>> there is a lot of potential earnings upside. >> you do need to see earnings estimates continue to rise. we think, in order to support the market. >> we will see solid but not blockbuster revenue growth in the third quarter. >> earnings need to do more heavy lifting as we turn the corner. >> this is bloomberg surveillance with the jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: good morning, good morning. bloomberg surveillance starts right now on a two day winning streak on the s&p 500. the 46th all-time high of the year. we are still counting on the s&p 500. the nasdaq, down by a little more. the calendar for earnings looks like this. later this hour we will hear

from bank of america, then goldman sachs. lisa, then it is on to citi. lisa: the question on if you get the same tone about the consumer remaining strong. the 46th record high but the 22nd record high for the equal weight. this is a broad-based rally across the board. it isn't just big tech and nvidia, but everyone realizing that a no landing might be a good thing, and that is what people are seeing in the data. jonathan: full charge. the biggest jump in investor optimism since june 2020 on fed cuts, china stimulus, and a soft landing. lisa: how much is predicated on the idea of a fed being really dovish and cutting rates significantly? is this all news is good news? if you have a no landing it is a good thing, a soft landing is a good thing, you won't get a hard landing because the consumer is strong. that has been the tone even as you have had an incredible bullish tilde whether it's in the fund manager survey or in

positioning. you've seen a pricing out of rate cuts that hasn't seem to matter for equity in valuations. jonathan: brent crude negative by more than 5%. welcome back. the washington post reporting that maybe those energy assets in iran might be spared? annmarie: washington is getting through to benjamin netanyahu and what they deem as acceptable when it comes to retaliation. you're seeing the risk premium that came from the president of the united states a week and a half ago when he was may be too transparent with reporters saying that these energy assets were a discussion that israel could target. now that risk premium is coming out of the market. the big development i think was over the weekend when israel got maybe a return for this. that was the that missile defense system. there are only seven that the united states has their hands on and they're are sending one to israel. jonathan: we know that iran will respond to this they said that they well.

if they respond, won't israel respond? what is the end to this? annmarie: one is a cycle of retaliation. the other is what happened when the trump administration went after soleimani through closed door negotiations. the iranians saying that we will retaliate but it will be a retaliation in name. we are not really going to try to go after something substantially because we want this to end. lisa: this is a long game. even if there is a relief selloff or rally in response to not having a strike immediately on the oil assets, don't think that the threat has completely subsided because of the cycle and how hard it is to de-escalate when you have two enemies that are deeply entrenched against each other. jonathan: we are down my more than 5%. one piece of the market puzzle that we've left out, we talked about equities and commodities in the bond market, the

relationship between fixed income and commodity markets. we have done about three to four basis points on the 10-year. lisa: we saw a huge spike up in the five-year breakeven rates. the expectation for five-year expectation. we saw a pop up in terms of the one-year inflation expectations. all of that fades when oil prices come down, which is kind of amazing because everyone says it is a clear line from oil prices to actual inflation to bond yields. it can be even disinflationary but at a certain point you have to wonder if that has been the driving force behind the selloff in bond yields. jonathan: your 30-year yield down almost six basis points. we will catch up with max from hsbc. trump and harris make their pitch to pennsylvania. ken leon, as big bank earnings resume on wall street. stocks at all-time highs.

still bullish, a powerful combination of dovish fed, china stimulus, low near-term eps expectations leaves us bullish. we find it hard to form bearish. high-yield credit, overweight even with spreads this tight, why? max: i think when you look at the euro high-yield credit spreads, they are still pricing in a bit more premium than the u.s. high-yield counterparts. we closed the u.s. high-yield overweight that we had for a long time earlier this month. overall i don't think it's an environment where you want to be in risky credit over equities anymore. you want to be in equities in particular. yes, you want to be a bit overweight in emerging-market debt, but this is the sort of

environment that lisa was describing. all of the news is good news, and that is particularly favorable for equities and in particular for the u.s. jonathan: the bank of america survey this morning, it really sounds like you wrote it. the biggest jump in investor optimism since june 2020 on fed cuts, china stimulus, and a soft landing.the question that you ask in the research of yourself, what would it take to make you bearish? is that question alone what makes you bullish? max: not alone but it is definitely one of them. the interesting thing is the bearish and bullish signals, the buy and sell signals, are still pretty much the same. the sentiment overall is still pretty neutral. when we speak to investors, the overall backdrop is, investors are pretty constructive, pretty

positive, but overall there is a bit of caution going into the election and you have geopolitical uncertainty. we had one good print around the labor market, but is it out of the woods? there are questions around the strength of the u.s. economy and that keeps investors in a weird position where they tell us we are kind of constructive but in the near term cautious. that is reflected in our positioning. you had indicators and throughout that we've had them closer to a buy signal despite equities at an all-time high than a sell signal. that alone is part of the reason we are so constructive and bullish. lisa: there was a time when no landing was thought to be negative for stocks because that would mean inflation didn't come down, bond yields remained high. why is that no longer a concern? max: i think it will be a

concern again when it is properly no landing. when we start talking about can the fed not cut at all anymore? may they have to reverse course or hike again? that is the case we had in 2022 when all of a sudden in these episodes there were more rate hikes being priced in. that was when credit spreads and equities suffered, when pretty much everything sold off. we had the same environment in september and october of last year when we had jackson hole saying that it's higher for longer, we can't cut rates at all. we had the same in march and april of this year when the rate market started to price in a possibility of rate hikes. once that properly comes back into the pricing it will become a problem for valuations across all of the risky assets. let's be honest, right now we are so far from that. we've gone from nine to 10 cuts to six cuts. that is a reflection of good

earnings growth, good profitability, good gdp growth, and we will take it. we will see a 180 degrees shift, the fed not even pausing but saying we are done, that would be a problem for risk assets. lisa: how much are you saying that if the fed were to come out and say that they would only cut by 25 basis points this year and only a few more before they reach neutral, that could be a catalyst? or it has to be something more definitive before you see inflation re-accelerate in a material way? max: it would have to be something more definitive. tim be more precise -- to be more precise, it would need to be a 180 degrees shift from what powell said in jackson hole. jackson hole two years ago, he was saying that there will be paying for households and businesses. that is what is required to bring inflation down. last year in jackson hole it was about higher for longer. this year it was we don't like

pain, we don't seek more pain, we will act against it. let's remember it is a different level of rates compared to the 2010's. they have room to cut. over the next two to three payroll data, if they come below expectations, they have a lot of room to say next time we will go 50 again. that can cushion any downside for risk assets. the fed put now is more credible even compared to the 2010's. it would need a dramatic more significant shift to become a problem and start to become a problem for risk assets. annmarie: when you look at the bank of america global fund managers surveyed the top three risks for geopolitics, what do you rank is the biggest risk? max: i think it is inflation, the rate side of things. is it the biggest one, more towards recession or more towards inflation and rates?

if you are of the view like we have been for the last two years that the u.s. won't go into recession, that the market is underestimating the strength of the u.s. consumer and strength of the underlying u.s. economy, by definition your biggest risk has to be rates. at some point perhaps yields increasing by so much again, either velocity or level, that it becomes a problem for valuations across the board again. also i think it is the biggest risk because if that materializes there's nowhere to hide. remember in march of april of this year or q4 of last year? everything sales off . everything sales off. the only place to hide is the dollar. from an asset allocation perspective it is by far the biggest risk. annmarie: given how bullish you are, are you potentially in the no landing cap? -- camp? max: i wouldn't call it no

landing. the market exaggerates a bit. short-term expectations, we started at sub 2% at the start of the year. they went all the way up to almost 3%. down to 1.7%. back up to 2.5%. we are are back down again. it goes from one extreme to the other. we have inflation, disinflation, and now we are not quite down to 2%. we are a bit stuck. that is not a problem for earnings. it's actually good for earnings because it is a nominal figure, it is good for nominal growth. i would not call it a no landing. the market is getting too obsessed about the definitions and swinging from one extreme to another. it's a supportive environment for nominal growth and that is particularly supportive for equities. jonathan: it is good to catch up

with the equity market at all-time highs. the biggest jump in global growth expectations since may of 2020, driven by the u.s. and china. 76 percent of investors say south landing. only 8% say hard landing. lisa: you have people deploying cash when you talk about cash on the sidelines. the cash level fell from 4.2%. when people say that they are bearish or worried, look at what they are doing because it's a different. that is what we keep hearing. jonathan: the equity market down by not even .1%. here is your bloomberg brief. dani: google signed a historic agreement with a startup to invest in the development of nuclear energy with ever-growing interest in powering ai data centers. seven small nuclear reactors will be constructed in the u.s. from which google will buy power. they are targeting five hunger megawatts of nuclear power by the end of the decade.

hundreds of anti-israel protesters gathered at the new york stock exchange ahead of the opening bell on monday morning. the group staged a sit in on the streets outside of the building entrance on broad street. over 200 people were arrested with several protesters handcuffing themselves to the building's doors. the event comes over a week after israel parked one year since the october 7 attacks -- marked one year since the october 7 attack. nasa has their sights on jupiter. sending a mission to europa to see if it has conditions that could support life. the spacecraft lifted off the space x in florida. it will come within 60 miles of the euro but surface and will perform around 50 flybys over four years. that is your brief. jonathan: we will hear more about 30 minutes. next, driving home the economic message. v.p. harris: under my economic plan, we will bring down the

cost of housing. we will lower the costs on everything from health care to groceries. fmr. pres. trump: you have been eaten alive with inflation and all in getting you back to even. jonathan: that conversation next. good morning. ♪

jonathan: market reopens for business. just north of 4%. the standout move this morning is crude. lisa, a break of 17. wti down by more than 5%. lisa: maybe netanyahu was conceding to a request from the united states saying that they weren't go after oil or nuclear assets, but rather military

assets. that said, so much remains to be seen. you have the iea coming out and saying that demand is going down. we are not necessarily going to see that surge of. how much of this is noise and how much is reality? annmarie: it feels like it is the biden comment coming out of that risk. what we have seen over china, especially with the chinese finance ministry not exciting everyone over what's happening domestically and china, it is the demand picture in china. the fundamentals of supply and demand are not changing and they are negative for the price of oil. jonathan: more on that move later. under surveillance this morning, driving home the economic message. v.p. harris: under my economic plan, we will bring down the cost of housing and help first-time homebuyers, giving them $25,000 for down payment assistance. we will lower the cost on everything from health care to groceries. fmr. pres. trump: you have been eaten alive by inflation and all

i'm doing is getting you back to even. the farmers are very badly hurt. the farmers in this country. we will get them straightened out. we will get your prices down. by the way, no tax on social security benefits. jonathan: kamala harris and donald trump going all in on the key swing state of pennsylvania. dueling rallies detailing their plans for the economy. harris is scheduled to sit down on wednesday for her first interview on fox news. trump joining the bloomberg editor-in-chief this afternoon for a conversation at the economic club of chicago. welcome to the show. let's get straight into it. what are you looking for from former president donald trump later on in chicago? >> he is going to get some pretty difficult economic policy questions from the bloomberg editor-in-chief asking him about where tariffs could go, the u.s. china policy is important. the impact of a smooth transfer of power to the rest of the world. this is his second exclusive

interview with bloomberg this year. he sat down with bloomberg businessweek in june. he's not shying away from taking on mainstream media asking pretty serious questions. lisa: we heard a clip where the former president talked about no tax on social security and the crowd went wild. we both know that to get any of these provisions done, kamala harris talking about tax provisions that she wants, or the trump campaign, they need congress behind them. what you hear from investors and how they are looking at the composition of the house and senate? saleha: you are exactly right. investors are very clear eyed about where tax policy is made. it is not just who wins the white house. the bigger focus should be on how the congressional races create the senate and house side. right now, it looks like investors are betting that congress may end up divided.

