>> the think just to think we could slip into a soft landing or harder landing is not unreasonable. >> we are already in the midst of it. >> the problem was soft landing would suggest it would stop. >> seeing the plane turning back up. >> the economy is fundamentally sound. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. >> let's get your trading day started. good morning, good morning for audience worldwide your scores look like this on the s&p 500,

equity futures backing away after 1% gain in yesterday's session. on the nasdaq 100 we are down by 2/10 of 1%. the next 24 hours shaping up as follows pretty cpi tomorrow morning later on this afternoon the fed speak for the fed minutes from the last meeting. we start this morning with a single name. google and the premarket negative by 1.2%, the doj knocking on google store. >> bloomberg reported this was going to happen but now we actually have the filing from the doj and what it talks about is google's anticompetitive conduct resulting in interlocking and pernicious, what i think is so different now that they're going to talk about microsoft is the politics. it was the trump administration first one after google. >> what a lot of people miss in the microsoft example. maybe the worst to be avoided. they didn't break them up.

it didn't make certain acquisitions they held off on certain things and it allowed up and comers like google at the time to shine. there are still consequences to be had. jonathan: not just this story but ai as well. here we are still up to 18% on alphabet through the close yesterday. considering structural remedies that would prevent google from using products such as chrome and android to advantage google search great google search related products and features. >> the remedies that we could see is putting an end to these exclusive agreements google has with things like apple and samsung. also bribing certain kinds of data tracking. and the great point when it comes to ai potentially google will end up even by their own nature what they're seeing out of washington pull back on the sidelines to these agreements there walking into. >> googles down by 1.2% in the premarket. hurricane milton set to make

landfall in tampa across florida on the west coast this is good to be a big issue for the state and maybe for the economic data for months to come. >> it's already a fog amongst the data. the new add in not just the hurricane. there hurricane before it. it's a lot of factors to consider and not just that it's the human life 5.5 million people being told to evacuate the largest in the state just the logistics of that alone saved for the damage of the hurricane is already complicating things. >> in 2017 it was nearly 7 million people leading their homes. -- leaving their homes. it could be bigger than that. also interesting patrick put out saying more than one in five gas stations in florida are out of gas. you can see people are struggling to get the basic needs even just to leave their homes. >> we will bring you updates this morning. joining us in about 10 or 15 minutes time. equity futures on the s&p 500 doing ok.

equity futures softer on the s&p 500 following a solid day of gains. in the bond market yields are higher by a single basis point. four point 02% on a 10 year yield. coming up we will catch up with andrew of morgan stanley on the path for soft landing we speak to adam of moody's analytics on the economic impact of hurricane milton and expecting volatility this election season. stocks edging lower as the doj considers a breakup of google. investors looking ahead to cpi tomorrow. andrew of morgan stanley in the soft landing camp. soft landings don't have to play out in a straight line. risks around growth are skewed to the downside a few false negatives could lead to belts of volatility. andrew joins us for more. let's start with that phrase soft landing braid what does it mean to you? >> it's great to be here. for us it means inflation coming down.

the fed easing and no recession. is very much what morgan stanley has been forecasting and what we continue to forecast. that's what fortunately we've been seeing from the data. i think we were in a critical window over september and still in october where the market will be more vulnerable to weaker data because the fed and the ecb haven't really gotten underway yet with rate cuts but i think so far that data is coming in solid and that support the soft landing view. >> you referred some of the data is a few false negatives. can we talk about the data through the summer. which one was the head fake, the deceleration and jobs through the summer or the re-acceleration on friday. >> i think it was this rise in the unemployment rate and this has been something that's had a lot of focus because over long period of time it's been consistently one of the more worried cyclical indicators. once the unemployment rate is rising it's almost kind of too late at that point that's when

the last indicators historically to crack. at that point it's very bad for equities and credit. i think that's what the market was concerned about. your concerns about triggering the rule, the unemployment rate was coming up and you have the fed as of july meeting still keeping rates on hold. there is another view their that's the view closer to morgan stanley's economist to the unemployment rate is giving somewhat misleading signals because of the shape of the labor market and the fact participation was actually quite strong, that was confounding the picture a bit but we really didn't know and even heading into the other week with the latest nonfarm payroll number you had a really wide set of expectations going into that number and an unusually wide set. the number we got was good we were 160,000 morgan stanley and we got a better number at that. also given these unfortunate and tragic natural disasters that we

are seeing in the u.s., that could make the next set of data prints uncertain. the fact that we got one solid reading for the economy or another solid reading on jobs is quite helpful for i think assuring the market that for now the economy is still in the right place. it's interesting to look at how fed language has not changed. they are still talking about a balanced approach. balance is the new blood -- buzz word. we have the gdp now tracker at 3.2%. if it is the fed that still biased to cut with a strong economy. how positive is that for risk assets. >> so we do think we are still in that environment. you mention correctly we also follow the atlanta fed tracker and we think it's been a great indicator recently and is suggesting a strong u.s. economy. but i think the other important thing is inflation is really looking like it's getting back under control, the battle against inflation has been won

and if you look at forward looking forward expectations from the interest rate markets over the next two years those are below implying a number below what the fed is targeting so if we think about historical performance patterns, certainly ones for credit. a scenario where the economy is holding up better when the fed is cutting more gradually towards neutral which is what we are forecasting at morgan stanley. we think from this point on they are doing 25 basis point cuts. that's been a much better trade-off for risky assets than one where growth is weakening more and we are getting more fed cuts. the scenario in the data is very much tracking closer to that better soft landing base case. >> that's happening in the treasury market rate the repricing since friday. in the corporate credit market the repricing has not happened. investment-grade spreads are 83 basis points exactly where they were on friday. are we surprised by the unmoved nest of the market. >> spreads are tame but our view

of morgan stanley has been that spread should be tight. but we are in an environment of better-than-expected fundamentals. we think a soft landing is an unusually good backdrop for credit. credit likes moderation. a soft landing is all about moderation and growth and inflation and monetary policy. and you still have very good technicals, some strong demand relative to supply in the market. later than average fundamentals. better than probably should be tighter than average richer valuations. so i think another important factor in am glad you linked it to yields is we are in an environment where higher yields are good for spreads. but higher yields are bringing more demand from insurers, from pension funds and from a lot of the buyers who have been driving the market over the last year and so with yields going up to 4%. all of a sudden that same spread hits a lot more yield bogies. annmarie: there's a number of

potential risks in the united states, there is the politics potentially we won't know for days or weeks. then there's the geopolitics we see in the short-term increase in the oil price paid what is the biggest catalyst to potentially your soft landing scenario. >> i do think understandably the u.s. election is going to and will get a lot of that focus. i think you are facing a close election. that's one important factor. and between two candidates with very different policy agendas and proposals. thinking about factors that won't just affect the market over the next month. we are less than one month away from the u.s. election but also really going to potentially affect how investors feel about pricing into next year i think the u.s. election stands out as an important factor and that's

why certainly at morgan stanley we've been devoting efforts to understand the issues around it and research related to election implications. annmarie: do you think the market is properly hedged for a scenario where the election might be contested. andrew: i think we have seen some volatility around the month of november but it's also a factor where this is an issue. i will talk about the election more generally put this is kind of a known unknown heading into next month, the markets had this on their calendar for a long time. a lot of investors cite the election is a major source of uncertainty. i think as much as it is fair to say the election is bringing the potential for volatility it's bringing the potential for uncertainty. it's also fair to say investors are aware of this and are going in with their eyes open. i think it's a factor when we look at 2025 and again we are pretty optimistic on more, day

activity in the market. we actually think moving past the election, having this once this question is resolved that that can be a positive catalyst in certain ways that can help to trigger more corporate activity and there are some risks associated with it but also some positives as you look past. jonathan: andrew of morgan stanley. equity market just a little bit lower. an update on stories elsewhere. yahaira: millions in florida are bracing for a potentially catastrophic hit from hurricane milton which is approaching the states west coast as a dangerous category five storm. milton is expected to make landfall later today bringing damaging winds, heavy rainfall and a life-threatening storm surge. this will be the second major hurricane to strike florida in less than two weeks. the justice department is considering breaking up google after a judge found in august

the company had broken antitrust laws to ensure its dominance of online searches. the doj said for more than a decade google has controlled the most popular distribution channels leaving rivals with little to no incentives to compete for users. the judge can order google to give access to data. google has already said it will appeal the ruling. the kremlin confirmed former president trump sent russian president vladimir putin covid-19 tests during the height of the pandemic. the claims were reported in a new book by bob woodward in which he also said the two leaders had spoken by phones several times since trump left office. the kremlin denied that claim. jonathan: more from yahaira in 30 minutes time. florida prepping for the storm of the century. >> expected to hit the tampa bay area and cut directly across the

state east to west. this could be the worst storm in over a century. god willing it won't be. jonathan: that conversation just around the corner. good morning. ♪

>> the latest news from citi, a news is still good news. down 1/10 of 1/10 of 1% on the s&p 500. still goldilocks over at ubs. the u.s. data is not so strong that the reserves contribution to the rate cutting cycle is set to end. we hold onto it for handle. yields just a little bit higher. 4.0178%. florida prepping for the storm of the century. >> the current path affects the

tampa bay area, cut directly across the state east to west. with the potential for the storm enter and leave on the coast. this could be the worst storm. god willing it won't be. >> florida bracing for hurricane milton, a dangerous category five storm expected to landfall later tonight. forecasters anticipating it will deal a serious blow to the tampa bay area less than two weeks after hurricane helene on the states west coast. joining us is alex da silva. how are things shaping up? alex: we've seen the storm explode over the last 24 or so hours getting back up to category five status as it closes in on the tampa bay area. calling for it to be a category four hurricane. very dangerous as it makes landfall from the mouth of the tampa bay to the sarasota area so small wobbles in.

