>> we need to look at some other areas of the labor market. >> slowdown in the labor market were not a great thing because that tends to not be something that turns quickly. >> argus are laser focused on this jobs section. >> inflation readings have come down. >> i think the biggest risk is not inflation picking up. but more of a melt-up in markets. announcer: this is "bloomberg surveillance." jonathan: live from new york city this morning, good morning, good morning.

"bloomberg surveillance" starts right now. adding back toward all-time highs on the s&p 500. up by .8 percent. on the nasdaq, thank you micron. that name is up big time. nasdaq 100 futures up now by 1.36%. we should also say, thank you, china. alibaba in the free market. check out those stocks. major moves as china adds to the stimulus package from earlier in the week. the promise of his skull support. lisa: once thought of as welfare , now suddenly handouts, essentially giving money ahead of the national holiday in china to individuals who might need it this really highlights how much of a reversal this administration has had in china as they now try to support a market ahead of what? that is the big question. why are they unleashing what is increasingly looking like a bazooka? annmarie: it is a great question.

usually when they talk about the economy at this gathering it is april, july, or december. we are in september. what did they know that they are concerned about? i also came on and said they want to stop the decline in the property market. why now? jonathan: we have some big moves in the stock market. commodities perking up. at foreign exchange, the aussie outperforming. all of that coming together nicely ahead of two big data points later. a from fed president john williams, one, and powell is in the mix as well, but these are prerecorded remarks. lisa: i had a similar feeling at the treasury meeting they have. we do hear from john williams. we have a bunch, as well as collins. all of this is coming at a time where people want to understand what the reaction function is from the federal reserve rent jobless claims will be an interesting moment. if it is weak but not that week

it is viewed as positive because that gives the fed impetus to go 50 basis points in november. at what point do people start to get worried again? especially at a time where you are getting stimulus and rate cuts around the world? jonathan: two hunted 23,000 is the estimate for job -- 223,000 is the estimate for jobless claims. andrew hallman horse, 70,000. we project a soft 70,000 in new jobs in next week' as payrolls report. can you imagine if we print 70,000 a week tomorrow? lisa: that could be negative in actual terms. if you have 70000 and you subtract 60,000, and then talk about the potential for government jobs and noisy data points that people strip out, you are talking about actual job contraction. that is the reason why that team is looking for a hard landing and something more recessionary. annmarie: this is the point, the revisions. everyone in the market basically

slices off 60,000 when it comes to those jobs. how would a number like 70,000 actually be? jonathan: we have said the difference between being bullish and bearish on the u.s. equity market is your view on the jobs market. equities on the s&p up by .8%, snapping back from yesterday's mild losses. in the bond market it is lower. we are down three basis points. lisa: this comes ahead of the seven year auction, but there is a feeling that if the fed cuts rates significantly it is going to bring down yields across the board. you have to also imagine we have a race to the bottom when it comes to interest rates. maybe that is an exaggeration. you have a global rate cutting cycle. what that does to yields globally has become more and more apparent, especially in the u.s. jonathan: evan brown of ubs on the program later. he thinks we should be pricing out the recession based on the things you described this morning. lisa: how much of a game changer

is what we are seeing in china? also for europe and on the margins for the u.s.? start to wonder how this plays out if you have all of this accommodation coming through. jonathan: coming up this hour, we will catch up with jewels can carve us after nailing the fed's 50 basis points move. and robert sorkin -- sucking of city. we begin this hour with stocks pushing back toward record highs on the promise of further rate cuts in america and further rate cuts. writing, market dissidents need to stop to think about why central banks are cutting to begin with. if the economy cannot handle the higher backdrop think conditions are not strong enough to maintain earnings estimates. george, congratulations on nailing that 50 basis points call at the federal reserve. for we go deep into what is happening, help us understand what guides you toward the correct call last week and what you are expecting on november 7.

george: the totality of data. that has been a keyword that chair powell has mentioned all throughout the summer. it is the totality of the chums -- the jobs market. i know we are going to watch the weekly claims. it will probably not capture the underlying, but there is downside risk for september. it is really the unemployment rate. once the unemployment rate starts to trend it does not stop trending. the estimates the fed has in their projections is wishful thinking. they have to give an upper level in their minds. we could get there next week. they realize that the data was revised to the downside. that is what kept us with the cut for the first cut, and it is probably why we get another one at the november meeting as well. jonathan: tell us what you expect from payroll so week from

tomorrow. looking for 70,000. i can imagine what the fallout would look like if we printed a 70,000. what is the number you are looking for with the team? george: we are in that sub-100,000 too. discounting what the revisions might be. it swings to the negative for september, really if we get close to zero or negative number that is lights out, right? i'm really focused more on the unemployment rate. if it takes back up to 4.3%, i think that is going to matter more. lisa: this to me is the interesting point. he said the markets moving to the downside. have we reached the point where larger rate cuts will be treated as negative for equities? george: exactly. the first cut is viewed as accommodation. the next cut is going to be a

realization that the actual economy is not as strong, and therefore is going to be bumpy. the fed is trying to phone the runways. they are going to try to soft land. lisa: do we have any sense of what exactly the prints are doing at this point? in other words, how quickly they're going to get implemented in the real economy? george: look, this is the classical dilemma of long and variable lags and which one is going to offset the other. these cuts start to unwind what has been a too-high rate complex. the problem is the interest rate curve has eased for the past 10 months. basically this time last year with we had 10%. now the fed has to follow through.

if they take long to follow through been [indiscernible] annmarie: to lisa's point, are we already seeing it in the real economy, in the sense that the mortgage data shows people lining up to refinance on their homes? george: i think that is a prudent thing to do. those that obviously became homeowners in the last year and i have had higher rates. they are going to take this opportunity to rethink, is this right -- the right level of rates? you could have a situation where the 10 year trends between 4.25%. jonathan: i think we have lost that connection with george going cal's -- george goncalves there. deutsche bank has an interesting call on this as well. they think the call to go the next 50 to one hundred basis points from the federal reserve is straightforward. i will share the quote with you.

the 25 versus 50 basis point debate is not really about nfp. the case for 50 rests on policy rates being comfortably above macron upper bound of neutral of 4.25%. the first 75 to 100 of rate cuts is easy. lisa: i think a lot of people say that is the case, that you could get away with making outsize cuts without igniting some broader market fear. at least at the outset. at what point do you trigger something else? people say, how much more can you price in in terms of accommodation before it becomes a problem? jonathan: we are pricing and 50 because we just printed 70,000 i don't think this market is going to like what it sees at all. the median estimate is something close to 140,000. 70,000 we would be talking about august 5 all over again. lisa: i don't think it is easy

to talk about the rate market. i do have sympathy with the idea that this equity market is getting more divorced from the real market. it is unclear how much accommodation is providing. if it needs to provide accommodation then we have a problem. increasingly for risk assets they are looking to the earnings and looking beyond the 25 to 50 unless it is having some kind of signal about the macroeconomic backdrop. jonathan: next up, jobless claims. with an update on stories elsewhere this morning, here is your yahaira jacquez. >> people familiar telling us here at bloomberg that new york city your eric adams has been indicted in federal corruption probe. the indictment is sealed and it is not clear what charges adams may face. this makes adams the first sitting mayor of new york city to be charged with a federal crime. been a statement adams saying, i always knew if i stood my ground for new yorkers that i would be a target. if i am charged, i am innocent

and i will fight this. meanwhile, donald trump is calling on apple to help investigators access the phones of the two men accused of plotting assassination attempt on his life. the former president said the fbi had been unable to access three potentially-foreign-based apps on the phone of thomas matthew crooks, the pennsylvania man who shot at trump in july. for years apple has resisted requests from law enforcement to build a back over that would allow authorities to access a device without a user's password . meta has debuted augmented-reality glasses. on ron accompanying wristband also allows users to click g -- click using just their hands. they are prototypes that are not for sale but will be used internally for testing and improving the product. that is your bloomberg brief. jonathan: let's roll that video

again. is that ed ludlow modeling the hardware coming out of meta? lisa: in talking about the way he scrolls with his fingers like this? jonathan: it felt like he had an out of body experience yesterday. lisa: i think he did. he said it is really revolutionary. i wonder what we are all going to look like if we have glasses on and rocking back and forth. annmarie: and is calling it the most profound technology experience he has had in his brief career. jonathan: this is not the future i want to be part of. up next, kamala harris, the capitalist. vice pres. harris: look, i am a capitalist. i believe in free and fair markets. we will prioritize investments for strengthening factory towns. i understand the pressures of making ends meet. jonathan: that conversation, plus the latest on new york city mayor eric adams. that is still to new york this morning. good morning.

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jonathan: micron up in the premarket by 15%. even this equity market a big lift. on the s&p, up by a little more than .75%. thank you, china. now the promise of fiscal support and also saying things like, we are not going to let housing prices go down. i'm not sure how they are going to do that, but that is the goal. lisa: this seems like a sea change terms of rhetoric. the idea that they are actually going to give stimulus payments to individual homes at a time when xi jinping previously rejected this as welfareism and a sign the seeds of people of a capitalist society of the west, and this is how they are trying to stimulate demand. to me it highlights just how much there has been a real tone shift in china. jonathan: i agree.

we will catch up with rob sacking of citi on this story. under surveillance this morning, kamala harris, the capitalist. vice pres. harris: look, i am a capitalist. i believe in free and fair markets. we will prioritize investments for strengthening factory towns. [applause] offering tax credits for expanding good union jobs in steel and iron and manufacturing communities. i will make the start up deduction 10 times richer and we will raise it from $5,000 to $50,000. i understand the pressures of making ends meet. i grew up in a middle-class family. jonathan: here's the latest this money. kamala harris pitching herself as a pro-labor capitalist in pennsylvania. budging to deliver a new tax credit for manufacturing union jobs. a tax plan also calling for the

incentives for the creation of ai data centers. joining us now, jack fitzpatrick. had an 82-page document out of the campaign yesterday on the economic plans. have we got the answers to all of our questions? jack: i don't think we have the answers to all of our questions, but we are getting more answers, more specific proposals from kamala harris, who is having a bit of an easier time casting herself as a capitalist this year, in the contrast to former president trump, calling for coming you know, an across-the-board 10% tariff. as well as in a year where she did not have to run the democratic primary and standout with further and further left-leaning ideas like medicare for all. so, the tax proposal details seem to be getting there. there are some policy areas where she has not provided a ton of detail. it evidently is not a huge part

of her legislative agenda. but when it comes to especially taxes and spending, which is where she is going to be forced to do work in the first two years if she is president, there is a fairly good amount of detail, especially for someone who entered the race a couple of months ago. annmarie: let's talk about tariffs. that is something she can work on on day one. she supported president biden on keeping the trump-era tariffs in place. what is the difference between these two proposals? jack: well, you know, she was pressed on that in the interview after a speech yesterday. and basically said she is going to be thoughtful about it. she did not offer a ton of details on where she might rate with the biden administration on tariffs in particular. that is why it is a bit easier for her to thread this needle and say she is a pro-labor capitalist with a contrast to a broad proposal by trump saying, let's do 10% on every good

imported into the country. that is one area where there is not a massive amount of detail and she has not been pressed on this a ton to say exactly where would you differ from president biden? how strongly would you differ from the first trump administration? but at least in what they are specifically proposing proactively there is a fairly clear contrast between harris and trump. lisa: we got the report, we got a speech, we got an interview with msnbc. she spoke about the nippon steel tie up. this was interesting as a view into any potential national security versus jobs. she said this. an american company and a factoring steel is going to be critically important in the context of national security. keeping it domestic is more important than keeping all of the jobs. jack, what do you make of that? jack: you know, she brought the

u.s. steel conversation back into a broader conversation that the biden administration has tried to focus on, on steel, on domestic production of semiconductors, physically saying, we want production and american ownership of some of the most important things to our economy for national security reasons. i'm interested to see what the polls show going forward on how that argument plays in pennsylvania, where this is a tricky issue, because some of the promises made by nippon steel were for major investment in pennsylvania. then again, if you make a little bit of a protectionist argument, if you emphasize u.s. investment and u.s. ownership i'm not sure necessarily that pennsylvania voters will see her as destroying a massive number of jobs. but it is a message she has got to convey carefully, especially for state like pennsylvania,

which clearly she understands by doing the speech in the following interview there. jonathan: jacket patrick -- jack fitzpatrick down in washington, d.c. i'm so glad you went to that quote. lisa: keeping it domestic is most important over keeping all of the jobs at a time where this is a delicate dance and people are talking about the labor market as being essential to a lot of these potential economic plans. jonathan: we will return to that story later on this hour. some breaking news in new york city. sources telling bloomberg new york city mayor eric adams has been indicted following a federal corruption investigation. bloomberg's lauren he must -- laura he must join us now -- joins us now. what doing those far? >> well, we know that sometime today a federal prosecutor -- federal prosecutors are likely to reveal charges against against eric adams, the 110th mayor of new york city as a

result of one of the corruption probes that has been going on into his administration for months now. we don't know what exactly the charges will entail or how many people will be charged or if it is just the mayor himself, but we do expect charges to be unveiled today from the southern district of new york, u.s. damien williams. annmarie: can you tell us about the investigations currently ongoing by the manhattan u.s. attorney's office? laura: yes. this is unusual in the sense that there is more than one that we know of. we know of at least three emanating from the southern district u.s. attorney's office, and an additional one that was coming from the eastern district u.s. attorney's office. first, which came into view in november of last year, centered on potential campaign finance

violations from the mayor's 2021 campaign. a successful campaign. and was looking at whether or not donors with connections to turkey were giving to the mayor, potentially in exchange for favorable action on things they cared about. that is the first one. the second one and third one both became more visible in recent weeks after federal agents issued a flurry of subpoenas and conducted a bunch of searches and seizures at the homes of very senior adams administration aids. the second investigation appeared to center on the now-former police commissioner and his twin brother. the former commissioner, edward kobani, has since resigned after his phone and home were searched. and the third investigation centered on, or appear to include several other top aides to the mayor, including a pair of brothers who have incredibly

powerful seats in city government. one, david banks, the new york city schools chancellor, who earlier this week announced his plans to retire at the end of the year, this calendar year, in the middle of the school year. and philip banks, adams' deputy mayor for public safety. jonathan: we have got to leave it there. we appreciate your reporting. any updates, jump back on and share them with us. this from the new york times. laura mentioned one of these investigations. this has been widely-reported on now for the best part of 12 month. whether the mayor pressured the fire department officials for a turkish building despite safety concerns. lisa: especially at a time where a lot of people have been indicted or subpoenaed in his orbit. the fact that i find most interesting is that i have not heard anyone come out in support of him in the democrats of the leadership. we have had a number of people distance themselves from him.

i wonder where he gets support and where he doesn't. annmarie: that is a great question. we heard from congresswoman alexandria ocasio-cortez, but where is chuck schumer, the senator from new york? where is how hakeem jeffries, the house leader on the democratic side? and of course, governor hochul. she's the one that can force them to resign after this indictment is unsealed. jonathan: not much support in the party right now. up next, the prospects of a truce between hezbollah and israel. you are watching bloomberg tv. ♪ or is work not working? at least, not the way it could work. your people are buried in busy work. and you might be thinking... can ai make it all work? it can. on the servicenow platform,

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jonathan: snapping a two day winning streak on the s&p 500. if you are waking up this morning, forget yesterday. up 1.4% on the nasdaq. macron, the stock is up in the premarket, but get to some of the single names. out of china, listed in america, alibaba up by 6%. jd.com up by 8.5%. it is a big rally for the china-related names again. lisa: it feels like chinese

authorities came out with rate cuts more and now they are saying, do you hear is now? we will deliver direct payments ahead of the national holiday. you want domestic spending and consumption? here we go. we have a problem we want to get ahead of people have been waiting for this for a long time. we can ask, why now, but people are celebrating it across markets. jonathan: guests don't believe they are really willing to go in this direction. i think that there are a lot of doubters. otherwise he would see base metals up in a big way. even bigger moves and some of the china-related names into bigger rallies in europe. is this the beginning of something bigger? lisa: saying yes, i've been telling you this. evan brown will say yes, i have been telling you this. believers will say we are probably having a trough. there are doubters because it seems to fly into the face of a lot of the rhetoric we've heard from this administration. if we have a better

understanding of why now, what they're trying to get ahead of and how committed they are prioritizing business over ideology, people will have a better sense of how much they can buy into this. jonathan: a range of benchmarks in europe and beyond. let's turn the page and get to the bond market story. the two year yield, 3.55 31. a ton of fed speak. chair powell is on deck but pre-recorded opening remarks. we aren't sure if it will be newsworthy. you will hear from john. then another dose of chairman powell next week. if you don't get the comments this week, you will get them next week. lisa: what are you listening for? i have a couple of things i'm listening to. jonathan: does he sound like goolsby and deutsche bank? the decision to go from here to somewhere close to 3%? isn't that great because we are restrictive to neutral? is the next 100 basis points an easy call? i don't think you will use the

same language as goolsby and deutsche bank, gives a hand that -- a hint that is how he is thinking all systems go we will get another big move. lisa: i would look at his progression, if he is on the side of austin goolsby, and then compare the fed speakers to their prior speeches before that meeting to understand jay powell's sway over them in terms of making them more dovish. there is interesting dynamics, power-wise, on the committee. jonathan: what happened in that room? lisa: i think other people want to know, too. jonathan: mike mckee would say, wait for the transcript. lisa: is that transcript accurate or is it a message from the market? jonathan: a transcript from the federal reserve? how dare you. we have had quite a big move lower in yield. over the last week or so things have stalled and yields have started to climb again.

are the markets coming into sharper focus? lisa: the seven your auction will be interesting because duration has more than issue being digested in the market. the five-year into-your have been solid the demand for bonds and yields continues to be present. how much is this treasury department getting a tailwind from china? also, deutsche bank coming out and saying that they actually expect the ecb to go faster with a 50 basis point rate cut as soon as december. on the margins, it is all systems go for rate cuts. jonathan: under surveillance, a top story, china unleashing a wave of stimulus measures to boost the economy. president xi pledging to backstop the real estate market and limit construction of new homes. the government offering cash handouts to people in extreme poverty. lisa: why now? annmarie: for months people have been questioning, when will they come out? the last time they made a decision out of the normal timeframe, this group, was when they were reeling from the

covid-19 pandemic. i come back to the goldman sachs note over the summer. the reason they have been cautious, goldman sachs over the summer, about doing physical and demand-side stimulus is they want to save the ammunition in case they have to do more in 2025. they see the weakening and the domestic market. then they look at the united states and say whether it is trump or harris there will be a lot of protectionist talk out of washington. lisa: before we understand the motivation and time may come it's interesting how big the shift has been from the rhetoric and economists and analysts analyzing this. the stimulus package represents a strategic shift in macro policy, talking about how this could stimulate confidence in domestic spending. maybe it matters exactly why now, but it matters potentially more whether it works.that is what a lot of people are looking at. jonathan: from goldman, at the moment it is good for markets. let's see if it works and gains

traction in the economy. it is really good for markets. the drama in european banking. commerzbank vowing to boost as it ramps up talks. the german lender looking to shore up support. the first meeting set for friday. lisa: i love this story because i can't put my finger on how the german authorities are justifying their hatred of this deal. i know that they have acknowledge that they cannot avoid having unicredit taking an even greater share of commerce bank. the actual shareholders of commerzbank are welcoming the input from unicredit, which i find fascinating. they say, why not have an open dialogue? jonathan: thank you. there was a quote from the german finance minister i think warranted far more pushback and interrogation. the style of the unicredit approach has unsettled many shareholders. ok. in what universe does a chart

going up into the right aggressively unsettle anyone who holds a stock? we are open by close to 30% in two weeks. we are supposed to believe that the german finance minister when he says it unsettled shareholders? the german government and who else? who would be unhappy with this result? lisa: why don't we ask one? what do you think? her quote, we think commerzbank should be willing to have an open dialogue. cooperation with unicredit in whatever form does it need to be commerzbank's detriment. everyone is talking about the stealth mode of unicredit. where was the finance ministry? they basically walked into this. how did they not know unicredit was building stake in commerzbank that they so love to the german government is ruled by three parties. the finance ministry is the fdp. they stand for free market and pro-business. i am confused as the statement

saying shareholders don't want this deal. jonathan: they are open to european integration as long as they are the one driving european integration and combinations. the hypocrisy of the german policymakers are something to behold. it never ceases to amaze me. lisa: is it effective? i would agree that if you take it a step further they can't stop unicredit from coming in either through a backdoor channel or otherwise. is this the new model of how to gain pseudo-consolidation in european banks? jonathan: macron shareholders are unsettled this morning, the stock is up 15%. [laughter] openai restructuring as a for-profit business. weighing a 7% equity for sam altman, marking the first time he would be granted ownership in the startup and a shift from the original plan as a nonprofit. lisa: they might not be a nonprofit and you might be a

windfall payment but it might be a public benefit corporation. a public benefit corporation is a company considering, basically, being for the good of people. what is a public benefit corporation? i'm sure that they will say that they are because they are helping people quit vapes. there are so many different aspects. how do you virtue signal at a time when you are ultimately creating the code that will set the groundwork for a lot of social interactions going forward? annmarie: if you are notannmarie: a public benefit corporation, we have bigger problems. we are capitalists and want to make money. this is coming at a time when there is an exodus of senior management. i wonder if that will potentially affect plans? jonathan: let's get to a bigger story of the middle east. joining arab leaders in a bid for a three-week cease-fire between israel and hezbollah looking to avoid an all-out war the middle east after days of israeli airstrikes across the border in lebanon. we are joined now for more. can you walk us through how

close we are to a deal? >> well, diplomatic strides have been made in 24 hours. it was significant that president biden and president micron and eu and arab leaders put out that statement calling for an immediate cease-fire on the border and saying that it is necessary for residents from both sides to be able to return safely to their homes close to the borders. that was the statement put out. the key question from here is, are israel and hezbollah going to sign up to the cease-fire proposal? so far, there has not been an official response. we have not heard an official response from the israeli prime minister. in lebanon, the government seems to be open to the proposal. i had the opportunity to speak with the lebanon economy minister and asked about the cease-fire proposal. he said it's welcome and necessary. i pressed and said, that is the lebanese government's stance.

can you get has bullet to the terms -- can you get has below to sign up to the terms? his words are that hezbollah has shown flexibility in regards to moving towards a truce. from the has below, in the past week they have suffered a lot of blows. 3000 operatives were critically injured in those explosions last week. they have lost senior commanders in the airstrikes that begun at the beginning of this week. from their perspective, would this be them showing that they are conceding? is this a sign of weakness if they agree to the cease-fire proposal? at the same time, there is a lot of internal pressure about the rising humanitarian toll, the rising number of civilian casualties, and deep pressure on the economy which was already in dire straits even before the war started. you add the other dimension of iran and syria and the notable

lack of language of them being inclined in any way of getting explicitly involved in this war. so, there is a lot of pressure building on hezbollah at this point. the language that i got from the economy minister suggests that they would be willing and hezbollah are beginning to show some flexibility towards accepting a cease-fire. annmarie: the thing that i'm struggling with his by then officials are saying to reporters potentially we are going to get lebanon and israel coming out in the next few hours agreeing to this deal. at the same time, israel is preparing troops for a potential ground invasion. if there were to be a deal, how long with this last and what comes next? joumanna: that is a good question. i know you're speaking to our jerusalem correspondent. airstrikes are continuing this morning. yes, the cease-fire proposal came out overnight, but the airstrikes are continuing today,

which tells you the cease-fire hasn't started yet. there has been a lot of talk about israel preparing for the possibility of a ground offensive. they have been very clear and that the war objective from the new front is to return security to the northern border. it is difficult to envisage israel signing off on a proposal that doesn't secure the border and they won't come away from it feeling there is a possibility that hezbollah may start relaunching rockets again. jonathan: let's get to ethan. thank you for the time. we are joined from tel aviv. ethan, let's talk about objectives on the northern border. what does security look like to the israelis? ethan: to the israelis, security looks like being able to live there and not be afraid of missiles, rockets, or fighters coming across in the way that it

happened in the south from hamas in gaza. on october 8 when hezbollah joined in solidarity what was happening in the south, the 65,000, 85,000 people had to leave their homes and haven't gone back. they feel they can't live there and the country has become reduced in size. until they can feel secure they won't go back. lisa: how much appetite is there among the israeli population to have another ground invasion at the same time that they are deeply entrenched in gaza? ethan: well, i haven't seen a poll, so i can't answer, but my instinct is there has been a growing impatience in israel to actually take a more aggressive stand towards hezbollah. the feeling is hezbollah's attacks on israel over the last year are completely unmerited. there is no land dispute between

them. that hezbollah is doing this out of ideology and israel mustn't put up with it anymore. israel has been watching the developments of hezbollah over 18 years since their last war and people would rather embrace a strong military response. you are right, the ground invasion involves an enormous amount of risk, but this is a fairly bellicose nation at this point. jonathan: a tough time for you and the team. ethan bronner out of tel aviv. things changed this week, the issues on the northern border came into central israel. the israeli in the street intercepted a missile headed for central israel for the first time. annmarie: that is another redline almost a year into what's been going on in israel. you have this redline of operated. we will hear from benjamin netanyahu who is set to be in new york today as part of the

u.n. general assembly and potentially get updates on this cease-fire deal between lebanon and israel. but what happens after three weeks? jonathan: an update on stories elsewhere. yahaira: congress has successfully passed a stopgap bill to avoid a government shutdown ahead of the election. the temporary measure will fund most government agencies at current levels for the time being, but another resolution will have to be made to avoid a shutdown in december. the bill now goes to president biden to be signed into law. macron sales are up more than 50% in the premarket, the largest u.s. maker of computer memory chips gave a sales and profit outlook ahead of wall street estimates. the upbeat forecast is the latest in micron is benefiting from a boom in ai spending. orders for high-bandwidth memory have added a lucrative new revenue stream for the company another chipmakers. shares of aramark are rising 5%.

telling us that the french food catering firm is exploring a potential acquisition of the u.s. rival. it has catered several olympics games and is hoping to expand overseas. the potential deal could face antitrust scrutiny. they would need to secure funds for such a sizable acquisition. they are currently valued at $12 billion while aramark is $10 billion. jonathan: mourn about 30 minutes. next, the promise of fiscal support in china. >> i think that it's a step in the right direction. we wondered why they had been dragging their feet. i think they don't want to follow the path that many western economies follow in a global financial crisis. jonathan: a big shift in china this week. you are watching bloomberg tv. ♪

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jonathan: equities with a lift, up .8% on the s&p 500, a rally and base metals a pickup off of the effort in china. in commodities, that is the move. commodity currencies, the aussie outperforming. single names absolutely ripping in the premarket. lisa: the consumer actually has more capacity to spend now that there are these payments being made to companies -- to individuals who are impoverished. understand the psychology of what the shift came from. it will be important for people having faith that it can truly continue. jonathan: the promise of fiscal support in china. >> i think that it's a step in the right direction. we wondered why they had been dragging their feet.

i think they don't want to follow the path that many western economies followed in the global financial crisis. monetary policy will be somewhat ineffective. vsco will need more. some of the banking capital infusions are a step in the right direction.whether they want to admit it or not chinese officials have to adopt some of the western playbook. jonathan: china pledging to support the economy with fiscal spending in an effort to revive growth. "many indicators continue to highlight cyclical softness including the global manufacturing pmi and lending to households and corporate's. we recently lowered growth this year to 4.7% next year to 4.2%. risks still look skewed to the downside." does this change the story for you? >> it could. the downgrades were before the stimulus announcements. we are seeing a lot of cyclical weakness. this is good news. it is more than i would have expected. we were expecting a drip drip

of minor policy initiatives through the year. that said, they're still deep concerns about the economy. you have a consumer that is hesitant to spend. confidence is still at subterranean levels. will this be enough to lift animal spirits and get the consumer spending again? i am hopeful. it could change the story, but we will have to see how boots hit the ground. jonathan: we heard it described as a classic recession, a recession like in japan and a hint of that in europe over the past decade. do those served as decent examples for what china is currently experiencing, or is this different? robert: a big part of the story is the property sector has unwind for several years. that acts as a negative wealth effect, a negative factor on spending. there are deep issues aside from that. you have had high youth unemployment there.

that doesn't exactly engender confidence in people to go out and spend.the balance sheet housing sector is a big part of that, but also questions about how in an economy of deeply aging demographics you are not placing the youth into jobs at a higher rate. there are other structural issues here. lisa: there is a question about how much chinese authorities have truly changed their approach and also how much stimulus helps the rest of the world's economy let alone just chinese economics. do you see a big readthrough to the u.s.? probably not as much as europe? or do you think this is focused on domestic consumptions and activity in a way that is more inside looking? robert: i think you will get some spillover effects. the outlook on growth is higher than our expectations. the readthrough to the u.s. would be more minor.

a bit more to europe. but this is more about boosting domestic demand. exports has saved the day for china's economy over the last several quarters. that has been where the strength is. authorities will be focused on how do we boost domestic consumption and demand. annmarie: are they seeing the headlines coming out of the united states? robert: that is one reason why i thought they would be more hesitant to pull out a policy bazooka this stage. we have a lot of conversations about why they are doing such drip, drip stimulus. we would hear that they were saving some of the bazooka out of fears of what would come out the other side of the november election, especially if you have a second trump administration where he has mentioned putting larger, more amounts of tariffs. this is a surprising announcement. what probably happened is they were looking at how soft the data was coming in. analysts were warning they were

risking missing their growth target. so, they decided to go sooner. annmarie: what if it is trump? what do they have left to do? robert: then there is a lot of unpredictability. the harris administration posture would be tough and the trump administration posture would be tough. the biden administration has not removed tariffs on china. in fact, they added more. they are worried about also if you get a trump to plano, would you -- trump 2.0, would you get a 60% tariffs or a much higher tariff? then they would have to find ways to respond. lisa: all things being equal, given how much the fed is expected to cut rates, how much room have they paid for the rest of the world to cut rates pretty aggressively? robert: i think this is a big story. the fed looked like they would cut five to six times. that ended up being delayed. other rate cuts have been slower

than expected and delayed. you see that in emerging markets and you've seen that around the world. now that the fed has opened the floodgates, it opens the door for other central banks to move faster. it depends what they do after. let's say that the fed moved with another 50 basis point move. it is easier among central banks to create consensus for moving faster. and they have to worry less about what happens with the exchange rate. we are in the midst of a global easing cycle but the fed can open the door to that to be faster. jonathan: citi has mentioned before and lisa has mentioned this before, can you imagine how much worse things would be if china had not waited and started doing it in 2021? how much worse the global inflation would be? it could have been a whole lot worse. next, ubs and national capital strategies and pimco.

the second hour of bloomberg "surveillance" is around the corner. ♪ ♪♪

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>> i wouldn't consider valuations to be a detractor from markets heading higher. >> i can get the equity market up to 7000. that is my highest target. >> you could see momentum here. >> mid-caps is potentially a better beneficiary and hedge near term. >> to me come in the market is pricing the average outcome of all possible scenarios. >> this is bloomberg

"surveillance" with jonathan ferro, and annmarie hordern. jonathan: on course to open at all-time highs. scores of by eight tens of 1%. tech is ripping. we will talk about macron later this hour. open the premarket by almost 15%. china, check out the single names. moves of more than 5% across the board as china looks more open to fiscal stimulus. lisa: we have seen the rate cuts and now comes direct payments to poor households ahead of the national holiday. we will talk in detail about what the proposal was. there is a broader point of how much this federal reserve with the 50 basis point rate cut and more down the pike has opened the door to a faster easing cycle around the world including china, even though it seems like a pivot from previous views. annmarie: really talking about

the issues happening now in china. confidence he called it at subterranean levels. he was saying he was a believer that china would potentially wait. you have to think, how much more firepower will they have depending on what policy we will get in washington in 2025? jonathan: a break of seven, the first time we've seen that in 16 months. in the fx market, commodity currencies, the aussie outperforming. let's talk about commodities, base metals are perking up. check out crude, brent, wti, down by more than 2%. annmarie: the financial times is talking about the fact that the saudis are no longer chasing price. unofficially they want $100 a barrel on brent and want to go after market share now. they are potentially concerned that you see the u.s. record oil production and they don't want to lose out on that market share.

now they are going to let it rip. lisa: you thought micro was confusing before, get this.how does this follow a global recovery and rate cutting cycle? oil is no longer a macroeconomic indicator. it is something else being swayed by political considerations. if you get a price war, how do you factor that into inflation rates when that used to be a leading indicator on consumer behavior? jonathan: brent right now, $71.72. later, jobless and tons of fed speak. who do you want to hear from? lisa: you pointed out john williams, that that was want to watch for sure because he is one of the big three. i always like hearing dissent, but all of them, i want to compare their speech now to what it was last week or the week before, before the quiet periods so we get a chance to see how much they shifted in tandem with

jay powell. jonathan: what was it in the quiet period? chairman powell saying we have to do this? something about cpi like governor wallace suggested? lisa: it was revisions we found out. also, the idea that if you get inflation data that comes in below expectations or even in-line, how much is that without weakness giving them the confidence to go more aggressively? jonathan: jobless claims today: 30 eastern. we will catch up with evan brown from ubs on why we should price out a recession not price in a recession. and kamala harris making her economic pitch. and the growing demand the power ai. we begin with the promise of fiscal stimulus out of china. equities running worldwide ahead of jobless claims in the u.s. and comments from chairman

powell. recession risk needs to be further priced out. investors poured money into defensive trades over the last couple of months, but resilient u.s. economic data and a proactive fed have meaningfully reduced the left detail. we look for treasury yields to continue bouncing from here and cyclical sectors to outperform defensive. let's start with a call on the economy. how encouraged are you from what you saw on the fed last week and what you see from china this week? >> very encouraged. when you have a meaningful change in messaging from two of the most important economic actors in the world, jay powell and president xi, it pays to listen. what we saw from powell was a message of labor markets are fine, we will keep it there. i think that the bar is low for them to keep doing 50's. ultimately inflation has come down quite a bit and that enables them to act more aggressively. jonathan: deutsche bank said as well, you are expecting the next

150 basis points to be an easy decision? evan: i don't know if it's an easy decision. the next 100 to 125 we are going to get. the more aggressive that they are now, the less i think they have to do later. you guys are saying that we are bringing down recession risks because they are acting sooner and more aggressively at this point. lisa: you have to wonder, how much does this leave inflation as a bigger concern even if inflation is less of a concern? you're talking about that with longer-term yields picking up a touch. are we truly seeing just a return to the past normal? is this going to be a new inflationary environment where officials are not willing to allow the economy to collapse enough to create that disinflation? evan: we are a long way from inflation becoming a meaningful concern again. we were talking about oil and what is happening there. oil, that is a major

disinflationary force not only on the heckling level but rippling through into core inflation. inflation is cooling. you would need to see in re tightening of the labor market to get domestically generated inflation getting going again. i think that this is the best of all worlds where they are supporting growth. maybe inflation becomes more of an issue if we get trump tariffs down the road, but that is tomorrow's story as opposed to today. lisa: the story you are painting makes me think that the u.s. is less exceptional and everything else is more exceptional with the valuations they are trading at? evan: i think the u.s. is still exceptional in one clear way. we have a great productivity story. we have seen productivity pickup in the u.s.. yes, employment has been coming down the gdp growth has been strong. that's also labor costs inflation lower.

you are not seeing that in europe. you are seeing ongoing supply chain and corporate margin issues and the like. the u.s. is still quite exceptional on that front. when we talk about equity markets, a lot of that good news is more priced into the u.s. then the rest of the world as is almost always the case. annmarie: how much is the european story depending on what happens next in china and if the fiscal and monetary stimulus works? evan: what happens in china there will be some positive leak through in europe, especially with the luxury names. if you can shore up consumer confidence in china, that helps on that front. i think that euro faces a number of domestic challenges. you still have stubborn wages. you still have german manufacturing sector that is in pretty bad shape. we heard from mario draghi last

week or the week before, him talking about how do we get europe more competitive? it is almost a sad read because you see such great, interesting work of things that can and should be done but so little confidence that the institutional framework will allow politically these reforms to happen. jonathan: let me jump in. as an investor looking at europe, how do you react when the german finance ministry sounds almost unsettled by stock going up? what is that telling about the situation in europe? evan: that is the underlying -- there is an underlying institutional issue that will hold europe back. i don't think i'm saying anything that's not already reflected in european equities. they are very cheap. they can receive some balance from the china improvement, and maybe the ecb gets more aggressive and that helps, but

structurally it is hard to make this long-term investment case for europe relative to the u.s. jonathan: you mentioned luxury. we have seen that run in luxury. a number of asset classes, let's pick three. out of those three to price out recession, what is it mean. to price in what now and where? evan: i think what we will see the most clearly is what is happening in equities regionally and intersection. a lot of people ford money into the defensive sections in the u.s.. i think that we have to price out a lot of that one. the left tail -- jonathan: utilities given that the run-up is off of the back of ai as well as the defensive nature of the particular group of stocks. what do you do with utilities? evan: utilities is the trickiest

because of ai. in itself, utilities look extremely overbought. we have seen tons of etf flows into utilities given the macro dynamics and our view that yields can bounce from here, that utilities should be vulnerable. then you get big ai-powered demand announcements. among the defensives utilities look a little better,. the staples are real estate and health care, they probably underperform utilities. at least you have the ai story in utilities. lisa: it seems overweight small caps, overweight chinese equities, maybe european securities, underweight bonds, and have a holiday. is that your view? evan: it is like a reflation without the inflation, is how i'm thinking about it.

this pricing out of recession risks, but now you have oil coming down for supply reasons. hopefully the middle east does not escalate much further from here. if oil was coming down for supply reasons, that's a stimulative thing for the private sector and consumers. we have stimulus from china, the fed and stimulus more globally, and we are setting up for a better economic picture than people thought going into the year end and next year. jonathan: fantastic to catch up, come back soon. an audition for ubs if there is one from bramo. lisa: i was trying to envision, what would this look like? i love the idea of stimulus from china, the fed, the ecb, and saudi arabia.

how much will that be a tailwind if you have oil prices falling for the right reasons, reasons not having to do with the lack of demand, the economy falling off of the cliff? jonathan: an update on stories elsewhere with your bloomberg brief. yahaira: we start with disney announcing new job cuts. the company is laying off workers at the corporate level that's part of a continuing effort to improve the profitability of the business. the website deadline reported 300 jobs in legal, human resources, finance, and communications were impacted. espn and theme parks were not involved in this round. oil prices are falling for a second day with saudi arabia reporting to be lining up an increase in output later this year. brent prices are down 5% from tuesday's close. wti is below the $70 mark. the financial times reported that saudi arabia is ready to abandon its unofficial oil price

target of $100 per barrel in a bid to regain market share. factions in libya have reached a deal that could open the way to the return of some crude production in the country. hurricane helene is strengthening as it approaches the florida gulf coast expected to become a category 4 before making landfall this evening. several counties along the coast are already under evacuation orders as the national hurricane center warns that the storm currently poses a "life-threatening situation." jonathan: appreciate the update. economic policy taking center stage. >> i am imposing tariffs on your competition from foreign countries, all these foreign countries that have ripped us off. >> i know the power of american innovation. i believe companies need to play by the rules. jonathan: that conversation next. live from new york city, good morning. ♪

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jonathan: equity futures on the s&p, up five .8% on the s&p 500. a rally in europe, a pickup in china-related names. the china story continues. lisa: for good reason. you have a euro that is opening the door to fiscal stimulus, a door that they had not opened before. a series of rate cuts. is this going to be the bazooka? that is what people are discussing today. jonathan: the yields are a little lower. the 10-year, let's call it 3.7 seven. economic policy taking center stage. fmr. pres. trump: i am imposing tariffs on your competition from foreign countries, all these foreign countries that have ripped us off. your companies are going to come in, they are going to pay a low

tax rate, and a really low tax rate if they make their product in america. v.p. harris: i believe inconsistent and transparent rules of the road to create a stable business environment. and i believe companies need to play by the rules. jonathan: the latest donald trump and kamala harris detailing their plans for the economy in swing states of pennsylvania and north carolina. "neither party is fully explaining how to pay for their plans. there are no responsible school hawks this year. both plans increase the u.s. national debt over the next several decades, but trump much more -- almost twice as much."music to lisa 's ears. do we need responsible deficit hawks? >> we do, but it is an election year. both candidates understand that. we will get to the fiscal responsibility part later. now they are both making promises that i think anyone who

has any kind of bond market focus and long-term debt-deficit concern is probably not sleeping well at night, but this is an election year. annmarie: how different our their policy proposals? a lot of the things they talk about are the same when it comes to the child tax credit, no tax on tips, rationing back red tape, less regulation so companies can produce more in the united states.there is a lot of overlap between the campaigns. douglas: i take a step back and say the old days where industrial policy was a bad set of words and free trade was the norm, those are gone. we are in different gradations of how the government plays an essential role in the economy. you are right that in that context both have drifted towards industrial policy and a central role for the government. i think that it verges from there.

trump's view is very backward looking. he wants america the way that it was in the 1950's and 1960's.we had an industrial base and manufacturing economy, but we are in the 21st century. even though she is embracing policies that are more government-centric and spend and not worry about paying for it until later, i don't think that the specifics overlap that much. her embrace of tariffs, which was muted in her policy plan yesterday, is a very different animal than trump's. trump believes that tariffs are the silver bullet that will solve everything to politically, economically, financially. give me a problem and a tariff will solve it. she is more targeted, measured, and forward-looking. i'm not saying that i agreed with every word in her 82-pages, but it was more thought out man his across-the-board throw it against the wall and see what sticks. annmarie: you are here for

meetings but you talk to everyone in washington. is there a party if you are a free-trade capitalist you can belong to anymore? douglas: no. the sad answer is the jacket camp, paul ryan, mitt romney republican party doesn't exist. there is hope among many centrists and republicans that if trump loses in such a way that he somehow goes away that the republican party -- it's not going to revert back to the old days of country club republicans who agree and free trade, but there would be a resurgence of the business-friendly, market-friendly mindset where trade is not a bad word. i'm not sure that will happen anytime soon, but i think that that is the brought hope. annmarie: lisa brought this up and it is a good point with u.s. steel and nippon steel, something vice president harris said that she is in the jake sullivan camp rather than janet yellen camp.

national security matters more than jobs. what is the direction of travel for either of these two candidates? you are a foreign country from an allied company and you want to do business in the united states? douglas: both parties, both candidates, understandably have put a premium on national security over pure commercial interests. that is probably the mindset that we have to get used to. the nippon steel deal is more problematic because the national security justification is, at best, a stretch. i think that the japanese and corporate's around the world, japan and elsewhere, understand that this is in the context of pennsylvania being a if not the most important state in the election and the atmospherics around the election. i'm not looking at that as kamala harris has decided that even allies like japan are not worthy of making foreign investments in this country because they are a national

security risk. it is more of a unique circumstance. lisa: let's build on the idea of understanding with the framework is currently to measure national security versus capitalistic business interests and jobs. do we have a sense of a predictable framework to determine the exact evaluation? douglas: you want me to describe small garden, high fence? we don't know how small the garden is or how high the fence is, what is in or what is out. it is an expanding, flexible concept.national security is not something that you can quantify. there are judgment calls baked into it, but you are right in questioning how far down the road this government or the next government can go and what certainty investors will have in that context. lisa: if i am a company and i want to do a takeover, a deal, or source my materials, how do i

know when it will enter the crosshairs of national security when it could be materials, chips, the food chain, anything. we saw that with respect to some of the supply chain questions having to do with the conflict in the middle east.how do we understand when that crosses the redline? douglas: first of all, the process is supposed to be confidential and address that. if you are a company looking to make an acquisition under that context, you're supposed to have a confidential process where that gets fleshed out and it doesn't make the front pages or airwaves. the nippon steel deal set an unfortunate precedent to make a lot of this public. that is a bad thing because it means a politicized process is now potentially a public put a sized process which means they can play out some of the arguments you are describing in the leaking on the media stuff that has been previously -- lisa: why shouldn't it be public?

douglas: national security issues are often subject to confidential sources and information. there are a lot of reasons why these things don't want to be on the front pages. i'm a little upset over the process being played out the way it has, even as much as the underlying question of how you define national security -- jonathan: it is important that it has been difficult under this administration who has used national security as a sophisticated way of exploring the same protectionist event that the former president used. it is hard for me to understand, what really is a national security issue? what is a sophisticated excuse to do the same thing the former president was doing without saying we are like him? to sit here and say, we are different? douglas: the nippon steel deal, there are reasons to believe they are stretching the national security definition. i would argue that the dual use, what we have seen in russia-ukraine or in china,

means that the dual use of those items that are commercial could be used for military purposes, it is an expanding definition. there is a legitimate case to be made that things that were not national security threats a decade ago our national security threats now. you have a dishwasher that finds its way into a russian drone, then you would say, why are you calling a dishwasher a national security threat and it turns out that it is. jonathan: let's do it again soon. next on the program, the ceo on the build the power ai. ♪

jonathan: two hours away from the opening bell. equity market session highs on the s&p 500. on the nasdaq 100 up by 1.5. micron in the premarket absolute ripping up by more than 14% approaching 15% higher in the premarket on a later outlook from that name. the additional lift from china. baidu, alibaba, jd.com. moves of anywhere between five and 8%. it's not just those names, check of the luxury list of names in europe. lvmh up by more than 7%.

anything that touches china right now. lisa: the bazooka is getting revved up. maybe we'll go on blast from the politburo as they ramp up monetary and fiscal stimulus to lower income households. first of all why now. how much is this going to be domestic consumption and not necessarily sums are to stimulative boost to the externally facing aspects of the chinese economy. jonathan: what's the opposite of a toxic brew. china is helping out. lisa: there so many aspects of the soft landing or vona. there stimulus from china and from saudi arabia in the form of some kind of race to the bottom for pricing at it all come together with a bullish tilt. jonathan: brent crude is 71.63. down by more than 2% here in the commodity market. annmarie: saudi's according to

the ft are deciding not to go after price, of the unofficially love oil around $100 for brent. especially when you see the united states producing more than 13 million barrels a day. now what they're going to do is go after market share and they will be the best at this and that means prices are likely to be coming down. jonathan: yields are lower and wonder of treasuries are speaking with regards to china. >> that you end up with a disinflation with oil on the supply side driven decline oil prices that helps this soft landing or vona we are talking about. at a certain point you have to wonder has the threshold gotten lower and lower for the fed to be more aggressive with the rate cuts and how much to we hear that tone from fed officials. jonathan: we've also got an auction later on, a 44 billion dollars of 70 notes. -- seven year notes. lisa: we haven't had that many

interesting auctions recently. tune in, under surveillance this morning some breaking news for you braid the new york city met -- mayor eric adams has been indicted following a federal corruption probe. saying it's not yet clear what the charges are, the indictment is excited to be unsealed later today. adams vowing to fight the charges and stay in office. annmarie: the new york times report in federal agents are searching grace e mansion. here's what the new york times is saying paid roughly a dozen men and women in business attire outside the entrance to gracie mansion, suv's, one of which had a place card that their law enforcement, they carried briefcases, backpacks and duffel bags and maybe one appeared to be a camera bag. this will evolve quickly as we wait for that indictment to be unsealed. lisa: all those waiting on strike are some real stories we can tap into. this is about potentially pay to play particular for the

government and questions about that, the potential support or lack thereof that this mayor has from other democratic officials we talked about that earlier, the manhattan borough president, his a fight is not our fight and that's the tone we've heard across the democratic party. jonathan: it's not what we've heard it's what we've not heard. very little support from this party. lisa: which means the path of least resistance how much is it for him to step down. what's next and we get to assess that for another day. jonathan: are you excited for that? lisa: i'm personally biased, i care about the city and i grow up here. i want to see it do well and be safe and be clean and have good schools. jonathan: are you running? lisa: i don't know, just wait let's see how this does. jonathan: lebanon's economy minister telling bloomberg hezbollah regarding a proposal for cease-fire with israel. benjamin netanyahu's office

saying the news about a cease-fire is incorrect and the idf will continue fighting with full force. annmarie: the administration is saying we should expect a statement from israel, from lebanon that they would agree to the short-term cease-fire, netanyahu doesn't seem to be on board with that. he will be speaking at the u.n. and is arriving in new york today. his speech is taken on utmost importance now. i question with administration plans to do. antony blinken is here in new york trying to work out a cease-fire agreement between gaza. that has taken them about a year and they have nothing to show for yet. now they want to do diplomacy when it comes to lebanon. israel's preparing for boots on the ground. jonathan: just to combine the stories we had messages yesterday saying he would run for mayor in the first policy would be to move the u.n. lisa: i know you've mentioned it, i'm getting some notes. annmarie: i think it is a platform to run on. jonathan: as long as you do the

show. lisa: could you imagine, from gracie mansion. jonathan: don't know what time it opens. annmarie: they don't have a rooftop. jonathan: they now have a rooftop, good to know. plenty to do. ok. lisa: you can buy your own stamps. they are separate for the u.n.. it's its own domicile. it's basically another country. it's not actually part of new york. >> carry on. kamala harris maintaining to mastic u.s. -- says maintain control of u.s. steel. this as nippon steel says it's working with steelworkers to build support for its $14.1 billion deal. you picked up on this line. lisa: potentially there could be this trade-off in jobs could be sacrificed. there is a bigger question here which is do we have a sense of

what national security concerns are with that trigger is that would create a preeminence of that as being in the consideration over jobs or some economic concerns and the sense of that. and doug whitaker was trying to get a sense of your knocking to get that. but could it be abused then for personal issues or potential specific political causes. >> we know under this agreement as agencies come together there is not an agreement right now which is why they have these 90 days the clock restarted for them to bring the case forward. the question is whether or not they come out with a review and puts it on biden's desk for november 5. biden says he would veto that and is that enough potential he sure up some votes in the county she needs in pennsylvania. jonathan: becoming a political football on the campaign trail right up through november and beyond. let's turn to this story.

the growing demand the power ai forcing big tech to look for alternatives. bloomberg intelligence estimate microsoft will pay constellation energy at least $100 per megawatt hour once the three mile island nuclear plant restarts. also looking to build up energy structure in the face of new demands. the ceo joins us now for more. >> great to be with you. jonathan: let's start with the big picture, security, sustainability and affordability. can we square that circle, can we address that issue? >> we have to. the economy can only grow as fast as the grid. we need power for everything we are attempting to do as a nation. so we have to find more sources of power. at the same time we have to tend to security and affordability is a big issue. that's why they are working on bringing technology into the mix. maybe we will take longer than we like to bring new sources to the power on the grid but we can use software and the technology

tools in order to manage the electrons we produce more effectively. >> talk about the technology solutions paid we hear about off grid solutions, to the things you are working on? barbara: the grid edge may be the most exciting place to be in the economy right now. think about all the buildings with electrical products, the ability now to put solar on buildings, we have batteries in cars so we have many more components capable of storing or producing energy. now the network all those together with the grid components that create microgrids giving us the ability to may be separate parts of the grid for security reasons if we've got power -- weather disruptions like were expecting right now across the country. so siemens has been working for a long time most recently you would've seen coverage of our brownsville project where we

provided a microgrid to the neighborhood of brownsville which integrates storage power production and produce enough excess energy that the utility was able to offer the community and electric vehicle so they could make it to their doctors appointments. >> companies are willing to pay for it just a moment ago. it raises a question of how much we have the capacity to produce it in short order. the goods necessary and which goods are we talking about. >> just in general whether it's having to do with the chips, having to do with the electrical grid wiring, the infrastructure necessary to make >> what you're talking about. >>this is why we have been investing in the u.s. over the last year invested $500 million, or the huge things was to open up new manufacturing in texas for the electrical switchgear that would go into data centers and help out the grid edge. you be seeing that announcement later on today and we will be on

the lookout for north carolina as we continue to expand operations. >> how much is the end-user and end buyer government agencies or government regulating agencies versus big companies like microsoft? barbara: the hyper scalars are at this and as i move across the country i would tell you if it were not for restrictions on the grid the appetite for building ai data centers is unlimited. but we know we will be actually limited by the power that can be produced. hyper scalars moving around the country looking for where can we get giggle while of power. the best places for gigawatts of power sound like they are in the south, north carolina, texas. you're seeing data centers pop up everywhere so can you find an asset underutilized that can produce power. put a data center close to it and make that local use of power very efficient so we are seeing

all forms of energy coming back on the grid. >> the demand is there in the united states, the biden administration has been backing this but i still hear complaints about permitting and red tape and how hard it is to build something like a transmission line. you come across the same problems? barbara: we are working hard on making sure we do address the growth of the grid for instance, permitting is key to be able for guests to move quickly paid in the meantime what we are encouraging people to do is everything they can behind the mirror. anything to save energy means we have more energy to deploy for new growth so get behind and start doing conservation measures but likewise start implementing the kind of solutions that allow us to use our energy. jonathan: independent unit, independent business. >> ev charging is a really critical business for the world right now and siemens has the

know-how to create chargers print you know committed to build a million ev charges. recently acquiring healy ox to be able to be in the charging infrastructure and be able to really address large fleets, proud to say the postal service selected us as one of their providers for charging the technology. when you look at that it is capital-intensive and so the big question is how you set them up for success and our expectation is by taking this kind of action we give them the ability to control how their gun arrays the resources they need and give them the freedom to operate. >> 7.5 billion dollars allocated for ev buildout from the inflation reduction act. i think they might've built two dozen. barbara: this takes a combination, of the investment the government is making actually is starting the flywheel that gets us going. i think you're seeing for every

federal dollar this being spent for something like six or seven that are coming from the private sector, we have seen that uptick increase. we are excited about bringing ev's onto the grid, we are excited about what it's can it do for us for resilience overall. >> one thing on the show is national security concerns and how to make particularly the grid and aspects that are fundamental to the operation of society invulnerable to potential attack. how much is that a focus for you as you build this out as are the backbone for these projects. barbara: we have something like 1200 cyber experts across the country as we develop new technology we are clearly attending to this but here's the thing, connected infrastructure is actually more secure. if you are not connected you just have no idea what's happening out there. once you get connected you can identify sources of threats and can actually take action. and so we are big believers and

have been working closely with our customers and with governments around the world getting our infrastructure connected. >> this was super smart, let's do it again soon. thank you barbara. we are going to need a lot of copper and even more out of china. briefly copper extending gains for the first time since july. copper up by 1.7%. lisa: silver absolutely surging as well. you have to imagine everything getting a boost from what we are seeing over from the china stimulus would also this global melt up. soft landing near vona. >> stocks up another 0.8 percent on the s&p 500 with an update on stories elsewhere with your bloomberg brief. yahaira: the u.s. is sending additional aid to ukraine. the biden administration announced a new weapons package worth $375 million. the ukrainian president is expected to present president joe biden with his victory planned today which will include

a pathway to nato membership. the seceded press is reporting that bil more in aid will be enough later today -- announced later today as well. commerzbank out with a new pledge to investors. the german lender vowing to boost profitability to $4 million by 2020 seven and increase shareholder returns. boosting investor support as it gears up for a potential takeover by italian rival unicredit. the commerzbank ceo is excited to meet with unicredit friday. and openai is discussing giving the ceo a 7% equity stake in the company. marking the first time ultimate is granted ownership in the ai start up. they're also discussing restructuring the ai leader to become a for-profit business. openai is considering these changes against the backdrop of an exit is of senior managers including the chief technology officer. that's your bloomberg brief. >> more in about 30 minutes

time. up next on the program the fed giving markets the all clear. >> powell is not going to lend -- let this economy have any kind of hard landing and so the market is just off to the races. it looks like if the economic data continues the way it is they will do probably 25 in november, 25 in december. >> jerome schneider of pimco up next. ♪

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is off to the races. it looks like if the economic data continues the way it is they will do probably 25 in november i don't think they should be making these cuts at the beginning let's see where we stand. jobless claims a: 30 eastern time. jerome snyder writing the outlook remains solid suggesting remote prop -- probabilities of a landing braid the neutral rate of less than 3% being achieved by the end of next year. something at odds with current data and pimco's outlook. let's compare and contrast that with your outlook. >> what we are finding is it's more data dependent at this point in time. reacting to individual discrete points and unemployment.

ultimately that's can be reconciled but when we look at the survey, fed officials are going to be thinking about what's the proper unemployment rate, does that necessarily have a linear trajectory. or at that point in time ultimately what is the neutral rate we have to get to which facilitates an imbalance economy. the federal reserve's somewhere between three and 3.5%. something in line with what pimco believes. if the market suggest somewhere between two and 3% so the neutral rate is very divergent from that and almost suggestive the market is looking at a recessionary or hard landing for the economy. that's what we are dealing with right now. market is interpreting, risk assets are interpreting that that the risk assets will be important in the near term and longer term by the federal reserve when in actuality that road may not necessarily be smooth. >> how do you think we will resolve our differences? jerome: rationalizing where

growth is, how the economy develops. consumerism is very strong right now we will see a third-quarter consumer print about 3.5% third-quarter gdp it's very sustainable at this point in time. even pce's over the next years when the release will be sprightly's slightly stronger than expected. it doesn't mean the economy is rolling over in the near term and may not elicit the function for the federal reserve. that doesn't mean -- you eventually will and so there are rate cuts and so we have to be careful as practitioners of pimco but also as individual investors to think about how that is and it doesn't mean you should be reacting to every single maneuver in the financial market in the tune of we are not fed funds traders but we should look and see the potential for price creation that has arrived -- derived from fed yields moving lower in prices moving higher. >> put all of this together and

you are saying the feds not to cut rates as quickly as people think because the consumer is doing what the consumer does in america. it doesn't really impose some sort of recession on a spread then you write this it's time to bail on bills. if i were listening to you there's a lot of risk out there price to perfection but people talk about why shouldn't i be in bills if the rates aren't going down so quickly and it feels good. jerome: our job was tough at pimco for years. and then for the people in my sector that had the easy round of buying those 5% yield, that was the right trade for 2023 in the beginning of 2024. what t-bills do not do at this point in time is have price implication. there was never a t-bill which has garnered price appreciation on the way. fixed income works in a variety of ways. clearly that's a very different landscape than a few years ago. the second component is use the tailwind moving rates lower to have price appreciation within the fixed income construct.

more importantly it's a lower volatility type of implementation within the portfolio. >> are you saying forget t-bills, go to one-year or two-year or something like that. >> here's one thing that's really interesting when you look at the money market and t-bills we've seen the recalibration, using t-bill guild -- t-bill yields move overnight based on the federal reserve, we seen those funds evaporate. the headline yield on the money market fund might read 4.8% of the chances of you getting that return is very -- most likely to be 3% so find the balance of having some total return which benefits from the price appreciation in bonds. >> how hard is it to give people that message while also saying this is a time to remain -- jerome: it's incredibly hard for it when you think about the history of utilization, people reacting to change in the fed funds benchmark, it's taking 12

to 24 months for people to move out of money market funds, if that happens the expectation of our rates are a year from now is 2.75%, you're missing out on 200 basis points, 2% of opportunity for cash. that's the reality so maybe you saw it and said t-bills aren't worth it. it doesn't resonate with people till after the fact. that's why it's so urgent to have people react to not just the daily data comes out but let's take a moment back, breathe and see what's happening on the landscape. jonathan: i'm still confused. if you think the market is pricing neutral below your estimates i'm trying to work out how we reconcile that in bonds of the same time. where does that come from? jerome: one, don't be so tactical that you're reacting to every siegel data point. the starting point for fixed income is positive meaning there are positive after inflation return at this point in time.

at 1.5%. fixed income in that regard, don't get caught up in the minutia of the fed funds rate is going to be expected at today and it should really be y. the gradual move more on benchmark rates will provide the tailwind price appreciation. we haven't completed that. and when we get that you will see bond prices move higher and we have layers of diversification, the step out of cash timing the bail on bills is incredibly critical. jonathan: jerome, appreciated. thank you so much. up to speed. deep breath. lisa: the difference between putting it in a money market and putting it in a managed fund actually goes into things that have a price the trades. it sort of the difference. jonathan: coming up, rio tinto, j of wells fargo and finally

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>> we need to look at some other areas not just the payroll. >> it's not on the turns very

quickly. >> markets are laser focused. >> the labor market is balance, inflation readings have come down. >> more of a melt up in markets. jonathan: big hour on this program. jobless claims around the corner. eight tense of 1% of the s&p 500 on the nasdaq 100 quite a run. a big cut by 1.5% encouraged by the move after the close yesterday but also the latest out of china. at a chinese equities once again this morning. >> fiscal stimulus people wondering how far they were willing to take this. right now it seems further than people expected. analysts saying this isn't a bazooka. now maybe it is.

the key is to understand what the thinking is. jonathan: copper ripping as well briefly three 10k for the first him since july. up 1.75%. annmarie: copper up, a number of base metals, precious metals going higher. except for oil the one place where the commodity space you really don't see a rise in prices. we potentially are going to have a price war on her hands in a few months. jonathan: will jobless claims spoil the party. the estimate to 23 the previous number 219. after you get that data point you of a ton of fed speak today, new york that present john williams. >> given the fact everyone keeps saying this is a market that hinges entirely on the labor market. robb of pimco said something interesting this market is more data dependent than this federal reserve.

right now this market is more hinged to the idea of soft landing near vona than anything more of a wobble which could be represented in jobless claims or beyond. that to me is the biggest hang up at a time where otherwise it's basically firing guns on all sides. annmarie: when it comes to data dependency, paul donovan puts out a note talking about this increased frequency size and data revisions underscores the dangers of being data-dependent and in driving policy. when you get obsessed with the data how concerning is that when basically in a week or two time we find out there's more vision. >> seeing the data worse than it actually is when it comes in and that's the bias of the market. lisa: which story do you pay attention to. it comes out better than expected earnings people are spending more than a revival on personal computer's and smartphones. i thought it was interesting disney is doing another round of corporate layoffs. you see the idea of efficiency how do you maintain margins. talking yesterday the paddling

duck of quarterly earnings to keep margins at a decent price which lisa pohlman they are just isn't -- there just is an uncertainty from companies in addition to the macro data and it's been trending lower. you can't discount that where some people are just getting carried away. myself included because how could you not. >> it's almost jarring. companies have been working hard to maintain margins. wherever possible. layoffs are not anticipated near term to be used and when they are the story changes. lisa: you've already pushed the levers far enough that it doesn't just end up being a one time thing. you end up with not a lot more to cut and that's not a scenario the fed wants to get to. the question we've been asking is how effective are these rate cuts at actually preventing that versus if it's already going to happen it's going to happen. that's the reason why jobless claims will be the seminal moment of today. jonathan: even lisa is bullish

prey it equities up by three quarters of 1% on the s&p 500. the 10 year, 37658. coming up, jim of morgan stanley on why he's keeping a close eye on the labor market. base metals advance on chinese stimulus and nato secretary-general as ukraine pushes for continued western support. we begin this now with equities heading to all-time highs. investors looking for the next catalyst from fed chair jay powell in jobless claims less than 30 minutes away. jim of morgan stanley has a warning for the bulls. the labor market maybe weaker than reported. it may mean they want to cut aggressively but inflation may not allow them to do so. they may account minute -- cyclical monetary and fiscal policy tools to buffer shocks to the economy. talk about killing the mood. how bearish are you based on that call? jim: i'm not bearish, believe it

or not i'm optimist slightly overweight on the equity side. how long can this actually continue. fed policy is based on a series of data which we know has been heavily revised lower consistently over the march over march numbers were revised down over that time. and the fed is trying to defend a 4.4% unemployment rate. we have all the covid related uncertainties but are still coming through the marketplace today. so the policy reaction function is really trying to focus on employment data where we don't really have a great grasp of the population of the u.s. due to immigration, i would argue that

the data would suggest that the unemployment rate is actually higher than what's being reported right now. if you look at the confidence number jobs hard to get versus jobs easy to get that was one of the key deterioration components so yes the labor market is tight today, it is strong today. the go forward indicators would suggest the unemployment rate is likely a higher level than what we are seeing today and it's going to be really hard for the fed to defend a 4.4% unemployment rate. the risk is -- jonathan: we are overestimating our ability to deal with it. so let's talk about what you do in equity markets. on the start of august when everyone was freaking out about the july jobs report and said this is an opportunity to buy. why isn't this an opportunity to sell given what you just said. >> so effectively what we have done is we've taken down our overweight equities towards a

more neutral level i would say it still tipped towards -- we have taken that risk down. the reason why really has to do with margins so what's happening right now in jobs. the economy and markets can be very different. so what's happening right now in terms of earnings and multiples and cash flows going forward is labor costs are likely to come down because of everything i'm saying. yet the overall economic run rate and gdp might be 3% in the third quarter is still reasonably good. you have corporations with the biggest source of cost which is usually labor starting to come in lower is actually starting to preserve margins in the future more valuable than people willing to pay a higher multiple. consensus 2025 earnings call it around $280 and you still keep a multiple of 20 or 21 around that. then you're looking at s&p 500

numbers that could go up towards 5900 and impossible even a little bit higher than that. so it's really hard to correctly push against that and to be very bearish on equities at the moment until as lisa was saying you start to see a real deterioration in the labor market and then you have consumption and that can create more layoffs and more decline in margin. we are not there yet. it's a question of the timing. lisa: what do you sell? which aspects of the market that are broadly overvalued. jim: i have an unpopular answer about think you sell is fixed income. the reason i say that is if i look at bond yields. out to 10 years around index durations at six years of duration. if they priced into hundred basis points.

where we've been taking off the table is in reducing our fixed income. bond yields came down we think they are priced for over 250 basis points of rate cuts and i don't really think that there can go down materially more on us with a hard landing. we are in the soft landing camps of the risk could be you end up with a fed that might not be able to cover it as much yet the bond market, the interest rate markets already pricing in that space. and even in high yield we go over with high yield and were thinking more about high yield yields. and there's not much excess return over treasuries once you cover default risk that makes the high yield asset class is attractive at what we have thought. so we are actually reducing some of that interest rate duration risk and spread risk within fixed income. lisa: john read this line from your research that i thought was interesting. the u.s. may encounter

diminished counter cyclical monetary and fiscal policy tools to buffer future shocks to the economy. you went on to say this could increase risk premium broadly across assets. is this more true for treasuries in risk asset at a time when potentially there other factors in addition to inflation but also the deficit hanging over the profile. >> i think it is all connected. when i say that we could enter reduced fiscal and monetary countercyclical monetary and fiscal policy really what i'm highlighting is that if we look at mortgages, mortgage rates, people have likely already cutting rates doesn't necessarily release a lot of spending from the sector because not as many people are going to refinance. bond yields are relatively low so that's already accounted for. on the fiscal side the u.s. deficit is between 6% and 7%. i don't care who the next president is it's good to be hard to spend money.

the ability to have an american rescue plan if there's a downturn or the ability to cut corporate tax rates to boost the economy in that sense is going to be really hard no matter who gets the next job. so what that means is if we put it together on the monetary side and also on the fiscal side that it's going to be hard to generate stimulus if we have a bigger downturn. at the margin, bond yields may not go down as much as what we had experienced in the past few decades. in response to these kinds of events. it does put a higher -- i would not caem a risk asset that i would say it does put a higher risk premium in amines investors need to demand a slightly higher yield these days and that crates a higher overall yield construct for markets. >> this was really thoughtful, appreciate as always. jim of morgan stanley parade and update on stories elsewhere with your bloomberg brief. >> the new york times is

reporting early this morning federal agents raided gracie mansion, that's the official residence of the new york city mayor eric adams. the search after sources told bloomberg the mayor had been indicted following a corruption investigation. the source as the indictment is likely to be unsealed later today and charges against him will be made public. southwest airlines is getting a lift in the premarket. the company raised its third-quarter forecast and announced a new stock buyback program as part of this turnaround plan. elliot investment slammed the carrier's recovery strategy as being reckless and chaotic and said it would continue to seek a board overhaul as tensions mount over the airlines future. the race for the final playoff spots in the national league will have to wait as hurricane helene hits the southeast buried the critical game in the series has been postponed and will be played in a doubleheader next monday.

the braves hold a 1-0 lead in the series paid the storm is forecasted to strike the region as a major hurricane later today. that's your bloomberg brief. jonathan: the morning calls plus rio tinto ceo as chinese stimulus sends space -- manuals higher. from new york, good morning. ♪ built their wealth the same way, you have... the fearless investor. the type a cpa. the bootstrapper. the bootmaker. yeehaw [narrator] but many do have something in common. we all trust schwab with our wealth. [narrator] thanks to our award-winning service, low costs and transparent advice. every day, over a million multi-millionares trust schwab with more than two trillion dollars of their wealth.

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make amazing happen. (♪♪) not spreadsheets... you need to hire. i need indeed. indeed you do. our matching platform lets you spend less time searching and more time connecting with candidates. visit indeed.com/hire jonathan: the opening bell one hour and 15 minutes away. in the bond market yields lower by two basis points. jobless claims just around the corner. lisa: coated kill the mood when you ceos lower for the wrong reasons? that is why people are tenterhooks to figure out whether they can lean into self lending nirvana. jonathan: --

lisa: i think revisionist history is something people according to including andrew hollenhorst who say typically we are getting these downward revisions in a bad time. jonathan: everyone messaging their broker. bramo is bullish, i do not know what to do. jonathan: jeffries downgrading hershey to underperform. analysts citing week chocolate sales. bernstein upgrading starbucks to outperform. the firm seeing market optimism since the appointment of a ceo is warranted. in luke capital raising its price target on wayfair by $10 to $55 and keeping a hold rating, saying lower interest rates will benefit home related sales. a new wave of stimulus out of china -- copper rallying back towards $10,000 a time.

china calling for a forceful rate cut and a backstop to the country's real estate market. the rio tinto ceo joins us here in new york. good to see you. this makes your trip to new york so much better. four day rally on the stock. can we start with china? what do you make of what you've heard so far and you think it makes a big enough difference to your business? jakob: china is the manufacturing hub of the world and therefore the economy is hugely important for commodity prices. china is managing its economy very meticulously. what you see is we know the property sector has had a tough time. the manufacturing sector is still growing. as they have a target of 5% this year they clearly have deemed it necessary to come up with stimulus. we see this again and again over

the last couple of decades. to achieve their targets. it is impressive. their approach is shifting. we are hearing more about fiscal stimulus. as you look your business can you walk us through how strong or weak demand has been over the last few months. jakob: demand has been good. the steel in china is running flat out. you can see the steel mill is probably producing more the domestic demand and that is why you see record export of steel and you have to ask yourself if that is sustainable. stimulus if it goes and infrastructure is good for the steel mills who are my customers and therefore good for us. lisa: you have a sense of where demand is coming from? it used to be directly correlated to china but now everyone seems to be building out their infrastructure and trying to create extra infrastructure pipelines to prevent against supply chain

disruption. how much is it shifting away from china? jakob: there are other economies that are really booming, for example the indian economy. that drives quite a lot. there are different types of infrastructure. the energy transition is also about building new infrastructure, building a new energy infrastructure. if you look at the chinese economy that boosts their growth quite a lot. jonathan: i want to talk about one of the reasons you're here and whether this quote from vice president kamala harris is music to your ears. "increased to mr. production will be paired with innovative and sustainable steps to build stronger knuckle mineral supply chains alongside our allies and partners including by incentivizing investments that expand u.s. and allied production of these resources." solution copper arizona. i am not sure how many people in this country realize we have a

deposit that could supply up to 25% of america's copper demand. where are we with that joint venture? jakob: the project has been for permitting for the last 12 years so it is a long process. we hope we are towards the end and we can get the land swap going. it is important working with the 11 first nations around the need to be sure we end up with a solution they are comfortable with. from a permitting point of view i would say we are towards the end of the process. it is a magnificent copper ore body that can produce for decades 25% of the needs of copper in the u.s.. on top of that rio tinto is one of only two companies who has a copper smelter. we can actually manufacturer the final copper. annmarie: how do you square what kamala harris and her campaign are saying with the fact that it

was the biden administration that put the brakes on the mine? jakob: i am not in politics. what is interesting with the statement you just read for me is it is a little bit like in the 1970's when there was an energy crisis people started stopping their oil. i think the learning from covid is a low bit more supply chain security is important for industry. we have to support that and that might be including some kind of stockpile to make sure -- you cannot have effective industry and less have secure supply chain. annmarie: you are dealing with the permitting of this project. when could we see it working? jakob: it is a long process. we are in the place of needing to have a land swap so that some of it is federal land. we've agreed how we can swap

with other lands so we have the whole land, then we can finalize the environmental impact consultations and then we can start executing a project. we are talking towards the end of the decade. then we will have production for the next 60 years. lisa: how expensive is it to produce something like copper in the u.s. than some of the other minds already in existence? jakob: it is not so much whether it is in the u.s. or elsewhere, it depends on the quality of the ore body. in this case the resolution has a grade of 3% copper. many copper mines have just .5% and that means you have to extract many more tons to get the same amount of copper. it can be quite efficient extracting copper. jonathan: i want to go down to argentina.

i think you paid almost $900 million. how is that going? jakob: i think there is a lot of opportunity in argentina. they have been through tough years. i hope the government will succeed on reducing the economy and ultimately get growth in the economy. we are happy with a few of the initiatives the government has done like the so-called regulator station. that helps us. we will produced lithium by december of this year and we are likely to take a big expansion for sanction in december, could be another $2 billion investment into argentina. it has not been without risks to invest in argentina because you have the currency restrictions.

we are seeing argentina heading in the right direction. i wish the government success. we are very aligned on that. jonathan: let's finish on lithium. if i think about your company, i think about the china boom. john sebastien had to do the cleanup. that meant pulling back on spending in a big way. you had to put out a lot of fires. i'm trying to work out as you start the car about the business and put your hand print on things, the business mix historically, we are talking iron ore, copper, and aluminum. where does lithium fit in? how big could that be? jakob: the m1 will always be small compared to copper and aluminum -- lithium will always be small compared to copper and aluminum.

you need batteries and you will need lithium. we have the technologies and why not ship in? i believe it can be quite substantial but it will never be as big as the aluminum market. jonathan: it is good to catch up. thank you so much for your time. up next, jobless claims just around the corner. a of fed speak as well. we speak with jay bryson and kelsey barrow, both here to react. your data is up next. ♪

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jonathan: the main event for the equity market, jobless claims seconds away. let us start on the s&p 500. up .8%. on the nasdaq 100 up 1.5. this could change in 10 seconds. in the bond market the yields look like this. the two year down to basis points at the moment. 3.5326. the 10 year is down three basis points to 3.70 56 -- 64. a ton of data across the screen

and what we are looking for is jobless claims. 223 is the estimate. and what we get is 218 on jobless claims. i think we just have to pause. 218 at any time going back decades is tremendously low for jobless claims, historically low. at a time where we are worried about the next step in the economy and the evolution being layoffs and claims arising do not see it in the data right now. we do not see at all. lisa: at the lowest going back to may 17, 2024. at the same time we are getting a revision in the first quarter gdp upward actually now, and it is basically showing ongoing strength. the big question is is there the bogeyman lurking, the slowdown in the labor market or the jobless claims telling us stop

looking for because it is not showing up. jonathan: equities are up and that sticks. equities up by 1.5. let us switch out the board. the two year yield was lower. now the two year is higher. that is a change. push that through the foreign exchange in the dollar is stronger, so just remember that payroll, a week from tomorrow, the estimate is 140. this is what we are looking at for next month, payrolls, is it going to slow down given what we have seen? coming out of the jobless claims numbers. lisa: if they are the best high frequently indicate -- frequency indicator the answer would be no. you are not seeing jobs being created, but people are not actually getting the opportunities and you are seeing that. there is a discrepancy between the bearishness and the fears

versus the claims numbers and that is what you are feeling in terms of the lift on the margins. jonathan: jay, i would love your thoughts, it screams that everything is ok. is everything ok? jay: you are talking about payroll coming out. as a net number it is two gross numbers. we get jobless claims from people who are losing jobs. what lisa was talking about was creating jobs. when you look at the economy we are not creating or losing a lot of jobs. when you get the net number out, we are up 1.35, so there has been a slowdown. what that means is you will not have that much income growth going forward. jonathan: is it inevitable that layoffs are next? jay: not necessarily. if you look at the financial health of most business is it is pretty good. the balance sheets are strong

and the debt service is are very strong as well. they do not necessarily need to lay people off. if monetary policy remains restrictive, that will continue to put headwinds on growth. that eventually and potentially could lead to jobless claims going up. lisa: do you get the sense that the market is too complacent about the soft landing near vona or is this -- nirvana or is is an economy at risk every acceleration that people are overly complacent? jay: if you say what is more likely, a slowdown or re-acceleration? i will take the slowdown story just because monetary policy remains restrictive. i do not cac -- a huge reacceleration. when i think about the risk of recession in the next 12 months, the underlying rate is about

15%. if you said what do think the rest of the recession is, 35%? it is not the base case, but we are not out of the woods. we are seeing signs of stress, delinquencies on credit cards and auto loans going up. and the excess money they had after the stimulus programs are all gone. so, you could get a move to the downside, although we are not expecting that. lisa: if that is the case why shouldn't the fed up 50 basis points? jay: there is a good taste for that but as you were saying earlier, we are just very data-dependent at this point. it is trying to balance the risk out there. and could you get a reacceleration, sure. there is still that possibility and i do not think they want to

go 50 to reverse that a few months from now. annmarie: reverse that because of policy out of washington? jay: i do not think you will get a huge policy shift in 2025. the biggest thing that congress has to deal with is the extension of the tcja at the end of the year. annmarie: and a debt ceiling. jay: are we expecting that, probably not, that does not expire until the end of the year. annmarie: what about reacceleration when it came to things like tariffs? jay: you could see that. if you were to get a reacceleration i think the fed goes on hold and everyone is pricing at 200 points a basis points and that goes away. i think the fed initially would wait and see how much feedthrough. jonathan: the bulls are getting everything they want.

a read of 220,000 on jobless claims and stimulus down in china. doesn't get much better than this. lisa: the only thing would be some disinflationary shock like oil prices falling. wait a second, that is happening because there might be a race to the bottom to preserve market shares. it does feel and i will be a broken record, and sort of fly in the ointment if you would is the question around what are we missing? and that is the reason why that is going to be the ongoing focus that we are not totally out of the woods. people can continue to worry. jonathan: the jobs report a week until tomorrow. we are vulnerable by one data point. lisa: do you think we are getting less vulnerable given the stimulus and rate cutting cycles? jonathan: it helps. lisa: there is less fragility and the confidence that people have they had even a week ago.

jonathan: yields are up by two basis points on a two year. thank you, we appreciate it. a bit of news in the last few minutes. the number is 25 billion, citigroup and apollo joining forces in a push with the latest. let us go over to sonali basak. sonali: you have a landmark deal in private credit along with one of the top global investment banks in the world. you have citigroup teaming up with apollo, the largest direct lender of its kind to provide $25 billion worth of financing. the idea is that citigroup would look to originate the deal flow and take a fee off of it and apollo and its partners would provide the capital. among the partners is a very prominent sovereign wealth fund which has been taking a bigger

role in the prime -- in private credit. this brings together two teams that have had very close ties over time. the apollo zone copresident used to run the team over at citigroup that dealt with leveraged finance and high-yield financing. you now have citigroup in a position where they are the number two invested grade underwriter -- investment grade underwriter but they have not made the top five with leveraged loans. hopefully this will help them make -- reach more clients by giving apollo more deals to finance. and corporations as well. they expect to do $5 billion worth of deals in the first year and both teams are looking to keep the door open to expand beyond $25 billion. jonathan: thank you for the updates. looking ahead to the conversation next week so watch this space. jim saying this is where the

industry is going. citi goes from an active m&a bank to the full toolbox. lisa: this comes how the big banks can fit into the behemoth that is private crediting that -- credit that is expanding that is being some of business that was in this large -- in the large banks. jonathan: plenty of discussants -- discussions about this. .8% on the s&p 500 and we had jobless claims data out of america and we were looking for that number because it separates the bulls and the bears. it comes on week in the bears will say look, things are turning lower and if it comes in strong the bulls are justified. it came in strong at 218 versus 223. lisa: the response is everything. you have the russell 2000 up more than 8% with yields creeping higher. you wonder how high the bar is

to get the bears to reemerge from the woods because they are kind of hiding. there is a real question of what -- what it take one bad payrolls to get people spooked again about some sort of downturn. jonathan: let us get to cassie. good morning. how vulnerable are we to a bad print on payrolls two fridays away? cassie: there are two things to consider, how vulnerable and what is the most likely to occur. initial claims suggest that the expansion should continue and the labor market is healthy. if you ask where the balance of risks is i would say it is to the downside. it is to the risk that payrolls growth slows more and the unemployment rate rises. i know there is a debate on if the fed sees payroll roles below 100,000 and that is the green light to do another 50. we forget that we had a payrolls

print below 100,000 two months ago. growth is already slowing. this is the most new information that i feel like i have learned in the past few days is that actually while the market is focused on the debate about 25 versus 50 being primarily about the labor market, some participants are opening up the door to additional rate cuts just on inflation alone. and that is why i think that you are not going to necessarily see materially higher yields just because the labor market stays around here. there are other reasons that yields should remain low and be biased lower because of the inflation backdrop alone. jonathan: was that the governor that made you start thinking that way? kelsey: it was, although to be fair we have been thinking about it this way for a a while. the fed has justification to cut probably 100 to 150 basis points

on the improvement in inflation alone. and then you couple that on what we are seeing in terms of expectations and breakevens, and the commodity complex and the global growth backdrop and they can feel fairly confident that there is space for them to ease and that is agnostic to does the labor market stabilize or does it move lower? lisa: one of the most controversial aspects is that you see this as an to buy bonds across the entire yield spectrum. when people come on the show they say they are comfortable with it up until five years and then forget it. and potentially we could get inflation coming back sticky because of a proactive fed. how do you push back against that? kelsey: when you think about what we recommend clients to do, what we have found is that despite the fact that the fed

has come in after 14 months of being on hold and cut rates there are still many clients under allocated to fixed income and over allocated to cash. there is still a lot of room to move out in terms of duration. in terms of how i think the term structure of the yield curve will evolve, i do think it is biased steeper. you will see front end yields move lower than long end yields as the fed delivers those rate cuts. but i do think that when you are thinking about building a portfolio that has diversification you can think about a quarter or for c --ore or core+ funds, which is what you get when you invest across the whole maturity spectrum which will gave income and capital appreciation if the claims data is not the neil -- the real signal and the terminal rate for the fed is not three

but lower. lisa: in this picture there is a question about if you are more biased to the potential for downside risk, why should you go into riskier assets? kelsey: there are a couple of reasons. first of all all of this in terms of the timing and transmission is very uncertain. the lags are very unclear. we do feel like we are getting closer to reaching an inflection point but it is not clear which way the economy will break. on the one hand the fed cuts 50 basis points and in 12 months, if they succeed in extending we could look at reacceleration. if that -- in that case spread should remain tight. if this is like every other time in history than the 50 basis point cut is actually not a proactive move to extend the cycle but a signal that they are too late.

the balance you need the combination of duration and high quality but also some carry in your portfolio because the outcomes, both tail risks are possible. jonathan: we have to leave it there. always great to catch up. we are counting you down to the opening bell. equities are high by .8% off of the back of the better than expected jobless claims. up next we will run you through the day ahead and catch up with this man, a conversation you do not want to miss. the nato secretary-general right here in new york city. up next. ♪

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only you can see. [crowd cheers] [music out] jonathan: as we count you down to the opening bell, here is the trading diary. a slew of fed speak and we hear from william barr, kashkari and jay powell. and then costco reporting.

the u.n. generally -- general assembly ongoing. then biden and zelenskyy meeting in d.c.. joining us as the outgoing general -- secretary-general, departing after a decade. it is good to see you. thank you for sharing what you is your final interview. you have been very kind to bloomberg and every time we have spoken to you you have been generous. if i think back over your tenure i can think of two big wake-up calls. one was from being elected and it really put the throat on some of the people who were the organization to spend more on defense and the other one was the invasion of ukraine. as you step back and think about your tenure, what stood out for you. jens: the most decisive and important challenge that we faced was the russian full-scale

invasion of ukraine. we have to remember that the war in ukraine did not start in 2022 but in 2014 when russia took crimea. since then over the last decade nato implemented the biggest enforcement because of russia's annexation of crimea. when a full-scale invasion happened we were propelled -- prepared. we had more forces so that happened the full-scale invasion , we were able to step up our support for ukraine and to increase our presence. so, ukraine has been there throughout my tenure but it has gotten worse. lisa: let us talk -- annmarie: let us talk about the potential path forward and we have the u.s. election. donald trump was talking about zelenskyy saying that he was making nasty aspersions that had to do with "the new yorker" article and the fact that he

went to pennsylvania, do you think that zelenskyy miscalculated the political situation in the united states? jens: i am convinced that president zelenskyy is willing to work with whoever is elected president in the united states. i also know that president zelenskyy worked with president trump when he was president. and during that time the united states increased its support to ukraine. it was during the trump administration that the decision to provide javelins to ukraine was taken. it is not for mere president zelenskyy to have an opinion on who the american people should elect. we need to work with whoever is elected for continued support. annmarie: there has been a change in attitude from president zelenskyy and he sat down and said he wanted to see the plan that trump had he says i have a path to victory.

and now he comes here and is poking the bear what he says about his running mate and the fact of the matter is that trump will be not meeting him along the sidelines of the yuan general assembly and that probably goes back to what zelenskyy has said about him. jens: it is falling semi-to facilitate a meeting between president zelenskyy and donald trump. all i can do is to convey is that it is important to support ukraine because this is not only about ukraine but about our own security. if we allow president putin to win in ukraine it will be a tragedy and dangerous for us because the message is that when you use force, he gets what he wants. and that will also be followed very closely in china.

this is not only about europe but whether we should allow leaders around the world was forced to achieve what they want. annmarie: what i have been hearing as they want to do similar to what trump said in the first round which was push nato alliance to have more of a collective defense spending. they would push for 3%. how would you -- your advice to the incoming secretary-general on how to deal with that? jens: you need to recognize the enormous progress european allies have made because back in 2014 only three allies met the guidelines spending down 2%. this year 23 allies are spending 2% or more. we also made it clear that 2% is not enough. the good news is that we met that target but we need to do more.

because we live in a more dangerous world. and therefore we agreed at the last summit that 2% is a minimum. it is not a ceiling but a floor. and we also have agreed new defense plans which require specific capabilities for readiness and for allies to provide those forces. to provide they have to spend significantly one to 2%. i will not give you a set number but it is significant. lisa: do you think that nato is significantly stronger or weaker than when you took the office? jens: there is no doubt that nato is significantly stronger. we are spending much more and we have many more troops on readiness and we have more capabilities and we have battle ready troops. the challenges that the world is more dangerous. so the successes that when the world changes we change and that

is what goes. lisa: the issue is that members might not agree where the dangers are and how to deal with them. how do you see nato facing off with certain economic and military threats from china and other countries where it is a little more complicated? jens: sometimes it takes time to make 32 allies representing 50% of the world's chili -- gdp and military might to agree. on china we have come a very long way. not so many years ago nato did not have any unified policy and now we have a very clear position that china matters for our security and it cannot continue to enable russia's war of aggression against ukraine without consequences for its interest and reputation and the allies have always -- have already agreed to work closer with partners in the pacific, japan, south korea and australia as a response.

jonathan: we could talk to you all day but we are running out of time. do you know a guy that might be able to set up the show and take it onto the security conference anytime soon? jens: you know, the security conference is a very good platform to discuss these issues. i will not give you a specific name. jonathan: i will get in touch and maybe that will change. thank you so much for everything over the last decade. thank you. the nato secretary-general. coming up tomorrow here is the lineup. we can -- we catch up with sebastian page, and david malpass. tom steyer and christina cap manny -- campmany into the -- and this market ripping into the opening bell. lisa: how many nodes of stimulus. it seems to rhyme with moff landing. jonathan: we just need to end

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>> we are getting amped up for another record high. 30 minutes from the start of the cash trade. katie: bloomberg open interest starts right now. sonali: coming up, micron serves up the latest serving of ai optimism. they delivering -- they are delivering surprisingly strong sales. matt: a lot is in flux in openai. we will discuss potential

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