♪ >> this is not just a solid labor market, it's a strong labor market late in the cycle. >> this is not a tightly market as the fed thinks it is. >> doesn't feel like monetary policy needs to be acting at a fast pace, we expected to be more gradual. >> the economy is ok and there is not any forcing the issue to cut rates. announcer: this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: live from new york

city this morning, good morning. bloomberg surveillance starts right now. coming into monday on a four-week winning streak on the s&p 500 following a blowout payrolls report on friday. your scores look like this. equity features on the s&p down half of 1%. on the russell, some underperformers. on the bond board, a brand-new look to the bond market in america. the first time since august, 3.98.89. the biggest one-week pump last year going all the way back to june 2022. some changes to some calls already. jp morgan and bank of america dropping the call for a 50 basis point rate cut in november. a little bit later on saying this that is done for 2024. annmarie: you have to think about what was said before this jobs report, looking where real estate is. he called in a very expensive insurance cut and now you see in the market if you look at the

futures, everyone pricing and 50, that is basically a 90 degrees drop. mohamed el-erian said to you inflation is not dead. jonathan: and all inflation becomes that much more important. we got cpi later this week coming on thursday. some bank earnings at the back end of the week it will talk about later. that much more important, cpi on thursday. annmarie: you have to imagine that the jobs report marginally shipped them away from inflation -- recession and toward inflation. it is pricing in less than 25 basis point of cuts. bank of america says the options market is in pricing more than a 1% move, but you know that whole thing is just one month, take a step back and a deep breath. i think that account for the good data as well as the bad. jonathan: i agree with you. one more jobs report still to come and an election to get to as well.

we are making some moves on wall street. goldman sachs with a new year and price target, any 12 month price target. mike wilson of morgan stanley upgrading the cyclicals to overweight relative to defensive. >> is perfect. it is perfect for them. you have the economy still strong, a fed that is still cutting, china dumping stimulus into the market. it's hard not to be bullish right now. jonathan: down half of 1%, for check out this. the year of his -37 consecutive session. that is the longest daily losing streak going all the way back to april 2022. two stories here. data is better in america, there is dreadful over in europe. annmarie: especially what is going on in germany. many would point to basically a recession happening, the manufacturing sector is not picking up speed. mohamed el-erian today is opinion piece talking about the exceptionalism in the u.s.

economy and how it is even more exceptional when you compare it to europe and also dina area. jonathan: one more thing i want to began on the screen, it is crude rally once again this morning. we're still waiting to see what the response will be from israel to iran. >> we are one year on at this point in still adjacent area where israel is fighting two land wars, one in the air if you want to fear of against iran. this is the unknown and that bullish narrative, is this in u.s. elections. those are very large unknowns that might hold back being able to go full force into this market. lisa: goldman sachs could search to the 90's iran toils is disrupted. i would also say over the weekend you have the israeli defense minister traveling to the u.s. this, speaking to fox news saying all options right now table when it comes to the retaliatory hit against iran. jonathan: 79.75.

your hour ahead looks like this. we catch up with katrina dudley. head of the latest u.s. cpi print and a former white house fellow one year after hamas attack israel. we begin with stocks on pause after flight is -- fridays blowout payrolls report. the longest weekly winning streak going on the way back to may. we continue to believe in a soft landing which is bullish for equities with a more imminent recession. katrina is with us in new york. it is like friday never ended. what did you make of that? >> we've had some bullish momentum in the market, we've been in a soft landing cap for a long time in terms of we think there are so many tools that have been available to land this economy on that landing strip and do something in terms of managing the inflation and getting mad down, which i think we can kind of check on that. you look at the employment

outlook, it's been bullish, people are good. so i think the fed has actually done a very good job. jonathan: they say feeling on friday that good news are -- is actually still good news. should they be anxious, should equity bulls be anxious about what is developing again? >> i grew up where we used to look at the bond market and it would inform us as equity investors and now i think that the narrative has shifted. we've got so many indicators coming out of equity markets that i think the equity markets have been a or friend of some of the bond market. >> you also mention some of the bearishness in the technical back. hedge funds need to take down exposure with volatility, corporate saarinen blackout period. in this market, how much does that way? >> you look at the fact that buybacks that than a big driver on some of the earnings rose as well as the incremental buyer in the market, and then we cannot

forget about the election. the election is causing uncertainty because we actually don't know who is to win this time. for a lot of people that is good news because it means it is still up in the air and there is still a chance for one candidate the full ahead. but when you have uncertainty, the market doesn't like it. we will see those spikes in volatility and you will see that uncertainty get priced in. >> but with a really strong backdrop how much does the election really matter? decide the rhetoric, the potential volatility, does that really change the hunter outcome when you have earnings and expectations were below, and a labor market that is very strong? >> in terms of the election come on terex we are in agreement that both parties have got incentives to continue that tariff regime. so i think that way we can kind of say it doesn't matter which side. but think about taxes. the income statement, it is a big number.

if you've got a lot of disparity in policy, particularly as it relates to work for taxes, obviously if you have a regime where there is a reduction in the corporate tax rate, that is bullish for equities. i think that is the unknown that we have. and i don't think we are going to have the next day changing tax rates, but it could happen fairly quickly particularly if you get a republican sleep. >> tcja is expiring next year. do you care more about the composition of congress that he was in the white house? >> i still do care about who is in the white house because that is the driving force, the representation of america. they are the person who kind of drives where we end up as a policy. as a country, we have this kind of tension in that we do believe that lower taxes are good for america, good for american business, but we do obviously have some fairly high deficits out there.

>> we do, and there's new projections what those deficits would look like about whether tariffs are trump. if you think both of these candidates are interested in using tariffs as a policy, and we just got data that should wage growth accelerated, by next year shouldn't we be concerned again with inflation? >> on the wage growth front, has a really big, lagging indicator in terms of the inflation outlook. any kind of job-related inflation flag so we expect to see. it really depends on how we respond to them. if i have a small company and the alternative is to buy something domestically vs. a cheaper chinese import which suddenly gets inflated up, it is good for america because i am doing that in house. i think the inflation number is not directly corollary of the fact that i'm increasing tariffs

sensibly and going to see inflation in america. i think a lot of companies have been doing a lot of actions where they are matching. they are matching manufacturing to where they are selling surveys tariffs may not be as impactful as initially thought. >> the u.s. vs. the rest of the world, how are you thinking about things? >> the momentum of the u.s. market, that is something that we are bullish on. we are concerned about that concentration. there's no necessary research that says a highly concentrated market will selloff x% because you have different concentrations. that is something that worries us. we do see a situation where you can have some of these large-cap companies flat, and that means they are going to and they are going to grow, the valuation will decline of the earnings increase and you kind of have

that tepid market return. and that is good for the overall equity market. what we are seeing is that bullishness in the top of the market starting to filter down. where i think people are focused is going straight to small caps but there is a really big middle in america getting ignored and that is the part of the market that i actually like at the moment. in the regime where you anti-ftc, you might not have that take out premium. but mid part of the market. jonathan: is there sector preference? >> i would go toward some of the industrial names where i think they've got that resiliency to take advantage of moving things around. >> it has only accounted for

2.9% of the index game so far in the second half. is it a healthy market now? >> i don't think it is quite yet healthy. you've still got the magnificent seven dominating returns and dominating the narrative. i think that what we are seeing is people starting to look at one of the second derivative and that is where they are going into the mid-cap names. i also think that some of the exposure that you were looking at in the magnificent seven, people are starting to say maybe i don't want nvidia or i want nvidia, so pick and shovel. >> do you understand at this point have the cap tech reacts to lack of magnitude in fed cuts at this point? >> in terms of understanding it, i think we have to go back to finance 101. the problem with some of these names when you've got such high

earnings growth expectation, which they are delivering on, any type of movement in interest rates, so much of the value is sitting in the terminal number. interest rate become something that they are very sensitive to, even though you would say they are probably the least letter companies and they would have the least short-term exposure that the valuation component is what is really driving them. jonathan: katrina, good to see you as always. your equity market down by about 6/10 of 1%. yields shifting higher this morning. with your bloomberg brief, here is yahaira. yahaira: bubbly since the last meeting there's been little direct contact between the two sides which remain deeply divided over a union demand to reinstate a benefit tension plan. but the economic pain is

starting to set in for both sides. last week workers locked asked that -- lost access to company back health care benefits and each data strike goes on boeing loses about $100 million in lost sales. pfizer shares are rising with 2.5% on the news that activist investor starboard value has taken a state of about $1 billion in the company. at the according to people familiar whose a star board is seeking to mount a turnaround of the struggling pharmaceuticals giant. sources tell us star board has approached former pfizer executives ian read and frank amelio to help and they have expressed interest in stepping in. and florida residents are bracing for another major hurricane less than two weeks after helene killed at least 225 people across the u.s. south. hurricane milton could become a category four storm and start the largest evacuation in seven years. the storm has the potential to cause billions of dollars of damage and cause more misery for

the region. milton is forecast to make landfall wednesday. that is your bloomberg brief. jonathan: it is the one-two everybody was fearing. elon musk hitting the campaign trail. trump: he created the first major american car company in generations and his rocket company is the only reason we can now send american astronauts into space. takeover, elon. jonathan: that conversation up next.

♪ jonathan: live from new york city, good morning and welcome to the program. equities pulling back by about half of 1%.

up by almost four basis points at 4.0% on a tenure in america. under surveillance this morning, elon musk hitting the campaign trail. from: he created the first major american car company in generation and his rocket company is the only reason we can now send american astronauts into space. takeover, elon. >> this is a must win situation. so i have one ask for everyone in the audience, everyone who watches this video, everyone in the livestream. one request, very important. register to vote. jonathan: elon musk hitting the campaign trail with the former president at the side of this year's assassination attempt. , harris kicking off a week full of media appearances, making stops at the howard stern show with stephen colbert, and the view. i just want to reflect on the weekend.

how unusual it is to see the ceo of one of the biggest companies in this country campaigning with a former president. how unique is that moment? >> very unique, and it speaks to elon musk's place at the very least as a commentator and a player in u.s. politics. he was harder to pin down even just a couple of years ago but now he is fully behind former president trump. he is spending money on his behalf. he is someone whose politics or maybe a bit more nuanced or divided previously, but he is a supporter of republican politics and seems determined to use his clout about as much as he can to help trump win the election. it is a strange set of circumstances, it plays into plenty of questions about x and the future of social media's role in political communications

, and it boils down to it is unique, it is strange, it is a little hard to predict the influence it is going to happen november. >> with look at some of that influence. the must founded america pack says join our team, email if you are interested. the pay starts at $30 per hour with notices for performance according to the website. how much money really is elon musk willing to go to back to former president? >> that is a good question. it may be the case that using ask to amplify voices that he wants to amplify could end up being a more significant prospect. we've seen plenty of big spending in u.s. elections since the citizens united decision. elon musk is not a unique figure because of political spending through his super pac or anything like that, although that does show you where he's

going. it is more the personality, the aggressiveness of him now very clearly taking sides. the spotlight that he has drawn for a very long time. that is what makes it more of a unique situation. there have been other people who have spent plenty of money on elections and must may do so, but it is not just the money. it is the personality, the fame and the influence all in one makes in a significant player. >> can we think of a similar name that is doing the same for the harris campaign? >> no, but republicans will point out, and they are correct to point out the democrats for a long time have had the advantage of celebrity on their side, and so you see it all over the place with a variety of celebrities. i mean, george clooney was somebody who had a significant role, it seemed, in getting

president biden to hand off the baton to vice president harris as the democratic nominee. so there may be a number of republicans kind of saying that this is a little bit of karma in terms of this celebrity support that plays into this. there's not really one person. i would say that if you are looking for an outsider who is using celebrity, fame, influence, a technological side of this, there is really one person, just elon musk who is having his kind of influence on a u.s. election. >> for the week ahead, jonathan laid out the meaty interview she is doing. she is on the view, howard stern, on a podcast. and a lot of the time the language on harris has been that it behooves her to avoid media interviews, that she is better off not doing it. what does it say about the campaign that she is committing to some now? >> first, it definitely since we

are in crunch time. when you get that compare and contrast between elon musk jumping up and down saying this is the most significant election in our lifetime, and a string of media appearances and a pretty varied string of media appearances by harris from the more traditional 60 minutes to the call her daddy podcast, you can tell the pressure is on. there was a bit of a pressure campaign to get harris to interact more with media, whether it is news media or otherwise. that seems to have gotten her out there a bit more, answering more questions, having more interactions. she put out the more detailed economic plan. it is a very very close race, and it seemed that both candidates do realize that. i think at this point it is just very clear we are getting closer and closer to the election and both candidates are doing everything they can. >> that is clear that it is a women audience, a women based

audience, but something like 60 minutes, it was focused on israel, at least the bits that we've heard so far. she was talking about the need to put pressure on israel. from what we've seen, how does that come across with how the campaign is trying to convey her message around israel? >> it really highlights the difficult position that democrats are in. they do not have a simple answer on israel. in the preview to the 60 minutes interview, harris said there is an important alliance between the american people and the israeli people, pointing out that people almost seemed to be drawing a distinction from netanyahu himself, but also said that she would pressure israel to try to find a cease fire that includes the release of hostages. really, there is a needle that needs to be threaded by a democratic candidate that you see in that preview to the harris campaign that is more

complex and more difficult for them then what you hear from republicans, which is a pretty consistent private democrats have not stood by israel enough, they haven't been tough enough on the run. and i think he will probably see that in the 60 minutes interview if we see more than just the preview that has come out on israel, that she is threading the needle and trying to take a nuanced tone on a tough subject for democrats. >> very quickly, the congress come back to aid in the hurricane relief? >> it does not seem that they will. they have what they need for immediate needs despite some misinformation on exactly what is going on. they could spend as needed for hurricane helene and hurricane milton, and they have put off some longer-term disaster works so in december they will have a lot of work to do that they could have gotten ahead on that in terms of immediate needs, they don't actually need to come back. jonathan: good to come back. more on the hurricane season,

particularly the one-two punch that florida is about to take in the next couple of days. i also want to talk at the prospect of not being able to vote in places like north carolina, how difficult it is going to be. >> you have to think that some of these people are still trying to get their power back and access the water little of picking about going out to vote. jonathan: coming up, we will catch up with adp as traders await u.s. cpi on thursday. in this market still reacts to payrolls from last friday. equities right now pulling back on the s&p 500, down by half of 1% in the bond market. a moment ago if the same thing on the two-year. of seven basis points 3.99. of seven basis points 3.99. i can't believe you corporate types are still at it.

just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

it's our son, he is always up in our business. it's the verizon 5g home internet i got us. oh... he used to be a competitive gamer but with the higher lag, he can't keep up with his squad. so now we're his “squad”. what are kevin's plans for the fall? he's going to college. out of state, yeah. -yeah in the fall. change of plans, i've decided to stay local. oh excellent! oh that's great! why would i ever leave this? -aw! we will do anything to get him gaming again. you and kevin need to fix this internet situation. heard my name! i swear to god, kevin! -we told you to wait in the car. everyone in my old squad has xfinity. less lag, better gaming! i'm gonna need to charge you for three people.

>> here come the bulls. this report, the payrolls report reaffirms a very bullish stance on risk assets. there is a window for markets to rally into the election. this morning, the pullback just a little bit on the s&p 500. we are down on the nasdaq, down on the russell. off by about half of 1% across-the-board here. the longest weekly winning streak going back to may. in the bond market, a whole new look. yields upe on friday and the move continues this morning.

the 10 year is up three or four. before percent on a 10 year yields. >> what would it mean if we invert and again. that would be madness. now we can look reflexively back in the last month's data not just on the jobs report, but on the upper revision to gdp, the upward revision to gdi and say things under the surface are looking a lot better. consumption is still there, this economy is powering forward. now we just worry about inflation. jonathan: now we've got to 50 or 25 to 50, 25 or nothing. the fed is normalizing, not using. the only thing the fed needs to see in order to justify a cut at its upcoming meeting is further progress on the leash in front. >> if they didn't go the next meeting, if they held, would it make that 50 look like a mistake? what are the objects of going zero after you just did a jumbo rate cut? that may be why they are so sensitive. >> joe mayer says he's raising

the question of whether the fed needs to cut at all in november. that 50 basis points cut, does that look like they moved too quickly? had they known this jobs report with the be doing 50 or that have been 25? >> we will keep repeating this exercise. think about how far away november 7 feels. how different things could be. another jobs report, cpi thursday, a decent understanding about what they are hearing from corporate america as well, and we may or may not have an election result that week. november 7 is still a lifetime away. >> there is so much uncertainty, and that mike them -- might make them want to cut 25. how does it look if they want 50, the election happens, and they don't that all? they can say we are independent from the politics, but they can't be, because the politics ties to vastly different outcomes when it comes to things like the fiscal deficit and tariffs, so they can't be. >> you got to compare and

contrast that with the european side of the trends. the euro negative against the dollar for a second consecutive day, the longest daily losing streak for his eagle currency in europe going all the way back to april 2022. and the two pictures right now, the contrast is pretty vicious. europe is pretty dreadful and america is better than ok. >> what does it look like if america doesn't cut and the rest of the world wants to do a cutting cycle? what if we get another 25 basis points and we are stuck on the fed rate? europe right now, which is trying to tackle deficits. france saying they are delaying their ability to get within target. the u.k. talking about enacting taxes. how unappealing does urine -- european debt look? >> the next decision october 17, so look out for that. the middle east marking one year since the october 7 attacks on israel. israel sending troops back to northern gaza and ramping up strikes of lebanon as the

government weighs in on how to respond to the missile attacks last week. >> president biden will be speaking joined by a rabbi, a candle lighting as well as vice president harris. but right now we are dealing with on the ground in the middle east, is this concern about a broader conflict, and israel right now is on multi-front when it comes to what they are dealing with. the biggest question remaining is how are they going to respond to iran's most recent retaliation for them? >> when this happened a year ago, the biggest fear was a wider regional conflict. i think we can safely say that it is here. the wider conflict has happened, israel is still fighting, there are still hostages in gaza. they are not talking about retaliation in iran. and we don't know what is going to happen. it is still a year on and more is involved. it is the fears come alive. >> the energy infrastructure in iran might be targeted.

79.70, a similar move on prude at 76.19. elsewhere, florida preparing for the arrival of hurricane milton expected to make landfall near tampa bay. the storm could reach category four power and may spark the largest evacuation in seven years. the region still recovering from hurricane helene less than two weeks ago. the one-two punch nobody wanted to see. >> they realized they are not out of the woods. the county that has clearwater has a lot of long-term care facilities. they are telling all of these hospitals, all of these facilities to please evacuate. the sheriffs and sometimes bars and restaurants think they can ride this out and stay open. we will shut you down. there's a tremendous amount of concern in florida and they are still dealing with hurricane helene. >> and i think that is part of the difficulty here. fema workers were just leaving to clean up the debris and now they have to turn around again.

it is the allocation of resources which gets really complicated. resources which, i should say are necessary not just to help preserve human life but also with an election just weeks away. this is sitting some areas that are crucial for the swing states, especially for the republican candidate. >> absolutely. you would hope that they voted already. that is why this has been politicized so much this time around. you have a lot of governors come out but are republican. i've spoke to a few of the offices and they say we are getting everything we need from fema and the federal government, but former president trump has really wanted to make us political because we are one month away from an election. >> chinese markets are still closed, i believe they reopen tomorrow. goldman-s facts critic its called to overweight. another 15 to 20%. if authorities deliver on stimulus measures.

hsbc and blackrock making similar calls, following this massive moves we saw in chinese equities going into the holidays. >> i think one of the big takeaway since there was this idea that there was no alternative to u.s. stocks. not only is china an option, but what about the proxies, emerging markets which have also been so under loved, what about european exposure to china? this changes a lot but there are stocks beyond the u.s. so if you are bullish on this, you have to be bullish on other parts of the world. >> up another 1.6% to kick off the trading week. a busy week of data ahead with fed minutes on wednesday, cpi thursday. any sign of rick celebration would be seen as a challenge to the fed's aggressive breakup last month. on the other hand, a drop could be one of the final data point the fed needs to compare to a long-term strategy on rate cuts. we got to start with payrolls friday. i don't think the we can ever

really happen for a lot of people. how consistent or inconsistent was that with the other data we've seen in the labor market? >> nothing leading up to friday would have prepared anyone, even watching closely. there were some signs that we were going to see a stronger jobs report. we saw job openings out a little bit, the adp report showed some strengthening. we know that layoffs has been very, very low, and so there are signs that there was strength in the economy, but those strengths didn't lead to 254,000 jobs being created. i think it is time to really talk about the effect of uncertainty in this economy. because when you think about the hiring over the summer, and you compare it to september, there is such a big jump. you have to wonder if firms were kind of sitting on their hands waiting for a rate cut waiting for a reason to hire, and they found it in september. jonathan: are we suggesting that the fed rate cut had an almost

instantaneous impact on this labor market? >> three fourths of the hiring was in sectors that are not as sensitive to interest rates. it was government, leisure, hospitality and health care. a rate cut doesn't have the same punch in those sectors as it would be for manufacturing. that tells me that this was not a great story. this was a certainty story. seeing that the fed committed to a course of action which was a rate cut meant that companies now have one level of uncertainty removed from their hiring practices. it shows the power of uncertainty and how that is very different from risk. risk, employers can control. >> does that also mean that a

lag in monetary policy is not as long and variable as it is when we are cutting? >> it could mean that for sure. what we are lacking is commending because clarity is the antidote to uncertainty. if they could commit to an action that will go through this preponderance of data that shows that the economy is in pretty good shape, that give the market something to grasp. we've gone from soft landing to hard landing to know landing. that is not a great place to make decisions. the fed could play a role providing that clarity, showing that we're landing this place really great place for the economy. that is what is missing. >> we are getting plenty of fed speak. all speaking just today -- plenty more throughout the week. what kind of tone do you think would help get the markets

there, would help trey this after such a big jobs report which is just one month? >> you might get very different notes from all of this fed talk. you might see may a governor bowman say look, this is another example of why i dissented from that 50 basis point rate that. you might see other members of the fomc say we are just going to look at the data and be very data dependent. not sure that's going to work in their favor because the data may show all kinds of things, especially in these 30 days prior to an election. the data is going to be critical. but it's going to be interpreted with a slant. so we don't have the benefit of objective analysis of data when we have this big overlay of the election. so what i hope to see is some commitment to a path forward in every single speech. i don't think we will see that. >> you mentioned know landing. that seems to take on a different definition to

different people. what did you subscribe know landing to? >> i honestly think this economy laid months ago and it is time for someone to call it. we landed, it's good, we can commit to a very moderate interest rate cut given the strength we are seeing in the economy and we don't have to get over our skis. the fact that people are hesitant that are staying on the side window, not just calling this for what it is, a strong economy is mystifying to me. so i think we could call it and some of this uncertainty about the direction of the economy. >> we can still reduce interest rates so long as they cooperate, is that fair? >> i think that is fair, but with a caveat. what is really hurting the fed's case on this is not the jobs market, it is the housing market. a market that the fed take

control is easily. not that they can control the jobs market. but the fact that there is all this demand out there, that there is a tailwind of demographics and not enough supply means that service inflation is with us, and there's not a lot the fed can do about it. so how a telegraph that is going to be very important. >> good to see you. on the latest right now, we've got a two-year, up eight basis points. here's your bloomberg brief. yahaira: arcadian lithium shares are soaring in the free market up 36% after rio tinto confirmed it has made an approach to acquire the company. the approach was nonbinding and there is no certainty any deal will be agreed to. it is yet another signal of a sector turning its attention back to growth as miners

increase their exposure to metals involved in energy transition. citigroup analyst suggested rio should buy arcadian with lithium minor trading well below replacement value. nintendo shares are rising after a senior executive with saudi arabia's sovereign wealth fund told local media it is considering increasing its stakes in japanese game companies. the study sovereign wealth fund is already one of nintendo's biggest shareholders with an 8.6% stake according to data compiled by bloomberg. and warner bros. new sequel to the joker is off to a rough start at the box office. the highly anticipated blockbuster pulled in just $40 million in its opening weekend that u.s. uterus falling short of even the most modest projections. the film which returns joaquin phoenix to the title role brings on lady gaga as his partner in crime and reportedly had a budget of over $200 million. that's more than three times the original movie.

it's also failed to impress critics with a 33% score on rotten tomatoes. jon? jonathan: absolutely bombed. haven't seen a trailer but i've seen a ton of bad reviews and think they put a lot of people off of the weekend. >> this is my bone to pick with this and other movies. if it is a musical, tell people it is a musical. you shouldn't be sitting in a theater being surprised. lisa: i had no idea. >> yeah, it's a musical. jonathan: is it a sing-along? one year of war in the middle east. >> when we think about the threat that hamas, hezbollah presents, iran, i think that it is without any question our imperative to do what we can to allow israel to defend doubt. >> -- to defend itself. >> good morning.

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♪ jonathan: check out this move on crude. wti, another 2.6%. that five-day move, five-day rally almost 12% higher. 11.88 percent rally over the last five trading days. under surveillance this morning, one year of war in the middle east. >> when we think about the threat that hamas, hezbollah presents, iran, i think it is without any question our imperative to do what we can to allow israel to defend itself against those kinds of attacks, which include the need for humanitarian aid, the need for this war to end, the need for a deal to be done which would release the hostages and create a cease fire. jonathan: israel ramping up

strikes in lebanon and gaza as the nation marks one year since the attack that launched the region into conflict. good morning. >> it's october 7, a somber day, but also a game changer for the country because ever since that point they've had to reconsider how they think about security and their place in the region. andy fast forward to today, bloomberg politics used the title a year of middle east tragedy which really highlights all of the actions that have been set in motion over the course of the last 12 months. today, israel was fighting in multi-front conflict. you have the ongoing war in gaza. if you look at the latest death toll by the palestinian health ministry, looking at 42,000 deaths, even the hamas had been very much diminished, even this

morning rockets were being fired toward tel aviv. there are still wondered hostages held in captivity with no signs of a cease fire breaker. you think about the developments in lebanon across the border, a ground incursion has been going on for a week now, ongoing airstrike around the border close to syria. more than one million people displaced. and in addition to that, you have ongoing strikes with these rebels in yemen who have been wreaking havoc across the red sea shipping routes, and in the big one is iran. if you think back to the last 12 months there li bin to direct attacks from iran into israel, the latest of which occurred a couple of days ago, and now the whole world is on alert to see how israel are going to respond to that. so it is a very fraught time but i think also the pathway toward

normalization or peace in the region has never appeared narrower than it does right now. jonathan: let's continue the conversation joining us now is elliott ackerman. welcome back to the program. we are still sitting here waiting to figure out what israel's retaliation might look like against iran. i think we need to a first -- reflect on the fact that the battlefront has gotten bigger and not smaller. what does winning look like for israel, what does that look like? >> i think it's really important we differentiate between israel having a right to defend itself, yes, but israel winning. as israel's ally, we have an obligation to make sure that they win this war. that is the quickest pathway to peace his victory. so what his victory look like? i'd argue for the israelis they have strung together a series of successes in the last month and

a half that they absolutely need to take advantage of. the massive strikes against hezbollah leadership. i think they are at a point right now where if i were benjamin netanyahu i would be strongly considering making certain that hamas and hezbollah are forces that can never threaten israel again, and looking to renegotiate security agreements in the region with many of the arab nations that were poised to do so one year ago right before the october 7 attacks. >> what do you say to those that say that if israel were to do that, it would probably push iran to go even further and actually result in enriching uranium even further into developing a nuclear weapon? >> i'm glad you asked that question because women look at the war that is going on right now between israel and iran, and it is a war, it is happening in a broader context, which is the

wars that are going on right now between a global access of authoritarian nations to include russia and that is also north korea, and to a degree, china and that is tacitly allowing so much of this to go on. so only look at a country like russia and ukraine, one of the great missed opportunities of the war in ukraine was the fact that we as the u.s. didn't empower the ukrainians to act decisively early on in that war by giving them the weapons that they needed in short order and allow that war to drag out into its third year in the cost for victory for ukraine has become much higher. for the israelis i would say if you want a long war, take incremental steps. if you want a short war, act decisively. i would not take too much counsel of people who tell you that you have to respect and fear these red lines that putin

has put up and that the ayatollah puts up because i think ultimately they do not serve anyone's interest and they don't serve the interest of peace. annmarie: the objections are obtained how much longer could this conflict stretch on, even if as you say it looks like it has the support of its allies and he could get there? >> i think that the first thing that israel needs to recognize is that this is a war being fought by proxy. it is really a war against iran. that is a get these rocket attacks to stop. jonathan: elliott ackerman, a former white house fellow on the latest situation in the middle east calling for an active

decisive measures going forward from here and maybe even a strike on nuclear facilities. annmarie: i go back to what was said over the weekend, could we see nuclear facilities, could we see oil facilities be the target of some sort of israeli retaliation? the answer was all at -- all options are on the table which was definitively please don't touch those nuclear facilities and may be best not to touch the iranian oil facilities as well. jonathan: right now crude is up by more than 2% across the board. brent crude getting closer and closer to 80. we will catch up with bob dollar, -- and before he sits down he will do a bit of a victory lap in the studio i'm sure. all of that and more on the second hour of "bloomberg

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

>> the market get choppy. could get choppy. >> any pullbacks would be opportunities to position markets. >> the market has expected soft landing pretty much so the

question is, what comes after soft landing? >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the equity market looks like this this morning. good morning. good morning. pulling back a touch on the s&p 500. on the nasdaq, we are down as well. the russell, he little bit of underperformance compared to the s&p. surprise, surprise. in the bond market, much higher yields. we are up another nine basis points on the two-year. four handles across the curve. the two-year, 4.01%. >> the market does not know what to make of the jobs report. once it an outlier -- was it an outlier? a very expensive insurance policy. unemployment rate down. which growth came in hotter. revisions came in higher. what do you do with this all?

the plane has landed, this is a good economy. you have to ask, why was everyone pricing in another basis point cut? that has now come off the table. some are saying no cuts. jonathan: did we really need that 50? check out the minutes later this week. cpi from the economic data side of things. bank earnings kicking off with j.p. morgan. after the find a big morning spread, thursday, cpi. >> that allows us to move to an old double that we know, inflation -- devil that we know, inflation. the equity market decided to stop selling off. it allows us to say the fed is not behind the curve. maybe it shows that the upside is now limited. not only do we need to worry about inflation again, but we are headed into an election. the runway is not as big for

equities, even if you have strong economic fundamentals. jonathan: still there by the way. the curve is normalizing. it makes more sense to deploy knight capital now. two year versus 10 year turned negative this morning. >> you can get back in now with higher yields. maybe now is the time we can put cash to work. probably not considering people have gotten used to their positions amid the uncertainty of the world. but that criticism that you are missing something with yields starting to come down, now would be the opportunity to take advantage of that. jonathan: equities pulling back. yields pushing higher. the dollar stronger. the euro negative again. standout move this morning, it is not just economic data. it is the move in the market. >> this cloud hangs over the middle east right now. what will be israel's response? two different stories when it

comes to the commodity market. goldman sachs says attacking tehran's energy facilities would not be the preferred course of action, and they are looking for brent to stay around $80 this quarter. jonathan: $79.83 on brent crude now. torsten slok says there is no need for further rate cuts. michael collins saying it is time to add duration. stronger-than-expected economic data in america. bob doll suggests it is hard to be bearish. monetary policy is easy even though there has been evidence of a limited drag on the economy. any constant toward equities has been admittedly wrong or at least premature. welcome back to the program. let's pick it up where we left things on friday. payrolls, jobs report, good news when you see the repricing in

the bond market. bob: first of all, it was one month. how many downward revisions have we had? i am not saying it was not a good number. it was an outstanding number. no question about it. but when you look at the employment data around the ism's, manufacturing and services, they were weak. which has it right? time will tell. but the inflation discussion is back on the table. jonathan: you just raised an important question. which was the head fake? the deceleration or the re-acceleration coming out of the summer? bob: i thing they are both true. economies do not move in one direction nonstop, so i think we will have the fits and starts. some people call it a bumpy landing. i like that term. i think that is what we are in for. it will be a good number at a also good number. it will be confusing for all of us. dani: you are looking for a

significant economic slowdown or a mild recession. that had been your base case scenario. if this is just one month, does it change it at all, bob? bob: it certainly lowers the probability of us getting that right. when i look at all of the statistics over several months, to me, it is still pretty clear the economy is slowing. we are seeing that in many of the employment numbers, notwithstanding last friday's. we are seeing that in the ability to find jobs. people trying to find full-time jobs, settling for part-time jobs. the economy is slowing. we just don't know how fast that is happening. and of course, the fed has seen some of that too. we got 50 basis points. we know the number is still high relative to other things. how many things can you find that have double growth as strong as the fed funds right now? it is leaning on the economy. >> can you help me sort out what

kind of economic environment we are dealing with? if you are worried about a slow down but now we need to worry about inflation again, how do you square all of those? bob: all of that can happen in many cases in the past. economies slow, and inflation picks up. we had that many times before. i could enter the fact that pe's are in the 20's. when they are that high, things better be close to perfect. so if there is fly in the ointment, that 22 pe has to be question somewhat. has to be hard to see upside. >> i know you contractor stress this was one month but how can we reconcile how good this month was when the survey data shows jobs are plentiful, that is coming down, while jobs are hard to find? that is what people are finding in the labor market. bob: that is why i am raising the question that it is one month, and all of the things

from prior months are showing not so fast that the economy is great and there are plenty of jobs. let's see what next month brings and watch all the other statistics that you just accurately pointed out. >> do you take 60 or 70 off of this payrolls report because of the revisions we have seen in the past? bob: that is probably not a bad thought. i had not come to grips with that, but that is probably a good idea. jonathan: i want to talk to you about what is happening in this bond market. we are starting to see a reconversion, never mind a distant version -- a re-inversion, never mind a dis-inversion. people are sent to get out of risk, take on credit risk. what is your advice now? bob: people that have a lot of cash that have enjoyed high

returns, put a little to work. this is a lot more interesting than the 10 year below 3.75% weeks ago. i would take weakness in the bond market. you don't have to be a hero. take your time. that is what is weighing on the stock market, the rise in interest rates, the rise in oil prices. maybe the economy is ok, the report may say, but why are earnings revisions so negative for the third quarter? jonathan: are you adjusting we got to a point in the bond market where yields up on good news is now bad news for equities? bob: yes. most people say when the 10 year about 4%, we begin to have those problems. i don't know if it is exactly 4%, but the pace of the increase in yields also i think has to be brought into the equation. and that is weighing on stocks. jonathan: so let's get into the stock market. lifted on the index. where do you want to be with all of that in mind?

bob: so i have a broken record for quite some time. i have argued for companies with high earnings predictability, high earnings persistence, and strong and growing free cash flow. you might call that quality. because all the unknowns we have discussed and debated back and forth here, i would have companies that are somewhat independent of the economy. those stocks have done just fine as the market has moved higher. i think if we get any settling, these names will do better. >> does that mean the market's ability to broaden out, go beyond the magnificent seven, go into small caps, do you see the market not able to do that in the safer part of the equity market? bob: i am not sure that the magnificent seven or five, whatever the number is, is the safest part because of the big valuation differential between the top 10 if you will, more than 30 times earnings, and the other 490, call it 18 times earnings.

i think the market can continue to broaden. i would say within the s&p, within the large-cap stocks, not so much down to small. we need confidence in the economy for the small stocks to do well. almost half of the russell 2000 companies are losing money. that is not real attractive. >> in this environment where higher yields can punish equity markets again, how worried are you about the cpi report? bob: i think we have to have our antenna up on it. look, i never say one month makes a trend, back to the unemployment report, but this notion that the fed had inflation under control. it will inevitably get to 2%. it has to be question. i don't think there is any way we get to percent inflation unless we have a recession -- 2% inflation unless we have a recession. jonathan: thank you. consistent on that point. looking ahead to cpi thursday.

we are vulnerable to this flipping the other way with cpi on thursday. dani: we are vulnerable, and what we have been missing his tenure yields have been moving higher since before the fed's decision. the bond market has been telling us something before the friday payroll report. maybe 50 is too much. maybe there is a threat. maybe you need to commit a higher premium. there are risks in the market that maybe we can ignore when we are freaking out about recession. maybe the jobs data lets us put that back in the spotlight. jonathan: the commodity market has been a piece of that puzzle. let's get you an update on stories elsewhere. here is your bluebird brief. yahaira: chevron has agreed to part ways with some of its assets in canada. the energy provider will sell to canadian natural resources for $6.5 million. the sale comes as chevron focuses its growth plan on other parts of the world, must be the

permian basin near the u.s. and a field impasse extent, where an expansion project that in kazakhstan -- in kazakhstan, where an expansion project is in effect. a 5.1% stake in nikon. nikon shared and planned -- the shared -- nikon shared its plans. a british super carmaker mark the 50th anniversary of his first formula one championship -- its first formula one championship. 1400 horsepower with a top speed of 217 miles per hour. if you are looking to buy one dumb about news. onl -- if you are looking to buy one, bad news. only 390 were commissioned.

that is your bluebird brief. jonathan: thank you. no one around this table is in the market for one. >> i feel like there should be a commission for this card because one of the reasons it is so popular is they are so dominant. jonathan: you would think they get a free one. you would think they get a free one. up next on the program, crude rallies on risk in the middle east. >> with regard to strikes on iranian oil facilities, what did you mean by that given the action we have seen in the market? pres. biden: i would think about other alternatives. jonathan: we will talk about those alternatives. live from new york city this morning, good morning. ♪

jonathan: risk assets facing a

few headwinds this morning, including this one in the bond market. yields higher on the 10 year and two year. across the curve, twos out of 30's. crude rallies on risk in the middle east. >> can you clarify some of your comments yesterday with regard to strikes on iranian oil facilities. what did you mean by them given some of the actions we are seeing in the market? pres. biden: look. the israelis have not concluded what they are going to do in terms of a strike. that is under discussion. i think if i were in their shoes, i would be thinking about other alternatives than striking oil fields. jonathan: crude rallying for a fifth consecutive session as the world awaits israel's response to the missile launch last week. the real risk may be an additional strike from iran.

heidi joins us now for more. the real risk may be an additional strike from iran. just explain to our audience what you mean by that. heidi: so i spent last week in riyadh in saudi, where you might imagine everyone was laser focused on whether what israel described as a missile response attacked, whether it would respond by striking oil facilities and structures. while there was nothing explicit said, the worry was that that strike on iranian oil facilities would result in iran targeting saudi and other gulf producers. while they have reasonable relations with regard to managing oil and oil facilities, i think there is legitimate

concern that there would be a potential for a residual attack as iranian response on other gulf facilities. >> what about the idea that iran can close the strait of hormuz? heidi: that is an option. there are some analysts that say that would be catastrophic. i think actually there are other alternatives. if there were an israeli strike on iran and iran did close the strait, saudi and the uae have capacity to bypass the strait of hormuz. and i think they have the capacity to export via the red sea. and uae has the pipeline that also has the ability to bypass, which is a stopgap measure. but in terms of the direct impact, there obviously would be a market, a significant market reaction.

but in terms of global oil supply, it could really mitigate some of the disruptions. >> as you look to what iran's response would be once israel decides to respond to iran, what are the gulf countries doing right now to try to mitigate any of the risks? heidi: so i think they are in significant quiet consultations with one another to try and really keep temperatures down. it is in nobody's interest to have this escalate and particularly escalate into a full-blown regional conflict. that is not only bad for commodity markets. that is bad for global markets for a whole variety of reasons that you are aware of. and so the general attitude is, let's keep the temperatures down and the conflict as confined as possible. >> you were the state

department's first ever chief economist. you look at state were craft. what do you think the u.s., the biden administration is looking at that could potentially harm iran right now as a punishment? heidi: so, obviously, what is on the table for the israeli response is military, nuclear, or the oil infrastructure. there are already somebody sanctions on iran right now -- so many sanctions on iran right now. i am not sure what additional sanctions could be contemplated. but i think, you know, to the extent the biden administration has any sway over israel, it would be to try and make sure whatever risk they are going to be undertaking is one they fully understand and have some way to mitigate. but obviously, this is a highly

volatile environment. the timing, given especially the auspicious date today of october 7, i think decisions are going to be made and we will see an eminent response. >> what i am hearing from sources in washington is the administration is weighing the idea of more sanctions, but is the issue more sanctions or the enforcement of sanctions that are currently on the books? heidi: so enforcement of sanctions would be a very important step. i think it's -- iran has been exporting, and china has been importing in particular a significant amount of iranian oil. but it is always a combination of stronger enforcement in addition to layering on additional sanctions. sanctions work when you have sanctions that are imposed multilaterally. far better than if you just have the u.s. imposing those sanctions.

i am imagining that conversations about sanctions are happening with allies and partners. >> can we do a little bit of scenario analysis? you said the oil market could react strongly with any israeli attack on iranian oil infrastructure. what could that look like? heidi: you are already seeing pressure on oil right now. we have had -- this is a crisis and a conflict that is one year into the conflict. and you have not seen so much reaction in commodity markets. but the potential that we have now that hezbollah has been to a large extent neutralized, at that was one of the bigger barriers to a direct -- and that was one of the bigger barriers

to a direct attack by iran on israel, it opens up the possibility for disruption of a major producer and exporter. >> how do you understand the biden administration's ability to speak to israel and avoid something like that, to say this hurts us heading into an election and other allies as well? heidi: the biden administration has done its utmost to try to influence the actions of israel. and i think they are strong defenders of israel. and they are, i am sure, having the conversations that will help inform at least thinking what a broader escalation might mean for the rest of the world. i think israel will make its own decisions at the end of the day. they have shown that time and time again. jonathan: appreciate your input this morning. heidi crebo-rediker.

crude higher, approaching $80. >> just within a few days, you heard biden take that pivot. he almost let you in on some of the conversations happening. there are discussions with israel -- discussions regarding israel attacking iranian oil fields. we saw oil prices spike and hold onto those gains. you cannot get rid of the geopolitical risk. hi d's point is not so much israel attacking iran, but what iran would do after the potential attack. jonathan: it depends on what israel will do to iran. in response to hundreds of missiles being thrown in their direction. i am not entirely sure what that looks like. or to go further, is it about taking iran on and ending what has been the axis of resistance for the last few decades? >> or is it sending a message? we know where your facilities are, where your head individuals

and personnel are. according to israel, all options are on the table. jonathan: brent crude up. wti as well. $76.30. coming up on this program, torsten slok saying the bottom line is rates will stay higher for longer. he said it a few times, he does not think this economy needs interest rate cuts. he certainly did not think we needed a 50. he think this economy is better and ok. if the report does anything to go by, it is. pulling back on the s&p 500, down by half of 1% on the s&p. the two-year at 4%. ♪

jonathan: before we get into this, the september jobs data was much stronger than highly correlated survey data for september, raising questions about its veracity and sustainability. we will have a very different view on this in a moment. just throwing that out there. s&p on the -- equities on the s&p 500, down. the nasdaq down 0.6%. in the bond market, bob doll of crossmark making the case that may be good news is bad news, because yields are back through. dani: what a joy that is with

cbi coming thursday. we have to worry about cpi again, just when we thought we put it in the rearview mirror. bob kept emphasizing this is one month of data. we did this for the bad data. maybe we should approach it the same way, even if it is good data, that this is still an economy we do not fully understand, and especially a confusing labor market. jonathan: let's turn the page and get to the commodity market story. another look at brent crude and wti. up more than 2% on the session. wti on a five day winning streak, a move of almost 12% over that period. annmarie: the market is fully supplied. demand is not necessarily fully there, because we are still waiting to see how the stimulus effects take police in china. the issue is the commodity market is very angsty when it comes to what is going on in the middle east, and they are preparing or potential israeli retaliation on iran and what

israel decides to hit. oil fields are clearly in focus. dani: this is another thing that excess need to worry about inflation again. bank of america put our projections, same for every 10% rise in oil, it is a seven percentage point increase in core inflation care that means it needs to get back above 100 dollars a barrel to start worrying about inflation again, but you add in oil, china stimulus, and, again, fears coming back in the market. annmarie: we should note we are not completely ruling out the possibility of recession because of the potential 1970's style geopolitically triggered hard landing. he is looking at the crisis and what is going on in the middle east. jonathan: what it mom and el-erian say friday? inflation is not dead -- what did mohamed el-erian say friday? inflation is not dead. under surveillance, hurricane milton could strengthen to a category four storm as it moves

towards florida, governor desantis declaring a state of emergency. annmarie: a lot of those fema workers were leaving florida to help other areas. potentially, they will need to be coming back. over the weekend, speaker johnson saying there is enough federal funding right now, they do not need to bring congress back. when you think of two potentially devastating hurricanes at the same time, maybe that changes. dani: and these are swing states that are being hit. politico has figures that, in 2020, trump won 61 percent of the vote in the areas in north carolina the had been declared a disaster after helene. in georgia, that figure is 54%. these are important regions for trump. annmarie: and these are regions that, right now, these areas do not have access to internet or clean water, they do not have power, let alone are the thing about getting there ballot in or lining up in a month's time. jonathan: it is a difficult

situation. it could get harder. elsewhere, boeing and its largest union heading back to the bargaining table, a federal mediator summoning both sides for a talk over wages. there's been little direct contact between the parties. the situation for the union, do they think they have the leverage we have seen from the and gulf -- the east and gulf coast ports? dani: -- the conversation has been that boeing workers can continue to strike because of the gig economy, that they are all taking second jobs. one person striking said to bloomberg he is settlement to his income by making t-shirts and selling them. you get the sense this is a workforce that is angry and willing to make sacrifices to continue the strike. annmarie: but last week, workers lost access to boeing-backed health care benefits. potentially, that is pushing them to this negotiating table. they have not been here since.

. september 27 potentially losing that access, that benefit, pushes them towards wanting to make a deal. jonathan: rio tinto approaching arcadium lithium for a takeover deal. he could be the most significant mining acquisition -- it could be the most significant mining acquisition in over a decade. rio tinto, for a long time, it was iron ore, copper, used to be coal. there will be more and more focus on lithium. annmarie: lithium, cobalt here this is what will power the future. when you at gasoline demand in china, it is less. because more chinese consumers are buying cheap dvds out of china. the power that, you will need access to things like lithium and cobalt. jonathan: big move in that stock. let's get to friday's low out payrolls report, reshaping

expectations. torsten slok saying there is no need for cuts, the fed is cutting rates, which is boosting growth and inflation further. the bottom line remains rates will stay higher for longer. torsten slok joins us now for more. morning. you caught your breath after a victory lap around the table. how did you feel friday when that number dropped? torsten: it makes sense, what is going on. it is not clear the data has been slowing down. gdp last quarter was around three. if you take this combined with strong data on consumer, goods, it mixed sense the labor market is still hot. it does not make sense to say the economy is still good but the labor market is bad. you cannot have it both ways. you cannot have it that the economy is good and the labor market is bad. that does not make sense. that is why the totality of the data, as jay powell would say, it is obvious things are still jumping around -- jonathan: employment component

is not fantastic -- torsten: the service headline was still good. jonathan: we will get to that. jobs were up at hiring was down. if things were great, you would expect the quits rate to be elevated. some people have pointed out maybe this is inconsistent with the broader data. what do you say back to them? torsten: what is going on in the job service -- the layoff rate has not gone up, meaning it is not the case that companies are firing workers paid on the other hand, just seeing a little less hiring. that is just a normalization. combined, of course, with still steady immigration, and tailwinds from defense spending, ai, and consumers are not very sensitive to interest rates going up because of locked and low interest rates. we still have fairly strong tailwinds to the outlook and less sensitivity to what rates are doing. it still makes sense to believe, over the next several quarters, the economy will do fine.

dani: it is that sort of thing that has led a lot of critics to say it was a mistake to go 50. is there a world where this dropped report would not have looked as strong if they did not go 50, that it helped maintain strength in the labor market and reinvigorate confidence? torsten: the key issue is what are the long and variable acts? textbooks would say 12 to 18 months before anything starts to show up. but the stock market is becoming a very important indicator for companies in terms of are we doing well, are we not doing well, should we hire, not hire? given the -- all that implies we have had faster transmission of monetary policy, because the forward gardens has been coming through quicker than what the text book would have predicted. dani: does that suggest 50 was a mistake? torsten: jay powell said, 10 times, they did this to recalibrate monetary policy.

there was a lot of discussion about why did they do this, what is the calibration as an excuse? the excuse was inflation has now come down. given the economic data has come down, it really is all locks. with inflation back closed the 2% and the economic data continues to plow along for that is why the fed is stuck in a situation where they need to say should we look at the economic data, or should we turn to inflation and say maybe inflation is a risk of moving up again. annmarie: when you look at the totality of data, some of these are going in the wrong direction, besides this one implement point, which was a blowout. do you think the fed will err on the side of cutting too much rather than too little? torsten: the fed has had a tendency that the risk to the unemployment rate over the last five years has always been that it would go higher. on the important discussion on that is wherewith they put the emphasis? do they put it on it is not on the jobs data, that is weak, it is also another of other indicators that has shown slight

weakness when it comes to specific areas. the vast majority of data that comes in, consumers, daily data, you still see restaurant data very good. you also have a debit card data is also very good, so you have come across the board come a lot of indicators that continue to be moving along quite nicely. there is just no slowdown. it is clear the jobs data stands out on its own as a special story. annmarie: november 7, what do you think the fed should do, and what do you think they will do? torsten: they have pre-committed themselves to rates going lower, so that is why i think they will cut 25 basis points. the key issue is all the incoming data being so strong is telling us maybe our style is not 3%, -- r-star is not 3%. that is why we think we are not too far away from the monetary

policy stance currently being close to neutral. if that is the case, we do not need a dramatic amount of for cuts, which has been put into the. plot -- into the dot plot. jonathan: you sound vindicated. do you think governor bowman is? torsten: she was saying we should not cut 50. we will get a lot of speeches today. all that ends up being very important for us to see, are they backpedaling, backtracking from this? maybe we do not need a lot of cuts because incoming data stay strong. jonathan: do you think they are not in a rush? torsten: what causes recessions? in 2020, that was caused by covid. the prior recession, the s&p 500, we were down 50% or that generated a shallow recession. where is the shock today, the

shock that should generate a recession? the only shock is a fed raising rates. that has been countered. that is why monetary policy has not been as restrictive. that is how a text book would have been saying. that textbook, we should probably put it more side, and that is probably a good commendation for the fed a let's look at the incoming data, and incoming data continues to actually be strong. dani: if the neutral rate is not as low, if monetary policy jazz mission is happening at a quicker speed, what will be the location of them continued to cut into strength? torsten: the challenges we still have dylan's from the inflation reduction act, the structure act. know when you meet says i will not invest in ai because the fed just raise interest rates on a five basis points. everyone still wants to invest in ai. we also had the as a strong tailwind. and deglobalization, the construction of manufacturing plants in the u.s., is also a strong tailwind those are things

that fed cannot really control, because the stories we talk about in market at the moment -- in that sense, monetary policy is unusually weak in terms of having a negative impact. annmarie: does the market still have the tailwind of the fed's first private of december 20 33? -- torsten: before that, there was very little activity in ipo, high yield issuance, everything was relatively weak. after the december pivot, they have seen significant opening in financing markets, and provided a tailwind. if you are a company that wants to do something in private credit, private equity -- jonathan: wonderful to catch up. so far, so good after friday. let's get you an update on stories elsewhere for it with your bloomberg green, here is yahaira jacquez. yahaira: donald trump and kamala

harris taking a break from campaigning to recognize the one year mark of the hamas attack on israel. harris will plant a pomegranate tree on the grounds of her official residence in wash ec document in washington, d.c. to commemorate it. foxconn saw revenue growth accelerated after it hit record sales for the third order. also known as hon hai, it beat its own expectations. that is thanks to its growing business, supplying servers with nvidia ai chips inside them. it was a busy week of playoff baseball in the national league. both series are tied at one game apiece, with the phillies coming back with a walkoff win over the mets after dropping game one at home. out west, the -- the guardians look to pull ahead

of the tigers. the yankees will host the royals for game two this evening in the bronx. jonathan: thank you. regular mets update just for bramo. bramo's not here. this is where bramo will be tomorrow. lisa abramowicz sitting down with j.p. morgan ceo and chairman, jamie dimon, 9:30 tomorrow morning. up next on the program, inflation isn't dead. >> this notion inflation is dead, that mission accomplished, came way too early. jonathan: that conversation, next. live from new york, this is bloomberg. ♪ king? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses

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jonathan: here is the stockmarket market picture. pulling back 0.4% on the s&p 500. in the bond market come up i

three basis points. the 10 year back to 4% for the first time since august. up by eight basis points at the front end of the curve of the session so far. under surveillance this morning, inflation isn't dead. >> i think this is pushing back against what has been, in my view, an overly aggressive expectation of rate cuts by the fed. this notion that inflation is dead, this notion that we are an accomplished, came way too ear ly. jonathan: the 10 year yield hitting 4% for the first time since august following the blowout jobs report friday, leaving traders to cut their chances for another rate cut and 50. michael collins saying we are sticking with our call -- the economic data, jobs, and inflation have been dancing

around. michael collins joins us now for more. i want to pitch in on mohamed's line, this notion that inflation is dead came too early. do you agree with him? michael: no. we are paid come in this business, to look for different paradigms in the when we are in. a lot of people this morning, after friday's really strong jobs number, we are jumping back on the strong growth, higher inflation narrative bandwagon, and there are other scenarios out there. this is very difficult. forecasting interest rates, even the path of the economy, are always difficult. today just as much soap you look at the climate risk we are facing in the last couple weeks in this country. it is a tremendous destruction of wealth, but it can also be inflationary. you have a tug-of-war going on, just from that one affect we are seeing increasingly around the

world. there is a scenario that prices stopped going up. if prices, which are high across a lot of different categories, just stop going up for a year or two, inflation goes to zero, and that is a scenario we are actually starting to put a little more weight on as a risk scenario, that maybe these 0.2, 0.3 inflation prints, which we are exiting later this week, turn into 0's and 0.1's, and then you are running at year-over-year inflation running at below 0.26 months from now care that is not out of the room a possibility. and that world, rates are possibly 100 points by. i know torsten slok was pointing to a picture that rates are 100 basis points to low, maybe it is 100 basis points too high. we have to take into account all these different scenarios. jonathan: that is what it takes

to make a market, two different views. the whole curve has reset higher, around 4%. what do you do with this this morning? michael: we are advising our clients -- in our portfolios, we have got a little long duration. a month or two ago, when the 10 year pushing down at 360 and there were tons of rate cuts priced in, it seemed a little overdone in the near term. i know we have spoken about that yet we were advising clients, if you ever get an opportunity to buy the 10 year, in that 4%, 4.5% zone, take advantage of it. right now, we are at the bottom of that buy zone, is what we are calling it. investors are probably going to take another bite of the apple here. we have seen flows come into public fixed income in a pretty big way. they actually accelerated, recently, with the fed's 50

basis point cut and with slowing economic data. i think maybe investors, this time, will be emboldened to take advantage of this backup in rates. i think i'm over the longer-term, that is the right thing to do. dani: there has been some pressure even before the fed raised cuts. 10 year yield up normally over 10 basis points. real yield up 19 points. do you think the fed's cutting, surely yields would be going closer across the curve. michael: markets overreact all the time here that is what happened. when the fed did the 50, markets kind of raced ahead of them for even more cuts. there were. and i basis points of cuts, almost 50 at each meeting at one point, priced in for this year. that did feel like an overreaction in the near term. i know this is a giant, liquid,

-- u.s. treasuries are supposed to be an efficient market. -- i think that was just a near-term overreaction on the downside, and the market started to realize that and get back to a more normal level, pricing in a longer-term funds rate of close of contact been taken off the table. your kind about a 330, 340 now. could that happen, could they stop at 340 and stay there forever? yes. maybe that is the view of the economic and inflation bowls and hawks -- bulls and hawks. there is a whole scenario where they get that fun rate into the 2's or, god forbid, even lower than that, and i think the markets are starting to go back up too much and not price in

those downside scenarios. dani: and then you get that call of get out of cash, go into duration. are clients actually listening to you? cash flows have been so much more sticky than so many people anticipated. michael: they have, but look at the flows. we see our flows across a whole variety of different situational, global, non-us, pension insurance, high net worth investors. we have a neat spot where we sit to actually see, every day, the shift in the money and, increasingly, we are seeing the bigger investors, even retail investors, looking at fixed income, and probably public fixed income. private fixed income has been really sticky and there has been this apartment in the liquidity there. big money coming back into public fixed income. maybe they get a little spooked with the backup in rates and pause for a little bit.

that is natural behavior, looking in the rearview mirror. if you get rates settling here in the low to mid 4's, it is a big long-term buying opportunity. let's hope everybody takes advantage of it. jonathan: mike collins of pgim, appreciate it. another opportunity to get a buy at 4%. dani: already, yields were going down here they are back up again. if you like yields below 4%, surely you will love them back above 4% once again. jonathan: if only that is how it worked. the two-year at 4% this morning, up eight basis points. up next, edward yardeni of yardeni research, dana telsey of telsey advisory group, gregory daco, erik knutzen. the third hour of "bloomberg surveillance" is up next.

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>> this is not just a solid labor market, it is a strong labor market, late in the cycle.

>> this is not as tight of a fed as the market or the fed thinks it is. >> it is a labor market is ok. probably 50 point is off the table. >> it does not feel like labor -- policy needs to be acting at a fast pace. >> the economy is ok. there is not any forcing issue to cut rates. "bloomberg surveillance -- >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: 90 minutes away from the opening bell. the third hour of "bloomberg surveillance" starts right now. on the s&p 500, nasdaq, russell, down across the board. on the nasdaq, down by .5 pierce and. on the s&p 500, a four-week any streak come on a weekly basis, the longest going back to may. the bond market, the picture is very different compared to last week. back to 4% briefly on the two-year, likely -- likewise on the 10 year.

3.99. yields are higher at the front end by close to eight basis points. dani burger, the commodity market, the source for some of the moves this morning. dani: it's inflation back in the concern, it is not just the commodity market. it is strong jobs and also china policy, stimulus coming to the four. the number that will thing of stimulus in china impacting the entirety of the globe? to get this concern, not just stimulus, not just the oil market, but may be fed policy, cutting by 50, is the thing that reinvigorated this job market. the transmission a policy happens quicker, which means the neutral rate is not as low as we thought, which means more cuts are not coming as much as we thought. jonathan: getting some upgrades from wall street from goldman sachs, new price target up. the 12 month price target now 63 hundred. i mentioned michael wilson at morgan stanley, overweight on the cyclicals relative to the defensives. very bullish stance.

stuart kaiser of citi, there is a window for rallies into the election with upside surprise on inflation on the 10th of october. let's talk about the middle east and the prospect of escalation. five days of gains for crude, a move of more than 11%. annmarie: you are seeing upgrades from wall street on potentially where that price can go, goldman sachs about $90 per barrel on brent if israel were to attack iranian oil facilities. heidi crebo-rediker looking at the next domino after that. that is why this is a concern. we will speak to ed yardeni, who says this is his big risk potential. jonathan: brent crude up by 1.7%, wti up by close to 2%. coming up this hour, we catch up with edward yardeni about why the fed might be numb and done,

dana telsey -- and gregory daco on why the next payrolls report will be the next -- most porton jv september payrolls report put stocks on a four-week winning streak. edward yardeni thinks the fed can take the rest of the year off. following friday strong september employment report, the futures market predict -- ed yardeni joins us now for more. is that one jobs report enough to say done with the year? ed: i think it wasn't just the jobs report. we also had very strong purchasing managers index for the services economy, that is where the strength in the economy has been. initial unemployment claims have remained very low. i think there have been quite a few numbers. as you know, the citigroup economic surprise index is positive again. that is one of the reasons the bond yield is back up.

it is a good indicator of the direction of the bond yield. jonathan: if you are right and they are done, and we reprice this curve higher and reduce, the interest rate cuts are priced in for the next 12 months, how well does this equity market warm, in your opinion? -- perform, in your opinion? ed: i think it performs differently. the bull market has been led by the. earnings have also been going up, which you would not really have a bull market unless you really had earnings trending higher. for the s&p fire -- 500, they are at an all-time record high care that is not the case for the small and mid-caps. there earnings have been flat. the market continues to flatten, but instead of broadening out like the russell 2000, which would be correlated with interest rates going down -- if interest rates stay here, it broadens out for the magnificent seven to the s&p 400 -- the s&p 500.

dani: something is if it this earnings season that in august. this time, it is somewhere below 5% that we are expecting earnings growth. the bar is certainly lower. what does that mean. earnings season is about to be upon us. could this not be the leg of the next bull market rally, whether or not rates are being cut? ed: my preferences exact what is happening here. i will are the market goes up on earnings from here rather than on valuation. this is not a cheap market. we have a buffet ratio. it is at 2.8, an all-time high. that is the price to sales ratio. the award pe for the s&p 500 is about 22, with the magnificent seven selling at almost 30 and the rest of the market at 19. you're not getting any bargains here. but what the market i think will do is go up on earnings, and we are going to have another

quarter where earnings will go to a record high in the third quarter. dani: it has been a market able to rally without the mag 7, without the mega caps, for the most part. we 2.9% of the rally is attributed to those mag 7 stocks, according to the spoke -- bespoke. is it a market that at least is more healthy, more broad? ed: i think it is healthy year if the stocks that go up that it -- healthier if the stock cycle up, that it broadens out, beyond the magnificent seven, but again, those multiples, which are at 19, could easily get over 20 quickly, so i think the health of the stock market is going to depend on earnings. i am a little nervous everyone is turning so bullish and all of a sudden everyone is talking about 6000. i started out you're talking a 5400 for the s&p 500 by year end, and that was an outlier. i had to raise that to 5800.

now people are talking about 6000. i think there is a head of steam building up that could be disappointed. annmarie: you were ahead of the curve. he also talked about that we are not completely ruling out the possibility of recession. what could trigger a recession for the u.s. economy right now? ed: we had been thinking the economy was surprised to the upside. we have been saying that for two and half years. we are thinking the economy will continue to perform well. interest rates have normalized. the fed has to reconsider what is the neutral rate, which, by the way, i think is a fairytale number. it does not exist. it is totally a theoretical construct.

all in all, i think the market goes higher on earnings. annmarie: what about the geopolitics? ed: 20% -- i do not want to get cocky about this, as i wrote. there is a chance of recession, a 20% probability in our minds, and it is geopolitically related. no it is a little hard to believe, but you look at the history of geopolitical crises, and more often than not, they have been buying opportunities. the reality is this the applicable crisis, so far, really has not given anyone a buying possibility, so there is still a possibility, with this war between iran and israel getting to be a more direct confrontation, there could be a selloff related to that. jonathan: do you think there is a part of the market that is to stretched? is it an index level call, a sector call? ed: i think it is stretched in terms of valuation, and part of that is because we do have a

very passive investment orientation in the marketplace. when people get in the market, more often than not, they are getting into etf's, and etf's really do not get very concerned about diversification. if you have an s&p 500 etf, and 30% of that is the magnet percent seven, that is what you are buying. whereas managed for folios might be more conservative -- managed portfolios might be more conservative. jonathan: at the moment, it sounds like you are bearish. is that fair? ed: i would say it is we are at the right place at the market relative to valuation and earnings. we could get to 6000. i guess what i am saying is i hope you do not see a melt up, here. i do not like melt ups, because they was meet to figure out to tell people when to sell.

dani: so if you think we can continue to move forward, but there are distortions in the market, it's overvalued, arguing the camp that this is a less efficient arc and these types of mispricings can continue on for longer because it forces passive management? ed: i think that is a good point. i agree with that. but at the end of the day, that is a theoretical notion, and the bottom line is, is this market going higher? i think it is going higher. we have $6 trillion going into multi-mutual funds. the stock market got to a without people panicking out of money market funds and getting out of the stock market, so there is a tremendous amount of liquidity in the system and there is a lot of lying on a global basis. i will continue to overweight the u.s. on a global portfolio. the china thing is kind of

running out of steam, and people will go back to overweighting the u.s. as kind of the safe haven in the global stock market arena. jonathan: what is it about china that you do not believe in? ed: they have got some major structural problems. the government created its own mess with the demographics. they have not a very rapidly aging demographic profile. the consumers are stretched. i do not think they will be buying additional apartments, so even if they managed to stop the debacle in the property market, that is not going to be a source of economic growth. all in all, it is an autocratic government running an economy that has done extremely well when they let capitalism at flourish. now, they are not. ed yardeni, appreciate it. bullish assets, not just as bullish as some are. here is your bloomberg reef with yahaira jacquez. yahaira: former president donald

trump is campaigning in key battleground states this week. he was in wisconsin yesterday for his fourth is it in eight days. on saturday, trump held a rally in butler, pennsylvania, the site where a gunman tried to take his life in july. he was joined on stage by elon musk. the rally was musk's most prominent moments at the campaign. he launched a pro-trump super pac in may. the wall street journal is reporting that vladimir putin's merchant of death is back in the arms as this, brokering small arms sales to yemen's ira n-backed militants. he was returned to russia in a change for basketball start brittney griner. a warning for people who use over-the-counter acne medications. popular treatments were found to contain high levels of benzene, a chemical linked to cancer.

