely will not have a chance to do what she's talking about, so the agenda laid out is mostly by way of letting voters know what she stands for. it will be interesting to see what she says about industrial policy in particular to indicate that she will talk about targeted incentives and building on biden's record in terms of the chips act and kind of trying to put targeted policies in place to bring strategic industries back to the states. i will be watching what she is saying with interest for the medium-term future and how much both parties are shifting towards industrial policy with the likelihood she could get any of that through 2025 before proposing it today is quite low. annmarie: don't the policy speech she gives now matter because of how many times she's flip-flopped the past years? tobin: absolutely. it's about giving voters a sense of they understand what she stands for. at this point, these -- she is

trying to let swing voters have a sense of this is what she believes, this is what she will try to accomplish, and these are the key industries she will be fighting for. the actual content of a biden-harris presidency will be case-by-case decisions about regulation, but given how dramatically her stances have changed on issues from 2019 to today, i think she needs to give people a sense that they can trust that this is the real kamala harris and that things she is promising to do now represents her vision for the future, even if she's not able to enact them. jonathan: tobin marcus, thank you. borrowing costs in the mortgage market, the lowest and cheapest in two years. refinancing mortgages is surging for a second week. the mortgage bankers association's refinancing index

jumped 20.3% in the week ending september 20. lisa: if you borrowed money at 7.5%, wouldn't you refinance at 6.3%? i mean, you are going to see more and more of this. the key issue is how much is this refinancing and how much is new purchases? when you look at how long homes are sitting on listings, even though the number of homes is going up, they are sitting on listings for longer. that is the gap people are looking to close. annmarie: people are excited to come back to the mortgage market, but when you see refinancing, think of the broker who says, don't worry, just refinance because you know the fed will keep cutting. jonathan: what will it take to unlock the inventory that has been locked up over the last few years? lisa: the inventory and the true demand on what housing prices would be. that is what i was reading in a number of reports yesterday, not for personal reasons. jonathan: of course. lisa: in some places you see the housing prices kicked down,

other places continue to climb, but this is really the key question. you start to unlock that, which direction do you go? jonathan: we will talk about this more in 20 minutes time. nothing personal whatsoever. daniel hale of realtor.com joins us in about 15 minutes time. lisa coleman joins us on the latest on the global credit market next. futures just about unchanged from new york. you are watching bloombergtv. ♪

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jonathan: equity futures on the s&p 500, down by 0.0 3%. after closing at another record and yesterday session. the nasdaq 100 down .20%. nvidia lifting the world of tech yesterday. lisa: i looked as to why, and it could be a sense that jensen is done selling shares, so that is the reason why, nvidia, single-handedly, lifted the stock market. it raises the question of how divorce the marketers from broader microeconomic stories and the difference between 100 and 150,000 k, 150,000 jobs,

would that make the difference between a bullish or bearish market? jonathan: the equity market is not the economy and that's been true for a while. if you straightened out that story yesterday and looked off of the back of consumer confidence, there was worry and i think that gets people anxious going into payrolls. lisa: a feeling of what are we missing? are we on a road to deterioration? one thing that is notable was andrew hollingworth of citigroup said a variety of indicators believe the labor market is entering a. 'of weakening -- entering a time of weakening and consumers feel like job availability relative to the lack thereof is really going down. they are not seeing the optimism, and going back to levels we saw at the edge of the margins from the pandemic and 2021. jonathan: november seventh, we

will talk about another 50 base interest rate cut at the federal reserve. the 10 year is up three basis points, from over 10 year, 3.7602. lisa: this is the two sides of the fighting story, the idea that the fed could cut by 50 basis points in november and at the same time, you see sustained growth in part risk grass -- risk assets and that is plane out in the bond market with the steepening of the yield curve, the idea that you could see ongoing growth. the question of what signal to take, could the fed continue to cut at that pace without weakness that could threaten a longer-term trajectory for risk assets and the economy? jonathan: hottest trade of the world, one of them, euro-dollar. just short of reaching that level. i say it is difficult because the data in europe is really bad compared to riposte growth in the u.s. -- robust growth in the u.s.

they say road west growth for the u.s. into 2025 is slightly better than places like we will see out of germany. lisa: maybe it has nothing to do with germany and it is with europe. maybe it is with people's bank of japan and how much they will cut rnight? that is the reason why you are correct, if you are treating euro-dollar this morning, i feel for you because how do you get a handle on which narrative to follow? is the delta between u.s. and europe? or what is going on with respect to how much stimulus the pboc can eject -- inject? jonathan: they are breaking seven of the first time in 15 months, just north of that level at the moment, firm or by .20%. iranian president said plans are underway to discuss a nuclear deal that has been stalled for years but did not provide details on the timing. iranian leader told bloomberg that it was among topics raised

with french president emmanuel macron on the sidelines of the un general assembly. annmarie: the new iranian president feels positive out of the meeting but what iran says and does is different. what are they doing? we are supporting a terrorist regime, what the u.s. designates, when it comes to hamas and hezbollah. overnight, the trump campaign talked about a significant threat. the biden administration has told trump there are threats on his life, but then you have others coming out saying, nuclear talks, anyone? lisa: when you have a situation where iran is speaking out of both sides of their mouths, potentially talking about it is accelerating the ongoing conflicts, saying israel cannot get away with this, and on the flipside, you have a makepeace feeling. this is why traffic is so bad right now in new york city because you have iran, the president of iran --

jonathan: it is always macron's fault, too. lisa: you have joe biden. hold on a second, you have the prime minister of israel that will join on thursday, supposedly. you have the turkish president, you pretty much have everybody under the sun who all hate each other, coming here and getting in a room, so traffic is slow. jonathan: someone was stuck in traffic yesterday. it is always macron's fault somewhere. volkswagen and its union started negotiations over wide-ranging cost cuts. looking up plans to potentially close german factories for the first time after scrapping decades-old job protections early this month. this one is going to be a battle, a real fight over in germany. annmarie: absolutely. this will become political because you cannot lose jobs in

the german manufacturing base. this was the darling of europe when it comes to the auto manufacturing in europe .. the union is talking about that there will be no cuts. how does bw and all these other companies start potentially turning a profit? guess what they are laying the blame, the politicians. because the destination and goal of getting there don't match. jonathan: vw down by .50%. univision announced two separate terminals next month with donald trump and kamala harris in front of a spanish-speaking audience, getting the opportunity to speak to one of the largest voting blocs in the country. annmarie: 36 million hispanics, that is the voting bloc of the individuals in the united states, an opportunity town hall. i would like to see if we get details of policy ideas. the oprah winfrey election, what are the details actually on how you would accomplish these things? lisa: the hispanic vote in this country used to go to the democrats and it is changing. i find that interesting.

i also find it interesting that we are talking about town halls and not debates. annmarie: 36% went for trump in 2020. this is a vote you cannot ignore. jonathan: groups in this country have not been happy about the immigration policy. you've seen examples repeatedly. annmarie: you do see that in the hispanic community. i've spoken to some individuals, i came here legally, it took me a ton of money, legal fees, a ton of time, it was a huge burden on my family, and they are very annoyed with the levels of illegal immigration into the country. jonathan: let's talk about the market, u.s. companies are looking to protect top and bottom lines as the fed kicks off its easing cycle. lisa coleman writing that companies have been working hard to maintain margins by maximizing efficiency wherever possible, except protect, layoffs have not been and are not anticipated near term. good to see you as always. before we talk about margins, let's talk about topline revenue growth.

why is that so challenged in the year to come? lisa: it has been declining steadily. when we look back over the trough, so going back about one year, that started to recover, and it is really moving very nicely up. but revenue at the top line has been slowing. that is consistent with a slower economy. what is really fascinating about this is companies -- i give this analogy -- companies are like a dduck on the lake -- duck on the lake, they see this top line, and they are paddling faster to maintain margins and they are doing a good job of maintaining margins. when you look at the median company within our investment-grade universe, they have maintained margins at 14% on an operating margin basis, pretty good. so really what we are waiting for now is can we start to see a kickstart to the top line? this probably goes back to what the fed will do with the economy. jonathan: what i would be

worried about, and i'm a worrier with lisa for company, the next step is that they run out of their ability to maximize efficiencies and protect margins and the next step is layoffs. do you think we are easing early enough to say that the margins will be ok? lisa: it's interesting you make this point because we look sector by sector, and as you mentioned, it is really just tech that has been the one area that has been laying off. tech has been using layoffs as a way to maintain margins by the better part of two years, not a new phenomenon with tech but other sectors really have not. we can look at how they have maintained margins, look at energy companies, there is technological change. companies have been good about making acquisitions, so there's no need to make layoffs there. even in a spot of consumer goods, for example, companies built on resiliency in light of

supply chain problems we had earlier, but maybe they don't need that anymore. we've had efficiencies come through, that if we don't start to see an improvement in the top line, can employment start to be the lever that they pull? so far, there is reluctance and maybe it is ptsd after what happened during covid with finding people, training people and the like, but i think it is something that we are on a precipice. lisa: i love the granularity you have when you look under the hood. i would like to go further and talk about the nature of how companies look at employment because it speaks to the uncertainty in the data. how many companies, not making broad-based layoffs, not hiring either, and relying on attrition and expecting to end up with a smaller footprint relative to the size of businesses, and i'm thinking of u.s. banks were ceos have said that is going to be

the future. is that what you are seeing in terms of the paddling deck corporate sphere we are looking at? lisa: so far, not yet. if i were to get down to that level of regularity, we would see there is not necessarily new hiring. you take away the job openings that might be posted, maybe you pull back there, so you are not actually removing workers from your company, but i don't know, i think as may be as we go further down the road, if we don't see the economy start to pick up as john said earlier, i think we are going to see some deeper layoffs, but nothing to indicate that at this point. it is like the calm waters on the top with the duck paddling along. lisa: moving to 5000 feet, we are talking about companies here and there ability to withstand and maintain the 14% margin. how different our things are now in europe and germany? lisa: very different.

we did a little comparison across europe. we looked across sectors and said who's doing well in europe and two is not? companies with exposure to china were doing much worse than companies that did not have the exposure, so just a few numbers on it, if you look at growth to the end of the year that we are projecting, for europe in general, we are thinking around 3%. if you look at companies with exposure to china, we are seeing those companies down 5%, so it is a vast difference. granted, some of that is influenced by auto manufacturers, and auto is not just about china, there are other issues, yet, you see it in companies with retail exposure, consumer retail products, they are seeing and feeling that downturn and the lack of growth coming through in china. that's the difference between u.s. companies and many companies in europe, the china representation.

jonathan: do you think that is an opportunity given the easing from chinese authorities the past 24 hours? lisa: i think it is too early to know. we are at the early stages. i mean, autos are a different kettle of fish because the china story is more complex for autos. what a lot of people may not realize is when you start to look at the surface of auto manufacturers, which are the european ones, where they make the most money in china is not in ev's but ice vehicles that are considered to be premium in china. if you start to get tariffs put on chinese cvs by the european authorities, do you get retaliation on ice vehicles in china? so there you have a little bit of a nuanced situation. of course, as you alluded to earlier for some of the auto manufacturers, there are very aggressive targets for emissions

coming through, forcing a lot of the companies into making large capital investments, particularly at a time where we seek ev demands are outweighing. jonathan: how investable are those credits right now in your? -- right now in europe? lisa: when we talk to rating agencies, we are told that they will have time and there isn't an imminent downgrade expected for these companies. when you look back, thing about during the covid time, these companies made a lot of money, so they really have had a little bit of money in the bank, let's put it that way. when we look at leverage, origins are good but they are coming down. again, the health is not bad. the ratings agencies do not appear to be primed at this point for downgrades, but i think you are subject to headline risk and that is likely to continue for the next month, two months, but i think at that

point you may have an opportunity once we see spreads really compensate you for some of the headline volatility to get back into the space. annmarie: when you think of volatility, you think of the u.s. election, how many are waiting on the sidelines to have more clarity? lisa: i would not blame them for blaming on the headlines. yesterday, it was a good headline, and this speaks to companies would like certainty, particularly if you are looking at making large capital investments. i told -- i'm told the elections have been decided and the composition of congress is decided and i would suspect many companies would probably take that away. jonathan: the remedies that are required in europe to cut jobs is going to be massive opposition from unions and government officials, particularly in germany. the outlook for tariffs, you have no idea what the next 12 to 18 months will. look like for

the companies lisa: i love your points in the difference of the cars that get purchased in china. i spoke to a car manufacturer from germany and they said they are designed differently in china because typically it is the driver seat that is nice and has a lot of space, and the cars in china, it is actually the passenger seat because there's always a driver. jonathan: live to be driven, not to drive. lisa: is that your goal? jonathan: yes. good to see you, lisa coleman of j.p. morgan asset management. let's get you an update on stories elsewhere. here is your bloomberg brief with kyra. yahaira: japanese banking giant nomura is facing a fine of 150,000 dollars for allegedly manipulating market -- japan 's bond market. they posted large orders without intending to buy or sell them. the relatively small fine is seen as a threat to the investment bank's reputation at

a time when it is refocusing on japan as a key growth area for its business. u.k. prime minister would like to meet vice president harris and former president trump before the election. the prime minister has said they are owing to work with whoever wins, but discover the labour party has connections to democrats. he is in new york for the general some of this week to the houston astros clinch their fourth straight american league west title in a come-from-behind win, while the orioles secured their second straight playoff spot and the royals held on to the second american league wild-card spot, coming as the mets and braves battle for a spot in the national league wildcard with atlanta taking game one of a pivotal series that could face weather delays with tropical storm helene expected to hit georgia today. that is your bloomberg brief. jonathan: any baltimore fans? company policy. annmarie: absolutely not. lisa: if it is, i have not gotten that you.

this family is with the mets. annmarie: they won last night, so congratulations, david rubenstein. aaron judge, 56, last night.incredible . >> do you think the fed is going to pay attention to inflation? probably what they are looking at more than anything, i think you have many promises, and it is really what is happening with real estate because that is the last piece of inflation. jonathan: danielle hale of realtor.com, next on the program. from new york, this is bloomberg. ♪ ere ya headed? susan: where am i headed?

am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence... the answer is j.p. morgan wealth management

jonathan: we are down .10% on the s&p 500, up three basis

points, 10 year yields, 3.76. >> you think the fed is going to pay attention to inflation, but probably what they are looking at more than anything making campaign promises is what is happening with the last piece of taming inflation. the problem in real estate is that you have not had enough housing for over a decade. jonathan: that's the latest this morning, applications to refinance home loans surging for a second week. homeowners are looking to take advantage of lower rates. a 30 year fixed mortgage at over 6.1%. daniel hale of realtor.com saying that surveys show consumers expect additional mortgage rate declines in the next year. not that the feds longer weighted cut has arrived, improvements may be more modest than we have seen to date. danielle joins us for more. we have seen a surge over the

past weeks, when we start to see home purchases accelerate anymore material way? danielle: thanks for having me, we have seen a week to week uptick in the applications, but it takes time for buyers to become aware. the mortgage application is in the early stage of the homebuying process. you have to have an offer on a home that has been accepted before you apply for a mortgage rates so what we will likely see is that pending home sales pick up and then mortgage applications follow and the mortgage applications are obviously weekly, so timing wise, you might see the results in the mortgage applications first. but there is an order of applications. if the offer is accepted and the buyer applies, that is what we see reflected in the data. lisa: what to make of the fact that actual listings have increased and it seems that there is a motion in a pool of existing homes that are finally up for sale?

danielle: we have seen a number of homes on the market for sale growing slowly but we are now up 36%, so it is substantial improvement. you're still down substantially from the 2017 to 2019 timeframe, which suggests more room for recovery in the market. and as we see more sellers come into the market, we will see that improve. it is important to note that existing home sellers are often buying another home, so what we have seen is really an increase in supply and demand in the housing market which will help increase the turnover rate in home sales and that has been rather sluggish recent months. lisa: reports show that homes have not moved as quickly as some have expected, so even though there are more listings, it is not as though they are flying off the shelves and understanding that rates are higher than what they used to be. how much do you view this as a sign of cutting, when you

de-freeze the market, you will not see the same price increases some are calling for on the heels of lower mortgage rates. danielle: with affordability stretched in the housing market, there is less room for prices to run. everyone has been surprised at how resilient prices have been, so buyers have been willing to stretch affordability as opposed to waiting for home prices to fall, and the big picture inventory shortage we see is a big explanation for that, so as we look at the last decade, there are several millions of home short of the number of households added, and when you have that scarcity, it's hard to see prices relax or decline in any meaningful way. as mortgage rates improve, we are going to see buyers come back to the market. if we look at the time it takes to sell a home, we are seeing homes that take longer to sell, but if you compared to the pre-pandemic benchmark, we are

still seeing homes sell about one week faster, so we do have room for the time on market to slow, and technology has improved and it is easier for shoppers to find a match in a home now than it was four or five years ago before the pandemic. we may see some of that market speed kind of stay as a factor in the housing market. buyers may have to make quicker decisions. there are two things going on, the market momentum and the seasonal momentum. fall tends to be a slower time for the market. it is one of the reasons why we identify next week as the best time to buy because buyers have some seasonal advantages and a good number of sellers still in the market with more negotiating power and often tend to see lower home prices. so for buyers who are flexible and not trying to sell a home, as well, it can be a good opportunity to get to the housing market. and the fact that rates are coming down i was an added onus. jonathan: we have inflexible

buyer sitting around the table, so we appreciate the advice. looking for rates to go a whole lot lower. annmarie: if we only had lisa's 3%, wouldn't we all be knocking on the door? lisa: are you trying to push me out? jonathan: no, i promise to 60 minutes ago. i have come in for the 8:00 our. what am i doing? goat farmer? lisa: you have 11 groves and you have cows. jonathan: that sounds perfect. up next, victoria fernandez, lara rhame, bloomberg surveillance is up next. ♪

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♪ >> there is a lot to like. this basically all comes down to the resiliency of the economy.