the main concern will be the storm surge. it could be catastrophic especially around the tampa bay area. down south to around venice we could see as much is 15 to 20 feet of storm surge just south of where the storm makes landfall. annmarie: when will the storm make landfall and is there a chance it could weaken ahead of time. alex: we are expecting to lose wind intensity due to the fact it will be interacting with a little bit more windshear across the northern gulf coast. we are forecasting landfall to be 2:00 a.m. thursday morning eastern time right around the mouth of the tampa bay. lisa: we've heard -- dani: can you underscore the historic nature of this pre-how different this hurricane is to past ones florida has experienced? alex: the mayor was pointing out the storm surge has been the primary concern here. the storm will be coming in from

the southeast gate like this ended will be shoving all the water into all of these inlets and it is a very flat continental shelf which is more prone to storm surge so you will be pushing all of that water in and it will be trapped there. you have multiple high tide cycles of storm surge coming in and then since we had hurricane helene a lot of these inlets, the barrier islands have been weakened by helene so a lot of the sand dunes and things like that have been weakened so this area is much more prone to storm surge. >> it looks absolutely brutal. alex there of accuweather on the latest. let's head over to the nation's capital. kailey let's cut to the chase. there has been an attempt on the campaign trail to make this a political issue yet when you hear from president biden and governor ron desantis florida it doesn't look at there's a problem between the two in any way, shape or form. >> between the president and ron

desantis right now sure. between the vice president and ron desantis perhaps a bit more so is there a been accusations he was trying to politicize the situation by making a phone call to ron desantis. he later said he wasn't aware of it. it is being a factor into this presidential campaign not just when it comes to kamala harris and her role in this as she could have the power here to look presidential, to express empathy to people but also weaknesses in the federal response. that because she is associated with this administration could backfire on her. then there's the donald trump factor as well and were thinking about how he may be politicizing this as he has been spreading misinformation and disinformation about hurricane response claiming theme is only providing $750 to those who lost their homes falsely claiming $1 billion in fema money was sent to migrants instead and now has gone missing making false claims about rescue efforts.

even a republican congressman from north carolina had to put out a statement yesterday debunking some of these online rumors and misinformation including saying no one can control the weather because that is something some republican members of congress have been suggesting is happening here. fema has a response page up on their website and we heard the president speaking from the white house saying this kind of misinformation is making people fear that the government is not can be there to help them when they are. >> i spoke to the governors team before biden came out and they had said president biden and the governor had a great conversation and biden game him his personal line which biden confirmed the press. when it comes to all of this, is biden administration doing its job and getting the states everything they need? >> to this point there has been no major complaints from those leading the states in the recovery efforts fema has had major shortfalls.

obviously no rescue effort and recovery effort will be perfect. there has been some condemnation of certain delays and arrival times in western north carolina. but by and large the resources have been there and despite concerns over funding that fema may have, resources they may not have to author -- offered they do have the money and resources to meet the immediate needs of the storm including tens of millions of meals ready in the dust to go and of course already 900 personnel surge preemptively to florida as they deal with the aftermath of hurricane helene that hit just 13 days ago and now we are preparing for hurricane milton. longer term there will be a question of the economic toll on this storm combined with helene could be hundreds of billions of dollars in the longer-term funding is a different conversation. one that's likely to need to be addressed by congress. the house speaker mike johnson has said there's no rush for them to return here in washington. >> congress is along to do list

when they come back into session in december. how can this impact november 5 and people's ability to vote. >> that's a major question. as we are talking about 15 feet of catastrophic storm surge major damage could be done to infrastructure as we have seen in western north carolina with roadways. have been majorly damaged. it could take a long time for that to normalize. so it raises concerns about the ability for people to get to a polling pace or to melee ballot in for those absentee ballots working their way through the system. it could have a major factor here when it comes to turnout. the other question is how it may impact voter sentiment in these affected areas not just when it comes to the presidential race at those down the ballot as well. he noted senator rick scott in florida which is an area where democrats are eyeing what could

be a longshot but potential pickup opportunity of his senate seat does have a long history of being able to respond to disasters as he was a former governor of that state. he showed up with president biden when biden visited in the aftermath of helene. this could be something that actually helps him in his race so there is a lot of political implications to consider but allowing people the ability to vote and making sure they have what they need to exercise their role in the democratic process will be a major one. >> does it change the tone globally of candidates ability to campaign when their national disasters and using aggressive language otherwise. does it mean it's time to pull back considering the national dialogue. >> rhetoric i guess we will see. we haven't necessarily seen that historically when it comes to at least one of these candidates what it could change the nature of the campaign leading up to the election. we saw the candidates diverted

their plans to be there to respond to helene to visit some of the areas, layers cutting short a western swing returning to washington. donald trump traveling to georgia as soon as he could so this could potentially focus the campaigns instead on florida or reduce the actual campaign activity out of respect for all of the millions of lives that could be affected by this. it is also changing the plans of president biden was scheduled to leave tomorrow for a trip to germany and africa. he has now postponed that to be here in the states to respond to this catastrophic disaster. >> you can catch kailey leinz on balance of power at 5:00 p.m. eastern time weekdays monday to friday. somewhat embarrassing for both candidates on this issue. much more for the vice president yesterday undercut by her own president almost at the same time she was appearing on the view in a news conference. >> the view was asking about this phone conversation. she did not mention governor

desantis by name. she said i talked democrats and republicans. some people want to make this partisan. the president biden was asked about this. governor desantis is cooperating i gave him my personal line and that is what the desantis team told me yesterday morning that are really positive phone conversation. we don't know what the call is supposed to be about with the vp and he's getting everything he needs from biden. >> it something she didn't deny in the conversation. annmarie: usually the oval office to the governor. >> up next, adam of moody's had a list of potential economic costs of hurricane milton. that conversation up next. ♪ i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working.

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jonathan: tuesday was kind of like monday, upside down. equities, bonds and the commodity market, too. s&p 500 negative by almost .10%. big run for tech stocks. nvidia extending a five day rally. the games in the double digits for single day. dani: we are back to tech supporting the overall market. yields maybe coming down. it is an environment that feels supportive of risk. every fed speaker is using the word balanced.

they still have a cutting by with a strong economy and gdp at 3.2%, why not buy? jonathan: even the high-end of neutrals, you have 100 basis points to cut still, and it is an easy decision. the curve is led by the front-end, yields down. just on the margin, down by almost one basis point. the two-year, 3.9525. brent crude and wti, snapping a five day winning streak, the biggest one-day slide since early september, the biggest one-day drop going back to 2022. still a middle east watch with brent crude $76.84. annmarie: this might be a momentary pullback based on what is going on in china, people questioning if we will see demand pickup and mainland china. the cloud over the market is the middle east.

we were supposed to have the defense minister of the u.s. come to -- of israel come to u.s., but that is not happening. jonathan: have you gotten closer to some kind of agreement? annmarie: potentially, but you look at what is going on on the ground, and there is constant fighting. matney yahoo! does not have ghosted to -- matney yahoo! -- benjamin netanyahu does not have the strategic wins he would like. jonathan: brent crude, $76.90. breaking down between boeing and a strike meeting it's one month mark, with the company and the union blaming each other. they make cut the credit rating to junk. annmarie: this was a double punch overnight when it comes to boeing. one, s&p talking about it will potentially have to go to junk as they are hemorrhaging all this cash. intentionally, we were going to get a deal and i thought the

timing was right because of the fact the union workers were losing access to health care. they say what boeing is offering or not offering is not working and talks shut down. dani: it is remarkable that they are not getting closer and that neither side is budging. the union is saying that boeing is not backing off of the original deal, despite the fact google would like to raise $10 million in equity offering. how much more difficult will that be if they get cut to junk? they are burning through billions every single day and they are still not moving on the issues of pay. jonathan: negative by 1.4%. the u.s. justice department weighing a breakup of the company, considering options to mitigate the tech giant's dominance, ordering google to share its search data is on the table. that name is down 1%. annmarie: there are a ton of names on the table that could make this remedy if there is no break of the company.

google has places like samsung and apple prohibiting data tracking, 32 pages the doj filed scathing and what they view google doing. google coming out and saying this is ridiculous. but this might drag on for years. what i find fascinating is that the politics of this, basically, there is a bipartisan push in washington, d.c., to go after big tech names. dani: i wonder how they break up the company without disadvantaging consumers. people like the idea that you can pull up google chrome. nobody would like to choose the search engine they go to. it is the best one, like google says, they would like to go to maps, and people like that all these things are together. if you break them up, will you have consumers facing consequences, as google says they will? jonathan: i think a lot of us do this, if i log on to being, i go

on -- bing, i go to google. dani: it is so much brighter, and now they have that weird ai then that tells you not super glue and sandwiches anymore. the interesting thing is that google seems to not have gone as full force into ai because of the threat. they did not make acquisitions or pushes hard to rival ai, and a lot of commentators have said the reason they have not done this is because they know the antitrust threat is thinking over their heads, so it is possible that it has made a difference to google's behavior. jonathan: hurricane milton ready to hit the west coast as a category five storm with 160 mile-per-hour winds. the hurricane center expects it to make landfall some point tonight with flooding, wins and storm surge. annmarie: you have a to president biden telling individuals to please evacuate. the highway is clogged. ron desantis late last night

gave an interview to the weather channel saying that we can rebuild your homes and business, but you might lose your life if you and your family stay behind. you look at the business impact, goldman coming out with what this could cost disney. disney wanted people back into the parks but this is not a good time of year, especially leading up to the holidays. they will lose a lot of customers but most importantly is getting out of harm's way. jonathan: let's talk about the economy fallout, with the potential damage caused being caused by hurricane milton, adam kamins writing that milton threatens to make it one of the costliest hurricanes ever to hit florida. the size and power somewhat resembled hurricane wilma from 2005, which resulted in $20 billion in damage. it is most likely that it will carry a price tag at least that high but possibly higher. adam joins us now for more. welcome. a pretty somber 24 hours and a

few weeks and perhaps months into 2025. you mentioned this in the research you have done. our parts of florida going to become uninsurable given the frequency of events like this? adam: that is the risk, and we are seeing this along the gold coast with multiple years now with major historically strong storms and if this continues, we have already seen a lot of private insurers pullback. we have seen insurance costs rise dramatically. the impact of affordability in florida has become problematic. there is a vicious cycle being entered for florida. dani: president biden warned the small would exhaust its funding of small loans for homeowners and businesses in the wake of hurricane helene. now you have melting. alex -- now you have milton.

how expensive will it be to rebuild these places after the hurricane? adam: it depends on the scale of rebuilding needed. if you are talking about an area south of tampa, we have seen places like naples and sarasota, which are in the potential code here, it is possible to rebuild them. more funding could be pulled together potentially. the rebuilding effort would be unbelievably expensive. it does not mean they would not to read, but i'm not sure how feasible it would be to rebuild it back into what it is today. dani: how expensive? adam: we can say the baseline. i look at hurricane wilma, it is similar in terms of strength. that was historically strong and it was not that large.