researchers tested more than 100 products and found about one third were contaminated with high levels of benzene. proactiv contained 18 times the amount as regular did by the fda. that's your bloomberg brief. jonathan: thank you. up next on the program, the morning calls, plus dana telsey of telsey advisory, with luxury stocks back in the spotlight. that conversation up next. ♪

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jonathan: citi pushing back. we got 2.54. the strong household survey was due to an abnormally large

increase in government employment that we would not expect to repeat. we expect a reversion to weaker dynamics at some point in the next few months. that is the call from citi. s&p futures on the s&p falling back -- pulling back. yield back through 4% on 2's and 10's earlier for the first time since august. wti just short of 76. time for morning calls. wells fargo, saying -- that stock down 1.5%. next up, jefferies downgrading apple. down another 1% in the premarket for that name. and finally, alibaba upgraded care that name is up another 2.5%. let's stick with china. the government's recent stimulus

sparking an equity rally and an optimism shift. dana telsey of telsey advisory group saying that chinese stimulus packages the largest since the pandemic. china is very important to the luxury goods industry, with the highest share at around 31%, followed by the u.s. just under 25%. good morning. dana: thank you for having me. jonathan: is it a real deal, is that the real deal? dana: let's see if it is the real deal. it propelled the stocks when it was announced. we will have sales coming up in just two weeks. they will not look good. overall, most of the luxury players, sales from china down 30% would not be surprising at all. jonathan: how weak has north america been for the stocks? dana: the u.s. has been weak for luxury, but not to the extent for china. it is single-digit weakness for the most part, and overall, the aspirational consumer is what is

being impacted. we got the benefit, during covid, of stimulus being added to the aspirational consumer that you do not have now, and you are seeing is cautionary spend versus essential spend. essentials is still holding firm. you need newness and innovation to drive demand, but higher prices do not help you in capturing some of that. annmarie: when you look at the luxury space, it feels very fickle in who is doing well and who is not. what is in trend in china? dana: overall, you're seeing the chinese luxury brands being in trend. look at tiffany. reduced the size of their flagship in shanghai by around 50%. it is a time when you're seeing the chinese go to japan, given the benefit they are getting from pricing in japan as compared to china. annmarie: is there a push in china -- we have seen this in the mobile phone market -- in the retail space, to have national champions? dana: yes. we have her that everywhere. you will still see, for some

brands -- hermes still generating double-digit increases -- some brands are still doing well. another one doing well but has memento them, ralph lauren. ralph lauren gets under 10% of their sales from china but it is market to market, and it happens to be performing well. jonathan: you have made a couple names. let's talk about your topic here what is it now? dana: when you look at luxury overall, ralph lauren is doing well. if i had to pick from european luxury players, the benefit and the rebound will come from lvmh. the breadth of their portfolio makes them differentiated from everyone else. dani: the fashion cycle feels very quick these days, maybe fueled my social media for what is the ability or even the want of these companies to try to keep up with them, to offer new products that capture some of these trends? dana: the investment by of the mh in formula one, what happened with the olympics, activating

experiences with the purchase of discretionary goods makes you essential and in the cultural mindset. dani: who was still behind? who can't keep up? dana: you need every to do better, fairer, to do better. they need to increase their relevancy. annmarie: can we also talk about what is going on stateside. when it comes to thanksgiving and christmas, i believe we lose five shopping days. how bad will it be for the retailers? dana: it later thanksgiving -- typically, you still get the majority of your sales 10 days before christmas, but look what is starting earlier. whether it is amazon prime day, target, walmart, everyone is offering deals. look at what is happening on websites. what happened this week? more collaborations. levi's and beyoncé, american eagle and timberland. so we have ways brands are

trying to say, look at me now. pricing was less important this past week. differentiation was more important. jonathan: you mentioned every. what do they do to get out of this hole, because it is a mess. dana: you have a new ceo who comes from the u.s., brands like coach, where he was before. i think they go back to their heritage. one of the things luxury brands have, they have items that are iconic. what's vertebrae known for? checkered outerwear. let's see, when he does his first sales call, what he has to say. jonathan: only back to that again? dana: the new store will open shortly. jonathan: what is going on? we have beta designing things and things were doing ok. things were ok. dana: what she did in order to the anti-with burberry, she brought social media into the

occasion and made it visible to all. after that, they tried to go too high-end when that wasn't where the brand was. other brands that were high end, that is where they captured the share. gucci has work to do too. dani: the idea that if you have sort of lost your way, if you have not gone back to basics, that you need to look on your roster of people of left to try to bring them back. dana: let's see what happens. it will take a while to create innovation at nike. elliot hill is a culture builder and people builder. i think he will bring back a lot of the people who have the mojo with product, when nike was there, but it takes 15 months, 18 months. you walk in the door, it does not change overnight. annmarie: based on what you're saying, what i get is quiet luxury reign supreme over that loud luxury, given what gucci has tried in the past. dana: quiet luxury does reign

supreme. look at all the news and noise consumers are spending their time on, whether it is macro events, the upcoming election. there is a lot of news and noise. quiet marjorie -- quiet luxury, hermes -- they're still winning. jonathan: do you get the sense that is what happened with vertebrae, they started to chase the loud luxury, and it just went wrong? dana: and they went too high a price for who the brand is. the consumer did not associate them with handbags -- jonathan: we saw them do the -- why have they made the same mistake? dana: sometimes, you get in a new designers and feel like you get the vision and authority to do it. you go back into your archives. it matters. annmarie: you're talking about ricardo tc, that was his failure. too much check on the inside, not as much on the outside. jonathan: that is where they went wrong in the 1980's, 19

90's, when the british football hooligan took over the brand, and they had to disassociate themselves with that by hiding the check. then they chased gucci by putting the check back and putting it all over the place. annmarie: this is why i am confused about lvmh. they have this croissant keychain and purse, but are they at a place where they can experiment? dana: they do the a they have the wherewithal, the design power. look what they do with activations, whether it is what pharrell williams did, the liv-ex, now formula one. they set standards and have a wider range. laroe, owen -- owned by the olsen sisters, got an investment. jonathan: good to see you. appreciate it. dana telsey there of telsey advisory group on luxury and the shortened holiday window for these luxury companies to sell goods into.

coming up next, greg daco of ey and erik knutzen of neuberger berman. no doubt we will get their opinion on whether check should be on the inside or outside. bank earnings kicking off on friday. jpmorgan and wells fargo get things started for you. in the equity market, about an hour away from the opening bell. s&p futures on -- just off, -- the 10 year through that level. we are higher across the curve from 2's out to 30's. crude up, 75.85. this is bloomberg. ♪ personalized financial advice from ameriprise can do more than help you reach your goals. -you can make this work. -we can make this work. it can help you reach them with confidence. no wonder more than 9 out of 10 of our clients are likely to recommend us. ameriprise financial.

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jonathan: 60 minutes out from the opening. s&p 500 lower .4%. yields higher. the russell 2000, no drama. down about a quarter of 1%. dani has your morning movers. dani: star board taking a $1 billion stake in pfizer, trying to turn it around. what they are planning is not clear at this moment. shares are higher 2.5%.

the concern is post-pandemic they do not have a blockbuster drug. apparently they are approaching former executives to try to bring them back to turn around the company. the nike playbook. what is old is new. rio tinto is making an approach for arcadium. there is up 33%. it is a great opportunity for them. the market is oversupplied with lithium. the demand has not been as great with china lighting behind but maybe the stimulus changes that. chevron, another deal for the oil and energy sector. they are selling a stake in some of their oil and shale assets to canadian natural resources. it is the latest oil producer to divest in this area. for chevron, they are concentrating on different

things, other regions. jonathan: obvious tailwind for that stock. wti up 1.6% to $75.60. let's look ahead to the week ahead. markets looking for the next big catalyst. cpi, ppi on deck will joining us is mike mckee. have you made sense of friday? michael: i have not but i don't not think anyone has. the question on everybody's mind is what does that mean for the fed? 20 fed appearances this week. 13 different fed officials. of the speeches i looked at, nine of them seem to have to do with monetary policy. we should get a good idea of where people are. my guess is they will all be like austin goolsby and say we do not have to make a decision yet so we will keep our options open.

it would be hard for any of them to say we need to cut rates 50 basis points. jonathan: chairman powell said we are not in a hurry. given the data we have seen how important do you think that line is? michael: that is the line they will all take. if they want to go 50 basis points they will probably have enough data. at this point they do not have to do that and they probably are much more inclined to go 25 at a time. cpi will be important thursday. it will not be completely determinative. we get pce and then one more jobs report. dani: i want to know what he says at 1:00 -- i want to know what she says at 1:00. will it be and i told you so? michael: she did that before to a certain extent but the independent bankers, i do not think she will bring up the macro aspect. she does a lot of banking

speeches because she is the small bank representative on the fed. that might be ignored but she does speak later in the week and we might get something. annmarie: you spoke to austin goolsby on friday and he called the report superb. you think they are leaning towards being 50-50 in terms of their dual mandate? michael: i think they have to be. we will get another impression from cpi. inflation causes wages to go up. people see inflation and ask for higher wages. just because wages were higher does not mean we will get a big inflation print. if we do not get a big inflation print, if it comes in as expected, which is a little bit of a decline continuing the agonizing crawl towards 2%, i do not think the fed has to emphasize it too much but they will say we are focused on both sides of the mandate. jonathan: cpi coming up on thursday.

with us is greg. what will it take for the fed to hit pause? greg: we will hear some chatter in terms of a pause and fed chair but -- in fed policy but i do not think that is the direction of travel for chair powell. he has been a key influencer in the fomc and his approach is correct, having agnostic optionality and being open to being surprised on the upside or the downside and adjusting policy that way. that is what led to the 50 basis point cut in september. i don't think anyone knows will happen in november. jonathan: november 7 is a lifetime away. how important will the payrolls and the election be? gregory: i think it will be too important. there is too much attention to every report. there is this notion that the fed is data dependent. the markets interpretation of how the fed is reacting to data

is data point dependent. you saw it in august and you are seeing it again today we're seeing the massive market reactions to payroll reports. there is reason to be cautious about the overall trajectory of the labor market. labor demand is still calling. the hiring rate is at a 10 year low. the notion that the labor market is re-accelerating is misguided. we have caution on the parts of employers and that is what is guiding the economy right now. dani: how should we approach cpi this week? gregory: what is important to look at is fundamentals. we have to look ahead at the curve, not just the recent data. we have to think about how inflation fundamentals are evolving. is there increased price sensitivity on consumers? yes? is there less pricing power on

the part of businesses? yes. you take all of these drivers of inflationary pressures and they are still pointing towards disinflation. we know it is going to be bumpy. the oil price developer and swear volatility. the direction of travel of underlying core inflation is still moving in the right direction and i think that is why you are hearing from chair powell any sense of panic. the economy is still evolving relatively well in terms of inflation dynamics and the employment dynamics and they are easing to rebalance the state of monetary policy. annmarie: so that begs the question why did they cut 50 basis points? gregory: i think they really felt they were behind the curve in terms of needing to ease in july. if you're looking at the rebel -- if you're looking at the level of the policy rate, it is quite restrictive. there is evidence in the labor market cooling, in the evolution of inflationary dynamics, that

points to a restrictive monetary policy stance. you need to get back closer to neutral given where we are seeing the labor market and inflation to element. that is what jay powell was trying to do. he is the key influencer within the fed. i put a lot of influence on what he is thinking rather than all the other policymakers. a lot of fed speeches but it tends to be just noise. jonathan: to think it was a change when chairman powell started to take stronger leadership? gregory: generally speaking there were a lot of different views that a lot of data point dependency. chair powell is not necessarily a forecaster like ben bernanke or even alan greenspan. he tends to be more focused on all of the data and is open to being quite candid as to not necessarily having a fixed view going into a meeting. he has some priors but not as much as other policymakers. that is going to be or prior.

no matter how the data evolved you will use the data to confirm your prior. fed chair powell is pretty agnostic when it comes to his view on the direction of travel for monetary policy. he said he would see two 25 basis point rate cuts if the forecast evolve as expected. if it does not come he might say let's take more times. if there is softness, he might say let's proceed with a 25 basis point cut. that agnostic optionality is the real point -- is the real driver of monetary policy. data point dependency has run it's time. dani: you sound different than a lot of people who are using last months of data as an excuse to say power was wrong and maybe his leadership should be questioned. would you push back against those views? gregory: absolutely. it does not matter what happened over the last month. we have seen revisions in the payrolls reports about a third of any monthly print.

the upward revision was 72,000. the month prior the downward revision was 80,000. you are seeing massive swings in terms of the underlying data. you have to have more of a forward-looking anchor. you have to forecaster for the next three months. how inflation fundamentals evolving and how her labor market fundamentals evolving? you are seeing inflation move into the target and labor market fundamentals pointing to easing labor demand and reduced labor supply absorption. in that environment you have to be closer to neutral. it is not about being restrictive or lose, it is about recalibrating monetary policy. jonathan: shaded. gregory daco there. a range of views around the table. eric newsom joins us. you heard greg's view. we heard from torsten slok earlier. torsten slok point is the

economy is the federalist -- the economy is stronger than the federal reserve thinks. what is your view? eric: i agree with what great was just telling you. the path is toward slowing growth and the fit has the latitude to reduce rates. cpi is in the low three, core cpe has a to handle. they are up a percent positive real yield. they have the latitude to cut 50. we think they cut a couple more times this year. we do not think they go to high two or low threes, maybe they wrecked 3.5, that is still room to go down from here. this is still in the environment of a slowing overall economy, not a recessionary economy. china's policy announcements a couple weeks ago helped with that tail risk. still a slowing economy and nominal growth from 5% to 6%,

probably closer to 4%. that will have an impact on profit and earnings and the labor market. it is clear powell is focused on the labor market. dani: does that mean the animal spirits we saw awakened after the 50 basis point of spreads and high at 16 year lows at an lbo machine that is reawakening on wall street, willing to issue debt, does that continue at pace even in the face of stronger data that is had some question whether they can continue with the cuts they have had? erik: the key question we are asking and investors need to ask is does the market trade slowing growth or rates relief? the answer is certain areas will trade slowing growth and those are the areas that are most fully valued. that is where we are concerned about certain areas of credit

market in the most richly valued areas of the equity market. other areas are right to trade rate relief, project leon the front end. those -- particularly on the front end. that is not the junkie russell 2000, that is all of the small-cap and mid-cap names squeezed by the rate cycle. that is real estate, which has an opportunity to benefit from some rate relief. this will be the key differentiator over the next six months in our view. annmarie: what are you thinking when it comes to the commodity market? you think it remains a useful hedge for what is happening geopolitically? erik: we have added to gold positions in commodities. we have a small overweight in energy that did not look that bright until a week or so ago.

we view that as a geopolitical risk hedge. gold has been the highest conviction view. in general commodity markets, the big question is will they trade slowing growth or rate relief. as a complex we are closer to that target in portfolios because of concerns about slowing growth. we like having certain geopolitical risk hedges including cold and extra exposure to energy given the challenges in the middle east. jonathan: can we just sit on gold? what are the benefits of that? what are the benefits of maintaining that position through year end? erik: it has to do with the potential for declining real yield. the potential for overtime some softening of the u.s. dollar as you get more convergence of u.s. and other economies, and then ultimately it is the risk hedge for uncertainty and geopolitical shock. that is one of the key things we

are highlighting. rod fundamental set upper markets is overall fairly positive and productive, but you have a lot of liquidity and a lot of crowded trades. you see inordinate moves based on policy announcements that 21% increase and then down 4% and 5% around the election. gold can be an anchor in that environment. so can bonds in an environment where good news is good news and bad news is bad news. stocks and bonds are trading uncorrelated more like the pre-covid period that what we have seen. annmarie: what is the catalyst for a weaker u.s. dollar given what we are seeing around the world and this idea of u.s. exceptionalism much better compared to europe and china? erik: we are tactically overweight the dollar given some of the decline we have seen over

the last several months. on a 12 month horizon we think the dollar is likely to soften and that is based on more of a convergence view between the u.s. economy, u.s. rates, u.s. policy, inflation and the rest of the world. we also have the potential for an in ministration that -- while some of their policies may be strengthening for the dollar, really once a weaker dollar. we are not calling the election, we're just looking at potential scenarios. dani: does china stimulus and a mario draghi style whatever it scenario change that? it fuels not just china but em and may be in their attractiveness? erik: in the short term we acknowledge the policy announcement make china more attractive now than several weeks ago. what we are still waiting to see is whether there is a true

fiscal bazooka to address some of the key challenges in terms of consumer confidence on issues in the real estate market. while the announcements help take out the short-term tail risk around the inflationary cycle and china we are not ready to say this is going to be a major catalyst for chinese growth going forward. we will see more in the coming days. there will be a speech from a senior leader tomorrow but it will take several months to see how this unfolds. then we will be able to reassess the situation. it does take out some of the tail risk of a recession. jonathan: appreciate it. erik knutzen. i am pleased you brought up mario draghi. the biggest lesson was the importance of intent. the ultimate vehicle they came up with was never activated, did not have to buy a single bond. just showed he had the intent to do something. it was sufficient.

what we have seen from the chinese over the last week is the intent. dani: that's why it is interesting to hear from people kind of skeptical the chinese rally can continue. considering the 10 we have heard from china. it is not my word saying it is the mario draghi moment. there is a consensus that is what is happening in china and they're willing to throw whatever at it. that is why when the market opens they are saying it will be another rally and maybe it helps the world. you can pick through the policy details and say i've not seen the bazooka but the languages there. jonathan: chinese markets reopening tomorrow. let's give you update on stories elsewhere. yahaira: hurricane milton is rapidly intensifying as it heads toward florida. the storm could reach category four status and spark the largest evacuation in seven years. governor ron desantis has declared an emergency and 51 counties and the entire florida

peninsula has the potential to suffer major effects from storm surge. milton is expected to make landfall wednesday. meanwhile boeing will resume negotiations with its largest union marking the third time two sides of met since 33,000 workers went on strike september 13. sheena stepped omitted a 40% pay increase and have their pensions reinstated. each day the strike goes on boeing loses about $100 million. lebron james and his son made nba history last night when they played together for the first time during a los angeles lakers preseason game against phoenix. lebron and bronnie became the first father and son to play together at the same time, let alone on the same team. they played four minutes side-by-side in the second quarter. jonathan: thank you. up next, we set you up for the week ahead.

we get you the calendar and we break things down a little bit more with mike mckee. from new york, this is bloomberg. ♪

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jonathan: equities recovering just a little bit. yield still at four on the 10 year. in the commodity market the rally continues. your trading diary looks like this. more fed speak throughout the day. tuesday the trade balance. wednesday we get fed minutes. on thursday cpi plus jobless claims. on friday ppi and university of michigan sentiment and bank earnings with wells fargo and jp morgan. michael mckee back for more.

how is important is the fed speak when we just heard from gregory daco that the only speech that matters is chairman powell? michael: we will get a sense for the committee is and if powell will be tracking people but we have to hear from powell to get a sense of where he is. dani: what will take on more important? fed speech or cpi or minutes? michael: the minutes will matter because we will want to know what they are thinking about the trajectory. cpi will be important as a data point. i think hurricane milton could have an impact, not just on politics, but these two hurricanes could be so big. normally you get a rebuilding boost to gdp but this could be spread out because it is so large and that could affect the gdp, shopping data, everything going into november. nobody in the asheville area is going out and buying a lot of stuff now and that could be true in tampa.

you could see impacts on the data going forward. annmarie: could the hurricane impact to the next jobs report? michael: it could. anybody in western north carolina or eastern tennessee is probably not going to be working on a regular payroll. we will see what happens with milton and what it does. it will hit right before the survey week. the survey week is next week for october payrolls. jonathan: is the beige book taking on more importance now for you? michael: it does because it is the only thing we get from them. they're always talking to ceos and business people and ordinary people in their districts and getting a sense of what is coming, what to the companies see in terms of sales prospects, revenues, and hiring? they put that into the beige book in a truncated form but it does give wall street and fed watchers something to go on.

jonathan: is it mostly bostick where the hurricanes it? michael: mostly bostick but also bargain. jonathan: michael mckee on the latest. tomorrow, a fantastic lineup. we will speak with jack caffrey of jp morgan. mohamed el-erian. tom porcelli. mark caban of bank of america. at 9:30, lisa abramowicz sitting down with an interview with chapin diamond -- with jamie dimon just a few days before earnings on friday. earnings from jp morgan and wells fargo just around the corner. equity futures negative one third of 1% on the s&p. a brand-new look at the bond market. a 4% to year yield, a 4% 10 year yield frost stop -- a 4% 10 year yield. thank you for choosing bloomberg tv.

this was "bloomberg surveillance." ♪

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matt: good monday morning. 30 minutes until the start of trading today. i am matt miller. katie: i am sonali basak. katie: and i'm katie greifeld. bloomberg open interest starts right now. sonali: coming up, the fallout from friday's blowout jobs report is forcing traders to recalibrate expectations while tensions in the middle east continues. matt: