>> financial conditions are incredibly loose. >> equity volatility has been low. >> it can look a certain way under the index with opportunities on the surface. >> i don't feel bearish or fearful. >> this is "bloomberg surveillance." jonathan: the weeks are flying by. live from new york city, good morning, good morning, bloomberg surveillance starts now as we kick off a trading week on the longest winning streak of the year so far, the s&p 500 following a sixth week of gains on the s&p in the last week after closing at an all-time high.

your week ahead looks like this. the imf world bank meetings, a big divide emerging between the u.s. and the rest of the world. listen to the commentaryro over the weekend. apollo, no landing u.s. economy with bank of amec considering the r word lisa:, re-acceleration. how much can the u.s. re-accelerate, as you point out, there's a huge divide between the u.s. and europe that's in focus at the imf, a reason i think a lot of people will be focusing on the possibility of yields going higher overnight with a number of different analysts talking about the 5% 10-year yield. now the question comes to the consequence of reacceleration. a five jonathan: percent 10-year yield. jonathan:more people leaning heavily into the so called trump

trade this morning. lisa: here's the question and i was reading a lot about this this weekend, what is the trump trade? people are talking about it being yield curve steepening or how you get small caps rallying as a part of it. at the same time it's not clear what will actually be the trump trade after the fact. this seems to be the real question right now as we reach the final stretch. annmarie: seems like there are two trump trades, many people speculating that there is a whale and then there's the financial markets, who said that markets are going to be rotating more towards him with a scenario in the past several weeks with equity markets looking more like 2016 election playbooks. meanwhile, bonds have sold off and precious metal cryptocurrencies have continued upward momentum. jonathan: gold selling off this morning by four basis points,

the tenure up by three or four supported by the moves and or oil -- oil. crude was down last week, bouncing back this morning. we will build on that later. a single name this morning is boeing. do we finally have what might look like a deal over there? the offer on the table is a big one, wage increase of 35% over four years. annmarie: we have a deal almost. tentative. why? september when the union reached an agreement it was overwhelmingly rejected by the union workers, saying it doesn't go far enough. tentative agreement struck over the weekend in the most interesting aspect of this is when it could or could not be ratified, which is wednesday after they come out with earnings early in the morning. lisa: right, october 23, this idea that suddenly the union leaders could vote on it when they haven't endorsed it. because of some of the pension

issues in the benefits on the other end. it really goes to show that the 41% decline has been a drip down . it's unclear if this could stave it off. jonathan: and this is a small bounce in that context. up by 4% in the premarket this morning with equity futures pulling back by a little bit, down .1% on the s&p 500. in the commodity market, building on this later, $70.36, higher by 165%. the lineup looks like this over the next hour, dan morris is following six straight weeks of gains on the s&p 500 on the council as israel looks at plans to attack iran and a boring economy being the best kind of economy. stocks are sitting at record highs after posting their longest winning streak so far this year with traders looking at a busy week of results.

u.s. earnings driving outperformance at the equity market, early in the season with encouraging results. the risk is that the growth is too strong and the market was too optimistic on rate cuts. dan, welcome to the program. as always, good morning to you. too much of a good thing going on in the u.s. economy? >> we should probably enjoy it while it lasts, we know that bad things often have a negative surprise and it could be another six weeks or six months of continued gains for the markets, but broadly speaking in the u.s. the market is pretty encouraging, stocks reflect that and we believe we are on the path to a soft landing with rates going down and we could discuss all day about how quickly that is going to happen and when the cuts will take place, but for now we are waiting for when the drop might be an the economy looks resilient. jonathan: ubs asking us about a so-called no landing. what's the difference between a soft landing and a no landing and from your perspective how do

you approach that capital allocation shift with either in mind? >> my interpretation was you don't get growth back to 1.7 5%, which we are well above now, last i checked the gdp now forecast from the fed was three point 4% with quite a ways to go, which is where we get into that dynamic of how quickly the fed is actually going to cut rates of growth stays that strong and i think that will be the dilemma where perhaps you have mispricing in the market into much optimism on the right front. from an equity point of view that is not so much of a big problem. lisa: at a certain point you have to wonder if the earnings will ratify the no landing scenario. although we have seen downward revisions to some of the forward-looking projections for the cyclical companies, how much does that raise concerns as we parse the earnings of auto

companies later in the week? >> the key thing to keep in mind is that revisions are important, positive being better than negative and even if you had negative revisions a year from now, the market should be up as well, so you want to keep that in perspective. inevitably analysts want to be optimistic and revised down those estimates, but if there is growth behind it that is what matters. lisa: how much are you trying to understand trump trade, harris trade, and gaming that out at a time when earnings matter, the fed matters, but oxygen has been sucked out of the room? >> for the next few weeks i would argue the opposite, the election outcome is so uncertain it is challenging investors in terms of thinking about how they would play the outcome, particularly when honestly i think it will matter as much if not more as what happens in

congress, as it determines what the victor will be able to do. if there's a divide in congress it's a more limited scope, but anticipating that now would take a lot. annmarie: given that we need to know the composition of congress and the swing state polling being on a knife's edge when it comes to the election, why are we seeing the markets rotating toward the trump trade? >> as you pointed out, it all depends on who -- how you interpret it and the scenarios you think you have for the results of the election. still up quite positive outlook. it might make a difference on which sectors do well or worse depending on the configuration, but at a high level we are optimistic, if you will, and overweight equities in the u.s. annmarie: so regardless of

what's going on in the rest of the world, the u.s. remains in the exceptionalism realm? >> it's hard to find another economy that can match the perfoace of the u.s., we will see how long that lasts, but for now it seems to be positive. jonathan: dan, always good to hear from you. the so-called trump trade is super difficult to disentangle. is it the so-called trump trade? is it economic data or a mix of both? financials are doing nice, but you could say that's about the earnings. the treasury market has been selling off and it's all about the economic data where it's difficult to disentangle what it is and what it isn't. lisa: basically, for every single company or set of companies that was rallying or selling off, you could come up with a logical explanation in the market or come up with a real continuation of what we had seen before the betting markets

had changed. when you start parsing through it, how much are people focusing on fundamentals? good luck if you want to bet and how much are people trying to delineate what it could potentially mean. fundamentals don't change in terms of the u.s. being the cleanest of the dirty shirts. you talked about this yesterday, the walls seem to be going up around the world and if you want to do this in america, you might have to come into america, under either administration, but especially the trump administration. what is so interesting was daniel's point. how do you put these on when it's not just the white that is up for grabs, you don't know the composition of congress if you don't get a 50% corporate tax rate with a democratically controlled congress. this is what is so challenging about the election in two weeks. jonathan: a red sweet, not the base case, but if you get it you could imagine 10 basis points moving. why?

all the proxies on the campaign trail, extended tax cuts, throwing and more on top of that , the federal reserve will have to back away on the front and and the long end. annmarie: i think that is astute, accurate, but will that be bad for stocks are good for stocks? we have talked about it, what is the threshold at a time when yields used to be the potential liability of equity valuations? if things are released with tax cuts and a whole host of other deregulatory actions? these are the questions that people have and you cannot answer them, which is the reason why a lot of people are singing la ♪ [laughter] jonathan: getting an update on stories later for the week, danny? dani: harris is leading donald trump and fundraising, 221 point $8 million in september, more than three times the amount

raised by the trump campaign. the latest politics average shows that the race is still in neck, harris leading trump by .9%. southwest airlines may be heading towards a truce. according to the people familiar they are discussing a potential settlement to avoid a proxy fight for control of the board. posting a framework to give representation without control, talks have not been finalized and could fall through. most of the familiar people said. what a weekend for baseball, the world series matchup is set, a battle of league heavyweights with the dodgers facing offer a 12 time in the series. sorry, lisa, the dodgers took down the mets in their six games behind the high-powered offense with shohei ohtani heading to the full classic for the first time in his career, facing the yankees back in the series for

the first time since 2009. juan soto and carlos stanton led the way for the new york team. game one begins this friday in los angeles and that is your brief. jonathan: saturday evening in cleveland, he was phenomenal. have we got the game report? annmarie: do you know what they call him now? mr. juanderful. jonathan: they didn't quite fit in that yankees jacket there. the belly was covering it up. lisa: i'm actually jonathan: watching the bond auctions. the rest of the show? annmarie: i think you should. lisa: i disagree. jonathan: ok. up next, elon musk shaking up the campaign. >> we are giving out a million dollar prize, all you have to do

is sign a petition in support of the constitution. jonathan: that conversation is up next from new york city this morning, good morning. ♪ i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one. we invent them, we design them, we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪

jonathan: all-time highs by the end of friday's session, what is that, lisa? lisa: i can't count any higher. jonathan: what is that mean for work? lisa: i don't know. [laughter] 25? small caps outperformed the rotation that has been the staple. jonathan: super helpful. lisa: isn't it? jonathan: under surveillance for this morning, elon musk shaking up the campaign. >> we are giving out a one million-dollar prize every day between now and the election and you have to sign a petition in

support of the constitution. it's very straightforward. you even have to vote. jonathan: he said that the super political action committee that he'd created will be conveying away $1 million per day calling for free speech. democrats expressing concern. >> there are real questions with how he is spending money in the race. how dark money is flowing not just into pennsylvania but apparently now into the pockets of pennsylvanians. it's deeply concerning. jonathan: jack, what is so deeply concerning about it? jack: democrats can make broader concerns about the elon musk support for trump, complaints about how he runs formerly twitter. there are more specific legal concerns that i think not just

democrats but scholars immediately have. in addition to the comments that you just played, musk has said that the million dollar giveaway is based on the eligibility requirement of you being a registered voter. that may be illegal to require people to incentivize voter registration with cash giveaways or giveaways by check. so, there are some legal concerns that could be really interesting that could be playing out between now and election day regarding the billion dollar giveaway, but that is in addition, that's icing on the cake for democrats, their heartburn over the role that elon musk has played more broadly in favor of donald trump. jonathan: over the weekend he was doling out the checks, one of them in harrisburg, another in pittsburgh. it's a must win state for the democrats. what are they doing to

potentially combat this? jack: there is going to be a huge spotlight on pennsylvania, now through election day. harris is going to spend a lot of time there, safe to say. she will be there today in addition to michigan and wisconsin. the money giveaway also raises some strategic questions about what, exactly, the goal is here. we are close to the election. it raises awareness, seemingly, of a pac that supports trump. not something specifically that the is doing. you will probably hear democrats, you heard josh shapiro, but you are going to hear concerns from democrats about elon musk's activities here. the strategic response might just be more of the same. more time, more money in pennsylvania. it is part of the triumvirate that when you look at pennsylvania, michigan, and wisconsin, harris doesn't

technically have to win all three, but she really wants to an l3, so you will see more campaigning with plenty of money going into those airways in pennsylvania and a huge focus on pennsylvania from both candidates. annmarie: no democrat has been a winner of the presidency without pennsylvania since 1948, so i think they view this as a must win state. following the money, overnight begot details about how much each campaign is pulling in and harris set a record, raising $1 billion in there three months that ended at the end of september. what are they doing with all of this cash? jack: they don't have a huge burn through rate. harris had an advantage in september. she came into september with a more than $100 million cash on hand advantage over trump.