the cost $20 billion roughly, and we would expect this number is going to be significantly higher. how much more depends on the track. if there is a close to direct hit on the tampa area, we are talking significantly higher than that. if it is something that hits in an area like naples or sarasota or a metro area, probably that $20 billion is a good starting point, and i don't think it would be dramatically higher than that necessarily. annmarie: do you think this will force people to relocate their families and businesses? adam: i really good question. something we have thought about a lot. what we have seen over time is that climate change and hurricanes and the threat of damage really has not been something that has compel people to move out of high-risk areas. i think the thing that could do

it goes back to what we talked about a moment ago, the insurance market. if portions of florida that are hit are uninsurable or insurance costs rise dramatically, higher costs, lower affordability, that is what gets people to move ultimately. that is what i'm watching closely. as we go year after year of these storms, the impact on affordability on insurance markets is what i'm watching closely. the long run will compel people to leave, but i would be surprised barring a direct catastrophic hit on the tampa area, which is, unfortunately, in the realm of possibility but not the most likely outcome. i don't think it will dramatically impact the outcome. annmarie: that is the black swan event individuals are worried about with florida. are there pockets of florida

right now that are uninsurable? adam: there are areas that i believe that there are options available throughout the state for insurance, but there are places where the private market has all but pulled out, so the state is the insurer of last resort for florida as far as providing insurance in some of those areas, and the question is how sustainable that is. the state can only support these increased potential losses and the cost associated with insuring, where potentially you have to raise in a way that would be politically unappealing and unlikely. i think there will be some pockets that are uninsurable. at this point, the state is still able to step in and can get insurance pretty much everywhere in florida. jonathan: we have had hurricane

helene, hurricane milton, and a port strike somewhere in between. it has ended. how are you thinking about the economic fallout across the country in the months to come in with the incoming data might look like and how distorted things might be? adam: sure. the strike had the potential to be a macroeconomic event nationally. we are fortunate that was resolved in a few days. if it had dragged on, it could've weighed on gdp growth by a few percentage points. and maybe turbocharged inflation a little bit. that was by far the biggest risk. helene, milton, those are regional economic shops, so if you look at that asheville, north carolina area, which has been devastated by helene, obviously, the human toll matters most, but the economy and that part of north carolina, you are going to see very clear

declines in data and an overall output once available. depending on where milton makes landfall, that will be evident in the data. we often see declines in employment a month or two after that are quite significant. i don't expect this to meaningfully alter the national numbers. the most likely way for it to show up would be a setback, nothing that would alter the trajectory nationally, but if it makes a direct hit on tampa, and effects orlando, as well, we could potentially see that show up in the payrolls survey, which is based on this week. jonathan: thank you. adam cameron's -- adam kamins of moody analytics on the fallouts we could see in florida. one individual that might be worth paying attention to his raphael bostic, many states that

have been hit fall under his coverage. i will get all of that out at 8:00 a.m. eastern time. we have some comments from him, we will see how that addresses the economic fallout of the hurricanes. elsewhere, here is your bloomberg brief. yahaira: the pentagon says the u.s. visit by israel's defense minister has been postponed. they learned it is because of a last-minute objection from benjamin netanyahu. president joe biden is set to speak with netanyahu later today. taiwan semiconductor shares are rising .70% after sales at tsmc beat expectations as the company posted a 39% increase in revenue. nvidia and apple's main chipmaker will reveal results thursday and give investors a deeper look at the state and power of ai driven growth.

lisa abramowicz sat down with the jp morgan chairman jamie dimon in london and asked if midsize banks should be allowed to merge. >> they should be allowed to merge and make that decision based on what they think is the best interest for shareholders. the government should not get involved in every single deal. yahaira: he also told lisa he is not planning to run for president. this election season, he has yet to make a decision on whether to endorse a candidate. that is your bloomberg brief. jonathan: fantastic exchange between lisa and jamie dimon. catching on bloomberg.com and youtube. next, pricing in election risk. >> if this period, the weeks before the election when uncertainty is highest, that leads to higher volatility, market weakness, and the flipside is after the election, uncertainty moves lower and stocks rise higher.

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jonathan: live from new york city this morning, good morning. i will start with the equity market on the s&p 500, just about unchanged, he syndicate of gains in yesterday's session. the bulk of this, a lot of this came from big tech. the run we have seen on a single name, nvidia, that is worth going over again. we are talking about gains of more than 10% across five days. dani: it overtook microsoft again as the second-biggest company in the world, coming at a time when people look at earnings season and there will be great to. other companies will be catching up to big tech. you can say that as much as he

would like but that is not what is happening. as we price out fed cuts as the economy chugs along, people are going back to the safety of big tech. jonathan: then you have to think about the potential fallout from the hurricane. let's bring up disney i get the latest from goldman. hurricane ian and dorian, matthew, 2017, forced the disney company to close for one to two days. there were multiple cancellations, as well. disney and orlando has to watch the next several days. annmarie: especially with how much they are making money off of theme parks, it is a big part of your business. goldman estimated 150 to 200 million in adverse impact because of the hurricane. jonathan: the equity picture at the moment, i would like to sit in the bond market, the two-year, 3.95, the 10 year just

north of 4%. the difference is positive by around six basis points. this came from barclays, arguing that the dovish fed reaction function argues for higher rates. which would argue potentially staying above 4% on the 10 year. if economic continues to come in on this fashion. dani: that was part of the reason that 10 year yields started to move between that 4% level. it is under the assumption the economy is still strong. it is time to go in and out by bonds. we hear from someone like ray dalio yesterday who said the volatility makes me not want to be in the market. jonathan: it is around 4%. look for five minutes later this afternoon. this morning, pricing in election risk. >> the question is uncertainty.

that is the key dynamic we have seen with elections. if you look at every election, uncertainty is the most important thing for stocks and it is this time before the election when uncertainty tends to be highest and that leads to higher volatility, market weakness, the flipside is after the election, the uncertainty moves lower at stocks usually rise higher. we expect them to repeat that pattern. jonathan: election date around the corner but the outcome could be days, weeks or months away. writing the following, the term structure of vix futures continues to signal increased uncertainty around the election outcome on november 5. this implies the market's underpricing the probability of a prolonged contested election. joining us to discuss this is robert hocking. good morning. how difficult is that, the way things have been priced this time compared to previous elections? robert: historically, you have

seen the month leading into the election as a pop in the vix, a 10 volvo increase --vol increase. if you look at the october futures, it is pricing in the volatility premium. it has been there pretty much all summer. yesterday, the october future settled right around just shy of 21.5. what you see after that in the term structure is a decrease, so per what you just brought up, the market is saying there is a huge uncertainty in the election itself and that afterwards, all kind of goes back to that long-term historic number. annmarie: it took days to know what was outcome in 2020, do you see that we are basically waiting to find out people were buying in to protect themselves? robert: absolutely. this time around, the market is pricing in something different. we don't really have an opinion

on that. it is more using the vix. the vix is a good instrument for this and it uses offers taken of the market, so it the market is pricing in and whether they are willing to commit capital, the market deals like this will be determined quickly. dani: not just the election, but here again and geopolitical concerns right now, where do those risks show up? robert: they show up in vix with no surprise. on october 4, if you look at their call ratio, something we like to look at, close to 2.25 to everyone call traded. that is much higher than i would say the longer-term historical mean, around 1.7, 1.8, showing that demand, and all year long, we have had very big volumes and a lot of demand for vix calls.

a lot of that you could say is the overall absolute rival of the vix. it is lower, trading below its historical for most of the year, and you have an ability with vix hedging and calls to see the vix can increase dramatically from 17 to 34 to 35, and you get bigger bang for your buck when it comes to using vix calls. dani: earlier in the year, at least single stock volatility, was protection on the upside. jon mentioned that tech is again carrying the market. do you see the demand coming back in, that people, not just for geopolitical events, but they see gains and they would like to be there for that. robert: a lot of investors are wanting to define their outcome and reduce volatility in their portfolio and have a better idea of where the portfolio could go, the outcome could take you. we continue to seek increases in

the options usage. it's interesting to see the balance between the shorter term expires, so you see that one-to-one ratio, and that is to say daily events are trying to hedge out shorter-term events and it is much more balanced from the upside to the downside and our longer-term exposure is different to those black swan tail risk type events where you are seeing that ratio and more downside trading risks. jonathan: appreciate the update, thank you, robert hocking. next on the second hour of "surveillance," we catch up with richard chilton, jessica taylor, huw van steenis, and craig fugate. the second hour around the corner with equity futures were erasing this morning's losses. s&p just about unchanged.

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>> could there be a more dramatic drawdown? that is a higher probability event. >> until we restore some kind of anchor, we will have this volatility. >> it looks like more and more parts of the equity markets are able to raise profits. >> there are plenty of drivers for the bull market. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: live from new york

city, good morning, good morning. the second hour of "surveillance" begins not with equities on the s&p 500 unchanged. the russell looks like this, down by almost .10%. we keep returning to alphabet, google down by about 1%. as we said earlier this morning, there is the doj knocking on the door of alphabet, u.s. stock down by 1%. dani: it also underscores the difficulty of relying on two huge stocks. the cap tech let us on the way, alphabet among them. so many people have said that any sort of idea that these big tech stocks would be broken up, it is not a reality. it is not a risk. the risk really needs to be present now. annmarie: when you sit down at a computer, you see bing, and most of you will go to google.com, if you wanted to find out about the antitrust case, you probably googled it.

this is what the doj filing gets into the heart of, "google controls, and what it does is indispensable for americans, and the importance of effectively unfettered in the markets and restoring competition cannot be overstated or go they are calling -- overstated." they are calling for a breakup but there are other remedies. jonathan: when you become this dominance, you attract this attention. let's talk about nvidia getting bigger. five days of gains, rally of more than 13%. in that time, we are talking about adding an additional 390 u.s. billion -- $390 billion u.s.. dani: yesterday, nvidia contributed 15 points to the s&p 500 gains, one third of the gains yesterday, attributable to one stock. we spoke with edward denny yesterday, who was worried about valuations in the market. you are certainly worried about them today if you were yesterday, especially to the

earnings season, where the rest is supposed to pick up the slack and widening breath but we are not seeing it. jonathan: that is up by another 1.2%. your next 24 hours looks like this, later this afternoon, fed minutes from the fed's last meeting. 2:00 p.m. eastern. tomorrow morning, cpi at 8:30 eastern. we are looking fully to friday, earnings from j.p. morgan and wells fargo. dani: the macro data has been confusing at best. as mohamed el-erian put it, they lack an anchor, hike of the earnings season serve as an anchor? we heard from pepsi, and those results were not great. we will hear from delta tomorrow and then the banks, credit conditions will be vitally important and could serve as a better read as things like jobs data are impacted by bigger events going on in the u.s. jonathan: a lot to work through. equity futures on the s&p 500

just about unchanged. the bond market holding onto a four handle, the 10 year at four point 02%. -- 4.02 percent. the prospect of hurricane milton being a category five storm when it lands on for the later this afternoon, this evening, into tonight. the accuweather forecast we spoke too early this morning spoke about 2:00 a.m. eastern time. at the time for landfall a little later. dani: it is not just the landfall of storm surge afterwards an area already impacted by hurricane helene. you don't have the same natural protection you did before. what is going to be the impact of having 5.5 billion people told to leave a region, of having roads stuff with people, people unable to get gasoline in their cars, and then you add the human toll, it could be devastating. annmarie: if you are trying to get out, can you even get gas? gas study talked about how one in five gas stations are out of gasoline.