it means a bit of a slower policymaking path. andre harris presidency, that is expected to cause some rough-and-tumble moments when it comes to dealing with china, possibly tax policy. also for trump, just because you have a republican in the white house doesn't mean that house republicans, which is what the house is starting to look like it is shaping up to end up, the house may not be fully on board with trump's tax policy because they are increasingly worried about the deficit. if investors are keeping a clear eye on congress, now it looks like aivided congress scenario, divided government in washington. a clean sweep for either party is less and less likely. could mean whether you have a divided or unified ss trump will be leaning far into tariffs. if congress is dragging their feet and can't agree across the

two chambers on any policy, that means that a president like donald trump will lean more on executive orders and administrative action. annmarie: what do you make of individuals like a key economic advisor of the former president saying, this isn't really carte blanche tariffs. this is negotiating. what are your sources telling you? saleha: he comes with a markets background and he is regularly talked about as a potential treasury secretary. bloomberg was the first to mention his name as being on the list for donald trump. we mentioned that as early as spring. he comes with more of a markets mentality. that's important to someone like donald trump who historically has really cared what markets think about his policies, how they might react. if you hear people like scott talk about pushing down some of the market concerns around wild policymaking, it means that he

would be the kind of advisor to a president trump that would keep markets in mind. lisa: i wonder, how much do we have a sense of who the cabinets would be around each candidate? who would they would put around them to signal how seriously to take some of their proposals? you mentioned a lot of people in markets expect the donald trump says a lot of things, but ultimately the stock market would write the check on him. is there any coalescing of cabinet members or policies coming around? saleha: harris has done far fewer interviews and media appearances with mainstream media, including flume burke. she has not -- including bloomberg. she has not sat down the way donald trump has. we haven't had the opportunity to ask questions. a harris presidency is likely to be a little more pro-business than biden has been. joe biden often vilified wall

street, and he suffered a little from that. he hasn't had the kind of support from ceos and corporate executives to really promote and push bidenomics. that message kinda fell flat with voters. with harris, we should expect, depending on how influential the progressive wing would be in a harris presidency, more of a say and sway from the people who represent the business community. she is very close with people like the former american express ceo. she has frequently spoken to peter from lazar. her brother-in-law is an executive at uber. she has deeper ties there. lisa: what will the final stretch look like in the campaign season? we have seen a real escalation in rallies, etc. we see a number of media interviews, including kamala harris on fox tomorrow. would you expect in the final

rush? saleha: i think that we will see each candidate try to reach the constituencies they are the most worried about. you can see that the harris campaign has anxiety around black men, as we saw with former president obama's direct comments to that constituency last week. donald trump seems to be going to blue states. you have to wonder if he is now not just hoping for an electoral college win, but the elusive popular vote which he has not secured before. jonathan: the latest. i think the interview with fox news is a big deal. it feels a little desperate. this is it somewhere that kamala harris would have gone a month or so ago. down the middle, tough, very fair. annmarie: he has given tough interviews to former president donald trump. this will be a tough interview for kamala harris. we've seen her sit down with local media interviews and she's going through her campaign trail

and members of the media like msnbc, very friendly. but this is half of the country. if you want to win someone like a republican leaning to nikki haley, you have to go on fox. jonathan: taking more risks for sure. next, ken leon. equity futures are just a little softer from new york. this is bloomberg. ♪

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jonathan: a lot both bullishness . 40 six all-time highs on the s&p 500 this year. the biggest jump in investor optimism since june 2020, the biggest jump in growth expectations since may 2020. futures a little bit softer this morning. bank of america just around the corner. down 0.05%. on the nasdaq we are down by .1%. yields lower four basis points on the 10 year. we are down more than five on the 30 year. we need to talk bout the comments from governor waller. but he did something we were talking about on this program. we said when are fed officials going to lower the bar for payrolls for october. governor waller did that.

disruptions from the hurricane, the strikes from boeing, he says "i expect these factors may reduce employment growth by 100,000 this month." lisa: talking about if current economic policies continued they can move forward at a neutral pace. he did lower the bar but at the same time he talked about not moving by 50 basis point increments. he was implying two more 25 basis point increments. that is not what he said verbatim. you'll kashkari had the same type of commentary about the deal -- neel kashkari had the same type of commentary. it seems like there is a consensus on the fomc. jonathan: looking for a messy month of data this october. let's get up to the commodity market and look at what is happening with brent crude and wti. brent crude down 5%, 73.76% --

$73.76. under surveillance, the washington post reporting is really prime minister benjamin netanyahu as agreed to limit retaliation against iran, reportedly telling the biden administration he will strike military targets. annmarie: that is part of the reason why you see oil prices dropping. the iea talking about plentiful supplies when it comes to what is happening in the supply and demand market. the geopolitical risk premium we have been living with off and on for an entire year but most recently after biden was very transparent about the fact that maybe israel hitting iranian oil facilities was on the table. that was under discussion. now the washington post reporting that has been put to the side, they will go after military facilities. that means oil prices can take a rest. lisa: it shows how much people do not understand what they do not know about the middle east.

you could see a 5% selloff just like that over one report. the idea that the top tail risk perceived in the bank of america survey is geopolitics. how do you price it? it is entirely in the commodity markets. jonathan: it can change in big ways day today. this is some of the latest in washington. sources telling bloomberg the biden administration is discussing cap and sales of ai chips to some companies and would set a ceiling on export licenses with officials focused on the persian gulf. annmarie: it is taking the playbook they used for china and using it for countries in the golf likely uae and saudi arabia even though mohammed was just here they put out a release saying this is one area they want to work together and collaborate with. what is interesting is this story from bloomberg news is scooped by our colleague in washington, d.c. at the same time, the financial

times interview with the new head of saudi arabia's institution that works on ai chips and they are promising to stop any ai collaboration with china that could jeopardize the universities access to u.s.-made chips. potentially that access will not be as carte blanche as they were expecting. lisa: the idea of backdoor access to china through the middle east and how much the u.s. is trying to crack down. how much is this an effort to prevent shipments from the u.s. to the middle east to china, but also a lack of understanding how these chips will be used for ai developments in the middle east. an idea of what that looks like and trying to extrapolate who are friends will be and to the enemies will be. a difficult needle to thread. jonathan: you are right between constraining the access between china, russia. lisa: who is your ally? can you be a -- can you be

confident the middle east will be a conduit to these places. we have seen that with the likes of oil and weaponry. jonathan: the u.s. acting labor secretary meeting with leaders of boeing and striking union workers. the union saying both sides are urge to move forward in the bargaining process. annmarie: the united states, the government wants to get this done and over with and see the workers back at the plant given the fact that boeing is not just an important company to the u.s. but critical to the u.s. industrial base. julie sue has not been able to get confirmed at the senate but she is doing a lot of heavy lifting with not just boeing but with what happened with the dockworkers. she was the individual able to get that across the finish line in october of last year, health care workers. she is doing all of this negotiation as the active labor secretary. jonathan: union background,

which seem to be the focus of this administration when it came to that seat. annmarie: that is why perhaps see is so good at this -- why perhaps she is so good at this. unions feel they can trust her. if she is saying you have to give a little, she has been successful. jonathan: going up 2.5%. major european carmakers getting slammed this year. the bmw ceo sharing his concerns over the eu's plan to ban the sale of combustion cars from 2035, saying it is not realistic. bloomberg's oliver crook joins us. how much of a reality check have these automakers had to confront? oliver: we talk about crises in europe and around the world that begin slowly and happen suddenly . in the last few months for the european auto sector we have entered into the suddenly period

of time. on top of global demand you also have these new e regulations at the end of this year that require all of these caulk -- all of these companies to sell about 1/5 of their cars to bev's to comply with emission regulations. there is a huge mismatch and what the policymakers want and what the market wants. bmw suggesting they need to push out the regulation. we spoke yesterday and what he says is policy certainty but we need a little bit of stimulus. none of these automakers are prepared for the regulations to kick in. the only company well-positioned is tesla because they have manufacturing locally within europe and only produce ev's. they can sell credits. lisa: you mentioned carlos of stellantis who spoke to us yesterday and he was standing in front of cars made with a joint venture of a company in china.

how much of a presence did china have given the fact a lot of different chinese manufacturers are moving output to europe to get around some of the potential tariffs? oliver: this is really interesting. we had a contrast from the car show in munich last year. last year you at the coming out of all of these companies, sometimes for the first time in europe. these are now staples. these are all over the place. more than 85% of the cars were ev's and a huge portion were chinese. elite motors with stellantis. the chinese model is adopting the german model in the 1980's. we are talking about a joint venture. stellantis owns 51% of that company. the difference is is that the chinese were very welcoming of this in 1980's because they had no automotive market. in europe you have an automotive market of one of the last industries within europe

considered to be at the cutting-edge. that is now being threatened. annmarie: we have seen it in the united states when it comes to the japanese automakers in the 1990's. much time to these companies have? when will we see factories close their doors? oliver: this is a question before all of us. the answer is it is happening right now. slowly at first and then suddenly. we have volkswagen talking about closing factories in belgium. two or three within germany. this is because the business model is not fit for purpose for the reality going forward. you can delay some of these regulations on emissions, keep the lifeline going a little bit longer, but it does not answer the fundamental question which is how these companies stay competitive. i am in brussels with eu policymakers grappling with the question of how to keep the continent competitive and how

not to be cast out to irrelevance of economic obsolescence. the car sector is at the front the edge of this and they do not want to be the next bookcase for how europe lost all of its -- they do not want to be the textbook case for how europe lost all of its industry. jonathan: thank you. we have mentioned this a few times. this conversation goes back a number of years. they really screwed up the auto sector in your. policymaker after policymaker buried their head in the sand virtue signaling around green and environmental issues. i'm not saying they should not be focused, but these targets were always unrealistic and they are always unrealistic without the state aid to go along with them. never mind the infrastructure these automakers demand. they gone programs like this and repeat again and again. we are at a point where they have to make a decision and we heard that in the voice of stellantis yesterday. we are talking about months before we get serious cuts to

capacity across the euro auto sector. lisa: what i felt yesterday is this feeling of urgency on that side but not clarity when it came to any consensus on what those policies would be. there is a bit of hands being tied with respect to the fiscal oversight of some of this given where we have come from. annmarie: the quote that stood out to me with the interview with this lantus ceo is we are not seeking to sell any of our brands right now. clearly this is something they potentially thinking about. how do you make money in this type of environment? they are looking at potential options. jonathan: stock prices brutal year to date for the likes of stellantis and bmw. big bank earnings continue to rollout. bank of america a few minutes. goldman sachs and citi reporting. ken leon joins us now. we are waiting for bank of america.

laurie focused on when the numbers drop? ken: banks have been an important part of the financial sector which has moved with the s&p 500 very strongly. we want further confirmation that business is good. the economy, everyone will be looking at the consumer. we are not seen credit risks fall off the cliff. third will be the dynamics of rates. rates from the standpoint that for bank of america 54% of their total revenue is net interest income. it is the economy, which is loan growth, and then rates coming down. i think in totality for bank of america, they will mostly be talking about not only corporate but also the consumer being still pretty healthy. additionally it is windowdressing because a year

ago they had over $100 billion of unrealized net losses and this was a mismatch related to their unrealized bond losses. with rates coming down that will benefit them. that is not a key mark for looking ahead. but we are looking first is these three areas, and then as we have goldman sachs later today and morgan stanley tomorrow, whether there is a separation of performance between the large commercial banks, bank of america, or clearly what we have seen with wells fargo from these type of banks. lisa: we are just minutes away from getting bank of america and then the calendar looks like 45 minutes later goldman sachs. we are getting numbers right now. very curious to see the separation between the behemoths like bank of america and the likes of goldman sachs.

jonathan: when the numbers drop we get a ton of numbers. i will go with what you see from investment banking, revenue $1.4 billion from the estimate 1.20 4 billion. revenue $1.4 billion come the estimate $1.24 billion. lisa: non-interest expenses came in a little bit light again. you see trading revenue coming in at $2.94 billion. that exceeds expectations of $2.77 billion. you can see a beat for equities trading versus the estimate of $1.8 billion. this is the key number. net interest income. this is what a lot of people were looking for. $13.97 billion versus the estimate of $13.9 billion. the same thing we have seen across the board when it came to j.p. morgan and wells fargo, the banks are doing well with the yield curve that is just

inverted and a consumer that seems strong. jonathan: trading revenue upside surprise, investment banking, but -- upside surprise. 13.90 7 billion u.s. dollars from the estimate $13.9 billion. ken, what is your take? ken: they hit the big metrics, which is great. looking further into the results, what we are going to be seeing is whether there is continued confidence in terms of generating noninterest income or service revenue. there are a lot of businesses that bank of america have that generate revenue and earnings that are important. they are in areas of treasury services, custodial services. this notion to get higher stock prices is having durable recurring revenue. obviously you cannot control

rates. certainly the other businesses serving their customers is critical. i think the plus side will be another factor. there is a lot of investment for bank of america and technology. some of the other banks besides technology has been regulation. the efficiency ratios and their ability to have revenue outpaced cost will be important, especially as rates come down. lisa: we did see for the headline numbers pretty much beats. this was interesting in light of j.p. morgan. provisions for credit losses in the third quarter came in a touch above the estimated 1.50 3 billion, at 1.50 4 billion. are these banks building reserves because they can or because they are being more aggressive with the loans they are making? ken: that is a great question. jp morgan was 3.1 billion.

it is mostly focused at credit card and consumer for jp morgan. i did not see bank of america but j.p. morgan was about 80% to 85% was related to credit card. bank of america has a great franchise. my comment before, it is ok to build reserves and take credit losses in credit card providing the flywheel of loan balance activity increases is not flat to down. that is a sign of a healthy economy and consumers that are still spending, hopefully prudently. jonathan: ken leon following numbers from bank of america. stock is down in the premarket. friday up something like 5% off the back of the numbers we saw from jp morgan and wells fargo. lisa: this is a bar that got kicked upward pretty

dramatically after jp morgan and wells fargo. it came in basically in-line. 1.0 8 trillion versus the estimate of 1.07. much of that is they did not beat enough? jonathan: bank of america a bit softer in early trading. with an update on stories elsewhere, here is your bloomberg brief with dani burger. dani: chinese tax authorities are moving to plant overseas investment from the country's ultrarich and have begun to ask individuals to come in for payment evaluations and request a self-assessment. the government has been trying to expand its revenue sources. land sales have tumbled while growth has stalled. eb chipmaker will speed will be awarded one point $5 billion in grants from the u.s. chips act and the private sector. the grant will, with the planned $6 billion in plant spending for factories in north carolina and new york. the blighted and ministration

says those factories could create 5000 jobs. apollo will match the chips act grant of $750 million. in sports the mets secured a much-needed win in the second game of the nlcs at dodger stadium. after dropping the series opener at the mets responded with a strong showing led by francisco lynn door. the maggie's are -- francisco lindor. and the yankees start or deliver best performance in pinstripes. home runs from juan soto and giancarlo stanton stealing wins for the bombers. jonathan: the subway series is a very real threat. this rivalry. lisa: it might get pretty ugly. annmarie: the last world series subway series in 2000, who won? the yankees swept the mets. jonathan: this'll be great if this works out. i'm not picking a team. i do not care enough to share

it. earnings rolling out on wall street. >> i suspect that given the volatility we have seen, broadly speaking you will see potential upside surprise in trading this week. jonathan: another upside surprise from bank of america. that conversation is up next. ♪

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jonathan: amh wants where one of those caps eric adams wears, half mets, half yankees. jonathan: i want you to wear -- annmarie: i want you to wear a yankees cap because that cap is appalling, but if you wanted to on this show you could wear half on each side for lisa. jonathan: i will ask mayor adams if i can borrow the cap.

big bank earnings rolling out on wall street. >> broadly speaking, trading and banking dynamics were a little better than expected at jp morgan. i suspect that given the volatility we have seen in the equity markets, i think broadly speaking you will see potential upside surprise in trading this week. jonathan: here is the latest from bank of america. the company with a slight beat on net interest income. upside surprise on trading revenue. goldman and citi later this morning. at 7:30, goldman, 30 minutes after that, citi. what are you focused on that? ken: that is our call, that the capital markets, particularly underwriting and m&a will drive fees and goldman, you get that outsized impact as you do with morgan stanley versus the bank so far. i think it is enormous that what

we have seen so far is no deterioration in investment banking. we have seen modest growth in the third quarter for ipo's. we are seeing there is a realization that rates are not going to zero, but financial spots not underwriting the m&a, the blackstone's and the kkr's have said we can monetize sizable assets or equity that they have. sizable means $1.2 trillion has to be monetized in the next 18 months. all of this for goldman will be phenomenal. first as an intermediary and second because they are expanding their business into private equity and private credit. there are dynamics of goldman and morgan stanley that do not get the same weight or impact for jp morgan or bank of america. jonathan: looking forward to

breaking down the numbers with you. goldman sachs just around the corner. that was ken leon of cfra. mohamed el-erian once to get me on the -- mohamed el-erian wants to get me on the mets bandwagon. lisa: what is the paycheck he would need to be a mets fan? jonathan: i would need transport paid and a free suite. annmarie: you are a yankees fan. lisa: uncle steve has done a great job with the mets. if push comes to shove fists can fly the table. jonathan: i am a yankees fan. i want everyone to get along. sarah hunt joins us later on. tobin marcus. ken leon. and stephen cook of the council on foreign relations. ♪

>> the market is punishing the more expensive stocks for the higher rates. >> the market is watching every data point. >> data always matter but one month does not change the narrative. >> from the fed's perspective the economy is in good shape. we can gradually bring rates back to a normal level. >> whether they cut 50 or 25 is less important. what is important is the steady path. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: lots to work through this hour. goldman sachs in about 30 minutes. live from new york city, good morning.

the second hour bloomberg surveillance starts right now with equity futures just about turning positive on the s&p 500. coming into tuesday on a two day win streak. the nasdaq unchanged. what else is good news? no news is good news. from the banks, no news at all from jp morgan and wells fargo and bank of america. lisa: i would argue it has been beats across the board with good news. even when you had wells fargo so we looked at consumer weakness but cannot find it. a key question, and this is something ken leon alluded to. look for this in goldman sachs earning, how much they are partnering with the private debt companies. bank of america third-quarter debt underwriting ebony was 303 $2 million versus the estimate. how much are they losing share? annmarie: i mentioned the temperature and what is going on with the consumer.

jp morgan says the consumer is still going out and spending. bank of america is looking at consumer driven parts of the bank, where they spending, is still maintaining. this american consumer is maintaining the idea of spending on services like restaurants. bank of america looking at this giant consumer banking and actual declines in credit card losses. nonperforming loans increased modestly. jonathan: the message is things are ok for now. we will wait for citi and goldman. what of the smaller lenders look like? what to the allied financials look like? lisa: we heard from allied financial. it was a warning heard across wall street. still a question. we are hearing from across the board not a lot of negativity which is the reason good news is good news and no news is good news and marginally bad news is good news which means the fed put his back into play.

jonathan: equities at all-time highs. futures on the s&p up not even .1%. the bond market back open for business. yields 4.07%. the standout move on the screen is crude, down almost 5%. earlier in the session it was a break of 70. the focus on a washington post article overnight. annmarie: this focus is they have reporting israel may avoid targeting iran's oil facilities, oil infrastructure. that eases the geopolitical premium in the oil price. the oil market is focusing on supply and demand. there is ample supply in this market. lisa: to the degree people are looking for bad news, which we heard they are, the geopolitics has been active and when you take that off the table how much does that open the door to a 47th record high on the s&p or a

23rd record high if you look at the equal weight? jonathan: 70 point $30. i love that york county equal weight. -- i love that you caught me that i do not know. i need to live by my words. this'll be the 23rd if it goes today. jonathan: coming up this hour, sarah hunt of alpine saxon woods. ken leon of cfra with results from goldman sachs due at 7:30, and we will speak with stephen cook on that move in crude. we begin with u.s. stocks at all-time highs as earnings season resumes on wall street. sarah hunt saying with earnings multiples at levels and a faltering in the growth story could have consequences even if it is more of a stable outcome versus a deterioration. earnings growth is key for equities. good morning. what you make of the bank so far?

a big week of gains. numbers for bank of america about 20 minutes ago. sarah: i think that is a good start and has been heralded fairly well. you saw the other financials besides jp morgan move higher. it'll be interesting to see how the credit companies do or how the banks to with a lower credit score. i think that is where they are seeing much more pressure and pain than in the upper end. we'll see how that goes. even if you're looking for it you will have trouble finding it. jonathan: it sets up retail sales on thursday. any reason to think we are soft and retail sales given where the consumer is? sarah: hard to see right now but you might have areas of softness. in general people are still spending well. it is too early to catch up from all of the economic disruption the hurricane had so you will see reasonably good numbers. lisa: consumers have plenty of money and any degree of weakening in the savings rate

has been tampered down by some of the recent revisions. what is stopping you from going full bowl -- full bull? sarah: there's a lot of uncertainty. we have an election coming up. it seems like things have calmed down in the middle east but will that remain? just because we have reports that does not mean we know what the outcome will be. there is enough out there to be concerned about. next year you have big expectation in earnings growth so you want to see that economy role along fairly nicely. there is enough out there you could get yourself upset or scared about, including the deficits and things were not talking about right now. at the moment that is not the focus. lisa: you are basically describing the story of my month. i can go home and worry about a lot of stuff but the next day nobody seems to care. i wonder if we are seeing the risk getting skewed to the upside in terms of economic growth.

we were talking about max kettner who was talking about the tail risk is an upside to inflation and a reignition of some of the price increases we saw, that this could create the doomsday scenario that could actually stop some of the euphoria we are seeing in equity markets. is that the risk hedge given the lack of visibility of any other risk, particular with the consumer? sarah: it is a big issue. the fact that oil prices have come down sharply helps on the inflation front. you saw the upward cpi print a little bit and all of the directionality shifted. is it a full shift or a small shift, that is one of the biggest risks because that will keep the fed from acting as decisively as it could. jonathan: 20 want to be in equities? -- where do you want to be in equities? sarah: i think you want to be across the board which sounds boring and annoying. i do not think you want to ignore the equal weight to the

way you did last time. before it was about technology and if you are underperforming technology stocks you are underperforming badly. the diversity and that you also need to see what is going on in the economy, that is why you want to sue be somewhat across-the-board. jonathan: as their theme you want to run with. this is what mike stanley was talking about, we have moved ai, the big nvidia of move, is there another theme that works. sarah: it is good to understand what is going on with thematic investing. european carmakers are saying we will not go full ev in 10 years. understanding the fact that you will have an and on the energy front is important. it is important to look at companies that have continuously good balance sheets can generate cash. that will be more problematic even if rates do not go down dramatically but stay higher camille see some of those companies that cannot survive on their own have more problems. it has not been an issue yet.

focusing on companies that are able to do things like buy back their shares and pay dividends will continue to be helpful. annmarie: you mentioned the u.s. election. you talk about the political risk for equities. what happens when we don't know the outcome for days or weeks? sarah: i would not like to see that happen. i don't think markets would like to see that happen. if it is any kind of protracted fight that will not be healthy for equity markets. we have had problems before and we have gotten through them. to the extent we have had challenges and we will come back to a point where there is an acceptable answer, i do not think it is as bad as it could be but i do not think equity markets would like that very much. annmarie: are they even pricing in this probability? sarah: i don't think so. i think they are not pricing in the sweep of one side or the other, they're pricing and the probability of a mixed government. annmarie: the equity market is

pricing in what they would like to be the outcome, not what is going to be the outcome. sarah: that is very equity market like. isn't that what equity markets do? we will try to telegraph that and make it happen. lisa: we are getting to the heart of earnings season. which sector are you most interested to hear from? we have heard from some of the banks. we will be done with the big bank earnings by tomorrow. which will be the company that gives you the best sense of whether people are a little bit over their skis in terms of risk? sarah: if you think about what will drive what we think about the consumer, you will be looking at the consumer side stuff. if we are thinking about the entire economy i want to hear about what the industrials say. that will set us up for 2025. that is the big question. we've seen really good earnings growth in 2024. do we have the underpinning

ability to do that and to get those earnings through? if we do that than the bullishness is not wrong. if you are to see cracks -- is nike having a problem because nike is having a problem? if we see broader problems like that the question starts to become what is happening next year. if you see much more stability and you see company saying we have a handle on these costs and we are able to push prices just enough to keep margins in good shape, i think that will be important. lisa: is there any sector you're completely avoiding? sarah: not at the moment but there places you want to be careful. you're always looking for companies that have their own dynamics but at the same time you have to be a little bit careful for reasons like nike and the individual idiosyncratic problems. i do not think there is anything you would say absolutely are to stay away from. it is interesting the iea is taking numbers down for demand

and yet we are taken global growth numbers up for china. one of those things is not correct. materials have been hit hard on the back of oil coming down. i don't think you want to be completely off because there still places to make money. jonathan: sarah hunt of alpine saxon woods. looking ahead to the rest of earnings season. capital one october 24 and then target in november going into the shopping season for the holidays, a big theme for us. lisa: you start to wonder how much we will hear idiosyncratic stories. we need to focus more on the consolidation of market share and the biggest players as they get in increasing men of power because of the data and the types of networks. i'm thinking of walmart and how much that will be a piece of the earnings. jonathan: consumer and consumer credit seems to be aware a lot of people are focused. here is your bloomberg brief with dani burger. dani: boeing plans to raise as

much is $21 billion as a precursor to a possible equity raise. it also announced a new $10 billion credit agreement to shore up its balance agreement. boeing is working to hold off ratings downgrades from moody's and s&p, both of which have threatened to downgrade boeing to junk status. the s&p estimates the strike will cost the company more than $1 billion a month. german investor confidence has improved for the first time in four months. the expectations index rose to 13.1 in october. hopes for stable inflation and interest rate cuts by the ecb were both factors in optimism. a pair of giant pandas are in route from southwest china to the smithsonian national zoo, where they will stay for 10 years. the three-year-old male and female pair will be the first pandas that reside in the

nation's capital since last november. it is unclear when they arrived but china's wildlife conservation association says the food prepared for the trip includes cornbread, bamboo, and carrots. jonathan: tiktok and pandas, a threat to national security. lisa: there is a lot of passion around pandas. they look like stuffed animals. they also do not move very much. how can you not be a panda fan? they are adorable. there is a lot of focus on them. annmarie: i brought my nephews to see them before they went back to china. they were moving. one of them was running around. this also means panda cam is coming up. ♪ of net -- jonathan: up next, seeking a battleground edge. >> we will lower the cost on everything from health care to groceries. >> you just wait a little while and let me get in. jonathan: the conversation from

new york city. good morning. ♪ at ameriprise financial our advice is personalized based on your goals, whatever they may be. all that planning has paid off. looks like you can make this work. we can make this work. and the feeling of confidence that comes from our advice... i can make this work. that seems to be universal. i can make this work. i can make this work. no wonder more than 9 out of 10 clients are likely to recommend us. because advice worth listening to is advice worth talking about. ameriprise financial.

jonathan: equity marketable rights and the next time i am on asked me about the pandas. it makes me feel more bullish. [laughter] lisa: i can say is there cute. i am getting a lot of hate mail. they kind of failed darwin. jonathan: their propaganda machines. to influence international views of china at a time there is serious tension between china and the united states and the western world. what else are they? lisa: keep going. [laughter] annmarie: i will take you there when it comes to tiktok. jonathan: you don't think pandas

are being used to influence diplomatic relations? annmarie: is a friendly diplomatic olive branch. jonathan: to reshape views and opinions of china. annmarie: i think we are reading in too much. there adorable. we can now have a panda cam back. that is the end of it. jonathan: futures unchanged. seeking a battleground edge. >> we will lower the cost of everything from health care to groceries. i will take on corporate price gouging just like i have done before. >> everything, it will be beta for, you will have a house, just wait a little while until i get in. one year from january 20 we will have your energy prices cut in half all over the country. jonathan: that is quite a claim. kamala harris and donald trump promoting their economic plans in pennsylvania. with more remarks on deck,

harris sitting down wednesday with fox news for the very first time. tobin marcus joins us for more from wolfe research. welcome to the program. i want to get to that interview on wednesday. it feels like the campaign is taking more risks. what you think is behind that? tobin: i think they correctly assessed they will not win by playing prevent defense and keeping her out of the spotlight and hoping trump will self-destruct. from's favorability is higher than has been in cycles past. he is certainly beatable but it will require them to keep reaching out to voters. polls still show a lot of voters feel like they have questions about her, about her policies, and what she stands for. then there is the meta-objective of showing she is willing to stand up to talk questioning and can go into adversarial environments and hold her own. that is a calculation. these interview she has been doing have not been flawless but

i think the strategic assessment is correct, she needs to make the attempt to go out and reach more people and do more things and let the chips fall where they may. annmarie: when she sits down with bret baier on fox and he said they will air the entire interview, 30 minutes straight even though their pre-recording it. the one concession they gave was the timing, that they would pre-recorded at the 5:00 hour and his show is at 6:00. what part of the electorate is she going after with his interview on fox? tobin: part of the objective is showing she can do it. it is a message even to non-fox viewers. it will be clipped and consumed by people who are not watching linear fox and the prime time. there are swing voters. it is not a big slice. you think about college-educated white voters who may have been republican voters in cycles past , that type of voter in the suburbs and big cities, the

suburbs of atlanta have been drifting left. those are winnable voters for democrats but not a block democrats have completely locked down. even though it is a conservative leaning viewer base, i think they're potentially persuadable voters for harris and trump within most slices of the electorate which is why we see them doing this diverse mix of media outlets that they both have been doing, including nontraditional stuff like podcasts. annmarie: what we saw after 2016 is the polls continuously under weighted the trump vote. is there a chance polls are underestimating harris right now? tobin: my view has always been the possibility of polling error is basically symmetrical. some kind of error will probably be in the polling. it is unlikely to be 100% perfect. there is been a lot of conversation about the possibility of another error underestimating trump which is a real possibility. i would not be surprised as see

polls underestimate harris. if so it will largely come down to turn out. i do not think the story will be there a bunch of "shy harris voters." trump has be relying more heavily than biden and harris on lower propensity voters. the inroads he hasbn making on black and hispanic men that have got a lot of attention politically engaged people who are thinking about voting based on popular considerations and they might turn out for trump and they might not. if we see lower turnout that is how we would get polling that turns out to overstate trump support rather than overstating it. annmarie: the vice president will be on charlamagne tha god and yesterday we talked about her talking about economic opportunities for black men. is any of this possible and is it going to land? tobin: is it possible in terms of getting it enacted? some of the elements of the policy agenda she has rolled out

, a specific little package of policies aimed at persuading black men to vote where there has been some erosion, there is a lot of attention on the promise of -- that is a promise to not do anything. to the extent there are and that slice of the electorate who are concerned about their crypto investments, trying to neutralize the advantage trump has had is something she can do. across most of her agenda, a lot of it is promises she will not be able to keep based on the composition of congress. she has to run on something. it does matter to voters to hear what you stand for, what you would like to do. if she does get elected, it will be an interesting couple of years with her likely facing a divided government as she does not succeed -- she does not succeed in getting done a lot of these proposals and we will have to see how voters react to that.

lisa: the blitz has been ongoing and continues for the next few weeks from both what we hear from trump as well as harris. what do you ascribe to the shift we have seen in prediction polls? now suddenly donald trump seems to be outperforming kamala harris? tobin: there has been a little bit of a tightening in the polls. the polling models have moved a couple points in trump's favor. the prediction markets have swung more dramatically in his favor. we do just see vibes sometimes. in late 2022, we saw prediction markets buying more into this red wave narrative. that is something i was skeptical of at the time. weighted up a situation where prediction markets were much more confident republicans would flip senate seats than the polling models were and it turned out to be wrong. i think there are probably some big players who have recently

become more convinced of trump's path to victory. there has been some shift in conventional wisdom. and democrats are more nervous. democrats tend to get nervous a lot so i do not know what that says about the race. there were in some quarters that harris would keep -- there were expectations that harris would keep expanding her lead. i don't think it was ever realistic for democrats to expect her to open up a 5% or 6% nationally. i was thought this was a close election. the polling we have now is not that far off from a realistic best place for democrats. to the extent people think tight polling means trump will win, i think that is what we are seeing. jonathan: good to see you. tobin marcus of wolfe research. getting numbers from goldman sachs, just to share them briefly, net revenue at 12.7 billion u.s. dollars, the estimate 11.70 7 billion. that is a big upside surprise.

trading revenue in line with the estimate of $2.96 billion. that stock is higher in the premarket. up 2%. already we have had numbers from bank of america and goldman sachs. we will get numbers from citi. goldman sachs up in early trading more than 2%. ♪

jonathan: two days of gains on the s&p 500. a decent day of gains on monday. pulling back on tuesday. the s&p 500 almost totally unchanged. let's get numbers from goldman sachs. the stock is up more than 2%. it is a beat on revenue. $12.7 billion come the estimate $11.77 billion. investment banking revenue much better than expected. lisa: open stock trading business had the best performance going back to 2021. they reported a 45% increase in quarterly profits. net interest income $2.6 billion. a big beat across the board. a real question as you talk

about this with j.p. morgan and the fact they lowered the bar and then beat the bar. we heard from david solomon that trading revenues were likely to drop. they rose by 2%. a similar story when it comes to some of the performance in the previous warnings that turned out not to be true. jonathan: let's talk about the three warnings. dan pinto warned about net interest income and said analysts were too optimistic. david solomon trading totally fine. the other warning was allied financial when it came to auto loans and credit there and i wonder if that will be dismissed later this earnings season. lisa: that is the bigger one because it is a different kind of risk, a deteriorating consumer we've not seen anywhere else. is it that we are just missing something? if they are missing anything, allied financial and capital one might have the keys to provide. jonathan: goldman sachs of the premarket. still with us is ken leon of

cfra. what is not to like? ken: went to a strong buy a couple of weeks ago and for investors it is what is next. what is next is the following. very strong results to date mostly driven by the u.s. markets. still goldman sachs is a global bank but they are getting 75% of their revenue from the u.s.. there is opportunity if europe gets better, what happens in asia, perhaps china. two the equity underwriting was stronger than i thought but it was an ipo. it was equity intermediaries. m&a is lacking. you put it all together, goldman sachs has 3.7 trillion dollars of assets under supervision. as a large asset manager, that gets to david solomon talking

about recurring revenues. what we see ahead is higher risk-taking now that everyone knows where rates are going. they do not have the exposure to larger banks. only 14% of their total revenue comes from net interest income. it is an exciting dynamic. the one thing we did not talk about is what they doing with the failed consumer assets they still have. earlier today it was expected that the general voters credit card goldman was operate getting goes to barclays. the biggest one was with apple. i did see that question will come up from analysts. jonathan: there's a piece of that puzzle i want to focus on for a moment into 2025. lori calvasina was with us earlier this week and she made the point that a lot of businesses are waiting for the election to clear before they

start making big decisions. we have seen m&a held back for very specific reasons in washington, d.c. the ipo pipeline has not been great. do you see that improving in 2025 and is there reason to expected to? ken: you are right. you run for bonuses if you are an investment banker in september. the tone is the election creates a stall. ceos, as they look at next year and as it comes into capital raising m&a, they are looking to see what will be that environment. they know where it is going for rates and cost of capital, but what does it mean in washington stop we are not going to be in a high risk on environment, but last year we had the trough in terms of investment banking and i see an view for next year. that is positive for goldman sachs. jonathan: there are a number of

different -- lisa: there are a number of different aspects to the story, the reason we've not seen ipo's pickup to the same degree, one is the increasing dominance of private credit and private equity. you mentioned goldman sachs beat on the debt underwriting. we saw a miss with the debt underwriting. our the different banks handling oreo losing market share from this increasing dominance of the private equity and private debt players. ken: it is private credit and jamie dimon speaks to it. it works brilliantly for smart firms i cover like blackstone and apollo and aries, but what happens if you have systemic risk? it is an old term are used, coop etition, which means the firms i mentioned work with j.p. morgan

and goldman as perhaps funding them in the transactions, but additionally they are competing. one term you would hear for 20 years as a bank analyst is the growth of bank syndicate loans. we are not hearing that anymore and those with the commercial banks have to do when looking at a size of loans over $1 billion. the private credit business is operating into those areas, moving from middle-market to larger transactions. i like it. i think private credit is great because as apollo says we will just look at what the measured risk is and decide whether we want to invest or not. lisa: are some of these private credit players taking business away from the big banks because it looks like the big banks are doing just fine? ken: there is a mismatch of

assets and liabilities and duration. we have been through that story for over a year. it is still there. this appeared assets which are long-term tales, the regional banks cannot hold onto those. they will be parlayed to the alternative asset managers. the area where they will compete is in wealth management and retirement. i mentioned these recurring revenue businesses like annuities and insurance. those are great businesses and that is where the opportunity is for all of these banks. jonathan: good to hear from you. ken leon of cfra. look at these moves. a big shift higher on goldman sachs on the premarket. a nice move on bank of america. numbers from them earlier. we will get citigroup in about

23 minutes. at the moment up another 1%. big moves friday off the back of what we saw from wells fargo and jp morgan. lisa: with beats across the board when it comes to net interest income and wealth management and it also has to do with trading revenues, i keep going back to the idea that the bar was lowered and they handily kicked over that line. is there something they were saying that changed or is it just that they were trying to gauge people's sentiments so that they could look good? jonathan: there is certainly a big dose of that. and it comes to net interest income 2025 is still a mystery. we spent the whole show discussing what will happen with federal reserve policy most days. you brought up a big issue. we heard this conversation with apollo a few weeks ago. mark made the point that fewer companies will go public. there are big structural headwinds to the story.

private credit is a big piece of that. the regulatory headline is another big piece of the puzzle when it comes to m&a. do not think it will be too different versus what we have heard from one campaign to the other. annmarie: cannot if we look at how the ftc is currently operating under lina khan, we have heard jd vance say she is one individual in the body can ministration he agrees with. regulatory along big banks and big camp -- and big tech, this is something both campaigns are looking to needle at. jonathan: goldman sachs rising in the premarket. the bank beating third quarter revenue and net interest income. results from citi still headed 8:00 eastern. elsewhere nvidia coming into tuesday at record highs, shares boosted by continuing demand for its blackwell chips. the ceo reassuring investors product delays have been

smoothed over. lisa: what i find fascinating is shares are up even with concerns around limits on how much the u.s. can export in terms of semiconductor chips. nvidia shares are up almost 14% this month. not even halfway through. today we are halfway through. 2.4% gain yesterday. a question of whether we are underpricing a story that has been one of the main drivers of return so far this year. jonathan: the -- annmarie: the biden administration has these controls on about 40 countries throughout the world when it comes to nvidia. the demand is so insatiable it does not matter. you can put more companies on the list, does not matter. massive demand in the united states. jonathan: nvidia making another move in the premarket relic. coming up at 8:15 we will have that.

a slightly controversial story on tesla, they're reportedly remote controlled some of their robots. sources telling us that while the robots were able to walk without external control, employees stationed elsewhere oversaw many directions between the machines and attendees. not clear how much progress we have made. lisa: this story reminds me of the wizard of oz where you pull back the curtain and there is a guy operating all of these different steam engines. there is a question about whether this is ready to go or whether this is looking like more of a promise. elon musk has a history of making big promises with ambitious timelines. it raises a question since that was the start of the event. annmarie: what can it do? it can be a teacher, babysit your kids, serve drinks, whatever you can think of. he was talking about the robot. i will say that knowing the

wizard of oz, the humans controlling what it is doing behind the scenes, it gives the title of the event, we robot a new meaning. jonathan: someone behind the curtain controlling you think. lisa: if it tesla employee wants to make me dinner with robot, i am ok with that. it depends if you are a good chef or not. jonathan: it depends what they can cook. that depends on the subscription . it is all subscription-based. how much have you spent on your software for your robot compared to the house next door? lisa: that depends on how well they cook. that would be brilliant. jonathan: is the future of chefs . michelin will rate your robot. let's get an update on stories elsewhere before this goes too far. dani: j&j shares down about 1%.

it did report stronger-than-expected third-quarter earnings. the beat was driven by surging sales of its cancer drug. j&j lowered its full-year guidance to account for a medical device acquisition. the cfos so they're looking for smaller deals but remain open to larger acquisitions. erickson shares surging to their highest level industry years, up 11.5% after its deal with at&t helped push third-quarter earnings above analysts estimates. north american sales grew by 55% year-over-year. sales in europe sought growth despite facing a challenge market for network technology. tensions between canada and india are escalating. prime minister justin trudeau accused indian immigrants of -- indian diplomats of backing harassment against canadians. it follows trudeau suggesting

indian agents were involved in the murder of activist. india refused to waive diplomatic immunity for questioning over a number of violent incidents. india has rebuked canada and expelled six senior diplomats in response. jonathan: up next, crude uncertainty. >> these attacks have claimed the lives of many israelis including yesterday. israel has every right to defend itself against hezbollah and will continue to do so. jonathan: that conversation is up next. good morning, good morning. ♪

jonathan: goldman sachs yesterday closing at all-time highs even before the move this morning. that is stock up more than 35%. that is where the outperformance has been. goldman up again 3.4%. another big move.

lisa: a lot of it has to do with net interest income. net interest income came in at $2.6 billion. it is a good and beautiful thing for these banks when you have a dis-inverted yield curve and that is what you are seeing all the results. jonathan: bank of america up 2.4%. you get numbers from citi and about 13 minutes. under surveillance this morning, crude uncertainty. >> israel is not fighting the people of lebanon. it is fighting iran's proxy hezbollah which uses lebanese territory to attack israel. hezbollah attacked last year without any provocation. it has continued to attack because ever since by launching 10,000 rockets and missiles at israel. these attacks claimed the lives of many israelis including yesterday. israel has every right to defend itself and will continue to do so. >> oil extending losses on --

limit potential escalation come easing market concerns over supply disruption. in a statement benjamin netanyahu's office said we listen to the opinions of the united states but will we make our final decisions based on our national interest. stephen cook joins us for more. do you buy the reporting from the washington post? to believe he will pull back and not go for energy infrastructure? steven: maybe. i do not put a lot of stock into the washington post reporting if only because these discussions have been going on for a long time throughout the conflict. every time the united states believes they have a government in a position where they agreed, the israeli government does exactly what they do and that statement, the ultimate decision is up to the israeli government. it will be anybody's guess until the planes or missiles are in the air. annmarie: if this is accurate,

what is united states and israel getting in return? steven: the israelis are getting a thad antimissile system which is an incentive not to hit iran's nuclear infrastructure. the clear fear is of the israelis drop the escalation ladder and go after those symbolic sites the iranians will respond in kind and that is what the arians have set. the united states would like this to be an israeli response and the end of it. that moves the israelis to move forward and protect the israelis from another iranian strike. annmarie: this is an important piece of technology only deployed israel once in 2019. they've never used it. wouldn't the thad be enough for israel to agree with washington in terms of retaliation? steven: that is clearly the hope of the biden administration.

the number of weeks ago the biden administration thought the israelis had agreed to a cease-fire in lebanon when the israelis escalated. we have to listen carefully to what prime minister netanyahu's advisors say which is alternately the decision is up to us based on our own security. this is been a tension. the united states has broader concerns were israel has significant concerns about its authority. at this moment to than it -- annmarie: they have specific concerns but at this moment to they know where it is going? steven: that is the big question, the overall israeli strategy, i think it is to reestablish israel's deterrence. they are having a hard time doing that. they have been pounding dollars for a year yet rocket still fire from gaza occasionally. israeli forces have to go back to sections of gaza to fight. they engaged in number of stunning intelligence operations

and pushed hezbollah back on its heels. since the killing of the leader, i count something in the -- they are operating outside lebanon to try to secure their border. annmarie: where we are right now in this conflict, is at the start of a longer conflict? i think of where the united states was when they went into iraq. this is at that time, decimating the iraqi military, decimating saddam hussein and his acolytes come up that conflict dragged on for years. where are we? steven: i think this will drag on for years. the israelis have no one to hand because off to. they had to keep going back into gaza. they do better secured about in southern lebanon. they had one between 1995 and 2000.

they do not have partners, you cannot count on you and peacekeepers were lebanese armed forces. the israelis are dealing with the situation where they have to decide on the least worst option. right now it seems they are having extended counterterrorism operations in the south and north. you said the u.s. -- lisa: you said the u.s. once more contain strike. is it because of oil prices or is it bigger? steven: it is clear the united states does not want a regional war because that would affect oil prices but there is also question about regional security. a larger work could involve saudi arabia and the uae, which are both extremely vulnerable to iran's missile forces. lisa: the reason i ask is because you think about the houthis attacking shipping resources, you think about the other threats that have raised concerns in the u.s. as well as saudi arabia and the uae. where would they stand if the

conflict were to escalate. steven: ultimately if it were to escalate they would close ranks with united states but the saudi's are angry with united states for not eating their worries -- now we are dealing with a much greater threat than they both started. jonathan: we had someone on this program suggesting maybe there was a vacuum of leadership waiting for the election and foreign leaders could take advantage. steven: i think it is clear when it comes to what the israelis want to do and what we are talking about. we are three weeks to an election and then there will be a transition. it gives leaders a free hand to do things. if netanyahu decides singly oil infrastructure is is is -- is in israel's best interest -- they essentially have a free hand to do what they want. steven: you think it gets more -- jonathan: do you think it

gets more or less dangerous between november and january? steven: i think we are an extremely dangerous period with israel promising a strike on iran and iran singly have no redlines. thus the thad. jonathan: given how many things this white house has got wrong over the last three years, are you surprised the same people finish this administration as started? are you surprised jake sullivan is still there? they have been there and made mistake after mistake. where is the accountability? steven: the middle east is extremely difficult. no doubt about it. i think the administration in particular the president made a number of miscalculations at the outset of this conflict. there is been the idea that from mr. netanyahu would give him leverage over israel's military operations. there was also the belief a new relationship with iran was

possible. jonathan: even cook, appreciate it as always. i that we all remember that conversation with jake sullivan right before the events of early october, saying it is as peaceful as it has ever been. annmarie: saying the region has been the most peaceful. they were able to edit it online. those words were still there. just recently was on the sayer -- we saw the same happen with secretary of state antony blinken. jonathan: coming up, stephen auth. from new york, this is bloomberg. ♪

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>> there is a lot of potential earnings upside. >> the health of the market will depend on earnings. >> you will see them continue to rise to support the market. >> we will see solid but not blockbuster revenue growth. >> we need to do more heavy lifting as we turned the corner of 25.

>> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and anne-marie quarter and. -- annmarie hordern. jonathan: equity futures just about unchanged. likewise on the nasdaq 100. negative by 0.04%. elsewhere some big gains and moves in the banking sector. it has been upside surprise after upside surprise. it was bank of america. higher by 2.6%. goldman followed. citi, market revenue 4.8 2 billion. lisa: pretty much it is across the board when you look at fixed income quantities. also leading 3.5 8 million. you can take a look at market revenue coming in above estimates. equity sales and trading coming in just north of $1 billion.

across-the-board a couple of hiccups but underscoring how much strength there is in the banking sector as a face-off with an economy that is fine and consumer chugging along and income coming in bigger than expected because if nothing else, the yield curve is inverted. annmarie: you took out a nugget from what david solomon is saying. strength is in his first sentence and strengths is in the sentence set second sentence. there is no third sentence. the banks are feeling good with no major drama. i am interested in what they have to say about other things happening. jamie dimon talks about this, should -- the geopolitical uncertainty. jonathan: that stock is inching higher a little bit in the premarket. here is the lineup. steve north as banks deliver better results.

and kathy of nationwide looking ahead to submit -- to some messy data. stocks are at all-time highs lifted by tech as they feel optimistic. steve north saying that will markets are known for climbing so the present batch of uncertainty is not unusual. with the market less than 5% away from the 2025 six k target on the s&p, investors can afford to be measured here. good morning. a decent run for the banks. you are encouraged by what you see? steve: very important. the banks are a big hunk of the value indices where we are overweight and telling people this is where you should be. once you diss invert the yield curve, what will happen is that rates are coming down and that will help the banks. you keep bringing up the idea that these rates are coming down. if they do not come down they

should be bad for tech. the 10-year yield we think will stabilize as you have pointed out between 3.5 and four. the curve is disinverting. the curve matters for value stocks, say the bank stocks. that is what we are seeing, the earnings coming through. they are trading at 16 times. and the gap is quite substantial on both where the earnings growth is heading and where the valuations are. lisa: there is a lot to unpack, the idea of the banks as a litmus test for the rest of the value sector. basically on how much this is an economy reacts accelerating or in the mid and early cycle of another bull market. i am wondering if that is accurate in these banks are a reflection of that, or whether they are telling a different

story than what we might hear from the ally financials or the regional banks? steve: allied financial we have cut that to keep -- cut that to pieces. they are saying that the low end consumer is in trouble. the problem was the car loans. that is where there is weakness in the economy. and we see that throughout the stock market. but, the rest of the economy seems to be ok. i would not say re-accelerating but in the line of it is landing. we had a little bit of a soft patch so maybe reaccelerating off of august. we see that as landing and that should be good enough for a lot of the stocks. i am not recommending to buy the whole index but i think it is a stockpicking game. lisa: you sound cautious, optimistic, but not necessarily let's go buy everything because it will be amazing. why the caution?

steve: we have had a huge move. when we set the target of 6000 a year ago for 2025, people thought we were nuts. at that time we were going into a recession next week and everyone knew it. they said we think we could get to $300 by 2025 on the s&p, which sounded like a big number. but on a nominal basis given how much it had been driven up we would see how we got there. we are still at 300 and we think a 20 multiple works. we have always thought that inflation would stabilize around 2.5%. i would call it the fed's informal target. if you are 2.5% on inflation you are a three at the fed funds rate and a four on the 10 year because you can reestablish a term premium. long-term bond investors have figured out we could lose 20% in a year.

they will want the term premium back. we have been pricing stocks again today -- against a 3.510-year yield. when you look at historically when that should be, about an 18 multiple. in the interests of being more aggressive we use a 20 multiple. 20 times 300 in 2026, which you discount at the end of 2025, i do not need my summer intern to tell me that is 6000. annmarie: going back to the concerns, you write about bull markets are about climbing walls of worry. you talk about five uncertainties you need to tie a bow around. what makes you the most nervous? steve: i am actually thinking about writing a piece soon saying four out of five is not bad. i wrote a piece over the summer called 1.5 out of three aren't bad. these things are clipping away.

the earnings numbers need to come in. let us see how the rest of the season goes. the banks are showing strength. that is good. then you have to get the inflation numbers not to re-accelerate. that is a little dicey but we think we are heading for 2.5. the ppi were -- was a 2.5. the inflation numbers need to stabilize but a little higher than the market but good enough. and then the fed needs to indicate not so much the pace but they are going to get to the levels we are talking about. all they have to do is get to 3% and the rest of the story falls into place. we have a fed meeting on november 7 which will be a big one just to see the tone. if things keep going the way they are going they do not cut. it depends on the tone. and then you need china to kick in. we are seeing that. they are attacking now at a fiscal and monetary policy.

we think that could be $5 trillion which would be an upside surprise. and then you need the election to fall into place to help the value trade because the election is about value versus growth, not so much the market overall, but president trump would be far better for the old economy stocks. if you look at his policy agenda. in a way that just adds fuel to the fire. at the moment it feels like we are heading to that direction. annmarie: fall in place is a trump victory? steve: for kind of the value small-cap trade that we have on in place. we think if you look at his policy agenda, deregulation, that help smaller companies that do not have the wherewithal to pay the cost of regulation. lower, high income tax brackets which affect all of the small-company businesses in that

fashion. the tariff agenda which is probably negotiated on helps the old economy industrial stocks, a lot of those in the value space. the trump agenda is primarily oriented towards more of this value trade. if that comes into place that adds fuel to other existing fires that help that trade. lisa: if you do get a sense of who wins, then you will be much more aggressive with the trade? are you waiting with cash to basically figure out whether you are putting it one way or the other? steve: tom keene always has that cash money market fund. triple leverage. we have two on the sidelines. two points out of 10. we are earning on that, not bad right now. but that will go back into the market. maybe when we get to four out of five.

it might be before the election. you have to watch the polls, but they are going in a direction -- the market will try to discount all of that. and if you are too cute and try to wait for everything to fall into place. jonathan: that begs the question on if you are being too cute? steve: i might be. we are still overweight stocks. jonathan: cautiously bullet -- cautiously bullish. steve: we are seeing if these can live up to -- nvidia is making a boatload and the rest of them are paying money to nvidia and they have to prove that they can make money. jonathan: it is good to see you. you get to five out of five comeback. steve on the latest. we have city numbers -- citi numbers.

we have had a decent run of gangs of the -- gains over the last week. this morning it continued. we heard from bank of america, citi and goldman sachs. let us cross over to can --ken, how is the transfer of this bank going? ken: i think it is continuing. there are milestones ahead and they still have to selloff next year the largest u.s. consumer bank in mexico. of shelley they already have the mark of reducing headcount by 20,000. and we will get some progress on that and just managing operating costs. 74 -- 74% of their total net issue -- interest comes from that income. they have a lot of good businesses to have durable reoccurring fees and treasury services and payments.

i think citi looked ok. and the take away from the large banks dealing with the consumer, is that the ncl, or nonperforming credit loans are in the 3.5 or 3.7% ratio. those are pretty good, even for all of the bank analysts. and to the earlier discussion, the banks are holding their weight and giving us a bullish deal with an overweighting of the financial sector. there are 12 stocks that represent 65% of the financial sector. four of the big banks are there. you have quality with visa, mastercard, s&p global and brookshire hathaway. i am relieved. i believe that the banks will send us off into a positive 2025 for the fundamental outlook for these large banks. and the analyst who covers a

regional banks is much more constructive than where we were six months ago. jonathan: do you expect more of the same from morgan stanley tomorrow? ken: i think it will be like old man and celebrate how well we are doing in the capital markets. trading, of course, but there is upside opportunity going into next year for investment banking. that is good for morgan stanley. with the equity markets rising, equity will benefit the largest manager. jonathan: good to see you. thank you for this morning. so far over the last few days a queen sleeper banking in america. lisa: across-the-board beats and you cannot find mrs.. the big question about whether this is just a positive rate for the financials or a broader positive rate on the consumer as well as the business sector that were struggling with how high

benchmark rates were. seeing them come down and assets perform that were put into longer-term debt. jonathan: let's give you an update with the bloomberg brief. dani: unitedhealth shares down 3.4%. it lowered the top end of its forecast, a rarity for the insurance giant that usually withstands the pressure. higher medical costs and the rising impact of a cyberattack were a part of that. it is alstom seem -- -- it is often seen as a bellwether. oil prices tumbling 3.9%. reports that israel will avoid targeting iran's crude facilities and its expected retaliation. the report is easing investor concerns about what many feared would be a major supply disruption. prime minister netanyahu told the biden administration that they plan to target iran's military as ia warns that the

oil market will face a glut into next year. julie sue has met with leadership at boeing as the ongoing strike continues to take a toll on the playmaker. she traveled to seattle and urged both sides to move forward in the bargaining process. this comes after the latest talks between boeing and its largest union broke down. the latest author was raised to a 30% pay boost which was rejected by union leaders. jonathan: more from her in about 30 minutes. up next the morning calls plus william stein as nvidia hits a record. live from new york you are watching bloomberg tv. ♪ (♪♪)

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jonathan: if you are just tuning in welcome. it has been beat after beat for earnings season and it was no different. we heard from bank of america, citi and goldman sachs. lisa: coming in strong across-the-board and that is important to highlight given the fact that there is a question. a high risk -- is high risk or low rates good for banks. as steve said it is the shape of the yield curve. when you have the long end at 4% in the short end coming down that is good. jonathan: goldman is up by more than 35% and is up another 2.7% this morning. goldman sachs downgrading at sea to sell -- etsy to sell. bmo downgrading american

intelligence group to market perform. evercore adding airbnb to its underperforming risk -- list. nvidia coming with record highs. william calling it a biwriting. they expect the eventually untaught them as driving will lead to ongoing structural and funded -- fundamental growth and stock performance. welcome to the program. let us talk about the rating. a lot of people have missed out on the run. it is up by a ridiculous amount. what is your advice to people out of the stock looking to get in, why is now the right time? william: the first and more -- and most important thing is to distinguish between record stock price and valuation. just because the stock is up does not mean it is expensive. we do not think it is. there are earnings beats still to come and it is not expensive

relative to growth. jonathan: how much of this -- lisa: how much of this depends on their ability to produce quickly and to get updates up and running in an expedited fashion. william: the company recently transition from a cadence between the ai specialized gpu's to a one year cadence. they announce that relatively recently and they are starting it going forward as they go from the emerging generation to the next generation called ruben, when they will be on the one year cadence. of course being on time helps. they are significantly ahead of the competition. we do not even view this one year cadence as something that is required to distinguished nvidia for that -- from its nearest competitor. it is about the full stack of

technology offered. it is not just high-performance chips. we talked about three things, a culture of incumbency, ecosystem -- ecosystem of incumbency and culture of innovation. and significant investment in software services. and now, pete -- pre-trained bottles are a big part as well. lisa: some people were surprised given that there is a lot of good, there is a potential cloud hanging over the stock in the way of restrictions by the u.s. government. how do you see if not dampening demand, how do you see nvidia being challenged or adjusting its business model in response to concerns about national security? william: it is a super important question, but critical to understand that this company has dealt with these restrictions for a number of years has have

most of the semiconductor companies. there have been export restrictions and let me get one example. we spoke with management a few weeks ago and hosted a bus tour and nvidia was part of the featured companies. an agent -- management was talking about sovereign ai as a significant growth driver. these are national level ai models built in countries that might not speak u.s. english as their main language. so, france and other countries in europe and asia building their own domestic horse auburn ai models. -- or sovereign ai models. i asked about china and it was a flat we are not working with the government in china. they have been in place for a while and the volatility of what is restricted will not only challenge nvidia but the other companies.

annmarie: would you say these restrictions which are right for nvidia and amd, united states have these caps. are they narrow at the moment? william: they are always changing. so, it is certainly possible that a new restriction could come into place that could make the companies -- company's revenue generation more challenging. for years they had specific products for china that they rolled out to address that market while not breaching any of the concerns of u.s. federal government. i think nvidia will continue to do that and continue to have a china specific skew, and new restrictions might make that harder. but this market has not been wide open to new -- to nvidia. so i do not see change coming in this area. jonathan: we appreciate your

time. on the stock with a buy rating. the stock is down by .7%. it is up by almost 100 -- 180% year to today. liam had an important distinction. the stock is at a record high and the valuation is not. the earnings have been real. lisa: that is a reason people can say there is no other game in town. even if they release fewer chips, may be a year, they are so far ahead of the competition it is hard to see how they will use that -- lose that share. annmarie: the national security concerns are interesting. it is interesting to see if biden has the time to put caps in countries in the persian gulf. is this something that if it is kamala harris it would carry through. if it is a former president donald trump are we looking at a similar type of cap when it comes to the ai companies and

their chips. jonathan: possibly. nvidia is down .1%. -- .6%. coming up kathy and vishal on the data in the bond market up next as we count you down to retail sales. from new york, this is bloomberg. ♪ ♪♪ ♪♪ the winter escapes sale is now on. visit sandals.com or call 1-800-sandals.

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♪ jonathan: 60 minutes away from the equity features on the s&p 500 totally unchanged. plenty of action beneath the surface. we count you down to the opening bell. morning movers. here's dani. david: digging into some of the earnings, really strong showing from schwab. shares up more than 8.5%. the been fit of lower rates and booming equity market. new client assets up by 27%. that help them beat on the e.p.s. also helped write down some costly debt. another mover, walgreens boots. reporting that they will be closing less stores than expected over the next three years. 1,200 stores. before they said 2,000. not as bad. just for context for the stock down 65% year to day. maybe a low bar for them.

the c.e.o. saying they have more challenges ahead for the rest of the year. spooking of -- speaking of low bars, here are the three major ones. city, goldman, banc of america up at least 2%. one of the stars of the show was trading. trading results strong. goldman sachs their best equity trading quarter since 2021. for city the best -- city the best quarter trading results for at least a decade. the interest income also fell but not as much as expected. jonathan: thank you very much. you have to imagine it's a high bar for morgan stanley tomorrow after the numbers this morning. lisa: especially because they are in this tit for tat. for morgan stanley they need to show not only are they beeting with the interest income their wealth management unit is outperforming. that's the engine people are looking f. jonathan: that's one for tomorrow morning. markets looking ahead to the data point of the week. retail sales on thursday.

kathy bostjanic expecting september to come in flat. anticipating some i hado sin contractics due to had lean. i want to get the words of governor waller. it may be we could see 100 case of payrolls because of the strike at boeing, anti-hurricane inn immact as well. can you put a number on it? kathy: good morning, jon. we know that in the past there's been disruption to employment, to production. can also skew higher prices of construction and used car prices. it is always difficult to precisely get a handle or estimate ahead of time. i think it's fair to say it's at least 100,000 or so off of this. historically it has been in that region of 50,000 to 100,000 depressing payrolls. it comes at a time where it's messy for the fed. they'd like to get as much

clarity as possible. the incoming employment readings. this just makes it difficult to get that clear view. jonathan: coming up, waller acknowledged this in the speech. the next couple lines he talked about the state why dropping in the quiet period and they wouldn't be able to explain to people what was going on. do you see a big mission, campaign effort from the fed officials for the next few weeks to explain how weak this number might be and how little it might mean for the decision they make november 7? kathy: i think that makes sense. especially with governor waller starting that discussion. i think that makes a lot of sense. i'm also a little bit concerned about this messages being sent during the blackout period. maybe they need to shorten the blackout period. that's another discussion. i do think that's true. you are going to see that in production data as well and jobs claims. we saw that increase last week. that's why we are getting increase in another -- above the

normal trend. and we are going to see specific states as well. lisa: what find interesting is everybody is looking for an exblannation why the fed won't be more aggressive with rate cuts. but no one's thinking maybe they won't cut rates as awvment why was the upside surprise not a big deal for alt people talking about further rate cuts and the likehood of 50 basis points by year-end? kathy: it's just one month's data. within that report there were a lot of idiosyncratic measures. where we saw increases which we don't think will continue. you also saw -- odd things like sporting event costs. up 10%, 11% in one month. those aren't repeatable. the overall trend still looks encouraging. particularly because we start shelter costs start to cool

down. we think that will continue to be the case. it is -- certainly should raise some doubts whether they will go into november, december. we would agree with that. it's not a shore bet or a slam dunk. we still in our baseline look for 225 basis points rate cuts. it's because policy is restrictive at this point. and the fed has told us, and rightfully so, they want to get back to a neutral rate to help nurture continued expansion. lisa: i want to pick up on what you just said. it's clear we are currently in a very restrictive state of monetary policy. there were doubts raised about that by kneel saying -- neal saying the extent to which the interest rate policy was restrictive was unclear. speaking at an event in argentina. chris waller talking about how it is important to move toward neutral. we haven't gotten that clarity from the fed. is there a precedent of this lack of clarity when it comes

the range of potential neutral rates we could be heading toward? kathy: i think it's refreshing. certainly a bit more transparent in the sense that you never really know what the neutral aid is. you have your models. you have the taylor rule you can use. also do the incoming data. that's what they are trying to do is put all that together. they really don't know. then there is a long run neutral rate and current neutral rate. they really want to guide to both of those. when there is a lot of uncertainty and this has been mentioned before by fed officials, they go slowly. you walk around in a dark room you don't want to trip or knock something over so you feel your way carefully. that makes sense. i think by all measures policy is still very restrictive. you have to look at the very interest rates sectors of the economy which is housing and also autos. then you look at how much of

economic pain the lower income and middle income households are facing. you can see that -- rates are too high right now where we are. does it mean that they need to go more carefully? we are not going to go 50 again. do they pause? i don't know if they would pause right now. maybe that pause comes sometime in 2025 in the early part of the year. lisa: we heard from waller talking about what the impact the hurricane had on jobs. annmarie: kathy, we have retail sails sales this week. what would that impact be? kathy: for the month of september not as much. but you could see so many tailing off. you could see in some of the credit card data there's been less spending. especially in the states affected. overall i don't look for a big impact in the actual number. there will be some, but small. it's more the october data where we are going to see a larger impact. that could just range

particularly in the consumer sector. but it could range also for businesses as well. spending, production, output. jonathan: appreciate the update. kathy bostjanic of nationwide on the incoming data. retail sales on thursday. 8:30 eastern time. around the table vishal khanduja of morgan stanley. good morning. we just had a big month of global easing which you recognized yourself. a federal reserve cut by 50 basis points. china begin to take on more of an easing posture. is that a reason to buy bonds or sell them? vishal: absolutely buy them. 250 basis points until 2025 that was a tough slog there. we are backing away from it. at this point i think we think it's fair value at this point. i think the market is getting a little bit away with these stimuluses you pointed out as well as one or two good data points that have come out. doesn't change the trend. jonathan: tell me what the trend

is for you. it's been confusing for the rest of us. we have seen contradictory data across the board for the jobs market. you can pick out something or look to the headlines and say everything's ok. unemployment is still close to 4%. what is there to wore bring? what's your trend? vishal: this inflation is very intact for us. kathy mentioned in the previous slot as well. the data points they are getting within inflation are the one that is are a little bit more volatile are showing up, which we don't think are going to persist for a long time. we are big component of shelter. it's going to drop off from the indicators that detract. this inflation is very intact. the economy is in that soft landing phase. labor market being one component of that. we don't think these cuts that they have announced or started off with 50 basis points are anything to resuscitate an economy which is going into a recession. these are recalibration cuts.

they used that word clearly. lisa: pause, an economy going into recession. what science are we seeing of any potential recession on the horizon based on everything everybody is saying f. vishal: i think we have seen it since 2022. 50e basis points with two really tough ports. start the question because whether these are labor pool increasing or people coming into the job force or layoffs. i think the market got very tied up with that for 2 1/2 months. now we are coming back into it with one very, very strong labor report. consumer's strong. underneath balance sheets are strong. bondholders. one quick point i would raise is, this is the issue that people have if a big chunk of the economy is insensitive because of the stimulus you put in and ensued a very low

interest rate environment where all of us refinanced at 3%. very similar to -- jonathan: all of us. all of us wish we had done that. lisa: some of us did. annmarie: some people are bitter about it. you are seeing a tick up in mortgage for financings as a result of how much things are coming down. lisa: the world are you talking about with this binary risk of narrative shifts doesn't speak to a world where credit should be holding inasmuch as it is. wouldn't you think if there was a risk that in particular high yield bonds should be just ticking up, showing a little bit of a sign of concern rather than cratering when it comes to the extra spread that investors demand to own? vishal: trying to demand a little bit and getting priced out. the lowest point of high yield. i think if you started in the way how we looked at the fundamentals, technical valuations. fundamentals are strong. you can take a few companies out

of that picture. technicals are fiercely strong. that is less of a spread buyer. more of a yield buyer. yields are best predictor of total analyze for the next three years. jonathan: when we look at spreads and compare them to a different period and say they are just as tight as they were back then. multidecade, how different is the index now preg.f.c.? how different is this one? vishal: much cleaner balance sheets are stronger. 1% toe 2% of real g.d.p. people will be just fine. i think a lot of balance sheets -- jonathan: can i ask an additional question. i know it's difficult and don't expect you to have a precise answer. typically historically 350 basis points, 250 on high yool is super tight. do we need to think that? is the new number 200 or 150? vishal: could be.

if triple c's are on the carnage they have been on. if you take out distress from high yield that's another 50 basis points already there. low 200's. we think that spreads are very commensurate to the fundamentals and technicals we are going through. they could be tight and frustratingly tight for a long period of time. second statement off that is. the lowest demand in our port yeol foes in a long time. highest quality. jonathan: explain that. vishal: we don't think that volatility are you getting paid for the spread. triple b to double b is the lowest in two decades at this point. as a spread investor i'm always looking for more premium. i need to get paid for that volatility i'm taking on. for fixed incomport folios i can still diversify high quality, can still spit out 5% to 7% return in the next three years.

i'm taking that probability. annmarie: when you take the step back you said credit are very strong, a flood of cash coming in. where is that come interesting? how much is coming from 350e78 who are waking up to the real -- from people who are waking up to the realization they are not going to get social security or some other benefits when they are old and need the income. they are going to need to be invested. vishal: i think the large end yield is very compelling. except for the very stront end, the zero to two or three. i think it should adjusts that is the fed comes down. every other part fixed income curves have already adjusted to be steeper. the roll down, traditional way of earning money on a fixed income, and clicheed way how we put it, the dual mandate of fixed income has high probability to be met for that long-time saver. you have the negative

correlation to risky assets back as inflation is coming down. .a. lisa: how do you hedge against the possession for geopolitical digs ruption and oil prices -- disruption and oil prices surge. how much do you plan for a scenario of that type? vishal: it's tough to massively shift poart folio positioning for that one. i think one way we are trying tt risk. not as much over the last three years. the lowest point of our overseattle weight we still have an overweight posture if this geopolitical tensions do flare up further, if we had a few signs in the last two o three weeks, that it could have, that we have enough potential to bad below investment grade risk which will sell off and react to these tensions. and back the treasury service. less geopolitical.

lisa: are you worried about the deficit? vishal: we are. in terms of the biggest -- we can throw out stats all day. the way it affects is you need to grow out of it or you need to do something as some of the european countries are getting on it, is being fiscally responsible and going through some tough times. lisa: do you think washington would do something? vishal: very tough. that is one thing that they are -- deficits in china is one thing. how common those two campaigns are and how aligned they are, unfortunately, at this point. annmarie: if the deficit is one of your biggest keshes, what matters for you is the composition of congress. how do you think about that? vishal: basically looking at the same numbers that you guys report on the sector as well. dead heat, but then senate and house would be split. which is not a bad thing for

deficits. we might be looking at a goldilocks scenario. jonathan: that's the least bad outcome. split congress because it won't make it too much worse. but not fix it. good to see you. thank you. vishal khanduja of morgan stanley. equities unchanged on the s&p 500. lots of bank earnings this morning. beats across the board from goldman, banc of america, and citi. lisa: as you expect them to do. this was one question mark. steve auth saying that. this is one of the pillars making him bullish if the banks felt well. treacherous goalielocks. that's sort of how we feel. it seems like every day people are saying i don't geopolitics, the deficit. jonathan: what about? always something. morgan stanley, the one lone bank still to go. they report tomorrow morning. update on stories elsewhere with

your bloomberg brief. david: to get to -- dani: to get into some of the specifics. goldman sachs, citi in the green market. they all had gains across the board. citi's marketing investment banking revenue topped estimates. both goldman and banc of america outperformed the third quarter. for goldman their best quarter for equity trader since the end of 2021. this pushing the bar that much higher for morgan stanley which reports tomorrow. boeing plans to raise as much as $25 billion. filing a shelf this morning, a precursor to possible equity raise t announced a new $10 billion credit agreement to shore up the billion streak with the strike going. they are hoping to hold off downgrades to junk status. the s&p estimates this will cost the company more than $1 billion a month. according to a press invitation from the state council information office, officials

from chinese housing ministry, finance ministry, and the national financial regulatory administration will be holding a briefing at 10 a.m. beijing time on thursday. the focus will be on promoting the steady and healthy development of the property sector t comes a few days after ministry officials promised efforts to back the real estate sector. jonathan: thank you. up next on the program, we'll set you up for the day ahead and rest of this week. live from new york city, this is bloomberg. ♪

♪ jonathan: 38 minutes away from the opening bell. equity features unchanged. have been all morning. after posting another all time high in yesterday's session on

the s&p 500. standout move has been crude. 7074. earlier on in the session following a "washington post" report that may be the prime minister in israel, benjamin netanyahu, might spare energy assets in iraq. lisa: steven cook poured cold water on this saying israel will do what it wants. look what happened on the weekend. the israelis are about to get a thaad. a serious piece of equipment. only seven the united states has. they are giving one to israel. the first time ever this is happening. lisa: when. annmarie: when you have that piece of equipment maybe you'll listen to the administration. jonathan: down across the board by something like #%. get to the trading the rest of the week count into the scoodle looks something like that. don't miss this. lisa sitting down with san francisco fed president later on. tomorrow, more earnings from morgan stanley. thurs an acb rate decision.

retail sails. sales. and more results from netflix . on friday housing starts and building permits. mary coming up later. >> she tends to be thoughtful based on the conversations she has as she tours her entire region. lisa: it's not anecdotes. it's trying to have set qualitative understandings of how people are feeling. i want to know what the destination is. i want to understand what neutral is and the goal is of the federal reserve which has a dual mandate of inflation and employment longer term what is the healthiest balance for an economy and get into that. because right now that seems to be an area this market is struggling with given how much bonds have been fluctuating. jonathan: apart if they were bullied, aim sure that might not come up. park that. talk about financial conditions. if you speak to the c.e.o.'s of asetted managers, they have a

different opinion on the level of interest rates required. financial conditions are easy. we had a conversation about how tide credit speeds are. equity markets all time highs. lisa: especially because financial conditions for big companies a very different than the financial conditions for particularly lower income and middle class individuals and families. that has been restrictive. you have seen that start to soften. how do you dovetail those two when you want to both katetory a certain cohort that's struggling while also not create frothy conditions in a market more immune to rate increases and decreases. that's a struggle. annmarie: we are three weeks from the election. do you think she'll dive into what 2025 might mean if the fed is thinking about it. is she a deficit person or does she care? lisa: i would guess she has her eye on it. most of them are trying to steer away from that looking at the parameters of current

conditions. jonathan: i imagine you are going to 2025. lisa: is this possible? she probably will say anything is possible. we do what the conditions as we see them. i'll telegraphing it. jonathan: look out for that conversation. the san francisco fed president. coming up tomorrow, emanuel, truist, charles myers, and we'll catch up with howard lutnick of cancer fitzgerald. equity features on the s&p just about positive from new york, this is bloomberg.

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matt: all right, futures are now a little bit higher, bouncing back and forth between gains and losses. we have 30 minutes until the start of trading. i matt miller. katie: and i'm katie greifeld. sonali basak, on assignment. "bloomberg open interest" starts right now. matt: coming up, capping chips. the u.s. may limit the amount of sales or continue to limit the amount of sales of ai chips to other countries. we will analyze that and what it means for other countries. meanwhile, looking under the hood of big banks, b of a, jumping 45%, a big beat. we will bring you all the headlines. everybody ise