>> the street is even more bullish on trump winning than the predictive markets. >> yields are moving higher based on the election. >> a closely contested election would be unsettling to the bond market. >> inflation is due to not higher or stay stubbornly stuck where it is, no matter who it is. >> this is "bloomberg surveillance." jonathan: election day, one week from today. "bloomberg surveillance" starts right now.

equity futures after yesterday unchanged on the s&p 500 and we have more weight to this. get to the bond market on the front end of the curve. if it closes higher for the second consecutive day, it's the second consecutive day since may of 2023 and after the closing bell this morning, alphabet reporting. the first of the next seven reporting this week. i vote -- i have heard this a few times already, this might be the last queen data point going into the fed meeting tomorrow. lisa: translation being that it might take on outsize importance because it's better than the headline number might be on friday. i will say it is incredibly notable that we have seen the rise in two-year yield's and 10-year yield's even though oil prices have been declining as it has come with other factors, the

trump trade or something else like better economic data, it's unclear but it is shocking that they are up 68 basis points. jonathan: i'm with you, crude had its worst day of the year so far. four basis points, i heard it from you, jim, bob, we are all looking at the same thing, why. and i'm hearing the t word quite a lot. trump trade rally in morgan stanley out of the gop suite for the list of goodies already discounted. annmarie: we are a week out and we have 50 million americans already voting according to the university election lab. why are people thinking more about a republican sweep? it's easier to get one then a democratic one, because of the senate map. there are three key races to watch. one, nebraska, becoming a wild card, and then wisconsin and

pennsylvania. these senate races leaned democrat and they are now tossup's. looking up 538, two out of the three blue wall states, wisconsin and pennsylvania, a dead heat for the presidential race. kamala harris thinks they can hold the blue wall and the trump camp thinks that they can easily pick one of them off. it's really going to come down to these three key states. jonathan: maybe this playbook this time around won't be the same as the one in 2016, so much of a trump win has already been discounted and a harris when makes it vulnerable to going the other way. lisa: directionally, some leadership might be in line with the trump trade of 2016, but there is a different scenario coming to the materials world, what's already priced in, and a deficit that is already significantly higher.

remember, inflation was welcome in 2016, thought of as a great thing to get us out of the disinflation spiral. what a difference eight years makes. jonathan: i remember back then, we wanted more active fiscal policy. remember that? backed away from that over the last year, for sure. in the bond market, yields have been climbing once again this morning. very briefly, 430 on the 10 year. coming up, catching and -- catching up with michael schulte. and at the eurasia group, they discuss trump raising momentum. and a discussion on the cooler labor market. bond yields are pushing through three-month highs going into a busy slate of economic data through the week. jolted job openings with consumer confidence today ahead of alphabet earnings. michael shall joins us with more.

michael, good morning to you. what do you make of the argument that we have already discounted the trump presidency? michael: you have, to a certain degree. pre-election every time he was ahead in the polls, markets went down. we are set up for something quite different. at the same time, the market didn't really think it would have a trump presidency and had no idea what it would mean. at the same time, i don't get the feeling that the election has been that important for the overall flows into the market. it's been important for some specific flows. i'm sure that the marginal yields are higher because of trump trades. i also think they are higher because people would much rather go in the other direction going into the fed meeting. most of what we have seen in the back up in yields is that most of the u.s. economy is ok and that the fed won't be cutting rates by 200 basis points over 12 months.

how big are the stakes in terms of redefining the macro environment? michael: it could redefine the country. it feels like a big election from a social perspective. you will have a different america one way or the other. as far as the macro is concerned, there are limited tools available, even in the case of a sweep. i don't think it's easy to extend the budget deficit beyond where we are already. it already seems to be a reckless fiscal path for the country. my suspicion is that whoever wins, you know, they had better hope for divided government, otherwise they will be disappointing a lot of their base going forward. annmarie: even if it is a sweep, the former president is talking about mass tariffs and the alien and other acts.

wouldn't this have huge effects on the macro policy? michael: terra policy is the big difference, where you can see trump and harris looking completely different. i will think that there could be limits to what can be done, practical limits. you will see market pushback, corporate pushback. but i think that under trump the tara policy that he feels was relatively successful, it's notable that the democrats didn't unwind pretty much everything that he did. i'm not saying -- there are obviously big differences between the two of them. and yet many of the big issues facing the country are going to be facing us no matter who takes shards next week. annmarie: true. more news overnight now about outbound investments when it

comes to china. they definitely have a bipartisan approach in how you want to view china. you said that when it comes to tariffs, the market pushback will be strong against what trump is trying to do. let's say that he does 60% on chinese imports. what's the market reaction? michael: i think it would be quite negative. there would be concerns, i think. annmarie: enough for him to come out and rewind? michael: i think he has -- look, he's an interesting character. sometimes he promises big and delivers small and sometimes he says nothing and then delivers. the trouble with trump, this is what we all experienced between 2016 in the beginning of covid, which was its own story, was trying to understand what he would actually do. i saw the headline on steve schwarzman where he said that trump understands more for the job of president is. i think that is partially true.

but he does seem to be a different person, eight years on. lisa: it's notable, you are talking about when we find out next week. i have a question around that. harley bassman on the move index, volatility in bond yields, talked about the biggest potential volatility event being baked into the bond market ever in his career with data going back to 1980 eight, saying basically the market is pricing in an 18 basis point rate move in either direction on the days immediately after. in this incident, our bonds the risk assets? michael: you have to be careful, volatility index chose to pay for short-term protection. you might have someone who has a big pro trump trade on and a

bond trading pushing against it. somebody is positioned in the opposite way. volatility levels get pumped. this time it's like the bond market has been used more by people wanting to put protection in their portfolio and how it performs between tuesday of next week and friday of next week. it's not quite the same as saying that the move index is high because everyone is afraid of the treasury markets. lisa: when you came on you talked about the different role and what you are positioning for. you didn't know. are you more clear and holding a position in this uncertainty? michael: when i said precious metals were interesting a few weeks ago and have performed well, i do think that we are in

the beginning of a long story of fiscal discipline being imposed on the u.s. and other developed countries. you hear more and more people talking about what we are going to do with the deficit and how we are going to deal with the deficit. the strong performance of gold and silver are signs of people moving into those markets partly to protect either corporate wealth or personal wealth. i think that that story survives no matter what happens next week . i have a hard time looking at our polio and understanding whether it wants trump or harris to come in. we have some traits that i think have been the beneficiaries of trump flow over the last month. other parts of the portfolio probably would have moved the other way. to the extent that we have exposure in china, they would have rather seen harris common.

i think we will see which way they push it next week. big picture, medium to long-term, certain trades like precious metals look interesting, no matter who tricked -- no matter who takes charge. jonathan: michael, good to see you there, sir. equity futures are rolling over, slightly negative on the s&p 500. with your update on other stories this morning, here is your bloomberg brief with dani burger. dani: speaking of trump trades, 70 1000, the highest since june. this u.s. election outcome is seen as a trump trade in the support for digital assets with some predicting a rally beyond the mark -- march record high. options traders have $80,000 by november regardless of the election outcome. apple iphone exports from india jumped by one third in the six months through september.