we spoke to moody's, talking about the fact that this will reverberate for a number of jobs reports in the next few months because it will be very challenging to read the economic data coming out of a place like florida, the one-two punch that nobody wanted to see. jonathan: for the next 60 and its, richard chilton, as the doj ways breaking up google, we will catch up with huw van steenis, and craig fugate. stocks are slipping a touch as the doj ways breaking up google and an historic antitrust case. other big tech companies are now an alert. richard chilton says in today's market environment, the highest quality companies have been able to strengthen and grow their market dominance at the expense of small and midsize companies. richard joins us for more. good morning. richard: how are you? jonathan: good, good to see you. it's take google, the threat of

getting too big, market dominance becoming a problem and the doj knocking on your door and may be blocking your advance as a company for years to come. how do you think about that issue? richard: certainly with google, we could see in the way the commissioner has held herself, that large tech was on her list. and they are great companies, the are all great companies, and where they are looking at google list whether or not they use their availability to force-feed their search with respect to apple and others. that came over in europe where they got bing for that, pun intended, and they had to open it up. it is still the best product out there for search, so my guess is that when we get the ruling from the government, it is going to

be pretty clear, and we expect the stock to go down and it will be pretty severe. i don't think they will breakup google. i think they will put remedies in, and i think the stock will recover from that, just because the remedies will not be as bad as what we looked at when they first came out. annmarie: going after big tech is a big issue, it was with the trump administration talked about. when you look at what is going on in washington, does that make you want to stay on the sidelines as an investor? richard: a lot of these companies, as you said, are really big businesses, and there are a lot of expectations and valuations are very full. there has been issues that have come out there with respect to privacy issues, places like meta

, facebook, instagram, and some of these are addressed from a societal point of view. that does not mean that they cannot continue to grow and serve audiences, but we do need safeguards and i think it is smart we are doing that. president trump came out with that, and it is a very big issue because of the data collection it is doing. and it is flowing into their hands. in the old days, no foreign entity could control more than 20% of any broadcaster. annmarie: rupert murdoch became an american citizen. richard: exactly. have we forgotten that? here you have media companies in the world who is influencing the lives of americans' elections

people, and collecting data, and it is completely owned by a company. that doesn't make sense. annmarie: you say we are in creative destruction." what does that mean? richard: an economist coined that term, and in a generic sense, it is the getting bigger by eating the smaller, and we have gone through that a long time. that is why we don't write in carriages because we have cars, and it is going down that path for a long time, but the pandemic accelerated that, so think of a gentle snowball going down even bigger, and then all of a sudden it gets really big because it hit a steep slope going down. that has been happening. it is a difficult time to be managing small businesses in america, public and private.

in part because they don't have pricing power, they have tough times with sourcing workers and their pay packages or higher. there is no supply chain that they can really rely on. as a result, the big are getting bigger, and that creates opportunities and a whole handful of companies that will lead to incredible businesses, and the dominance is increasing. dani: in some of the biggest companies, there is stress taking form in corporate and executive turnover. places like nike, for example, is there something unique about today's environment that is pressuring corporate executives in a way that it did not before? richard: you mentioned a very interesting case study, and, you know, nike, companies have to

grow, change and evolve and keep up with things, or they will follow victim to aol and yahoo! and that was a perfect example. and nike has seen in the last five years companies like hoka and on reach 2 billion in sales, and they are not a preferred brand anymore in apparel, and now "just do it," now they are also a brand in a category with no pricing power. they have got serious issues, and it was because of the nature of their business for a long time, and there are others often like that. starbucks is one example like

that, too. we have a lot of respect for the new ceo of starbucks. we owned domino's for 15 years when he was there and it was magic, and he is a great ceo, but you cannot turn things around on a dime like that. dani: there has been a concentration for ceos to understand what is happening within the company, home depot is a great example of this. they are telling their employees in the executive and corporate office that you need to do one day on the retail floor eight hours, once a day, a company that has had a difficult time coming out of the pandemic after everybody pulled back from spending on home decorating and refurbishing. what you make of the strategy that says to get back to the people? richard: i like that strategy. when home depot started, everybody had to do their stint. some of the better companies use to do that.

when i first started out, i uncovered consumer in 1983, when i worked at elias capital, and to cover mcdonald's, you had to spend a day in hamburger lane. it was pretty hysterical to see these pedigreed analysts, but they used to make people put on the orange vest and go work on the floor. i think that is part of a culture, and i think it is really important. you cannot beat in the retail business without understanding what people would like to buy. the thing that is interesting about home depot, which fits into duck tales is when we first bought -- i mean, i have owned home depot forever, but when we first bought it this last go around, which was january 19 2010, it had about $180 billion

and is served the retail, do-it-yourself media. today, it has expanded to $950 billion, and 52% of their business comes from servicing the probe. so they are not just what they were, basically, they are a wholesaler of building products to the professional, which gives them a lot more availability -- ability to increase their supply chain, and a lot of the smaller local places cannot do that. they don't have the merchandise. so, it makes that business incredibly attractive. jonathan: good to catch up again, richard chilton on the latest situation with corporate america. let's get you an update elsewhere with your bloomberg brief. yahaira: florida is bracing for hurricane milton. accuweather reported the

category five storm is expected to make landfall around 2:00 a.m. eastern tomorrow morning, packing winds of 160 miles-per-hour, strong enough to tear homes apart. the tampa bay area is facing a storm surge that could reach as high as 50 feet which could lead to widespread flooding. this would be the second major hurricane to strike florida in less than two weeks. rio tinto is making its first acquisition deal. it is making its biggest acquisition deal in 17 years. they agreed to buy arcadia lithium for $6.7 billion in cash. they will pay a 90% premium to the closing price on october 4, which is before the first concern -- confirmed. as we mentioned earlier, lisa abramowicz sat down with jamie dimon in london and asked if he sees a deterrence for companies

to go public. >> in the u.s., we have made it harder to go public. the costs are much higher, and filing to the sec is higher, so i think we have to get to a place where it is easier and cheaper to go public. yahaira: he says he thinks the fed was late to raise rates but they did the right thing by lifting their foot off the gas. jonathan: thank you. more in about 30 minutes time. next, florida bracing for disaster. >> this storm is expected to make landfall on the florida peninsula, the west coast of florida, sometime late wednesday evening, maybe early thursday morning and really almost every place on the west coast of florida could get major storm surge. jonathan: the latest on hurricane milton, next. ♪

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jonathan: the equity market looks like this, down by 0.06%, the bond market around 4%, the commodity market down by .80%. wti, 72.96. under surveillance, florida bracing for disaster. >> this storm is expected to make landfall on the florida peninsula, west coast of florida, sometime late wednesday evening, maybe early thursday morning. i know there are a lot of folks who have evacuated those areas, and you could get hit with serious storm surge, almost every place on the west coast of florida could get major storm surge. jonathan: more than 5 million

people are being urged to evacuate florida's gulf coast with hurricane milton expecting to make landfall this evening. governor ron desantis declaring a state of emergency and 51 counties. joining us is jessica taylor of the cook clinical report. let's talk about the politics of all of this. it is not just florida, it is parts of georgia, western parts of north carolina have become devastated, eastern parts of tennessee, as well. when you look at the races you cover and you acknowledge the fact we are talking about 51 counties in a state of emergency across florida, how many races become difficult to gauge given what is playing out following hurricane helene and milton? jessica: in the past few weeks, it has been north carolina because that is a focus at the electoral college level and areas of western north carolina, with the exception of asheville,

but, overall, goes counties are incredibly republican and now it is a question of people and if they can get absentee ballots, and will there be mobile voting shelters? voting may not be top of your mind when you are just finding basic necessities, so i think polling in north carolina for the last few weeks is going to be difficult, if not impossible, but we just don't know how that is going to affect turnout, given those republican areas, that could hurt trump, and then you look at the politics of the misinformation we are seeing spurred, -- spread, that even senators have worked to refute with the fema money coming in is separate from the money from fema meant to address the border crisis, and then georgia, how

does that affected? that is slightly trending in trump's favor, and that in florida, there is a key senate race and florida is no longer the presidential swing race it once was, but the focus is rightly on helping people in the path of the storm, ones already affected by helene, and then in the coming days in the aftermath, we will address how this affects voting and what needs to be done. annmarie: when it comes to north carolina, it is about the electoral college.

i've and our most recent swing state polling that we did at the cook political report in partnership with bsg and ge's strategies. we found this at a two point race, 49 to 47%. baldwin having a very narrow lead over her republican challenger, eric hovde. he's a wealthy businessman, has put about $20 million of his own

money into the race. the spending, which had been favoring democrats, is now more at parity. internal polls from both republicans and democrats mirror our own polls that this is a margin of error race. and so we've shifted this rating. you know, i still think montana and ohio are the most likely republican pickups in that order. but then i think it becomes a question of sort of these next blue wall states and michigan. but increasingly, wisconsin, we see just becoming a much tighter battleground. i think, again, that's just a function of that. republican voters are coming home and our poll we saw have to have an 11 point swing among independents toward him. and so i think just, you know, the last senate race that we had in wisconsin in 2022 was decided by one point. so these are just very, very close elections. jessica, your polling still shows trump holding a sizable lead when it comes to who do you trust with the economy. but you note that the august advantage he had over handling inflation essentially was wiped out. what do you think changed? i think that harris is trying to

communicate more on this, separate herself from the biden administration at times. but talk, you know, talk about affordability and different things. i also think that, you know, trump's emphasis on tying her to bidenomics hasn't necessarily worked. and then i also think, as we look at some of the economic indicators with gas prices going down, we'll see where that remains for the rest of the month. of course, i think that's one of the biggest consumer confidence indicators that we have. just because as you're driving around, you're very cognizant of what the gas price is and different things. and then with the, you know, with interest rates going down as well, i think, you know, food prices still remain very high. but i think that harris has come out in many of these regards and portrayed herself as competent on this. so, so, yes, on inflation. that was a very noteworthy number. you know, overall in the economy, trump still has a more narrow edge. immigration, though, is the big issue where he still has the biggest edge over harris, though that's also increasingly tightened. but, you know, when it comes to issue of issues of democracy on

abortion, that's where harris has the biggest lead over trump. jessica, always a clinic. it's good to hear from you again. jessica taylor of the cook political report on some of these races across the nation, the most overused phrase of the last two months. things are finally balanced. it's a close race. how many times have we all heard that it's getting closer? it's getting harder and harder to call. what struck me, though, yesterday on the view, was kamala harris's answer to what distinguishes her from biden. there's not a single thing that comes to mind in terms of you know, what has been impactful from the biden administration and republicans really harped on that, on repeat on social media yesterday. coming up on this program. hugh van steenis of oliver wyman, on the state of the banking sector ahead of earnings due later this week from new york. this is bloomberg.