>> we expect the economy to continue to expand. >> we do think an economic contraction plays out. >> the economy is performing like it really does not get impacted by these swings. >> i think the bond market and equity market need to happen in tandem and make sense rationally for what's going on in the economy. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. >> 90 minutes out from the opening bell, equity futures just about unchanged on the s&p 500. some relative outperformance on the russell, up 0.1%, muted price action in the last few hours. lisa: maybe it's because everyone is at home because nobody wants to go through the traffic and midtown manhattan. why would anyone make a major trade ahead of earnings? we have not even talked about earnings but i think earnings could potentially be one of the biggest catalyst going forward, as well as the nonfarm payrolls.

the difference between 100000 and 150,000 is going to mean the difference between a bear market and able market. -- a bull market. >> those that say it's hard to get a job, its rising. it's leaning into decided that traders think we are potentially going to have to go 50. you hear from the fed governor bowman say she wants to see a moderated path, very different from what goolsby was talking about, we are going to need some significant cuts. jonathan: that differential and consumer confidence, when that starts to narrow, economists get concerned. that's been narrowing for a number of months. that speaks to some weakening. tom: the reason why i asked -- lisa: the reason why i asked such a narrow question, i am justifying narrow questions, but let me just explain that to me there is a sort of feeling there have been structural changes in the labor market, the way that

companies view labor post-pandemic that mean that there's just more stasis. there is as much hiring, but it also means there is not as much firing. is that a healthy labor market? jonathan: she joined us about 20 minutes or so and made the point that topline growth is threatened. inflation has come down, gdp has decelerated, nominal gdp is lower. when that happens, you start to protect margins, maximize efficiencies. the last thing you want to do is start layoffs. we are hoping for is a real acceleration in growth off the back of interest rate cuts so we don't have to go through this interest-rate cycle. that's the difference between being bullish and bearish. lisa: which is the reason why some of these incremental data points are going to be so important and potential catalysts for some volatility. if we get 140,000, which is the

median, that settles nothing, because ultimately, you will have people arguing both sides of the discussion. jonathan: jobless claims before we get payrolls. jobless claims tomorrow morning at 8:30 eastern time. the estimate in our survey, 224. the previous week, 219. equities pulling back by not even 0.1% on the s&p 500. the move in yields, we resume the climb, 3.7640. lisa: what's fascinating is the steady grind higher in 10 year yields. early days, hard to make so much about this. but we've talked about reigniting of inflation concerns, this question about whether bonds will act as the ballast or the source of risk during a selloff? that will be an increasing question as people consider whether reactive, preemptive rate cuts will keep inflation higher.

-- inflation and rates higher. jonathan: growth, you've got some company. lisa: somebody is going to say gold, really, lisa? they could be right. that has strengthened for consecutive days to near highs in tandem with some other concerns percolating on the edges that may be we will get some sustainable inflation. jonathan: another record high on gold this morning. coming up this hour, we will speak to mary ann bartels of century wealth as the s&p 500 it's a new record high, scott ciccarelli of truest on why he is snapping up walmart shelves and leaving costco on the shelf. and victoria fernandez. we begin with stocks propped up by nvidia and tech as traders shrug off consumer numbers. mary ann bartels seeing more room to run, saying our bullish view on stocks just got even

more bullish thanks to the fed's 50 basis point rate cut. they gives me confidence that the s&p 500 has the ability to reach 6000 before the end of the. mary ann bartels joins us now for more. welcome. when i read things like extremely bush, i am not thinking about 5% upside, i am thinking about 10 and 15. mary ann: i can still get the equity market up to 7000, that's my highest target. not for this year. i think we can still get to 6000 this year. i think these rate cuts that are going to come down the pipe are really going to continue to fuel this bull market going into next year. lisa: what is this going to be driven by? ongoing small caps and equal weight? or is this going to be participation all around because it is soft landing nirvana? mary ann: you do have a broadening of the market.

industrials really liking the rate cuts and stimulus from china. we have not seen tech as the leader since the correction but my sense is that they will resume their leadership within this market. and semi conductors being the key leader, i called them the leaders of the pack. so i have not given up on the leadership of tech. because historically, if you lose your leadership, you lose your market. i am not looking for small caps, you know, it's like when the tide rises, all boats left. small-cap can certainly go up but i don't see it as leadership within this market. lisa: there a real question we have been analyzing this morning about inflation and whether we are starting to see the seeds of may be some fear creeping back into markets with higher yields in the long end. do you believe that this is actually a reflection of potential re-inflation types of scenarios down the pike? particularly what's happening in the gold and yields? or do you see this is something of a headfake?

mary ann: we are in the camp that we are in a secular trend for inflation. in 2000 and 2000 or the secular lows for interest rates and interest rates are on a 20 to 30 year cycle of rising. i believe sometime in the future we will see 10% interest rates. i think the back end of the curve is concerned about growth and inflation. gold i definitely believe is picking up that we are now in an inflationary environment. but the cycle right now is for inflation to go down. so the long-term inflation is up, short-term, the inflation cycle is down. would have been telling people is i do think rates at the short end of the curve can drop pretty dramatically. i think we can get the two-year at some point down around, 2% 1.5%. i think over time, the 10 year will go down.

if anybody needs a mortgage, anybody needs to refinance, anybody needs a loan, when rates drop, this is going to be your last opportunity to lock and load. lisa: i'm just trying to square this idea that you could see the two-year going down to a 100 or 2% but also seeing the seeds of a soft landing and potentially 7000 on the s&p 500. don't low rates like the -- like that imply some kind of accommodation to a weak backdrop? mary ann: you would think so and outthink that to be the case but not if the fed cuts aggressively and hence that they will cut aggressively because the market will move for them. it could be that the first half of the year is good and we see a pickup in growth in the first half and we see weakening in the back end. i think this is more to do with the fed having an easy policy. lisa: in june, you wrote a lot

about utilities and real estate and how you wanted to get in on those trades. is it too late to buy into those sectors? mary ann: no, i think sometime next year we are going to be talking about tina, especially if rates go to the levels that i think. we are going to go to. the market has been hunting and pecking for yields back since june. we got strong buy signals on utilities and reit's back in june and i still think the market or investors will seek out yield within this market as yields go down. jonathan: good to catch up. mary ann bartels of century wealth on this equity market. tina is making a comeback next year. what do you make of that? lisa: basically this is a fed that's got the market's back and that's the white knight hope, that essentially you are going to get rate cuts in advance of weakness that will stave off that weakness, and that's what this market is leveraged to, which is the reason why yesterday we saw that 50 basis

point rate cut in november being priced in on the heels of a subset of the conference board data. a lot of this kind of goes to the feeling that people are hoping for a lot of heavy lifting from the federal reserve. jonathan: citi yesterday, if economic data begins to justify larger rate cuts from the federal reserve, gets higher, not easier to be bullish, because that data gets weaker, and that's the problem. lisa: the biggest flight in the ointment is the question of, how willing is this fed to get ahead of any weakness? they've got a lot to cut just to even be ok, not even necessarily accommodative, that's not clear. i think if the rest of the fed agrees with goolsby, then frankly, the bull case that for cuts, even without that weakness, superstrong. jonathan: couldn't agree more. if goolsby is the fed chair, let's get their superfast we think we are super restrictive, we don't need to cut 200 basis

points, we don't need week data to do that is basically what he is saying, right? lisa: yes. you have a fed greasing the wheels for a recovery before we get a downturn and that's what i think a lot of people are levering up to. jonathan: let's get you an update on stories elsewhere with your bloomberg brief. >> china conducted a rare missile launch into the pacific ocean in what appears to be the first such test in four decades. the nation's military confirmed an icbm was launched with a dummy warhead and fell into the expected area without offering further details. china said it notified relevant countries in advance of the launch but unofficial from the japanese government said his nation received no such notice. the national hurricane center issued watches and warnings across florida as tropical storm helene continues to strengthen. according to the latest advisory, the storm is expected to be a major hurricane by the time makes landfall thursday night along the northeast coast

of the gulf of mexico. the man who was found hiding in the bushes with a loaded rifle at donald trump's golf course in florida has been indicted for attempting to assassinate the. former president. according to an indictment released yesterday by the department of justice, ryan routh was charged with attempted assassination of a major presidential candidate, possessing a firearm to attempt to commit a violent crime, and assaulting a federal officer. that's your bloomberg brief. jonathan: thank you. up next on the program, some morning calls, plus scott ciccarelli truist on why he's bullish on walmart but pulling back on costco. that's next. this is bloomberg. ♪

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jonathan: equities right now pulling back by 0.06% on the s&p 500, bond yields higher by four basis points, the 10 year 3.7697, got close to 3.90 yesterday -- 3.80 yesterday, pulled back. td cowin downgrading expedia from hold to buy. second cup from morgan stanley cutting general motors to overweight. gm down by 3.4%. finally, barclays upgrading hp to overweight from equal weight, citing signs of a recovery in enterprise service. that stockstill lower by 3.4%. let's turn to retail. scott ciccarelli of truist upgrading walmart to buy, citing its increased market share

across all income levels. . he's downgrading costco to hold due to changes the retailer has made to its shopping experience. scott joins us now for more. let's start with walmart. what are they executing that gives you a little bit more confidence in the name? scott: i would tell you that they have always been a low-cost leader, ok, so they have had that kind of reputation with consumers. but i think the big change with walmart has really been continuing to roll out various convenience options, whether that's home delivery, curbside pickup, they had this membership program, you know, basically walmart plus, and all sorts of derivatives off of that. any kind of resistance you had to shopping out walmart, they are knocking them down. they have really been able to narrow that competitive gap i really being able to service customers no matter how you want to shop. jonathan: costco is not just a relative trade, you know the

changes the retailer has made to the shopping experience. what is it about the shopping experience at kostka right now that you think is harming consumption at the stores -- costco right now that you think is harming consumption at the source? scot: it's partly a valuation call. the stock has added $160 billion -- million dollars to its market cap in the last few months without really any change in growth trajectory. they have made some changes. they are rolling out scanning people's membership cards on entry rather than people just walking in and showing their membership card. we think at the margin, that could have a negative impact on the company. when somebody who comes in and you know that there is what's called friend groups sharing membership, maybe there's four people, and the one person has the membership id, may be one other person signs up so you could have annexed celebration and membership sign-ups but maybe -- have an acceleration in membership sign-ups.

there could be a negative ramification for a stock that i don't think there's a whole lot of room for error at this stage. people are talking about the rotisserie chicken, iconic product from costco, still $4.99 after all these years, and yet, they have changed the packaging and people are complaining that the product is a little more soggy, the bags week, etc. it's not necessarily a game changer but for a stock that has very little room for error, its changes at the margins that not everybody is going to love necessarily. lisa: before we move on to walmart, to compare and contrast, just to develop that in the, how much business do you think -- to develop that a little bit, how much -- how much business do you think they are going to lose with the crackdown on card sharing? scot: some people are not members and do shop there. would i be concerned about as an investor at these evaluation levels is any kind of moderation in the sales levels.

that could wind it being a negative catalyst for the stop. when you've had that much appreciation in such a short time. lisa: there's a problem i guess if that is the narrowing kind of gap between potentially a beat or a miss when it comes to earnings revenues, which is the reason why every company, retail, airlines, etc. wants to become a credit card company, wants to also become a shipping company, also wants to become something having to do with media and tech. how much is that what distinguishes wal-mart from the likes of cisco? that they can be an advertising company, too. they can also be an ad driven kind of sales machine. scot: when we are talking about walmart, i mean, i think they kind of saw the model that amazon created. amazon, whether it was aws, the advertising business, logistics business, they all become higher margin revenue streams that can help subsidize the core retail business. i think walmart is basically taking a page out of that book.

because if you look at what walmart is doing and some of the numbers that they have given us, some of it is ok, to be fair. but some of the numbers they have given us, is much higher margin then there core retailing business. a big chunk of their profits now are, 34% of their profits, are coming from these ancillary revenue streams. what you can do with that as drive margins higher, so good for investors, but also help subsidize that retail business to drive prices lower to open your price gaps against competitors, which helps reinforce that flywheel, which they can utilize to continue to gain market share. lisa: what was it about walmart, the catalyst, that really means that they had this destination across the entire income cohort? scot: i think it's probably the convenience options. they've always had kind of that low-price focus. they probably let's call it got

religion on really driving wider price gaps really six, seven years ago. is the convenience options that i think breaks down those barriers. whether it's the home delivery as they build up there walmart.com business, the curbside pickup, they've rolled out the walmart plus membership, very similar to what prime has done, or amazon has done with prime. again, they've just increased that convenience factor so dramatically that people who may not have shopped out walmart before can now shop at walmart and they feel good about it because they can get good prices and have home delivery. jonathan: they appear to be taking share from the dollar stores as well. you wrote this about dollar tree in the last few weeks, investors expected a mess, and that's what they got. but you still like this stock. can you walk me through why you would still buy this name this morning? scot: basically, valuation. i think the stock has been taken down to the point where, like, it just isn't super logical in

terms of where investors are trading it. but have they lost share? the answers jus -- the answer is yes. they purchased a company called family dollar probably about 10 years ago at this stage and they have not been able to turn it around. they had activist investors come in, brand-new management, management that was very successful turning around dollar general, and they just have not been able to pull it off. at the same time, you've had dollar tree, where they've changed pricing, they've tried to implement higher price points within the stores and it's been with mixed results. but dollar tree ultimately is a pretty good business. it is differentiated another from a dollar general, from a family dollar, from a walmart or target that i think it should deserve a better valuation than i think what is being afforded in the market. so honestly, it's been a poor call on our part, and some other investors as well, but it just doesn't make logical sense to downgrade the stock where it is today, in our opinion. jonathan: i want some thoughts

on something that has bugged us. when we hear from these companies, it sounds like the low income shopper is on its back, really struggling, things are terrible. we never hear the ceo's talk about poor execution. how my shove it is about the low income shopper struggling? and how much -- how much of it is about the low income shopper struggling? and how much of it is about four execution? scot: there is a compounding effect that i think has had ramifications across the spectrum of any company that really has any kind of exposure to that low income consumer. but in terms of execution, there have been missteps. and i would tell you that a lot of companies are still struggling with the aftermath of what happened with covid. you had shutdowns, and then you had this massive surge of demand. widows happened? you have people -- what else happened? you had people job hopping. people could walk across the street and get an extra dollar,

two dollars an hour, so all of a sudden, you had a turnover rates increase at all the stores. your execution at the store tends to diminish. you tend to have higher shrink rates, because people don't know how to watch the stores. there's a lot of ramifications to that. jonathan: this was awesome. let's do it again soon. on the retail sector, scot ciccarelli of truist. coming up, laura rhame of sf investments and professor joseph stiglitz speaking at the bloomberg news economy event. let's take sneak peek. >> bush could look in the eyes of putin and say there is somebody i can trust but i think the rest of the world didn't feel quite so comfortable. there will be an adjustment from hyper globalization, in both parties. but the difference is one in which i think harris is

committed to a global framework, working with what she views, you know, with our partners, close partners and those, you know, like our nato allies, but also our partners in the south. and so, it is trying to avoid a rupture, and doing everything we can as we adjust our economy to embrace the rest of the world. so, that's what, another one is i think the way to understand trump is his view of the world is a zero-sum. and that means if u.s. does better, other countries will do worse. other countries do better, you saw the -- ♪

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♪ jonathan: two day winning streak on the s&p 500 coming into wednesday9 your equity market looks like this. we are lower on the s&p by 0.05%. the russell, the small caps, just about unchanged. 60 minutes away from the cash open with your morning movers, here's manus cranny. manus: good morning. general motors is on the back foot this morning. morgan stanley downgraded the stock from underweight to equal weight. this is the second slashing of this stock this week. this is a much more holistic view from morgan stanley, which is the consumers stretched,

inventories are on the upper trajectory. and of course, affordability remains out of reach. it is some kind of tipping point in the auto sector. them into action that morgan stanley -- the m&a action that morgan stanley thought was going to come through, those actions have not played out. two strikes on general motors this would. let's talk about kb home. mortgage costs are high, softening demand. boom, look at refinancing today, of 20% last week after we saw those cuts. we've had five straight weeks of mortgage applications rising. this is on the back foot this morning because the numbers are there. if you look through the gardens today and you say, how does the housing market -- through the guidance today and say, how does the housing market shape up? i would you view with doordash, 25% on the upside -- i will leave you with doordash, 25% on

the upside. the concept of vertical integration at doordash. you can restock your minibar. i didn't know people had many bars at home. jonathan: it's a new york city thing. don't see it in the u.k. as much. lisa: it is very much a united states thing. jonathan: just letting manus cranny know. i am just letting him know, relative to london, bar cards are a big deal. lisa: if you live in a house, you can build your own. jonathan: usually in houses in america you have actual bars. lisa: you also have many bars -- minibars. >> you guys have been talking to tom keene too much. lisa: it's a normal thing. jonathan: the s&p 500 touching a new record high. lara rhame of fs investments saying this.

it's ironic problem of overly optimistic economic expectations. one so much good news is preston, markets can be rock by any downside and growth -- is priced in, markets can be rocked by any downside and growth. do you really think we are vulnerable to one-week jobs print in the next few weeks? lara: absolutely. i am condemned to be focusing on claims every single week now for probably the next quarter. the fed is in rate cut mode but markets have priced in so many rate cuts, not just this year, but next year. i think it's really going to be an issue for stocks. rates have fallen 100 basis points and equities are kind of still where they are, price-to-earnings ratios are kind of haven't moved higher. this is the issue. we have gotten just so priced for all this good news and rate cuts, and epic markets are

vulnerable. jonathan: where do you think that leaves the bond market call at the moment? lara: i think we have seen the bulk of the long-duration move. because here's my outlook. we are going to have an incremental slowdown, growth closer to 2%. this is nothing radical on the growth front. but for equities where they are, for how many rate cuts are priced in, i think the bond market is due for a disappointment. look at the 10 year is up 10 basis points since the fed cut rates. there is a reason for that. the data are just not showing us a recession. they're just showing an incremental slowdown. lisa: somebody might be listening and saying, but come but, but, there are reasons to like things. the fact that stocks are less unless correlated to the macro backdrop given that so much is tied up with nvidia and apple and microsoft. lara: there is no doubt that concentration is a big issue. and listen, the equity market is a reflection of the fact that

the u.s. is still the only game in town and the global economic slowdown. and that we are just seeing still i think a lot of hope around ai, rate cuts are priced in. but i think we need to differentiate between equity markets and the underlying economy. the economy can withstand easily absorb on incremental slowdown, whereas equities i think are really increasingly reliant on this really aggressive rate cut trajectory to maintain valuations that are very high by any historic measure. lisa: you don't like stocks, you don't like bonds. what do you like? lara: i like bonds, i just like looking deeper into credit. because when we think about the underlying economy, there is just so much i think robust strength there. valuations are overstretched in publicly traded markets, they are much more reasonable in the private space. as rates come down, we are going to see an increase in m&a

activity, get a natural lift and other parts of the economy. they're going to get some relief on may be middle-market companies that have been challenged by higher borrowing costs. i think there's a lot to like out there. it's just that we are really looking expensive in those publicly traded equities space. jonathan: lara rhame their of fs investments. the daily update, jobs hard to get makes for hard landing. take a listen to this. the percent of individuals finding jobs hard to get is rising. this confirms the rise in unemployment rate is not good news about labor supply, but instead an indication that hiring is weak, an argument he's been making for a while. lisa: when we talk to people who study the companies and the earnings calls, and basically they are not hiring. there is going to be job losses for attrition. whether this leads to a hard landing is debatable. he's been talking about this for a while. that said, that is not being

pressed into the market and that is why people are looking at nonfarm payrolls as potentially another sort of chink in the chain fence. what's the? the chink in the armor. thank you, control room. jonathan: did the control room save you? did they? nice. joining us now is victoria fernandez. welcome to the show. the path of least resistance is higher for stocks. where does that come from based on the economic data we got just yesterday morning? victoria: i think it comes down to what you guys were just talking about when lisa was saying a lot of the concern out there in the market, which i see as well in regards to the labor market, topline growth, and earnings. it is just not been priced in. the market is really kind of on this high after this 50 basis point cut that, hey, there is a fed put in play, powell is not going to let this economy have

any kind of a hard landing, so the market is just off to the races. we have had some negative economic data. but yet, we have had two new highs this week alone in the market. i think you don't want to stand in the way of that train that's coming down the tracks. but i do think you want to be cautious. i don't think that the economy is going to do as well as the market is pricing in. i think it's getting a little over its skis. but in the near term, i think you want to ride that train a little bit. jonathan: is the enthusiasm hanging on one data point, just jobless claims and what happens with layoffs? is that what this all hinges on? victoria: unfortunately, i think a lot of it does right on that one number. i would hope that the market would actually look a little bit deeper. y'all have been talking with me all your about digging under the hood in the labor market, don't just look at that claims number. actually according to the data we see in terms of layoffs, it looks like claims will probably

bottom in october and then start to move higher. i don't think the market is anticipating that. annmarie was talking about labor differential. we have been watching that so closely. you look at those numbers coming out of the conference board. it is eight months in a row those numbers have been deteriorating. quits are down, hiring is down, temporary hirings are down. those are all leading indicators within the labor market. one of the things we watched the closest is cyclical employment. don't just look at the regular payroll numbers, take out the health care, government, education, and look at the cyclical component. that's been steadily declining. in every soft landing we've had, that element has been moving higher, not lower. i think we need to look at some other areas of the labor market, not just the payroll number. lisa: what are you doing? buying gold and buying long bonds? victoria: you know i love bonds. we have that connection.

i think you do have to participate in this equity market, even if you don't believe the long-term story that it has priced in right now. you want to partake in the upside of the market. you look at some of the elements where you have seen some leadership changes, look at financials, some of the staples, health care. those are areas we have been talking about for months. at some fixed income in there. have rates come down a little bit? yes. but you're are still getting stronger yields in the curve so you want to move out a little bit. somebody said long-duration is probably done. i would lock in some of those rates because you have heavy resistance on the 10 year. and you also want to add some income generating components outside of fixed-income. look at covered calls, look at dividend plays, look at long short portfolio's that are just trying to beat cash. those are some elements that bring you diversification because we think there's going to be a lot of volatility.

lisa: how much credence do you give to decided that we are seeing a tick up in the long end of the yield curve in terms of yields moving higher because there's a concern about inflation being stickier because of what the fed is doing? victoria: i think you see the longer end of the curve moving higher because people are pricing out the idea of a hard landing and they are all in on that soft landing, so you are seeing yields move a little bit higher along the long end for that. it also has to do with the inflation component. we have set for so long that that sticky part of inflation we think would keep the fed from moving very quickly, i was actually surprised they went 50 basis points for that point alone. look at prices paid in the pmi this week. they moved up to six month highs on goods and services and import costs on services were at 12 month highs. i don't think we are out of the woods on inflation and the longer end of the curve is reflecting that. i know you were talking about

mortgage rates earlier and i hate to say it, but mortgage rates are highly correlated to the belly of the curve, and we are seeing that move higher as well, so i am not sure we are going to get a boost from the housing market because of this. lisa: if you are worried about inflation, you sound a little bit like the fed governor, bowman, who talks about taking this measure approach because she's also concerned about inflation. you think you're setting up for november to be a 25 basis point cut or you think you are lonely? victoria: i actually thought for a wire that we probably wouldn't see a cut in november. i thought the fed would be much more patient in just going 25 in september and 25 in december. with the 50 point move in this last meeting, it leads me to believe that powell is going to be a little bit more aggressive so i probably would have been someone to dissent as well on that move and would have favored 25 basis point. it looks like if the economic data continues the way it is, they will do probably 25 in

november, 25 in december. that's 100 basis points this year. i think that's probably more than what the economy needs, but it's what the market is expecting. it is what the market is telling powell they want. so we will see if he gives the market would it is asking for. lisa: but earlier, you cited about that metric when it comes to jobs, it does feel like it is getting much harder to find a job. isn't that what the fed should be leaning to? wouldn't that lead you to a cut in november? victoria: i think there has to be a balance. you know, the 50 basis point move they had at this last meeting i think is enough, it's going to have a lag, right. you are not going to immediately see someone say, great, 50 basis point cut, let's go buy a house immediately, let's go buy a car. it takes a while for that to feed through the economy, so i don't think they should be making these big cuts all right at the beginning. let it work through a little

bit, see where we stand. if the economy is expecting gdp growth of 2%, 2.5%, they're expecting strong earnings and that's what they are saying right now with the equity market moving higher. but yet, they want really aggressive cuts. . the pieces of that puzzle don't fit well together. i think taking a slower path on lowering rates is something the economy can handle and would be better from the inflation perspective. hopefully, that allows the cracks in the labor market to slow, but we still have a good handle with the consumer. jonathan: victoria fernandez there of cross mark on why the path of least resistance for stocks is higher from here. i think most investors would take that mix, a better growth backdrop with fewer bigger rate cuts from the federal reserve. lisa: absolutely, because ultimately, it is the economy, stupid. that's what people keep talking about and feeling in the stock market. i wonder what counts as good economy and for who.

we were talking about walmart. they are looking to become a tech company, data company, advertising company that give their margins patting to allow them to compete. this is the type of thing that is going on. can you bid on that even if the broader economy is not doing so great? jonathan: we've got utility companies establishing a stronger correlation with tech spent and ai and data centers. lisa: you end up with a non-correlated asset to some of the traditional metrics that they traditionally were hinged to. it creates a muddy backdrop. jonathan: what are we priced for? the power of micro dynamics to drive markets through upside surprises has diminished. . goes on to say fed actions have increased the probability of a soft landing for now but markets have priced all that and then some. you said this earlier this week. you said, what's the risk? i said what aren't we priced for and what are we priced for? lisa: exactly.

