>> there is a sense markets are increasingly worried about some kind of fiscal risk. >> companies are less optimistic than they were a few quarters ago. >> i would say that is happening. >> we are going to get growth. >> corporate america sitting there saying i'm in a pretty good position, the economy is doing well. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: live from new york

city this morning, good morning for our audience worldwide, bloomberg surveillance starts right now with equity futures on the s&p 500 looking to snap back from the week of losses on the s&p 500 going into an absolutely stacked week of earnings. it's the best week of earnings season. microsoft, apple, google and meta. economic data with payrolls on friday. the high is 164, the low is -10 k. >> how muddied is the water gotten. saying that strikes like -- hurricane milton probably cut it by 25,000. to me the biggest potential surprise is an upside surprise or presenting strength. >> also the wide margin of these

calls, how bad was the hurricane milton effect that it would be a -10 print. also interesting in this data is the revisions from the blowouts hurried are they revised lower or higher at 254 thousand. all this comes eight days away from the u.s. election. all this will drop when we have u.s. presidential election and then the fed meeting potentially not knowing the result of that. jonathan: a lot to get to including this move in the oil market. wti seeing no move right now. limited strikes on iran. >> a sigh of relief in the oil market provided by the fact no supplies were disrupted. israel decided to directly attack iran they did not go after civil, nuclear or oil facilities so the market is breathing a sigh of relief. you of the administration, out friday talking about that they think this is the end of this direct cycle between israel and

iran you have to think the end until when. >> is this de-escalation? going after some sick military assets including their possibility of making fuel for some of those long-range ballistic missiles you have to wonder how much this really is the end of the conflict and how much it de-escalate and frankly very much in the court and it's not clear how they will respond. >> in absolute terms it's not good. jonathan: markets work anticipated the real possibility energy infrastructure. the fact that they did not strike that over the weekend, we are down five to 6%. >> fair enough, this market is binary. we can put it off and evidently that's not good to be imminent so that is absolute this relief they are seeing. >> boeing is down 9/10 of 1% in the premarket. boeing is considering a $15 billion capital raise. go to be the largest equity raise and the last four years. >> trying to stave off some more

time and potentially getting downgraded as the strike continues. even if they do get some sort of reprieve from the downgrade, how much can they really get confidence from their investors at a time where it's not clear the wall street journal reporting they would invest some of their aerospace intergalactic -- the starliner. but that to me really highlights what's on the table and potentially changes that. >> historically the starliner is part of american history so that would be huge if they decide to look at options potentially selling this asset. there was one thing we learned over the weekend. potentially raising those funds and third the department of labor going back to the drawing table with the union saying you have to get back to the table. this is the seventh week of those workers on the picket line. >> here's the asset class to watch. on deals this morning a little

bit higher up by two basis points on the 10 year. the climb consumes. >> it's not only supply but we also get quarterly finance on friday. we have a stacked lineup of options and i want to say it's unusually staff -- stacked because they brought forward a lot of the options. $70 billion per that's just today. and then tomorrow we get $44 billion of seven your notes all of the time where it's unclear the long-term trajectory for the deficit as well is inflation. this is a significant concern. i think this is important. despite the election looming, bond vigilantes and earnings are likely to be bigger drivers of this market than anything else. jonathan: that was just for you. bond vigilantes in just a second as well. looking ahead to a busy week of economic data. former u.s. ambassador to switzerland -- and norman of csi

s following this limited attack on iran. traders looking ahead to the data point before the fed's next decision. payrolls do on friday. writing that the meeting suggests 50 basis point cut that occurred was too much too soon. that raises the risk that price inflation might start moderating and the stock prices might continue. welcome to the program. let's start with the stock market. are you calling this a matter. >> we are looking at the multiples that are getting right up there close to where we were right before the tech wreck in the late 1990's. we saw that at s&p 500 up to 25 now we are at 22. 80 starting to look like it. jonathan: we have seen bond yields back up as well.

can we fold the election into this conversation as well. do you think a gop sweep would open the way for a new move toward 5% on the 10 year. edward: it is conceivable scenario. the bond vigilantes definitely mounting up. the low bond yield the last few weeks ago was 3.6 5% and now we are at 4.26%. we got four point 28 product -- 4.285%. i think there's a possibility here that if we get a sweep, either the democrats or republicans the bond market will conclude that nothing will stop either party from spending a lot and may be cutting taxes a lot for some folks not for others. all in all continuing to weigh the deficit and the debt. interest payments continue to accumulate we will probably hit

$1 trillion making headlines in the next few months. >> it's a very compelling argument. >> and last week i was in with all these international central bankers, where do all of their clients want to put their money even with all of these concerns of the u.s. election, the deficit, united states we still want to compare so what's can make people say we are done. edward: it is a good point. the dollar has actually strengthened at the same time as the bond yield was going up so that suggests there are people concluding if the fed -- if the bond vigilantes that they don't want any more rate cuts rather than thinking was premature. that strengthens the dollar which means people aren't buying these bonds. i would not get too excited about the bond yield going up to 5%.

it seems to be looking more realistic than it did a few weeks ago and a few weeks ago we thought the fed did the cut prematurely, that the economy was good surprise to the upside and that's what's happened. >> people used to think higher bond yields would excise a pretty big tax on equity valuations. what we've seen is this melt up continuing despite the melt up in yields. what we've seen is a change without rotation being challenging to small caps. do you think that that is what this is going to look like until year end. >> if in fact the market is starting to perceive that the fed is going to not ease as much as they thought on the 50 basis point cut on september 18, than i think the market starts to cool off to the idea of the russell 2000 will outperform and go back to the s&p 500 maybe even go back to those

magnificent seven stocks. and look, to john's point, i don't want to get too worried about a melt up here and evaluation basis, if it turns out to be an earning step melt up we certainly have tesla for example maybe it wasn't so much earnings as hype, but as you folks point out this is good to be a busy week for earnings and we have some upside surprises on the magnificent seven which would drive the nasdaq to further record highs. even in the face of bond yields going up. >> i want to get back to where you see bond yields going. we could get higher yields regardless if it's a republican or democrat sweep when you look at how senate races are looking to go it looks like you can take the sweep off the table. if this good to be a it's likely to be read. tell us what that could mean not just to yield short-term and long-term but also other assets. >> it gets as confusing in terms

of policies are confusing. the idea of raising tariffs across the board and against china 60% is probably a bargaining position but it's hard to imagine this administration would get advice from its own economists saying that would be a good idea as it certainly would be inflationary. so bargaining chip for the dealmaker trump would make sense, but as a realistic alternative to taxes on incomes, it doesn't make that much sense. on the other hand, trump wants to produce more oil to the disinflationary for the u.s.. but there's no discussion about doing anything to reduce the deficits to deal with the exploding interest expense of the government. so i think the bond reaction to

the sweep as i said by either side you are right, the sweep is increasing. if it's can happen it would happen with trump winning because of what you said about the senate and the house and in that scenario the bond yield i think easily goes to 4.5%. >> take us through what can happen if this election drags on or is contested. edward: i don't even want to think about that possibility. the country is so partisan we've been kind of but driving ourselves with the political partisanship and to have a closely contested election would be very unsettling to the bond market, to the stock market, to all of us i think and we would be resolving obviously at some point we will have a president but in months it could be the rest of the year will not be a great one for the financial markets. >> that's the market nightmare very few want to see.

thank you sir. equities doing better this morning up by 6/10 of 1% on the s&p. here's your bloomberg brief with dani burger. >> the yen weakening this morning a three-month low, japan's ruling coalition failing to in the majority in parliament for the first time since 2009. the concern on political instability could translate to a less hawkish boj. the prime minister restore stability indicating he plans to forge ahead with putting together the administration and continuing on as prime minister. shares are falling and the japanese traded company pushed out its ceo after investigating allegations he purchased illegal drugs. he was on the job for less than two years and resigned all positions effective immediately. he is best known as a designer of cameras and imaging gear before heading into medical equipment. the company cited the ongoing investigation. indonesia has blocked apple from

selling its iphone 16 in the country. officials say the company hasn't met local investment requirements. apple ranks outside the top six smartphone brands in indonesia and its potential growth market with a young increasingly tech savvy population. that's your brief. >> a little bit of breaking news out of germany coming from the vw labor chief. volkswagen seeking to close at least three german plants and downside all remaining plants in the nation. some big news potential for volkswagen. lisa: this was somewhat expected just because we have heard warnings to that extent and it's interesting we have not heard from policymakers what they can do. this from the council chief also said -- it on vw supervisory board. more products and quantity shifts an entire assembly line far beyond what we've gotten so far. >> is this the start of a bigger negotiation with interested

parties. >> there is good to be an even greater push saying if you want this industry to be here and to be thriving you need to provide us some help. jonathan: oliver crook out of berlin joining us with the story. up next on the program donald trump headline in the garden. >> we must defeat kamala harris and stop her radical left agenda with a landslide that is to big. you are fired. >> that conversation up next, live from new york city this morning, good morning. ♪

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jonathan: live from new york city. equity futures up by 6/10 of 1% on the s&p 500. donald trump headlining the garden. >> we must defeat kamala harris

and stop her radical left agenda with a landslide that is too big to rig this election is a choice between whether we will have four more years of gross incompetence or whether we will begin the four greatest years in the history of our country. kamala, you are fired, get out. jonathan: donald trump and thing up supporters at a packed madison square garden during a nearly six-hour rally. the former president was back by dozens of speakers from elon musk to house speaker mike johnson. joining is now around the table former u.s. ambassador to switzerland, irv mcmullen. good to see you. we've got to start unfortunately with a comedian called tony hinchcliffe who made some disparaging marks about puerto rico. how unfortunate is that this event is being overshadowed by

that and what's your reaction this morning. >> i think the american people are smart enough to sift through the nonsense. there were probably 30 speakers that spoken coding the president and the vice president all of whom were focused on the economy in the future and for the media to fixate on one comedian who i never even saw, i was in the motorcade with the president. he got on early paid never even heard him speak so i don't even know what he said but i can tell you now with everyone else was saying was right to the point, a right to the heart of what americans care about. annmarie: with all due respect it's not the media, it's the republican party. you had senator scott of florida coming out denouncing those comments. you had congressman anthony d'esposito of new york forum who's in a very tough race who is puerto rican coming out and announcing those comments. isn't that a failure so close to the election? do you feel like this could be that hillary clinton deplorable moment given the population of puerto ricans in florida,

pennsylvania, in swing districts like new york. ed: i think the president directly addressed yesterday are you better off today than you were four years ago. that was the heart of what that rally was about. and i can tell you the american people understand a comedian who makes remarks that were clearly not acceptable remarks people have denounced them i think we've heard people all over the spectrum denounced them. it's not going to take over a rally that was historic. i was with the president and the motorcade from the tower, hundred thousand people lining fifth avenue cheering on the president in manhattan. that's the story. that is a major story. and it's not good to be a comedian who started off early on in the evening when no one really saw. now we are seeing it today he's probably the most famous comedian in america today and i'm sure there will be plenty of

making but we are knocking to talk about that. we are to talk about what matters to real americans. real americans donald trump spoke to this. the african-american community and when i went down on the floor because i got out on the floor to see with real people were saying. people from all over new york and new jersey, all over the area. really ready for change because they are hurting. their economic well-being has been captured over the last four years and they are ready for a change. annmarie: last night really fell at the rnc part two and you are the former first lady give a speech which he did not do at the rnc. do you think he is making his closing pitch too late. that moment are you better off today than four years ago, shouldn't that have been the pitch at the debate against vice president harris. >> i think the president has made this clear from the outset. are you better off today than you were four years ago.

starting at the first thing he said when he got to the podium. and i think the american people know they are suffering. i live in south carolina. you can add it to the countryside. people can pay eight dollars for a pound of bacon. they can pay $50 to go to mcdonald's. this is the real world. donald trump is speaking about it, addressing it and he has a plan to deal with this. we have heard nothing from kamala harris. lisa: all due respect there is more than 80 page document that it's his economic plan and we have are economic plans and have talked about that. so there is a plan she has and she's laid out. i don't want to let this go because there was a question about what that rhetoric does because it was also tucker carlson calling harris samoan malaysian. there's been an ongoing discussion trying to cascade the other side with certain types of pejoratives. i'm wondering what tone you think that sets. ed: personally i think the real focus here is the future of

america. and i'm not can get drawn into a conversation about what other people say about other people. it's done on both sides. donald trump was called adolf hitler paid where's the outrage. the outrage is always been republicans have something to say don't agree with what was said. but i can tell you we argan a focus on the things that americans care about. we have focused on it, the president is focused on it. it's the reason he is winning in every major battleground state right now today. and it's the reason he will win reelection. lisa: you talk about focusing on economic policy. talking with $2 trillion in cuts to federal spending. we've heard this discussed for. if this is something going or memo any was in take over twitter and said i was can a/all the employees and he went in and slashed more than 80% of the staff. is there a plan to actually do that type of effect. >> it's actually open and it's

changed its name, it's a completely different company paid its efficient. i trust elon musk to make the economic decisions. elon was asked that question how much do you think it wasn't a plan. at $2 trillion cut is what he says he thinks is the fat in the government. it's not the trump plan. however i do think elon musk last night the reception he received was mind-boggling. because these are not new york and washington political people. these are real people from all over america. i think they respect that he respected free speech and the kind of company he has. he's an entrepreneur of major -- and the fact he's can a player roll in helping the president set the economy straight in the united states is something a lot of people are excited about. annmarie: you've said at this intersection close to the former president where you get a lot of

calls from foreign dignitaries but also a lot of individuals in the business space. over the weekend donald trump shared a story about the google ceo calling him up and saying how great his stunt at mcdonald's was and how much of a hit it was. are you seeing a shift in big business towards willing to make sure they are preparing for trump 2.0. ed: one of the big surprises i've had in the last week to 10 days is democrat friends of mine who own businesses, entrepreneurs who supported kamala harris and pretty much said -- they found a way for them to do it. annmarie: but they believe in him or they see the writing on the wall. ed: i think they see the writing on the wall but also realize the economy is the future. and americans know that this economy cannot continue. we say, has a 60 page plan, where has that been for the last four years. where has she been for the last four years. suddenly there's an epiphany on

how the economy. donald trump stunted he had four years to do it and that's why think the american people realizes the answer to the future. >> you are always generous with your time, we appreciate it. it's good to see you. ed mcmullen, former u.s. ambassador to switzerland. you can sense that shift in the >> last few weeks. >>not just from google but i think really from amazon's jeff bezos. not only now in the washington post -- not allowing the washington post to go through the endorsement they had written for kamala harris but also these reports that there's been conversations. >> up next on the program the latest out of vw from berlin we will catch up with ali crook and speak to desha speak on israel's limited attack. this is bloomberg. ♪

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jonathan: snapping a six-week winning streak last week. equity futures looking to bounce back on the s&p up by 0.6. this week, basically all the big tech reporting earnings with the exception of nvidia. this small caps by 0.7% going into the jobs report friday. the estimates are all over the place. this will be a noisy one. rbc, bloomberg economics looking for negative 10 k. if we get negative what we do with that.

by the bond market i don't know. two-year, 10 year, 30 year. two-year yield back to 411. up to 110. lisa that would be my question on friday morning if you get a really soft print is this market can a look through or not. >> it depends on what the >> unemployment rate is. >>a lot of people saying there's more emphasis on the unemployment rate as a proportion of what this labor market distortion might be. a lot of people are looking through it. fed officials have said it's the totality of data. they argue tomorrow's jobs data, the opening report puts numbers argan have outsized influence on just how we look at friday. jonathan: brett writing talking about that being the last clean data point. for the month of september because this one's a little bit dated before they go into this mess for october. >> i think people are looking at that at earnings reports some of

those out of the c-suite. and sort of guiding how to view just how messy this report is because everybody knows. jonathan: crude is lower by 6% on brent and wti. brent crude down to 7152. wti down to 6736. >> can you imagine any other time we weren't living through this cycle of violence and conflict in the middle east where israel would have a direct attack on iran, annuity oil prices pulled back. the market was potentially baking in israel hitting infrastructure or nuclear infrastructure which would've been a massive spike. you see a pullback. >> coming up later on this story. here out of volkswagen. out of berlin purred what's the latest this morning. >> we've been talking about the

woes of the manufacturing. what we've got today is the proposal for volkswagen, the brand volkswagen with the vw print on the front. what they're actually can -- intending to do without. and john they are absolutely huge talking about cost savings of about 4 billion euros. talking about blanket cuts of workers at volkswagen by 10% across-the-board we are also talking about the closing of three factories. this is a company that has never in its history once closed a factory in europe. talking of a closing three in its home country. potentially one in belgium as well. this will be potentially tens of thousands of job cuts. just to reiterate volkswagen talking about closing three german factories for the first time in its history and germany. >> it's the other big players in europe as well. i wonder this morning whether this is really the start of a much bigger negotiation in

government. get your act together and provide some state aid or this will happen pretty soon. >> i just interviewed the ceo earlier in studio this is the biggest supplier to the automotive sector and heat what we heard from him is what we've heard from a number of executives, what they need to do is not be so focused on the supply side. they need to stimulate the demand side and this is something that will come home to roost in a very real way. we've been talking about contraction on pmi charts. the reality of what's happening is now can ago from the pmi charts from the balance sheets the can -- kitchen table and tens of thousands of jobs, volkswagen employs three and thousand people in germany that can have a huge economic consequence to say nothing of the political consequence. in terms of where voters will feel and what they will vote for. >> it seems like the german society has this entrenched feeling of not becoming indebted, of not being fiscally responsible.

that was the tone we've been hearing out of executives from the president to going down the pike to the central bankers. have we heard signs to potentially get a shift. >> what we've heard from these -- one two thirds of the coalition from olaf scholz and the greens they've been talking for a long time about having to reform this debt break which is part of the german constitution. changing nearly two thirds of parliament it's a big thing in order to be able to be effective and that's what constrains them on borrowing. you have the fdp, you have the finance minister still holds the finance ministry said no way. now the opposition likely to be elected. they are never get a budget on this. the question is will the severity become so large they are forced to do something. they did manage to make some of these exceptions when it came to covid and defense and doing some special funding.

and the potential strikes as a consequence of these bargaining's i think may -- things may have to change. >> are beginning get strikes for at least an hour today at some of these plants. >> again just to bring this, the reason they aren't out not working on this there -- this is across 10 bmw plants. but to listen to what the workers councils are telling them about what management is trying to do. and she just delivered this information we've been given 10%. potentially closing and putting all their jobs at risk. this is what they are looking at. obviously all those people will go home without fear of potentially losing the job but also the reality this could be a taste of what is still to come. they could do warning strikes as early as the first of december. jonathan: appreciate the update on the latest with vw. supply versus demand so let's start with the supply side of the equation.

this came from the team here at bloomberg news analyzing some of the data on the continent. from euros five largest automakers. reducing fewer than half the vehicles they have the capacity to make. the threat is to reduce capacity. the solution that they are looking for is something to basically trigger demand. do something to incentivize purchases across the continent because if you do not we will be cutting fast. >> the timeline is of important. executives of stellantis saying this needs to happen now or they have to start cutting plants now because they are losing money. how willing is some of the leadership of the chancellor or whether the parliament can come together and stave off some of these closures. >> here's the latest on crude. oil following israel's limited attack on iran avoiding the country's production facilities over the weekend. the attack in response to iran's

missile attacks three weeks ago. a senior you -- intelligence official joins us. welcome back to the program for a die heard a phrase this. normal. do you get the sense this is the new normal. between iran and israel for the time being. >> good morning. we will see this is the new normal for months to come until iran can be convinced to seize -- cease attacks on israel and israel has reset deterrence in the region. >> what's good to be ron's response. the administration thinks this direct confrontation has been closed out, iran is saying they will respond. >> several of iran's leaders have said they are considering the sort of response they are to take. iran needs to undertake three actual steps simultaneously. they have to determine what exactly as happened in their country. what defenses are left, what does this mean in terms of their offensive capability.

the israeli attacks did very little we can tell to stop iran from conducting multiple missile strikes in the future. but nonetheless iran's air defense was so severely hit that israel's counterattack could be severe. at the same time iran must maintain the diplomatic offensive trade with nations in europe, saying we are trying to be reasonable. you must pressure israel to pull back and they're not going to want to shift u.s. elections in a way that would make the united states more hostile. iran needs to support the cease-fire in gaza and lebanon for ron's pressure campaign the long term to succeed it needs its proxies in gaza and lebanon to survive. >> if there was a cease-fire agreement that it could end the direct hostilities between israel and iran. >> in the short-term, but the april attack by iran on israel erase the important redline that

neither country could attack the other directly. that is gone and we've now seen several instances where ron and israel have struck the other parade we are in a new normal were such strikes can become more routine. it doesn't mean each week but it means several times a year. we have to keep in mind strikes don't have to be vast. they could be much smaller. iran could launch a few missiles or drones to say is this something israel would respond to, we are off the map in many ways. >> there have been a number of red lines that have absolutely evaporated over the course of the past year. are there any red lines even left. >> it is uncertain. it's likely iran's decision to build a nuclear weapon would be the last redline that needs to be erased. the challenge for iran is that the united states and israel more importantly seem to have exquisite intelligence about what's going on in iran and israel is just demonstrating it

has the capacity and willingness and capability to conduct at will vast strikes against iran's nuclear enterprise. if your iran you make a decision for the nuclear weapon the question you have to ask is can you get away with it before israeli missiles and their craft destroyed the facilities and the personnel involved in the program. >> do you have a sense of whether this is a medium-term tactic before setting the stage after the election pray this was an effort not to really change the decks ahead of november 5 but after that the gloves are off. >> possibly. but it is unlikely. what israel did was they moved up on the escalatory ladder. in essence in april this it we can touch you from inside, leave us alone. now they have said we can touch you at will in a number of locations, please leave us alone. it depends upon what iran undertakes. after an election i'm not sure israel believes either a harris

or trump administration would be interested in actions israel might take but would involve the united states in a long-term and expensive conflict in the middle east. >> this could possibly be the end, that essentially if israel new tours some of its adversaries in the short term that there could be some sort of deal and that we are significant we closer now than we were even two weeks ago. >> if iran does not attack, and israel believes deterrence with iran it has strategically neutered hezbollah and hamas we could be in a position where israel might be willing to say this is a victory of sorts and allows cease-fire proposals to move forward and a peacekeeping forces to move into southern lebanon and into gaza itself. annmarie: you mentioned the election. you said you think either administration obviously would not be interested in being dragged into a long-term conflict in the middle east. but there is reporting that

former president trump apparently gave his support and that in yahoo! in a phone call saying do what you need to do. -- apparently gave his support to benjamin netanyahu in a phone call saying do what you need to do. >> it should be interpreted more as to what you need to do to end this problem. but it does not mean the united states wishes to involve itself in a very costly and unpredictable conflict which was first reached on global economic and political consequences but the trump administration based on its actions against cost of soleimani is likely to support robust actions by israel against its adversaries. jonathan: norman, appreciate your time this morning. former senior u.s. intelligence official at csis. wti down about six percentage points. with an update on stories

elsewhere with your bloomberg briefed pre-here is dani burger. dani: mcdonald's is bringing back the quarter pounder. it will return to restaurants at all -- at all restaurants this week. the infection appears to stem from the slivered onions on top of the hamburger. the company has stopped selling burgers and about 20% of its more than 13,000 restaurants in the u.s. ended will return without the onions paid eli lilly expects to sell its weight loss drug in hong kong earlier this -- later this year. it remains unclear when it plans to launch the product in the country. its arrival is already selling its diet -- diabetes drug in hong kong. the world series resumes tonight. game three set for 8:00 p.m. eastern in the bronx. the dodgers have a two games to

zero lead. more than 14 million viewers on average. it is a seven year high. the yankees are hoping for a boost from aaron judge who has just one hit in the series. it will look to turn things around. the next three games in new york city. jonathan: tickets on sale in the bronx later on this afternoon. they are not really paid -- really. annmarie: history is on the yankees side. if you look at how they played against the dodgers. the team that was up in the first two games of the series lost the series. 1981, 1978. jonathan: i thought we would be having a moment of silence this morning. lisa: i thought we would talk about british football. jonathan: i thought you would want to talk about the yankees. lisa: i've moved on. >> the bullish case.

for the u.s. dollar. >> it's quite clear the dollar has to keep rising. if donald trump wins and you did not hedge for it in the book they will tap you on the shoulders. >> that conversation up next, live from new york city this morning, good morning. ♪

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>> into the election it's quite clear the dollar has to keep rising for three reasons. swing states are moving in trump 's favor. you have the data surprise in the u.s. and third is that tap on the shoulder moment if donald trump wins this election and you did not hedge for it in your book, bill tap you on the shoulder and say what you doing. strengthening from 157 in dollar-yen. if that was to happen. >> the dollar strength coming into the final week of the u.s. election trying to sway the economic impact of both candidates writing we have painted the election is a binary event with massive tail risks on either side. the data favors the dollar regardless of who wins. suggesting buying dollar dips into 2025 even if harris wins. mark welcome to the program. give us the best case outcome. and give us the worst case outcome for the u.s. dollar. >> it's a binary bet with like

two large tail risks on either side. the most bullish for the dollar is a red wave. you get tariffs immediately. day one is soon as trump takes over. you a fiscal support and deregulation. all the things that are great ingredients that are cocktails for outperformance in u.s. equities and on the others the thing that confuses the market the most or is most bearish for the dollar it's probably the most unlikely scenario about 10%. largely again what you can do is undermine the equity market. the most important thing to think about for this election is the number one thing that's been driving the currency market is not rate differentials its equity market performance. >> with that in mind, what do you think is outperforming already pricing in the election outcome because a lot of people are looking to financials and saying maybe that leads to a trump win and maybe that's overdone and maybe we get a reversal of that. do you see any sign of that taking place with that in mind.

>> i think one component we talked about this a lot this entire year there's really no backroad feed driving markets. we talked about inflation and then growth. now we are talking about inflation again. so the number one factor we see that is kind of underscoring what's driving market performance is we expressed positioning. i want to highlight that through we saw recently in the dollar. the dollar was a short our positioning models so we had the perfect storm on u.s. data. which is happening through most of the summer. we've also seen again the fed took a huge risk by cutting 50 basis points. and now we are seeing that backlash a little bit. also again the positioning was built in to a single narrative which was only about the slowdown in the u.s. economy. all these things of come back to markets and they were positioning correctly. leaves us again very focused on the months or six weeks of data

that catches markets off guard when the pendulum swings too far in the other direction. a big piece of this right now is the dollar looks fundamentally positive. data is doing better than what we are seeing in europe and china and i know markets are focused on the china stimulus package. that's a second half of 2025 story things will get worse before they get better so again the key theme here is the macro situation is evolving into what is more bullish fundamental story for the dollar regardless. lisa: some are skeptical of the dollar .2 gold and say it's been a moonshot because people are worried about the dollar. i'm worried about the idea that people have faith this can be the river -- the reserve currency. do you look at gold given the fact it's doubled in price since the past five years if you take a look at that, does it make you would all concerned about this dollar call? mark: it doesn't.

what is interesting is what are the assets people want to hold in an environment when there's geopolitical uncertainty dealing with structurally higher inflation for the pandemic. in a world where what are your bigger risks. recession or higher inflation. and i think in that environment, more people are focused on hard assets and those provide a decent hedge relative to fixed income. i think if you were to think about what's my asset allocation mix you want to belong u.s. equities which gives you exposure to the u.s. dollar. if you think about an asset allocation in the election piece for next year is asia has the ability to grow their economy. they have savings at the rest of the world. europe does not have the ability to grow its economy so we talked about the pieces, france is spending too much, and germany does not spend enough. if you thing about the mario draghi report everything that's coming out of europe is focused

on the industrial audio sector which is something there's a reason why tariffs are being put in the sectors and china's the world's largest exporter right now. so we think about the growth in the equity and all of the stories. the u.s. equity probably the risk adjustment relative to other classes. we could see a rotation to asian equities. that still leaves europe far behind everywhere else and gold is still an asset to hold onto. what we are seeing is ported in with inflation above target. >> just got some breaking news on going here for mark mccormack. the latest on boeing launching $19 billion share sale meant to address the troubled playmaker liquidity needs and potential credit rating downgrade. the latest reporting this morning. >> about $5 million of depositary chairs.

and basically this would be about just under 19 billion facing the share price on friday. the real question is as we parse through this about how much liquidity they are raising and what they are giving in a decent term. >> the stock is down by 40% so far. down another one third of 1% in the premarket. a little bit later this morning. we catch up with victoria fernandez, henrietta of veda partners and tom of rbc with the latest news out of bw. a real threat to close down plants and offer pay decreases as well. then we catch up with joseph endorsing the vice president, harris pre-plenty of thoughts on why he believes she has a better economic plan. in the bond market bond yields a little bit higher up a single basis point. 425 on twos, 411. massive week for tech earnings. the second hour of bloomberg

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>> this economy is performing better than expert to have reasons to expect. >> we are simply growing better pray look at the imf revisions. the u.s. up. >> there's a bit of a disconnect with a lot of the data points that have been coming out. >> we know it's potentially of an important inflection point depending on which way u.s.

policy goes in many areas. >> up place has landed. >> lisa abramowicz and annmarie hordern. >> the second hour of bloomberg surveillance starts right now as we come into monday after snapping a six-week winning streak on the s&p 500. the first weekly loss in the last seven. equity futures on the s&p 500. on the nasdaq up by .6. this is often our favorite week of the quarter. the favorite week of earnings season. google, meta, microsoft all coming up through the week. after we saw tests to kick off the mag seven. that name was up by more than 20% in a single trading day. if that was not enough, we have this for you as well.

a shed load of economic data climaxing with payrolls on friday. i think it's worth doing so again. we've inched down as we get more survey estimates. 110 is the median now. i think going back to this for a reason. from bloomberg economic speaking about in one hour and 45 minutes looking for -10 k over at bloomberg economics. lisa: hurricane influence and the strike influence which is reason why you ask the right question, how will the bond market respond and could the potential bigger surprise be upside and ultimately a lot of people are looking at the unemployment rate in the internals of that data to understand a little bit of the cleaner read in the report coming up tomorrow to understand the last clean reading of economic data for that report. annmarie: we seen the treasury yields climb and everyone on this program last week said the bigger surprise will be to the upside. everyone's going in with it

baked in being a low. everyone saying it's good to be low because boeing is on strike. you of hurricane impacts as well. everyone expect a week data payroll report. >> deutsche bank looking for 100 k. that's their estimate. the striking workers that reflects a 44 k drag from striking workers paid 33 k of which for boeing. let's talk about boeing and the premarket softer by 1/10 of 1%. is this your kitchen sink moment for this name. launching a nearly $19 billion share cell to address the quality needs and prevent what they've been trying to prevent the last few months. lisa: the news just dropped. i have no idea. it is unclear to me exactly how much they will raise and whether this is can it be what they need be injection to really stave off that downgrade to a junk rating. it's clear they need to survive and do a lot of structural

changes to their business. is this just buying time before they get another agreement. can they get the people back into the doors to work. >> futures backing off just a touch. up by 4/10 of 1% on the s&p. this bond market move yields higher by a single basis point. coming up this hour. across market stocks look to bounce back from last week's selloff. henrietta with one week to go until election day and time to run wrapping up earnings for the automakers. begin with stocks looking to rebound from the first down week in seven as investors look ahead to the payrolls report. victoria fernandez across mark loeb investors saying we don't want to stand in the way of forward momentum these reports represent. we can see warnings slowing down is possible preyed victoria joins us for more. let's get straight to it. one assigns things are slowing down. >> i think most of that's good

to be coming from the labor market. we know the fed is focused on the labor market right now so i think it holds even more potential there to drive the markets. so the jolts report tomorrow i think is good to be key. it will tell us what hiring looks like. we know hiring has been frozen. temporary jobs have been coming down. the labor differential is thriving and it's quite negative. you look at small businesses, the nfib report and they are saying look we are not to be investing so capex will be coming down. we are seeing the skill set mismatch so it is hard to find the labor that we need. they see revenue coming down and we are seeing that in earnings across the board beating on revenue has been very slim for some of these companies yet they are able to come in and be on the bottom line so revenue is a concern which means margins are a concern and they are losing their pricing power.

there's a lot of elements here that are affecting businesses and consumers and with a consumer driven economy i think we have to be concerned that a slowdown could be coming. >> hiring is down, anxiety is up. you mention the labor market differential. you see that impact economic outcomes to a degree. i don't see it in retail sales but you see it in topline revenue growth. is there a reason to back away from consumer facing companies. >> i think you have to be cautious when you are looking at these companies. there are some with strong balance sheets that are going to do well here in this holiday shopping season. and you can still have some exposure there but i do think you have to take a step back and say where are you probably going to see people pullback the most we know high-end consumers of the ones that are holding up this economy and they pulled back from the luxury outcomes. we've seen it in irma's and others. they are moving into median

income levels sources that typically aren't there go to places. it's a perfect reason why walmart has done so well because you had higher income consumers move and become more their customers. so yes i think you have to be careful when you're looking at retail but surveys are saying the consumer is going to spend 8% more this holiday season than they did last season. which is kind of hard to understand when they are struggling but at the same time nerdwallet came out and said 28% of holiday shoppers have not even paid off their gifts from last year. it puts a real question mark on how strong the consumer will be heading into the new year. >> and the american culture that has supported a lot of this and frankly the strength we've seen. i'm curious what this means for you. it does not sound like you are willing to pull equity investments or anything of the like and go into gold and hide. i wonder if we are starting to

see the change in leadership back to the idea of magnificent seven leaning once again. are we seeing the death of the very brief rotation out of mag seven into the 493 others. >> i'm not sure we are seeing the death, but this week we know we have five of the mag seven reporting. tesla reported and knocked it out of the park so are those names going to take leadership probably here in the short to intermediate term yes i think they will be driving the markets whether it's positive or negative depending on earnings. but if you look at some of the sectors, financials continue to outperform on a relative basis. you've got for the financial sector as a whole over 90% of those names making 52-week highs right now. you look at tech and that number is way down from there. the numbers close to 50, 50 2% and semi's are lower than that. i still think you have financials, you have industrials

that are leading but could we see some short-term shifts, this week especially with the earnings we have. i think we can. >> how difficult is it understanding some of the leadership right now. with respect to financials how much is that an issue with the election and the leadership in the race, donald trump potential he winning versus the increasing yields, stronger performance, better-than-expected economic data to the upside. >> you normally see financials perform better following the election so you do have one if you look at 2016 and use that as a guide. some of that being pulled forward right now to financials doing really well but we will see that taper off. we just don't know. yields are moving higher at the same time the equity market in general is moving higher. the trend is still higher which tells us the market is being led by growth so where are those inflation scares, they are not there as much anymore but where

you argan's see scares is in regard to debt and treasury issuance, of refunding announcement this week. let's watch those carefully review typically have yields move higher about six to eight weeks following the first rate cut and then they start to fall again. so let's watch and see how yields behave and if we start to have any kind of effect on the equity market as we get maybe four and a quarter, 430 is that resistance level right now that people are watching. >> you're basically saying what we are seeing financial markets is depending on data not on the betting markets which are posting and potentially a republican sweep. >> i do think the market is saying regardless of who wins, we are going to probably get higher inflation because we are going to have continued spending. i don't hear anyone talking about any kind of cutting and

cost and so therefore we will see inflation move higher. the debt move higher. yields are moving higher based on the election not just because a trump when is being priced in more. i think it sees it regardless of who wins. i also think we are seeing some of the fed cuts priced out of the market. in the city -- it's surprising with the high yields. all of those are pushing yields higher. it is not just the election but i think there is definitely concern in regards to debt and treasury issuance going forward. >> we have a lot of different events this week and next week that a really good to be important for the market. what are you most focused on? >> obviously the earnings that are coming this week these are large companies, we know they've been driving the market for years so we really want to watch and see how they are going to perform. that's really important but one of my favorite things is the jolts report. we've talked about it before.

i know everyone watches the payroll numbers talking about how that's can be affected by a lot of the other items we've had as of late. so let's look at that jolt. are we seeing hiring continue to fall. are we seeing the job mismatch still there. are we seeing openings, down. these are the things that i think will give us insight into the underlying drivers of this market which is the consumer. >> that data comes tomorrow. good to see you paid victoria fernandez of cross mart global investors. welcome to the program equity futures at session highs up .5% on the s&p 500. let's get an update with stories elsewhere. >> just some more details on that boeing breaking news. they are announcing a nearly $19 billion share sale but offers to sell 90 million shares of $5 billion of deposits. the offering confirmed earlier reporting and is meant to address boeing's liquidity needs

and prevented credit downgrade to junk. the capital infusion is necessary to fund its prevention ramp-up with a seven ongoing strike ends. london's workforce is expected to remain below pre-covid levels. the city is still grappling with a workforce that job vacancies in london are stuck at 25% below 2019 upgrades. it's been an issue for the hospitality sector. fewer workers are buying coffee and pints after work. for workers out of london that remains robust. the u.k. regions are seeing at or above pre-covid levels. rapper bad bunny has thrown his support behind kamala harris. the latino superstar showed a video to shared a video with his 45 million followers on instagram after a comedian at donald trump's rally called puerto rico a floating island of garbage. the comment drew backlash from many including florida sender rick scott. a trump advisor has distanced the campaign from the joke

saying it does not reflect the views of president trump. that's your bloomberg brief. >> more in about 30 minutes time. i imagine the person responsible for booking tony hinchcliffe for the opening act of madison square garden for donald trump is in a lot of trouble this morning. >> ambassador mcmullen saying he's the most famous person and took away from the event and could have some serious damage. there nearly 600,000 latino votes eligible voters in pennsylvania, half of them are from puerto rican dissent. jonathan: not the headline that campaign wanted. up next, eight days until election day. >> for the past nine years we've been fighting against the most sinister and corrupt forces on earth. when you vote in this election you can show them once and for all this nation does not belong to them. >> that conversation up from new york this is bloomberg. ♪

>> equity futures this morning up .5% on the s&p 500. here's a snapshot across assets. the 10 year 2520 and the commodity market down by almost 6% on wti. 6758. under surveillance, eight days until election day. >> for the past nine years we have been fighting against the most sinister and corrupt forces on earth. when your vote in this election you can show them once and for all that this nation does not belong to them. >> as i travel around our country there is an overwhelming call for a fresh start. >> for a new generation of leadership that is optimistic and excited about what we can do together. >> here's the latest, donald

trump and kamala harris taking the fight for the white house outside the swing states we are just over a week until election day. bloomberg reporting more registered republicans voted in arizona, nevada and north carolina than democrats. henrietta writing it is distantly possible a victory his name the 2024 election by wednesday. if not the worst case scenario suggest development could come through friday and possibly saturday as was the case in 2020. henrietta joins us for more. do we get a 2016 or a 2020. >> i think we are looking more at 2016. a lot of the disparities and discrepancies, any concerns the local level amongst the electors fully staffed, the 2020 midterm elections they've gone through these lawsuits. i think all the teaser crossed in the eyes are dotted. i'm optimistic. >> what you make of maricopa county election official saying

it could take anywhere from 10 to 13 days. >> they are definitely preparing for us for the worst. i believe arizona and nevada were uniquely were embarrassed by the way i think this time around they will be very diligent and careful about how they are reporting and then hopefully we won't have to depend on one state to know who wins the election. maybe in the house for sure and maybe will take all week to get a solution but i'm hopeful the rest of the country will give us a decisive solution. >> a theme from sources on both sides is democrats are running a very good ground game. but you're seeing a lot of republicans are going out and voting early. are they catching up to that ground game. >> the ground game right now is incredible. in a number of states including nevada there are double the

amount of election day republicans from 2020 voting early this cycle. so this message you saw last night was vote early. the republican party across various swing states including pennsylvania and georgia as well have spent millions of dollars trying to educate voters to vote early, in person. democrats still predominately vote early in mail-in ballots so we are waiting for that data in clark county to match up. what we will need and what democrats will need going forward is to see what the turnout is on election day. in particular this is a week were a lot of younger voters turn out early if they are going to vote. mostly it is rural, white older voters which is disproportionately republican. >> we know once you go out and vote early then whether kamala harris and donald trump you can focus on some of those margins to get out then on election day. you say this comes down to the

suburbs pre-who wins the suburbs? >> the 2016 hillary clinton lost the suburbs and i think it was only by two points but it was enough to lose the entire election. this is the suburbs outside of philadelphia and pittsburgh, key portions of michigan and wisconsin. in 2020, joe biden narrowly winning them by a think two points. he was able to claw back suburban voters. , harris currently leads nationally with suburban voters by six points. so we spent a lot of time talking about the youth latino and male vote. but -- rbc they will be part of the conversation as we talk about puerto rico, things like that but that is what turns off suburban married voter. and they disproportionately vote in elections and they have been the clincher for either candidate in the last two cycles and probably will in the third cycle. they are voting more than they did in 2020 well cities and urban dwellers are opening --

are voting less and rural voters are voting more. the suburban -- the suburban vote is critical. >> are you saying that kamala harris has more support than the polls were giving her. >> kamala harris has more support with voters who matter more because they vote more. they are larger demographic and ones that are persuadable more than anything else per you've lost the cities, those are going to the democrats and you've lost the rural, they are going far to donald trump. it's a voters in the middle in suburbia that are swinging back and forth between 2016 being pro-trump and then 2020 deciding they did not like what they had gotten for the last four years and now under, harris running at the top of the ticket they have swung pretty substantially in her direction and away from donald trump. and what's good to be the biggest bang for your buck population wise to flip these states. lisa: pretty controversial what you are saying based on polling we are seeing in the momentum

and betting markets which would give donald trump the clear lead. where are people wrong in their analysis preyed is it just the suburban voter. or is it something else in terms of what the deciding factors really are. >> i spent all week last week with investors in new york and i would say the street is even more bullish on trump winning then the predicted markets are. last i checked predicted markets were at 61% trump would win. on the street it's more like 70% so there is this high degree of conviction and the early voting data out of nevada is a very weak picture for democrat so there's reason to be excited. it's too early to get fully on board the trump trade. and put your bets on the market right now in a way that suggests there's no time for change. there's a whole week of early voting in most states and then obviously we have election day were turnout will be the name of the game. i think the street is picking up accurately on the state of nevada but that's not the story the rest of the nation is telling us. >> we spoke to a guest this

morning who said for the business world in the tech titans the writing might be on the wall. let's talk about some of the tech titans. after the assassination attempt on donald trump in the summer we had an interview, we spoke to the meta-ceo mark zuckerberg who referred to that as being bad aspirated and then we saw washington post filled to endorse a candidate. some people suggesting maybe it's because he was worried about an incoming trump administration and then we had on the rogan podcast the alphabet ceo given the former president to call as well to congratulate him on his campaign event at mcdonald's and what a hit it was. what do you think that they sense is coming from the republican leadership that might affect them. >> that is a great question. you will have antitrust on the docket next year with a tax bill we have to write, tariffs are also going to be concerned expert control restrictions inbound and outbound investment restrictions i think all those

pieces are really integral but the reality is there is a $5 trillion tax bill we will be writing next year and all of these corporations particular many that are multinational have a lot of skin in the game on this one so it makes sense to try and make for your bridges mended with everybody potentially. i think there should be a lot of focus on house members and house races. those are pretty predominantly coastal states this year so new york and california five of those that were trying to influence the outcome of the election and most of the house members. >> appreciate your views and perspective. the analysis there from henrietta. that last note, that final note on what's happening with big tech players. >> you have to think not just mark zuckerberg came out and saying it was bad aspirated it was the only tweet jeff bezos set this year was following that first assassination attempt on the former president's life. then we've got a lot of criticism about the washington post not going through with

their endorsement on the editorial side. lisa: what could they potentially do and you ask the right question which is what is on the docket. the potential of lina khan being there and still being aggressive as we heard jd vance talk about or do they just not want to be in the crosshairs of being called all sorts of names and castigated as biased because that really undermines a lot of consumer confidence. they've already seen during previous administrations. >> from tim cook over at apple maybe. up next on the program as we look ahead to forward earnings after the closing bell and looked back to some pretty concerning news out of vw this morning. from new york this is bloomberg. ♪

jonathan: equity futures on the s&p up by 0.5% this morning. last week, only one positive session in the s&p. looking to bounce back from the first week of losses out of the last seven. the nasdaq up by 0.6%. tons of earnings, including 5 of the mag 7. the two-year and the tenure up by double digit points from last week. lisa, as you pointed out, it is not just economic data. some real issues as well, some

supply-side stories. lisa: basically, you will get a slew of issuance. it is frontloaded because of the calendar. somewhere upwards of $40 billion worth of notes this week. it is a question of how much is this risk aversion, how much is it a bullish feel in the u.s. economy? to me, it's notable we saw the biggest underperformance in the russell 2000 going back to july, at the same time the 10 year yield hit the highest level going back to july of this year. jonathan: yields creeping higher this morning. switch up the board and get to the foreign exchange story. dollar-yen of the last few weeks climbing for four weeks, the longest run since april. about 152.67. an election story over the weekend. lisa: prime minister shiba held this snap poll

he lost the majority for the first time in prominent since 2090 the question is could his leadership be disrupted enough that someone else gets and who wants to emphasize some sort of fiscal expansion at a much greater scale that would prevent them from hiking breaks further? that is the fear you are being expressed in a much weaker young. annmarie: even if he is able to stay on, he will have a very weak coalition and a very weak government. jonathan: dollar-yen 152.65. israel launching retaliatory strikes over iran of the weekend, destroying several air defenses and damaging iran's long-term ability to develop ballistic souls. iran's leaders emphasizing their right to respond. annmarie: this is why you have u.s. officials coming out and saying this is the end of this current retaliation, tit-for-tat

, between israel and iran. they say this should close out the direct exchange. but you look at what norman ruhle talks about, the fact that this is a new normal in the middle east. how many red lines have an evaporated? maybe this closes out the tit-for-tat for now, but where is this going in the future? lisa: the conflict in the middle east isn't over. what a shocker. but there is this question going forward of whether you have taken some of the hot war elements out, given the fact that some strategic assets, like the fuel, to fuel ballistic missiles, were taken out, as well as some of the air surveillance systems. jonathan: brent crude 71.77. shares of boeing just about unchanged in the premarket, the company launching a nearly $19 billion share sale to address liquidity needs and stave off a potential edit rating downgrade. boeing shares off by more than

40% so far this year. and a real conversation after a share sale like that over whether this potentially is the kitchen sink moment. lisa: it depends whether they can get workers to actually come back to the plants. annmarie: we are entering our seventh week paid until those workers come back, every analyst says they are just hemorrhaging cash, which is why they have to do this in the first place. it is not even really working for their stock. they are even talking about this possibility of options for the starliner, something that is a storied part of boeing and america come in terms of getting to space and nasa. this feels like they are reaching the bottom. jonathan: this is the latest on vw, volkswagen seeking to close at least three plants in germany and downsize all remaining sites. the company aiming to cut salaries of all ploys by 10% and divest entire departments with outsourcing and moving work

abroad. lisa: right now, i am looking at vw's response in an emailed statement, saying some plants are doubly as excessive as the competition. they're talking about the need for some sort of comprehensive solution. but i'm looking at this and i am thinking, is this a negotiating tool? how much time do they have before they start doing mass closures, and will this be the norm? is this the only solution at a time where policymakers have not weighed in? jonathan: unfortunately for vw, they have the willingness to do this, but they may not have the ability, because of the unions are so powerful. the second, i believe this is part of an ongoing negotiation with the government that vw is the only conductive all auto manufacturers as well. stellantis had this conversation directly with us a week ago, saying we have weeks, not months, to figure this out.

that supply-side solution will be painful politically. lisa: which seems like it is moving towards that. to your point, is this actually a negotiating tool? if they're not getting any response from fiscal lawmakers? last week, speaking to the german bundesbank head, they are having a contracting economy, they should be arguing even more for rate cuts, but his argument was, well, we'll see, it's actually not that bad. is that the status quo in terms of how people feel, that it will get better, stop being so dramatic? jonathan: sadly, german officials have had their head in the sand over much of the last decade. let's talk about ford, reporting after the closing bell this afternoon. the automaker is trying to rein in warranty costs. tom narayan saying qfii

consensus seems achievable but 2024 guidance could be cut. tom joins us now for more. good morning. fortunately, we have to start in your before the united states. how much of a supply-side issue do we have there? how much capacity needs to be cut at these major manufacturers? tom: i think it is real. i think what vw is saying is more than politics bid i do not know if you noticed mercedes results yesterday. if you look in the details, you notice revenue per unit, outside of china, was down 8.5%. are we at the beginning of a deflationary cycle? if mercedes is feeling it, then maybe vw, bmw, etc. are seeing it. europe is not as healthy, economically, as the u.s., as you point out. there is something to it, what vw wants. when pricing falls, it drops 100% to the bottom line. jonathan: so what kind of cuts

are you envisioning for the european players, the big five? tens of thousands of job losses, plant closures? tom: to your point, it is not as easy to do it. what the oem's would rather have his stimulus come back, especially for ev's. they have a giant revelatory cliff next year. that's ultimately what they want. if they don't get that, it's huge fines or paying tesla for credits. what will happen is subsidies will come back for ev's, especially germany. they will have to buy some credits, maybe pay a little fines. i think you could see plant closures. lisa: how much time do they have? we heard that from stellantis. that they will need it in the next couple weeks. it is a couple week timeline? tom: it could be. what we thought of the mercedes results last week, after they

had already profit warned, is alarming. are we at the beginning of a big price deflationary cycle? maybe they need to cut sooner. remember, these guys also have big balance sheets. they are financially healthy. could they withstand that? possibly so. but it is scary. once it starts happening, the price deflation, it can get ugly. lisa: financially ugly and profitable are different things. some plants are double as expensive as the competition. this is a direct commentary on how much cheaper it is to produce in china than it is in europe, and a lot of those cars are going to be cheaper for the consumer at a time when inflation is still a problem, enough for the ecb to mention it every single time, despite some of the economic numbers. at a certain point, isn't this a structural problem that even plant closures will change? tom: it could be. the problem is, when chinese

oem's interior, what will happen? it will take a while before the chinese contrition horse into europe, but when that happens, things could get ugly. lisa: meanwhile, we are expecting ford results. there's a question how much u.s. manufacturers are insulated from some of the trends we are seeing from european map -- auto manufacturers? we saw results from gm, and they were pretty good. tesla knocked it out of the park, respective to expectations. how much disparity is there? tom: i think it is a big one. where do you want to be? with the u.s. exposure, absolutely. i would differentiate ford's situation from gm and tesla's. remember what happened to stellantis. they have this week dealer inventory problem in the u.s. guess who has a higher deal inventory problem? ford. the jeep explorer, jeep grand cherokee, bronco -- this is the

sweet spot of competition. if stellantis is starting to cut pricing, that could go head on against ford. i am worried about them, that they will have to respond. you already have a high dealer inventory issue with ford. i think it is a very infant situation from gm, who has a pretty healthy dealer inventory situation. and large suvs does not compete as much for the pain point is. annmarie: we note ford is scaling back with ev ambitions, but one will turn around? tom: it will take a while. there at this weird point where they are losing money relative to ice's, but the scale is not there. if they were to sell a little more ev's, it would still lose relative to ice's, but not as much as they are now, because they are not selling enough ev's, and there is such a fixed

cost base. in a way, they need to sell more ev's, even though they are pivoting. that is what we expect to see tonight. will these ev losses decrease? we know the volumes. they already gave it. so i think the losses will be similar. annmarie: but unlike europe, subsidies are here if you die states, and they are unlimited. tom: but they're not getting as much per they are still sourcing battery if her structure from china, etc., so you do not get as much as gm or tesla. you have two ev's, and those are the sweet spot where the competition is already the model y is right there. the gm has models which are new, and they're able to take advantage of the ira and sell this car for less than $30,000. it is like the cheapest ev on

the market, whereas ford cannot get the advantage. annmarie: unlike byd's less than $10,000. tom:, well, can they sell those in the u.s. anytime soon? we'll see. jonathan: what do you make of this scout come back? tom: this is really interesting. most of the inbound's i've been getting relates to rivian. usually you get a lot of fanfare from the corporate's from some thing like this. nothing. i tend to think this is a very independent strategy from vw. let's invest in this, let's also invest in rivian, let's see what happens. we want the u.s. badly. let's see who wins. jonathan: what did you make of the car? tom: i think it looks really nice. jonathan: i thought it looked pretty cool, too. it has old-school bronco vibes,

without negative connotations. tom narayan of rbc. with your bloomberg brief, let's cross over to dani burger. dani: thank you. the medtech firms cuts forecasts, now 1.5% for the year. earlier, phillips said by 5%. china has been cracking down on its health care sector, with strict acquirements for many products. the ceo says uncertainty in china will remain the next few quarters. former president donald trump held a nearly six-hour rally at new york city's madison square garden yesterday. trump was joined on stage by nearly two dozen speakers. the rally featured is him's of vice president harris over the border, crime, and the economy, and also included a comedian who made off-color jokes about latinos and called puerto rico a

"floating island of garbage." shohei ohtani is expected to play in tonight's game after partially dislocating his left shoulder. the dodgers manager said he did not have the exact agnes of the injury and said that ohtani is planning to play through the discomfort. the yankees host the dodgers for game three in the bronx tonight. jonathan: thank you. more from dani in about 30 minutes. up next, dueling economic plans. >> i am a believer in tariffs. it is the most beautiful word there is, tariff. >> i will create what is called an opportunity economy. jonathan: that conversation next. ♪

jonathan: equity futures on the s&p 500 negative -- rather, positive by 0.5%. use a saying negative because we only had one positive day last week. up this morning by half of 1%. yields higher by a single basis point. under surveillance this morning, dueling economic plans. >> i am a believer in tariffs. giant tariffs. it is the most beautiful word, tariff. >> we will create what i call an opportunity economy. an opportunity economy. we will build what i call an opportunity economy. >> i want to cut taxes on americans while putting tariffs on china and foreign countries. >> focused on bringing down the cost of living for working families, investing in small businesses and entrepreneurs. >> i will support a tax credit for family caregivers who take care of a parent or loved one.

>> i will be laser focused on creating opportunities for the middle class that advance their economic security, stability, and dignity. jonathan: the latest this morning, according to a recent poll, the economy remains the most important issue for voters in the upcoming presidential election. 23 nobel prize-winning economist sided with harris. we believe, overall, harris' economic agenda will improve our employment opportunities and be vastly superior to the counterproductive economic agenda of donald trump you're one of those nobel laureates is joseph stiglitz. professor stiglitz joint is not for -- now for more. i want to go back to something you said six years ago. you said no country could have a more unqualified team than

trump's. as you know, harris and biden did not remove many of those tariffs. in a recent reuters poll, some 66% of registered voters say they were more likely to support a candidate hacking a new 10% tariff. the first question, how much daylight is there between what you think this country needs and what this country seemingly wants? prof. stiglitz: there is a very big difference between harris and trump on these tariffs. trump has talked about 100% tariffs and tariffs even on our allies, whereas harris has talked about a very moderate tariffs on china. the reason for those moderate tariffs is, like it or not, we are in a new cold war, and we have to de-risk. we have to reduce our dependence on china.

that 10% tariff is a signal to our business community of where we are going. the 100% tariff that trump proposes will be extraordinarily disruptive, lead to significant inflation, and, in the end, result in a tax and an inflation that particularly hurts those in the middle and the bottom, because it is a tax on the goods they buy. annmarie:, professor, we have heard from biden administration officials talking about the fact that china is unfair on the global market, that they dump on other markets. when i talk to trump advisors, they say they want reciprocity with free-trade. how do you get there? prof. stiglitz: first, let me say that some of this unfair

allegation is exaggerated. the fact is, the reason china is ahead of us in ev is they recognized that there was a need to a green transition 20 years ago. they have an anonymous s -- an enormous scale. they have high competition among a number of firms. they have many more engineers than we do. they've been training a lot of them, some of them in the united states. they have, you might say, a natural competitive advantage, which they have taken advantage of. in addition to that, there has been some subsidies. but we've thanksgiving at norma's subsidies -- we've been giving a norma's subsidies -- we've been giving enormous subsidies, too. we need to recognize that china today, not 50 years ago, has comparative advantages and

certain aspect of manufacturing. annmarie: the u.s. has given subsidies when it comes to the inflation reduction act, when it comes to the chips act. do you think the u.s. is subsidizing as much as china? prof. stiglitz: i suspect it is subsidizing even more. those subsidies are estimated between $1 trillion and $1.5 trillion. that does not include the half $1 trillion given in trip subsidies -- chip subsidies. chips are an important ingredient in cars. the fact of the matter is we are giving massive subsidies. annmarie: is the u.s. in violation of wto rules? prof. stiglitz: indubitably, the u.s. is in violation. china's probably in violation. my own view is, if we want to have a rule of law, what we should do -- if we believe

chian's in violation, go to the wto, present our case, let the judges side. the problem is the u.s. has the fenestrated the -- defenestrated the wto by not allowing judges be appointed, so there's not a quorum. let me go back to the point you raised. there is no comparison between the economic policies of trump and those of harris. trump's policies will lead to more inflation, larger deficits, lower economic growth, and eno rmous amount of disruption in the short run. jonathan: professor, why do you think that did not happen under trump in the first term? prof. stiglitz: the differences he now has unambiguous control of his party. let me give you one example. you mentioned the letter from 23

nobel prize economists. there was a letter from more than 80 nobel prize scientists, every year, almost, during trump's administration. he proposed massive cuts in our science budget. fortunately, a bipartisan agreement among democrats and republicans knew how devastating that would be for the u.s. our strength lies in science and technology. you cut those budgets, it's going to really weaken the united states. that's why more than 80 scientists, nobel scientists, came out in support of harris. today, he has such control of his party, if there were a republican congress, those cuts might be put into play. jonathan: this is a conversation

you and i will have in their near term, in the new future. thank you for being with us. professor joseph stiglitz on why he is siding with harris' economic plans. ♪

>> the fed is biased to cut. that should put treasury --

perpetuate, unless you think the labor market will tighten magically. >> the labor markets are still broadly cooling. >> you would not suggest this economy requires a real interest rate of 3%. >> we see inflation surprising to the upside into the first quarter of next year. >> the result is probably somewhere in the middle. that said, no landing has probably not run its course yet. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: 90 minutes away from opening bell. equity futures up by 0.4% on the s&p 500. on the nasdaq 100, up 0.6%. what a year the next two weeks will become including this week. earnings from the likes of microsoft, apple, google, amazon, meta. data coming through including drops tomorrow, then friday, payrolls, just around the corner. next week, election day on

november 5. two days later, a federal reserve meeting. lisa: i think people want to put aside the will he win, will she win debate for now -- just some people -- because there is data that will come out. how much are we going to see some answer to whether it is the economic fundamental data that has been driving some of the recent increase in yields and rise in stocks, or whether it really is the belief in what the outcome is of the election? annmarie: people have been waiting, potentially, on the sidelines. companies have been talking about, when you look at survey data, they want to see clarity. financial markets want to see clarity to understand what the policy might be in washington before they make big decisions. what are we hearing from analysts? people are not flying this week. apparent people do not buy real estate this week or next week. they want clarity in the u.s. election before any decision. i care about the earnings, but i think the outcome of the u.s.

presidential election weighs a lot more. jonathan: here is clarity on the bond market. yields higher, up to basis points. double-digit basis point moves on the week last week on the two-year and the 10 year. in foreign exchange, the euro just ate touch stronger, 1.0821. -- just a touch stronger, 1.0821 . coming up this hour, we catch up with liz young thomas of sofi, angelo zino of cfra, previewing earnings from apple. we catch up with lara rhame of f s investments. we begin with stocks climbing on bonds falling ahead of a pivotal week or financial markets worldwide. liz young thomas writing expectations for a strong economy have risen while expectations for more aggressive rate cuts have fallen for the commensurate rise in yields reflect the more optimistic economic outlook. liz, welcome.

loved your note. very simple and direct. just a deep understanding of what is happening in the bond market. walk us through how the shape of the yield curve is changing and what is leading that move and what that might mean for equities and where you want to be. liz: what has been happening since the yield curve came out of inversion and as it was approaching that steepening level is, first, we had a bull steepening k we talk about bull and bear in these terms, we are talking about the bond market. more recently, we continue to see a steepening, but it is really a bear steepening, which means yields have been rising across the curve, so rising at the two-year level and the 10 year level, but rising fast at the 10 year level, which continues to make the spread between 2's and 10's wider. initially, as that happens, it is usually positive for things like banks, because you get optimism over interest margin increasing as the year goes on. as long as that holds and the

economy stays healthy enough, we do not see this big tick up in dealing currencies, that continues to be positive for financial markets. we are also starting to hear there may be reignition in the ipo market, capital markets activity, particularly once we get past the election. that has been positive as well, particularly -- particularly for financials. what you want to watch is, after that phase, it could end up being the steepening of the curve, the rise in yields, and jumping because of inflationary fears or perhaps some sort of shock to the commodity market. at some point, those rising yields start to make equities nervous. i think, right now, we are right around that level where equities have taken a pause and said, hold on, yields have risen a lot in the last month or so, let's make sure this is not going to tighten financial conditions too much. jonathan: is it the level or the reason? are we entering that zone in the bond market and about 4.25 where

we are entering this zone, regardless the reason? or do you think equities will stand up to this, so long as the data produces continued upside surprises, like payrolls friday? liz: the reason recently has been economic strength and positive economic surprises. i even put a chart in my recent note working down what has happened this year. earlier, in 24, we had economic surprises negative, for the most part, but we also had inflation coming in the hotter. people got nervous about that. yields were rising but it was because inflation was coming in hotter. it'll of the year, we had inflation cool down. you saw yields start to fall. then we had this inflection point after the first five cuts. that has been the real key. we had strong economic data, even in the beginning of the cutting cycle. the question, is at the level that matters, i do think it does

pay there was a key level in the 10 year where equities took a pause. a process not a bad thing. it does not mean there will be this big correction coming, but just a pause to see until the election is over, can we withstand this through the election? some of the next stops are probably 4.30, 4.50, and we are even hearing people talk up about -- talk about 5% a possibility. i am not at that level now, but that would absolutely pressure equities. probably before then, you would see equities pressured. lisa: i went how much this goes to the story of the pause we are seeing in the upper performance of the broader index or even small caps, and whether this is a tipping point for you, given the underperformance of bonds has really come in tandem with the shift back to the mag 7. liz: the shift back to the mag 7, at this point, is a tale as old as time. it's as if the investors go back

to the mag 7 in good times and bad times and said rise times, if there's nothing else to do. as we continue to get more data, if things stay stable, what we are more likely to see is the continuation of that rotation out of big tech, not because some thing is wrong with big tech, but because it has been such a winner so far. investors will search for growth in other areas. i talked about this the last few weeks. if investors are searching for growth in other areas, i think health care could be a big beneficiary of that. a lot of those cyclical sectors that have shown signs of life will also need to come through in earnings, and we will get a good test of that this earnings season. they need to pick up the weight perhaps the mag 7 needs to slow down on. i think the shift out of the mag 7 is somewhat due to yields, but i think more so due to the idea the economy is still strong, cyclical sectors should pick up

here your question about small caps, i think some of the movement in small caps is also due to that cyclicality. we can't explain it by a huge rise in yields that usually pressures small caps. if we are headed into a period where we are in this more midcycle expansion, you should see some life from small caps. but that's a part of the market that continues to make -- give me pause, because it still has not made new highs. i think small and mid-cap stocks are still waiting to make sure the labor market is intact, perhaps through the end of the year, because those would be more sensitive to moves in labor. lisa: if you put these two ideas together, i wonder how important the earnings will be this week, given the fact they big tech wears happen supports to an economy that is otherwise not doing that great. sort of this secular overlay of the ai theme. i am wondering, if you do get outperformance from the big tech

players this week, does it almost take away from the rest of the story, showing they still are the main drivers of a lot of the strength we are seeing in the economy? liz: at this point, because it has happened so long, i think big tech ends up being more a sentiment tested and -- test than a big driver. there are a lot of other crosscurrents going on, a lot -- so perhaps not quite as market moving as it has been in past quarters. but the mag 7 will continue to be a big litmus test for sentiment and investor sentiment, particularly with the idea of our investor still willing to pay up for this? are we still willing to pay up for the growth this will produce down the road, now that we have realized this ai theme is not something that will create profits and tangible impact by the end of this year, it will

take longer. from a sentiment perspective, they still matter. if they beat and continue to go up, that is a good thing for the sentiment. if we get a surprise miss or negativity, that would hurt sentiment a lot. annmarie: you keep coming back to the crosscurrents of the time of the fact we will get election headlines and, at the same time, you heard about the sentiment of these big tech players. is there a political outcome that is better or worse for them? liz: i do not know there is a political outcome that is better or worse for them. i think it really pans what is going on in the broader economy and what is going on with risk appetite in general for investors, and i think risk appetite has taken a bit of a backseat not. not that has gone away, but people have slowed down. earlier in the show, you're talking about people waiting even through this weekend next week to do big purchases to make decisions.

the same thing is playing out in the market, and a lot of it will be about how much is each dollar of earnings worth to me, as an investor? the sectors typically more sensitive to elections i think will traditionally be more sensitive this time as well. jonathan: wonderful to hear from you. liz young thomas of sofi, putting the puzzle together. i want to sit on the bond i get, 2's/10's. we had a 60 basis point move since the fed reduced interest rates by 50 basis points in the middle of september. quite a move. lisa: some people's adjusting this kind of raises a question about -- i do not want to say wisdom, but wisdom of cutting by 50 basis points. is that almost a mistake, because, in some ways, that tightened financial conditions. is that indication of an inflation picture, and inflation call, or is this really having to do simply with the election and the potential outcome? jonathan: i will save my opinion

. -- lisa: mark rowan also talking to you about apollo, this idea that the economy is not slowing down here the question is when do we start to price in inflation? jonathan: this data and this story can change fast, so look out for the economic data through this week. payrolls friday. with an update on stories elsewhere, here is your bloomberg brief with dani burger. dani: volkswagen's top labor leader says the company is closing at least three factories in germany. it is part of a plan to cut cost and become more competitive. europe's biggest automaker is planning universal pay cuts of 10% and shrinking our meaning sites in the country. it is also considering divesting entire departments and divisions, outsourcing to other service providers, and moving work abroad. mcdonald's is bringing back the quarter pounder. the chain ruled out beef patties

as the source of an infection that left one person dead. a quarter pounder's will return to all restaurants this week without the onions. the good times are rolling for the kansas city chiefs. the two-time super bowl champs are still undefeated. they hold the league's last perfect record, with every other team racking up at least two losses. jonathan: more from dani in about 30 minutes. up next, morning calls, plus angelo zino of cfra previewing earnings from apple. those results drop in later this week. from new york, this is bloomberg. ♪

jonathan: just a little more

than an hour until opening bell. equity futures on the s&p up 0.4%. bond market, yields higher by a single basis point on the 10 year. let's get morning calls. jefferies reiterating its buy recommendation, saying mark ets have already priced in. -- from high single digits in recent years. your third and final call from kent accord, raising its price -- from canaccord, raising its price target on tesla. up by another 0.8% in the premarket. turning to tech, angelo zino of cfra remaining bullish on apple head of thursday's earnings, writing we expect apple intelligence to help support and commensal consumer upgrades, driven by loyalists and an aging

installed base, with ai being even more evolutionary than cyclical. angelo zino has a buy rating. he joins us now. apple -- angelo, rather. welcome to the program to talk about apple. i will share this from one of your peers -- unrealistic growth excitations. how realistic are growth expectations given we have the new hardware but not the new upgrades to the software yet? angelo: thanks for having me. when we look at all this, it has definitely been a mixed picture since the iphone 16 launch. some of the expectations we have seen out there look a little aggressive, and part of the reason is there have been a number calling for this super cycle with the iphone 16. we have been on the others out of in the sense of saying the iphone 16 is probably going to

be a growth cycle, and that is a good thing. the last two cycles were no growth to the slightly declined for the iphone 15 and iphone 14. that said, you have easier comparisons. you have the aging installed base pair that launch of apple intelligence is going to get trickled out the next few months. we expect great things to come out of apple intelligence. we are excited to see what developers are going to do, specifically as they integrate siri across the ecosystems. that said, we are looking for the iphone 17 to be better than the iphone 16, and we are looking, at least for this cycle, to be closer to mid single-digit growth rate, where others will may have been more aggressive. jonathan: do you think they are vulnerable in certain geographies as well? i would love your thoughts on china, because we have had conflict reports from certain companies, lvmh and starbucks highlighting a weaker consumer.

i think geithner point said apple sales were ahead of where they were this time last year. how do you read things there? angelo: it is kind of similar to what we have been hearing about the start of the iphone 16 cycle, and that is it has been very mixed in nature. the way we are looking at china now, we are looking for a return to growth after two years of no growth out of china. it is one of those situations where easier comparisons, especially as we look forward through this cycle, as you look to the quarters where we saw some pricing pressure in terms of discounting and what have you, we expect that china will momentum to improve as we go into the march quarter specifically. it will not be something driven by a significant higher volume relative to what we have seen in the past. overall, it will be an improvement relative to what we have seen. we expect tim cook -- he does

not provide exact guidance in terms of the december quarter, but we ask for him to talk about improving trajectory for the iphone and in terms of saying potentially seeing exhilaration of growth in the december quarter versus september quarter. hopefully, that is enough to see some of the gains we have seen in the stock where it is now. annmarie: there is one person who i think is probably my test to see whether apple is gaining traction with ai in this idea of whether you should trade up for the new model. that is one jonathan ferro, and have not seen him come in extolling the benefits of artificial intelligence or even, really, fully understanding whether this will be truly a game changer. from your perspective, what do we have to see to make this the game changer that creates this upgrade cycle that everyone has been waiting for? angelo: and again, i do not expect to see a big upgrade cycle.

i personally did upgrade to an iphone 16, and i'm not necessarily someone who often upgrades in terms of the cycles, but i've a device out there longer than four years, the ai tilt to this intrigued me. it will be more of a word-of-mouth thing. as you see these new capabilities trickle out, especially when you start thinking about the second tranche and third tranche, not necessarily stuff you will see today, but we start thinking about the chat the integration -- the chatgpt integration, siri integrationin q1 and q2 next year, that is where word-of-mouth starts to heat up. and the fact the iphone could be that ultimate personal assistant closest to you, the closest device to you out there. that is where it gets a little more interesting. especially the gen z population i think really starts getting more interested for more of

these devices as well. i do not know if there's anything specific that gets you to go out there and by that device, but if you start seeing more and more of your peers and your friends and what have you start upgrading, that could potentially get others out there upgrading, especially if you have had that device north of four years or so. lisa: even without the upgrade cycle, how much do you see this really being a services company increasingly, as well as an airpods company, but how much of the surface is going to stave off potential weakness? angelo: i think the services tilt is the most interesting aspect of this happening. it has driven the gains for this company the last five or six years. you look at the number of analysts who have thrown out potential super cycles client -- time and time again, and it has not come to fruition, it is because of the services side of things that have held the stock up here when you look at the september quarter, you attract

them to surpass 40 billion in annual revenue. when you think about apple intelligence out there, we think potentially they come out with a plus type offering, where they start charging $10 or so a month , probably for at least four quarters out from now. that is not something baked in this stock. if you get somewhere along the lines of 300 million users over the next three or so years, into that offering out there, all of a sudden, you are talking north of $30 billion in avenue -- in annual revenue tied to the ai opportunity. a big reason we think this stock continues to hold up as well as it is, despite the fact an increasing number of people out there do not believe in this super cycle, is because of the fact you have that potential comes out there in some point in

time. that drives higher margins. we think the street is underestimating the gross margin of this company over the next three years. there are catalysts for this story, and it will be tied to the services side. annmarie: we talked about china, ai, but we have not talked about europe, which looks like one thing weighing on tim cook's mind right now. according to the former president, tim cook called him to complain about these potential e.u. fines. how much is that a drug on apple? angelo: that is definitely something tim cook does not want to have to deal with, but he has to deal with, so i think it is a good move overall for him to make that phone call to potentially the next president out there in terms of trump. but you look at how big a deal it is, it is a big deal in our view. it's impacting the innovation we think, on apple's side of thing, that potentially has an impact

on the services opportunities out there for that business and even potentially what they could do on the hardware side of things. the bigger risk is whether or not that trickles outside of europe into other regions of the world. this is something tim cook definitely is concerned about and why you saw him make that call. jonathan: angelo zino of cfra, with numbers from apple later this week, big question whether they get a carve out if we get a trump presidency and aggressive tariffs. annmarie: a carveout because they want some of their performance being made around the world. about what did howard ludwick tell you around this table? no carveout. jonathan: from new york, this is bloomberg. ♪

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jonathan: equity futures on the s&p ahead by a third of 1%. on nasdaq 100, up by 0.5%. your morning movers, hey, manus. >> so much of today as news flow is about the cal calibration of response. when do you make your move? choosing to go in for real defense of the about 5% of boeing is held by banks. 5%, a huge risk exshow sure -- exposure held by the bank.

$5 billion of receipts. $14 billion for the year. this is about shoring up the defense from equity capital markets to credit line bolstering up defense of the realm about $25 billion. flying kites about what comes next in the recalibration of boeing which could be the space business. do you spin it out? it could be the winning opportunity. that's one of the kites that's been flown about what shape is boeing going forward. $20 trillion of equity market capitalization will report this week. five will deliver the numbers. you really want to focus on 40% of the sales for nvidia will come down the pike. that is what will embolden and underpin them which made a record high last week. fact of the day, maaing 7 peaked out on july 10. down 2% relative to the rest of the market. down 2% from their highs.

a snapshot of what's going on with oil. down nearly 6% at one juncture. relatively limited response from israel on to iran. be very careful about how you interpret that. either way the drag on the market this morning is big oil, exxon, chevron. take a look. that's the drag. disruption, disruption can be opportunity. jonathan, good morning. jonathan: good to see you as always. let's turn to the data. investors bracing for a host of data due out this week culminating with the october payrolls report on friday. lara rhame saying this, my outlook for the employment data is a little above consensus. i think we get a 150 increase with the unemployment rate steady at 1.4%. lara joins us for more. welcome to the program. 150 in the grand scheme of things is pretty punchy. how much have you taken off for the strikes? how much have you taken off for the hurricane impact? lara: i think the strikes were a little later in the month.

so i am more focused on the hurricane impacts, which i think will take about 50,000 or 60,000 off. we are in a world where we are still getting a robust employment picture despite the fact that we are seeing so much uncertainty coming into the election. jonathan: is 150 enough to hit pause on the federal reserve? lara: i don't think so. i think the fed is clearly signaling they want to make this first step of reducing rates and i think the unemployment rate will stay steady around 4.1%. there's more than just one number in this very significant report. we have also seen wage prices ticking up. i think there is enough else here to make them want to keep adjusting that real fed funds rate lower. as inflation has come down, the real fed funds rate has risen significantly. so that's a recalibration that i am thinking of more than a big easing cycle. >> if they do cut again by 235

basis points and we get the 150,000 number that you are expecting on friday, does this lead to a much further steepening in the yield curve? do you start to see 10-year yields rise substantially? lara: i have been in that camp that is expecting a bear steepening for some time. i think the long duration trade if you blink, you miss it it's over, looking ahead when we think about renormalization of the yield curve, it's a two step process. in the short term part of the curve, interest rates are coming down. the fed is of course cutting, but you look at the 10-year historically rates are usually 150 basis points above the fed funds rate. it's not like that's my forecast today, but i think that upward pressure on the long end continues as long as the federate cuts stay relatively moderate, which i think they will. lisa: i am looking right now at five year break even rates, the expectation for inflation between five and 10 years, it's

come down. this doesn't seem to be as much of an inflation and growth story as some people are suggesting, that actually it's a real yield story of real yields increasing. how do you parse out the idea that the increase in yields really has been due to the 50 basis point rate cut or this idea that the fed wants to get a lower real rate? it seems like there are some other factors here at play. lara: there are so many other factors. i think we are seeing sort of perfect storm of things, which are pushing rates higher, because it's a combination of expectations of inflation next year given the election outcome. i think people leaning into a bit more of a trump victory. i would say that i think inflation is due to notch higher or at least stay stubbornly stuck where it is no matter who wins. and then you've got debt and deficit dynamics. those are deeply unfriendly and interest payments on the deficit have gone parabolic.

that's also something that will be in place no matter who wins. and then finally, i think the solid growth story continues to be an underlying part of this federate cut cycle. we just do not have many examples of the fed cutting rates when we don't get a recession, and when we have seen that, the fed has been much more cautious in cutting rates than sort of a traditional cutting cycle which includes a big economic slowdown. if the economy stays where it is, i think long term rates are due to continue to rise. lisa: would they be cautious on november 7? you don't think 150 gives them reason to pause? what number would? lara: i don't think it's about one number on the payrolls. i think listen, if we get unemployment rate down sharply, if we get a big retracement of wages, but i don't think the fed ever moves off of one piece of data. we have seen some unfriendly c.p.i. numbers. we have seen the wage data. we have seen a bunch of

culminating data, which i think reinforce their notion that it doesn't hurt to just sort of bring rates down slowly this year, but then pause in the beginning of next year. i think when i am in the fed's seat, the rate cuts are priced in. i might as well walk through the door. but the beginning of next year i think that's when they pause. i don't see any rate changes in the first half of the year and i think that's where the market's got it wrong when they're pricing all this policy accommodation. >> they pause next year regardless of the outcome of november 5? lara: you know, i think they always wait to see policy in place. when you talk to them, it's not sort of campaign rhetoric or hopes of policy that make them change their interest rates. it is really seeing policy in place. i don't think any of us really expect any meaningful changes in policy until -- to hit until the

first quarter, second quarter. all of that has to get through congress. that's one of my key takeaways for the election. congress matters. when we think about the tax cuts or changes in tax policy that would affect the consumer and the trajectory of growth significantly, i think they wait to see what really comes down the pike in terms of the votes and what is actually in place in a policy way. jonathan: lara, thank you. always appreciate your time. lara rhame. knoll dixon of state street, good morning. good to see you. we have a lot to work through. you said the next two rate cuts will be easy. would a 150 on friday make it harder? noel: i don't think so. i think the fed keeps in mind the q.c.w. revisions. what we see could always get revised away. again i think the next couple of cuts i think are big and i think that's justified. but we get to the conundrum about where the neutral rate is and that's when it starts to get

fun. jonathan: where do you think it is? noel: you know, i think they start to get into that conversation early next year. our view is that we think it's probably at least 3.5%, could be high as 4%. >> do you awe grie -- agree that potentially they couldn't cut it all the first half of next year? noel: i think it's a real polt because they are cutting into strength and basically financial conditions are still really easy. if you look since q4, 2019, household net worth is up over 30%. those impulses in the economy i think is certainly could cause inflation, if we are being honest, to probably reaccelerate itself. lisa: core p.c.e. getting on thursday this week, the exmtion is for -- expectation is for it to tick up to the highs going back to march. do you think that will be really negatively received by the fed,

that that will enforce this idea we heard from lara and yourself, that they will not cut at all during the first half of next year? noel: i think it does because if we're being honest, the last c.p.i. was up 40%, 40 basis points month over month. year on year still above 4%. that excludes housing which is still pretty sticky. so i think the mission at it relates to core inflation is not done. i think there is a risk that you could see some real stubborn stickiness. >> what does that mean for economic growth versus inflation for supply side issues? there are sort of dual issue here that some people are saying well, it might be good to buy stocks because if it's a growth story, that he positive. other people might say inflation is picking up because there are different trade lines and there are different disruptions in the red sea.

noel: i think why they don't cut is important. if they don't cut because they recognize neutral is higher because of just structural changes, that's a decent story as it relates to real growth. but if they don't cut because there is concern about reaccelerating inflation, then that could choke off growth and i think that will be more of a negative story. >> you say the biggest concern going in is the red wave because that might push yields closer to 5% but why wouldn't a blue wave push yields higher? noel: our perspective is that we think 5% probably ultimately will be the goal. but how we get there is important. so if we get a blue wave, i think it's more of a gradual process to get to 5%. but if you have a red wave, we could get a nonlinear, volatile pathway to 5% that happens in

short order. that would cause i think a lot of volatility and concern. lisa: what drives that differential in the timeline? noel: i think the higher fiscal spending under the trump administration, which based on dynamic scoring is about over $4 trillion, with harris it's about $2 trillion which is still significant, but i think you know with the red wave, you get the tariffs and i think it introduces a lot more concern. jonathan: how much do you think we have discounted so far in terms of a red wave? there's been some discussion of fixed income about that. how much of that do you think is priced? noel: i think when we look at it, we actually have a measure through our nar narrative map. we think it's some getting priced in. but i don't think it's fully appreciated because in the polling, betting markets, you have to separate betting markets from the actual polling. betting markets are showing a higher probability. but if you actually look at the polling in the swing states,

it's still tight. i think it's more of a 50/50 situation. jonathan: i find your argument quite persuasive. if we wake up on wednesday and we have a red sweep, what moves are you thinking about? 25 basis point moves? noel: probably not bigger than that in one day, but i think it will be a nice spike in especially the long end 10 year. jonathan: appreciate your time. thank you. noll dixon, state street. the 10-year at the moment, 425. did you find that persuasive? i did. i see a big debate right now happening on the south side to what extent is this g.o.p. sweep priced short. i am not sure. >> i don't think people are necessarily fully pricing that in given the fact it's not a certainty, something like 48% chance in the betting markets that you get a red sweep. but there is a 12% chance only of a blue sweep. i was reading some probabilities. at least that might be priced out a little bit more which is the reason why it's maybe 50/50.

annmarie: the senate is going to be red and not only is it going to be red by a small margin. i think what you are seeing play out in the betting markets, not the polling markets, is the fact you look at the political report. these democrats defending seats saying wisconsin, pennsylvania, they were supposed to be lean dem. they are now tossups. the bond market i think and maybe investors are wake up to the fact maybe if trump wins, it might be a blowout in the senate and more of his agenda could get done. jonathan: it's not just about whether or not it's a blowout. it's the japanned of the platform. there is a big dre of scoapt simply how many of these -- skepticism how many of these policies he would push through. that's where i sense skepticism still. >> i think it depends what the policy is. twen comes to tariffs, he could move quickly. do you take him at his word? do you take him seriously? are you going to get a 10% tariff or do you take him as one of his economic advisors says,

this is a negotiating tactic. you are looking at 2.5% on chinese imports for tariffs for two years. then we are going to stop. it depends on what you take from these campaign promises, don't even get me started on taxes. campaign promises and what actually happens. jonathan: the 10 year, 126 -- rather, 426.60. here is your bloomberg brief with dani burger. dani: former president donald trump held a six hour rally at madison square garden yesterday. trump was joined onstage by roughly two dozen speakers from elon musk to hulk hogan and mike johnson. the rally featured criticisms of vice president kamala harris over the border, crime and the economy. it also included a comedian who made off color jokes about latinos and called puerto rico a floating island of garbage. falling used car prices are creating a financial risk for millions of drivers.

about 1/3 of people have loans that are larger than the value of their car. the paper cited a survey, being underwater isn't uncommon given how much a car loses value. however used car prices have dropped 19% since 2022 creating a higher than usual share of underwater loans. the yankees are looking to turn things around, game three of the world series tonight. the dodgers are leading 2-0. tonight's game will be at 8:00 p.m. the blockbuster matchup has been a ratings hit so far, an average of 14 million viewers, a seven year high. the yankees are hoping to get a boost from star aaron judge, who has had just one hit so far in the series. that's your brief. jonathan: thank you. up next on the program, we will set you off for the day ahead and catch up with anna wong of bloomberg economics. stay tuned for that. ♪

jonathan: these are the scores. the bond market just about unchanged. the 10 year at 424. some of the movers in energy to look for, this move on crude, down by 6%. here is your week ahead as we count you down to the opening bell. stacked, absolutely stacked. today ford reporting after the close, plus google earnings. wednesday initial g.d.p. data. thursday, a rate decision and in the u.s. another round of jobless claims. plus results from apple and

intel. on friday october jobs report. joining us, anna wong. welcome to the program. in the survey, we do at bloomberg, your number is right at the bottom, negative 10-k. walk us through where that's coming up -- coming from. anna: i think the biggest challenge in forecasting is the weather, the effects from hurricane milton and lingering effects from helene. our team has forecasted the hit from weather will be approximately 175,000. we use a variety of processes. we use home based data, which suggests to us that a lot of the sectors that's sensitive to weather and the states that are in the path of the storm were pretty seriously hit and we also looked at fema maps and map it

into employment. we saw that the highest possible number of jobs affected in the path of floods were about 12 million. a lot of these numbers are similar to irma from a couple years ago and that hurricane also hitting florida led to a 200,000 hit to payrolls in that month where it hit. so we think that that's why hurricane alone could possibly bring the payrolls down to negative. but i think a lot of market participants will be dismissing that as entirely due to weather, but i think there are other cyclical factors at work, including weaknesses in manufacturing sectors that preceded the hurricanes. we also saw from high frequency data that the state and local government and education sectors were unseasonably weak. on top of that, very widespread

slowdown in professional and business hiring. >> given all of that, why don't you see the unemployment rate rising? anna: in the past month, we documented that the unemployment rate has seen a support from election workers, including emergency response workers. so in the household survey of people who are not at work due to weather, would not be counted as unemployed as in payroll survey. so you don't get that negative drag in the unemployment rate, and on top of that, you get this boost from the household survey putting a lot of weight on these government workers and election and fema response workers. so as a result, we see that it will stabilize at 4.1. >> you've had a more pessimistic view of the economy than a lot of people. have you been surprised at how resilient the economy, what do you think has sort of been the reason behind some of these

upside surprises? anna: yeah, so on the unemployment rate, we were more bearish than most people and we were right. since moat of this year -- most of this year, the last two months of payroll where the unemployment rate dropped, that was a surprise to us. and so we did a deep dive on what's driving the unemployment decrease because i do think that if the unemployment rate continued to decrease after the fed cuts that is a sure sign of soft landing. but what we found as drivers of the decrease in unemployment rate the last two months, we think it's transitory. a lot of it is actually related to disasters and election related temporary boost which we think will go away in december. jonathan: anna, we can leave it there. it's good to catch up, anna wong. negative 10-k. 164k is the high that comes from r.b.c. the median is 110. there is a lot of noise in this

report. this goes beyond the hurricanes and the strikes. she's talking about cyclical weakness as well in this economy. lisa: in particular manufacturing. we have seen manufacturing come in light again and again. at the same time, there have been some signs that maybe it's recovering have yous just -- just a bit. maybe the weakness is moving to services is. that said a lack of understanding more broadly of what weakness is, what it looks like, because really even if we get some of these numbers in the unemployment rate stays at 4.1%, are people going to get concerned? are people going to take this as frankly just simply messy data? annmarie: a lot of people coming on saying it will be muddied, still bullish on the market but we have a low print because of everything that's going on with the hurricanes, with boeing. that's why i care about the revisions. 254,000 jobs that september payrolls report. does that get revised to the down side? jonathan: that's what lisa was looking for two months ago. can you imagine if those revisions happen after the

election? can you imagine the political push back? >> we will have lots of fun, conspiracy theorists. honestly, this to me -- yes, i don't want to imagine what that's going to be. on friday let's see what the revisions are. if we get revisions to the upside, that would be interesting. we have gotten some revisions. but you are right. how much political accusation could you end up getting? annmarie: there have been 800,000 revisions to the down side already this year. people have them banked in election or not. jonathan: imagine taking 60-k off that number. coming up tomorrow, we will catch up with the former world bank president and tom becker of black rock. a a big week, the election night a week tomorrow. big week ahead. tons of earnings. lots from big tech. some big reports on the data side of things with payrolls this friday. from new york city, good morning to you. thank you for choosing bloomberg tv. this was "bloomberg surveillance." ♪

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>> the week before the election, 30 minutes until the start of trading, i am matt miller. sonali: i am sonali basak. katie: i am katie greifeld. "bloomberg open interest" starts right now. ♪ >> coming up, the next 10 days could be make or break for investors. there is a slew of big earnings. a fed decision, the election and more on the horizon.