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jonathan: equities the struggle on the screen. yesterday a decent day of gains driven by major moves in big tech. this five date run through yesterday on nvidia. $390 billion of market cap added to a single name and five session. that is the equity screen. turn the page and get to the bond market story. the two you're just 4%.

how many times have you heard we are in the buy zone? another chance of a 4% yield. dani: do you want to buy ahead of the cpi report that seems to have taken on new importance? the idea that the economy is not only struggling along, it is strong. can you really buy at 4% if it could be more than 4% given tomorrow's data? jonathan: let's turn the page and get to the commodity market. there is the picture on brent crude and wti. brent crude on a five day rally. the biggest one-day slide since early september, almost the biggest going back to 2022. annmarie: i still maintain this has to do with what happened in china. you thought china was going to do more in stimulus, they did not. this was the demand side pulling back.

the fog still maintains over the middle east of what is going to happen and potentially we will see more money to the upside in the oil market because of the risk premium. 10 to $15 potentially from 80 could be on brent. jonathan: i am still thinking about what he said on copper. we could see a multiple on copper three to four times where we are. dani: so much of this is a long-term transition of reasons you could be bearish. maybe china, the economic stimulus will not be as good. he talks about the transitioning happening in the longer-term trends that allow copper to make a move. that had fallen out. jonathan: copper down .6%. brent crude $77. under surveillance, her kate middleton churning towards florida's -- hurricane milton churning towards florida's gulf

coast. just two weeks after hurricane helene devastated many areas. annmarie: this is devastating. everyone is bracing for the impact. the one to punch no one wanted. governor desantis office said this is the black swan event they always worried about. they are basically hobbled it up in their emergency center talking to people like the president of the united states. president biden confirmed what the desantis office told me, the president gave him his personal number think tommy directly if you need more. dani: we cannot forget -- personal number, call me directly if you need more. dani: there are still people there who need it at a time when fema is stretched. the homeland security secretary says we have enough money for the short-term things but we are in trouble in the long haul. he and biden have both called

for congress to come back and approve a longer-term budget. it is another hurricane after 70 regions are already facing devastation. michael: a former -- jonathan: a former fema administrator on this program. benjamin netanyahu said to speak with bite it later today to outline the nation's plan for retaliation against iran. the two have not spoken since august. this after israel's defense chief abruptly canceled a trip to washington. annmarie: this after remarks biden originally said about net yahoo! were leaked to the press -- about benjamin netanyahu were leaked to the press. i will not quote them. basically saying benjamin netanyahu is a bad guy. if you are the u.s. administration you want to slow down what israel is doing you would send your defense chief over to the united states because they are no way they're going to launch an attack on iran when your defense chief is

in washington. this says potentially it is more imminent now that i would've thought at the start of the week. jonathan: so we are just waiting. here is the latest on china. china's finance minister planning to announce on saturday fresh moves to further strengthen fiscal policy. china's office confirming the upcoming briefing as the stock rally uses -- as the stock rally loses steam. dani: for what it is worth, this is the body that would announce more stimulus. i think you can see from the market this idea everyone is expecting a massive package of stimulus has fallen by the wayside. volatility makes you think twice about investing in chinese markets. expectation setting for an opaque market is so difficult. whatever these policymakers are trying to do, it is almost impossible to discern it because it is a difficult market to read and almost intentionally so. jonathan: are you tuning in for

the briefing on saturday? dani: i don't know that we will get much from it. new mora says everyone should be calm. annmarie: he will also be taking questions so i hope the reporters going with hard-hitting questions. jonathan: q get hard-hitting press questions in china press briefings? annmarie: likely not but tune in. jonathan: big bank earnings kicking off with j.p. morgan and wells fargo. "the dynamics between traditional banking and private lending might be changing. what we are seeing is the retrenching of the banking system where banks parcel the riskiest slice to private credit providing less risky lending themselves. private credit could be the ozem pic to help banks on yet another diet." hugh is with us. let's talk about some deals. citi and the partnership with

apollo. what does that mean to you and you think that is the blueprint for how these companies work with each other in the future? >> these are the deals that have changed the conversation. we have seen 14 partnerships between private credit and banks after just two the year before. it is because the banks are realizing the need to at risk. even if all not be near as bad as they thought they still need to diet. they are trying to slice up their balance sheet and put the riskier pieces out. in the citi it is to lay off some of the noninvestment grade risk. that is one of the most interesting things in private credit. having insurance assets. they are lowering the cost of capital and can become much more competitive assets. jonathan: when you say the riskiest parts of credit, do you mean the most profitable parts of the bank business model are

going to private markets? huw: it can be more subtle than that. it depends on the type of trade. the u.s. has now allowed synthetic risk transfer so people can slice up their sheets. on the bell curve they are slicing off the bottom couple of percent, the risky piece. what they are doing is much more open optimization trait than simply shedding risk. largest banks are saying we can write even more loans, do more shared but we need to lay that off. one splenic not to lose are worried because they are worried private credit will encroach on that sheet. dani: with all of those worries, there is always going to be someone who says there is a risk, there is a black box. i thought it was interesting, the sec top enforcer made an argument saying there is too

much concentration. it is not that it is a black box but it is too few people chasing and owning assets. apollo talking about doubling in size. is there a sense this is becoming an industry too big to fail? huw: the systemic risks people worried about are overplayed. they are small business in the context of asset management. go blackrock and others north of $10 trillion. pimco has a couple of trillion dollars. you are also not getting counterparty risk to blackstone or apollo, you're getting risk to the asset they run. are they forthright about their credit decisions and have a scrub their sheets down? read it is a bit different. -- credit is a bit different. you need a few more people. i think scale helps them originate assets.

i see the big firms really breaking ahead. private credit overall is the same as 2019. the top six firms just got 22% new money in june versus the traditional firms, just 1%. dani: the pandemic it was this free-for-all feeling of everybody trying to start a private credit firm. is that done? if you want to start a farm it is not possible? huw: from my conversation, there are a lot of firms who have a for sale sign up. not at the top end -- they need to resource assets or originate assets. both are tricky. i think there is a halloween out of the middle. annmarie: so there is no peak in private credit. how much more room doesn't have to grow? huw: there was this cheeky comment about the golden period.

in 2023 banks were on the back foot. last time i was here private credit took 90% share of lbo financing. banks are back in business. it is different banks. it is the really big ones who are squeezing. i think there is more runway. we have had wave after wave of disintermediation in the u.s. banks. bank lending as a share of the economy peaked in 1973. the next wave is around asset backed lending, real estate, and infrastructure. it is about moving to slightly different asset classes. jonathan: stock about the future of banking. -- let's talk about the future of banking. to hear that bank lending peaked in the 1970's might be news to some people. we had a guest -- how many banks are in the mortgage lending business? have they retrenched over the

last 10 years? if banks are not in the money lending business what are they in? what is the future of bank lending? huw: there is a huge variety. at the end of the day banking is there to help payment and store your money. the crypto boom has not meant -- i still think there is a lot of payment. security services, prime brokerages. they are an effective way of lending. if you're looking at the banks, the bottom line is if you are on the margin you need more scale. it is interesting, whether it is the unicredit deal, whether it is the flurry of u.s. deals, it is about how you get more scale. that is the challenge my conversation with banks are having. jonathan: how difficult is it to get scale in europe? huw: i wish the best of luck on this but it is tough.

jonathan: is it a cultural thing? what is holding it up? huw: all sorts of things. at the end of the day the purpose of the bank is to hold deposits and help you pay. you want a great deposit scheme. you have to verbally guarantee all deposits 18 months ago. we have a fragmented deposit guarantee scheme. in germany you have three different schemes. on the positive side we have three deals at the moment. it is happening, probably not on your show because it is not top of the news list. dani: one of the things banks are trying to do to people up is in their asset management division. a monster $20 billion fund raised for goldman.

it is more competition in the industry. what does that mean in terms of giving more favorable terms, of some of that risk of too generous terms creeping into deals? huw: everyone wants to get into private assets one way or the other with partnerships. we put out a report that comes back to a conversation we had. if you take all of the asset managers in canada and the u.s., 64% of the value -- they are dominating. if you cannot beat them, join them. what of the interesting discussions is not so much is x buying y, but the partnerships. maybe not all of them will work, but the investment frontier is the hybrid products and trying to work out which ones will work to get in. to go back to what the traditional funds are doing,

they are thinking who will i partner with if i cannot do it myself? jonathan: always good to catch up with you. let's get you an update on stories elsewhere with your bloomberg brief. yahaira: alphabet shares are falling about 1% in the premarket as the u.s. justice department considers breaking up google. the agency saying in a court filing it is considering options to mitigate the tech giants dominance in search. the judge could also order google to provide access to data it uses to build search results and artificial intelligence products. google has already said it plans to appeal the ruling. bloomberg reporting couche taird sent seven and i an offer. it is still trying to take over the japanese company after an initial bid was rejected. the initial offer represents a

20% premium from the closing price yesterday. boeing shares are falling. the company withdrew its contract offer to workers as talks to the association of machinists and aerospace workers union broke down. both boeing and the union blaming each other for the impasse. the strike nears the one-month mark and the cash struggles pileup. jonathan: thank you. up next, hurricane milton closing in. >> it could be catastrophic around the tampa bay area and down south to around venice where we could see as much as 15 to 20 feet of storm surge just south of where the store makes landfall. jonathan: that conversation is up next. live from new york city, you are watching bloomberg tv. ♪

jonathan: stocks just about unchanged on the s&p 500. -0.5%. in the bond market yields up two basis points. hurricane milton closing in. >> it could be catastrophic around the tampa bay area south to around venice where we could see as much as 15 to 20 feet of storm surge just south of where the store makes landfall. you could have multiple high tide cycles of storm surge coming in and then a lot of these bays and inlets, the barrier islands have been weakened by helene. jonathan: fema bracing for milton's landfall. the industry is preparing for $3 billion deficit by february but the government says it has the resources to meet the immediate

needs. former administrator joins us now who led the administration under the obama administration. we recall the work you did with governor jeb bush in the early 2000. the hurricane season two oversaw in 2004, 2005, what is different about the hurricane seasons now we have to confront in florida? >> we are seeing rapid intensification that we have not seen before in history. when you look at going back 10 years, how many charms went from a tropical system to a category five hurricane in less than a couple days. we will get ready for the more intense hurricanes as we were approaching and maybe not have a wait time. the good thing about milton is there has been a lot of time to get ready. any people started evacuating as early as sunday. this is different that a storm that just popped up. it will not reduce the impact. annmarie: let's talk about the

female response. are they prepared craig: craig:? i get this question a lot. as bad as hurricane helene was fema has a lot more resources and capability and they will not stop the response at hurricane helene. that is a concern for people in the area. while the national media is focused on milton fema is still supporting the governors in states that have already been hit. the priority will be life-sustaining, getting communities stabilized to set the stage for long-term recovery. annmarie: fema said they have only 9% left of their personnel reserves, that is about 1200 people. where did they luck in terms of getting the bodies they need to go to these areas that will be hit? craig: those numbers refer to staffing for long-term recovery. the initial response teams, fema has a lot of capability to

reprioritize the resources as well as employ people from the headquarters. we did this in superstorm sandy. given the size and impact of what milton looks to do i imagine there will be people redeployed across the nation. annmarie: is the current funding and 40 think congress will be forced back into session and get off the campaign trail? craig: right now fema has money to do the initial response and provide support to the survivors. the bigger question will be the level of funding required for long-term recovery, the permanent work. that will not just be fema. there'll be a lot of federal agencies that need additional funding to support the recovery from these previous storms and disasters as well as what we are about to see with hurricane milton. dani: it not even just the storms. before that it was wildfires out west. you get to the point of a $3 billion deficit.

does there need to be a structural change with fema and funding to ensure it can continue to deal with successive climate issues? craig: this was a situation we faced in the obama administration. speaker ryan and at that time the obm director came up with a way to increase fema's funding, but it was always based on past storms. as we get bigger and more intense disasters we need to look at a funding mechanism going forward. it is critical we understand this is your federal tax dollars. this is increasing cost of the budget that does not seem to be slowing down. it is growing rapidly and it is far beyond what fema programs are being taxed with. for the federal taxpayer, we are seeing a terminus transfer risk to the taxpayer where previously insurance covered this. as the insurance markets are no longer able to provide affordable insurance due to the increasing impacts, we are

seeing this transfer risk to the taxpayer. that will grow. i don't know if we have answers for that yet. dani: what does that mean for when these areas get rebuilt that are still under risk? a place like tampa still had impact from helene. does it need to look different because they are under constant threat? craig: the answer is yes. fema has for a long time been focused on rebuilding better. not just putting things back. we will not just have to put it back better but we will have to build it for future risk. that will not be inexpensive. the other problem is we will increasingly see the transfer risk to government run programs like the citizens insurance program because commercial insurance is finding it extremely difficult to stay in the markets for affordable product given their extreme exposures. jonathan: conversation we had earlier this morning just devastating.

appreciate your time this morning. the former fema administrator. it is easier to protect vulnerable parts of the country that have to confront issues like this one. what has been difficult about the past month is the damage done by hurricane helene and parts you would think were untouchable to the kind of pictures we saw over the last few weeks. dani: it is in these rural areas like north carolina where it is difficult to get resources to them, difficult to restore them with internet and basic services. this is why you get these calls that more needs to happen with fema. jonathan: coming up next, we'll catch up with cameron dawson. we will speak on what it means for the walt disney company. tiffany wilding of pimco looking ahead. and we catch up with amanda l ynam of blackrock. from new york, this is bloomberg

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>> to think we could slip into a

soft landing or harder landing is not unreasonable. >> we look at it as a soft landing because we are already in the midst of it. >> it might not be a landing at all. >> the economy is fundamentally sound so it can absorb shocks. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: this narrative so far this year going back and forth, back and forth. in lincoln with this to say -- ian lingen with bmo saying it is not hard to imagine another round of job gains, going on to say "when combined with this week's inflation series investor should be wary of another swing of the pendulum of policy sentiment." equity futures look a little something like this 90 minutes from the opening bell. on the nasdaq, we are down .2%. going into tomorrow, 8:30 eastern, cpi, the main event for

the data. fit minutes -- fed minutes. later this afternoon still questions about that meeting. was it chair powell forcing everyone to go 50? dani: it'll be interesting if the minutes reflect that. it will also be interesting to see how it is massaged. considering we have had the jobs report will it be changed to look at a more hawkish light? are we going to see a discussion that takes 50 off the table and broadcasts something that says the economy is strong, we do not need to cut as forcefully. you get a hawkish narrative that comes back in. annmarie: williams basically said it will be 25 from here on out. i am interested in the minutes, even though they are boring and backward looking, how many individuals may have preferred 25 but did not go with it because they got pressure from powell himself which many people have been speculating because what happened in terms of the

leak or non-leaked the wall street journal and financial times? jonathan: there are a few of them willing to acknowledge that openly in public. a couple of names in the premarket. alphabet is down about 1%. we talked about the doj concerns with that company. another stopped to watch was nvidia, up another .7% in the premarket. the run continues. look out for that name a little bit later. we'll catch up with cameron dawson of new age wealth aztec whiplash hits markets -- aztec whiplash -- as tech whiplash hits markets. traders attempt to look ahead to thursday's inflation data. cameron dawson saying we would not be surprised to see continued volatility in the near term as risk assets are going into a historically high volatility month priced for perfection. the volatility is unlike delete

to be cataclysmic -- is unlikely to be cataclysmic. cameron dawson joins more. easier to write than stay outside -- mental say out loud. annmarie: i put it in just for you -- cameron: i put it in just for you. jonathan: nvidia has had a massive run in for some they're reflecting on the first half of this year. we started to think about high rates for longer and tech start started to perform. are we reaching for that playbook all over again? cameron: it is interesting to see the equal weight s&p 500 which has been doing better start to rollover on a relative basis, which suggests there is this narrowness creeping back into the market. you see it within the tech sector itself. look at nvidia driving semi conductors. microsoft is breaking down. it is now below the 200 day moving average. even within the tech sector there pockets of weakness being

held up by a couple of names. jonathan: is this about rate cut expectations? cameron: we think it is the confluence of everything. if you appreciate the fact that you have strong economic growth supported by fiscal deficits as if we are in a crisis, now with the bond market pricing in the largest non-recessionary cutting cycle in 40 years, what are risk assets not to like? we think that is why you see credit spreads so tight. nearly at the lows we saw in 2020 one. equity valuations 21.5 times, nearly the highest we saw in 2021. the markets are price for perfection because the backdrop is nearly perfect. the question is can it last and where does it go from here? dani: does earnings season help with expectations of 5% growth year-over-year? kind of a low bar. cameron: it is a low bar because

-- and you've also seen the estimates get trimmed. the thing is that over the last two months you have seen 2025 estimates get trimmed. we think that is why markets have stalled out. they have been relatively flat. you need to see earnings estimates continue to rise in order to support the market. the one thing that has been the key underlying support for the market since 2022 is rising 12 month forward earnings estimates. that is absolutely critical to maintain. dani: you have seen that 72% of the companies are expected to grow, but as john was describing the market does not have breadth at the moment. do you expect that to change? cameron: it is the hope of a lot of people. if you look at next year's earnings estimates, the market has priced in the magnificent seven decelerating materially and the rest of the market accelerating in their earnings growth.

in a way that creates a high bar for the rest of the market to deliver because you had these big accelerations in earnings growth which are already priced in and forecasted. jonathan: the banks report on friday and we are all reporting what we heard a few weeks ago when we heard from j.p. morgan who talked about lower interest rates may be weighing on it interest income. what you think will be the standout theme for this reporting season for the banks big and small? cameron: it comes back to the credit risk question. is the economic data overstating the strength of this economy? the message from the banks will be important because they will give us a notion about small businesses, about consumers. if we continue to see credit risks bubble up and look at default rates within consumers, if you continue to see that it would question some of this headline data not being as strong as it looks on the

surface. jonathan: jack caffrey of jp morgan mentioned it is unusual to see defaults on auto loans. if you go back to gf see, -- if you go back to gfc, the car was the one thing you held onto. what can that be about? cameron: it is a function of the price increases out of the pandemic, function of people reaching for cars out the pandemic, but it also right-click -- it also likely affects the true economy. it is the lower income consumers more likely to finance their cars and have floating debt. we know the low income consumers under pressure and the one thing keeping them above water is this jobs market. it is pretty incredible you are seeing this huge uptick in defaults with a relatively robust jobs market. look at where the unemployment rate is. if that goes up higher it could have default in the cohort of consumers in line with the gfc,

even though consensus seems to be we will not have a consumer led recession in the cycle. it is unique but it is something that makes us question the data. dani: that is one of those things out of line with an economy driven by consumer spending. you also see it with some of these companies. in just the last month, pepsi, or mail, dollar tree, lululemon have all cut in the last month. this continues to be a problem for the equity market. is there a situation with packaged food companies that you cannot by because of what is happening with the consumer? cameron: earnings are forecast to actually accelerate next year on the revenue line. if you see fitting pricing power, companies saying we want to raise prices but consumers are pushing back because they cannot take it anymore, that suggest you will see a deceleration in revenue next year, which is not what is being priced in.

dani: is that cap how bullish you can be? cameron: not think it would be the end of the world to expect relatively flat returns in 2025. it is not enough to say get out of your equities and run for the hills. it is to appreciate that if the earnings number starts to flatline is likely returns flatline. it looks like a year like 2015 or 2018 where the market chops sideways in the good news is it allows you to grow into a very full valuation multiples which is where we are today. annmarie: what if tariffs comeback? what do forward earnings look like? cameron: we did not see it impact company earnings in 2018 in a material way because it was far more pocketed.

if we have broad tariffs, we know it is effectively a regressive tax, we know it lowers consumption, it is less of an inflation risk and more been an effect that he could dampen consumption. that would be a source of volatility. annmarie: you think companies will have to focus on this this quarter because it is just around the block in terms of what this election will look like? cameron: we have already been hearing from companies over the last three or four months that they have been delaying capital spending, they have been delaying hiring decisions because of election uncertainty. certainly that is something weighing on their mind, whether or not they will absolutely make changes because of the election going into this earnings season. they will probably say you have to wait and see. jonathan: think of how wide the ranges for 2025. a suite for other side we could have a corporate tax rate of 20% on one side and 50% on the

other? how wide is the range for 2025? cameron: massive. both sides are talking about higher deficit spending and growth dampening policies. on one side you get growth dampening from tariffs and immigration, the other side you get growth dampening on higher corporate taxes, which just means we then have to turn our minds to the bond market and how does the bond market digest all of this? we know the bond market did not like the higher treasury issuance in 2023. treasury yields went up 150 basis points and valuations in the equity market hated it. we think that instead of this idea of by the rumor and sell the news with the election, the election itself could be of course of volatility if it results in a sweep. jonathan: that could be cataclysmic. don't do that. let's get you an update on stories elsewhere. yahaira: millions in florida are

bracing for her kate middleton. the storm was just -- are bracing for hurricane milton. the storm was just downgraded to a category four. forecasters are expecting the storm will do your -- will deal a serious blow to the tampa bay area. a storm surge is capable of dangerous flooding in some coastal cities. general motors is working to lower the cost of its electric vehicles during an investor presentation yesterday. the detroit-based automaker hinted at a lower cost electric pickup truck with a 350 mile range. the president also shared the company is working to secure a supply of lithium ion batteries in north america that will help lower production costs. a new documentary about the origins of bitcoin may have uncovered the mystery of who created the cryptocurrency. the hbo film points to canadian

software developer peter todd. the documentaries creator uncovered early posts on bitcoin forms to track down the creators identity. todd shrugged off the idea and called the suggestion leader chris. -- the suggestion leader chris. -- called the suggestion ludicrous. ous. jonathan: i would be the boring end to the movie to find out his name was peter todd. dani: nothing wrong with that. every couple of months there is a new venture someone has found. jonathan: though just by this guide an island somewhere, billionaire. dani: he is way too wholesome to be the creator of bitcoin. jonathan: up next the morning

calls and geetha of bloomberg intelligence on hurricane milton's impact on the walt disney company. that is just around the corner. ♪ 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 are everywhere you turn. but at t. rowe price, we're letting curiosity light the way. asking smart questions about opportunities like advances in healthcare. and how these innovations will create a healthier world tomorrow. better questions. better outcomes.

jonathan: a little more than one hour away from the opening. equity futures unchanged on the s&p 500. yields higher again three basis points on the 10 year. 4.04% as crude turns higher by .1%. the relationship between those things over the last few days is pretty well-established. the moves in yields and oil. dani: they have been based on different things. to start the week it was geopolitical concerns. yesterday it was china. how much will it impact?

what level does oil need to be that inflation is a concern? bank of america says that for every 10% rise is seven percentage points to core inflation. oil needs to get above $100 for there to be an impact. jonathan: let's get you morning calls. jeffries upgrading southwest to hold, saying management is taking the right steps. that stock is up 1%. the capital upgrading home depot to buy expecting higher demand due to the impact of hurricanes. that is up 1.3%. goldman sachs keeping a buy rating on disney, noting hurricane milton could cause losses of $150 million to $200 million for the parks division. that stock is down one third of 1%. walt disney closing its florida theme parks in faces starting at 1:00 eastern today. seaworld and universal studios also expected to close. geetha bloomberg intelligence

joins us now. let's start with walt disney. what steps are they taking as hurricane milton heads to florida? geetha: they are closing the parks. they have done this whenever we have had a category four or category five hurricanes. the most recent is hurricane ian in 2022. then you had hurricane irma in 2017. they take the utmost for caution in closing their parks but this does have a huge economic impact for the whole economy and definitely for the walt disney company. jonathan: as goldman indicated, it was not just the parks closed , it was also multiple itinerary cancellations. given the strength of hurricane milton, how are you thinking about the damage outside of the theme parks and what duration are you thinking about? geetha: they had a disney which cruise line set to sail october 11 which they have canceled. they have rerouted to of their other cruise ships.

it does have wide-ranging implications. we ran some numbers. we think the minimum damage disney will see in its fiscal first quarter operating income for the parks segment will be $125 billion. it will have an impact on the cruise ships. disney is already battling softness -- a softer demand at its theme parks. attendance has been flat. we think now it will be down, almost low to mid single digits for the current quarter. it will definitely have a prolonged impact. as we get into 2025 and maybe attendance starts to recover, disd will have the additional problem of a new universal park that will open in orlando. we are seeing prolonged impact from disney for overall theme park softness and competition. dani: why is disney saying to

date they will raise prices in disneyland on california by about 6% on popular days? do they have that pricing power now? geetha: if you look at the parks business parks is the bread-and-butter of the walt disney company. even just about four or five years ago parks made up only 35% to 40% of profit. last year it was almost 65% of profit. in 2024 it will be 60% to 62% of profit. it is becoming a bigger and bigger portion of the profits as the linear networks are in decline and streaming has yet to turn a profit. parks are important. as they see the slower demand, they have to offset some of that slower demand by raising prices. the tricky part for them is they should not price themselves out. i think they do have pricing power. they are undertaking a huge expansion across all their

properties including disneyland in california which allows them to add attractions and charge a bit more. jonathan: you did mention -- dani: you did mention they will face competition from universal then you add in the cost of the hurricane and you add in people being slow to go back to florida. how do you see margins evolving over the time? geetha: margins for the domestic parks business has been extremely strong. this was a host of different things they instituted through the pandemic as the parks were shut there were so many operational efficiencies they put in place and we saw margins go from the high teens to the mid-20's and inching their way to the high 20's. we think this will have an adverse impact on the overall theme park softness. i think over time the parks business has over -- has always been resilient business and over

time it will trend towards the low 30's. annmarie: over time it has been resilient but the cfo was saying in august it is little bit softer. he told us on bloomberg tv they were waiting for people to stop going to europe for holidays and look domestically. what is the cadence of people wanting to get out and the appetite to actually go to these theme parks? geetha: the appetite has not been there. the way they characterize the situation is lower income customer and the lower income consumer is facing a lot of financial stress. prices have risen almost 35% over the past seven to eight years. they are feeling that inflation. the higher income consumer traveling internationally. that will continue to be a problem through most of 25. that is why we are definitely seeing some amount of parts softness -- some amount of park softness and we think there will

be about a billion-dollar hit to the parks over 2025 because of that softness. jonathan: have we found a new ceo yet? geetha: not yet. they are searching. you have the frontrunner. the four internal candidates, the parks, -- jonathan: they should make a movie about this one. thank you. it would be a very long movie. let's get you update from the national hurricane center. this is the latest. we understand the hurricane has weakened to a category four hurricane. the latest update came about 24 minutes ago from the national hurricane center. they said hurricane milton was moving northeast at 16 miles per hour. winds will increase along the west coast of florida by this afternoon. preparation, including

evacuation if told to do show should be rushed to completion this morning. this is a final warning. dani: it is a final warning after we already heard from the tampa mayor saying if you choose to stay in one of these evacuation areas you are going to die. roads saw 150% of traffic on monday. it seems that people are heeding the warnings. their ability to do so is the issue. annmarie: palm beach county issuing a mandatory evacuation order. some of these counties that were not in the path are saying they better be safe. this could move. they want people to be saved first and foremost. jonathan: accuweather speaking to us suggesting we see landfall about 2:00 a.m. overnight this wednesday night. the national hurricane center, that is latest for them. up next, tiffany wilding of pimco and amanda lynam of

blackrock. cpi data 24 hours and five minutes away. equity futures on the s&p 500 as we count down to the opening, negative .06% with yields pushing higher another three basis points at 4.0 4% and crude unchanged on wti, $73.55. from new york city, this is bloomberg. ♪

jonathan: forgot to say before winter commercial break that dani is gone on an assignment. she has not run off. you will see her later with a special guest. equities unchanged. on the nasdaq we are down .1% after a big run for nvidia. let's get you morning movers with katie greifeld. katie: as you know the u.s. is weighing a breakup of google. the doj sing in a court filing the agency is considering asking a federal judge to force google

to breakup and selloff parts of its business. needless to say that would be historic. the fact that it is being considered is somewhat expected, hence the muted reaction in shares, currently off half a percent an hour before the bell rings. over the past three months this has been a weight on google and alphabet, currently down 13% since july. taking a look at the shares of boeing. that strike is barreling on. production has been shut down on the west coast for nearly a month. the news being boeing withdrawing its contract offer to its union. you also have the s&p global ratings coming out and saying they are considering downgrading the company to junk, that is worth another 1.6% decline. let's end with good news. nvidia, the big leader come up 1.2%. out with two pretty specific

announcements, including strategic partnership with accenture. you also had justin wong sing the future of ai be services that can recent. that sounds clarey -- that sounds scary but the market seem to like it. jonathan: what a run on nvidia. five days of gains over that period. an additional 390 billion u.s. dollars of market cap. want to watch going into the opening. at 8:30 eastern tomorrow we will do jobless claims in cpi. later this afternoon we have fed minutes. as the week progresses it is about friday bank earnings. j.p. morgan wells fargo just around the corner. joining us is amanda lynam of blackrock. big questions about the payrolls report, the veracity of the data , and sustainability of the data and whether it means the fed will back away. how are you recalibrating your thoughts about what to expect

from the federal reserve? amanda: presuming the inflation data comes in relatively in-line, there is a pretty clear path for the fed to cut to around 3.5%, slightly higher in 2025. then the conversations about the neutral rate of interest become that much more important. there's a lot of consternation about will we get as many cuts as were priced a couple of weeks ago? for corporate credit as long as those cuts are being reduced because growth is high, that is a backdrop credit can easily absorb. what has been so notable to us is when we would talk about revisiting the mid 2021 credit spreads we would get some pushback. now the market conversation is can we go tighter than that? that has been telling. we were talking about above trend growth, fed that is poised to cut, there's a good outcomes for credit. jonathan: it tells us about the

bounce of the market that we never talk about how tight we could go. last week there was something for everyone in the economic data until the blowout payrolls report. you could see it in consumer confidence in the jobs data. hiring was down, the quits level had dropped. then we had this blowout report. contradictions in the economic data. there is a word i keep seeing, bifurcated. does that explain the contradictions? amanda: i think it does because there is no one consumer or one savings rate. it is much more of a services economy. the underlying dynamics are different between whether it is consumer, commercial real estate corporate, and i also think from the perspective, we are still unraveling post-pandemic shifts. some of the old playbook's, the inversion of the yield curve, those were reliable recession

indicators. there is a question as to whether or not we can use the same guardrails in assessing the economy today and that is underlining a lot of this. annmarie: john has been bring up allied financial and about a month ago on how they are talking about this intensification of what is going on. is that for just one side of the consumer? amanda: the subprime consumer is unquestionably under pressure because they are still dealing with higher price pressures. you mentioned the divergence between auto delinquencies and home priced illiquid sees in the economy. one part of that is consumers want to protect the value in their home. they want to protect their home is a significant asset. it does seem like the way consumers are prioritizing debt payments has shifted across asset types. jonathan: and you talk about how well priced the story as you describe about all these consumer face companies if they

are dependent on one cohort of consumers, are you seeing that discrepancy? amanda: the overarching theme in the corporate credit market's interest in laggards and whether or not they will catch up. this is the point where we need to be discerning for most of this year -- for most of this year ccc's have lagged. retail was never underperforming but you did see the lower quality lagging. that gap has closed considerably. ccc's are above 600. it seems corporate investors are looking at the landscape and saying what has underperformed that i think is unwarranted and can i step in. the overarching headwind of the election hangs over that, especially if we get meaningful impacts to tariffs. i would say it is very much a risk on tone. it is very much what has underperformed.