exporting $6 billion in iphones made in india, putting exports on track to surpass 2024 and they are a crucial part of the efforts to lessen reliance on china alongside with tensions from beijing between it in the u.s. starbucks is threatening to fire staff if they don't return to the office three days a week. a memo from bloomberg sees that the coffee chain is implementing a standardized process to hold workers accountable. the move comes two months after brian nichols took over as ceo and he told employees last month that they should work from wherever they need to get the job done and he thinks the places the office. jonathan: every time i see a story like this i am shocked that they are not back in the office already. lisa: starbucks benefits from people being in the office, not making coffee at home, seems like a logical home bias to get people back to the office. jonathan: you would think.

equity futures are just about unchanged on the s&p. up next, election day is one week away. >> donald trump spends his entire time trying to have americans point the finger at each other. >> her newest line is that everyone who is in voting for her is a nazi. jonathan: that conversation, up next. good morning. ♪

jonathan: checking out the bond market, yields are still climbing, up by two basis points . equity futures are just about unchanged on the s&p. election day is one week away. lisa: donald trump spends his full time trying to have americans point the finger at each other, fanning the fires of

hate and division. >> her newest line from her campaign is everyone not voting for her is a nazi. they are nazis. i'm not a nazi. i'm the opposite of nazi. jonathan: donald trump and kamala harris are revving up their campaigns with one week until election day. kamala harris is delivering her closing argument speech at the sign -- the side of the january 6 rally. mike, what did you make of the closing arguments? mike: this is her opportunity to speak to a national audience much the same way donald trump did on sunday night in new york at madison square garden. but in the case of the vice president, she is aiming the message specifically at key voting groups in the swing states. we know which ones they are and we know that she is going to be trying to speak specifically to

women and republicans who might be sitting on the fence and wondering about whether they can cast a ballot for donald trump. she is trying to highlight how the president has sowed divisiveness, including with remarks by some of the speakers who appeared at the rally at madison square garden on sunday. trump, for his part, is going to be trying to distance himself a bit from that. you heard it in his remarks last night, trying to back away from accusations that those remarks indicated that he is in the view of democrats something of a nazi, someone who espouses fascist viewpoints, as some of his former advisers have said. it's a critical moment for both. trump, giving remarks in pennsylvania. harris, tonight, here in washington with a symbolic speech. sunday was part two of the rnc. his wife actually spoke and

introduced him, something she didn't do of the rnc why is he giving a press conference at mar-a-lago this morning? didn't he already give his closing argument? he did mike: -- he did -- mike: he did, but the event in new york did not age the way they had hoped. he wanted to leave new york with the aura of inevitability and the sense that they had the race locked down. instead we saw that some of the language we had heard, the racist and misogynistic comments we had heard on sunday, they risk undermining him with key voting populations. not just women, but black voters and latino voters that he has been trying to court for months. we are going to see him today try to somehow extend an olive branch there and also put some of the blame for what we are seeing in the economy and elsewhere, especially the

border, back on harris and the biden administration. jonathan: mike shepard, good to catch up. to continue the conversation, john lieber joins us now. let's start with the harris campaign accusing the former president of being a fascist, drawing parallels with nazi rallies decades ago. looking at the polls a week away from the election, is any of it? >> doesn't seem like it. nothing has moved except for one big event, joe biden dropping out. otherwise, it has been pretty steady. you have seen movements among subgroups like independent voters that were shifting towards harris and are now moving back towards trump. but if you look at the big set pieces of the campaign, the dnc, the rnc, even the trump assassination event, attempt, you aren't seeing big movements and not in the closing days. one of the big markers of this campaign is how incredibly

steady it is and how the views on both candidates are totally baked in. lisa: i was thinking about this last night, culture wars coming to the fore, it's a reason we are seeing this massive gender gap. the preeminence of cancel culture on one side, people who are really looking for potential issues that other people who say anything and it doesn't really register. that is why i think it is notable, has the incident at madison square garden broken through in a way that some of these other comments really haven't? >> the risk is that it's a really close election and you have about half a million hispanic voters in pennsylvania from puerto rican origin. it's entirely possible that it doesn't take a big movement in the polls or even a big event to be the thing that the sides the election. it would be ironic if it was an unfunny joke from a no-name comedian at an unnecessary rally in manhattan that costs trump the election, but in an election

where the candidates were set -- are separated by as few as 10,000 to 20,000 votes, that's completely plausible in this cycle. which is why these comments from the manhattan rally are resonating so much with trump doing damage control. lisa: what you make of the fires that we saw in washington state at the ballot boxes. supposedly only a couple of hundred ballots were destroyed, but how much is there a risk going forward of this type of activity increasing? >> there is a lot of risk of that. republicans have been convincing themselves for four years that the election was stolen and in doing so have studied good techniques for how to steal an election. that's a big factor. i don't think it will end up being a big factor, but the thing we should keep our eye on is people's trust in the system. one of the problems with trying to tamper with the ballot boxes is you do not know who's ballots you are burning.

you could target different neighborhoods and try to go after different demographic groups who you think have a higher propensity to vote one way or the other and washington state is not going to vote for trump, we know that. but i think this is going to be an issue where people lose faith in the process if they see that proper safeguards are not in place to protect the sanctity of every ballot and long term it has a negative effect on people's beliefs, fairness and the system, and it's how you get a majority of republicans believing that the election had been stolen, a dangerous and disturbing trend. annmarie: this ballot boxes was in the congressional district for the democratic incumbent is facing a tough challenge. when you look at the map, right now the harris campaign thinks they can hold the blue wall. the trump camp thinks they can take at least one of those states. looking at wisconsin, michigan, pennsylvania, which one is the

most riep to flip? >> to me it looks like she is the weakest in michigan, big problems with an air of american has been weaker there with white voters than in other places. that's the place where the trump team thinks they have the best opportunity. pennsylvania is obviously the biggest and most important state, most important in the polls. wisconsin seems shaded a bit towards harris. i would say that michigan would be the big battleground. annmarie: interesting, in wisconsin and pennsylvania, those are the senate races looking more like a coin tosses when they had been leaning democrat. do you think the senate races could go read at the top of the ticket and then the states go blue? >> again, it doesn't take much in the cycle, you don't need a lot of split ticket voters for something like that to happen. all three of those races are competitive in wisconsin, baldwin, in pennsylvania.

casey has the benefits of incumbency, helping them survive even good challenges in a decent year for the out party. jonathan: good to hear your thoughts, john. this should have been the envy of the harris campaign, donald trump, former president in the democratic backyard, with energy from a camp that never seen before in this country, but as john put it, overshadowed by an unfunny joke at an unnecessary rally. annmarie: it is in the media having the criticism, they will of course critique it, but it is the fact that republicans had to denounce those comments. why? there is a large swath of voters in pennsylvania, philadelphia, 300,000 individuals of hispanic descent, half of those of -- are puerto rican. florida, rick scott had to come out. this could hurt any campaign

when the margins are so thin. when you can win or lose a state by 10,000 votes. jonathan: the trump campaign is hoping the news cycle moves on quickly. we are moving on to the equity futures and up next on the program, pricing in election risk. we check in with dean at election advisors. from new york city, futures are negative. 430 on the u.s. 10 year. this is bloomberg. ♪

♪ ♪

with so much great entertainment out there... wouldn't it be easier if you could find what you want, all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock included, for only $15 a month.

jonathan: bouncing back from a week of losses and we are negative by zero point 05%. bear in mind, the nasdaq is not coming off of a week of losses. seven weeks of gains in the nasdaq 100, thank you, tesla, with alphabet after the closing bell and we will talk about that in a moment. what to watch in the bond market? front-end of the curve. a seventh consecutive day of yields on the 10 year, the longest streak since may of 2020 three. up marginally this morning, lisa is on the 10 year.

lisa: mark rowen talked about how the economy isn't landing and he follows this, he among other executives over in riyadh were talking about how likely it is, clear or unclear, that the fed will make these rate cuts this year. there is a feeling that they might have to rethink it based on how much better-than-expected the economic data is coming out, even at a time where inflation is coming out with thursday being interesting for core pce. jonathan: the problem they all have is that the data will be so noisy this month, we will call it a noncyclical reason for hurricane strikes and if it is strong, it must be really strong. annmarie: and it comes after -- lisa: and it comes after earnings with the technological earnings cycle boosting growth and forces in a way that in the near term sort of defies the way

that it was pre-pandemic. in other words, a higher neutral rate, people are grappling with it. payroll estimates are still around 110. jonathan: on the foreign-exchange story the euro just rolled over into negative territory, holding onto 108 and the dollar, stronger for four consecutive weeks. the move in the bond market is breathing life back into the u.s. dollar that was left for dead a few months ago. we had dollar bear after dollar bear on the program. lisa: how much are people looking at the idea that it is coming in better-than-expected and that even if there is a red sweep, what does it do? u.s. action, the rest of the world's problem, the dollar gains, that's what you see in the market. how much of this is tied to that believe about what the market is positioning for trump? jonathan: under surveillance

this morning, david solomon touting the strength of the u.s. economy. saying that his best case for the u.s. to achieve a soft landing with a better outlook for dealmaking is basically putting some doubt on moves from the federal reserve after the next two meetings and we heard that repeatedly from a lot of economists, that the next two cuts might be easy but after that we are in no man's land. lisa: potentially no rate cuts in the first half of next year, which would be different than a market pricing in an additional 100 basis points of rate cuts. i'm curious how much we are trying to figure out in real-time the new neutral rate at a time when they're in this this latin growth in the economy. -- latent growth in the economy. i'm hearing more of a bet on that than the election or even fed policy. annmarie: he sounded optimistic about the trajectory of u.s. exceptionalism, concern over

things in the middle east, reiterating what he said to you in may about how the u.s. and goldman are doing well when it comes to the election. he is excited for clarity and was excited on the edges talking about this, the prospect of potentially a different environment from dealmaking. a.k.a., who will be leading the ftc. from the trump administration, we know how jd vance feels about lina khan and how trump feels about deregulation, she likely wouldn't get another term. jonathan: it's important, corporate leadership wants clarity. what kind of deal can be closed in america given what he have seen around kroger and tapestry? lisa: it's why we are seeing and hearing about this backlog looking for clarity. but it is unclear, even if there is a change at the top of the nation, will there be a change

on the top of the s&p given the comments? jonathan: that's the latest in that what they call it, davo's in the desert, 21 billion in the expanded share sale, looking to stave off a credit downgrade with a crippling labor strike in their seventh week. the stock this morning is down 1%. lisa: looking at the numbers, the company is burning 4 billion in cash for the fourth quarter and have been hemorrhaging something like $14 billion as a result of the strike and the questions around the safety of some of their jets. it is one thing to raise cash to build up after it's done. it's another thing to get it done and get stability to build off of understanding what your business model is going to be. jonathan: sheila con came on to say that this would be six weeks and after that, once you calculate the pay increase,

these guys would come back to the job, but they are not coming back to the job. lisa: raising the question of what they would take to get it done. the white house said come on, guys, get it together, this will be important and we are still left here with them burning cash and raising money to begin to build after this is over when we don't have a sense of what that could be. annmarie: tens of millions every day as the workers are on the picket line and it was amazing they were able to get this deal done. what is so interesting and why someone was so shocked to the last deal didn't go through was because at what point are they going to say that i need to get paid and they are now no longer receiving health benefits. that is a big jonathan: hit to individuals. jonathan:that is the latest on boeing. this is the latest on ford. warranty costs and hurricane disruptions, making a stark difference to gm, raising their profit forecast, stock down in

the premarket in the last week. gm, decent. tesla, knocked out of the park. ford, stronger. lisa: with a similar issue to volkswagen in terms of volkswagen -- backlog, what are the big distinguishing features? product mix? a question of how much business was devoted to electric vehicles? questions around the distinguishing features over success in those who are flat on their backs. annmarie: ford is trying to cut costs, removing billions in materials, but they said they are not cutting as quickly as competitors and that everyone in the auto industry is also trying to cut costs. jonathan: ford, getting hammered in the premarket, let's turn to the election. metro risk advisors reporting that everything is high in risk

relative to recent estimates over the playbook for volatility, heading lower once the information is out. dean curnutt joins us now. what is it have to say about event risk for the next week? dean: right now the priced implied volatility is in the bond market. in other words, it could be sunny day after day, but you know it is coming and you have to brace for it. right now, the markets are not moving very much. you have got one month of realized volatility and it is a difficult situation. you have got something on the calendar that is consequential and as you are referencing before, vastly mood in the index, really pricing in the potential for a gigantic move in

bonds. especially. volume risk premium as we like to call it is the spread between implied and realize the cross assets, equities and bonds. you see it in certain foreign-exchange pairs in around the world. so, the u.s. is basically exporting election uncertainty around the globe. the playbook, historically, and i have studied this quite a bit through brexit and the 2000 20 election, it's all different than the current financial climate, the playbook is very sticky and hedging costs are high and once the information is out, volatility comes down. so, it poses specific and interesting challenges for the hedgers, because hedgers effectively bet that the market could move in an unwelcome way, but then you have to think forward as to how well your

hedge premium will hold after the event. history tells us that it doesn't hold well after the event. jonathan: it's a lot to unpack, but one key phrase is -- once the information is out. is there a risk this time that there could be a long time before we get that information? dean: it's a great point. i have been thinking through the betting sites in trying to understand if it is the whale, as you reported on, folks with capital moving the odds in the trunk direction? or is there real marginal information content we should pay attention to? most would say that if trump wins, the challenges will be considerably less from the democratic side. who knows, maybe the black swan is that the democrats will challenge this. i think that one of the things we are supposed to focus on as equity investors is the bond

market. i'm very troubled by the 70 basis point increase in 10-year yield's after the fed eases in september. that's not something we would typically expect. if the goal is to ease financial conditions and that is a main part of financing costs for companies, mortgages and so forth, it's not working. what the move index is telling us is a significant amount of uncertainty is in the risk asset class. what we have learned in the last couple of years is that equities can succumb to higher bond yields. the market is pricing for a higher outcome in which bond yields go up and stay up. it's a risk, the endless supply of capital that the u.s. needs to run itself. lisa: there is this question

around the 70 basis point increase two days before the fed meeting and the question of whether this is a commentary on the fed cutting too early or igniting optimism around growth with a less restrictive policy and the question of if it is a reflection of bonds and risk assets during a time of uncertainty within the political sphere. which one of these scenarios do you see is the more likely reality? dean: there might be higher bond yields against the increasing odds of trump in the bond market and there could be citibank economic surprise indexes going up in concert. the last one, perhaps the world has had enough with the u.s. that. we are obviously still the reserve asset and that's not going away anytime soon, we

should respect that. we should also respect the history of market prices even for liquid assets like the treasury market. there is a crisis just cap out. -- there is the possibility that prices just a gap out, where the markets last year said no more for the additional supply coming . i feel like we push up against that without a real credible discussion around deficit reduction, neither candidate has really expressed any interest at all in deficit reduction. i come out of this with the idea that there is an opportunity for investors to hedge. the s&p has got to be the best benchmark in the world. over the last calendar year it is up 41 percent with 12 realized volatility. it's an unbelievably sharp ratio. it's almost impossible not to be

fully invested, it's a difficult benchmark to be. you have the opportunity to take the gains and put them towards hedging trades that don't break the bank but move you towards a modest slide after the election. lisa: harley bassman talked about the move index implying 18 points in either direction for benchmark yields. i'm wondering, based on the correlation across assets, could a move like that trigger the decline and the gap in prices, not just in bonds but elsewhere in equities? dean: we saw some experience from 2000 22. some said it was a controlled equity drawdown. but up here we have got to keep a close eye on it. at some point the stock market is not going to be satisfied with higher bond yields and what

they potentially imply for choking off economic growth. jonathan: 430 on the 10 year, appreciated as always, dean curnutt. s&p futures are negative by close to .1%. updating stories elsewhere, here's your bluebird brief with dani burger. dani: shares of hsbc are up announcing a fresh multibillion-dollar stock buyback with better-than-expected earnings and results were driven by the wealth arm, benefiting from higher profit volumes in asia as they are looking to merge global investment gauging units. prosecutors in philadelphia are suing elon musk and the trump super pac, saying that the million dollar giveaway is in illegal scheme to influence the election. the giveaway reports to award voters in swing states to sign a

petition. his allies have argued that the giveaway awards people for signing a petition, not supporting trump. doctors are on the brink of their eighth world series title after beating the yankees 4-2 in game three. the dodgers went up early and they never looked back. the yankees had been hoping for a boost from the offense but only managed five hits with the air and the playoff slump. the yankees will try to become the first team in history to come back from a 3-0 deficit. that is your brief. jonathan: tough evening for you -- for new york sports. is judge going to turn up? annmarie: it's a crime. i finally know what it feels like to be a mets fan. all of this adversity. lisa: gratuitous. annmarie: all the adversity, got to believe. lisa: it's unfortunate the yankees haven't been able to

rise to the occasion. annmarie: so nice of you. jonathan: up next on the program, separating the signal from the noise. >> with payrolls, we will probably see a significant impact from the hurricanes, but the markets should look through that and see what is going on. jonathan: that conversation, up next. live it from new york, you are watching bloomberg tv. ♪ at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real.

♪♪ ♪♪ the winter escapes sale is now on. visit sandals.com or call 1-800-sandals.

jonathan: investors confronted with one of the most pivotal weeks and markets this year, i would say the last few years. a big week is coming up for financial markets worldwide. s&p futures are unchanged, earlier on in the session it was at 430 for the first time since

july. under surveillance this morning, separating the signal from the noise. >> jobless claims picked up a bit a couple of weeks ago and that was clearly the effect of the first hurricane that hit the southeast. two weeks later we had the second hurricane. for payrolls you will probably see a significant impact from the hurricanes. the fed and the markets should look through that and see what is going on apart from those areas. jonathan: jay bryson, writing "it will be difficult to get a clean read from the report. 33,000 union workers, in addition payrolls are likely to be depressed from the devastation caused by helene and milton, the latter of which made landfall during survey week. jay joins us for more.

let's try to break this down. going through the track, how much is union strikes. how much is hurricanes? how do we get a clean read on what is and isn't signaling weakness? >> to your last point, it will be difficult to get a clean read on cyclical weakness, but with 30,000 out on strike and those who are not unionized and furloughed that will be affected by that, if you look at continuing claims of survey week, it was up 30,000 from the week before. these are people showing up for hurricane helene in the mountains of north carolina. initial jobless claims remaining elevated this week, probably people from milton. the way that we think about it is your underlying runway is somewhere around 150, 1 hundred 60. knocking off 80,000 or so from

those different events, that is how we come up with the number. there is going to be a lot of uncertainty and, as you say, it will be difficult to get a clean read on the signal and the noise. lisa: how much are you focusing on unemployment as the cleanest of the dirty data points? >> that will bump up. we were at 4.05. we will expected to go up to 4.1. if it shoots up to 4.4, you have to start digging into what's going on with the labor market there. that's what's causing all of that and it will be difficult to get a kind of clean read their, but you know, again, most of this stuff is temporary. when you look at the other indicators in the economy you wouldn't expect the labor market to be falling apart right now. lisa: i find it fascinating how much the bias in the market has shifted. the weaker than expected jobs

market dropped last summer and it was the last time we saw those markets where they were on the tenure. if these numbers come in better-than-expected, you suddenly see a bigger reaction from the other side. >> if they come in better-than-expected, it shows you the underlying strength of the u.s. economy. we are skeptical about the strength of the last month, 200 54,000 jobs. seemed like education and health care hiring was very strong. i mean, it had been strong, but it was super strong month. the same goes for leisure and hospitality. i would expect to pay back there, but if you don't get it, if you get two consecutive months of strong hiring in those sectors, you have got to look at that and say wow, the u.s. economy is stronger than be believed. lisa: how big could the revision be for the print?

in september? . we don't factor that into much, it has been swinging around lately. obviously, if there is a downward revision, there is something there, but the main focus will obviously be on the october source, which is where we expect to see the weakness. jonathan: is there any kind of print that would stop the fed from cutting these rates a week from tomorrow? >> from cutting? yeah, i would say for arguments sake let's say you get a 150 thousand number with a big decline in manufacturing because of the boeing strike and you have big decline in some of the other sectors around here, you have a 150,000 kind of print, something like that. maybe the markets start to price out that probability of the fed waiting in november, pushing it back off to december.

jonathan: interesting. jay bryson, thank you. a shift because of the election week, the range of estimates, 110 is the medium, -10 is the low. the highest comes from steve over at mizuho. lisa: i would argue that if you see an increase in the quits rate, if we get higher-than-expected core pce thursday with an unemployment rate that actually drops meaningfully on friday, you could set yourself up for a messy meeting next week. jonathan: this conversation will continue with lisa in a moment. and we will speak to jesse taylor and mandeep singh, as well as david malpass. second hour, just round the corner. equity futures are just about unchanged. from new york, this is bloomberg. ♪

>> there is really no macro theme driving markets. >> we have to be concerned of a slowdown. >> issues are mounting up. >> the solid growth should be used as an underlying part of this fed rate cut cycle. >> next couple of cuts or big 10, i think that is justified. >> this is "bloomberg surveillance," with jonathan ferro, lisa abramowicz, and and reheard earn. jonathan: equity futures on the s&p 500 just about unchanged,

likewise on the nasdaq 100. earnings today after closing bell, we hear from alphabet, tomorrow microsoft and meta, there is a microsoft and apple, friday the payrolls report. the week today, the election. then the federal reserve decision. one of the biggest weeks for years in financial markets worldwide. lisa: pretty much every catalyst for uncertainty in markets is coming to the floor was some sort of maybe resolution. fed decision, considered to cut by 25 basis points. of course, the election. a question of how much of a relief rally is being set up for given the extremity of how much uncertainty is baked into the market. i love the notes. is this exciting, anticipation, urges holding your breath until we have an answer? annmarie: election anxiety is being exported to global markets.

the election when we got from now, the market is pricing in a trump rally. remember, republicans were feeling this excited during the midterms of 2022. a member of pimco says if the posters are underestimating what we have seen in the past, then he wins, but what if they are underestimating like they did in 2012 with obama and underestimating younger voters, many women who vote for harris, how will that recalibrate some of this trump trade? jonathan: the market is leaning into a long dollar, short bonds, rest of the world position. how vulnerable are those trades into next week? lisa: everyone comes up with a slightly different answer, how much this time is different, mike wilson at morgan stanley talking about how the positioning generally has a 2016 playbook but is different in couple ways.

he points out this is an election were donald trump is actually the favorite candidate. that was the opposite going into the last election in 2016 and he won. so how much is this baked in? jonathan: we have to deal with earnings, numbers from google after the closing bell, mcdonald's this morning, third quarter sales at -1.5%. revenue from mcdonald's 6.87, estimate was 6.81. this is third quarter, and we know things will be more difficult in the fourth quarter given their difficulties in the last week. lisa: the issue for them is the international markets also. there is now this question about e. coli and the onions and they are pulling the quarter pounders and france, cha, u.k., and the middle east, andests. starbucks also facing some of that pushback. some of these consumer

international companies, how much will they feel the brunt of some of the disgruntlement with the united states? jonathan: equity futures on the as a be about unchanged. draw your attention away from stocks and go to the bond market. 10-year went through 4.30% this morning. two higher for seven consecutive sessions, longest run since may 2023. a 50 to 60 basis point move since the fed cut interest rates. lisa: on the 10-year yield, just shocking. dave current saying he thinks people have not made enough of this, so consumed by the election, earnings, and other developments. why? is it because people expect the fed is cutting too much too soon? is it commentary on trump? or is it that the u.s. is doing fine? jonathan: such a big heavy

flavor to this program with fixed income. lisa: we could talk about options, not that great yesterday. $44 billion of seven-year notes today. watch this space. it is getting more interesting. this expresses hesitance people have. jonathan: coming up, lisa jan above morgan stanley, mandate seem -- mandeep singh of bloomberg intelligence, and we will talk to david malpass on trump's economic policies. stocks inching higher ahead of google earnings. lisa shalett writing markets extremely active over the past month of traders have juiced up the scenario baked into equity valuations, adding improved odds of a republican sweep to the list of goodies already discounted. lisa, that is quite a quote. good morning. are you suggesting this market has got a little bit too far? >> absolutely. we have been talking about it

for a while, on a valuation basis, this is a very expensive market on a very ambitious earnings expectations. let's think about what companies have reported. if you look at the 12-month trailing earnings for the quarter ending june 30, year over year, s&p 500 profits, including the max seven, were growing about 5% year after year. the mag seven have not all reported yet, but we are up 3%. expectation for full year is year-over-year up 9% to 10%, next year accelerate to 15%. so these are ambitious re-acceleration numbers. when we think about what is baked in and why we said there is a lot of goodies here, there is a view we will get that reacceleration and it will be based on margin expansion,

profit margins that are hired, but it will be so-called immaculate. we are not going to cut jobs to get there, which means you have to get productivity gains. with all of this wonderful news happening, the fed will keep cheerleading from the sides and cut 25 bips a quarter, at least. the latest is, all goes well, we get a red sweep in washington, there is no more regulation and we could goodies like tax cuts and the world is a wonderful place. so from where we sit, we look at risk premiums. as lisa was just talking about, the importance of this move in the treasury markets, wire stocks shrugging it off -- why are stocks shrugging it off? typically, this move on the long end of the curve, particularly as underlying real rates approach 2%, which historically

has been that obstacle for stock valuations, i think it is dangerous for the stock market to be shrugging this off. this is a significant move. we have seen lives in the real rate, inflation expectations, term premiums, in auction performance. so i am very focused on watching these moves in the yields. lisa: and the bond options, which is the reason why we will always welcome you. there is a question about whether yields are rising for the right reasons. it is an argument people have made and we have gone over on the show, and there is a question of why you think that the yield rise we are seeing right now is for the wrong reasons or if it does not matter. it has reached that threshold where it needs to be something stock investors pay attention to. >> look, i think the bond market has this right. i do think real growth has been better. i am in the camp that says inflation expectations and the potential for an inflation boomerang next year is actually

rising, especially if you bake in the part of the story about a red sweep. you do not get it without the goodies but none of the collateral damage, which as we know, tariffs and closed borders could be inflationary. i do think that the bond market is anchoring on some hypotheses that is very anchored in the data, and i think the stock market will have to wake up and pay attention. lisa: what do you do with that, go into gold and into a bunker and hope for the best? >> we are focusing on value and efforts of acacian. seeing that valuation in this market matters. we are playing in parts of the stock market that are somewhat cheaper, frankly. it has included some of the value cohort, included financials and a handful of industrials and health care stocks. that has really been our approach, to even it out and not

take very big bets and aim for diversification. lisa: financials is a trump that, but you say it is a very different bet. >> thank you for pointing that out. our premise -- our financials is not premised on a deregulatory push. we think basel to end game, easing of those capital requirements, will happen regardless. we think that that has already been signaled by regulators. what has us excited about financials is not just the potential for cost cutting and operating leverage, but the capital markets activity really looks like it is going to come back over the next two years as financial sponsors and private equity guys finally get off the sidelines with these kind of market valuations and start doing deals. lisa: with the red sweep, we get

goodies potentially with the bad things, but what if the polling is underestimating the support kamala harris and some of these democrats have with issues like abortion? how are you going to think about the next few years? >> look, i think a harris win at this point, i think markets would be surprised. i think we get somewhere between 2% and 5% pullback on that, because i think there has been some pretty big rotation. but i think you get a lot of status quo type moves. i think we continue to get a continuation of the fiscal stimulus programs that would saunter the biden administration. but we do not get necessarily some of the issues, the inflation threats, so we continue maybe on this soft landing trajectory as opposed to this no landing trajectory. so i think the bond market comes

back in, as well. yields come back in. annmarie: even without that fiscal spending? >> yeah, i do. her plans, if you do the analysis, and our team has done it, fiscal deficits under her current plan will run about half of what he has proposed so far. jonathan: so hard to game this out. you think of 2016, trump was bearish for markets, and then the night of the election all of the sudden it was bullish. 2020, out the window. everyone seems to have forgotten about that. the markets were ripped that month. lisa: how much is going in versus the candidate? and if he can implement the tariffs but cannot get rid of some of the regulations and the taxes unilaterally at the same speed, does that change the reaction from markets?

jonathan: lisa, this was a clinic. lisa shalett of morgan stanley wealth management, thank you. equities down a little more than .1% on the s&p. here is your bloomberg brief. dani: mcdonald's reported third-quarter cells that missed estimates, shares down nearly 2%. weakness in international markets. the u.s. was a bright spot, growth at .3%, more than expected. investors are ready, looking ahead to the fourth quarter, trying to assess the impact of an e. coli outbreak linked to quarter pounders. apple rolling out the first set of apple intelligence features alongside a new imac desktop with an ai focused processor. the ai software is available for iphone, ipad, and mac. a broader set of capabilities was previewed in june, but some of the most anticipated features are not arriving until december.

amazon founder jeff bezos defending his decision to block the washington post from addressing kamala harris. the owner says ending endorsements addressed a credibility gap in the media industry and denied there was any quid pro quo with trump. bezos wrote endorsements create a perception of bias. that is your brief. jonathan: thank you. a deep irony about the moment, the accusation and the level of people who want to drop endorsements, half want to continue them. a lot of people complaining about this. it is not about being neutral, not about endorsing, it is about endorsing a particular candidate that matters here. lisa: one of the issues jeff bezos is facing is that cnn reported that the ceo of amazon had calls with the trump camp. so he came out because of this criticism and had to say, have to be clear, there is no quid pro quo. jeff bezos says our profession, i did not know he was a

journalist. jonathan: he is one of us. not really next, closing arguments on the campaign trail. vp harris: on day one, i will be working for the american people. fmr. pres. trump: are you better off now than you were four years ago? jonathan: that conversation up next. from new york, good morning. ♪ (cheerful music) (phone ringing) [narrator] not all multi-millionaires built their wealth the same way, you have... the fearless investor. the type a cpa. the bootstrapper. the bootmaker. yeehaw [narrator] but many do have something in common.

we all trust schwab with our wealth. [narrator] thanks to our award-winning service, low costs and transparent advice. every day, over a million multi-millionares trust schwab with more than two trillion dollars of their wealth.

jonathan: equity futures on the s&p 500 as follows the futures down but almost .1%. bond yields higher by a single basis point, 4.30% rounded up on the 10-year.

closing arguments on the campaign trail this morning. vp harris: if elected on day one, he will be sitting in the oval office working on his enemies list. on day one if i am elected, which i believe i will be, i will be working on behalf of the american people on my to do list. fmr. pres. trump: i begin by asking a very simple question, are you better off now than you were four years ago? jonathan: here is the latest, kamala harris making closing arguments in the nation's capital later today, hours after trump speaks at mar-a-lago later this morning. the cook political report reading trump's closing argument, his campaign says, is this, harris broke it, trump will fix it. even with these advantages, the race remains locked in a dead heat. the reason is trump himself. jessica taylor of the cook political report joins us. good to see you in person. i share your research with our

audience, there is no trump policy that comes without his polarizing behavior. in a poll, just 34% of voters said they liked trump's policies. and his leadership style how much of a problem is that for the former president? >> if this were a generic republican, this race would probably be over. voters have to choice whether you like for the economy was under trump that then you get the rest of this baggage that comes with him. that is where we are seeing harris upon streak closing message, he is an authoritarian, a fascist, this is chaos. i think some of the things that came out of that madison square garden rally, he is having to answer for them today. he is going to pennsylvania where there is a large puerto rican and hispanic population, and that is now the story in this final week before the race. it is not focusing on how he would be a change -- trying to make it focus on how he would be a change from the biden-harris

administration, but harris and democrats say, yes, it is a change, and you will get all this chaos and insanity again. annmarie: do you see anything in the pulse that trump will be able to go past that ceiling that he has been cap that? >> this is the real question, why the thing in the back of our head is that the polls were wrong in 2016 and 2020, they are still capturing where he is at. we have not seen him grow his coalition. the question is with undecided voters, do they go to him or do they stay home or do they go to harris? that is the real question as we look at some of the swing state polling that is deadlocked. annmarie: cook political report has it a tossup race. >> all the swing states we rate as a tossup. polls are within one or two points. annmarie: financial markets are pricing in a red sweep, partly

because of the senate. you have done great work with senators that are defending seats, democrats, in wisconsin and pennsylvania that might be tossup's. what does the map look like today? >> it is favoring republicans. if we look at a republican trifecta, that is what is most likely to flip, the senate. we know they will lose west virginia, jon tester in montana is the underdog. they could sue one for republicans. and then the races that we have seen tighten up have been those blue wall states, wisconsin, ohio is next probably, still a difficult state, a state that trump won by eight points, and seeing tightening polls in wisconsin. pennsylvania, the race we moved last week into tossup with bob casey and david mccormick. michigan remains closer, probably slightly alyssa

slotkin. but they are all very close. we have seen those races, as the presidential race goes, probably the senate race goes. in 2016, every senate race when the same way as the presidential race. 2020 only susan collins managed to win. we are seeing a delta of just a couple points per we could see split tickets in arizona, for instance, were trump is favored. lisa: can you walk us through what a red sweep looks like, given the fact that not all republicans are the same, not all democrats are the same -- how much are we looking at trump truly having a clutch over the republican party in a way where he can get through his policies very easily, even with a civil majority? >> that is why republicans want to get to 53, 54 seats, because if it is a very narrow majority, the most important people in the senate become moderates. susan murkowski, lisa collins,

they have such a favorable map and want to take advantage of this, especially if you see trump 20, and the house is deadlocked, only four seats one way or the other. there are places like in new york and in the california that are more democratic areas that republicans need to run ahead of. then we have seats in michigan that will be very close. i think it is probably the way the presidency goes, probably the house goes. that is why republicans want to get that bigger majority to give trump a cushion. lisa: when we talk what will potentially change the outcome, everybody talks about turnout and who has the better ground game and early voting came here what do you see? >> democrats have a very sophisticated operation, their bread and butter, getting those people out. i hear concern among republicans because the trump campaign has

largely firm to this out to turning point usa, to elon musk. but you see encouraging early voting signs in places like nevada were democrats typically have a strong ground game, and republicans are having much better turnout. it is a question of, have republicans learned to love early voting or encourage their people? is this cannibalizing their election day voting that we see as more republican or is it just more republican enthusiasm? we will not know until election day turnout. republicans are making us early, because in nevada was how that race decided by just a few hundred votes, so if they emphasized early voting early on, they might have won that senate seat. lisa: trump gave a nod to this at the garden and you have see the rnc doing work saying early voting is safe, just make sure you vote. their best case in terms of -- what is your best case in terms of when you think the election

will be decided? >> i think we will know the senate pretty early on, based on montana and ohio, if we get those results. i think friday, saturday, pennsylvania is not going to be able to count some absentees. if it is a wave one way or the other, if we see north carolina or georgia go one way, trump picks off one of those blue wall states, we might see earlier results in a place like wisconsin or michigan, or if it goes harris. but if it is very close, it may not be for several days. we need to be ready for that. jonathan: that is what participants are focused on, how long it takes. and great maricopa county officials keep going back to this because it dragged on in 2020, they say 10 to 13 days. they want you going into this with a low bar so they can potentially get out quicker. so we talking weeks, not days. jonathan: nobody wants that.

jessica, good to see. jessica taylor of the cook political report. next, mandeep singh of bloomberg intelligence. he joins us as google prepares to report after the bell with earnings. that is later. equity futures on the s&p 500 -0.1%. bond market through 4.30% on the 10-year. the two-year up almost a basis point to 4.14 percent. from new york, this is bloomberg. ♪

jonathan: here are the scores for you this morning. equity futures looking lower, down by a little more than 1/10 of 1%. quite a run for the nasdaq over the last seven weeks. small caps smaller by 0.25%. the main event is in the bond markets. 2-year, 4.14. yields are up for seven consecutive sessions. as alisa said, soft two-year. a ton of economic data this week, job openings for september. for many of you come the last clean read predates hurricanes, some of the strikes, followed from the strikes.

on the 10-year, 4.30. lisa talked about the moves that we have seen over the last month or so. lisa: september 16 was the cycle. jonathan: two years later, they cut interest rates 50 basis points. lisa: why exactly are benchmarked 10 year yields ahead of that september meeting? is it because the economic data is coming in stronger than expected, trump getting a perceived lead in the markets, or the economic data coming in better-than-expected and the bond market reacting? it raises the specter of bonds being a risk as it when they have been the haven trade. that is a fascinating paradigm we are dealing with now. jonathan: we have to describe what the risk is to work out the risk asset.

the risk is gop sweep and you get all of that issuance in supply that becomes a problem. the federal reserve came out with a real bias to reduce interest rates. people still believe that they may well cut interest rates. the base case is they build by 25 basis points even with the strong data. that just feels this idea that the outlook becomes better and yields are higher at the long end. ultimately that describes a last month, do you have to play in the trump wind and gop sweep to some extent, but have we fully priced in the tax cuts from the campaign trail? i still think there is a large degree of skepticism about how much they will actually do if they get into power. lisa: question on what a no landing looks like, soft landing. for those of you rolling your eyes, these terms mean nothing, there is a question of whether we will see a re-acceleration in economic activity versus just chugging along.

that is the discrepancy between yields that can stabilize, recalibrating what a neutral rate looks like. annmarie: tariffs can happen immediately. that can be inflationary. every day there is basically a new tax cut. i don't know who will be paying taxes if we get a republican sweep and campaign promises come to life. but that will not take effect until early 2026. the bond market will have to price and the idea that we may get some of these but they will not know which ones they will get but tariffs they could know immediately. jonathan: amazing to see them where the momentum is at the moment contrasted with the polls. a: flip for many of you but here we are leaning toward this trump trade, the idea that you can get long a dollar, short bonds, long u.s. versus the rest of the world. euro-dollar briefly breaking below 1.08 moments ago.

1.081 is where we are right now. lisa: david solomon but this well when he said, the election, when i worried about is weak growth. questions about the geopolitical sphere. that was the most interesting aspect. that is the constant theme through all of this, less of what is happening in the u.s. and more of what is happening in europe. annmarie: the laws are going up not just 10% from imports from france, germany, but also the 60% imports from china. where does china now dump even more on the market? europe. jonathan: that growth engine is already sputtering. they have internal issues already. euro-dollar right now 1.082. benjamin netanyahu saying he is open to a short truce in the war with hamas.

the latest plans for peace talks include a two day cease-fire and the freeing of hostages in exchange for palestinians held in israeli prisons. annmarie: it would be very short, the biden administration would be breathing a sigh of relief, especially if they could get this done before the election. jessica taylor talked about that senate race in michigan, how hard it is because of arab americans and how individuals feel about how the biden administration has handled the war. but one has a mouse agreed to throughout this priceless -- process besides 11 months ago when there was a brief pause in hostilities? time and again they say no. benjamin netanyahu may be says he is open to the cease-fire but is there any inclination that hamas is? lisa: not to be flippant, but who is going to be the leader in the hamas camp?

that is one key question. jonathan: here is the latest on another issue, finalizing curbs on u.s. investment of technology into china. quantum computing and artificial intelligence. the goal and to prevent china from gaining a military edge. lisa: reemphasizing how both camps have been going after potentially curtailing some of the technological connection between the u.s. and china. a question about how much biden is doing this to say we are on this, too. a question about whether this will loom over whatever administration comes next. annmarie: this will come into the congressional review act window, but bipartisan support against china, i don't see that if there is a republican sweep. this executive order came out august 2023. i've been talking to sources

about outbound investment from u.s. investors, capital investment into china, that they think they could have the edge in cyber technologies. here we are a week into the election and we get it. jonathan: all of these plans on the campaign trail, it doesn't matter. it takes a long time to get things done in washington, d.c. often you have to focus on one thing at a time and then the next thing down the road. lisa: are you advising marcus to be patient? jonathan: it could be that you have to wait a long time if you get a gop sweep to get a tax cuts that people may want. lisa: this is the question if you are being told forward is a very long time forward. people want to know now. that is what is going on in markets. jonathan: earnings from apple coming up on thursday. sources telling us that iphone sales in india jumped by a third.

they want to reduce their dependence on china. china will be a huge feature this week for the tech players. lisa: fascinating story where tim cook is talking about how he is committed to china. people were buying iphones on the mainland but still moving production to india with the question of, is that going to be the next growth engine, but also how do we diversify away from china should there be another problem. look at what they do, not what they say. jonathan: one of the mag seven companies reporting this week. google expected to report strong growth. mandeep singh joins us around the table. alphabet is the star this year, not in the ai game. up 20% be written what went right? mandeep: they have released

their own large language model, seen some traction, but the expectations are still low. everyone expects chatgpt to take away some of the search share from google. overall in terms of sentiment, still somewhat neutral on google compared to microsoft, apple for that matter. that is where i think they can surprise to the upside simply because what they have done is not only on the search front they have released a model, even on the chipped front and when it comes to training these language models -- some say it will save them $1 billion. google has their own ship, and that is where the advantage will be. jonathan: always the regulatory burden on the horizon. it feels like it is getting bigger and bigger, this massive crowd they have to bear with over the next 12 months. how big is that brent? mandeep: it is in terms of the

number of cases pending in the u.s., let alone outside. that is why they have to restrain themselves from being very aggressive when it comes to tapping these markets. youtube could easily expand into other domains but given how dominant it is, that is where the effect of regulation comes in. jonathan: are you saying this company is not as aggressive as it could do, limiting their own growth because they are worried about what is happening in washington? mandeep: absolutely. everyone thought that google was the monopoly in search. now everyone at least believes there is competition coming from these other players that are building search around large language models. they are definitely not the first out there in terms of adding another product or future because they are so dominant in the businesses they operate. lisa: which businesses are you looking for signs, revving on their ability to expand should

the environment be conducive to that? how important is it to make greater inroads into cloud computing to be a real competitor with aws, azure? mandeep: that is where they have more runway in terms of expanding as well as making acquisitions. when it comes to cloud, even that is a segment with a long runway simply because they have all the capabilities in-house. even microsoft, growing $80 billion azure revenue, 30% growth rate, they are depending on openai. alphabet has all the ingredients in-house, their own model, cloud infrastructure. that is a powerful advantage because all of these models rely on proprietary data. you have to have technology to train these models. google can do it all in-house. that is where i feel the moat will become more obvious as we go along scaling these models,

but right now, the regulatory pressure is limiting them in terms of how frequently they release new products. lisa: a particular company they would want to buy if they could regulatory relief? mandeep: they were looking to acquire riz but they turned down that offer. said to be a $23 billion offer that they were willing to make. that is where you see they are willing to expand on the proprietary side because they are so dominant on the consumer side. from a regulatory perspective, they have fewer hurdles to overcome. annmarie: if they are so worried about policies out of washington, is that my sundar pichai is calling up the former president? mandeep: for all of these big tech ceos, what happens on november 5 is have a bearing on who is at the regulatory bodies, how these cases progress. if there is one thing that is a

big risk for google, even a forced divestiture of one of their segments will have an impact. google's infrastructure is shared across all of their businesses. it is all powered by one common infrastructure. forced divestiture will have an impact. jonathan: this is the change from leadership in silicon valley. they used to cloak themselves in -- now they have to come from the threats from the right. if you listen to jd vance, these are capitalist individuals are worried about the dominance of a select group of companies in america and are willing to do something about it. how are these tech firms shifting the balance down in washington, d.c., a lobbying effort, when all that you start to worry about what is left, and now they have there will be about the right, as well? mandeep: they just have to show

why they need to be big in terms of developing this ai infrastructure. everyone out there is trying to develop artificial generative intelligence. the way you do it is by investing in big infrastructure. they have to show to the regulators and everyone involved why the scale is so important when it comes to developing this new technology. jonathan: no doubt we will catch up later this week. mandeep singh of bloomberg intelligence. with an update on stories elsewhere this morning, here is your bloomberg green with dani burger. dani: david solomon is optimistic about the economy, saying his base cases for a soft landing. >> if you took a tour around the world, the u.s. economy is doing quite well, very resilient. a little bit more concerned about european growth and economic situation in china. dani: i also said fed rate moves

will be data-dependent next year. pfizer shares jumping to percent after recording a third quarter that topped estimates, saying it was on track to deliver a $5.5 billion in cost cuts. they were coming under pressure from activist investors to find new hits in a post-covid vaccine era. it was the american sports fan favorite day of the year. monday saw all four major sports and action for likely the only day of the year. the phenomenon is known as the sports equinox. a full slate of nba and nhl games are happening at the same time as game three of the world series and monday night football. that is your brief. jonathan: top 24 hours for new york sports, unless you are a mets fan.

