>> there is an extraordinary uncertainty tax on this economy. >> you are not yet at that extreme optimism territory. all it does is make the market more vulnerable to any negative catalyst. >> the trend remains a disinflationary one. >> it is the fundamentals of the u.s. economy and earnings and interest rates. that is what we focused on. >> u.s. economy has once again proven more resilient and fears that suggested announcer: this is "bloomberg surveillance."

jonathan: live from new york city this morning, good morning, good morning. "bloomberg surveillance" starts ght now. a three-day losing streak, which is the longest going back to early september. equities seeing just a little bit of relief this morning. up by .4% on the s&p. on the nasdaq we are up by .75%. two stocks to watch, tesla and boeing. let's start with tesla, knocking it out of the park. a blowout quarter and huge promises from elon musk promising 20% to 30% delivery growth next year. annmarie: dan ives will be joining us. prices are stabilizing and unit costs are coming down. for tesla if he is like this moment potentially is a change of direction. they have a tough few quarters behind them. right now they beat estimates and they are talking about

growth in the future. every we talk about their slowdown in china. for tesla that is where their growth is. jonathan: if you compare and contrast what we have seen from some of the u.s. players, tesla, gm, the numbers are ok. contrast that to europe. we have had profit downgrades, cuts to stellantis, bmw, take your pick. annmarie: with tesla china demand quote -- china demand continues to outperform by a factor of three for ev's. also what is going on in china, bloomberg has a scoop that they are telling some of these chinese automakers to slow down, it clause when it comes to investment in the european union because they are still negotiating these tariffs. jonathan: which takes us to another mass. bowing down by 2%. i did not expect to be talking about this this morning. i thought we would chug a deal yesterday afternoon. the strike continues. factory workers rejecting a new contract that would have increased their wages by 35%

over four years. annmarie: also would have gotten a bonus and had some retirement benefits, but not enough. that seems like the real crocks right now. these workers say, we are ready to go back. they have not been getting paid. they also have not had access to health care, which is why some money people thought this deal was going to get down. yesterday what did we hear from the analysts? they could put all of this behind them once that contract gets done. now these workers are staying on the picket line. jonathan: the sager caggiano -- lisette your cake yeah no later on. we look like this on the s&p 500. the s&p up 5.4%. in the bond market of three-day slide replaced by a little bit of a bounce. more on the euro a little bit later. the pmi's out of france not graded all. a little the better in certain places. euro-dollar at the moment 1.079a

we will catch up with george can call this -- george gone calvinist and dan ives of wedbush on tesla's blowout quarter. begin this hour with the s&p 500 looking to snap a losing streak. boeing kicked off earnings with the mag seven report. joining us now to discuss it is george ken calvert's -- george ken calvert is of mufg. i want to go back to september. you absolutely know the 50 basis point reduction of the federal reserve. how are your thoughts on the next move from the federal reserve evolved over the last few months? did you go through the earnings and look at this economic data? george: thanks for having me back. the outlook for rates here do matter and we are at an important crossroads with the

election coming up. a number of macro events into next week as well as throughout the first weeks of november. we get these macro events every so often. we headed in the last week of july. this one could and should be much larger considering the implications around the election coalescing into that short timeframe. the fed has to still cut rates regardless of who becomes the next president. we are going to see lower rates because the fed is still restrictive. and we are still challenged with calibrating the fiscal policy as a substitute for fed policy. i think those days are gone. unless we get some reason to spend and increase fiscal balances further i think the fed policy is important to the economy. jonathan: with the rate move in mind, you suggesting that absent a red sweep, a gop sweep, this

market is kind of hitting its limit on bond yields right now? george: absent a red sweep, yes. i think so. we are really concerned about potential for much larger tax cuts with a red sweep. we shall see, but it would really come down to 4.5 on the 10 year note. it will start to matter for other markets, not just the bond market. we got evidence yesterday, given equities finally having a big move to the downside. absent a red sweep is getting close to the high end. annmarie: where are they going to go if we do get that red sweep? people are starting to potentially price in this could happen. what if it actually does? george: this is why everyone is harkening back to the 2016 playbook. we saw a pretty big intra-day

swing when donald trump and kospi the presidency back then. we had rates moving 30, 40 basis points in the overnight sessions. pretty big moves that culminated with three days of 65 more or higher in interest rates. i think that is the hedging going on right now, for that downside risk, for much larger rate moves. but because we have seen this a lot of this is being priced in. that is why we are thinking 25, 30 basis points even with a registry -- red sweep. annmarie: when you look at the policy proposals they are still talking about fiscal spending. they have kept the tariffs. some of those trump put in place during his first term. why is it a red sweep that is driving this and not even people considering the fact that this could also be a scenario under the democrats? george: that is a very fair point. i the majority rule will result in additional spending, and that will be debt-financed type

spending, or tax cuts that are financed by debt. either way you're going to see a rise in overall debt outstanding. the next president, whoever they may be, the next government will have to do with fiscal sustainability. interest rates will matter for the government, not just for the economy. jonathan: you said that carrying on cutting interest rates, what tells you they are still restrictive, and to use their phrase, sufficiently restrictive? what is the tell for you? george: i think the fact we are still not seeing robust bank lending, that most of the bank lending is to non-bank financials, private credit, and the fact that if you look at it in real terms bank lending is actually negative if you take out security market improvements in their portfolio.

thanks cannot operate like this much longer, especially the regional banks. they are being restrictive by keeping the curve inverted. jonathan: financial conviction -- financial conditions elsewhere, super easy. you are focused on credit and fixed income. credit spreads incredibly tight. investment-grade looking at the highest levels we have seen going back decades. we have had rates close to 5% now for close to 18 months. unemployment still close to 4%. george, some people might look at that and say, actually maybe this neutral rate is closer to 4% than it is to percent. george: even if so they will still have to cut, right? i think that is the whole point. the short-term neutral rate could be in the high threes, low force. we don't know. that could depend on this fiscal calibration we are all trying to do real-time. as we go through this we will realize, is our star 100 basis points higher from what it was

pre-2019 when we had a debt to gdp over 100% if you look into the debt outstanding? at some point the debt outstanding, the interest costs, that will start to reduce growth potential. and i think that will bring down rates and the fed will have to get down toward 3% again. jonathan: are these arguments to move more slowly or do you think the next 100 basis points is on autopilot? is that what they are conveying to the market? george: we think the november cut would be disruptive not to deliver the cut. i would really require a large nfp next week, as well as a revision to september numbers on the upside. we have been getting revisions to the downside, as you know. it would have to be a strong nfp for them to skip. and i don't think they would do that anyhow. but the december cut, that could be a skip. especially if there is a red sweep.

if you have early indications of early shopping season is doing well into december, then the december cut could be a skip. it is not our base case yet. i could be a time where they adjust qt as well, for a substitute for not cutting. annmarie: you are talking about the fact that the fixed income market keeps being swung around. what if the fed meets on november 7 and they do not have the results of the presidential election? george: even more reason to cut and keep it consistent. [laughter] jonathan: george, we will leave it there. it is good to catch up. george goncalves of mufg, who nailed that 50 basis point reduction on september 18. to get you up to speed on some numbers coming out of ups. eps coming in at 1.7 six. on revenue, a little bit of an upside surprise. $22.16 billion. up 5.8% in the premarket. with an update on earnings let's get you your bloomberg brief

with dani burger. dani: on those tesla earnings, shares up more than 11% premarket. he reported its biggest quarterly profit in more than a year. ev maker reported that cyber checks have turned a profit for the first time and laid out ambitious plans for the future. tesla's cheese executive -- chief executive -- ridesharing in texas and california next year. promise to make tesla the most valuable company in the wall. barclays shares are rising in the london trade. the .74 percent, touching her highest level in nine years. it posted a surprise increase in fixed income trading. executives are delivering on the lofty promises they made earlier this year and hope to boost the bank's leg and returns. boeing shares falling in the premarket this morning. factory workers rejected a new labor contract offer. workers romaine on strike, and that is a fresh blow to the struggling playmaker.

about 64% of union number -- new members voted against that deal. the contract would have raised wages by 35% over four years. that is your brief. jonathan: more from danning in about 30 minutes. next, downside risk dominating the outlook. >> we see the risks of adding up and we see them to the downside. right now markets are still very willing and. this is risk-on. that could change. jonathan: the imf's annual meeting in washington, d.c. brammo on the others of this commercial break. from new york city this morning, good morning. good morning.

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compare and contrast what we are seeing in the economic data from this commentary. economic activity little changed since early september. two districts reported modest growth. retail sales, big upside surprise. things seem ok for the financials over the last week, and then a pretty downbeat. we will come back to that a little bit later. you have a bounce back from three days of losses. in the bond market, treasuries bounce too. yields are lower by five basis points. under surveillance this morning, downside risk dominating the outlook. >> we see the risks of adding up and we see them to the downside. and among the risks we see the political risks in the middle east is -- east, trade wars, terrorist. this is a risk on the horizon. markets are very brilliant. evaluations are fairly high. that could change.

jonathan: risk to the downside still building. the imf cutting its global growth outlook as the list of reasons to grow. speaking of reasons to worry, lisa has more. she joins us now from the imf headquarters in washington, d.c. what tops the agenda? lisa: let's start with the idea of the rise in protectionism. this is something we are going to be talking about with our guest. does that mean? does this mean the concern about china and what is going on there or the concern about the u.s. and donald trump coming back to office and what that could mean with respect to the gates going up in the united states? it is something different for everybody, yet there is a lot under the surface bubbling up in terms of existential concern about what this alliance means. about what free-trade means. about what kind of economic scenario we will have under different scenarios that could possibly come to pass on a policy level. i'm going to be speaking with the lebanese finance minister,

as well as head of israel's central bank. you're going to be talking about what it means to have an economy in a war zone, as well as the divide between europe and u.s., with the head of the german central bank, at a time when there are so many questions about how they really revive their economy that has traditionally really relied on the auto manufacturing sector. annmarie: how much are you hearing on the sidelines that these individuals outside the united states are concerned about a more protectionist u.s., regardless of who gets into the white house? lisa: to some degree that is a base case. it does seem like there is a feeling that one candidate will be regime change and one candidate will not. that is the difference, a question of how much you fundamentally are threatening to undermine the concept of who allies are and who they are not, and really raise the question of the need for partnership versus something that seems more predictable. more of a continuation of the

old order. that seems to be more of the town, even if tariffs are here no matter what, even if some of the trade policies under donald trump are some of the same we saw continue under joe biden. there is a feeling of different tone and it feels like that is being painted in stark contrast him both sides. i do want to bring in somebody who is better-burst in this. i'm very pleased to say that doug rediker, former board member of the imf, as well as the managing director and founder of international capital strategies. how much are you seeing this sort of dominate the discussion right now? the idea of the potential outcomes determining vastly different economic scenarios? doug: there is the public face and the back room, or office space. publicly the imf is being very cautious to talk about protectionism, to talk about downside risks, to talk about

global uncertainty. behind the scenes that means we are really worried about the u.s. election. it is not really for the imf or for a lot of other institutions to overtly say we are scared of the outcome of the election, because that is not politically savvy to do. but behind the scenes and very tangentially behind the scenes, because it is in front of the stage, the election is all people are talking about. lisa: how much are we looking at a scenario that is very different under a potential kamala harris versus donald trump? even though tariffs have continued under the biden regime? doug: protectionism and tariffs and something called industrial policy is -- as opposed to fair and free trade, that is now the new norm, and that is unfortunate that is being built into everybody's models and their kind of dealing with and in a traditional macroeconomic way. but the difference between trump and harris is two upend the status quo. as you mentioned, versus we can predict this. that is a big deal. it is a big deal.

you have heard everybody else talking about this. softly, in terms of downside risk. the downside risk is huge because it basically upends all of the starting points for their analysis. if you impose 10%, 20 percent tariffs, it is hard for the imf, even though they gave it a good college try, to model what the impacts of that would be because the imf actually said, we can make a dent in this. we can make some assumptions, but really what they are saying is tit-for-tat means this could explode into a very uncertain downward scenario. and we don't want to especially talk about that. but behind the scenes we are scared to death. lisa: i feel like over the past couple of years that is how it has been. year-and-a-half ago i remember the elephant in the room was china. last year in marrakech it was the war in israel and the attacks on israel.

about china, it is a very different scenario this time around where there is a meeting in russia where the leaders are from china and russia and they are not here. how does this parallel represent the new state of affairs? doug: i'm glad you brought that up. it is the bricks versus the west, the imf representing the bretton woods institutions established by the west. in the bri see -- your ics -- brics scheduling during the same week, -- week. they really represented that relationship building knowledge-sharing between the international economic policy community in the chinese leadership. they are not here this year. that is a big deal. they are at the bri see -- bric

summit. they are really not at the same level. that to me suggests that china is not shortening its shoulders and walking away from the imf, but that there is a real sense that the international financial institutions represented by the imf are no longer getting that buy-in they really need from china. lisa: as a former board member of the imf, at what point does the imf benefit from coming out and saying, this is a multipolar world, this is the alliance we are representing, what free-trade means in our universe is trade agreements between these nations, and we have to retreat from that initial, sort of, we are the world vision? doug: i don't know that we want to retreat from we are the world. it is a very delicate position the economics department and the financial stability report on other flagship reports are coming out with this week. i'm not sure they are going to retreat from that, but they are

trying to draw that line between what is good for the global economy and the world we are actually confronted with. those two are diversion because as we started with, protectionism is the norm. i thought christine lagarde this week when she was asked, what is your favorite word, she gave two words. she gave fair trade. i tipped my hat to her because nobody is saying that anymore. you heard jake sullivan give a speech year and a half after his speech last year in which he took a very protectionist bent. he was a little less protectionist this time. i guess my view on the kamala harris, he didn't ask about me to weigh in on this. if kamala harris does get elected, while i don't see her embracing free-trade i do think there is some imf-inspired, this is better for the world and better for the u.s. if you start to see trade as maybe not a bad word. i'm hoping that that actually starts to percolate through

these meetings and through the u.s. election. skeptical, but i'm hopeful. lisa: how much are people speaking in different terms when you speak with them this time around? because of potential regime shifts like come on the back of whatever happens? doug: i think everybody is hunkering down. i think in a 50-50 election scenario with the election being an elephant in the room, basically everybody is saying publicly, we don't know. they don't know, and none of us know, and that is a huge -- the elephant in the room is not just the election. it is the uncertainty about the election. no matter who you talk to if they tell you they know, they don't know. lisa: doug rediker, thank you for being here in washington, d.c. at the imf headquarters. jonathan: looking forward to the coverage later this hour. lisa sitting down with the south african central bank of and are set your cake down go -- lesetja

kganyago. annmarie: but doug rediker is saying is there is a normal basis when you look at american policy that they are more protectionist. the issue is, how far does that protectionism run? with one candidate is much deeper. he's talking about 60% when it comes to china. that is different than what the harris campaign would explain when they view tariffs as targeted. they want to use other things like export controls. it is difficult if you are a european country and you are not sure what the policies going to look like. jonathan: your outlook could change a lot faced on what happens in this country over the next month. dan ives of wedbush as tesla recorded its biggest profit in more than a year. that stock is up with 11%. from new york, this is bloomberg. ♪

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jonathan: we are looking for a bounce in the equity market. equity futures shaping up as follows. yesterday the biggest one-day lost -- loss going back about a month. on the nasdaq we are bouncing back by .8%. mild losses over the last few days. they picked up yesterday as persistent water torture coming from the bond market. drip of high yield. these are the scores right now on a two year. we are down three basis points. some relief, a rally if you

will. to the downside going into jobless claims later. yields are lower by five basis points. we have had a big spike the federal reserve reduced interest rates by 50 basis points. we have had a move of more than 50 basis points in the wrong direction for a lot of you. on a 10 year, much higher yields. is it the economic data or the politics? everyone has a different view. this was standard chartered. most of the october moves seemed due to nfp rather than trump. a former -- a further market move may depend on the republican sweep in congress, as well as winning the white house. we have heard that this morning. is it the data or the politics? annmarie: i will go back to torsten's lock. term premium has been pricing in over the course of the past month outside of what is going on in the election. but then you look at george goncalves and what does he say? if there is a republican sweep potentially yields could go

higher. but he says that is the max. potentially after the election could see those yields come down. jonathan: let's talk about the european side of the trade. euro-dollar, breaking into 107 over the past few days. 108 right now, just holding on. the data not great. out of france, awful. for the euro zone manufacturing, 45.9%. basically on its knees. the survey was 45.1% and the previous number was 45%. services at 51 and the composite 49.7% versus an estimate of 49.7%. we have been talking about data dependency, taking things meeting by meeting at the ecb. then all of a sudden, reality check slapped by the face by the economic data the economic data has the -- has not been great at all. you are having a conversation about 50 basis point reduction that the european central bank. annmarie: when you hear from

officials, the president is talking about the fact that it is a trend. we are going to be cunning. she did not want to get into the 25 or 50 debate. when you see data like this and the fact that inflation is coming closer to their target and the growth prospects look dim and could be worse after the election depending on if tariffs go up in europe is going to be stuck between a hard place between china and the united states, then people are starting to say maybe 50 is the right move. jonathan: the german central bank governor later this morning. look out for that. under surveillance this morning, japan's finance minister delivering a warning, saying he is raising the level of urgency for monitoring currency moves after the yen hit alma -- an almost three-month low. dollar-yen still above 1.50. annmarie: how are you not going to be speculating in the dollar-yen trade? why? two big elections. it is not just the united states that is going to be pushing the trade. also this sunday the japanese

economy, that country has an election as well. they are stuck between two of these big hurdles they have to clear in the political space. jonathan: let's talk about the latest polling coming out of bloomberg. finding trump and harris are locked in a dead heat with election day less than two weeks away. the candidates tied in each of the seven swing states with 49% support among likely voters. annmarie: what i would say is if you go back to september we have been doing this paul for one year. aris was leading among likely voters in the swing states by three percentage points. now you see them in a dead heat. she has lost momentum and trump has caught up this on the previous month. now you look at the issues. if you have looked at our polling throughout the last 12 months what you will see is that the economy is top and center. no other issue holds a candle. no other issue comes when it comes to the economy although she has been able to narrow that gap it was really bad for the democrats when biden was top of the tippet -- talk -- top of the ticket.

jonathan: super finely balanced going into election day a few weeks away. let's squeeze in some luxury. sales riding in the third quarter. even amid a broader luxury slowdown. speaking of slowdowns, at gucci, caring reporting small positives but morning as profit will fall to the lowest level since 2016. we are bouncing back because the bar is low, but gucci is the problem child and it is still a massive problem. the numbers in china speak to the numbers we have seen elsewhere. annmarie: when it comes to her maze they are this outlier picked -- hermes they are this outlier. they are the exception. they are not the rule when it comes to the luxury space. then you look at caring overall, they are slowing down in china like everyone else's, but caring has a problem child, and that is gucci. she is the standout. gucci does well, caring does well. it does feel like when you hear

from executives at caring they think the turnaround plan is working with their new designer. they went from loud fashion to a little bit more quiet luxury, but you are not seeing it yet in the numbers. jonathan: gucci's sales slumping 25% from a year earlier. let's get you some single names and kick it off with tesla, delivering better-than-expected earnings, reporting its biggest her quarterly profit in more than a year. dan ives of wedbush keeping his outperform writing, writing this is clearly an indication that musk is continuing to focus on his profitability side. the bulls will tear this quarter. after a choppy 2024. i'm pleased to say that dan joins us now. let's get into some of the optimism. promising 20 to 30% delivery growth next year. where is 20% to 30% delivery growth coming from? dan: i think china is what is going to be driving that.

look, this is much better than anyone thought. that optimism is very important. combined with that margin spike, this is an aaron judge-like quarter when you put together the margins, as well as that delivery outlook during bulls are going to be happy. jonathan: the market agrees with you. the stock is up in double digits, but china is the one i'm scratching my head a little bit. lvmh, starbucks, they are all reporting bad news out of china. wise tesla going to be different? dan: i think it is market share gains. you are starting to see the price cuts have subsided. you're starting to see market share gains in china. they just had their best month in china in terms of september ever. it is 45% of deliveries. you combine that with some signs of strength that i believe will improve in the u.s., as well as europe, and the big thing is next year you're going to have a $30,000 vehicle. they doubled down on that as much as we can talk about

autonomous and ai, that is the vision. that is the future, deliveries, margins, that is the focus. this is something where the inflection point in the tesla story began last night. annmarie: can you talk to us about this $30,000 vehicle? on the call last night elon musk said a $20,000 ev was pointless and would be silly. dan: in terms of 25,000, when we talk about what they are going to come out with first half of 2025, that sub-$30,000, it is important from a price point perspective. now that they can produce vehicles so much cheaper than anyone else. that is huge for margins, but also the ability to come out with a car that is essentially cheaper than anyone else out there. i believe the best ev in the market. you look at what they are doing not just in cyber truck, in semi, and of course what they are going to be bringing out

when it comes to autonomous. i think that really, multiple growth drivers right now, and look, the new york city cabdrivers. it sets up for a stock that will have a three in front of it in next year. annmarie: i know you think this is an aaron judge-like performance, but musk has a history of promising ambitious timelines. how much do you have to take with a little bit of salt? dan: i think you take it with salt, and a lot of that has been factored into the stock. even if it pushes around. the fact that that margin number hit, 200 pips above the street, that has been a huge overhang in the stock in terms of the margins. and then delivery growth. the best case was 15%. the fact that he said 20 to 30%, it is music to the ears of the bulls. after what has been a very difficult year. but i believe, better days ahead right now, and i think this was

a huge quarter, huge step forward. jonathan: you meant to say you take that and rub it in the wounds of the bears? that was that line. dan ives of wedbush. the stock is up in the premarket. let's turn to boeing. 33,000 factory workers remaining on strike. after rejecting a contract that would have increased the races but -- that would have increased their pay by 35% over four years. sheila kahyaoglu of jeffries joins us now. i was surprised. i assume you were to? sheila: i was on the show a few weeks ago saying 67 weeks was our marker based on the first-year pancreas. the first year is 12%, so you are wiping out that pay by essentially not getting paid and having no health care over the last 42 days. jonathan: do we know what they are asking for? what do they want? sheila: we're not sure how much of a wage increase one.

they want some sort of defined benefit plan. bubbly that is a nonstarter. we know what comps are getting. a manufacturer in which todd just improve -- just approved their wage increase. they give their workers at 31% wage increase. we have seen american give their flight attendants 30 to. the. -- 36%. only air canada one up to 42 percent, but obviously canadian pilots are slightly different story. annmarie: it feels like the pay rises not the problem. it feels like it comes down to the retirement benefits. it is not that but -- it is not the defined benefit the pension had. what more could boeing give to get this over the finish line? sheila: i have no idea. i think you focus on the wages. they have a ratification bonus of $7,000. we take that bonus any day. the package in general, we find pretty compelling, and so to investors. the good news is, 36% voted for it, compared to the 6% last time.

we need 41% to get this approved. annmarie: in september 94% said no, we do not like this deal. so, the one, i guess, silver lining is that it is moving toward the direction of being ratified. how much longer do you think this will take? sheila: it is not like an earnings miss. we do not know how quickly they could even move. 1.5 billion of free cash flow losses per month starting in october for this. basically october is wiped out. and you are also hedging your supplier. it is putting not only boeing, but suppliers are starting to furlough and it is going to cascade through the supply chain. jonathan: how do you think the credit rating agencies are viewing this? sheila: the credit ratings, let's talk about the earnings call outside of the strike number because i think that is the most significant thing we learned yesterday. boeing essentially added another $4 billion loss outside of the

strike to 2024 financials. if we move from losing $10 billion to $14 billion in 2024 but we also learned was that 2025 will be a loss. that was surprising to the market. the fact that the stock was only down half a percent tells you some of it is embedded. i don't know how rating agencies are going to stomach the free cash flow loss. they needed key for -- free cash flow to keep the writing. jonathan: are you satisfied that this is all the bad news we can take and this stock can perform well? sheila: i think the next three quarters of free cash for losses is pretty satisfactory. annmarie: the white house has gotten involved in this one. you have julie su going over there. she has been in the middle of the negotiations. do you think this is embarrassing for the white house? this is one negotiation there were not able to get over the finish line. sheila: they just started becoming a part of that discussion a week ago. clearly this strike is now day

42. the last strike was 58 days. we don't want to repeat that, given how much everyone needs boeing aircraft. this is a global duopoly and boeing is essentially producing zero maxes at the moment. jonathan: i'm not sure what the role of the white house is in this one. i could see why the white house would be involved, putting pressure on them to end the strike, because they are worried about how it would influence the election. i'm not sure how may people are voting who care less about the boeing strikes. is that even on the radar? annmarie: the west wing cares about it in the sense that boeing is part of the u.s. industrial base. sheila: in the next two weeks according to delta nobody is going to travel on election day anyway. but i agree, it is not going to impact the holiday season with the port strike, but i do think at some point it is going to push up prices, which is positive for the airlines. jonathan: we got some numbers

for southwest. eps, the estimate was a little more than seven. as you gauge the numbers as they come in, understand for the first time, and american later, what are you looking for from the industry as a whole this quarter? sheila: southwest, we are looking for them to solidify. they pre-announced, so we knew there were going to be mildly positive. with elliott knocking on the door looking for a management overhaul. additional quantification is what we are looking for. they are looking for $6 billion of he bit. -- of ebit. american, we are looking for a potential credit card deal after they had issues in their corporate strategy. jonathan: have they fixed things? sheila: no. it has resulted in about $200 million of headwinds on the quarter on the corporate side. let's see if they have a corporate -- a credit card deal negotiated.

jonathan: thanks for catching up with us. with an update on stories elsewhere this morning, let's crossover to dani burger. dani: more earnings to get through this morning. ups up nearly 7% in the premarket. return to profit growth for the first time in nearly two years. higher volumes, more profitable packages, all of that contributed to the b. the parcel industry has been under pressure off of the covid peaks, but this quarter ups' largest business my climbing nearly that climbing nearly 6% to beat estimates. the stock was down 16% so far this year. ibm, those shares are falling. the company reported disappointing sales for the third quarter. by slowing consulting demand. revenue rose 1% in the period, and that missed analysts' estimates. clients are not expanding budgets and some generative ai projects are coming at the expense of traditional consulting. those shares down 5%.

dr pepper is buying ghost for over $1 billion. the wall street journal reporting that curate would pay $990 million in cash for a 60% stake and eventually acquired the remaining state by 2028. buying ghost with mark curate's biggest acquisition since it bought dr pepper snapple in 2018. not debating over whether starbucks is any good, but drinking energy drinks instead of coffee on the way to work in the gym. that is your brief, jon. jonathan: let's not start that again, danny. up next, the threat of a global trade war. >> if you have an increase in trade fragmentation, increase in tariffs, if you have financial conditions tightening, that is something that is going to weigh down growth and activity in all regions in the world. jonathan: more from lisa in washington, d.c. from the imf annual meetings come up next. ♪

jonathan: just turned yesterday upset out. that is what this market looks like. yields a little bit lower, down five or six basis points. the 10 year, a break at 4.20. under surveillance this morning, the threat of a global trade war. >> we find that an escalation in trade wars, regardless of where they are coming from -- it is not just the u.s., by the way. there has been trade policy distorting measures by a number of countries in the last few years. if you have an increase in tariffs, if you have financial conditions tightening, this is something that is going to weigh down on growth and activity. in all regions in the world. jonathan: the imf warning that increasing protectionist policies are a downside risk to growth as the outcome of the

u.s. election looms large over the meetings. lisa is back with us from washington with south african central bank governor lesetja kganyago. lisa: hey, jon. i am here with the head of the south african central bank, and it is not all about the election with respect to trade wars, but also the ramifications for inflation at a time where you are considering lowering your inflation target. can you talk about how you understand the appropriate inflation target at a time where you are looking at something like 4%? while the rest of the u.s. and europe looked at 2%? lesetja: what is in no doubt is south africa's inflation target is out of sync with peers. a developed economy forecasts 2% target, but the rest of the emerging-market universe are looking closer to 3% then to 2%.

if you look at a country that is not quite 2%, they give themselves a margin around 2%, i think that we are clear is that we put our inflation target in 2000. it is now 24 years, which means we have the inflation target and have to ask questions about how optimal the current inflation target is. which is the work we are doing with the treasury. what is clear is that if we revise the target the target can only be reversed lower. lisa: do you think that in some way the emerging world and developed one are converging? that in some ways you might lower your target to 3% and maybe it might be appropriate for a number of developed market economies to raise their inflation rate to closer to 3%? could you see a regime like that? lesetja: it has not been our baseline. emerging markets have come closer and closer to the developed market targets.

i think what is clear is that there is no virtue in high inflation, and the lesson from the greater inflation in 2022 had been that the public actually hates inflation and the public actually will prefer price stability. lisa: what is the cost of having a lower inflation target check this is something the federal reserve is grappling with at the same time they are talking about the dual mandate. they don't want people to lose their jobs in some type of entrenched fashion, even if it means the consequence of having higher inflation. you think it is worth having more pain economically in order to bring inflation back into a closer to 3% range? lesetja: the problem with that analysis, lisa, is an assumption that there is no cost to the economy of having higher inflation. there is a cost, and we have seen it with the public arising against the high cost of living.

and it is important that one is a life to that. that said, many central banks will grapple with what we call the sacrifice ratio. how much growth do we have to give up in order to bring down inflation? what is clear is that once you have brought down inflation and the inflation rate is taken out of the matrix of the decision-makers, price setters, then investors know that you have brought price stability. lisa: are you saying the ecb has it more right with respect to being single mandate rather than focusing on a dual mandate of employment and inflation? lesetja: you know, what the policy anchor for a central bank is a policy choice. representatives of a particular country. i think the fed has the dual mandate. the ecb doesn't. neither do we.

but having a low and stable inflation is done in the interest of sustainable growth. lisa: always wonderful to see you. you so much for being with us today. that is lesetja kganyago. jonathan: that was great. fantastic, as always. look out for more from lisa later. she will be speaking with the lebanon economy and trade minister and the bundestag president. do not miss that. lesetja kganyago said it. people had inflation. annmarie: if we revise inflation targeted moscow lower. this is the issue not just happening in south africa. it is happening in the united states. it is happening around the world. inflation, it bites people's purchasing power. jonathan: still a massive issue on the campaign trip. we will catch up with ryan nick of newedge wealth, advisor to president biden daleep singh, and house speaker kevin mccarthy.

love that on the next hour of "bloomberg surveillance." up next. ♪

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>> we have pockets of extraordinary strength and resilience. big companies. then we have pockets of real weakness. >> the problem is not growth. the problem is valuation. >> i think there is a catch up trade from the small mid-caps, but perhaps that is not the immediate position to take today. >> this momentum has some legs.

>> these large cash flow-generating companies that can protect your portfolio, that is where investors are going to go. >> this is "bloomberg surveillance." jonathan: we are looking for a bounce from a three-day slide in stocks and bonds. check out the scores. equity futures up. on the nasdaq we look a little something like this. on the nasdaq 100 up by .8%. on the russell, up by .5%. after a three-day climb in 10 year treasury yields, we decline on the 10 year. we are down by five or six basis points. on a two year we are down three basis points to just north of 4%. they did this morning we will be talking about jobless claims. 242,000 is the estimate. expecting the stated to be incredibly distorted from the hurricanes going into the big one in november.

payrolls report just a few days before the election, and a federal reserve decision and we are still trying to work out what is shaking up this bond market. is it the economic data or politics? annmarie: it depends on who you ask. torsten slack said, i have been seeing this in the data long before people ours darting to price in this idea that maybe we would see not just a donald trump presidency, but also the entire congress turning red. a red sweep. maybe trump just spends a little more. jobless claims are going to be interesting because of the distortion, and then of course the payrolls report. we already have noisy data when it comes to the jobs data. people take off $60,000 because of revisions. much harder is that going to be to read based on what we had in terms of hurricane impacts and impacts of things like boeing? jonathan: you know better than most where the polls are and how they have trended over the last month or so. this is what is of interest to me. if i speak to market

participants a lot would say this market is starting to lean toward the prospect of a trump 2.0 presidency. then if i ask you where the polls are i don't hear much change it all over the last few weeks. annmarie: very little. depending on which poll you look at either candidate might bleeding. in ours, we have been doing them for 12 months, it is a dead heat. one thing is consistent a lot -- across a lot of polling, and that is the economy is still the number one issue for this electorate, and the trust factor, who has the trust of the american people when it comes to things like handling the economy? that remains in donald trump's hands. but if you look at these polls, it is a knife's edge. jonathan: here is the earnings. check out american airlines. their stock is higher by 2.2%. eps coming in at $.30. that is an upside surprise and another upside surprise, and

here is another one. this is how they see adjusted eps. they had seen $.70 to 130. that stock is up by about 3%. that is a beat and arrays. we will catch up with ryan nick of newedge as tesla earnings boost equity markets. advisor to president biden as the g7 finalizes alone to ukraine. and house speaker kevin mccarthy on the most critical swing states to watch on election night. begin with stocks bouncing back as tesla earnings kick off the black-white. brian nick remaining cautious saying, we see max seven earnings decelerating next year to a healthy rate, but we are concerned about lofty expectations for everyone else. especially absent a reignition -- economic reignition triggered by falling rates. brian, good morning. start in the bond market. the sect the selloff over the last few days. brian: we hate to attribute any market moves to things that are

happening in politics with the election, but if you map the 10 year, and you have probably all seen this graph come on top of the betting odds, they are moving basically in sync right now. there is a sense that the markets are worried about some kind of fiscal risk. it is hard to pin down exactly what the concern is, but some kind of risk that is causing the yield curve to steepen, especially long-term rates to move up. at the same time you are not seeing a full throated endorsement from the fed. that interest rates are going to continue to come down. i think the combination of those things with some data we have seen, not uniformly strong if you are looking at the rest of the data, in general enough to support rates where they are. jonathan: i was going to say, have you mapped the 10 year over the economic surprise index would you see the same thing? brian: it has kind of gone back to neutral. economic data has been surprising not one way or the other on that. but the movement has been toward a more positive surprise.

there is may an overdetermined explanation. i think that next week's report is going to be very hard to pin down because all of the distortions. that is going to set us up for another month where we are waiting for this very small number of data points that still seem to matter. jonathan: we have the earnings, and that -- the same thing applies to bank earnings. some people have said this is about the process -- prospects of higher yields. would you say it is more about the earnings? brian: we are pretty comfortable with financials right now. if there is one sector we are looking at that would be the one. but we are concerned about is the economically-sensitive industrials. anything related to housing. we have seen those start to pull back. the concern is we are not going to see that interest rate. we have been talking about with the election or better data. a lot of these analysts are counting on lower interest rates. you see broad-based earnings

acceleration across large and small-cap stocks next year. if we don't get the interest rate dip and we don't get the reignition those expectations look much too high to us right now. we are pretty cautious overall in cyclicals. thanks might be the exception. annmarie: when it comes to equities and their relation -- relationship to politics right now, the issue is a comes with all of these provisions attached to it. you have to be made in the united states. why are people not concerned about this idea of tariffs going up and that they are inputs to make something in the united states might be something more expensive? brian: this is where it gets hairy to define anything from the politics to explain what is going on with markets. it seems like investors may be taking a leap that they know the outcome, that they know with the policies going to be, and what the market reaction will be. it is a lot of leaps to be taken. going back to the first trump term, you are seeing a lot of

the same patterns in markets. stronger dollar, higher 10-year yield, better performance among cyclicals. all of that happened after the 2016 election, but those trades reversed. by the end of 2019, before the pandemic hit, interest rates were lower. cyclicals had not been outperforming. that was with the deficit-expanding tax cut and with tariffs. i'm not sure why the conclusion is that certainty of tariffs next year should make you think that 10-year yield should be higher. if anything it should be lower. annmarie: you also talked about the fact that the bond market is falling -- following the betting market. why the betting market? romney was a whale in the betting market. he never made it to the white house. why are they following the poll -- why aren't they following the polls, which arnett connect? -- which arnett connect? brian: i think the betting

market is probably reflecting the fact that the two last presidential elections the polls have understated the support for trump at the end of the day. seeing that narrow in the last couple of days. i think it is going to come down to what the payrolls reports due over the next six month. -- months. we are not optimistic that the takedown in unemployment is going to last. we could be at 4.5% unemployment by march. in which case i think the 10-year yield is going to be lower. annmarie: what does the fed do? brian: we are going to have an outcome from the fomc meeting, at least. [laughter] if they made it clear they're going to cut rates at this meeting. if they were seriously contemplating a hold we would have to get some more -- we would have to have gotten more fed commentary ahead of that. i don't think anything in that

november 1 payroll data is going to dissuade them from cutting rates. it's going to be hard to interpret because of the distortions, but i don't think we are going to see a blot report that is going to make them say, we have to wait until december. jonathan: given the distortions what is a blowout report? is 200,000 a blowout? brian: if there was a 50,000 to 70,000 cut in the weather affects, i think that would be a blot report. maybe with the unemployment rate, that would be your, oh boy. i would validate the move we have seen in the 10 year as well. jonathan: that would shake things up. brian nick of newedge. let's get you an update on stories elsewhere. here is dani burger. dani: shares of spirit airlines lower this morning in premarket trade. down 5.8 percent. the budget carrier is in talks with frontier about filing for bankruptcy. people familiar tell us the aim of the bankruptcy would be to

facilitate a tank over -- a takeover by frontier. spirit is staring down a liquidity crisis after its failure to merge with jetblue. bloomberg has learned that apple is nearing the production of an updated macbook air for release early next year. sources say the latest model will look similar to the current design, but include the new m4 chips to speed up performance and better handle ai tasks. the products will handle a wave -- follow a wave of new macs coming in the next week. mcdonald's supplier taylor farms is recalling some yellow onion batches produced in a facility in response to the e. coli outbreak. mcdonald's has not confirmed the source of the outbreak that led to dozens of illnesses and one death across 10 states it said raw onions that go into its quarter pounder burger are the likely culprit of the contamination. what has not ruled out the beef as a potential source. and that is your brief. jonathan: that's not great.

thank you. who knew they only used a certain annmarie: type of onion as well? annmarie:we are learning a lot from this. what is scary is, this is the beginning. sometimes it takes months to figure out how much is impacted and how may people got sick. jonathan: my now bigger than the total market cap of five of the g7 countries and 18% of the u.s. stock market. bottom line is, the global equity markets, including retirement allocations, are basically leveraged to nvidia. nvidia reporting about a month from now. up next, the g7 finalizing a $50 billion loan for ukraine. >> we are very close to finalizing america's portion of this $50 billion loan package, making russia bear the cost and the expense of the damage it is

inflicting on ukraine. jonathan: we will get the latest from the biden administration, up next. ♪

jonathan: here is the state of play this morning. equity futures on the s&p 500 with a bit of a balance following three days of very more losses. on the s&p 500 we are up by .5%. treasuries have been selling off over the three previous days as well. yields declined by five or six basis points. under surveillance this morning, the g7 finalizing a $50 billion loan for ukraine. secretary yellen: we are close to finalizing america's portion of this $50 billion loan package.

we are making russia bear the costs and the expense of the damage it is inflicting on ukraine. we expect to be able to contribute $20 billion to the $50 billion g7 package. jonathan: the g7 finalizing a $50 billion loan for ukraine, using the profits generated by frozen russian central bank assets. treasury secretary also unveiling the u.s. will reveal strong sanctions against russia as early as next week. joining us now, the deputy national security advisor for economics, daleep singh. credit where it is due, a lot of this work you had a lot to do with it. walk us through the objective of this loan. daleep: two days after russia invaded ukraine the united states, the g7, we collectively froze russia's central bank assets.

about 300 billion dollars worth in total. by all accounts this came as a surprise to putin. the severity of the action, the speed, the unity of the g7. two-plus years later the, this june the g7 committed to lend $50 billion of that value to ukraine. using the future interest flows to pay us back. yesterday president biden said we are going to make good on our commitment. we are going to lend $20 billion to ukraine, the rest of the g7 will lend $30 billion. it is a big deal. never before in history has a multilateral coalition frozen the assets of an aggressor country and then found a way to unfreeze those assets for the benefit of the aggrieved party, all while maintaining the rule of law and our solidarity. annmarie: you concerned about the consequences in the future? you have the brick -- brics talking about whether they need to move away from doing transactions in the dollar

because of this. daleep: the important aspect of this, one is, we followed the rule of law. in every jurisdiction we stuck to the letter of the law. second, we maintained our unity, our solidarity. there had been some calls to seize the principle of these reserves. we have a legal pathway for doing so. europe does not. you're going to keep working towards that. at this stage what we are doing our harnessing the interest flows that will accrue from these assets and saying, let's transfer the value of those interest flows to ukraine so it can fight for its existence. annmarie: i was at the g7 when this cat pushed over the finish line. the europeans sang, we are going to come on board. how much does the u.s. presidential election, how much does the fact that in november potentially there is going to be a change at the white house, impact the europeans wanting to get this done today? daleep: i would say part of the motivation for this g7 deal was to prove to putin the matter what happens in our election time is not on his side.

i can give you 300 billion reasons why time is not on putin's eye. it is also important to demonstrate that multilateralism as a force multiplier. all of those were underlying motivations for how this deal come together. jonathan: some people might suggest america is losing influence on the global stage. we have not managed to persuade china to come to our side of thinking on several issues in international foreign relations right now. is there any evidence we have regained any kind of influence on the global stage of all out of this administration? daleep: you mentioned china. i know there has been a lot of talk about protectionism at the this week and beyond. my sense, my interpretation of what you are doing is that this is a very positive view of the world, and we hope china, other countries come toward our way of thinking. what we have said is, we are going to invest in our productive capacity. two, for countries playing by the same rules we are going to give access to our productive

capacity and purchasing power. but third -- and this is where china comes in -- for countries that are not playing by the same rules we are going to use restrictive methods like terrorist to level the playing field and prevent hundreds of billions of dollars of taxpayer money from getting undercut. that is not a defensive approach. it is a positive view of the world. we are trying to change the terms of the competition. if the terms of the competition are, your capacity to innovate, your ability to collaborate with a network of alliances and partners, your ability to attract ideas and talent and investment, that is a vision every country can buy into and i very much like our chances if that is whether competition goes. china included. jonathan: there are some economies, some groups of countries starting to think about trying to move away from the u.s. dollar. mohamed el-erian wrote earlier this week, a loss of confidence in america's management of the global order may have contributed to this run-up we are seeing in the gold price. do you see any evidence of that?

a breakdown of confidence in america's ability to manage the global order? daleep: if there was a breakdown we would not see it in the data. by the time it showed up it would be too late. what matters is whether we continue to be who we are. either we continue to have the rule of law. independent, incredible institutions. trust in our stewardship of the global economy. that is what gave us dollar primacy in the first place. if we continue to invest in those competitive strengths we will be just fine. annmarie: gold is one example. what do you say to those that say, sanctions don't work, they just create new markets. daleep: what is your alternative? we are in an environment of geopolitical competition. when there is conflict we tend to have three options. do nothing and stand aside and watch international rules that underpin peace and security get flouted or go to war. annmarie: if that is the

feeling, then why do a price cap? putin makes money every single day exporting oil and gas. why not just sanction it? daleep: sanctions0 work if they are sustainable. and they are only sustainable if they hurt our target more than they hurt ourselves and economy. take energy, for example. coming into the war russia was the fourth-largest supplier when global supplies were tight. we cut off russian energy within a month of the invasion. but the idea of cutting russian energy from the world, that would have felt good. believe me, it would have felt good. but it would have meant a global shock to global energy and food prices. it would have harmed millions of innocent people at home. it would have flattered putin's energy export revenues. so we took a much less sexy, much less shock and all approach. which more nuance, harder to explain, but the global price of oil is down one third since the invasion. the global energy market is

coming into balance. we are moving away from russian fossil fuels. we are going to have a chance to hit him harder. the time is coming. annmarie: a chance to hit him harder how? daleep: i'm not going to telegraph that, but rest assured, we have options. annmarie: let's go back to this idea of china and terrace. russia is able to get chips from refrigerators and use it in their military base. we are talking about the fact that they need to be used in places like china. what do you think separates the democratic position than what the former president is saying on the campaign trail check on daleep: i'm going to speak hypothetically some not on the campaign. across the board tariffs are going to have four predictable consequences. number one, global retaliation. number two, it is a regressive tax on the most vulnerable segments of society. number three, it compresses profit margins for any business that imports components.

number four, it would isolate america on the global stage. it would play right into putin's hands. our approach has been that there is a role for targeted tariffs, but terrace alone are not a path to prosperity. so, we have taken an approach which says, number one, we are going to invest in our productive capacity, give access to our productive capacity if you are playing by the same rules. but we will use tariffs, especially in strategic sectors. we put tariffs on $18 billion of chinese products over our term. the previous administration put them on hundreds of billions of products in an indiscriminate faction -- fashion. that is not where we are. jonathan: he would not shock me that if in four-years time this is what is confused us all. there were complaint after complaint about what donald trump are doing and then all of a sudden they were capped. not only that, there was a rebrand.

i often hear democrats call it a tax, and then we here really sophisticated things about what the democrats have done themselves and they say, this is about protecting national security. as a security objectives. is that a distinction without a difference? daleep: it is an important distinction. either it is export controls or sanctions, we need to have a limiting principle. for tariffs or export controls, for example, if we can identify a strategic objective, supply chain, technological preeminence , energy security, and if we are competing with a trading partner that is playing by a different set of rules, and if that competition threatens to undercut the investments we are making, then there is a role, and terrace can play that role. we have to be clear with ourselves on the public and our counterparts, including in china, why we are putting on these tariffs rather than slap them on indiscriminate -- intimately. jonathan: it is good to see you.

thank you, sir. daleep singh, the national security adviser for international economics. coming up, dana peterson of the conference board showing fading optimism among corporate ceos in america. equity futures on the s&p right now up by .5%. in the bond market yields are lower by five basis points. the two year down three to just north of 4%. and the euro looking at 1.795. from new york, this is bloomberg. ♪ ♪ e you corporate types are stil just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star.

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jonathan: check of equity futures on the s&p 500, session highs up by zero point 5% on the nasdaq 100 up by 0.9%. morning movers with manus cranny. manus: the gap between promises and a delivery from elon musk and tesla is closing. cyber truck makes a profit for the first time with promises of deliveries of next year 20% by 30%. this is a pre-session high for the stocker, blowout quarter in

terms of the volumes promised. take out the credits and the margins were 17.1%, way ahead of foot rbc were expecting at 13.5%. this causes rbc to catch up, upgraded the stock to $249 with an outperform on the price tag. there is a real musculature to that. it is a blowout quarter on margins and promises. will they deliver a cheaper car next year? maybe they don't want to announce that yet. boeing is on the downside. machine workers say no to a 35 percent pay increase because they want to hold out funds. this is the stumbling block here 94% rejected the previous offer. the rejection comes in as 64%. this is dealing with some of the unvarnished truths, which is a very defensive union and losses of over $6 billion. wells fargo remain underweight on the stock at an $86 ticket on

it. ibm, this is fascinating. software consulting sales. a solid quarter, but uneven. you have a cannibalization. generative ai projects, three billion dollars in revenue, up by $1 billion, but those are coming on board at the expense of the traditional consulting business. gen ai cannibalization wrote large at ibm. jonathan: assuming you have finished, thank you as always. on the 10 year, 4.19 just north of 4%. finance bounce in the equity market following three days of losses on the s&p 500. a nest egg up a close to .9%. under surveillance, boeing factory workers, 64% of union members casting ballots voting against the deal with pensions remaining a key sticking point.

the stock is down 3.8%. i have to note the surprise from the analyst community who thought that we would get a deal yesterday afternoon. annmarie: george from bloomberg industries said he thought he gets this done. you have higher wages, $7,000 signing bonus. the only silver lining that i could see now is that in september the vote for no was an overwhelmingly 94% of workers and now it is 64%. they need to get to 50%. does boeing go to 40%? that is what they're asking for. jonathan: the stock is down by close to 4% in the premarket. southwest is reporting third quarter profits that nearly doubled estimates on wall street . american is delivering a beat and a raise with a stronger balance sheet. that stock is still lower, down by 3.6 percent. southwest is up by 1.5%. lisa: for american airlines, they had a rough summer turnaround from july.

southwest come they had a huge fight with activist elliot investment. maybe they are putting that kind them. the trajectory potentially looks like it is only going up. jonathan: you can talk about industry and execution. american airlines, the execution has been awful over the last few years and they're still trying to climb out of that hole. annmarie: what more can they do? do you see the actual money being spent? they want to climb into have better terms of business sales, business class and first class. do you see them doing that? not really. this is a problem. jonathan: the latest on the election campaign trail, the doj is warning elon musk's political action committee that his offer of $1 million to registered voters may violate federal law as he plans to do it every day until election day. sources tell us at bloomberg that the public integrity section sent the warning. annmarie: elon musk knows that

he potentially has this morning, this may be illegal and you may in violation of federal law. i'm interested in how he changes his tune if he goes on the campaign trail with the former president, does he start talking about the $1 million check? more interesting to our viewers especially, yesterday he was asked about the outsized role that he has an the trump campaign. he talks about the department of government efficiency that he would like to oversee. it -- it sounds like one of the first items of business he wants is a national pathway to improve autonomous equals as opposed to the patchwork work that tesla needs to do. he wants to be in control of a government agency that would directly benefit his company. jonathan: i will raise you something far more interesting. if i receive a $1 million check in this effort and it violates the law, do i have to give the money back or can i spend it? if i've got one of those checks

and i cash that thing? annmarie: my advice to those individuals would be to go cash it now. jonathan: spend it quickly. attitudes of u.s. american ceos. the conference board measure of ceo confidence shows sentiment falling for the second straight quarter. ceo optimism continued to fade in the fourth quarter as leaders of large firms expressed lower confidence in the outlook for their own industries. dana, always great to catch up with you. what stood out for you, what underpins the lack of confidence or falling confidence going into year end? dana: a lot of it is election uncertainty. when we ask ceos, what are you very worried about, the top three things are cyber, regulation, and geopolitics. putting those together, there is a lot to worry about for companies. they are also concerned about what the tax and tariff environment will look like for next year. putting all of those things

together, as well as a lot of uncertainty for certain industries, i think that companies are less optimistic than they were a few quarters ago. annmarie: shouldn't this be a moment for business that they should feel certain about the election? not who wins, but they know what is coming at them depending on who wins. we basically have a race of two incumbents. dana: but the policy is different around key issues, especially that impacts businesses. will there be a change in the corporate tax rate? more or less tariffs? more or less regulation? those things matter. especially companies that are b to c they wonder if their consumers will see a tax hike that will impact consumption and their bottom line. there are a lot of things that aren't clear and we won't know until the results are in. lisa: what sectors are you seeing this hit the hardest? what sectors are the most anxious about november 5? dana: when we talk to our

members, those who are b to c are very concerned about what the tax environment will look like for consumers. are consumers going to eventually run out of spending power? it doesn't seem like it so far,but will that happen ? will the labor market holdup? questions that businesses don't have answers to. a number of our businesses are pretty optimistic. they are the ones benefiting certainly from the industrial policies around infrastructure, manufacturing, building, reassuring, chips, whether you make those things or provide the inputs for them they are optimistic. of course, there is concern about, what does the environment look like? some of these pieces of legislation that help them be eroded, done away with, or maybe more policies, we just don't know. annmarie: following the election, we get some clarity, what will businesses do next?

a hiring spree? capital spending? dana: when we ask businesses what they will do with their payrolls, it is still the case that roughly 40% are anticipating that they will sit tight. they won't hire or fire. under 40% say that they will continue to hire. they are probably still experiencing labor shortages, especially the jobs were you physically have to show up for work. we saw an upcreep and the percentage of those who will that people go. 25 percent. 75 percent are still not planning to do anything detrimental in terms of letting people go. it is something we definitely have to watch. in terms of investments, they are saying that whatever our plans are right now, we will follow through with that. it's unclear. if they were planning on investing more, they will do it. if they were to invest less, they will do that. or sit tight, they will do that.

there is a lot of uncertainty. gdp data shows that companies are spending on a lot else aside from ip. they want to see the election on the presidential level and composition of congress, because that will determine what legislation is passed or changed. jonathan: we will get jobless claims and in november we get the october jobs report. how useless will this economic data be given the hurricane impact of the last few weeks? dana: we know that jobless claims did pick up a little bit a couple of weeks ago. that was very clearly the effect of the first hurricane that hit the southeast. if you looked at the data, you could see florida, tennessee, georgia, they all had elevated claims. two weeks later, we had the second hurricane. we will probably see an uptick in jobless claims today because of that. you can look at the detail to see what states were impacted.

away from michigan, which i think is impacted by strikes and things like that, we are not seeing much of an uptick in claims. in payrolls you will probably see a significant impact from the hurricanes, but the fed and markets should look through that and see what is going on apart from those areas or industries that we know were definitely impacted by the hurricane. the key thing is to look at hours and wages. workers are still seeing wages rise and the unemployment rate does not tick up much, if it doesn't it is temporarily associated with the hurricanes and we shouldn't worry. jonathan: thank you for catching up with us. speaking of the word worry, you see anxiety in the labor market data and in the conference for data and in the survey that they've done of ceos. annmarie: ceos just want clarity and they want to know what the regulation environment will be,

with the corporate tax rate will be, and before they start capital spending and hiring they want clarity out of washington, d.c. i am reading the citi released report, notable drag from recent strikes and hurricanes, markets may be inclined to look through a weaker reading. how many will say, ignore it, look through it? jonathan: an update on stories elsewhere with your bloomberg brief, here is dani burger. dani: china is pressuring automakers deposit expansion in the eu because of escalating trade tensions. earlier the eu voted to increase tariffs on electric cars made in china. plants have already been reversed to make cars in italy following beijing's request. hermes remains resilient, head of analyst estimates. sales exceeded estimates in the

quarter. sales and china fell slightly below expectations. the resiliency is led by strong demand for its pricing handbags, like the burkin. less than two weeks for election day and the candidates are in a locked dead heat. donald trump and kamala harris are statistically tied among likely voters in each of the seven swing states. in the final push, trump's campaign is aiming to mobilize voters who have not typically turned out. harris is looking to fire up women and pick off moderate republicans who are not trump devotees. jonathan: i give her that. more from dani in 30 minutes. what is your take? annmarie: trump has a slight momentum the final month of the pole because in september harris was up slightly. still come all of this is in the margin of error. 12 months, we have done this over the entire year, the economy is the number one issue and it benefits him.

jonathan: away from the national polling, what you see in senate races? momentum towards republicans? annmarie: two key ones that were democrat have moved to toss out wisconsin, tammy baldwin's seat. people are talking about maybe mccormick of bridgewater coming to the u.s. senate. jonathan: up next on the program, the campaign trail gets ugly. >> let me ask you tonight, do you think donald trump is a fascist? v.p. harris: yes, i do. fmr. pres. trump: after all the catastrophe she has caused, kamala harris can't say one thing that she would do differently. jonathan: for house speaker kevin mccarthy is up next. ♪

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jonathan: equity futures on the

s&p 500 are up by 0.5%. put a bounce in this equity market. the bond market, 4.1938 on the 10-year. the campaign trail gets ugly. >> let me ask you tonight, do you think donald trump is a fascist? v.p. harris: yes, i do. yes, i do. i also believe the people who know him best on this subject should be trusted. fmr. pres. trump: after the catastrophes she has caused, kamala harris can't say one thing she would do differently. you saw that. what would you do differently? i can't think of anything. jonathan: kamala harris and donald trump attempting to paint stark contrasts in a race that is anyone's to win. candidates tied among likely voters in all seven battleground states. joining us is the former speaker of the house, kevin mccarthy. a tight one.

i could never offer you -- if i could offer the outcome of any one race, what would you want to know? kevin: pennsylvania, because we elected presidents not by popular vote, but electoral college. the last election was won by few votes, donald trump would get pretty much the same electoral states that he got before and i believe he would pick up georgia. if he picks up pennsylvania, it is over he got to 270. he wouldn't need arizona or nevada. when you look at where the play is, even the union voters in pennsylvania overwhelmingly support trump over kamala. kamala, at the end of the day, if she loses this race, it will be her listening to pelosi and she pushed her to pick walz because schapiro is too ambitious. annmarie: he is beloved in

pennsylvania and is out there still campaigning whether or not he is on the ticket. do you think that in pennsylvania they would reject the democratic party even though they love their democrat governor? kevin: they not rejecting the democratic party. they are tired of high inflation prices. they are tired of the border being wide open. they want someone who will actually say, you watch president trump go into a steeler game and people start chanting "usa." what do you think they would chance if kamala were sitting there? they probably wouldn't say anything. if i were to say tell me three things kamala harris would do she is elected president? she spent $1 billion in the only thing i know she will give people $25,000 for the first house and bring inflation to home prices. that is the only thing i know. annmarie: are you looking for a republican sweep? kevin: it will be a tight race.

the republicans will win the senate. the presidency, i give a 60% chance that president trump will win. it is a tight race. in the house, it is actually easier for republicans to win seats this cycle, but republicans are behind on money. i saw four races that were tied that didn't have the money to play. they made a mistake in this process. we always had more. i don't see the strategy in the house where you are on offense. the last two cycles, i only won when biden won the presidency it was the first time since 1994 no republican incumbent lost. annmarie: speaker, the republicans were feeling good two years ago. it wasn't the red wave. kevin: we elected the most republican women, republican

minorities, won five seats in california and new york, we won when republicans were losing. the problem is, they aren't keeping with that same strategy. president trump, this is what you want to look at. first of all, the campaigns in wisconsin and pennsylvania, the incumbent democratic senators are using trump in their campaigns. not against them but hugging him. that is a good sign for republicans. you're looking at articles where there is infighting the democratic already because they want to know who to blame when they lose. they're talking about, would it have been better to keep biden on the ticket? now you have people going after nancy pelosi because not only did she and obama push biden off, she selected the vp candidate that that put them in this problem. annmarie: you are well versed house races. kevin: do you want a walk-through?

annmarie: not all of them, there are too many. you were a prolific fundraiser. there is not enough money, who's fault is that? speaker johnson? kevin: i would put that on the party with all of the democrats. why would the democrats partner with these eight republicans? they knew that it would give them an advantage in the election. just our super pac last cycle had more money than the dccc and their super pac. the makeup of the environment, timing is everything in politics. gallup does an interesting poll where they don't ask if you will vote for harris or trump here they asked, which party do you identify with? they've done this for decades. republicans are leading 48-45. republicans have never led. who is best to solve the problems? republicans lead in that. in the house, north carolina

redistricting so you start with three new seats that you can pick up. you have the race in colorado that last time was a new seat that we had a libertarian who picked up 4% of the vote. alaska, a ranked system. you don't have a second republican running there. pennsylvania, we had a bad top of the ticket for governor. dave mccormick is fantastic. donald trump is fantastic. one or two seats there. michigan -- annmarie: you're feeling like republicans were talking two years ago. we only have a little time left. kevin: i'm telling you there is opportunity. every cycle that i was leader, we gained seats in california. the question is, are you putting the resources in to get the message out? the environment is there. if you don't turn it out, there's a problem. annmarie: a man with resources, elon musk says that if you are registered voter you can get $1

million. there are legal issues with that , but i want to ask if he can become the head of government efficiency. does that make sense? he's talking about if he becomes that person there's a pathway may be to approve autonomous vehicles that will help his company that he is the chief executive of. kevin: elon has never said i want to go into government to get autonomous vehicles approved. listen to the question you asked. could we have elon musk go to government and make it official? i don't know. we just had a hurricane in north carolina. the only way people can get the internet is because of elon. we have astronauts stuck in space. the only way they can come down is if we ask elon. we just watched a rocket that elon created an engine only made in america where before we paid putin for their rockets and he

lands it on deck. i would pray elon would come in and make our government efficient. you would have accountability. you would have a government that works for the people. does he want money from it? no. we want more people like that. there is no other country in the world -- everyone would beg for elon to do it. democrats want to think that is wrong? that is what is wrong with them. jonathan: you will be tweeting this clip later. thank you, sir. the former house speaker, kevin mccarthy. we will catch up with deutsche bank, the lebanese economy in d.c., and jobless claims just around the corner 35 minutes away, and the abundance bank president. equity futures as we cut you down to the opening bell, 94 minutes away. futures up.

from new york, this is bloomberg. ♪

>> is an extraordinary

uncertainty tax on this economy. >> you are not yet back at the peak euphoria territory. all it does is make the market vulnerable. >> the trend is a disinflationary one and therefore supports a cutting cycle. >> it is the fundamentals of the u.s. economy with earnings in interest rates, that is what we focus on. >> the u.s. economy has proven more resilient than years have suggested. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: 30 minutes away from economic data in america with jobless claims around the corner. morning to you all. equity futures on the s&p, firm or .5%. on the nasdaq 500 we are doing well. the russell is doing ok. likewise in the bond market we are seeing treasury yields lower on the 10 year by five to six

basis points. on the two year we are down to 4.04%. the estimate for jobless claims, 232,000. there will be a big hurricane disruption in the labor market data. lisa: everyone will tell you to look through the noise of these disruptions. citi comes out with a note, this leaves us watching jobless claims in the states not impacted by recent hurricanes to get a clean read on what is going on in the labor market. for any layoff trend signaling economic activity that is confusing at best leave us expecting that the september employment trend will not last. it is interesting to see where those claims will come in and how different they might be. jonathan: we had a big surprise, the number was 254,000. october, a sneak peek of the estimate, 135 k. those numbers drop on november 1. november 5 we have an election

in november 6 we have a federal reserve decision. a lot coming up this hour as well. we will come -- we will catch up with deutsche bank and we will state speak with steve talking about searching for answers in the wrongs places. and some played -- traders are looking for a 50 book -- 50 point cut. deutsche bank with us on earnings season. results so far are slightly stronger than expected the financials where investor positioning was below neutral. good morning. good to see you. we have a big week with all of the major tech players with the exception of an nvidia, how high is the bar? binky: the bar has been fluctuating and it is extremely high at the beginning of the year and came down a little bit as positioning came in. it has been going sideways to

slightly higher. just to be clear, positioning aligns with earnings growth. if you think about earnings growth for the main tech companies it is important to keep in mind that this very clear trend channel over the last 30 years. if they deliver as they have been, the best possible earnings they held to the top of the channel, that is 11% growth and that is down from 40% printed in the first quarter of last year and 38% in the first quarter of this year. so the slowing for you is inevitable. it is happening and it should not be confused with bad earnings. you are absolutely right that it is all a question about the bar and expectations. and i would say it has to fluctuate as you go through this period. it is not all meant to happen in this morning, but it will take a while. jonathan: we often do not do single names which is basically

a market, nvidia. now, at apollo this morning it is bigger than the total market cap of five of the g7 companies. they own 18% of the global stock market. in the bottom line is that equities are leveraged to nvidia. what do you think will define earnings season, does it come back down to the one name or theme? binky: i do not think so. size means that they are definitely important. the size of the growth rates. i would say that the issue of the year has really been whether we would broaden out and i would say that is happening. for it to happen you need the fundamental underpinning of earnings growth also rotating, which is what would drive moves in positioning and earnings growth. it is all happening. i think, unfortunately it is

happening slowly and pretty noisily and the noise mostly comes from energy and materials. and that is oil and commodity prices and you have to go two years back to russia and ukraine. but, we would argue that it is happening. for this quarter, for example, we are looking for a modest deceleration from 12 to 9% in round numbers. half of that slowing is the year-over-year decline on oil and commodity prices. it is not telling you where economy earnings are going and the second half is coming from what we spoke about, the well understood among the analyst community both bottom-up and top-down that he earnings growth is basically slowing for make a cap growth -- mega cap growth intact. but right now, we are looking for year-over-year growth in the mid teens. jonathan: those firms are

responsible for massive buyback plans. you referred to this robust demand backdrop for u.s. equities. can you walk us through that? binky: one very simple way to think about equities three demand and supply point of view is how existing equity money is positioned, so that is the positioning measures and there are new moneys coming into equities, the equity inflows. and if you want you can put them on the supply side but it is not nice put everything onto one side. it is buybacks. if you think through whoever you are, on each of the three in terms of positioning, business -- positioning today is lower than the july 16 peak. how could that be when the market is a little bit higher? we have had very robust inflows into equities. and that has been going on for quite a while. it is not just equities getting

robust inflows but bonds have been getting robust inflows too. positioning has the upside, even into the mid july peak. we have very robust inflows. the biggest driver is the buybacks. and they basically move with earnings and we are looking for 11% earnings growth next year which by itself is a use for 11% upside and buybacks. and there is a matter of the buyback payback ratio which tends to fluctuate between 40% to 60% and we are sitting in the middle at about 50%. if the economic backdrop improves and corporate confidence continues to improve you will see that buyback and payback ratio go up. in short, all three cylinders from a demand and supply point of view look very robust. annmarie: what could spoil the party, you talk about catalysts.

geopolitical risks and the u.s. election. how do you take those into account with is pretty risky picture? binky: i would say the election, for example, through traditional parent is for the equity market to pull back a month earlier and really the way you think about that is the premium for volatility in that first week, basically after the election. as jonathan already stole my punchline which is it happens to coincide with all of the early month macro data that comes out at the same time. and it is only a few weeks since the last payrolls report which had a huge impact. i would say today, there is a whole bunch of catalysts having an impact. if you look across asset classes, just look at the vix. a little bit below the 20's, and

to many people it seems reasonable. but if you compare that to what actual volatility is doing you have almost a 10 percentage point premium in the vix. that is enormous by historical standards. it is not just equities, you could do the same to rates, move versus realized volatility. and look at currency, and the same is true. the market is really all up on these multiple catalysts for risks. annmarie: an angst he market. people are talking about a trump trade in equities and bond markets. why don't we see that in the equity -- in the tech markets? binky: i would emphasize the uncertainty from the election and the market buying protection from the volatility around the election. i think it is too early to start to factor in all of the policies and implications.

there is a natural tendency for all of us to focus on that. but, just take the last tax cut. i mean, tax reform package. the 2016 election and by december, proposals will being circulated and feedback was being sought and when did it come to pass? in late 27 -- in late 2017, when me and my team are running a piece called with nothing priced and for tax reform. there is a lot of water under the bridge between now and when things happen. annmarie: when it comes to corporate tax rate there is a huge that -- 15% and 28%. that will not likely get finalized until the end of 2025. does that get pushed out for these companies? binky: it will depend on if and when it passes, and that is a complicated route to bet on

right now. in terms of thinking about corporate tax reform and earnings is that there is no doubt that there is an immediate impact. over time, if you look at the s&p 500 from the 1930's until today, there is a very clear trendline. and now, on this chart, you should overlay the corporate tax rate in the u.s.. it has done lots of things and the trend has not change. i am not saying that equities at the present value have earnings, but if they have value, things have not changed. jonathan: this is a long-term policy discussion but i love your thoughts on the shorter term. a lot of people will be dialing you that we do not have a result on member eighth, ninth or maybe longer. we talked about the federal reserve decision. they might not know the results.

what are you going to tell people if we do not have results when it could have a pretty profound impact on policy years out. are you gonna say just look at the trendline and it will be ok? binky: no. it is about basically what is happening shorter time -- shorter term. positioning and perception of what is going on. i think that basically, a result that takes time really does not resolve itself. it does resolve itself but it does not change the story. instead of a one-day event, it is about a few days of events. but the question is does it pass? jonathan: is at a tip that you would buy? binky: we think of it as a temporary pullback. going back to your question, election or risk, historically presidential elections have not change the business cycle. the highest system-level are

above the business cycle. and, i would remind that once anybody comes into power they have a strong incentive not to destroy the business cycle. there is a built-in check. jonathan: is that how you see a republican administration, they will be constrained by the raggedly -- by the equity market and are asked -- and that is based on what happened the first time around. binky: i think the evidence from the last time around is very clear and i have a piece on it. i can dig it out. every time the trade war is fired up, let us put it that way, the equity market went down by 10%. i called it trump relenting but he would basically argue that we have a deal and the market would bounce and then we that she would say that we will escalate and in the market would go down. did it change the trajectory completely? no. jonathan: i call it the

presidential put. we all remember the time when the equity market was lower in the president ultimately pretended to have a cold and suggested that things were better than they were. annmarie: that would mean the equities would rally again and puts out a statement saying something to a reporter and the equities fall. this happened with him running -- wanting to rip up nafta and then massaging the message because the dow jones was doing bad. ultimately, that is what he regulate spy. jonathan: it is always good to see you. send over that piece. how old is it? binky: from the last administration. at least four years. jonathan: fantastic to catch up. looking ahead to the earnings next week. a massive week. we will hear from apple, meta, and alphabet. we'll wait until november 20 want to hear from nvidia and then we can focus on november 1

and in the payrolls report. and then november 5, the election and then two days after that chairman powell will try to do a news conference and hopefully he has some clarity on what the future might look like because we might not have some around this table. with an update on stories elsewhere here is the bloomberg brief. dani: earnings we have gotten, krr, higher by 2.5%. the third quarter profit beat estimates and transaction fees hit a record. the growth was driven by fees for managing $624 billion, and 18% jump versus last year. elsewhere it raised $24 billion in capital and the pe funds returned 5%. ibm shares are falling in the premarket trade 3.5%. they reported disappointing sales and were hurt by slowing consulting demand. revenue rose 1% and that missed analyst estimates.

the cfo says that clients are not expanding budgets and some generative projects are coming at the expense of can -- of traditional consulting's. boeing factory workers have rejected an offer and will remain on strike which is a fresh blow to the struggling playmaker. 64% of union members voted against the tentative deal. it would have raised their wages by 35% over four years. that is your brief. jonathan: more from her in 30 minutes. up next morning calls and then down to washington and we will catch up with lisa abramowicz annual meetings kick off the nation's capital. from new york. this is bloomberg. ♪

jonathan: equity futures on the s&p, a bit of a bounce up by 0.5%. you can think one name for that, tesla. one stock info because that one right there. tesla the first up. bank of america raising to 265. we are up by almost 14% in the premarket. goldman sachs raising the price target. highlighting up the outlook for 2025 deliveries. finally, wells fargo raising its price target to 125 noting its better-than-expected gross margins. here is stateside so let us get down to the latest from the imf headquarters. we have talked a ton about policy from the federal reserve and you and i have gone back and forth on this. what about the ecb and how can we talk about reductions when

growth is worse in europe? is that about to change? lisa: that is one of the big questions. you see the bifurcated ideas coming out of different regions in europe. frankly for the european central bank. you have the bank of portugal coming out and talking about the potential for a 50 basis point rate cut as soon as december. and then you have the bundesbank talking about the potential for may be more temperate rate cuts, even as that economy is really the one struggling. which is at and where is the priority at a time where potentially inflation is coming down at a rapid pace but so is growth. annmarie: european capitals are focused on november 5 more so than we are. how much more as a 50 basis point cut likely if we get former president donald trump and they are concerned about tariffs? lisa: that is a big concern and

honestly this to me is the elephant in the room at the imf. there is a feeling that right now a lot could change in about two weeks, less than two weeks although it is unclear when we get the results. that is really what is hanging over everybody. interestingly enough, the bundesbank central bank president is talking about the prospect of what that kind of unilateral policy will do for the u.s.. there is a lot of soul-searching and castigating by a lot of members by central banks and policymakers as people try to get a sense of exactly how much their lives will change. this is such a bifurcated picture because you have the likes of the ecb and federal reserve talking about inflation and the potential for weakness on the margins and then you have the lebanese head of finance and also the israeli central bank president. it is such a different moment,

whether you are dealing with the economies of war or the ones who are doing ok and are trying to figure out where inflation will come and what is the priority. it is something of a fraught meeting. jonathan: thank you. we will catch up with her in about 30 minutes time. sitting down with the german central bank governors going into an ecb meeting going into the next month after reducing interest rates but conjure -- but confronting weak economic data and having a real conversation about the process of a 50 basis point reduction. the date is expected to be ok. it drops in about seven minutes with jobless claims coming in. mike mckee is with us for more. how distorted will the data be? mike: distorted by the hurricanes so people will be watching to see if we come down at all. it does not look like and from what we saw in the book yesterday it does not look like companies are laying people off so that might not be an issue.

it is hard to get a clean read because of external activities that have happened on jobless claims. we will see, at least something that will get people talking about next week. jonathan: and then payrolls which is what we want to talk about. november 1, payrolls. what is a strong number and we had a conversation with a guest earlier that said maybe the number was behind 100 and that would be a strong number given the disruption. mike: people are all -- people are all over the map because people could have been on payrolls for an hour which is all you need during that time. you also have the boeing strike continuing and you have whatever fallout there is from that if other companies have to lay people off because boeing does not need their parts. so, you have a real range of views and anything around 150

will be considered great news. bloomberg economics is thinking we might get a negative number. annmarie: every analyst says look through the data because it is noisy. and the fed do that? mike: it can if it was a terrible number. they will look at unemployment and the hurricanes and strikes will not affect the unemployment rate. if it does not go shooting up the fed does not have to worry. they can look through it and say a lot of this is temporary. so it probably will not affect things. you were right when you said the rest of the world is concerned about the u.s. election. that is not going to affect the fed this time that it might the future. i was at the imf meetings over the last two days and the u.s. election is all they are talking about. jonathan: it looms large. it is like a big elephant in the room that everyone acknowledges but do not put in the forecast

because they do not know what to do with that. mike: i had one central bankers say that their hope is that if donald trump is elected that the markets crash, because they want the markets to send a message to trump not to do this, this. annmarie: and the point that he is regulated to the dow jones. jonathan: can you tell us where that is from? mike: europe. jonathan: good to be seeing you. jobless claims are five minutes away. we are looking for 242,000. we are looking for a big distortion as well off of the back the hurricanes. several states across this nation over the past views -- few weeks. we will catch up with steve up next.

jonathan: the opening bell is 60 minutes away. the economic data is seconds away. mike mckee will break that down. it is a nice balance up by 0.5 percent encouraged by a blowout quarter from tesla and optimistic just -- projections from the man himself that investors seem to be buying this morning. in the bond market the yields are lower by five basis points in the 10 is just south of 420. -- four point 20. without economic data, it is mike mckee.

mike: this continues for the united states economy. 227,000 jobless claims and the estimate for -- was 242 thousand. a lot of people got out and filed unemployment claims because they were out of work because of either the boeing strike or hurricanes that hit. and a lot of people have fallen off. we have seen a big increase in continuing claims. 108 million 97,000 up from 1,869,000. people are still on the roles and we would not expect them to go back quickly given the damage done. but, 227,000 is a low number. we saw the beige book on wednesday say that companies are not laying off people. they are not hiring, but not laying off. everybody is waiting to see what happens going forward. jonathan: a massing -- a massive guessing game. what do you think that number would look like given the claims

over the past few weeks? mike: a pretty good number, probably. but there are so me wildcards with the storm that it is hard to know what we are going to get. the fed will focus on the unemployment rate and not the overall job creation number. they will look through that and want to see what the participation rate is and a lot of these numbers could be distorted but they will look through it. there will not be any reason that there -- that they would not cut rates after the election. whatever is going to happen from whoever is going to be elected will take a wild. they keep going -- will take a wild. they seem to be going with the cuts and that seems to be the consensus. whether or not the number is strong. there would have to be something really wrong with that report for the fed to be calling up the folks at certain newspapers and hinting at it might be something different. annmarie: what would the number

be? what is really wrong? mike: something that is strong because the idea of a negative number is not inconceivable given the weather situation and other things going on. so, i would say if you got something north of 200,000 that would be a real surprise and people are not expecting that. and then the fed might want to reconsider whether it cuts rates at all. jonathan: stay close, jobless coming -- claims coming in at 227,000. looking at the treasury market before this number dropped we were set at 420,000. , and the yields are lower by three basis points. the two year down two basis points. 4.05%. for a snapshot, the equity picture is still high and up i .5%. that comes from the nasdaq 100.

thank you tesla, up .1 .5%. the euro tower -- dollars deal south of 108. with us is steve of mizuho, it is good to see you. let us start with the claims number, what do you think of that? steve: exactly what is happening in the economy. orbit america is sitting there saying i am in a good position and the economy is doing well. am i rushing out to add a lot of workers to my employment? no. my looking to trim work force against the backdrop of demand and the answer is no. the unemployment rate actually becomes critical trigger for the fed as mike mentioned. if it were to drop to 4% on the unemployment rate, i think they will have difficulty saying we will have to cut rates in november. i think that is the driver in terms of where they go in the november meeting. every meeting is live, they want

to cut rates and they told us they want to. it is a question of does they get -- does the gate -- data give them the opportunity. jonathan: what is the difference between 4% and 4.1? why would that change so much? steve: it was the progression up to 4.3 that justified the move. now you've gone to 4.3 if you get back to four, what is the progression. and if it is not really going anywhere then if i am trying to maximize employment and i want to keep a full employment economy i have half a percentage point better than full employment. what is my logical argument for saying that i have to go in november. i do not. i have forward rates already very accommodating. forward rates already anticipate that they will get us to 3.5%. annmarie: it is an incredible week. november 5 and then 48 hours the

fed meeting. how difficult would it be for them to talk about where the economy is going and make a decision on the rate cut if we do not have the outcome of the u.s. presidential election? steve: mike hinted at an important point, fiscal policy takes time. to the extent that the window of what they are trying to influence is six months to a year, and it is going to take time into 2025 to get fiscal policy enacted from whatever we wind up settling with. and then it comes down to is the white house in control of the house of representatives. if they are in cahoots you can always buy a senator vote. you can always get something done. annmarie: who knew it was that easy. steve: it is with the vice president being a tying vote and the majority will be slim. it comes down to simple calculus, are we looking at 2020

five as early as possible fiscal stimulus or february of 2026. in that environment they have the opportunity to do what they are doing. annmarie: tax cuts, 2026 and tariffs, day one. is that why the bond market is picking up on that? steve: i think they are overplaying the tariff story. this is a guy who is a negotiator. i will go into negotiations with all of these people to try get concessions. am i going to throw out my trump card, i hate to use a term, day one. or do i just dangle it out there to threaten with it to see if i can get the concessions i want? this is what he did the first time and i assume he will do that again. in some instances it will be make your contributions to the ukraine situation and we are sick of doing it and that is his stance on doing that. on the other hand for other people it is put up your markets.

it has not been fair trade and therefore he has an argument and people are jumping to the conclusion that tariffs are automatically inflationary. let us look at this. we went out and raised tariffs especially on china and everyone said there are going to be horribly inflationary and it was not. so, we were talking about embargo russian oil and oil prices will go through the roof and it did not happen. these are complex systems. they are going to go somewhere. jonathan: they were successful at locking up russian oil. we heard from a biden official that their emphasis is on reciprocity and you will hear a lot of that from officials and whoever is in charge over the next several years. i want to finish on rates. we know what the federal reserve thanks the range of estimates on neutral, they tell us. where do you think it will ultimately turn out to be? steve: 4%. there estimate of neutral is too

low. i think that they are gravitating upwards which they should be because the economy has proven to be resilient suggesting that they are not as restrictive. if you look at where we are and where we should be that is telling you that they are not terribly restrictive. the data is telling you that they are not terribly restrictive. if you believe that you will get to percent inflation and you have a 2% you -- real yield and i think that is valid. those estimates are based on the post financial crisis read covid -- pre-covid period which is and allow millie. that is the biggest mistake that was done in the financial markets. jonathan: it is good to see you and catch up. passionate as ever about all of this stuff. the jobless claims at 227,000. with an update on stories elsewhere with the bloomberg brief, here is dani.

dani: shares of southwest and american lower by 1% and 2% even though companies set -- offered earnings that would be. southwest is in the midst of a bruising fight. american says its full-year profit will top estimates but did note the higher costs. tesla shares are rallying up 14%. bev maker reported its biggest quarterly profit in a year and said that the cyber truck turned a profit for the first time. elon musk said the company aims to rollout ridesharing in texas and california. bloomberg lp has partnered with the robin hood foundation to launch a charitable stockpicking competition. participants compete for a charity of their choice by selecting a long and short position over a six-month period . it is for charitable purposes

only and does not constitute advice. stay tuned with the robin hood foundation board member on bloomberg tv at 11:30 a.m. eastern to learn more. that is your brief. jonathan: thank you for this morning. up next do not miss this, we will set you up with the day ahead and we will be catching up with the bone this bank president in washington, d.c. that is next. this is bloomberg. ♪

jonathan: counting you down to the opening bell around the corner. equity futures shaking up as follows. up by 0.5% and let us get to the trading diary. 9:45, s&p global pmi. durable goods tomorrow. forward earnings monday.

big tech earnings from google. tuesday. wednesday an additional gdp read. thursday, another round of claims, course -- core pce and apple and amazon results. friday it is the payrolls report, what a week coming up. let us turn back to d.c. with global financial leaders gathering in the nation's capital as the imf meeting continues. they are pointing to a number of risks with downside growth. alongside the abundance bank president is lisa. thank you. lisa: i am here with the president of the bundesbank. as we sit with leaders and policymakers. i have to say you have been a lot to -- a lot of these. what is your take away from this year? >> today is the second day, but

i have to say it is a very special meeting, we are living in complicated times. we need more compared to the years before and many geopolitical risks. these are part of the discussions we have. lisa: when you talk about risk that is cold -- that is code for will donald trump or kamala harris become the u.s. president. that is very much a focus. how much is that dominating your discussions? joachim: 12 days ahead of the u.s. election, i will not speak of who will win the race. but what is also clear is that we have to discuss different scenarios. because it comes with an impact. this is also part of the discussion, to think about what could happen, what are the spillovers to the global economy. i think these are important things that are arising from the u.s. election. lisa: how much do you see

germany's calmly being affected. joachim: germany is a large and open economy so we are very oriented. all of these discussions about tariffs that are harmful to germany and definitely not helpful for both parties or both sides of the atlantic, i think we should consider all of this and find out what can we do. we have to talk to each other. there could be severe consequences where tariffs could be included in the way they have been discussed. lisa: will it be inflationary for germany? joachim: it will if it gets to the direction that the exchange rate is being influenced by the tariffs. there is a certain risk that this could also have inflationary effects. lisa: disinflationary effects? joachim: it could be. when the euro is depreciating

then the imports are getting more expensive and they could have some quick push inflation. lisa: there is a real question about the inflation ramifications and we can go into china about the overcapacity coming in and whether that will lead to lower prices in goods. right now it seems like the conversations that we have on surveillance, people are talking about why isn't the ecb cutting more, especially when the growth outlook is not that great. we got pmi's out of the region. you have been one of the more cautious to cut rates, why? joachim: we showed our commitment. we mention here that we have a clear single mandate and that is price stability. and we are very committed when we fought in get inflate -- against inflation. we have lowered three times the inflation rate and we are on track. we are rather confident that we will achieve our target, maybe

by the middle of next year, so this is a success story, you should not forget. i have to repeat that we are data dependent on our single mandate. lisa: we have had inflation, low the 2% target in the euro region. we have seen growth slow. haven't you already achieved the goal? joachim: that was a single month, september inflation came out on that basis and we decided last week to lower interest rates by 25 basis points. we should not be too hasty. we should be cautious and keep our track to really look at what data is coming in for december and when our next meeting is coming. we have the new protection -- projections that will include year 2027 and we have more guidance and orientation. i am not in favor to speculate too much what is happening in the december meeting.

i believe it is not helpful. lisa: to speculate? joachim: on what we cut or cannot do. i will have all of the optionalities, which are based on the data and we should not forget that when we started the interview by thinking about what are the answer -- the uncertainties. geopolitical risk and then after the u.s. elections we will have more information and then we can take new concessions. lisa: you are saying you are open to a range of decisions you are trying to be open-minded. are you open to even an outsized rate cut or do you think it is important to go in 25 basis point increments. joachim: i will not speculate because i think this is not helpful and we did our job in a way over the past 2.5 years that gave clear indication that we are thinking from meeting to meeting.

data-dependent in an uncertain world. and i will stay on that course and react and decide when i have new information. lisa: there has been a lot of discussion about how the federal reserve is a dual mandate that -- federal bank and there is his focus on inflation and unemployment and the labor economy. do you feel like your hands are tied? joachim: i think the u.s. is a success story over the last 25 years now, and we are not a political or fiscal union or a capital market union or a banking union. our single mandate is price stability. and we achieve price stability over the course of the last 25 years. and so we should not change our strategy and in the face of really complicated monetary policy. lisa: some people would argue that for many years the ecb was

combating deflation risks and it was price stability in the opposite direction. where are you on that? joachim: in the period of deflation we were flexible and changed our ways and we are doing monetary policy. we introduced new instruments and showed our capacity to adapt to a new situation and that -- and we should not forget that. because the 24th of february in 2022 when russia started the war against ukraine and then we changed our strategy and we hiked 10 times and inflation went up more than 10%, it was a very complicated situation and we did well. i really have to repeat myself here. lisa: this goes to the question of are those tools in the toolbox? do you see where we could go back into negative rate policy? joachim: i do not.

this was very exceptional and very special circumstances. i see the scenario that we are coming back to the target of 2% and then we are ending i do not know where. if this is a discussion about the neutral rate, i cannot tell you where it is. this is dependent on the data. lisa: when it comes to germany's economy it has declined in terms of growth and contracted, what do you think it will take for it to grow again? joachim: first of all the german economy can do better but i have been surprised that so many see the german economy so negative. that is not the case. the last two years were complicated and the german government did manage to overcome some of the energy crisis in 2022. there is a certain probability that there is stagnation or slightly negative. but next year in the imf it is

forecasting that we are going to the past of 0.8. and this is not as bad as some of us address it or are commenting on the term. lisa: do you think it is inaccurate to talk about structural talent? joachim: yes, there are structural issues and we have to do our homework. we have to do more investments and we have to invest all of the future new developments into ai digitalization and overcome our problems. there are several things we can do and we know how to do it and we should not forget in the past , taking the experience from the past, this is a very capable one. we should not underestimate the german economy. i am positive that even the imf

today said it, we should not underestimate germany. there is a good chance that we can more or less basically come back. lisa: if donald trump gets elected, do you still think that that comeback chances equal? joachim: as i said, i will not speculate. lisa: you have to have outcomes. thank you so much for being with us. the president of the bundesbank. jonathan: thank you and we appreciate the conversation. let us have a note on what we heard from a german official of the central bank. headline inflation has a one handle. the euro zone pmi's came out in the 40's and just south of 50. the german economy is stagnating. are we going to contract into the end of the year. one of the biggest industries are the oil market. some of the biggest car companies are talking about cutting. in the headline comes from the

president, we should not be too hasty. she asked the question are you constrained by the single mandate which is inflation. if you had other things to focus on you would look around you and thank this economy is in a mess and need support. annmarie: he is doing his best to say that germany will not be too bad. but given the data that you referenced and what the auto industry is doing, it is looking dark and bleak. it is the rest of europe holding europe up. it is the periphery holding europe, not germany. jonathan: economic history will be the judge if this is the right approach. look out for this, lisa speaking to the former ims first deputy director. john dugan and jason thomas coming up on this program as well. we will catch up with jim, mohamed el-erian, neil. and robert second of citi. thank you for choosing

bloomberg, this was bloomberg surveillance. ♪

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>> coming up, southwest gets a needed boost in third quarter trofts as it tries to fend off a fight with activist investor. matt: and tesla delivers a blowout quarter. strong sales growth for next year as well