we are priced for the idea that the fed can take the austan goolsbee's side of things, cut aggressively. can this federal reserve be preemptive in its cuts with enough time to get that put into place without necessarily causing real acceleration up to 7000, as one guest was saying or potentially, triggering some new wave of inflation? jonathan: we are going to play this from month to month for the rest of this year. equities on the s&p 500 slightly softer. with your bloomberg brief. >> striking boeing workers are not interested in the company's sweetened offer to hike wages by 30%, according to the machinists and aerospace workers union, wish called the offer inadequate and disrespectful. the company angered the union by taking the offer directly to workers. boeing tried to smooth things over by lifting the friday deadline for workers to approve the offer after the union nixed the vote.

the trump campaign says it has been briefed on real and specific threats by iran to assassinate the former president. a campaign spokesman says a representative from the director of national intelligence told trump about the plot, but there is no indication iran's efforts are linked to the two two recent attempts on the former president's five. mets owner steve cohen is reviewing new renderings of a proposed complex surrounding city field. the plan with hard rock entertainment would convert the stadium's parking lot to a gaming center and music venue called metropolitan park. cohen's team says the project in total will create more than 23,000 jobs and invest $8 billion increase. the i guess tony's approval from key lawmakers and new york governor kathy hochul -- the idea still needs approval from key and new york governor kathy hochul. jonathan: sound enticing to you,

enticing enough to make the trip? lisa: you know what citi filed means to members of my family. don't make it a casino. it's a bastion of the american sport, the metropolitans that can bring people together of all types to really enjoy. jonathan: us yankees fans in midtown would say it's an eyesore on the way to jfk. ed ludlow on his exclusive with meta's cfo. we will catch up with him in just a moment. this is bloomberg. ♪

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♪ jonathan: the opening bell 40 minutes away. equities basically unchanged on the s&p 500, just a bit negative.

the selloff and treasuries resume, yields are higher by two or three basis points. the calendar for the day ahead looks a little something like this. the u.n. general assembly continues today. we will get more fed speak at 4:00 p.m. eastern time from kugler, plus earnings from costco and pce and umich sentiment and get micron reporting earnings after the opening bell. let's go to ed ludlow. what are you looking for with earnings? ed: beyond the idiosyncrasies of what micron does, it's a great crystal ball of what's happening across many industries in the world of technology. there is the ai bit and as we build a data center infrastructure, high-bandwidth memory chips that surround the gpu are really important. what's so weird is they are proportionate so for every piece of nvidia tech you have, you have seven or eight corresponding micron chips.

if you look at the stock, that's not the case. why does it not got the corresponding equity market love? micron is at the core of very cyclical industries. jonathan: one of the biggest stories i think in the last week and may be the year so far, the fact that we have restarted a nuclear plant in this country and have pledged to give the energy to a single tech firm in america just makes me feel like this is the start of something much bigger that we need to pay more attention to. how big is this for you? ed: it is big because i think we don't really appreciate the number of parties involved. nuclear power, yes, how many ceo's do you know the have a customer that will go up to them and say i pledged to pay you for the next 25 years. that ceo of constellation has that deal with microsoft. think about all the reit's that are involved in the financing of bricks, concrete, data centers. the energy component is relevant

because you have all the systems involved that bring the hvac names. i think we will start to get a much bigger picture of what's happening because of the less attractive names in the cycle, and nuclear power is a big part of that story, because we needed to find energy from somewhere. lisa: we need to understand exec at how this whole field is evolving, which is the reason i will be tuning into your interview later today with meta chief technology officer. a question about how they cai functioning at a time when they had to go back to their bread and butter, not exactly the metaverse and some of their more moonshot plans. ed: yes, but i've experienced something this weekend i've been reminded, which is my job is to serve the bloomberg audience. what is the news? how does it impact the investor? please remember that these are technology companies. think the reason your audience should tune in this afternoon as you will see a technology company that's actually pushing

the boundary on hardware and software. it is astonishing. have they done enough on the thing that they are going to show this afternoon to convince investors that they have a clear direction? it is astonishing, guys, so please tune in and all will be revealed. jonathan: for a moment, i was a bit worried about you putting on one of those virtual reality had eadsets and having an out of body expense. ed's interview with andrew bosworth, meta's chief technology officer. lisa: i am curious about how they are trying to think around some of the artificial intelligence aspects. you talk about the energies, and i want to pick up on the. how do they make it more efficient? if you think about a company that's going to end up with a line item that's going to be funding a nuclear power plant potentially, you're going to imagine that they have an incentive to increase the

efficiencies of some of these neural pathways they are creating. basically, make it less energy intensive. >> on the sidelines of the you and -- the you and -- the un, sam altman went to the white house and said they are going to need government help. jonathan: where is this energy going to come from? how many more of these stories are we going to see in the next 12 months? lisa: probably a lot and you imagine microsoft is not alone, whatever meta is going to announce later today. jonathan: what was that about? that was quite a tease for that interview. lisa: normally, it's to serve the audience. jonathan: he's had an experience. lisa: he had an out of body experience, so hopefully we will find out white. jonathan: was it one of those virtual reality headsets? lisa: like an oculus play? there's a real issue here about how it also limits the barriers to entry. you have to imagine that a tech

company has to afford to pay for said power. this goes down to consolidation in the biggest players and how you sort of deal with that. jonathan: tune into ed's experience a little bit later on bloomberg tv. coming up tomorrow, evan brown of ubs, jerome schneider of pimco, rio tinto's seo. if you want to hear read on china, talk to someone who has a big is this in china. that conversation is must see tv and we will speak to the nato secretary-general jens stoltenberg. your mark on the s&p 500 just about unchanged. in the bond market, yields continue to climb. 3.76. if you have to trade this, you have our thoughts. euro-dollar, 1.1196, just about unchanged on the session. from new york city, thanks for choosing bloombergtv. this was "bloomberg surveillance ." ♪

>> let a little air out after another record close from the s&p futures. today's trading, i'm matt miller, i'm sonali basak and i'm katie greifeld. "bloomberg open interest" starts right now. sonali: coming up, stocks are set to slip after the s&p 500 posted its 41st record of the year. he sees more upside and we're going to talk about deutsche bank, blackrock and j.p. morgan.

matt: