>> the market is underestimating the strength of the u.s. consumer. >> i think the consumer is as strong as it has been. >> will continue having a strong economy. >> the evidence suggests it is an economy pretty resilient. >> it is the u.s. driving the world economy right now. >> this is "bloomberg surveillance." jonathan: live from new york city, good morning, good morning. really busy morning ahead of us. here is the lineup. ecb rate decision 8:15 eastern, 8:30 data points, retail sales, jobless claims, 15 minutes after that, 45 -- 8:45, christine

lagarde speaks. later on this afternoon, earnings from netflix. tech is helping out this market this morning. tech is doing better that ok. nasdaq 100, up by .7%. tsmc delivering a raise, common things down in the equity market. lisa: now expecting sales to go roughly increased by about 30% versus the estimate of mid-20's. a big question mark, are we sing the winners and losers from this in terms of which areas of the industry these chips are getting apply to? is that what we are seeing? are those most vulnerable to china and those less vulnerable? jonathan: demand is real and i believe it is just the beginning. annmarie: talking but the chip demand side every thing stabilized and starting to improve.

this is just the beginning, how much marking this company go? really quelling those concerns about the future of ai, the hardware of ai. long-term, you're to think about where this company is going. they are expanding around the globe because of the concert and overhang of geopolitics, not just out of china but also the administration, to cap some of the chips going to certain countries. jonathan: we can take a little from the news this morning. later at 8:30, jobless claims and retail sales. jobless claims. how distorted will claims be after the one-two punch we have seen across some of the states in this country following hurricane after hurricane? lisa: and market will respond to upside or downside distortion? more so than they will potentially retail sales come in strong? in other words, is the market still biased attentional weakness in the labor market that can push the federal reserve to cut rates more significantly. annmarie: jobs came in great. retail cells likely will come in

good. it doesn't hurt that interest rates fell into super. jonathan: digesting oppressing whatever the ecb decides to do. the news conference with christine lagarde, to make this more interesting, they don't cut rates. if they don't, then this is best watch tv at eight eastern. lisa: basically, how will she justify? did she say somehow she is still worried about inflation? is this a vote of confidence things are more robust? let's be clear, nobody expects them not to cuts rate. the hypothetical is hypothetical. i think -- jordan rochester had a good interesting idea which is essentially these news conferences give you nothing because basically they have not given any forward guidance whatsoever. david on help -- they had been unhelpful. annmarie: they reiterate what we hear from the fed, data dependency. all priced in but nowhere to go.

what does this mean for the future of the european central bank had the potential rate cutting cycle? euro area inflation revised down. to your point if they did not cut, that would be a little insane given where inflation is. this is a single mandated ecb. if they were dual mandated ecb, they should be cutting. look at the job cuts across europe and potentially in the manufacturing base of germany, the idea of plants closing. this is a european economy in trouble. jonathan: it would be a total shocker. every single one of the big specs a rate cut a little bit later. coming up this hour, russ koesterich a black rock. we will catch up with the connecticut governor. and dan scally later this afternoon. we begin this hour.

jobless claims data 88:30 eastern. russ koesterich right, they continue to run mostly long and nobody's but with less. silly have been adding to consumer names on this thesis that economy will be fine and will continue to grow at or above trade. welcome back to the show. do you expect the data at 8:30 to backup your thesis? >> i think so. we have an economy that is solid. we saw that in the nonfarm payroll numbers, most of the data with economic releases now coming in above expectations for the first time in a while. this is an economy i think you can still have some confidence that growth is decent. the fed is cutting, maybe not quite as fast as the market thanks, and apart from some of the geopolitical risks, fairly decent for stocks. jonathan: the last time we spoke have you introduced your overweight on equities a little bit. i sensed a bit of consciousness

around valuations. where are we now? >> that is fair. the equity market is not cheap. we know that. we have still maintained what i call a modest risk on stans. we are still a little above benchmark in terms of equities. a modest amount about benchmark. we are still long spread products in the five, high yield . the notion is when that 40% of the traditional 60/40 portfolio for the first seven years, can get a decent 6% to 7% yield, get that tailwind. we are long the u.s. on tech side, consumer side. is to reflects the fact these are the companies that was see delivering on cash flow, margins we still think there is upside. lisa: you said you have recently been trimming or tech exposure. i'm wondering why, especially in the different kinds of messages

from getting out from asml as well as tm and c. >> we're still long tech in the global allocation fund. we're just less long over the summer. some of these trades, around the semi space. valuations have been stretched. if you look out three to five years, i think these are names you want to own. we have been seeing these get crowded, buying back on some of the dips. it is tactically trading around that core long position, just not quite as long as we were back in may and june. lisa: you talk about being overweight, credit, stocks. i don't hear a lot of 30 year treasuries. i hear the opposite. i want to talk about why government especially as you shift toward gold, which we see it break out. can you explain those two trades and how they are related? >> absolutely.

we have spoken on this before, lisa. a couple of issues on long big treasuries. middle of the curve, we see good opportunity. with the long end of the curve, have a few issues. the biggest one, you can only gain a yield of about 4% on the 10 year. you have massive amounts of supply, a pullback in some of the buyers that were very active a decade ago from the fed to the chinese to regional banks, and not really a lot of risk premium in going far out of the curve. at the same time, one thing treasuries are not doing as well as they were doing five years ago grandma not provide that -- years ago grandma not provide that consistent hedge. they did reliably tend to give you a negative correlation of stocks. less so today. gold is a bit different. i'm not sure it is going to give you a great hedge on a day-to-day basis. we are all talking about the deficits, the sustainability of

the u.s. debt. one of the advantages of gold, it is as scarce as that. we think of the long-term direction of the dollar and u.s. fiscal sustainability, gold is one of the assets that is diversified in a portfolio with that longer horizon. annmarie: basically two ideas at the same time. overweight the u.s. but still concerned about its long-term trajectory. do you think at some point someone is going to call foul on u.s. exceptionalism? folks i think it is unfair western. i think part of it comes down to timeframe and the question of the private sector versus the public sector. the private sector, we still see companies and technology on the consumer side, on the energy side that we think can continue to grow. the challenge in the u.s. is not the private sector economy, it is public-sector debt. we think about an asset class like old grandma it is directed at that long-term concern around the public sector coming fiscal

sustainability. jonathan: yep to knowledge the exceptionalism. what is the rest of the world offering right now? what i see in china, not much. europe based on the willingness to carry on, not much. what about the rest of the world? >> i still think there are places you can look at from the bottom up basis. we found opportunities in japan on the technology side. europe has been challenging, growth has been slow. there are companies there but you raise a very good point. one of the challenges investing in your, and this has been the issue for years, not just low growth, the leverage to china. whether you're talking about luxury good manufacturers or german industrials, you have to have a view on china if you're going to be long some of these names. when you see this appointment in chinese regional sales or overall amount of stimulus, these are the names that are headfirst. jonathan: great to catch up. russ koesterich a black rock.

i make that starkie point on the eu. the european union has warned x, calculate fines against them by including revenue from elon musk's other businesses. this is the problem with europe away from this story. the fact we keep seeing headlines like that, the fact we are not taking a big step back on the continent and saying, where is our spacex and what are we going to do about it? is part of the much wider problem plaguing for a long time. lisa: what is this saying? the message you keep getting come how much does this really hamper the creation of new technology and the fact we are seeing asml and other tech in europe underperform at the same time others. outperform because you quite a bit. annmarie: and the european union, not just what they're doing in terms of x, they've done this with apple, amazon, go after all of the u.s. companies -- to your point. the u.s. comes up with the

inventions, regulated, the chinese i think -- jonathan: replicate. innovate, replicate. let's get an update on other stories. dani: president joe biden is heading to germany for a visit with the chancellor. it is his first trip abroad since announcing he would not seek reelection. he arrives this evening. he will be joined by u.k. prime minister keir starmer and the french president macron for the meeting of the transatlantic quad to discuss russia and the conflict in the middle east. stan druckenmiller says markets are pricing in another trump presidency, but he told bloomberg exclusively he will not be backing the republican contender or his democratic rival harris. he called trump a blowhard while saying a harris presidency would be bad for business. apple's chief people officer is

leaving the company after less than two years on the job. sources told bloomberg apple employees were notified of the departure yesterday. the title was created for service who is test with overseeing human resources and recruiting for apple's roughly 160 thousand employees. her tenured is considered short for senior executive at the company reporting to ceo tim cook. that is your brief. jonathan: have any people feel like stan druckenmiller? his views on the election? doesn't that resonate with a lot of people? lisa: it looks like he is not voting and that resonate with a lot of people who just can't bring themselves to vote for either candidate. jonathan: they don't know which way to turn. lisa: what is interesting, he said he felt the market is going to be convinced that trump is going to win. you still have a race very much tied. jonathan: you do get that sense, don't you, that the market is leading in one direction at a

time that the polls are pretty even. lisa: what we've seen consistently is even if people understand what a trade is, they never really understand it until it happens and then you get a sense of what that trait is. right now you people saying different things on both sides in terms of what is going to happen. we shall see on november 5, six, 7, 8. annmarie: he said he liked the financials. is that a trump trade or the fact the bank stocks, earnings had a blowout quarter? jonathan: you can make a big call on what this all means for the from angel markets. we remember overnight would happen in november 2016. things change quickly. up next, making a difference. vice pres. harris: let me be clear, my presidency will not be a continuation of joe biden's presidency. and like every new president that comes in to office, i will bring my life experiences, my professional experiences, and fresh and new ideas. jonathan: a fiery interview between kamala harris and fox news. the conversation, up next.

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jonathan: morning to you. welcome. equity futures doing ok. later on this morning, 8:30 a.m. eastern, economic data, retail sales, and jobless claims. this morning, making a difference. vice pres. harris: let me be clear, my presidency will not be a continuation of joe biden's presidency. and like every new president that comes in to office, i will bring my life experiences, my professional experiences, and fresh and new ideas. i represent a new generation of leadership. i invite ideas, whether it be from the republicans of the business sector and others who

can contribute to the decisions that i make. jonathan: the vice president putting distance between herself and president biden with election day less than three weeks away. i knew polling from fox news showing donald trump leading harris by two points. joining us to discuss, the governor of connecticut. good to see you. welcome to the program. she is taking some risks. do you like what you see? >> yes. take those risks. go into the lion stand. go back and forth. donald trump won't even debate again. she is having a pretty good debate. i appreciate that. lisa: is it too late? should she have done interviewed two weeks, month ago? >> i think she is moving along. donald trump won't go on abc so i think she's doing ok. lisa: do you think she is evolving as a candidate over the course we have since july? >> i think so. everything has been so compressed for her and tim will

stop now we are in the final stretch. >> have you been happy with tim walz performance? >> i love tim. he and i were elected at the same time. all the governors, both sides of the aisle, he is so genuine and real. we like governors, by the way, governors have to balance budgets and live in the real world, unlike these other guys. i think is going to be a great vice president. lisa: when he was in congress, he was a blue dog democrat, moderate. as a governor, he is very liberal. legalizing marijuana, licenses to undocumented immigrants in his states. do you think that given his record as governor, he was the right choice for a general election when the democratic party needed to be seen as coming into the middle, especially after vp harris left flops from her primary?

>> legalizing marijuana, does that make you liberal? i thought that was libertarian. i think you see that having in states across the country. fighting for a woman's right to choose, that is about freedom. i don't think that is particularly liberal. he balances budgets. i think he has pretty good balance. lisa: there's a question about how much his campaign will reach out to business and tim walz is going to connecticut where he will talk with business people. how are they responding to some of their concerns, whether it is about tax increases, having a viable immigration policy, or, frankly, when it comes to antitrust and the ability to understand -- >> i like that they are reaching out to business. i think the biden administration was a little more ideological. i think harris-walz are more pragmatic. i've seen that in crypto, what they want with capital gains. they take the deficit very

seriously as do i. i think their outreach makes sense. i am proud is coming to greenwich to tell a story. lisa: do you have a sense of what they're going to do it antitrust? >> i don't. my instinct is they talk about price increases. they worry about monopoly pricing. probably will be strength when it comes to antitrust. lisa: one thing you've talked about with us this question about immigration. how people are coming to connecticut. that made you got check some of the assumptions. do you think there's anything further they can do, tim walz and kamala harris campaign, to change the narrative? that there immigration policies have led to a lot of problems? >> i start with the fact this is a country built on immigration, legal immigration. that is part of our economic strength, unlike other parts of the world. if they'd asked me last night

what is the difference between you and president biden, i would've said, mr. biden, give the jewels i need to shut down the border to illegal immigration. i think that is what kamala should have said. jonathan: whitey think she won't say it? i think that people -- why do you think she won't say it? you say pragmatic, others may say she is a shape shifter. she just wants to get elected, and trustworthy. these are the values, thoughts, policies just five years ago and now they are over here. how can we trust them? what is the message? >> talk about a shape shifter. talk about donald trump. we know where she stands. she was the vice president, jonathan. the vice president isn't worth a warm bucket of spit. you are on board with the biden administration, that is your job as vice president. now she has been a candidate for 90 days and she has shown her stuff. annmarie: if you think the vice president's job is that

important, than how she qualified for this job if she's running on some of her time in office as vice president? >> i think it is a pretty good training ground. jd vance stopped i the u.s. senate for a cup of coffee. she has been front and senate as a senator, as vice president. i think she's got the training and the experience she needs to be a good president. annmarie: some states are voting. connecticut you can go on monday. you said you're going on monday. why does she need to do as people are out and about voting? it is not like she has time before november 5. the time is now. the election has started. >> i'm just urging -- i am worried. the guys in the finance world, maybe it wasn't so bad under the trumpet administration. maybe i will sit this one out. no way. this is a transcendental boat we

have coming up. i came in office under president trump. the government was shut down. every time you did not get your way, the government shut down. then we had covid. we had to go to china to buy our masks. it was dysfunctional for 2.5 years. this election -- i can't stand people saying, maybe i will said this one outpost of jonathan: yet a low unemployment rate. something around 3.5%. part of that is because people have been leaving the state. we all went legal immigration. how are we going to achieve that as a country? something a lot of us can agree on. i went to a long process to be here. how do we make it easier for people to come here illegally -- for people to come here legally? >> we have a lower an employment rate than the rest of the country in connecticut.

for the first time in a generation, people are moving into the state. some are coming from new york. i am proud of that fact. how do you keep that economic momentum going? for us, manufacturing, untrained manufacturing, the defense trade. they're going, bigger piece of our economy. fintech and life sciences the next generation. old industries. that was our reputation. no longer. lisa: policies going forward that can be viable, immigration policies. the bigger take away is, set a lot of your business friends and colleagues are on the fence that don't want to vote, feel like it is an equal chance between the two. what do you think is driving them to feel that way. what you think is the most misunderstood policy that you kind of want to underscore and wanted them to understand? >> i think for a lot of those folks, cut fine taxes is kind of

-- despite what it means to the deficit, to making investments. what i like about kamala, she's talking about opportunities. she is saying with daycare, i give you the opportunity to start your own business. it is an ownership economy. it is a different field than the last four years was of jonathan: governor, good to see you again. governor ned lamont of connecticut. at next, we will check up with the latest outlook for the economy and the bond market with andrew bolles. this is "bloomberg." ♪ personalized financial advice from ameriprise can do more than help you reach your goals. -you can make this work. -we can make this work. it can help you reach them with confidence. no wonder more than 9 out of 10 of our clients are likely to recommend us. ameriprise financial. advice worth talking about.

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♪ jonathan: equity's doing ok this morning, up i 4/10 of 1% on the s&p 500. -- up by 4/10 of 1% on the s&p 500. dreadful earnings. tsmc has made up for it. a bit of comfort in the tech sector. the nasdaq 100 up by 8/10 of 1%. the two year yield at 3.9 five. the 10 year, just north of 4%. some critical data later on this morning. jobless claims is tricky. the highest of the year, lots of excuses for it, begins with h

and ends with kane. hurricane. lisa: i like that. yes, i wonder if we have shifted the narrative. there was a biased market that was being perceived in the labor market. given all the commentary we have heard from the banks and the solid data we have seen from the likes of bank of america looking at consumers or morgan stanley or jp morgan, is there now less of a bias to look for weakness and possibly an upside surprise to initial jobless claims? jonathan: the euro is one await .62, going into the ecb's meeting -- 108 .62 going into the ecb's meeting. we probably won't cut interest rates for the time being and then the data happen. all of that in the last month, inflation and headline below target. pmi's, absolutely terrible.

overwhelmingly, the view on the south side, the european picture has weakened considerably. goldman sachs, euro's own data has been significantly weaker than expected. jp morgan, there is a case for cuts more quickly. lisa: there is a great expectation and markets. this will be the first back-to-back rate cut and it will begin a rate cut per meeting going into the remainder of next year. i can't emphasize enough what jordan rochester said. i struggle to see it being an informative and market moving press conference. i would love to be wrong. everything she has said has turned out not to be the case. that ultimately is the reason why people will pricing these rate cuts, even if she says she is data-dependent in the news conference. jonathan: they were accused of being data independent and not data-dependent. when it comes to the data, i'm interested in the approach. central-bank differences, the

federal reserve and ecb. the federal reserve is using the phrase recalibration. the ecb is going meeting by meeting and i wonder whether that needs to change after the data of the last month and whether we get any hint of that in the news conference later this morning. that would be a big shift. it would be something to look forward to later. lisa: the inflation data in europe has come in below expectations consistently. the economic data has come in below expectations consistently. if they are in the face of inflation that will struggle to be above 2%, let alone below 2% as well as weakness. do they start to telegraph a more protracted path of rate cuts? jonathan: there is a strong case for delivering cuts quickly to avoid a growth slowdown and hence a disorderly disinflation process. is that the risk for the ecb? lisa: are they worried about having to combat disinflation and even deflation akin to what

it was pre-pandemic? is there a shifting narrative in europe that is different from the u.s. where people are worried about sticky inflation in certain sectors like airplane tickets that we heard about yesterday? jonathan: that sounds personal. euro-dollar, 108.62. vice president harris, bound to be different from president biden. in an interview on fox news, pushing back on criticism over the border crisis and transgender rights. donald trump leads kamala harris by two points in new polls. lisa: she was forced to defend the administration she is currently part of, their border policies and why they decided to get rid of the trump era policy of remain in mexico. you could tell he want to stump her on how many immigrants have entered the united states. and she was filibustering a bit here. but, depending on how you look at it, whether your politics is either she did well or she didn't because you already went in liking her or didn't for a lot of individuals. at the end of the day, she was

forced to really have a substantive policy focused debate and some of the best exchanges of this cycle for her were during the debate. she should probably be doing more interviews like the one she did last night. lisa: like on bloomberg, for example? it's difficult right now because we haven't heard anything on the policy front from any of these interviews. this is about trying to massage a message to the middle. annmarie: this is where i wonder if she did win over the individuals she was going after, the nikki haley republicans who are not sure if they can vote for the former president. they don't like the fact a number of individuals, especially in the national security space, say he's unfit to govern. like ambassador john bolton has told us on this program. did she win them over? bret baier made up a great point, they talked about the oil

exports that iran has made airing this administration and the money tehran has garnered from it. jonathan: as for chinese stocks slumping after another disappointing policy briefing, china has nearly doubled the quota for unfinished residential projects. there was a big lift in this market. then people started to go the other way, very quickly over the last week. lisa: is it a trade or investment? pre-much everyone who came on the show said it was a trade and we are seeing how much it was. the promised stimulus is not the same as growth. jonathan: let's turn to the latest from tsmc. hiking its revenue outlook after delivering better-than-expected earnings, looking for sales to climb 30% in u.s. dollar terms. that is up from previous projections from a mid-20% rise. that stock is up more than 8%. some outperformance on nasdaq futures this morning. this morning, we will focus on

u.s. retail sales and jobless claims data, due out in just under two hours time. the team of pimco, out with their updated secular outlook, writing the u.s. economy like others appears poised to achieve a rare soft landing, moderating growth and inflation without recession. there are risks such as the upcoming u.s. recession and its implications for tariffs, trade, fiscal policy, inflation and economic growth. andrew joins us. how election dependent are we in 2025? >> it's clearly a very significant event for the u.s. and the world. i was listening to your discussion on your and if you want a bearish case on europe, the risks around a trade wall, a 50% chance for a dollar trump presidency. -- donald trump presidency. the commons tariffs, you would

think that -- comments on tariffs, you would think that china would see europe as a loser on global trade war. that's another issue on the european side. very consequential around trade on the fiscal side, if it's going to be a divided congress, not such a significant factor. you will have ongoing high deficits, regardless of the outcome for the election. the trade part of this, the risks around the global trade war, to mystic in the u.s. and the international impact does affect everything, as you said. jonathan: d think that just reinforces your belief, your conviction that maybe if you want to be long-duration, europe is the place to be? >> i think that if you look globally, the five-year part of

the curve looks attractive across a number of markets. including europe. i think that the baseline, the baseline, the global baseline is for soft landing in the u.s., a really good outcome in the u.s., trim like growth in europe. -- trend like growth in europe. you are not pricing significant recession risk. that five-year part of the curve i think is a good place to be. in the event of worse than expected with macro outcomes and market outcomes, there is room for the rally in that part of the curve, broadly pricing central banks. that looks of it right to me in the baseline -- a bit right to me in the baseline.

you have the potential for lower than terminal rates if you get the worse than expected outcomes. lisa: long-term bonds are going to have to have a premium built into them because of what you were talking about, the deficit, some of the fiscal overhang in the u.s., especially when compared to europe which has deficit issues of its own but is facing a much more disappointing outlook for growth. are you saying that's not true? that even though you are worried about the fiscal deficit, it doesn't mean there won't be significantly higher premium? -- premium u.s. long-term bonds than in europe? andrew: in both cases, you want to be in the five-year part of the curve, the 5-10 year part of the curve. in europe, you want to be under the 30 year part of the curve. in the u.s., that is fiscal premium over time. if the u.s. -- you could build

in more risk and it would be the 30 year part of the curve that you would think you would see that. the u.s. is flat. if there is a u.s. led global curve steepening, that will impact europe. that happened in the first president trump term. you could make the bullish case on the five-year part of the curve. the u.s. and europe, the curve steepening position makes sense. markets like the u.k. and australia, where terminal rates are a bit high compared with the u.s. and compared with the history in the u.k. or australia , rates look pretty attractive as well. lisa: as you've been talking about the economic peace, very

much another side. we've been talking about the ecb rate decision coming up later this morning. and a question about how much the european central have to diverge from the federal reserve, simply because inflation is falling faster, but so is growth. do you see that as a possibility that that's what's going to happen and potentially the ecb could cut rates much more quickly than the federal reserve and it could lead to a bigger divergence in the short term between the u.s. and europe? andrew: i think it certainly could happen. remember, the ecb has the single mandate inflation, look where the wage demands are coming out in the german economy. this is a central bank which i think is going to be not that radical. the pricing looks reasonable to me, getting to terminal rate close to 2%. may more likely to go a little bit below 2%.

i don't have a superstrong view on the timing. i think there is some incoherence in their communications. you are not going to do something in october. i always think they could speak less rather than more and that the actions speak for themselves. i think they are going to go today, it looks likely they will go in december. and then into next year. the key thing for me is if they need to, if the data does weaken significantly, they have plenty of room to cut rates beyond what is priced in. don't think they will be going back to the world of negative interest rates but they could certainly go to 1% or a bit below. maybe half a percent. when you look at positioning, in the baseline, it looks fine. the yields in europe look pretty attractive. and in the event of the

asymmetric risk, i would agree with weaker outcomes and you could benefit if you're in that five-year part of the curve. jonathan: i wanted to squeeze in credit. greaat the firm including yours. how are you thinking about what's happening with credit right now, with investment grade in high yield spreads. it is comparable to frothy. sin financial market history. -- frothy -- in financial market history. andrew: i think credit will do fine. you have risks of negative outcomes. i think the u.s. led market looks fine. but when you are slowing down, there is risk around that. i think one thing to do is to be up in quality.

if you are in investment grade credit, if you are in mortgages, agency mortgages, nonagency mortgages. if you are looking at high-quality spread, it will be robust across a range of outcomes. i think this is a better place to be than more economically sensitive parts of the market. i think we can achieve a lot of what we want to achieve being up in quality, investment grade credit. we don't need to have a lot of exposure to high yield credit. you can do some emerging markets. again, have the high-quality exposure. i think this is an environment where yields are very attractive. you can build really attractive portfolios, five, six, 7.5% type yields without needing to go significantly down to the more economically sensitive parts of the credit market. jonathan: andrew balls of pimco. yields a little high, on the 10

year, just north of 4%. here's your bloomberg brief with dani burger. >> joe biden has marked a new milestone in his effort to forgive student loans. today, the administration has announced it has approved $4.5 billion in student debt cancellation's for around 60,000 public servants. nestle has cut its sales and profit guidance for the year. struggling to rebuild market share after higher prices turned consumers off name brands. the swiss food maker abruptly replaced its ceo, shifting from an outsider who had run a health care company to an inser -- an insider who climbed the ranks. nestle's shares are off more than 10% this year. uber might be considering a bid for expedia. uber approached its advisors about a possible acquisition of the online travel company. they have reached out to expedia

and and ft has said there is no ongoing talks between the two companies. the ceo of expedia from 2005 to 2007 remains a board member. jonathan: more from dani burger in 30 minutes time. . up next, outpacing expectations. >> that's been the most stable thing we have seen in this market. all the narratives have shifted. but earning trends in corporate america have been the most stable part of this market. ♪

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outpacing expectations. >> we still don't think we are in an ai bubble. in the equity markets, if the economy stays more -- that should lead to corporate profits moving up. the earning trends from corporate america have been the most stable part of this market. jonathan: earnings season ramping up as tsmc confirms a continuing ai boom. earnings revisions have been -- three q earnings revisions have been negative for cyclical sectors. this indicates to us the market is thinking about soft landing in 2025 and a shift toward cycle beneficiaries. dan skelley joins us. the emphasis starts to shift away from the financials and toward the mediatech type layers.

>> we've gotten off to a great start in the last week with banks and seeing some of the consumer plays as well. the bar is high, jonathan. one thing we've been talking about is respecting that rotation since july and august. it's been fairly consistent since then that you've been seeing the value in cyclical sectors responding better to earnings results. jonathan: the tech story has been a mess. this week is a fantastic example of that. everyone is spooked. tsmc comes up and everything is ok. where is trait now? dan: it was a mixed bag -- it is a mixed bag. it was the only game in town for 18 months. let's see what happens with china, i know we will get into that. we are seeing better global growth potentially. the reality is it is a higher bar, it is a mixed bag. things have certainly changed.

lisa: when you talk about the idea of growth outside of the u.s. and you talk about china, you've been telling people not to buy into the chinese equity rally. it seems to be where the mood is shifting, how much can the rotation continue? if all the pillars don't hold up, you have a, fed rate cuts that people believe will be cutting down the pike and the china stimulus. can you get some of that and have the rotation? dan: it's a really good question. it pertains to the u.s. leadership and large-cap value. fed cuts, more confirmation about a soft landing. we have seen that in services. do we need to see more in manufacturing? yes. manufacturing has lagged. more to come. and has the earnings broadened out? you are not necessarily as reliant on china continuing to follow through with stimulus to get that trade to work.

lisa: how excited can we be outside of the u.s. if you don't have china cooperating? dan: you have to pick your spots. look at germany, who has been reliant on autos for a long time. not only are there cyclical pressures, there are structural pressures with changes in the industry, competition, new technologies. there is a lot of more idiosyncratic risk to those places than most people discount. annmarie: let's talk about the geopolitical and domestic politics. these risks you say are over the market. you say the passing election will be a clear event with downside volatility. what about if there is a contested election? dan: we didn't say election night. we subscribe to the fact they will be more of an election week. -- it will be more of an election week. once we get past that, we will

except a winner. we think the election is one component. two years ago, it was try to disprove the recession. a year ago, it was what was the path of the fed? would they be proactive or reactive with rate cuts? annmarie: what if there is a florida recount issue? what if it is that kind of contested election? dan: it could be a higher volatility environment but we think it will be short-lived. jonathan: you can't wait to see the backend of this, can you? dan: can't wait. jonathan: do you think this is the typical election where once the event is cleared, it is back to business or could we see some serious change to policy that we need to pay attention to? dan: not to diminish the gravity of the moment, i think the one scenario that presents the most near-term voluntarily -- volatility is -- which over the last week or so has been increasing in terms of the

betting odds. in trump 2.0 with a red congress, debt to gdp is 30% higher than it was in 2016. interest rates are higher as well. it is a different backdrop. the idea of doing this physical expansion, tariffs, extreme trade policy and potential changes to immigration policy, all of that throws a real wrinkle on this goldilocks soft landing disinflation thesis. jonathan: we could see some big changes. up next on the program, we will catch up with mohammed, we speak to terry haynes, ken tropin and hermann chan. from new york, this is bloomberg. ♪

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

>> technicals are fiercely strong. >> the amount of liquidity in the markets is phenomenal. >> i think you will get the best use from the equity market. >> stocks and bonds are trading uncorrelated. >> it is probably more uncertain for bond investors than equity investors. page boss this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the second hour of bloomberg surveillance starts now. this is your morning, this morning.

8:15 eastern, an ecb rate decision. 8:30, jobless claims, u.s. retail sales. a: 45, president lagarde speaking. lisa: there are two different diverting themes. strength among the u.s. consumer, which we make it highlighted at 8:30 am, and weakness in the euro region that the european central bank will have to respond to with rate cuts. those stories have led to diversions and the rotation theory we've seen play out in the u.s. can they continue and where is the balance of risks? annmarie: it feels like they need to continue. european inflation revised down. what christine lagarde said in july about the jobs market that the ecb could take time to gather new information when they are setting policy. has time run out? when you look at the labor market that is developing now in europe? jonathan: earlier this morning, going to europe for bonds. why did you go to europe for bonds? growth is not great and the ecb

will have to cut interest rates. two, you have the risks of the walls going up in the united states of america putting tariffs on the europeans that could damage growth more. there are two risks that you double down on longer european debt. united states for equities, if donald trump gets a red sweep, they are turning up the heat domestically. the growth you will see in america will be contained in the united states of america not bleed out to the rest of the world. lisa: it raises the question if american exceptionalism will be a theme in terms of equity performance or if you start to see the diversification and broadening out in a more mature way. you can see that tension playing out in a number of different regions. jonathan: this is all analysis of 2025. we need to deal with q3 of 2024 and earnings going into q4. on the nasdaq 100 we are up by .8%. some outperformer's from tech this morning. tsmc, taiwan semi, better than

expected. lisa: which basically raises a contrarian view to what we saw from asml that came in disappointing with future orders coming in below expectations. we keep talking about this. how much does it show that the semiconductor industry is a fate of two different worlds. those exposed to ai and those that aren't. or does it have to do with, where are your business customers? in china or in the rest of the world? ultimately, that will make the difference. jonathan: the stock is up in the premarket by little more than 8%. we will catch up with mohamed el-erian on the fed's data dependence, and her mention of -- hermann chen. we will count you down to the date of the week. retail sales and jobless claims around the corner. mohamed el-erian writing the following. excessive data dependency has contributed to volatility not just in the fed's forward

policy, but also actual policy steps. hopefully the early signs of a fed shift to combining data dependency with a more strategic approach will take hold. are you seeing evidence of that shift taking place? mohamed: i think i am and i hope that i'm not too hopeful. they got hammered on data dependence in the wall street journal. in july, we didn't need a rate cut. mid-september, we needed a 50 basis point rate cut. now, we are talking about caution on rate cuts. that is huge volatility from a policymaker that is supposed to set guidance for not just the u.s., but well beyond the u.s. i think there is realization that it's time to get out of this data dependency. you mentioned the word recalibration. if you look at chris waller's

comments from earlier this week i sense it there. jonathan: he brought up the october payrolls report the drops november first and that we could see distorted data. it raises questions of how dependable is the actual data we are about to get? mohamed: that is the problem. the revisions not only change the numbers, sometimes they change the whole interpretation. that is one problem with data dependency, excessive data dependency. i'm not saying don't take data into account, i'm saying don't make it the main determinant, only determinant of policy. that is where you make mistakes. the fed is shy about being more strategic because of the huge mistake they made in 2021. you don't add to that mistake by making another mistake. i think they will emerge from this period of excessive data dependence. lisa: you said in the past that you can parse through this unreliable data, but listen to

what companies are saying, listen to ceos and cfos. frankly, all of the bank ceos and cfos are telling us that the u.s. consumer is incredibly strong. is there something that is emerging that is not muddy or confusing about the strength of the u.s. consumer? mohamed: what is emerging, lisa, is that the weakness is concentrated and not spreading. it is concentrating unfortunately in the lower income households, but it is not spreading. that is what you're are hearing from company after company that serves the whole of the income distribution. those who serve the lowest income have a different music, if you like. different mood music for unfortunately the people who are the most vulnerable. when you look at retail sales today, we need to figure out, how are these retail sales being funded?

are they being funded out of current income or out of debt and rundown savings? that will be important moving forward. lisa: we saw a loss provisions increasing in a lot of the banks and people view this as then preparing to ramp up lending and take more risk to meet the demand to continue to fuel purchases. what is the risk? the financial conditions have loosened far beyond what the federal reserve has indicated, to a level where you could really see a re-acceleration on that front? do you think that is a moot risk? mohamed: i think that part of the provisions also reflect the stronger-than-expected outcomes. keeping a buffer for later on and then you can release it when there is earnings pressure. i don't attribute all of the provisioning to concerns about credit. i do think part of it is just a strategic buffer, and it makes total business sense.

in terms of financial conditions, you heard it in the introduction to your 8:00 hour, 7:00 hour -- sorry. they are extremely loose. we have not only the private sector creating a tremendous amount of credit and leverage, we have the public sector creating a tremendous amount of leverage. the correct point was made that at full employment we are still running 6% to 7% gdp deficit. that is incredibly stimulative in this environment. financial conditions are incredibly loose due to both the private sector factory of credit and public sector factories. jonathan: the difference between the approach the federal reserve is taking and the ecb. the federal reserve comparatively has a much better backdrop for growth. much looser financial conditions

and much more financing goes through the markets and bank channel compared to europe. it begs the question why we are having the different conversation around the ecb. why we are seeing 25 and we have no idea what is next. the federal reserve is saying recalibration 25 to 50 seems to be the debate on the street. what explains that difference? mohamed: part of what he claims that difference is the different experience in the euro zone with inflation. 1.47% for the euro zone as a whole. the netherlands 3.3. ireland 0%. it is hard if you are the ecb because you are making policies for countries in different situations.i agree with the notion that the market now, and i put out a chart on x, that the market is pricing in the same amount of cuts from the ecb and the fed. i don't think that's what's going to happen. i think you will see the ecb cut more than the fed. i agree with what andrew bolles

said about the attractiveness of not just the european german bunds but of u.k. gilts. annmarie: does the ecb need to make a decision based on what is going on in germany specifically, their manufacturing base that is on the edge of shutting down shop factory doors? mohamed: yeah, i think they do. they have to take that into account. germany is the traditional automotive growth of europe. there was a lovely title saying the problem child of europe. if you look at the draghi report it brings out all of the structural weaknesses and headwinds that face europe. if i was the ecb i would take that seriously. it will come at some point, feet into price formation. jonathan: unlike the united states, it feels like there is a self-imposed that break taking hold across europe going beyond

the u.k.. i look to france and other places too. italy is doing better but they seem to have a more pragmatic approach to debt issuance over the last several years. even they have become somewhat more conservative. what is driving that force, those forces come across the continent? mohamed: this is a very active debate in the u.k. right now. simple rules change behaviors. any parent knows that. in the case of debt, we got a case of simple rules to change behaviors on debt. now, we have got to the point where these simple rules are not only too simple, they are counterproductive. you're starting to get a debate on the appropriateness of fiscal rules. three things in particular. the definitions, the time horizon, and whether you should treat investment the same as current income, current spending, given that they have different effects on the economy. that debate will see the u.k.

lead the way. i suspect in two weeks time we are going to see some significant revision to the fiscal rules in the u.k., and the focus will shift to europe. lisa: if the rules stay in place or there is a constraint on that, what is the chance -- on debt, what is the chance into to three years the european union will be fighting disinflation again? mohamed: really high. structurally, this economy is going to not just slow, but risk getting stuck in a very low level. yes, the risk is high but the ecb will rightly say, and i agree with what i'm sure president lagarde would say, it is not the ecb's job. it is the job of government at the domestic and regional level, because you need fundamental structural reforms to put europe back on a path of high growth. jonathan: this was a clinic. it's good to hear from you

always. we won't mention the mets. i just mentioned the mets. forgive me for mentioning the minutes. come back soon when they win. there are still more games to play, right? lisa: if you can still hear me, i like your tie and i will keep talking over annmarie. jonathan: thank you. mohamed el-erian of queens college cambridge. here is your bloomer brief with dani burger. dani: the trading desk at goldman sachs since the s&p 500 can go beyond 6200 by the end of the year. the index has sent 46 closing records by the end of the year. the rally is primed to continue. according to goldman's calculations, the s&p could reach a figure of 6270. that number becomes a new high topping the previous bullish forecast of 6100. the eu's warning letter x that it may calculate fines against

it by including revenue from elon musk's other businesses like spacex and neural link. they have been investigating x for violating the digital services act. people familiar told us that the eu may consider in that figure all of muska's companies. meta has fired two dozen staff in l.a. for abusing the food credit system. they fired staff who use their $25 meal credits to buy household items like acne pads, wine glasses, and laundry detergent. some have been pulling their money together or getting meals sent to their homes. elsewhere they said that they need wider company layoffs as part of a restructuring. jonathan: more from dani and 30 minutes. next, pressurizing on the campaign trail. live from new york city this morning, good morning. ♪

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jonathan: live from new york city, plenty to get through. an ecb rate decision, jobless claims and u.s. retail sales. equity features, session highs up by .4%. under surveillance this morning, pressure rising on the campaign trail. fmr. pres. trump: we want workers and we want them to come in, but they have to come in legally. they have to love our country, love you, love our people. the problem with this administration is they have totally lost control. v.p. harris: we have had a broken immigration system transcending donald trump, before. i have no pride in saying that this is a perfect immigration system. they need more resources and congress is ultimately the only place that will get fixed.

jonathan: trump and harris wrapping up the rhetoric in high-profile interviews through the week. " neither harris nor trump hurt nor help to themselves in interviews. they didn't move the needle either way in this still neck -and-neck race. " the harris campaign has taken more risks. has it paid off? >> i don't think you will see much movement either way. i think harris out there alive and contentious is generally speaking a benefit for her. trump, seeming as he did on tuesday in your interviews, relatively cool, also helps him. but it won't move the needle in a world where there is basically neck and neck race and it has been neck and neck for three months. annmarie: i imagine she was going after the nikki haley republicans that she can potentially bring over to her

side. did she do it justice? terry: on balance, i don't think so. did she make that sale? i don't think so. she probably made some inroads, but the passion on some things, particularly trump's unfitness for office, for a haley voter is bounced off of what she makes of the immigration issue. she is trying to be loyal to her administration and at the same time try to provide the view that she might do something different, or is inclined to do something different. at this point, she would be better off cutting biden on a lot of this but that makes her look impotent in the administration. it is a no-win situation for her and the interviewer knew this. annmarie: she is the sitting vice president and her president

is joe biden. she did have a good performance last night whether you agreed with her answers or not. do you think that she is evolving as a candidate and potentially the democrats didn't do her justice with not providing her with a primary? terry: i don't think it is the primary. i think she came off, when she became the candidate, i think as far too much the tool of the party regulars. too many decisions that have been made in the harris campaign have been designed to placate the base, shore up the base, deal with the base. fewer have been made to reach out to the undecideds and bring them onboard, yet that is the fundamental campaign strategy. she is finally doing that a little belatedly, but she is also making a lot of mistakes. she goes to pittsburgh, a blue dot in a red sea, and it doesn't

venture out 15 miles to see fracking and understand what that is about and have an opportunity. she is not going to the al smith dinner tonight, which i think is a huge fail on at least three counts there is a lot of campaigning here on harris' part where she would do better if she was listening less to her own campaign people, i think. annmarie: she is not showin at the economic club of new york or chicago. she might go sit down with joe rogan. do you think that that could potentially help the democrats as they try to make this bid for more men to vote for them? terry: it depends on how much fire she is willing to show and how willing -- there's a lot of talk these days about authenticity, which is in itself a construct, but how authentic she is willing to be with rogan. if she can have a good, serious, substantive conversation with rogan i think that does help her a little bit.

if it is tentative and designed to hit polling memes or phrases, it's not going to work well. lisa: when we talk about the state of the race, a lot of people point to polls that are neck and neck. the market is pricing in a trump victory and a red sweep. is that how you interpret them? terry: the sentiment exists on no evidence. there is not contrary evidence, but all of this talk of trump momentum, trump this, trump that, is based on pollsha usually have three to four ts f margin of error. you know this. the back-and-forth over the last month is, if you look at the two-way national, there has been a trump 0.3% swing in one week,

and in one month it has been harris 0.5%. so, two to harris. those are rounding errors and people deal with them accordingly. the prediction markets are not polling either. they are sentiments. lisa: how messy could it get with the lawyers lining up and everyone expecting this to be election week, election month, alexion three months, whatever it may be? terry: i think it will get a little messy. it is not just the lawyers. i was struck by something that i saw coming out of pennsylvania yesterday, where it was reported to show that pittsburgh could deal with all of its mail ballots and count them on election night and philadelphia couldn't. i laughed because in the old

days machine politics, you would hold back cook county and illinois until the rest of the state came in and then he would produce the votes that you needed to make sure that your candidate won. it is not just the lawyers. people are fumbling the ball all over the place, not the least of which are election officials. they have done well on a lot of places, but you will see these hiccups and outliers for a few days to come, particularly in a race this close. jonathan: we have to do a lot better than that. terry haines appreciate it. we have to make changes. i think that she did a pretty decent job. you have to separate style from substance. when it comes to substance, it will often be in the eye of the beholder, subjective. there will always people who are unhappy. the trump campaign, they just haven't got a good answer for immigration and they're never

going to give the answer that they want. just a focus on style. several interviews have brought out the worst of her. she makes simple mistakes to simple questions. i think that the hardball interviews are bringing out the best of her. i felt like she really researched for this conversation in a way that i never had that feeling before from listening to tons of conversation that the vice president has conducted over the years. she has a simple tactic. we saw this on show in a bigger way in the last election cycle with vice president pence when she said, let me finish. when she says "let me finish" it is almost impossible for the interviewer to speak over top of her and allows her to filibuster. i haven't seen a good way to counter that. what she is doing when she says let me finish is not answer the question that was asked in the first place. annmarie: it is a very good tactic and she used it almost immediately which meant that brett had to tone down how aggressive he was being in the short amount of time he had to

get the answers he wanted. it was a tactic. i also think there is a gender issue. when you are woman and you say to a man, i'm trying to finish, it works. jonathan: i hope we see more of those robust conversations through the cycle. coming up, we will catch up with the founder of graham capital management. the data is about an hour away. jobless claims and retail sales, eight: 30 eastern. the bond market yields are higher just north of 4% on the 10-year. ♪

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jonathan: live from new york city this morning, good morning. one hour from economic data in america, jobless claims and retail sales. equity futures on the s&p 500 are firmer by about .4% with some morning movers. let's cross over to dani burger. dani: overnight, the ft reporting that uber has expressed interest in buying expedia. these are just talks with advisors, but a desire to become the everything app, a super app, like we chat in china. expedia shares are higher by 6.4% and uber sales are lower on

that news. a stellar set of results, the best set of results in more than two years thanks to the price of alumina moving higher because of supply constraints. shares of 6.6 percent. finally, the whipsaw of tech. it is a positive story. earlier this week it was negative from asml. reporting in the asia session that they had a really strong quarter, upgrading the forecast saying that there is extreme demand for ai chips. this morning, it means that tech can rally. nvidia up just under 3%. jonathan: we will touch base with dani again. striking weapons sites in yemen linked to houthi rebels. the defense secretary lloyd austin saying that the strikes hit five underground facilities. amarie: a statement yesterday said this is an

ability to target facilities adversaries seek to keep him out of reach of matter how deeply they are buried. the question is, why did they wait so long? american intel officials say that the assault of vessels in the red sea led to a decline in the area. everyone who said that more needs to be done in terms of taming these individuals, especially with what is going on in the red sea, why are they waiting until now? lisa: they have been doing different attacks on haouthi military sites, but this is the first time they have used equipment that can get to underground facilities. just wonder if it is watch what they do and not what they say, a ratcheting up, especially with a multi-front attacking capabilities in terms of the proxies to iran. jonathan: the military might of north america is pretty incredible. the stealth bomber, phenomenal. lisa: did you watch top gun? jonathan: of course. annmarie: they are using the

stealth bomber at the same time that they brought the thad into the region. i can't get over the piece of equipment they've moved to israel. we've never seen this before and this is a serious piece of technology that would likely have iran and its proxies on guard. jonathan: the latest on boeing, the latest report boeing is looking to raise $15 billion in a sale of shares in a convertible bond. announcing steps to raise $25 billion in a filing earlier this week. boeing is looking to repair finances with an outgoing cash drain and worker strike. that is down one third of 1%. lisa: we have reported news with boeing shares higher? i ask because it seems ike every drip feed of information is worse and worse. at this point, it is expected they would have to raise money. the question was, when? whether the threats to cut staff came ahead of that to shore up support? the question continues, how will they get out of the doom loop?

annmarie: it has been more than a week since the latest contract negotiation in which 33,000 workers have blown up, walked away from it on both sides. the acting labor secretary julie hsu was they are trying to get them across the finish line. on the surface at least it seems like there is no movement when it comes to boeing when it comes to labor unions. jonathan: the ftc finalizing a rule requiring companies that sell subscriptions to make it as easy to cancel asked to sign up with the click of a button or in a few steps. the chair says that the rule will and traps and save americans time and money. i say that it's good news because i feel the same way about subscriptions. why are they harder to cancel than to sign up for? annmarie: it is usually on the bottom of every website to cancel. this is a good issue to come out if you are an incumbent before the election. the white house celebrated the move yesterday saying that unwanted subscriptions out of

four americans and the administration is taking action to save time and money. jonathan: i can't mention my company but i have one fitness related subscription and i have no idea how to cancel. i have to work out how to cancel this thing. lisa: you have to call and they say that it's better to pause. you say, i don't want to. they say you need to fill out this form explain why and you can pause it. you say no and they start giving you hell. jonathan: they make it easier to pause than to cancel. annmarie: why are you canceling a fitness subscription? jonathan: it is a specific hardware that you wear on your wrist and i'm not happy with the data it brings. are you suggesting that i'm not working out anymore? i'm pleased that this is getting really personal. investors preparing for diverting paths after the u.s. presidential election. finding a common thread writing, this is what he has to say, given neither trump nor harris

is fiscally conservative, we expect the yield curve to steepen no matter which candidate wins. give her being here and sitting through that. let's get to this bond market. how are you thinking about treasuries if either candidate wins in november? kenneth: neither candidate is a fiscal conservative. neither party has shown much enthusiasm and/or attention towards the deficit. i think, no matter which candidate ultimately prevails, the long end of the fixed income market is vulnerable because the deficit is growing and growing and the interest expense associated with it is the elephant in the room that eventually markets will have to focus on. jonathan: we are running a deficit of gdp of about 7% at a time when unemployment is around 4%. how unheard-of is this in american economic history?

kenneth: we have been kicking this can down the road for a long time. fiscal conservatives have been run out of politics. it is one of the things that i think is the sleeping giant that at some point the market's psychology will pay attention to it. there will be some event and i can't say what the event will be, that will provoke attention to it. i think it will matter, but we are not there. lisa: as a macro hedge fund, the sleeping giant has been asleep for 30 years. how do you position for a catalyst that may or may not come, and it's unclear when it will come even if the facts are correct? kenneth: a great question and a hard answer. you can't trade today on what may happen in nine months. we are more short-term than that. we have to focus on the short term factors going to market and try to tactically trade around those factors. think about the last fed meeting. i can't remember the last time that the fed went into a meeting

where they would go 25 or 50 and it was 60/40 they would go 50. that is so close to a coin flip. we haven't had that in 50 years. the market in fixed income is volatile and interesting, certainly for those who focus on rate trading. lisa: how do you play that when it is a coin toss? kenneth: we had a view that they would go 50. it turned out that view was correct. we play the steepener trade, and that worked for a week or two. the strong data came out and people were forecasting potentially a 50 basis point cut again. that was priced out quickly. the markets are moving a lot and it's not always easy to get it right. jonathan: we want to understand the relationship from your standpoint between bonds and equities. the equity market seem they can handle that.

if yields are going up because of deficit issues and pushing back against policy issues and politicians in washington, d.c., how constrained will equity market gains be over the next year or so? kenneth: investors and their psychology, and psychology is so important in the mindset of institutional and high net worth investors. stocks have gone up for 15 years. everyone has been trained by the debt. every time equity selloff people are told this is when you should get in. i think that that provide some momentum and upward pressure on equity prices that is pretty hard to overcome, no matter what the fundamentals might really be. jonathan: if we get a red sweep, buy bonds, sell stocks? kenneth: we know trump will really try to lower rates. i don't think that the short end is necessarily going to go up. i think the short end will reflect lower short-term yields.

i think the market likes trump as a pro-business equity play. i would expect the equities would generally move higher. i think what we are not going to know the day of the election is who won. with all of the mail-in votes we will look at a week or two of uncertainty and that probably isn't great for equities in the very short run. annmarie: we might know the composition of congress, though. how are you looking at spending regardless of who is in the white house? kenneth: i think both parties will spend like crazy. if you are a fiscal conservative, i think that you can expect that that is not really going to move the meter that much, who wins. harris has not really articulated her economic platform, so we assume it is biden's, not that different from biden's. trump wants to do deportation, less regulation, and cut taxes.

there is a plausible case to be made that that is a pro equity risk-on point of view. you know, there is a lot to be seen between them on that. annmarie: a kamala harris aid will probably email me and say tell your guess there are 82 pages of her economic plan on her website now. trump borrowed $8.4 trillion, night and 4.5 trillion dollars. you have an idea if kamala harris or donald trump would be worse or better for the deficit? kenneth: i would say that it's a close call. it is hard to know, and it really depends on what happens in congress. it is not just who wins the election. it's what happens in congress. lisa: that sigh reflects what we all feel, let's get on with this.

if you are looking shorter term, how do you play it? how do you figure how to take advantage of the volatility that is inevitable? kenneth: when things are mispriced, that's a good time to get involved and say that we have some conviction that this is not going to happen. for example, recently we have had a long dollar position. we are talking pretty tactical the last few weeks. that is starting to work out a little bit. right now, i think the best thing a macro fund can do is we are pretty guarded about risk. this is a volatile time. the uncertainty is at very high levels. it is not a time to get down on your skis and say i'm going to go as fast as i can. you have to manage risk and wait for higher conviction opportunities. lisa: it is fascinating to me based on what you said that risk

has a different profile today than it did 10 years ago. that risk may lie as much in the bond market if not more, particularly longer-term treasuries, as it doesn't equities. how are you thinking about what risk means and how to mitigate it? kenneth: what we do at gram's we meet every morning at 9:30 and talk about every position, how the positions have changed, what stresses are in the market, is there liquidity problem that we have to be focused on. it is not a particularly long meeting because we do it every day and have for something like 15 years. i think it puts us in a pretty good position to know where we have to be careful. if a particular trader or one of our systems is not doing well, we are very attuned to that. if we have to take action, we do. jonathan: can i say that 9:30 is a much more reasonable time for a meeting? i think we all agree on that for sure.

before you go, you do a lot of work with the robin hood foundation. walk us through initiatives you are focused on this year. kenneth: sure. robinhood every year deploys about $140 million in poverty programs, poverty-fighting programs. i have been a board member for about eight years. it is remarkable when you see the effect this has on people's lives that are less well-off than any of us. for me, we have a hero's breakfast around thanksgiving every year and it is amazing to hear these people talk about how these programs change their lives and allow them to get out of poverty and be successful. for me, i think about how fortunate i am, running a hedge fund, in finance, been successful for a while, and i

find that it is this weird thing. the more i give to robin hood the luckier i get in life. it is one of these unbelievable causes. for 36 years i have supported robinhood. i have been on the board for 10. the amount of great work that the organization does, and they do it in such a business-like fashion with investment principles funding all of the research into what programs to support, it has been phenomenal. jonathan: we are lucky today to get some of your wisdom. kenneth: thank you for having me. jonathan: from new york city, equity futures right now are just about firmer on the s&p by .4%. an update on stories elsewhere. dani: apple has canceled project patent, they worked with a chinese carmaker around 2017 to create a long-range ev battery

system using lithium iron phosphate cells. apple spent about $1 billion a year the last decade on its car project before ending it in february. the cars are powered by the blade system that uses a battery pack according to sources and was informed by lessons from the work with apple. mckenzie says that the best times may be over in their annual state of the industry report the consultant said that recent improvements could prove fleeting. i caught up with the partner behind that report. >> there are some forces at work that don't necessarily favor banks, structurally speaking. they include the interest-rate environment. they include the increased spending on tech, ai, data, and things like that. and it includes forces from outside the core banking sector, so private credit, for example. dani: the new york liberty led

the minnesota lynx to the wnba finals. a three-pointer was made from 28 feet with one second remaining. one game away from the championship. the next game is friday for minnesota. the liberty have appeared in the final five times before, including last season, losing each time. that is your brief. jonathan: more from dani and 30 minutes. the regionals in the spotlight. >> we are going to see a slew of regional bank reports over the next two to three days into next week. we do expect to see continued better than expected performance. jonathan: that conversation is around the corner. live from new york, this is bloomberg. ♪

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jonathan: mohamed el-erian on

this program about 45 minutes ago making the point that he believes the ecb, over time will cut rates more than the federal reserve. another rate cut from the ecb in about 25 minutes time. the euro totally unchanged on the session. equities better than expected up .4 percent after earnings come in better than expected on the financials. overnight, tsmc. under surveillance, the regionals in the spotlight. >> we are going to see a slew of regional bank reports over the next two to three days and into next weekend we expect to see a continued better than expected performance. asset yields will come down, as you know, but they won't come down as fast as funding cuts. so the regional banks, which rely on interest income to a greater extent than the diversified banks, should do quite well in this environment over the next 12 months.

jonathan: regional bank earnings in full swing on the heels of a strong showing from the larger financials. investors are eager to see the effects of lower rates on smaller lenders. herman it is good to see you. what is the early takeaway? >> u.s. bank, pnc today, we have a number of them. i would say across-the-board things are solid. net interest margins are starting to expand at this point in the economic cycle, and that's good to see. because of the margin expansion we are seeing better net interest income. jonathan: help our audience understand the relationship between regionals and interest rates. we know how much it hurt them when they were going up. how much is it helping now that they are going down? herman: i would characterize it as a yo-yo effect. when the fed started instituting rate hikes thatp. last yearh the regional bank o, svb, and a handful of

other regional banks failing, banks had to jack up their deposit price. that affected their net interest margins and topline. now we are in a steady state where things are starting to benefit marginally, and that has helped the top line. lisa: how much do the top performances come from interest rates going lower versus an actual improvement or ongoing strength in the underlying loans they made? herman: so, the rate cuts really happened in september. not really affecting the third quarter reported numbers. that will be more of a fourth-quarter effect. in the third quarter, it is really these loans and assets that were put on their books 3, 4, five years ago at a lower rate. they reprice at a higher rate now and that is helping the top line. lisa: i ask because there is a forward look that we are trying to glean from some of the earnings we have seen in terms of the credit impulse to the rest of the economy and whether it is the allied financials of the world that are warning about

credit deterioration that will be the dominant theme going forward, or the ongoing concern around income-based on rates.do you think based on the earnings we've got so far that the fears of consumer credit deteriorating rapidly are overblown? we aren't seeing anything in these earnings that could confirm that? herman: on credit quality, the banks are stacking in another quarter of strong credit performance, and there hasn't really been anything that would concern us in terms of deterioration of the overall economy. banks, you can view them as a readthrough for the overall economic backdrop. credit has been really benign. we are seeing really stable. there are edging up a little bit, but nothing to be overly concerned about. jonathan: we haven't spoken to you in a while. we talk about commercial real estate every time. what happened to the story? herman: we get these negative headlines, and pnc is one that

talked about being very early innings of the unraveling of commercial office real estate, so be something that we continue to talk about over the course of next year and the year after, but the banks have added to the reserves on these office commercial real estate properties. now, we are talking about north of 10% reserves on these problematic loans. so, any deterioration will be absorbed. jonathan: you are fairly confident we can handle this into 25 unit freight still come down as much as people think they will? herman: i think we will. these are known risks that the banks continue to add to reserves. it is not going to surprise anybody that there will be an office default coming down the road. jonathan: we have seen a few of them. thank you very much. other regional banks, the coast is clear if you listen to the major players. the focus is on the regionals for the next few months. lisa: i love how you bring up, is there any boogie man?

commercial real estate, we were using that for a while. that's not there either. how much can we talk about banks creating credit going forward, creating a line of credit to lower income individuals who have been priced out? that is an interesting follow on to this. jonathan: when we talk about credit to large lenders we are talking about prime consumers, not low income consumers. when we say things like the coast is clear, it is like, yeah, for the prime consumers with credit scores above 800, which is ridiculous. lisa: i would push back on that, but our regional banks expanding credit? jonathan: next on the program, and the next hour an ecb rate decision, news conference, and a lot of data. ♪

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>> technicals are fiercely strong. >> the amount of liquidity in the markets is phenomenal. >> i still think you will get the best use from the equity market. >> stocks and bonds are trading uncorrelated. >> it is probably far more

uncertain for bond investors than equity investors. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the third hour of bloomberg surveillance starts now with equity futures on the s&p up .4%. we will get to that a little bit later. we need to talk about the next hour on the program. in 15 minutes, a rate decision from the ecb. 15 minutes after that, jobless claims and retail sales. 50 minutes later, an ecb news conference with christine lagarde. this hour is stacked. lisa: i'm looking for two things. the ongoing divergence to the ecb and fed. mohamed el-erian's point, how much do we see the ecb on a faster path to rate cutting than a federal reserve? how much is this market baking and consumer strength? has the pendulum swung to the assumption that the u.s. is in a strong position? is that what the data will confirm? annmarie: fascinating

conversation with mohamed el-erian because you see the revisions on inflation that the ecb cares about revised down. he brought up a good point. the dispersion around europe when it comes to inflation, where the single mandate ecb matters, 3.3% in the netherlands, 1.7 percent in spain, ireland 0%. how much harder is christine lagarde's job than jay powell? jonathan: the last meeting was only five weeks ago for the ecb. since then downside surprise on inflation, deutsche bank, the european picture has weakened significantly. goldman sachs since the september meeting the eurozone data has been significantly weaker. jp morgan, lisa teased this out in the conversation with mohamed el-erian, on inflation there is the strong case for delivering cuts more quickly to avoid a more abrupt to slow down and hence a disorderly disinflation reprocess. mohammed made a similar point to

you. annmarie: what is the consequence for the ecb? we talked about going back to zero? how far can they cut, how aggressively will they? will this be a forward-looking ecb when forward guidance for them has been worth not very much? what have they been able to telegraph in these press conferences in the past six to 12 months? jonathan: coming up this hour, we catch up with they believe events of jp morgan as traders drive another small cap rotation. -- with david leibovitz of jp morgan as traders drive another small cap rotation. jobless claims dropping under 30 minutes time. saying that together with signs of the labor market momentum is softening, it seems unlikely that the recent data has changed the fed to resolve around policy normalization, and we expect the fed will likely deliver an additional 25 basis point cuts

through to year end. david, good morning. we are 27 minutes from jobless claims and retail sales. what are you expecting? david: i think the claims number will be messy, for lack of a better term. there has been a lot going on in the labor market between strikes and natural disasters, so on and so forth. we won't go down to the low to 20's where we had been over the prior couple of weeks. the bigger question given the noise that we expect in the claims data is what we see from retail sales. our big story this year has been that labor income looks ok. in the united states, when consumers have income they spend it. if we are seeing the re-strengthening in the labor market that was observed in the recent payrolls report coupled with a better sales report, that will give us conviction about the runway. jonathan: we had this conversation this morning about data dependence. how dependable is this data? you talked about the hurricane distortions in the jobs data.

wouldn't we expect something similar and retail sales? david: i think the issue with the labor market data will be, one, the noise is coming through from the natural disasters, the strikes, and those are more regional issues. the retail sales will give a more holistic picture without the same distortions. on the other hand, with respect to the labor market data, response rates have been coming down quite significantly. overall, when we look at the labor market, we are of the view of let's not extrapolate one single data point into a broader trend. let's look at the mosaic and see with the broader data set is telling us about the health of the labor market which will dictate the path of the economy going forward. lisa: talk to me about the mosaic. it seems retail sales are bigger part given it will be confirmation of a trend we are hearing about in earnings? david: i think it will. is not only about the retail sale story, i think it will be about the industrial production story that we see this morning. retail sales will give a good

read on where consumers are spending, how much they are spending, what does the breakdown look like between goods and services, which is still central to our thesis on the u.s. economy. one thing we are also expecting as the fed continues this policy is that goods and manufacturing will begin to come back. you may not necessarily see that show up in the industrial production report today, but i think that the manufacturing side of the economy will be increasingly important going forward. if consumers begin to soften on the back of a cooler labor market, we think that there could be room for manufacturing to pick up the slack. lisa: we're talking about the u.s. more nine minutes from an ecb rate decision and i keep thinking about the dollar and how much there could be a potential one-two punch for the euro that leads to dollar strength. potential strength in the u.s. consumer edified by retail sales. at the same time, the ecb is grappling with a different picture. how much is at the thesis at a time when that divergence seems to be -- i don't want to say a

certainty, but a growing base case? david: it is difficult to get excited about europe these days for number of reasons. i thought that you summed it up well. the pmi's, the unemployment rate is two percentage points higher than in the united states. it's difficult to get excited about what's going on. when we think about the currency side, we will leave the equities be for the time being, we struggle to see anything spectacular going forward. if you think about currency in the short run, it is about rate and growth differentials. what we are seeing is the u.s. economy with more resilience and a european economy that is continuing to crumble coupled with a fed that probably isn't going to be able to move as far as what people were pricing in a couple of weeks back. annmarie: you talk about the fact that americans get money in their pockets and they spend it. how wide is the gap between the american and european consumer? david: i think it is behavioral. when the income runs out the

credit cards come out and consumers are willing to take on leverage in a way that isn't the case in other places, particularly in europe. the way that european investors behave, they have a greater -- the conservative approach puts a lid on how much of the european economy can grow, but hopefully the rate cuts can get something going. jonathan: we start the program this way this morning talking about what often comes out of europe. things like regulation around the oil manufacturers, things like fines for the tech players. that is problematic. go create the companies. this was the draghi push. create the companies that can compete with these american giants. lisa: it is the plus and minus of hope that comes with leverage versus the fatalism and reality check that comes with fiscal prudence. there needs to be a balance. it seems the hope of re-leveraging, taking out the credit card, keeping it going, is keeping this economy going

well and maybe europe should take a page from that. david: we have such a dynamic economy in the united states. since the pandemic we have seen small business creation has gone through the roof. you can create new businesses here in a way that isn't the case in other places. you have the dynamism embedded in the economy that allows us to stay on the front foot and move forward during times when other economies may struggle. jonathan: people became more hopeful about europe because of foot china was about to do. what is your assessment of what china has none so far? david: i think china is putting band-aids on a problem that requires surgery. we know the underlying issues. there is too much debt, a property issue, and underpinning that are unattractive demographics. the bazooka needs to be fired on the fiscal side not only the monetary side. we were having this conversation when the information came out on monetary authorities that you have to differentiate between flow and fundamentals. liquidity, the provision of

liquidity, that flow will lift markets temporarily, but of the fundamentals don't show up the durability of the rally will be called into question. that is what you are seeing now and why we need to see the fiscal canon fired for this rally to have legs going forward. lisa: so buy u.s. stocks with a little bit of cash and call it a day? david: we like japanese equities as well. but we do prefer markets where the underlying economic growth story is more robust. the u.s., japan -- we are not abandoning em and china because we think that there could be an opportunity. when you look at the way that the chinese market behaves, it goes up the elevator and down by the escalator, so we think we'll have time to get out of the way of the bust if things aren't working. the least interesting part of our portfolios is probably on the fixed income side. we continue to like high-yield bonds, like credit broadly, and our neutral long-duration.

when you look at the moves in the treasury market, it's difficult to get off of the fence when volatility is this high. the question on duration going forward is more about the price at which you add duration as opposed to whether or not you add duration at all. jonathan: well said. the chinese market went up 100 floors just like that in the space of a week. equities right now on the s&p 500, just about positive by a couple of tenths of 1% on the s&p come up by 4/10. let's give an update on stories elsewhere this morning with your bloomberg brief. dani: a new national poll of likely voters gives donald trump a narrow lead over kamala harris the fox news survey from early october has the republican at 50% versus 48% for the democrat, which is within the 3% margin of error. quinnipiac polling in swing states gives trump a 7% lead in georgia and harris a 2% lead in

south carolina. bombers stuck store -- struck storage sites linked to houthi rebels. the defense secretary lloyd austin says the use of b-2 bombers was intended to send a message, despite numerous strikes by israel and the u.s. on the houthi, the allies had so far been unable to halt attacks. visitors to disney theme parks have a new way to skip long lines at the biggest attractions. the company is launching the lightning lane premier past week, which guests can use once per ride but it will cost $400 per person. limited quantities will be available at first and they may adjust pricing and availability next year based on date and demands. that is your bloomberg brief. jonathan: thank you. in a word, no. no chance. next, the ecb rate decision

around the corner. live from new york city, good morning. equity futures are posited by .4%. the euro is unchanged. ♪

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visit sandals.com or call 1-800-sandals. jonathan: lisa, the only person in tv worldwide who gets mid-show dry cleaning. lisa: i spilled coffee! the jacket goes on. we are five seconds away. jonathan: only in new york city. seconds from an ecb rate decision. the ecb on tour. a few seconds for the ecb rate decision. i will share the last interest rate decision, 350 with a rate cut. this is what we get from the ecb, cutting the deposit rate to 325 from the 50, largely in line with expectations from the european central banks.

25 basis point reduction from the ecb. they say that with they will keep rates sufficiently restricted for as long as needed which sounds bizarre when you're cutting rates but this is as inflation comes down and is below target on headline rate. we were looking for 325, and that is exactly what we got. they were looks like this. 1.0863, a slightly stronger euro in the mix. lisa: not pre-committing to a rate path and talking but going forward meeting by meeting. now, this is as expected cutting 25 basis points andgiing no forward guidance. why should they given that they haven't been able to provide much going forward? thdisinflationary process is well on track, they say, which i think is the key question. how much are you looking for this to be a deflation story versus inflation? this is interesting. inflation is expected to rise in the coming months according to the ecb.

a mixed message now. jonathan: inflation expected to rise in the coming months before declining to target over the course of the next year. that is the more important piece for the ecb in terms of how they set policy. domestic inflation remains high as raises are rising at an elevated pace and cost pressures will ease gradually with profits partially buffering their impact on inflation. they go on to say that the governing council is determined to ensure that inflation returns to the 2% medium target in a timely manner. they will key policy rates restricted for as long as necessary to achieve this. the governing council will follow a data-dependent and meeting by meeting approach to determine the appropriate duration of restriction. in particular, interest-rate decisions will be based on the assessment of the inflation outlook on incoming data. the dynamics of inflation, the strength of monetary policy transmission. the governing council is not pre-committing to a particular rate path. in slovenia, we are joined for more. what did you make of this one?

>> as you say, it was all but certain. every single one of the 65 economists that we surveyed saw this coming. it is the third cut easing cycle, the first back-to-back rate cut we have seen from the ecb in over a decade. it has been such a turnaround since september when christine lagarde was pointing to december for the next cut. it is because you have inflation below the 2% target, and all of the signs suggesting weakness in growth when you look at the survey data. if you put this decision aside, the press conference in under half an hour is going to be all about the path ahead. looking at that guidance, not a whole lot of clues being given. they reiterated they need to keep policy sufficiently restricted for as long as needed to keep inflation at 2% in the

medium-term. that is important, because yes, they are under the 2% level now, but they are expecting inflation to go back up again towards the end of the year. that is similar to the situation in the u.k. don't hold your breath for more forward guidance at this press conference. you have the slovenian central bank governor, the host of this conference, saying that today does not automatically mean they will go again in december. if christine sounds like that, it will be a volatility killer. lisa: i'm struck by how different this statement is from what we hear from the fed when they say we don't welcome any further weakening in the labor market. the ecb statement talks about labor cost pressures continuing to ease gradually, but still a big part of the inflation. domestic inflation is high and wages are rising at an elevated pace. how much does that cohere with the data that suggests a deceleration in activity across the euro region? lizzy: the big question mark in terms of the data is the labor market when it comes to the euro area. think about how you have, yes,

signs of easing, and big companies offloading workers. volkswagen notably thinking about closing plants in germany for the first time. at the same time, unemployment is still at a record low. you have pressure on wages upwards keeping inflation going a healthy clip of wage growth, so i difficult situation. that is what they want certainty on, the labor market. by december they will have more data on negotiated wages. jonathan: enjoy it slovenia. the news conference is about to take place in 25 minutes. the ecb reducing interest rates by 25 basis points, as expected by pretty much everybody. the assessment on inflation, the disinflationary process is well on track and the approach is different from the approach we see in the federal reserve. they are talking about recalibration, which potentially explains the next 150 basis points and may be more of

interest rate reductions. the ecb is treating every meeting as a live meeting, not pre-committing to anything, and saying that we will take this meeting by meeting. that was the approach of the september meeting by the ecb. then the data happened and reality hit them in the face. we had a downside surprise on eurozone inflation and here we are, an interest rate reduction. lisa: is this the consequence of the ecb not being a dual mandate central bank? only going after inflation and still seeing what they call as elevated wage inflation? or, is this an issue where the ecb actually has more of an inflation problem? are they basically seeing that as an issue? or is this a matter of them having a different mandate than the federal reserve? jonathan: jeremy, your initial take on this, and then into what is holding them back from pre-committing to more given how dreadful the backdrop is for

european growth? jeremy: clearly, the data backdrop it has deteriorated since the september meeting. you touched on the pmi's. the inflation downturn was obviously more aggressive than expected. if you listened to the september press briefing, madame lagarde tried to pre-prepare the market. i think that it is this broader negative backdrop in terms of the global manufacturing sector, which is amplifying the euro zone downturn, which is warranting easier policy. the problem from an ecb policy is the nature of the composition of the council where you have a range of policy members with very different perspectives. you still have very hawkish members from the core members of the european union, such as germany and austria, who are reluctant to sanction an aggressive easing profile. that leaves madame lagarde with a difficult balancing act. she tries to pursue this by a meeting by meeting data-dependent approach, but

it's very much the case that we are moving more towards a more sequential policy backdrop. i would suspect it would be more of a case of the ecb maintaining a data-dependent meeting by meeting approach, but probably heading headlong towards the deposit rate towards 2% by the middle of next year. jonathan: there is a wrinkle in that and you know it. when draghi left the ecb he had to convince the germans to do things they didn't want to do. this time the german economy is the link link -- is the weak link. sure the euro be trading on rate or growth differentials backed up by an ecb that is willing to support growth in a material way? jeremy: at the moment, we are looking at rate differentials. we have seen a crossover in what has been priced for immediate policy reactions in the fed relative to the ecb over the course of the last month. if we are still going to see the ecb very much biased on the market interpretation, biased

towards policy easing, that implies that the euro is going to continue to struggle somewhat . i think we got to a situation now where a lot of the real money euro longs have been cleared away and we are looking at a market that is increasingly looking a little oversold. i think it's the case that headwinds are obvious. the risk of further action from the ecb is evidential. it may be the case as we get nearer the 108 threshold, that might be expecting slowdown in terms of the retreat from those recent highs of 112. lisa: how much does the ecb have their hands tied as a result of the pace of the fed? how much do they want to keep the euro in this zone to prevent important inflation from coming into play? -- import inflation from coming into play? jeremy: n/a since you have a nominal's commodity prices, which will always be evidential

for the inflation backdrop, but the euro amplifies that. if we were to see a substantial cheapening of the euro. there is a recognition that what the fed is doing is relevant for the ecb, but the majority will look at the policy narrative in isolation, look at the single mandate that you touched upon. that is notable, the single mandate of maintaining inflation. that is how they will maintain policy. if the euro were to cheapen back to 1.05, that would create greater inflationary pressures and that would prove to be problematic for the ecb policy narrative. jonathan: appreciate the update and your reaction to a rate reduction this morning. when he five basis point cut from the ecb. that news conference with president lagarde is about -- 25 basis point cut from the ecb. that news conference with president lagarde is about 20 minutes away. francine lacqua singh down with an exclusive conversation with

christine lagarde -- sitting down with an exclusive conversation with christine lagarde. you cut interest rates, why are you cutting interest rates again at the ecb? lisa: why aren't you more confident in the disinflationary process if you see that weakness coming down the pipe economically? jonathan: are we fed independent, election independent, china independent? lisa: we will be independent of this conversation until we start on monday. that's all i can say. jonathan: from new york, this is bloomberg. ♪

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jonathan: 15 minutes ago the ecb reduced interest rates by 25 basis points. next stop for the federal reserve's november 7, with a lot of data in between. some of that set to be distorted by hurricanes. we are waiting for some of that data. retail sales just seconds away. equity futures on the s&p 500 shaping up as follows. up .4% on the s&p 500. on the nasdaq 100, higher by .8%. here is the data right now. it is an upside surprise on u.s. retail sales. we were looking for .3% month over month. we got .4%. if you look at the control group we got zero point seven.

that is stronger than expected. on jobless claims, 259 was the estimate. 241 is the number. we could spend some time on distant -- on potential distortions. for a lot of people, they will put more weight on that upside surprise from u.s. retail sales. see the nasdaq up .9%. the s&p 500 up .5%. if you switch to the bond market we can get a feel for how treasuries are responding to this. we are focused on retail sales. up by six basis points on a two-year. back through 4% on a 10 year. the data out just moments ago, an upside surprise. lisa: this is confirmation that the u.s. consumer is spending. you mentioned the control group. if you strip out auto and gas, that is what we are looking at in the pop in retail sales. when you take a look even stripping out autos, up .5% versus .1%, key question here,

are we still in goldilocks? does this confirm goldilocks or something else? is basically taking off the risk a scenario of recession once again and confirming some of the litchfield? jonathan: dana peterson of the conference board joins us now. you have only had a few minutes. tell us your first reaction to it. what do you think of retail sales? dana: i think retail sales are strong in nominal terms. if you account for inflation you're probably looking at an increase of awfully .2%. if you put that together for the quarter looking at anywhere from three point 5% to 3.75 percent annualized growth in retail sales in the third quarter, which bodes well for consumption. consumers have the income. they are complaining about the level of prices, but they are seeing prices fall for those big durable goods like furniture and cars, and they are running out there and buying. jonathan: it is sending

treasuries lower and yields higher. i don't know what to do with jobless claims. last week we had the highest print of the year. a lot of people suggested there was a hurricane distortion in that data. how much weight do you put on the labor market data over the last few weeks? how much weight would you put on the data for the next two months? dana: i have been saying that the labor market in the united states is fine. we did see an uptick in jobless claims over the last couple of weeks, but fortunately we do have state data. if you look at the states that were impacted by the hurricanes did see a pickup in jobless claims. in fact i took florida, tennessee, north carolina, and south carolina, and they represented roughly 36 -- 36% of the increase we saw two weeks ago. the other big portion was out of michigan. i don't know what happened in michigan that week, but jobless claims were low everywhere else. it is probably what we are going to continue to see once you

strip out those hurricane effects. lisa: if we are seeing basically no real pickup if you strip out those effects in jobless claims and we are seeing ongoing retail strength when it comes to back-to-school spending, why are people not feeling it? dana: i think people are not feeling it because there is a lot of anxiety out there. even though most people are working, they are still concerned about the fact that they are not seeing as many job openings. but i think job openings are falling because companies have been hiring. they have been replenishing their payrolls. when we ask ceos at the largest firms, they continue to say they are either going to hire more people. every few, just above 20%, say they are going to let people go. that is 80% who are not going to touch their labor force. as long as people are working they are still going out there and spending, even though they are saying, i'm worried about elections, i'm where it about taxes, i'm worried about the fact that i might lose my job,

but nonetheless they continue to hold onto their jobs and they are spending. lisa: we just got an ecb rate decision and we got from some of the statements that they are concerned about inflation. art of that is because that is their mandate. here in the u.s. inflation does not seem to be at the forefront of a lot of central bankers' minds. it seems like inflation is leaved to be under control. at what point is this strength we see in the consumer inflationary? or have we written that off? dana: consumers have been spending consistently over the last two years. he saw upper revisions in inflation and a big upper revision in income. but i think the inflation we are seeing, most of it is from housing. again, shelter costs are slowing, but it is taking time. it is going to continue to take time. probably will not see further material slowing in shelter costs until probably the middle of next year. we actually see it reach a

bottom. there is also elevated wage gains, and wages are still rising at a pretty healthy clip. you also have these other structural changes. an aging demographic that are raising costs for health care and health insurance, and technology which is raising the costs of cars. and all of these national disasters. had two major hurricanes that are affecting insurance for homes. you had these things that the fed cannot manage. certainly the housing area, yes, and we are seeing that slowly ease. but for the most part i don't really see consumer activity as being terribly inflationary. it is really those outside forces on the consumer that are forcing them to have to pay more. annmarie: when you look at this retail sales data, and a blow in some categories, do you believe it is going to have any implication on the fed's decision on november 7, given they are data-dependent? dana: absolutely. all of the data we have seen

from the labor market, to the stickiness in core inflation, both pce and the core deflator, and also the continued spending by consumers, the fed can probably say, we don't need to go 50 basis points. you're probably fine with 25 basis points. you still want to be very cautious here and make sure that inflation continues to trend back to the 2% target. not just overall inflation, which is the target they are -- which is what they target. but they are also looking at underlying inflation and they don't want to see stickiness or an upturn in that. the fed needs to continue to move cautiously, and a 25 basis point rate cut makes the most sense, in our view. jonathan: dana peterson there of the conference board. the data this morning, better than expected both on retail sales and jobless claims. with us, brian weinstein of morgan stanley. good to see it. this is kind of moving your way. you said the biggest risk is higher rates. how much higher? brian: i don't think a lot higher anytime soon. i think we are -- stuck in a

range. it is amazing that they are going to ease 25 after this data. that is why the 50 was so brilliant. now that they have calibrated to that shock now we are recalibrating. we can do 25 because it is a long-term trend. i don't think the data dependency trend is real. they are on a bit of a path. they want to ease, and eventually you will have much steeper curves and much higher long-term rates. now with all of the election stuff and hurricane distortions, a bit of a range. i think that trend can continue for a little while. jonathan: is that what recalibration is? is that mckinsey for autopilot? brian: i think it is autopilot. did not kill the economy, which we should keep in mind, but it is higher than neutral. we don't know where it is. we know it is lower. inflation has fallen a lot, so you ease and don't fall behind the curve. there is a risk to it, but the

risks will be apparent next year. we will see how smart it is and when it looked -- when we look on it it looks smart now. lisa: we have to develop that. this is the question we have been asking. at what point is this raising the risk of inflation later on? you're saying potentially that is a 2025 story. is that correct? brian: that's right. i believe it does raise the risk of inflation later on. if you look at long-term charts of inflation there is these long-term trends. for a long time, most of our careers, we were hanging out in that sub-2%. are we japan, is this going to be disinflation forever? we have broken that. when the fed gets ahead of the curve inflation stays stickier, above 2%. the market disagrees. i do think next year we will see that inflation is going to be a above 2%, maybe uncomfortably. but i don't think the fed will be able to react to it aggressively.

but they have a dual mandate, so they can play the game versus the ecb. lisa: which is the reason why people are encouraged to buy u.s. stocks. because this is a central bank that wants to support economic growth and the ongoing strength in the u.s. economy. how much do you just follow the fed? don't fight the fed and this is the ultimate fed put? brian: for now i don't think you want to fight the fed. if there was growth in other places -- listen, we will see what china does. versus europe you want to own the u.s.. you have a central bank that is being -- getting easier. you are running a 6% fiscal deficit. you have candidates that are going to spend more money. certainly seems cheap enough now, unless we get that big shock in rates, which i think is a later story. jonathan: he said there is a cost. pays the price? europe, china, the united age? brian: i think eventually the united states.

borrowing costs have already gone up, so you are seeing this happens in phases. people were shocked when lowering costs went to 5%. the corporate market, performing pretty well. it is a long-term story. credit is a better risk-reward than treasuries. there are costs, they just don't appear the moment we speak about them. it is a 2025, 2026 story and it depends on what the rest of the world does. jonathan: you cannot finish an interview with a zinger like that. we are going to have a whole conversation on what you just said there. brian weinstein of morgan stanley. let's get you an update on stories elsewhere. dani: meta has laid off a number of employees as part of a larger restructuring initiative. employees in departments and looting whatsapp and reality labs were among those affected. meta did not specify how many jobs were cut did note that some employees were being moved to

different jobs. a possible acquisition of the online travel company. the ride-hailing giant has not officially reached out to expedia and the ftc says there are no talks between the companies. uber's ceo was ceo of expedia from 2005 to 2018 and remains a board member. floyd mayweather is buying 402 million dollars of affordable housing in new york city. according to a person familiar with the matter many of the 60 buildings are located in ottman happen. mayweather has jumped into real estate before. that is your brief. jonathan: thanks for that. up next, an ecb news conference with president lagarde. ♪ you're a rock star. we're all rock stars.

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jonathan: the opening bell, 45 minutes away. in just a moment, an ecb news conference begins in slovenia. cutting interest rates by 25 basis points. a sneak peek of next week. this afternoon, netflix earnings. tomorrow, housing stocks and business -- and building permits. looking ahead to next week, next tuesday, gm earnings. wednesday more results from tesla. thursday another round of jobless claims, and earnings from ups and american airlines. president lagarde following that interest rate reduction of 25 basis points. this drops from deutsche bank. chances are that today's decision represents a pivot point into a faster normalization of monetary policy after back-to-back rate cuts. lisa: basically this is the market expecting, or deutsche

bank expecting an ecb that recognizes the weakness of little bit and telegraphs that they are going to continue adjusting policy. this is the question about whether or not they are going to prioritize some of the week is. that is what i'm going to be listening to when we hear from christine lagarde. lisa: that is what -- annmarie: that is what ing is focused on, inflation undershooting. and it is hard to see how today's rate cut cannot be seen as a signal that they are in a hurry to bring those interest rates down further. jonathan: i wonder how spooked they were by the pmi's. the pmi's were pretty bad. speaking to a bad outlook for european growth. in much worth compared to what we are seeing in the states. we have just had retail sales dropped, coming in better than anticipated, and we are still talking about the federal reserve goosing interest rates on november 7. lisa: everybody's take on this is not what they said. the ecb talked about the

potential for inflation to remain stickier before going back to 2%. if people listen to this and say, fine. you have just cut twice back to are probably going to keep cutting and you are going to recognize the weakness more than put it in your statement. jonathan: that press conference ended pretty quickly last time from this ecb. some of the commentary since then, the european picture has weakened considerably. this was the line from j.p. morgan. i would love it if someone asked this question. there is a strong case for delivering cuts quickly to avoid an abrupt slowdown and a disorderly disinflation process. lisa: how much is this ecb going to be fighting disinflation or deflation once again if they see the same level of weakness we saw in those pmi's? jonathan: let's face it, things could get worse not better, based on what may or may not happen in the election that takes place in this country. lisa: the walls are going up in china and the united states. jonathan: let's head over to

slovenia and listen to the ecb president following that 25 basis point reduction. pres. lagarde: and to all of the slovenian authorities and the slovenian people. we have been beautifully-greeted and it is a real pleasure to have spent the last two days here in your company and in l yublijana. the vice president and i welcome you to our press conference. thank you, governor, for your hospitality, and thank you for your welcome, and we express our gratitude to your staff. some of whom are present in this room, actually. the governing council today decided to lower the three key ecb interest rates by 25 basis points. in particular the decision to lower the deposit facility rate, the rate through which we steer

the monetary policy stance, is based on our updated state assessment of inflation outlook, the dynamics of underlying inflation, and the strength of monetary policy transmission. the incoming information on inflation shows that the disinflation reprocess is well on track. the inflation outlook is also affected by recent downside surprises and indicators of economic activity. meanwhile, financing conditions remain restrictive. inflation is expected to rise in the coming months. before declining to target in the course ext year. the myti inflation remains high, as wages are still rising at an elevated pace. at the same time, labor cost pressures are set to continue

easing gradually, with profit partially buffering their impact on inflation. we are determined to ensure that inflation returns to our 2% medium-term target in a timely manner. we will keep policy rates sufficiently restrictive for as long as necessary, to achieve this aim. we will continue to follow a data-dependent and meeting by meeting approach to determining the -- determining the appropriate level and duration of restriction. in particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission. we are not pre-committing to a particular rate path.

the decisions taken today are set out in a press release available on our website. i will now outline in more detail how we see the economy and inflation developing, and will then explain our assessment of financial and conditions. looking at the economic activity the incoming information suggests that economic activity has been somewhat weaker than expected. while industrial production has been particularly volatile over the summer months, surveys indicate that manufacturing has continued to contract. for services, surveys show an uptick in august, likely supported by a strong summer tourism season, but the latest data point to more sluggish growth. businesses are expanding their investments only slowly, while housing investment continues to fall.

exports have weakened, especially for goods. although incomes rose in the second quarter -- this saving rate stood at 15.7% in the second quarter, well above the pre-pandemic average of 12.9%. at the same time recent survey evidence points to a gradual recovery in household spending. the labor market remains resilient. the unemployment rate stayed at its historical low of 6.4% in august. however, surveys .2 slowing employment growth, and a further moderation in the demand for labor. we expect the economy to strengthen over time, as rising real incomes allow households to

consume more. the gradually-fading effects of restrict of monetary policy should support consumption and investment. exports should contribute to the recovery as global demand rises. fiscal and structural policies should be aimed at making the economy more if, competitive, and resilient. that would help to raise potential growth and reduce price pressure in the medium-term. to this end it is crucial to swiftly follow up with concrete and ambitious structural policies on mario draghi's proposals for enhancing european competitiveness and proposals for empowering the single market. implementing the eu's revised economic governance framework fully, transparently, and without delay will have

governments bring down budget deficits and debt ratios on a sustained basis. governments should now make a strong start in this direction in the medium-term plans for fiscal and structural policies. annual inflation fell further, to 1.7% in september, at its lowest level since april 2021. energy prices dropped sharply at an annual rate of -6.1%. food price inflation went up slightly to 2.4%. goods inflation remained subdued at .4%, while services inflation edged down to 3.9%. most measures of underlying inflation either declined or were unchanged. domestic inflation is still

elevated, as wage pressures in the euro area remain strong. wage growth will remain high and volatile for the rest of the year, given the significant role of one-off payments and the staggered nature of wage adjustments. inflation is expected to rise in the coming months, partly because previous shortfalls in energy prices will drop out of the annual rates. inflation should then decline to target in the course of next year. the disinflation process should be supported by easing labor cost pressures and the past monetary policy tightening gradually feeding through to consumer prices. most measures of longer-term inflation expectations stand at around 2%. turning now to our risk assessment, the risks to

economic growth remain tilted to the downside. lower confidence could prevent consumption and investment from recovering as fast as expected. this could be amplified by sources of geopolitical risk, such as russia'snjustified war against ukraine, and the tragic conflict in the middle east, which could also disrupt energy supplies and global trade. lower demand for euro area exports do, for instance, to a weaker world economy, or an escalation in trade tensions betwee major economies, would further weigh on euro area growth. growth could also be lower if the lagged effects of monetary policy tightening turn out than expected. growth could be higher if the world economic -- world economy grows stronger than expected or if easier financing conditions

and declining inflation lead to a faster rebound in consumption and investment. inflation could turn out higher than anticipated if wages or profits increase by more than expected. upside risks to inflation also stem from the heightened geopolitical tensions, which could push up energy prices and freight cost freight costs, and disrupt global trade. moreover, extreme weather events and the unfolding climate crisis more broadly could drive up food prices. by contrast, inflation may surprise on the downside if low confidence and concerns about geopolitical events prevent consumption and investment from recovering as fast as expected. monetary policy dampens demand more than expect, or if the

economic environment in the rest of the world worsens unexpectedly. so, looking at the financial monetary conditions, shorter-term market interest rates have declined since our september meeting, owing mainly to weaker news on the euro area economy, and the further fall in inflation. while financing conditions remain restrictive, the average interest rates on new loans to firms and on new mortgages were down slightly in august, tell 5% and 3.7%, respectively. credit standards for business loans were unchanged in the third quarter, as reported in our latest lending survey. after more than two years of progressive tightening. moreover, demand for loans by firms rose for the first time in two years.

overall, lending to firms continues to be subdued, growing at an annual rate of .8% in august. data standards for mortgages eased for the third quarter in aero, owing especially to greater competition among banks. lower interest rates and better housing market prospects led to a strong increase in the demand for mortgages. in line with this, mortgage lending picked up slightly, growing at an annual rate of .6%. so, to conclude, the governing council today decided to lower the three key ecb interest rates by 25 basis points. in particular the decision to lower the deposit facility rate, the rate through which we steer the monetary policy stance is based on our updated assessment of