jonathan: is it uncomfortable bullish? amanda: in certain instances it can be but we need to be respectful of the technicals which are so important in the corporate credit market. we have had very limited net supply. we have had significant demand from yield based buyers. we are reinvesting higher coupons on an ongoing basis into this market which is also absorbing that. we are mindful of the fundamental risks. there is an opportunity cost to be underweight risk assets more broadly and we to be respectful of that. jonathan: hearing you talk about these issues begs the obvious question of why is the federal reserve producing interest rates into what you described? amanda: they have said they do not know where the neutral rate of interest is. that 3.5% we are looking for is where we believe they can cut. there are pockets of weakness in

the subprime consumer. the leveraged loan default rate is approaching 70% on an issue 12 month basis. high-yield default rate has increased. in aggregate credit has been was billion but other the surface there is a lot of bifurcation. in order system the weakness we have seen in cohorts, the fed will continue to normalize but we are not expecting easing. that is a real distinction for corporate credit. jonathan: you mentioned -- annmarie: you mentioned the election and the potential of tariffs. amanda: the paths can be so binary you want to be positioned so you are not cot oxides either way. there are certain things we expect to be prevalent. higher deficits, protectionist policies. for that reason we like financials because it is not subject to making a widget and shipping and across regions. it is not subject to tariffs.

we need to see what happens and build in nimbleness and portfolios so you are not cot oxides either way and can make directional shifts. no major shifts to a large degree. it is too close to call. jonathan: the banks reporting on friday. let's get you the latest from pimco. the u.s. economy appears poised to achieve a rare soft landing, moderating growth and inflation without recession. there are risks such as the upcoming u.s. election in its application for tariffs, trade, and economic growth. joining us is tiffany wilding of pimco. lots to work through with you. the economic data, payrolls on friday, cpi tomorrow morning. how old will those numbers look by the time we've worked through the election and have a better picture of what 2025 looks like?

tiffany: that is a great point. we have an incredibly big election on the horizon here. with policies with either candidate that could look very different. the deficit is the real loser here, with neither candidate likely to do anything about it in the longer-term trajectory of government debt. there are bigger differences within trade policy and that will matter for markets. trump has been discussing policies that could be quite disruptive in terms of their scale and scope they are implemented the way he is discussing. be mindful of that type of risk and keep a defensive portfolio. annmarie: this this potentially the biggest risk to the soft landing, the u.s. election? tiffany: certainly when you look

at the tariffs and the aggressive nature he is talking about doing them, 60% on china, 10% everywhere else, there is a transition cost to that. the economy will have to transition to some new place after you implement those. it would likely cause elevated recession, elevated inflation. the potential for recession -- it just creates business uncertainty. you have businesses that want to invest. that is happening on a global scale. there are definitely some huge risks around the election. there is a question of if and when he will implement of the things he is talking about. trump likes to look at the

equity market as a barometer of his success. annmarie: may be making quick u-turns of policy on how the s&p or dow jones does on a specific day. you mentioned the deficit and fiscal policies. both of these individuals vastly different corporate tax rates. what does that mean for the trajectory of the u.s. deficit? tiffany: the longer-term issues are less about these more discretionary pieces being discussed. they are about the nondiscretionary programs and the trajectory of demographics in the united states. social security, medicare, medicaid. neither candidate has said they will touch either of these programs and you cannot change longer-term trajectory without doing so. we suggested this is just tinkering around the margin. we think they will probably come up with a plan.

we are dealing with the trump tax cuts, the tax cuts and jobs extension. most of those will be extended. the harris side is talking about higher corporate tax rates while the trump site is talking about raising money through tariffs. there will be differences but we do not think it will make a huge dent in the longer-term trajectory of u.s. debt. jonathan: we appreciate your outlook on the upcoming information we will get on the back of the hurricane about the strike florida. the upcoming economic data might be very distorted marred by the hurricane we had before and the one tomorrow, hurricane milton. how are you and the team the key about the incoming data off of the next month or so. tiffany: certainly it will be noisy. the first issue is there is a reduction in activity in the month when the hurricane hits. afterwards there is more rebuilding our hearts go out to

the folks that will be impacted, but just from an economic perspective you tend to get a surge in activity after these events because of the rebuilding . you use car inflation as you have increased level of flooding. it tends to create a stagflationary environment and the something that fed will have to watch. do not think the impacts will be like what we've seen over the past few years in terms of inflation but it is something that could keep the fed on edge over the next quarter or so as we are working to the effects of this and the economy. jonathan: on edge and not on pause or on hold? tiffany: our view is a range of scenarios. the federal reserve can continue a sequence of rate cuts and we compare their policy rates that

are normative rules of what policy can be they have a lot of rude cut interest rates. they were delayed in cuts relative to other rules would have said and now they have more room and as a result of that. they're are working on sequence of rate cuts there isn't has taken downside risk out of that. meetings now between march seems reasonable to us. you see how the economy responds and you go from there. jonathan: tiffany wilding of pimco. amanda lynam still with us. you see it the same way as tiffany? are the cuts easy until march? amanda: i think barring some extraneous events i think there are. there is a wide agreement that we are above neutral but how far above neutral is the question

and i think that is going to matter. if we do not have as many cuts delivered because growth is supportive. jonathan: amanda lynam. good to see you. let's get you updated on stories elsewhere. yahaira: the kremlin confirmed former president donald trump sent vladimir putin covid-19 testing devices during the height of the pandemic. the claims were first reported in a new book by bob woodward. as for another claim made in the book that the leaders had spoken by phone several times since trump left office, the kremlin denied that one. fewer people in the u.s. are applying for mortgages. applications fell for the second week in a row, down 5.1% from the week prior. this is u.s. mortgage rates jumped by the most since july 3 putting an end to a month-long slide helping revive housing activity.

in the minnesota links are heading to the wnba finals after an 88-77 victory over the connecticut sun. minnesota was led by the defensive player of the year who had four blocks in addition to scoring 27 points. minnesota will be looking to win is first championship in history . the game begins tomorrow night in brooklyn. jonathan: appreciate your work this morning as always. i wanted to fit in this. all eyes will be on florida as the state prepares for hurricane milton. joining us is abc's rena roy from tampa. walk us through the time you expect landfall in the intensity is the hurricane evolves and how things are tracking currently. reena: i can tell you that about 6 million people across 11 counties in florida are under a mandatory evacuation.

you can see right behind me that rain is coming down. it has gotten more consistent and heavy. we have started to feel gusts of wind. landfall is expected sometime tonight between 9:00 and midnight as a low end category four hurricane, bringing up to 18 inches of rain and record storm surge of up to 15 feet in the tampa bay area. it is unclear where landfall will be but i last checked the path was slightly more south near sarasota. it is all hands on deck. the governor says the national guard store mobilization is likely the largest in state history with thousands of troops activated. some areas are extending evacuation orders inland earlier on we got an update from the national hurricane center on the category of the storm, dropping back a ba.5 to a four. could you walk through the

difference on how small a change that might be? annmarie: when we talk about cat -- reena: when we talk about categories we are talking about the wind per hour. right now it is fluctuating between three and four. it will keep changing throughout the day. we know the hurricane is getting larger and the winfield is widening. we know there will be widespread destruction. jonathan: appreciate the update this morning. thank you. stay safe. reena roy of abc. hurricane milton expected to make landfall around 2:00 a.m. eastern time. up next, we set you up for the day ahead, the calendar for the next few days. from new york city, this is bloomberg. ♪

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jonathan: the futures on the s&p 500 just a touch softer as they have been all morning. negative .6% on the s&p following a gain of almost 1% yesterday. thank you, nvidia, for supporting this market. thanksgiving period coming up. thank you, nvidia. a five-day gain of the stock of more than 13%. over those days we are talking about adding $319 billion to a single name. ridiculous run and up another 1% on that stock in the premarket. that is the story of the equity market. earlier on we headed two year ended 10 year reach 4% for the first time since august. we are back to where the front end of the curve sticks. at 10 year .3%. the move in crude the first time

since august we see our breach of $80. since then we have backed away. on wti $73.14. thing softer in the commodity market. annmarie: the next catalyst can be for the upside of prices. we will get a briefing from the chinese finance minister talking about more fiscal spending that might increase the idea of more demand out of china. then the geopolitics of all of this in the uncertainty about what israel's response will be and if you see any inclination for a wider conflict prices will spike again. jonathan: we were expecting the defense minister to come from israel to washington. there was a feeling may be an attack was not imminent. where are we now? annmarie: the defense minister is no longer coming and is really officials said benjamin netanyahu will decide what to do and will get on a phone call with president biden today. they have not spoken since

august. i read this as the white house trying to buy time. the defense minister coming here means there'll not be an imminent attack, but now reading the to lift mean something may be earlier. energy down about 45%. on copper and -- the china piece of the puzzle, we will get more on that over the weekend. more on fiscal policy from chinese authorities on saturday. the other things look forward to the next couple of days. fed minutes at 2:00 eastern. look for that following the 50 basis point interest rate cut from the fomc. this is the details of what happened in that meeting. they can massage some of this. tomorrow we get cpi and another round of jobless claims.

delta reporting earnings. earnings season really ram sub. major players in wall street kicking things off with j.p. morgan and wells fargo. coming up tomorrow to break down all of these themes, we'll catch up with brian levitt of invesco mike wilson of morgan stanley, overweight consumer cyclicals. and we will speak to erika of ubs on the bank reporting season will stop equity futures on the s&p 500 basically unchanged. -.06%. in the bond market, we hold onto the 4% yield on the 10 year yield, up two basis points. from new york city, thank you for choosing bloomberg tv. this was "bloomberg surveillance." ♪

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matt: we are looking at futures down after making up yesterday while we lost on monday. 30 minutes until the start of trading. katie: sonali basak is on assignment. "bloomberg open interest" starts right now. ♪ matt: big tech crackdown. the justice department weighing the google breakup and historic antitrust case. boeing withdrew its contract offer, saying talks with its largest union don't make sens