the question is exactly where they spend the money. how much goes to the logistics of the campaign. how much goes to the airwaves, television ads. which states get that. as i said, there is a huge focus on pennsylvania, michigan, wisconsin. it does not seem that harris is forgetting about georgia or arizona, or even north carolina. so, there are outstanding questions about the details of where they spend that, but for now we know yes, there is a significant financial advantage at the end of the campaign for harris over trump. jack: how much of that money is -- lisa: how much of that money is going towards the post-vote legal challenges people are expecting? jack: you typically have money left over in a campaign that goes to legal expenses. it tends to not be a huge

percentage. if you are trying to do the math on the effect on election, they are not saving up a massive amount of money and if it gets really messy, which is a possibility with legal challenges, there could be further fundraising by other groups that tried to get involved. lisa: the reason i'm asking this, elon musk in the payments he's putting out there, there's a federal law that makes it a crime for anyone who pays, offers to pay, or accepts payment for registration for voting with questions around the safety of campaign workers and thing -- in places like maricopa county and a real question around regardless of republican or democrat, the increasing amount of security, how much you have members of the campaigns trying to ensure security or just oversee different aspects that will inevitably get litigated. jack: yeah, those are

significant concerns. financially a lot of the responsibility doesn't fall just to the campaigns themselves. right before congress left, you probably remember the addition of about 125 million dollars for the secret service to ramp up protection for presidential candidates. as we said, the governor of pennsylvania has said that he has concerns about the legality of the elon musk cash giveaway. if it is in violation of the law in some way, there might be state officials looking into it. really, it is probably safe to say that despite the increase in a variety of costs around the logistics of the election, the fundraising advantage that harris has is still largely going to be focused on the typical campaign maneuvers and probably won't be massively drawn away by all of these other storylines. jonathan: you spend most of your

time in the halls of congress. what congressional or senate seats are you most watching next week? jack: hard to narrow it down, but if i were going to name a couple, i would say that the senate so pivotal and important. if harris is the winner, she might still have a republican senate. i would say that the uphill battles that democrats like jon tester and sherrod brown face, those are tough races in montana and ohio. they need to do well there for a possible president harris to have any chance of a real ability to follow through on her legislative agenda. the red state democrats are, i think, the most interesting races to watch with tester and a brown being the toughest ones. jonathan: jack, good to see you down there and washington, d.c. what do you think of the

mcdonald's retreat -- routine? annmarie: a lot of people in trump world were excited about it, thinking it worked, it got a lot of play across social media, these videos of him frying french fries there, and then in the drive-through window, taking people's orders. it was a stunned, apolitical stunned. jonathan: this is where we are at, 15 days out, taking digs at the vice presidential candidate? jonathan: this is why a lot of the people were ignoring this. customers were preselected to drive through, like its salted? don't burn your hand? don't get it on your, you know, button-down. jonathan: i guess the numbers matter. out raising trump 3.1 -- 3-1 right -- last month, numbers phenomenal, but the race is still very tight. up next, we catch up with

stephen cook as israel ramps up attacks against hezbollah and lebanon following the biggest weekly loss in crude of the year so far. asset-backed this morning on wti this morning, higher than 1.7%, brent crude off by 1.4 and wti, $70. ♪ is it me... or is work not working? at least, not the way it could work. your people are buried in busy work. and you might be thinking... can ai make it all work? it can. on the servicenow platform, ai transforms your entire business. your people work better, your customers are happier, and todd... well... he's practically euphoric. practically. so, let's get to work. (♪♪)

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jonathan: equity futures are softer this morning, down by tort -- down by .2%. no landing, the no landing continues, gives a ton of reasons for it. here are just five? there were more. [laughter] a dovish fed, public financing wide open, high stock home prices, limited servicing costs, locking in low rates, the list goes on and on. lisa: increasingly, this is more of a downturn than not. with earnings expectations for the likes of banks, how much is it priced in? that was increasingly the tenor of the notes over the weekend,

whoever it was over at j.p. morgan, we knew all this, so now what when it comes to stock valuations? jonathan: that's why we are seeing the push higher and bond yields this morning. yields higher by four basis points. the 10 year is at 412.4 three and if you switch it up once again, once more it is wti and brent bouncing back by 1.4% and breathing -- breathing more life into the trade. lisa: everyone is looking for when will israel respond and retaliate to iran, giving the lift to brent crude. it might be because you could point to more stimulus out of china or growth aspects, it being one of the more difficult trades to understand in full. but it has an ongoing connection with yields and oil prices. regardless, it seems to be at this point incontact.

the next -- jonathan: the next trade, gold, gains of 30% this year, coming from mohamed el-erian in the financial times today. what is at stake is not just the erosion of the dominant role of the dollar and a gradual change in the operation of the global system. fantastic column out there this morning. on the back of this gold move, which has been phenomenal. lisa: it draws into question the structural shift as banks look to allocate more in gold and look at that addition of dental individuals in china without the confidence of investing in home prices. lisa: he talked about it being not just an inflation hedge or geopolitics, but banks around the world are starting to purchase more gold with sanctions, they are looking at other ways to d hedge against

the dollar. which is why you have seen this uptick. potentially, this is why you have seen one way you could go, higher. jonathan: under surveillance this morning, the latest out of china with banks cutting the benchmark rates, their latest measure to help in the housing market slump. the size of markets beating expectations within the forecast range. lisa: it's about how much remains this year versus next year with an understanding on the outcome of the election, but the other understanding is what is the ultimate goal of chinese authorities? is it to support housing prices? to put a floor beneath how much the economy can deteriorate? what does it say about how slow the economy has gotten? that's what people are trying to put their arms around with those earnings out of europe. annmarie: there was that thinking before the stimulus from china, that they were going

to with their firepower until they saw the outcome, with donald trump and tons of tariffs, they might want to use it, but jeffries this morning talked about a trump win as a buying opportunity for stocks with the track record saying that he's not as anti-china as he seems to be. he did a big trade deal with them in january of 2020, contrarian to everyone else who comes on the program and says that trump is going to be much weaker or china. jonathan: when it comes to the equity market, this is important, the one before the last election cycle, the presidential put. it's a different kind of story. we talked about it around this table. if he becomes president for a second term, what regulates him is the financial market and the dow jones. we know what it is in that is ultimately what brought both sides together as well, market forces putting more pressure on both sides, one more than the other, coming to a deal. jonathan: the issue -- lisa: the

issue, does the market forces a better framework for trade rules or does it not? is that the same kind of regulatory force that rules what the foreign president would do in a second term? annmarie: how many times during trump 1.0 which he come out with an idea, reversing it by the time he trump -- touched down to have a softer tone. why? because after the statement and places like us ran a headline saying that this is coming from the president, saying he's pulling out of this or that trade deal with markets tanking, he realized it's not good for u.s., then he started to roll back. to your point, he is regulated by the dow jones in the s&p 500. will it work, i question? in his second format. jonathan: my favorite example of

this is when he said he had a phone call with the president of china that the president of china knew nothing about. i said the right takeaway isn't that he's lying, it's that he came out and pretended. suddenly we thought we had a deal. you remember this? ridiculous. lisa: speaking to your point, the main concern, which is what a lot of people will be the case in his second term as well. i think that is kind of the idea of what you are talking about. jonathan: more on this later with boeing and the machinists union, looking to vote on the proposal on wednesday, the same day they are set to report earnings, bowing up by 4%. this is a bounce that will stick? lisa: we don't even know if it will be ratified, a lot of the

leaders haven't signed off on it. but then what? how do they figure out what boeing looks like in five years? a lot of people think there is no way it will look like it looks today. lisa: everyone has to come out and give this earnings call, looking at that agreement in their thoughts, he can't say much and then we have to wait until hours later for potentially the ratification of the deal? you have to remember that in september a deal was struck between union leaders and overwhelmingly the workers said no, it doesn't go far enough. jonathan: the elon musk super pac pledging to give away $1 million per day for those calling for a petition for free speech and the right to bear arms, saying that they will pick random registered voters in swing states to win the prize through november 5. annmarie: and he already did

this twice over the weekend. the question is -- is this legal or not? josh shapiro came out over the weekend, previously the state attorney general. so, he didn't put his finger, his thumb on the scale too much, but he did say that this is something that law enforcement can take a look at. there will be a lot of criticism towards musk and what he's doing on his social media platforms in the money he has caught piling into this campaign. lisa: federal law makes it a crime for anyone who accepts payment for registration to vote or voting. elon musk is making the line very blurry. it's what we have seen so consistently throughout the election, that in spirit maybe there is a violation, effort to manipulate around the edges -- not the election, but the concept of legality, has just been really pushed to the edges in that is what we are seeing in this case.

lisa: pushing a boundary over the weekend, that's for sure. israel launching attacks against lebanon one day after a drone exploded next to the home of prime minister netanyahu. reportedly the aim of the strikes was to target their ability to function as israel weighs its next move. joining us now, stephen cook of the council on foreign relations. welcome back to the program, difficult question to start. do you have a base case on the response and what it will be? we are still waiting. what's the base case now? >> essentially what it was before, they will go after the iranian assets that threaten it most. the iranian ballistic missile capabilities. their manufacturing capabilities. of them, and the important regime targets. although, the attacks on banks in southern beirut, this is a

financial lifeline for hezbollah , showing yes, perhaps the israelis will not heed the advice of the bison administration and go after economic targets in iran. clearly israelis are interested in disrupting the ability of iran and hezbollah to operate, going after oil infrastructure and other financial assets, like they had done in lebanon. that baby in the offering for the israelis. jonathan: what kind of conversations do you think the administration's having with lebanon right now? >> i think that they believe that there is an opportunity for the lebanese government to begin to extend authority into the southern part of the country. i think that this is mostly a pipe dream. lebanon does not really actually have a government. there has been some talk of

having elections, i'm not quite sure under the current circumstances how you would organize those, but nevertheless the administration continues that diplomacy. here's the difference between the united states and the israelis. the u.s. won a deal in the israelis want to win the conflict. that's where the tension is coming from. annmarie: how much weight does the biden administration have on that? right now? >> we heard of before, netanyahu has said they have taken american advice seriously but they will be securing the country as they see fit. the conflict as it has unfolded over the last year, every time the administration offered advice or pressure the israelis to do something, israelis have gone about to do with the where they wanted anyway. israel has come to the conclusion they are getting bad advice from the united states. they might listen, but they will continue to advance their own

interests in terms of how they calculate the war and its own judgment. lisa: how much cloud do you think that the u.s. lost over the reports of a loss of intelligence? >> there's conflict over this. the fact that it was leak is open to debate. nevertheless, clearly someone wants to put a break on israeli operations. there is a sentiment within the foreign policy bureaucracy that the israelis are looking to draw the united states into a conflict with iran and it may have been someone's effort to prevent that from happening. lisa: we know that israel had plans in that there was a seven hour meeting over the weekend where a lot of people discussed it. was there a sense of the time frame or why there was a delay

in understanding what the response will look like? >> frankly, i thought their response would be much quicker. they are clearly deciding on the best way to invoke the most damage on iran without necessarily inviting a significant response, something that the iranians promised. at the same time, israel may well be negotiating with allies in the region about how best to attack iran without inviting retaliation on them. so, this is a very complicated operation. iran is far from israel. but it's not really a question of if but when. it is likely to come in the coming weeks if not days. lisa: yesterday the prime minister's office reiterated what they said publicly, in the end they will be making their decisions based on national

interest. this was in response to not speaking to the president of the united states, but speaking to the republican challenger and candidate, donald trump. is this appropriate? >> well, it really is quite extraordinary that the israeli prime minister was talking with the candidate about the u.s. israel relationship. it's clear that netanyahu has long felt more comfortable with republican presidents than he has with democratic presidents. although this isn't to suggest that he had a smooth relationship with president trump. one of the things we learn from the cushion or what memoir was that the trust deficit between trump and netanyahu was significant. permit perhaps not as much as it was between other presidents and prime ministers, but nevertheless, it was a problematic relationship. jonathan: wasn't john kerry

accused of shallow diplomacy a few years ago? annmarie: yes, when the trump administration came into salvage the nuclear agreement. lines get blurred a before and he gave -- got a lot of criticism for that. jonathan: reports of north korean troops going to fight in ukraine? that is a heck of an escalation. annmarie: to think stand up to me. one, not very appropriate. two, how depleted is the russian military, army, and defensive posture if they have to rely on north korea to send in troops? we know that kim jong-un and president boudin have a close relationship, but this takes it to another layer, another level of coordination between these two. lisa: and it raises the question and i'm glad you bring this up, how close is that nexus between

russia and iran? how depleted are these forces, with what's going on, or is this really becoming an access unto itself? jonathan: getting much closer over the last few years. brent crude, 7430 four. updating stories elsewhere with your brief, here is dani burger. dani: vice president harris at down for an interview with al sharpton this weekend and was asked about the former president's street talk on the campaign to describe her record as vice president. >> what you see in my opponent, former president of the united states, really is, it demeans the office. i was clear about this, donald trump should never again stand behind the seal of the president of the united states. he has not earned the right, he has not earned the right. and that is why he is going to lose.

>> harris predicting that the lack of trump decorum would be a disqualifier with voters. t. rowe price saying that the firm's cio fixed income would make a call on a recent note with rising inflation expectations that ongoing issuance by the treasury is flooding the market supply, pressured further by the fed balance sheet reduction. bitcoin flirting with $70,000. data from bloomberg shows that the u.s. bought bitcoin etf's with $2.5 billion in inflows over six days with a rally in part because of crypto rules that become friendlier after the election. jonathan: up next on the program, the calm before the election. >> ongoing high deficits regarding the election trade partners and of the risks of the

global trade war domestic impact in the u.s. and the international impact on the states, everything. jonathan: that is next on the program. live, from new york, you are watching bloomberg tv. ♪

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jonathan: session los all-time highs in the s&p 500, softer than nearby one third of 1%. under surveillance this morning, calm before the start of the election. >> very consequential around the trade, the fiscal side, properly, if it is going to be a divided congress he will have higher deficits regarding the outcome of the election. the trade part of this, the risks around the global trade war, the domestic impact in the

u.s. and the international impact, it affects everything. jonathan: foreign leaders are bracing for the outcome of next month's election. the u.s. economy in particular reportedly still unstable ground, they wrote that the last five years have been priming jump scares and drama in the economy and that reality is a lot less exciting as the economy is on a steady march, refusing to be tripped up by even remarkable events. where does this boring stability come from? >> everything. the labor market is stable. business investment and corporate profits are drama free. the consumer spending like normal. every sector of the economy, manufacturing, the economy performing as it normally would, that's really important now. inflation is still too high,

that's one reason, but the second is that there is still a big segment of consumers who had negative real earnings for a long time in are just getting back. that is why despite a boring and solid economy, consumer sentiment is so bad. lisa: one reason that people don't like boring is that it doesn't last and typically they get too hot or too cold in a time where we don't understand the neutral rate. how do you understand how close we are to a pivot .1 way or the other? >> it's in my book here, lots of labor market data. i'm going to keep saying that. lisa: [laughter] ok. >> i have a data set that is 20 million workers, or 25 million, at adp, so when i look at the stability of wage gains, i see an economy that continues to hire a little bit better than it

did a few months ago, but not the surge that you might expect after looking at that september jobs report, which was the most exciting data point of the year, probably. even looking at other indicators of the labor market like initial jobless claims after those back-to-back hurricanes, they had tipped up, now they are on the way back. looking at the stable data from adp, these were moderate gains. adding the labor market altogether with a pretty normal unemployment rate, you have an economy continuing to march along just fine. lisa: another way to put it is that during pandemic the balance of leverage seemed to shift from workers to employers in demanding more. where is the balance of leverage now at the time when we are waiting for the boeing strike or to vote on whether they will end a strike on wednesday? >> it has shifted back to the

employer, in my view. people are not leaving the way they work. not turning over as quickly. talk to any company and they say that people are staying put. when people don't move, it means the employer has the advantage. we see it in the advantage between jobs. these other strikes are not about the present, but the future. underpinning all of these is something about ai really, workers are trying to position for the present and for how their jobs might change in the future all at once. annmarie: you talked about it in your research, employee sentiment dipping. are they just waiting for big outcomes, are people on the sidelines? >> i think there is a hesitancy in making a movie and you typically see that in election years, but this one being so

close there is a hesitancy with employers and consumers. people are waiting to make big decisions in we will see that in the durable goods, the expensive big-ticket items you might have to get a loan for or put on your credit card, people are hesitating to see where interest rates are going to go. it's not just domestically, but globally, reasons for uncertainty, getting back to your point, when things are boring, people don't trust it as much. you wait for the other shoe to drop in i think that is pretty true of this economy as well. jonathan: you can sense the economy of the moment. good to see you. we will be catching up with terry wiseman of mccrory. that's up next.

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>> what is really truly in the driver's seat is the fact that the economy is resilient. >> what we discussed his acceleration in the economy. >> the fed needs to continue to move cautiously. >> would not rule out 50 basis points for december. >> the fed's job is not yet done. >> this is "bloomberg surveillance." jonathan: the second hour of "bloomberg surveillance" starts right now with equity futures pulling back from all-time highs in the s&p 500 futures negative by a third of 1%. no real drama here. on the nasdaq 100, we are down

half of 1%. on the russell, we are down a third. the data much better the last week. big upside surprise last week's trading sessions and then this week things get a bit quieter. got a beige book, imf world meetings, sentiment on friday. earnings pick up a little bit with gm and tesla. it is the calm before a very busy few weeks. payroll a few fridays away and election on november 5 and a federal reserve decision on november 11. lisa: i love it. a, week -- a calmer week. it is the calm before the storm. even amid all the economic news and earnings that are supportive of strength in the near term, there is a real question of how durable it is. the numbers this you are seeing in the market is what you heard in the commentary over the weekend. jonathan: no news is good news

until 445, 475. not just mentioning random numbers. i am looking at the 10 year. at what point does good news become bad news for the equity market? lisa: people talk about 5% 10 year yields and you have to imagine there is volatility on the heels of the election. at what point does that cram some of the returns in the equity markets? david talking but for the next decade you could see 3% returns for the s&p 500 because people are going to things like bonds instead for returns. you get those kinds of discussions again as yields continue to climb. annmarie: 5% threshold the next six months, that costs are rising. what did we learn just a few days ago? the budget deficit hit its highest since the covid pandemic in 2024 propelled by higher social security and defense spending. regardless of the composition of commerce, bounce back

as well. jonathan: we are up on wti and brent crude. coming up this hour, we will catch up with stuart kaiser from citi. 47th record high so far this year. adam on the dangers of trump's economic plans. an oil rebounding as investors await israel's next move. following a week full of better-than-expected economic data, solid economic data, retail sales continues to improve risk reward for equity markets and smooth the runway until election day. good morning. stuart: good morning. jonathan: that is a small window, the next couple of weeks. it gets messy? stuart: it could. update on the economy, policy, politics, so it could get a little messy. a common refrain as i am

carrying much more risk than i otherwise would have. just the massive event risk despite the positive data. people are keeping it close to the best. jonathan: you have been keeping it incredibly consistent. you said good news is good news. until when? when does good news start to become a bit of a constraint for equities? stuart: it is what gets you to the 4.5% or 4.75%. if it is related to deficit spending and a buyer's strike or something like that, that is bad news to begin with. if we are putting strong jobs data in the market and yields are reacting in step, i think we are ok. if it is coming from a third-party source or something like that, that is a different issue. lisa: that is a very sanguine, logical view. we talked about the efficacy of logic in this market. goldman sachs coming out and saying valuations matter actually.

when you start getting real yield for bonds and starting to see those types of levels, people start to invest in bonds for total return, for capital gains, and it will be an offset to potential stock allocations. do you ascribe to that kind of view that at a certain point stripping out of the why, stripping out the good news is good news, you will see some sort of penalty to stock valuation if yields go to a certain level. stuart: i tend to live 12 months and in in my view. i am sure they are looking at longer data overturns. if you will hold equities for three to five years, valuations matter and yields matter more. we could have made the same argument january. i will just sit in cash. there is a logic to that. may be on a sharp ratio basis you would have rather been in bonds this year. but the volatility is not so much fun over there either. look, their volatility is

impacting me personally so it is a little painful. valuation matters. for that you are talking three to five year time period. it is the why. if you are printing earnings growth like we are printing, it will be hard to keep people out of u.s. equity markets. annmarie: we were talking about how it seems to be escalating in the two weeks leading up to the election, and there have been downgrades, revisions lower to the forward look we have seen out of some companies. it does not seem to worry you that much. why? stuart: third and fourth quarter have been revised down with the historical norm. usually they are too bullish. the number looks high relative to history, the 2025 numbers. starting to talk about 2025, that would worry us more and that is where the revisions risk is for the equity market. third and fourth quarters seem to be ok but 2025 seems to be bullish right now. that was a big focus on the backside. people were pushing on these banks to talk to us about 2025

and what is going on there. not as worried about this quarter. but that year is a little murky right now. annmarie: you talk about the vix as a premium less than expected. why? we are less than two weeks out. stuart: people are getting convinced with the betting odds moving in one direction. that maybe gives you more confidence that one party might win more than the other. if you have four outcomes, trump, harris, the sweeps, the blue sweep is such a low probability that you take one of the options out. i think that option is probably viewed as a little negative two markets by investors. taking one of them out has helped. i think odds moving in trump's favor has probably helped a little bit. the fact is we are rallying, which is helping as well. annmarie: do you think the financial markets are taking their cues from the betting market?

this could be a self-fulfilling prophecy. stuart: i agree. those are as tiny as they have been since late july. to your point, there is a lot of skepticism about what is driving those betting odds. polly market is viewed a little more international and there is no limit on the size of the wage you can put on there. so i will take that with a huge grain of salt for that reason. people believe markets, whether betting or equity markets, are with the crowd. if there is money behind it, it will not be ignored. predictability, i doubt that. lisa: i want to talk about the wisdom of the crowds because we talk about that as trying to understand what is the trump trade. when you see a rally extended, how much of that is because people truly expect donald trump to win versus the fundamentals? how do you parse the two? stuart: we are 50-50 on the

election. if anybody believes they have a strong view on who will win, that is probably not the right place to be. the trump trade, banks have done well. but frankly we also got banks earnings. from our perspective, i am a fundamentals person. i think the earnings are driving that more than the election odds. this happened in early july. we had a rally in trump trades, banks included. you also had some positive news that was also driving it. it is impossible to parse. there is no way to see the markets are pricing in x percent of a trump victory but if you want to believe it, you will use the sort of price action in your favor i guess. jonathan: just a few words on the annex. you can learn -- just a few words on the earnings. you can learn about the earnings. what have we learned the last few weeks? stuart: on the backside of

things, the expectation in-line was good enough and we saw that play out in the banks. banks eps has been revised. you are seeing the bar is not particularly high. the quarterly s&p number has been revised down about 1% in the last two weeks. those two things are telling you the bar was a little lower this time. if you put up in-line numbers, it is a positive. that said, there is not a lot of macro events this week. there is a lot of earnings this week, particularly the 24th. it has a large cap tech print, and how does the market trade that number? lisa: you said it was important to understand not necessarily third and fourth quarters but what will happen in 2025. what will it do to earnings and the response in stock prices if we have no visibility into 2025? and frankly, corporate executives are saying that is a crapshoot. stuart: if there is a lot of uncertainty about that 2025 number, that should create a little more friction to the upside.

if that is happening, the market will reorient it back into the economy. if we are not sure about corporate earnings, we need to look at the economic data. if the economic data is strong, we will translate that through to a solid earnings season. if the microbe is murky, we will focus on the macro. if the macro is murky, there should be more premium on those stocks and there should be a headwind to the upside. jonathan: a cycle. the outlook improves, earnings are good, equities are higher, spreads are tight, and the outlook improves. what will disrupt that in the coming months? lisa: this is the reason people are talk about geopolitics. you underscored a point that after the election, regardless of who wins, there will be a vacuum of power and the potential for a whole host of different geopolitical hotspots. i can raise all of these worries. people will say, but also you were weed about today, nervous nelly? there is a reason why on the margins you are hearing people

some caution at least on the surface but then buy stocks. jonathan: the list is always long for her. lisa: always. jonathan: let's give you an update on stories elsewhere with dani burger. dani: carson blanche shared his outlook for the stocks earlier today. >> there is a fed put. there is always a fed put. does there come a point in time when the system breaks and the fed cannot fix it? theoretically, yes. in our lifetimes, i don't know. i think for now it probably just pays not to think too much. probably mag seven. dani: he also announced his version two china a market he is calling on investable. major damage to the economy if donald trump is reelected, bill dudley writes. his trade policies did

not do too much in his first term but they will if he wins in november. higher tariffs would raise both inflation and hurt growth. the new york liberty have won their first wnba championship. they beat the minnesota lynx 67-62 in overtime in the final of game 5 last night. the lynx were trying for a record fifth wnba title. that is your brief. jonathan: thank you. more from dani in 30 minutes. donald trump's favorite words, next. >> if these companies do not make their cars and products here, they will pay a tariff, a very stiff tariff when they send their products into the united states. we will call this policy build it in america plan. jonathan: that conversation coming up next. live from new york city this morning, good morning. ♪

jonathan: equities down by a third of 1%. yields a bit higher up by 4 basis points. under surveillance this morning, donald trump's favorite word. >> if these companies do not make their cars and products here, then they will pay a tariff, a very stiff tariff when they send their products into the united states. we are going to call this policy build it in america plan. we brought the rate down, and you saw this, from close to 40% to 21%, now down to 15%. but only if they build it in america. jonathan: so here is the latest. global markets bracing for donald trump' plans tos overhaul the u.s. economy through steep tariffs and big tax cuts, including cutting the corporate tax rate to 15%. a word of caution with adam

writing the approach weaponizes uncertainty but uncertainty is a difficult weapon to control and it will backfire on whoever wields it too widely. adam joins us now for more. looking back to the program. always important to spend time with you and think through some issues. let's think about that quote more. what do you mean it is a difficult weapon to control and will backfire on whoever wields it too widely? adam: thank you for having me back on "surveillance." i think the issue is two things that do not necessarily work in economics when you threaten a lot. it also is harmful to you. the first is you create uncertainty, not just in the minds of that corporate ceo or that particular government you are negotiating with. you create uncertainty ripple effects throughout a bunch of other government companies and they start to self-insure. they don't just get scared to do what you want. they don't necessarily do what you want them to do.

the second problem with this uncertainty weaponization determines one way in terms of policies is you actually have to implement it to be credible. you cannot just threaten it. a lot of people talking in the markets, a lot of pundits and people if needed with the campaign say this is all about negotiating. they will threaten the tariffs and taxes and that will reassure the u.s., but you cannot do that unless you are actually going to do, the only way to do that is to implement the policies. so you get the harm upfront and do not necessarily get the benefit. one of the ironies for people, you and i and others on this program, talk to and talk about is the more the markets bet that trump will win but will not actually do these crazy things, the more it is incumbent upon him to have to do it. annmarie: but when you hear from

some trump economic advisors, they see it will be used as a caret and stick approach, meeting may be 2.5% of the 60% they want to do on china but 2.5% every month until they get xi jinping to the table. because what they say is there needs to be fair trade between china and the united states and they do not view trade right now between china and the united states as fair. do you view trade right now, what china is doing, as fair? adam: no, but i do not think it is something you whined about. this is something the biden team and trump team have done. if it had been georgia playing against texas, the top two in college football, they would have spent their whole time whining about the referees, a call went against them or the crowd went against them. that is what they are doing, packing it up and going home. but real players in the major leagues, which the u.s. economy should be, you have to win even

if the referees are against you and the crowd is rooting against you. you do not get so caught up in excuses and small deter ants. annmarie: the biden administration kept the tariffs on so it would be your idea for both of these campaigns to try to level the playing field? adam: but i think the point is the biden administration and trump administration had the tariffs that had no effect. the phase i tariffs in the china deal had no effect on what they were buying or selling. they claim the chinese are still stealing ip, subsidizing, doing this and that. you can say if this did not work, let's try it tenfold, but that is the key difference here. trump this time is talking repeatedly on the record in the platform about doing tariffs at 10 to 20 times the level he did last time and doing them across

a whole range of countries, not just china but a much higher level. it is going to have much worse effects on the u.s. economy. you can shrug it off. it is not good. it is a tax on people and companies that were affected by the tariffs, lost valuation as the study showed. it was inflationary for people. but the big thing is harris has at least said repeatedly tariffs are a tax. they are for working people more, which is true. she will not do across the board tariffs. she will reconsider the whole approach. there is a difference between stopping the tariffs where they are now and only using them in specific cases on china. across the board, huge tariffs. lisa: there is a bigger question and this is why the concept of tariffs has been resonating with a lot of people, which is there are whole swaps of the u.s.

economy the few left behind by globalization, by moving manufacturing overseas, and would welcome the manufacturing and some of the industrial prowess to come back to the united states. is there a proposal to increase production in the united states in a sustainable way with the staff that we currently have? adam: i think the answer is no. i think i would push back on that political perception because it is not grounded in reality but there are people obsessed with having domestic manufacturing, and we have many factoring. you talk about apple, new video, all of these -- nvidia, all of these companies with more this morning than the companies that make stuff. these are the companies that design stuff, that do are indeed. you can say, what about the terrible things happening? there are not that many terrible things happening. we have the highest labor force participation rate in forever. we have one of the lowest

unemployment rates in forever. we have income growth much higher than it has been. you have fewer people in poverty than it has ever been. so this constant refrain that we are losing because our many factoring has moved up and up in value and become more productive and therefore needs less workers on the floor is falsehood. so you say, how do we buy off the angry people? that is how you get trump. and that is not good. and so at some point you have to appeal to people that they may be so angry. or that they maybe should adjust. and the reality is if we cannot drive the entire country about what has happened in a few counties and a few states and that is part of our politics. year after year, a majority of the country clearly has views on whether it is gun-control or globalization or the economy or health care and again stymied by small-group. dutch by small-group -- stymied

by small groups. lisa: there could be some potential national security components. adam: that is a much more serious issue and the one that is genuinely difficult and people are wrestling with.you can imagine if we bought china that there would be planted bugs and controls that could be dangerous. not clear the economic response to get around it but that does not mean you should let everything get in. we are seeing reports now about all of these weapons the russians are using, all of the things the chinese are using where you can see the asml, all of these companies we are protecting are still selling and producing in china, and that is in the very narrow spectrum of focusing on just the chips and just the critical industries with the full weight of the u.s.

government, and you still cannot maintain the sanctions to the controls, so it is like the tariffs. you just keep upping it and saying we did not try hard enough? jonathan: it is tough to get a conversation you and i will continue, we will all continue with you through to election day and beyond. i want to mention a data point that is at the heart of all of this. if you go back to 1995, china's share of manufacturing global exports, 3%. 25 years later, north of 20%. and a lot of towns and communities in the western world left behind as the many factoring shifted abroad good we are at right now is what donald trump displayed in 2016, that this is how you win elections. this is how it is done. what we have seen develop since they're after is the spread between sound economic policy and the kind of policies that when you elections getting wider. you can have conversations like this with economists but as far as politicians are concerned,

these are the policies they believe they need to convey to the electorate to win elections, and until we do something about that, ultimately this is the path forward. lisa: it is the swing states that have seen a lot of these areas hollowed out and really become the main areas that determine elections for the entire country. jonathan: up next on the program, we will catch up with javier as oil rebounds. we are tracking supply risk in the middle east. wti back in the 70's. ♪ personalized financial advice from ameriprise can do more than help you reach your goals. i 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: coming into monday on the longest weekly winning streak of the s&p 500. we just had week six. as we open on week seven, we are negative by .3%. nasdaq 100 soccer by .6%. earnings season wrapping up during the week, gm and tesla to watch. lisa: possibly the highlight of the week in a data-light week. key question about competition from china, the difference between u.s. car manufacturers and what we see out of europe that have really been hammered in expectations and sales forecasts. jonathan: we've had expert point out the same thing, downgrades to the outlook. we heard from vw, bmw, same

story. gm and ford, are they going to follow suit? lisa: we have seen this in recent earnings, they have diverged meaningfully because they have a solid plan base in the u.s., don't have chinese cars coming into the states. sales in china are not as big of a component as they are for european manufacturers. also, gm has done well with hybrids and combustible cars and trucks, which seems to be a mainstay for americans. jonathan: they're very different auto markets. we have talked about this, this is the direction of travel, three separate islands that don't really interact with each other. all plants producing for a one, auto plants producing for another. lisa: maybe it is geographic.

europe has not come up with that framework preferably yet for how that will look. annmarie: long-term question for the auto industry, if the world really does move to ev's tangibly in the future, what does china do next? they have the raw materials and the processing. at what point does china say, you want the electric vehicle or the battery? you cannot just buy the battery, you have to buy the car. jonathan: that is the equity market, here is the bond market. 2-year yield's, just short of 4%. 4.1282 on the 10-year. you have to go deep into the summer to see yields this high. a question about what is driving this, is it the economic data or the politics? stuart kaiser said it is not so much about a red wave, it's about taking away another

scenario, taking away the scenario of a blue wave. annmarie: the reason why he said volatility had come down marginally. lisa: you have not seen volatility go down dramatically with the bond markets because there is the possibility if you get a red sweep, under certain scenarios, that could cause deficit to increase more. cause extra premium to be baked into the treasury market. jonathan: the story of how yields in america fueling dollar strength for a third consecutive week, the longest weekly streak against the euro going back to june of this year. 1.0851, -5.1%. i think this -- negative by .1%. lisa: what is the approach that lawmakers and policymakers take especially as the heads of the finest come together.

do they talk about borrowing more money to support industries or the idea of the woes of the deficits of the u.s. and how that could cause problems, how it's important to bring that down. if they talk like that, people nodding their heads, but it is not good for the european region, which may need cash infusion more than a fiscal restraint. jonathan: southwest airlines, elliott management may finally be heading toward a truce. both sides have been discussing a potential settlement that would avoid a proxy fight for control of the airlines board. the stock is down 1%. lisa: looks like they have a stock buyback plan, they will keep the ceo, they will keep the chairman. either way, shares are up 7%, the first annual gain going back to 2019. there is the feeling the company has underperformed even when people are talking about how low

cost airlines in general have been challenged. annmarie: we have seen them make these policy changes do not just revitalize the company but also fight off elliott. at the end of the day, i think the consumer may wind from this. they will start with assigned seats and also premium options offering extra legroom. if you want to get a cheaper flight, they are doing some due diligence. lisa: who paid for this spot? jonathan: a big reason there is an activist investor on board because everything you said could have been sent five years ago. lisa: you need to get fees, otherwise you'll have a hard time. i remember at frontier, they would say, do you want a drink? three dollars. jonathan: going to start selling oxygen on frontier? kamala harris saying donald

trump's lack of decorum will disqualify him from some voters. telling al sharpton, president spoke into the rooms around the world with the authority to talk about democracy and the rule of law. he has none earned that right, and that is why he will lose. annmarie: she is going after us on things that he said on the campaign trail this weekend, not just about calling her out, a former pro golfer's, etc. this may not land for some people but it may for others. the issue is, two weeks before the election, they are giving it all they have. trump is in north carolina, making sure that that state goes with him. she is going to every single blue wall today. pennsylvania, michigan. jonathan: pretty strange comments over the weekend. not going there. hezbollah attends to attack benjamin netanyahu's home.

he says that is the reason that retaliation against iran is warranted. annmarie: today we will see secretary of state antony blinken going to the region. his 11th trip since the october 7 attack. why is he going now? i think this is the u.s. making sure they get him in the region. lebanese reporters also talking about the fact that they want these u.s. officials in the region to buy them time. if you have the secretary of state in the region, you cannot be israel and have a massive retaliation against iran at the same time. jonathan: part of the reason crude is off by 2%. rebounding last week with traders keeping a close eye on supply risk. other headwinds include signs of soft landing in china as banks cut lending rates.

javier blas joins us for more. we will be talking about gold and oil. you wrote a number of weeks ago that the risk of falling to 50 might be greater than the risk of value to 100. has your view changed? javier: it has not changed. i know this is a big red herring, but mathematically with brent and wti trading between 70 and $75 a barrel, we are closer to 50 and then $100 a barrel. i believe israel has put aside their intentions to retaliate against iranian installations, so the focus is on 2025. more open crude coming into the market, soccer and demand growth next year, and oversupplied market that doesn't demand prices north of $100. annmarie: talking about the fact that some are bullish on china.

do you see the demand pickup in china? javier: they are one of the world's largest sellers of oil, always bullish on china. i don't think that the global demand is as weak as some say. still around one million barrels a day, which is remarkable given the electric vehicles and efficiencies we are introducing into the economy. the problem is opec bringing extra barrels into the market. not alone, brazil, canada, other oil coming into the market. this is not just a question about whether china is a strong, it's a question of supply. you could have very strong supply and demand and therefore and oversupplied market. altogether in 2025, we have more oil than we will consume, so prices need to be weaker. annmarie: let's look at the geopolitics and what is playing

out. do you think the market right now is pricing in enough the potential for an extended war in the gulf? javier: the market is not pricing in a significant the reduction in middle eastern supply. if we did, if we were to lose the iranian oil supply, perhaps oil from other countries in the region, saudi arabia, united arab emirates, dubai, we would have much higher prices but the market is not there. the risk is not as elevated. i do agree that if we lose a significant chunk of oil, prices need to go much higher. lisa: how much is gold a geopolitical player versus a separate story entirely? javier: to me, separate story. the main driver is too much public debt around the world, high fiscal deficits. some countries, on a gdp fiscal

deficit that looked more like we are fighting a war with country that they are not fighting wars at the moment. there is an element every time there is tension in the middle east, gold is the safety, but mostly a financial play. the meetings this week in washington with the international monetary fund, world bank will have a big focus on public debt. that is positive for gold. lisa: larger take away here where we talk about what is influencing, the geopolitical heritage, the supply-demand dynamic, given how much transition there has been to electric vehicles in places like china, increased demand for what? when is the commodity that you look to to really understand consumer appetite? the most leveraged.

is it still loyal? -- oil? javier: we'll gives you a good indication of where the economy is headed. i would say diesel is the key component of the global economy. that is today where the weakness is in china. a lot of talk about gasoline demand being weak because of electrical vehicle and attrition. -- penetration. the refined petroleum product has been weaker compared to diesel, and that is because of construction activity, generally transportation of goods. annmarie: when you're talking about a i demand, everyone talking about consumption. you have a piece this week about how cold it is not going away, is the driver of this transition. are we at peak coal or could this go higher? javier: we have been talking

about peak coal since around 2013. it was always said that it would be reached in the next couple years. 2015, it was 2017, so on and so forth. global demand for coal in 2024 will be at an all-time high. i believe nxtwe don't have yet . also the word peak to me is the wrong one. when you talk about peak, you are talking about reaching the summit of a mountain. what comes after that is a rapid descent. the going up and down is very similar. here we talk about the peak, a high summit, staying there on a plot to. that is not what the scenario says at 2050. we need the peak followed by

almost a cliff. that is not happening. lisa: much are people looking at a i adoption and how much demand that will require? coal, gasoline demand going forward? javier: you look at the electricity consumption in the next six years, from now until 2030, it is coming from -- ai will play a role alongside data centers. it is similar in terms of size from what we know today, the incremental need for the use of water. the biggest driver for electricity demand until the end of the decade is going to be coming from the industry, where the industry continues to electrify, moving away from natural gas and petroleum, coming on to electric vehicles. the other big challenge is air-conditioning. the needs for cooling are

skyrocketing around the world. that is a combination of climate change, hotter weather, but also a lot of the population in countries where the summers are hot, getting wealthier. reaching the gp that is associated with the first purchase of an air conditioning unit. that is happening across north africa, south west asia, pakistan, india, etc.. that is where the electricity is coming in. i am just trying to be nice to artificial intelligence. it is kind of the sexy, new thing in the energy transition, but it is not the thing. desalinization will be as important. very few people are talking about that part of the electricity consumption. jonathan: we enjoyed this. thank you, javier.

a few paragraphs that jumped out to me. the international energy agency published his world energy outlook. buried in the report was a warning. the outlook for coal has been revised upward for the coming decade principally as a result of updated electricity demand projections notably from china and india. it was not a small revision. coal consumption in 2030 is now estimated to be 6% higher than only a year ago. lisa: how is that transition to clean energy going? the quintessential dirty energy source and this is one of the necessary components to adapting to a new world. annmarie: this is why there is tons of criticism at the clean energy transition. the ev might be better for the planet but how it got to be made, these negative externalities on the transition. what else he talked about, the

plateau, remember in the debate when donald trump had to go after germany about normal energy? their response in itself proved trump's point. germany said that coal would be off the grid by 2038 at the latest. that was their response. jonathan: the dirty secret in the energy transition. let's get you the update with your bloomberg brief. here is dani burger. >> the s&p 500's decade of big gains is about to come to an end, says goldman sachs. u.s. stocks are likely to sustain their about bagger performance and investors will turn to other assets like bonds for better returns. he predicts the s&p will post a total return of just 3% over the next 10 years compared with 13% in the last decade and the long-term average of 11. boeing shares higher in the premarket trade. it reached a tentative deal with its largest union to bump employee pay by 35% over four

years. however, hourly workers have yet to sign off on the agreement. union negotiators are not endorsing the proposal. the kansas city chiefs are the nfl's last undefeated team. the game saw no touchdown passes and five combined intercepted between patrick mahomes and brock purdy. elsewhere, the jets fell to the pittsburgh steelers on what a night. donald trump among those in attendance, leading vance in a usa chant. jonathan: up next on the program, the u.s. in the driver's seat. >> the world's savings have gone to the united states. the market is now completely wrongfooted by this economy. jonathan: that conversation, next.

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jonathan: stocks just a little bit softer, down to a third of on the s&p 500. under surveillance this morning, the u.s. in the driver's seat. >> u.s. exceptionalism, u.s. outperformance over all over the last couple years. the world's savings have gone to the united states. i think we have to clean out some of the positioning at some point and get a more meaningful dollars on the before the u.s. economic outperformance can drive a slower. i think the market is completely wrongfooted by this economy. jonathan: u.s. dollar on the longest weekly winning run since june.

the first has been tested to a more hawkish data, stronger activity, less disinflation versus the rest of the world.2 the second founded support in donald trump's rising probability of winning the election. so long as they process, the dollar can strengthen. can they process, which is more durable? >> regardless of who win the election, american exceptionalism will continue in the data. but there is a catch. forget about who wins, let's say it is contested and people start to question political and legal institutions. we know there will be a lot of lot there involved in the contesting of an election. that is how the american exceptionalism story is linked to the election. until then they are two separate

issues. if trump wins and we don't have a contested election, then we will have a trump trade and american exceptionalism running at the same time. that is the better scenario for the dollar. lisa: how much upside scenario? thierry: our own productions have the dollar going down to 1.05 clearly a strong dollar story that continues from these levels if trump wins. lisa: you are talking about a contested election. at the same time, people are talking about election week, w eeks. at one point, as it grinds on, as ballots are counted, as people recount again? thierry: if you go back to the 2020 election, some states had not resolved their final counts for four or five days. that didn't mean that we

didn't know who was going to win because the counts from the other states, deterministic up president joe biden. but if we have a situation where states had to be decisive for the election, beyond three or four days, then you start to see fragility in the market. annmarie: if it is a contested election, the people by the dollar and u.s. treasuries because they need a safe place to go, or they are viewing the united states as not unfair footing, as a scary place to invest? is that why gold is higher? thierry: one of the reasons. people are trying to hedge the risk out there. getting back to the u.s., yes, they would buy treasuries because that is the obvious safe haven, but that would not be good for the dollar. in this context, lower yields, weaker dollar as well. jonathan: the one i would worry about, if we wake up that morning and treasuries sotloff

and the dollar does, too, then we have a problem. lisa: speaks to the question of what the underpinning of the country is, goes to the point about american exceptionalism, how much that gets undermined. jonathan: thank you, thierry wiseman. in the third hour, we will check out with jim caron of morgan stanley, jason gursky, and we will speak to bob elliott. 15 days to go until election day, or as lisa suggested, election week. equity futures on the s&p 500 a little bit softer. from new york city, this is bloomberg. ♪

♪ ow! whoa! watch where you're going. yeah mom, pay attention. what if it's a concussion? hang on, i'll look it up. uh... i'm probably fine... probably? we noticed something wasn't right and got her to a doctor. i thought i was okay, but i had a concussion. sometimes, it's hard to tell on your own. don't mess with your melon. if you hit it, get it checked.

>> financial conditions are incredibly loose. >> the market with fixed income is definitely volatile. >> you can look a certain way at the index but there is opportunity under the surface. >> i don't to feel

opportunities are there. jonathan: election day, 15 days away. live from new york city, good morning. the third hour of bloomberg surveillance starts right now. equities pulling back from all-time highs. 47 the record high of the year in friday's session. we are down .6% on the nasdaq 100. looking forward to a week full of earnings. our attention on the automakers. tesla and gm around the corner. lisa: much visibility do they have into the future? i know this sounds peripheral but how much do they see an increase in demand because benchmark rates are going down? this is the type of sector that could get a boost from some of the interest rate cuts we have seen so far. annmarie: citigroup comes out today, waiting for two risks. we are going to get a earnings,

but there is a limited data this week will keep markets focused on the election and the upcoming jobs report. we heard from neither bridgerton, the fact that it is a boring economy, hesitancy on the side. people want to know the outcome of the election before they start may be moving jobs, investing more, getting m&a deals done. jonathan: it all speaks to each other. the auto earnings later on this week but the to weakness over into europe, strength in the u.s. something the imf and world bank meetings will have to address. the election 15 days away. the policies we could see implemented in this country could really shake up those industries and economies in a big way. lisa: in a way, they are the epicenter for some of the things we've been talking about,

isolated industry growing up on their own, national security, questions about where the chips are, and then the prowess of manufacturing. that has become in some ways one of the biggest deciding political factors at a time when swing states tend to be manufacturing hubs, at least used to be. jonathan: every time we go to these meetings, we have the conversation, their inability to regain and retain relevancy. the imf and world bank have lost the conversation. these tariffs are going nowhere. either they are going on or they will increase. not much they can say to change that. lisa: this used to be a celebration of mobilization. -- globalization. you have to wonder where the meetings will sit with this. do they castigate the u.s. or a

deficit that they say will lead to higher borrowing costs? do they encourage spending in places like europe? how do they uphold some sort of order that they once had them are ultimately a lot of the politics coming down will undermine a lot of weight -- a lot of what they ascribed to. jonathan: equity futures on the s&p a little bit softer. the opening bell about a one hour and 26 minutes away. in the bond market, we are up by five basis points. 4.1322. it is not just about the economic data. we've already had a range of conversations suggesting there is a trump trade building in the last week. you see it in the bond market to some extent. also difficult to disentangle that from the strong data we have had in the last week. certainly the bond market is one

way to capture the story. lisa: stuart keiser said there is one scenario being priced out, the idea of a blue sweep. as that becomes less realistic, you start to expect, on the margins, can you imagine that yield would rise? that is why some people are saying maybe that is a component of what we are seeing in the bond market. annmarie: markets seem to be turning toward this trump trade. one thing i will say to those that are discounting a blue sweep, what happened to the red wave that wasn't in 2022? at people just forgotten about the midterms? jonathan: yields are up this morning. the two-year up four basis points, just short of 2%. jim caron on the longest weekly

winning streak of the u.s. so far. bank of america on the case for b acceleration. we begin this hour with stocks trading on record highs, investors considering the prospect of a no landing. jim caron saying he is not bearish but skeptical, saying that inflation is creeping higher. tensions in the middle east also create a potential for a more systemic type of risk. we cannot forget that a bull in a candy shop is still just able, and goals can be unpredictable. welcome to the program. a bull in a candy shop. do you think that we are a little too high on sugar right now? jim: i think that's a good way to put it, i think of it as a little bit of a sugar high. my concern is we are pulling forward 2020 five or earnings, painting a near perfect picture going into the future. it is not that i am negative on the markets broadly, i just

think we are getting a lot happening really quickly. we are getting the soft landing that everyone has been projecting, but we are getting it very fast. valuations reflect that. if you look at $280 earnings for 2025, roughly consensus, you assign a 22 multiple to that, you get an sap close to about 6000. that is about where we are today. if you take that valuation down a bit and get it more more normalized, the s&p is 5600, lower than where it is today but not a disaster. net-net, we are talking about a few percentage point in either direction. i don't think that we will be in a very strong bully run from these valuations, so that is where my skepticism is. not saying that -- consumer was strong, gdi numbers are all

good, so people can get spending. i am saying how much can people continue at this rate of change? jonathan: this is what karen dawson said over the weekend. you could have argued that stocks were expensive. i'm sure you would agree with that. but i need to be a catalyst to change this market ever higher. it feels like we are in this virtuous cycle, looking for a disruptor to it. the fed is cutting rates. we have a dovish fed. hi stocks, high home prices. continued support from fiscal plans. though a debt servicing costs for corporate and households as well. that is just feeding on itself so the outlook keeps on improving. from your perspective, do you have anything in mind that could disrupt the process? those could be the reasons that people are so bullish right now. jim: it is why we maintain a

bullish tilt in our portfolios as well. moving toward neutral is not moving toward negative. there are some potential factors. tensions in the middle east could flare up. we could get some election volatility. ultimately what we would need to see is damage done to the consumer and a rise in the unemployment rate. i think some of the damage that could come, if we see a weakening of the labor market. we are not seeing signs of that yet. we know that the nonfarm payroll data has been heavily revised over time. if we see that where we see margins starting to shrink across corporate america, that could create a significant or faster move higher in the unemployment rate. that would completely change the narrative. we are not there yet. that is the most important thing to highlight. we are not there yet, but we

have to recognize, these valuations and levels, it makes it hard to have a positive surprise, easier to have a negative surprise. lisa: one aspect of your argument is abdicating this idea of a cyclical tilt, that you can get rotation away from big tech, some of the other large stocks and really fuel this next lack of recovery. i saw the same sentiment over at j.p. morgan. how much are you leaning against the cyclical move, the idea that the russell 2000 have been outperforming? jim: we are embracing the broadening of the markets, cyclicals, even defensives. with the markets are realizing is that this mag seven, the larger growth names that are out there, have done a good job this year, but there may be more to the story.

this will be across the russell, broader based sectors of the markets. one of the theme we are putting forward as we go into 2025, how do you invest into what seemed to be a fully valued market? you cannot really play the beta, the index will go up another x percent. when you have to do is start thinking about the different components of the market. you have to find sectors that are well valued, that have lower pe multiples, good factors, good interest cover ratios, have some pricing power and control. you can find them in the other 493 stocks. that is what we should be looking at. that is the management style we need to move into. i think it will be more about asset and investment selection as we move into 2025, as opposed to just target weight allocation into x percent equities or bonds.

it will matter how the constituency of your portfolio is made up. lisa: is this a sort of one-year time frame of an adjusted investment cycle or do you see this as a 10-year timeframe as the overall level of the index returns? jim: something that probably adjusts over the next year or so. let me call that short-term. i don't think that we will always have this bifurcated market like we have today. that is where you get the broadening of the markets where you get other sector that have not participated in the rally start to participate late. that is usually a late cycle thing. then the markets tend to move in a more uniform way, beta, beta down. i don't see this as a long-term view, but 2025 will be all about tacticals.

we will be talking about taxes and policies no matter who the next president is. we will start talking about that in january 2025. that is when the decision will be made that will have big influences in the markets going into 26 when policies are likely to change. annmarie: do you believe the market is rotating into the trump trade? jim: i think it is. it was said earlier on the show, in some degree, it is a movement away from the blue wave. i know we have been talking about tariffs, and they are a tax, that taxes are also taxes. it one candidate is talking about tariffs, one is talking about higher taxes, they are about a tax. that means inflation to the investor. no matter who the president is, it will be hard to get inflation under control. that is why you see yields moving higher. not just a trump trade or not,

but a realization that we are moving to an area where deficits will still be high, still a large degree of spending out there. the u.s. deficit is too high, by the way. and all of this is putting upward pressure on rates. this is something that we will have to deal with as we move into the next months ahead. jonathan: 370 when the fed cut 15 basis points. this morning, 415. good to see you. 40 basis point plus move on the 10-year since the fed started cutting. lisa: coming from people who expected if you cuts with better data. it is also coming with this realization of regardless of who wins, deficits will be a beer question mark hanging over this bond market. jonathan: with an update on stories elsewhere this morning,

here is dani burger. dani: israel launched a military operation targeting is below's economic holds and lebanon. it serves as hezbollah's alternative banking system. senior officials say the aim is to target hezbollah's ability to function during the current war and as it seeks to rebuild and rearm. elon musk's super pac will give away $1 million a day until the election to someone who calls for free speech and the right to bear arms. he said that his group will randomly pick a random voter to win the prize. josh shapiro questioned the legality of the payments, calling you deeply concerning. the u.s. grand prix belongs to charles leclair after finishing ahead of his teammate.

attention quickly turned to teammates lando noris and max for stepan who were locked in a controversial finish. noris was penalized for leaving the track. that is your bloomberg brief. jonathan: ferrari, one, two. for anyone who missed it, we will give you a recap. lisa: is this the new thing even more than football? annmarie: we are doing baseball again. lisa: his formula one superseding football in ferro land? jonathan: next on the program, morning calls, plus jason gursky on my defensive stocks are positioned for long-term success. that conversation, next.

jonathan: the opening bill, one

hour, 12 minutes away. stocks down 131%. bond yields up to basis points. time for some morning calls. citi downgrading -- the stock is down 1.5%. second call from berkeley downgrading ups from underweight, lacking long-term pressure from the possible loss of amazon volume and competition from fedex. jp morgan downgrading her stew underweight, citing a long patio normalize performance. turning to defense. the city equity research team saying rising government spending is positioning the sector for success. we expect spending growth to favor investing in determines and in the restocking of the munitions in ukraine in the middle east, both of which

suggest weapon spending is likely to be faster than overall military expenditures across the western world in the near to medium term. joining us now is jason gursky of city. i know you have to read the scenarios of spending. could you go through each of them for us? jason: the scenarios are all kinda related to defense spending as a percentage of gdp amongst western allies in particular. our base case is the recent increase in spending as a percentage of gdp as a result of the conflicts in the ukraine and middle east, consolidate those, we continue to spend out into the future at current levels of gdp, which sets up the military budgets to rise in the low single digits with the ship that you mentioned. ship to weapon the spending allowing for single-digit growth. the upside scenario would be an

unforced conflict that pops up or the sense that western allies feel even further threatened there and they do today and we end up spending more. the downside scenario would be a compression of spending as a percentage of gdp. again, in your set, deficits get in the way, and we need to make hard choices about what we end up spending scarce resources on. our base case is that spending as a percentage of gdp remains flat given the environment, single-digit growth for weapons, which supports the defense contractors. annmarie: do you have a sense of who potentially wouldn't want to add when it com to the defense budget, kamala harris administration or donald trump 2.0? jason: at the end of the day, spending tends to be driven by the threat environment. western allies spend when they feel threatened.

i think what we might see is a little bit of a shift in the mix of spending between the two administrations. former president trump has been pretty vocal about his desire to wind down the conflict in ukraine in pretty short order. the last time he was in that seat in the white house, he shifted spending two more things that fly and float, to support a perceived threat out of the asia-pacific region and china. i think we could see a little bit of downward pressure on things that crawl on the ground, support ground conflict in the ukraine, more upward spending that would support conflict in asia-pacific. whereas harris would be a little bit more evenhanded and spread spending across all regions. lisa: what strikes me about this conversation that is so interesting, modern warfare looks similar to what i think about what i think about previous warfare, crawling on the ground, flying and floating. how different are some of the

equipment demands now for modern warfare versus 10 years ago? jason: they are different, for sure. supporting troops on the ground but space-based assets have become incredibly important. space is the ultimate high ground. we can garner lots of intelligence, reconnaissance, data from space. that is why we have seen companies like spacex be so successful in the launch environment, space development agency spending a lot of money on developing new space-based assets. space has certainly changed the last 15 years. attributable aircraft and uav's have popped up, pretty profound change in the way that war is conducted today. likely to see a lot more investment in uav, attributable aircraft. the dod is standing up a program to do just that. lisa: how much of an upper hand

the u.s. have over europe when it comes to military expenditure and creation of some of the companies coming out? jason: good question. prior to the ukrainian conflict working out, a report suggests about 60% of the military kit that the europeans purchased actually came from u.s. suppliers. today it's about 80%. some of the industrial base here in the u.s. is much bigger, more diverse in its capability sets, and much healthier than what we have in europe. mario draghi in europe recently penned a report, we had to fix this, we need a better industrial base, need to be better coordinated. that will be one of the interesting things that comes out of this, longer implications, that europe becomes a little bit better coordinated, stops importing as

much from the u.s.. annmarie: what i heard from individuals that would surround the former president, he would talk about 82% target floor for nato. now he is talking about spending potentially 3% of their gdp toward defense. how much bigger can europe continue to spend, the u.s. industrial base, if it is the former president in office? jason: good question. you certainly get down to hard choices with that. first let's get to two among nato countries. you are counting just the european countries, i think we are still below two. let's get you two first. but it would be a significant increased and will be to budgets that are eight, 10% higher for a few years, even a decade, to get to 3% growth. but a trump administration would continue to put pressure on the

europeans to pay their own way relative to the united states as we focus on asia. it would be a big deal. probably harder to do in practice that quickly, given the tough choices that you would need to make, either by raising taxes or raising spending in other areas. jonathan: we have to leave it there. jason gursky. bob elliott of unlimited from a beautiful new york city. 80 degrees today. lisa: it feels illegal. you love it.

♪ ow! whoa! watch where you're going. yeah mom, pay attention. what if it's a concussion? hang on, i'll look it up.

uh... i'm probably fine... probably? we noticed something wasn't right and got her to a doctor. i thought i was okay, but i had a concussion. sometimes, it's hard to tell on your own. don't mess with your melon. if you hit it, get it checked.

>> counting you down to the opening bell with equity futures softer throughout this morning. down on the s&p 500 by a quarter of 1%. nasdaq 100 negative by almost .5. let's get you some morning movers with manus cranny. manus: boeing with five weeks of pain in a cash burn. looks like there's a third bite of the settlement sherry on the table put to the unions on wednesday at the same time as the results come through. if this does that voted through it looks like the next question for the ceo is what will you do, how will you restructure this company. existential questions about what parts of the business within boeing remain and how quickly can you get that back on the

production line to help your cash burn. we stick with the airlines paid spirit airlines has been given a lifeline so to speak. 2025 and 26, the stock up because they've been given an extension. you've got until december the 23rd restructure debt and its one of those -- the u.s. bank national association restructuring which may lean into the loyalty programs to help them get through. let's close it off with a quick look at humana. the stock is down 42% on the year. cigna are back at the table again. they want to try to put a merger together. putting these together will create one or 25 billion dollars worth of market cap and indeed it would let these two health insurers bulk up, fight back at the pressure on the margins. bid this morning by 4.8%. >> you've been missed, welcome

back. picking up on spirit just briefly. jetblue, the deal that never was. i would love a conversation with the administration about what's happened here. we are knocking to let this deal happen and then this one happens. lisa: are you going to lose more jobs because you have a company that will not last if it continues by itself. that something people have to deal with at one point our mergers and acquisitions something that makes financial sense for companies and jobs and at what point does it become counterproductive for capital. annmarie: spirit had a lifeline they were potentially going to get the cash injection they needed in this ftc said no. it's a great question and it's something that would be fascinating. >> that stock is up in early trading. >> looking for further signs of economic strength. data surprises, client concerns

and shifting. torilla acceleration. there are enough minor headwinds for re-acceleration. good to see you. >> thanks for having me. jonathan: what undermines that. >> let's talk about the recent data. start with jobs. fantastic jobs report for september. but we will think of that more like a mediocre student who aces one test. we are not there yet in terms of having turned the corner. i don't think it is just that. if you think about the gdp provisions, they are more to the older data from early 2023. so it's telling us a story more of a very resilient economy that's been holding onto around 3% growth in private domestic demand for six quarters so it's

not so much that we really accelerating it's just we are well above what we thought trend was. >> what would change her mind. what would convince you? >> the first one would be significant fiscal stimulus. but potentially after the election that would be have to -- over and above extending the tax cuts because they are status quo from businesses right now. the other possibility is you get a large negative supply shock. the economy is already at potential. with that negative supply shock. lisa: what is that negative supply shock? >> it could be a number of things. it could be geopolitics, it could be some significant disruption in terms of tariffs. lisa: we talk about ther word. it used to be -- recession. i love this because it puts into cold relief the idea that maybe this market sees the tail risk as increasingly reacceleration

and not recession. is that what you are seeing is baseline data and baseline analysis that you see coming out of wall street. >> the way we talk about it is two or three weeks ago before we got the jobs report and the data provisions we would've thought the risk to our output was slightly skewed to the downside so more towards recession and read -- then reacceleration. but the base case for us is still an economy that softens up a little bit. as inflation continues to move back downward. annmarie: what you expecting a november 7 from the fed? aditya: a 25 basis point rate cut. we are comfortable at that view. basically the last jobs report did the work of two jobs reports. in terms of really delivering job growth with the outside provisions as well. i think they will be comfortable doing another 25 but they don't >> really have to do a 50. what if we get a really good

jobs report before that fed meeting is there a chance they do not cut. >> the bar would be very high for that for a few reasons. if you don't cut in november. you're basically admitting you made a mistake in september by going 50 and you've already told us we can keep cutting for now with policy rates close to 5% as long as inflation continued to go back to the target. it wasn't terrible either. they should be comfortable still. >> given the fact that essentially you're saying it's not that the economy is re-accelerating we are staying under level it seems like it's above trend growth. how much are you saying maybe we need to reassess how far the fed can cut. the target rate has to be substantially higher than we thought maybe two months ago. aditya: this is exactly the question. so there could be a few reasons why the target rate has gone up rate the first would be inflation is not going the way we wanted to be. but that would be more -- the

other potential story is trend growth has gone up. that could be because of labor supply but also productivity. the other thing on november 7 is that it a: 30 we get the productivity data which will include the gdp provisions. in the election. but i think it will actually be quite interesting. a story around productivity the change quite a lot and that has significant implications for long-term growth as well as the rate. lisa: how much you push back against people who can see the trickle effect of the 50 basis point rate cut through the economy. you can see mortgage rates coming down and you can see loan activity picking up on the margins. do you reject that or do you say yes in a way on the margins it's been stimulative. >> to the extent that that is happening it has to be very marginal. they cut rates in the middle of

september. we have some of the september data heard we don't have any of the october data right now so we really won't see it in any meaningful way. >> always good to catch up with you. distracted around the table just a little bit with news out of disney. this is what the stock is doing at the moment. just slightly positive. james of morgan stanley taking on a closer look at the company. director in charge of planning for successor to bob iger would become the chairman in early 2025. january 2 to be precise. the executive chairman of morgan stanley. that particular position ends at the end of this year. taking on the chairman role at the walt disney company. we were waiting for an announcement, divorce the plan. we expect to make an announcement in early 2020 six to find a replacement to bob iger. lisa: bob iger gets to stay at

the helm of this company for another year. but james gorman what i love is when he was retiring from morgan stanley he was talking about he does not know the next thing for him is maybe i will take more time. more time is to head over to disney. jonathan: the walt disney, p premarket positive by 1/10 of 1%. we recap the details in a moment. a week full of economic data. but the one to watch is the next few weeks after that. we get a payroll support and a few -- week after that the u.s. election in america two days after november 5 you've got a november 7 federal reserve interest rate decision. with us around the table is bob elliott. good to see you. let's get straight to it. bond market yields are higher. why do you think this is happening? why are we up on the 10 year since the fed cut rates by 50 basis points? bob: 80's very unusual for a fed

to engage in aggressive cutting in an environment where real gdp growing 3.5% where we see the gdp gap basically at its highest level in several decades. and we see asset prices as strong as they have been spread slow. but tippet -- that's not the typical economy that would get significant easing ahead. the fed is committed and the direction is clear as chairman powell said. jonathan: that goes into an election where we could see more debt issuance. you think about where yields could go. people talking up five at t. rowe price preyed where you think that yield is going right now. >> when you think about what's going on with bond yields the key risk for rising bond yields is they start to flow through the stocks because bonds are in the stocks whether you like it or not and that discount rate both affects stocks directly and of course starts to tighten economic conditions. so moves in this range we could

probably withstand another 30 or 40 basis points of 10 years moving higher before we start to run into some concerns that that will create a drag on the economy and you see a little bit mortgage refi's coming down. as mortgage rates have raised on the high-end. we get a little bit more 40 or 50 basis points when we start to get concerned. and getting up to those levels. lisa: what are you pointing to as evidence. additional rate cuts as accommodation. >> i think the basic question is what is neutral policy right now. and the fed will give lots of different quantitative examples and various models about what neutral is. i think it's an empirical question. if the economies been growing at 2% or 3% for the last eight quarters and inflation is above what their mandate is. and unemployment is at 4% give or take, that's a pretty good

economy at today's level of rates and it's been a good economy freaks any. of time. i would argue in the time from anybody cares about basically rates at these levels are neutral not rates that are considered low. lisa: actually see a potential for inflation coming back. it's a more serious concern is there a way that you are playing that through your positioning. >> if you look at the situation we have one of two paths. the first is that the market start to recognize the over easing policy and price that in and get ahead of that. and that's most of what we will see. to bonds, stocks are up relative to bonds. that's all indicative of the markets catching the fed and saying too easy a path ahead relative to how strong this economy is. otherwise we have to wait quite a while before the actual stimulation in today's numbers happens with a tightening of the

economy preyed wage growth and then finally the inflation. much more likely to see the markets ahead of that and that's what we are seeing. >> i love your tweet last week. how much higher could we see gold because it feels like every day lately it's been a new fresh record. >> the key thing to remember on gold is it's a global asset and so often we are here sitting in the u.s. thing about gold relative to u.s. real rates. but the vast majority of demand for physical gold is coming from china and the direction of travel in terms of chinese policy is pretty clear right now which is an easier policy ahead including what they announced in the last day or so. so given that circumstance you argan to continue to see a lot of demand for innovations as folks are looking for a safe haven. it's not the housing market. the stock market is a bit of a casino. if you're really trying to preserve wealth in the chinese context gold is the way to go

and it's no wonder we are seeing this easing out of china today which is having a knock on effect of raising bond yields and prices at the same time. >> mohamed el-erian has a calm -- how the u.s. needs pay more attention to what's going on in gold because it's not just about a hedge or geopolitics it's the fact that there might be de-dollarization. it's what happens when you have sanctions and tariffs. does that mean 20 and 2026 gold is a place we see more central banks dive into. bob: the central bank demand for gold has been very strong to gilly from those countries that are antagonists to u.s. interests. we've got a $50 trillion global government bond and just a 1% move out of those bonds into gold would be a huge pressure to go higher because it's very hard to create supply in the market. the way that you get incremental

supply in the market and there's monetary demand is you have to scrap because all the demand for monetary gold being produced right now is already being met. your to figure out ways to scrap gold and how do you get people to put cash for gold, putting those on the television prices of got a go a lot higher for that to happen. >> who are those catering to. i think >> i'm curious going forward about how you view the connection between yields and oil prices. a lot of the relationships of gotten skewed and one thing that i keep talking about is as oil prices go up bond yields go up. do you think it's entirely the macro story. >> if we look over the last couple of weeks since the fed laid out there over easy policy, oil has traded chapo lee flat and we've gotten this bond yield move. i don't get primarily the driver.

it wouldn't take much in terms of constraints apply in the oil market to create a spike in prices and that's the worst case scenario for the fed. an action we are spending december 1. we have a new administration but focused on tariffs we have oil prices that are rising. and we have a strong economy. and that's good to be a real challenge for the fed as they enter 2020 >> great to see you, thank you for breaking things down. the outlook for november the first week in november if we get a red sweep certainly not a best case right now for many of you and not guaranteeing. let's do some scenario analysis. we set on this program you can see a vision quite easily moving 50 basis points. what would industries that morning for the next several days or yields climbing because growth will be stronger inflation might be hotter. and consider hiking or getting a

legitimate buyer strike in the treasury market accompanied with a selloff in the fx market on the u.s. dollar. we did not see that when he'll start to climb higher. it was typically accompanied with a stronger fx market. stronger u.s. dollar. if you get something different and we got a taste of that in the u.k. were guilds and the pound got weaker if you do a little bit of that in america all bets are off. lisa: that would be basically the shift and the undermining of american exceptionalism if you get a dollar selloff in tandem with higher yields pretty it's the equivalent rhyme within the moment. that is one of the big concerns. >> five basis points. 41322 with an update on stories elsewhere with your bloomberg brief here is dani burger. >> changes to the c suite at disney. shares of change this morning. naming morgan stanley executive chairman james gorman as the chairman of its board effective

january 2. he's currently the chair of disney's succession planning committee which is working to identify the next ceo. playing to a point that ceo in early 2020 six to take the reins from the current chief. elliott investment management southwest airlines may be heading towards a truce according to people familiar with the matter. discussing a potential sediment that would avoid a proxy fight for control of the airlines board. the framework would give it representation but not control of the board. the talks have not been finalized and could fall through according to people familiar. promised to give a baseball update. the l.a. dodgers are heading back to the world series after limiting the mets in game six last night. they will face a long time cross-country rivals the new york yankees who are back in the fall classic for the first time since 2009. it will be a battle of the league's top superstars with shohei ohtani and with the mets gearing up for l.a. and aaron judge and juan soto in pinstripes. tough love for those looking for the bargain ticket prices as of

this morning there are zero tickets available for under $1000 for games in either city and that's your brief. >> not a shocker to me at all. thank you. out for change around the table. >> i thought you said you were coming with me. >> on the weekend guy only. >> this is why i'm upset with the mets. i really want the mets to win. so that the dodgers and the mets. we exhausted the before that game but also with the mets one we could all go to the game. >> that's not how this plays out. lisa doesn't want to talk about this. >> we should talk about bond yields. we should talk about options in the bay in the market. >> facebook. sprinkle of yankees. next we set you up for the week ahead. trading diary just around the corner.

>> equities down just a touch we are negative by 2/10 of 1% bond yields higher at five basis points 413 42 as we counted down to the opening bell. the week ahead. the imf meeting continues today. tesla and boeing report thursday another round of jobless claims and pmi data wes moore earnings from bps and american airlines. new age consumer sentiment as we look ahead to boeing union workers also vote wednesday about whether to accept the plane maker's latest offer and end a five-week strike. the stock is up joining us is george ferguson of bloomberg intelligence. at decent offer, walk us through the offer and whether we can close the deal. >> i think the biggest point of the offer is boeing's come back

to a 35% increase in wages. which seems pretty good although a little bit shy of some of the 10% gains we've seen for organized labor in the marketplace. i think we've sweeten some of the 401k and thing about more matching and the 12% matching they talked about providing i think a five grand incentive in the 401(k). but those numbers have kind of looked up this morning. some of them may not be perfect but they get the point and they're trying to go back at the 401(k) which has been a challenge because the union said they want a return to the pension which is really very difficult again. we haven't seen anyone roll back a pension ever i think. and i think going ahead and trying to sweeten some of that increase in pay i like -- i think it sure from the

marketplace paid inching to see how this proposal goes down on wednesday. >> 30 seconds how much can this company provide guidance without certainty about whether it will get a ratified deal. >> i think you not to get any guidance. >> appreciate the updates. setting the bar pretty low for borrowing earnings and a couple of days. lisa: it costs them an estimate of $100 million per week that this strike goes on. how do they provide guidance when they are basically hemorrhaging cash and they don't know when they can get things back on line. how low is that bar for them to walk over at a time when there is this much uncertainty. jonathan: do you think 35% gets it done? lisa: i don't understand what the holdup was sprayed it was the sort of long-term parameter of what the future looks like and it has to do with pensions.

i don't know what kind of nod they got from the white house. a lot of question marks around this especially with the union leaders on the deal. jonathan: the stock is up by little more than 3% in the premarket. coming up tomorrow we catch up with cameron dawson, the rbc ceo joins us on the program and we speak to gilles of axa. thank you for joining bloomberg tv. this was bloomberg surveillance. ♪

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matt: 30 minutes until the start of the cash trade. katie: bloomberg open interest starts right now. sonali: the good times may be overcome a goldman sachs is out with the morning -- warning the s&p 500 is not likely to sustain the performance of the >> crop -- past decade. >>boeing union workers hammer out a tentative agreement ahead of earnings. the vote not until wednesday. >> take a look at surging activist activities as star board poorly takes a stake in ken view. all that and more. 30 minutes until the bells rang a little bit lower premarket but remember the s&p