lisa: i am actually rooting for good games, close games, close a series. i think it should be competitive. nice to see people actually work hard. jonathan: down in the premarket done by more than 10%. investor is not enthusiastic about the company this morning. lisa: revenue up 3% versus the estimate of three and 5%. revenue down 40%. -- 14%. maybe they are not cool with the kids anymore, the sticky thing that they put in the holes. i know that annmarie was a crocs fan. annmarie: my nephews are, little kids. they love them. because they are slip on.

lisa: this is the truth. and a little pokemon. but i think they are losing their appeal. jonathan: the stock is down 10%. sounding the alarm on policy risk. >> trump's policy will lead to more inflation, larger deficits, lower economic growth, and enormous amounts of disruption in the short run. jonathan: that conversation next. the former world bank president, david malpass, just after the break.

jonathan: equity futures on the s&p a touch softer, down by .1%.

sounding the alarm on policy risk. >> there is no comparison between the economic policies of trump and those of harris. drop policies will lead to more inflation, larger deficits, lower economic growth, and enormous amounts of disruption in the short run. he has such control of his party , if there were a republican congress, those cuts might be put into place. jonathan: economist debating the impacts of trump and harris policies on the u.s. economy. both projected to add trillions to the deficit with many expressing caution against the effects of trump's tariff proposals. joining us now is the former president of the world bank, david malpass. fantastic to catch up as always. as you know, there is a difference between a campaign promise and a legislative reality. how big is the difference you

have seen? david: it is huge. both campaigns are promising the air and the sea. as washington gets at things, this is how washington got to be huge. they chew up policies. one of the things is to be very clear about what policies are the most important. one from trump is that we need to produce more energy and fix the grid so there can be more growth within the economy. just can you do that? that is really hard to do. same on the taxes. the tax code is really fouled up, not doing what people are trying to get it to do. can that be changed? it is hard. i call it an upheaval. people need to recognize the upheaval in monetary policy come about it. that is hard to do. annmarie: what kind of upheaval? right now, the biden administration is producing more energy than any other administration ever.

elon musk is talking about $2 trillion can be shaved off. where? david: when you say energy growth, you have to go off of baselines. could the usb producing more energy? the answer is yes. one of the problems, the permian be, a remarkable field in texas that they keep saying is exhausted but keeps producing record amounts, doesn't have the pipelines to get the energy from the fields into the cities and around the world where it is needed. there is a giant amount of energy for the rest of the world because they are behind, as well. the $2 trillion, every part of the government can be done more efficiently, plus a look at what harris is talking about, a joint growth in government. cbo as us going from $6.3 trillion this year to i think

$10.3 trillion. it is the most massive growth plan for the government that anyone has seen. but that can be cut back. annmarie: unless the trump administration is going to cut in social security and medicare, where are we saving? even if trump fired -- which he loves the bird -- every federal employee, where is this $2 trillion coming from? david: we are going from $6 trillion to $10 trillion on both sides. you can do it that way with slower growth. but there are direct ways. people across the country know of government programs that should not be there. the federal government is subsidizing everything. that can be cut without harming. think about what happens if you don't employee the person as a federal government worker, they are then allowed to work in the

private sector. they will end up working in the private sector. they will be more productive, they will get stuff done. the government is crowding out private sector business all the time. lisa: how much are we seeing this priced into the treasury market? how much is this behind the increase that you see in longer-term yields? david: we were at 0% rates for a long time. it is just taking markets a long time to figure out what is a neutral rate. that does depend on what your policies are going to be. if you are going to have a weak dollar policy, as it seems biden and harris have had, that means you will have to have higher interest rates. if the dollar is the reserve currency, the yield can be lower, and you can keep the increases away from the long end. i think markets are really responding to where they think

the policies are going to be. the positive side is, if you say something sensible today, the markets will price it in. they will not wait for that in the future. jonathan: if you say something sensible today, you probably won't win next week. that is the problem. good to see you, david malpass. the difference between a campaign promise and the reality of getting things done in d.c. as we count you down to the opening bell, about 94 minutes away. equity futures on the s&p 500, down .1%. the third hour of "bloomberg surveillance." up next.

>> the street is even more bullish on trump winning than the predictive markets are. >> the most bullish for the dollar is a red wave. >> to have a closely contested election would be very unsettling to the bond market. >> inflation is due to not

higher or stay stubbornly stuck where it is, no matter who wins. >> this is a member of surveillance with jonathan ferro, lisa annmarie hordern. jonathan: let's start with equities and then move to bones. equity futures look like this on the s&p 500. a little bit softer this morning, likewise on the nasdaq. small caps negative by a third. new level to talk about in the bond market, 10-year through 4.30. yields up again on the two-year for a seventh consecutive session. we will go through the day ahead. do you do later this morning, jolts, job openings at 10:00 eastern time. after the bell, the first of five mag seven earnings reports this week. alphabet after the close. then payrolls on friday, next week on tuesday, we will get an

election result i hope wednesday morning, could be election week. two days later after that, we get a federal reserve meeting. good luck to the fomc. lisa: are you having fun? exhilaration is not the first word when it comes to mind when thinking about the election, may be anticipation for some sort of certainty. especially at a time when you have yields creeping higher. that is why i think that is the main theme. why have you seen this 68 basis point rise in 10 year yields when the fed is still on track to cut rates? that mystery is underpinning a lot of what we see in the markets. annmarie: depends on who you ask. jessica taylor talking about, it may take days, at least for the presidential race, if it is that tight. that means may be friday, saturday. we could have a fed sitting down

48 hours after a presidential election not having any answer on what policy will look like going forward. jonathan: we are flying blind into 2025 and it is hard to have conviction about anything. this just came in from a subscriber. the market seems to be clear on one thing only. the 50 basis point cut last week was the wrong move. lisa: people are saying the fed will may be cut to more times this year but after that could be on hold for a while. there is this better-than-expected data coming out, economic surprise index by citigroup and bloomberg. a question. is what we are seeing in the bond market a trump trade, was it a mistake, are we seeing inflation expectations skyrocket? they are creeping higher but there is something else afoot. that is something we have to keep a focus on. jonathan: we get more this week.

lisa: 44 million dollars, seven-year notes. jonathan: stacked our coming up. thomas becker from black rock. we will speak to john murphy from bank of america securities. and mona mahajan on why the bull market is still intact. bond markets climbing ahead of a week full of data with one week to go until election day. blackrock's thomas becker's has be our position for a continuation of transatlantic growth and to visit divergences and should widen interest rate differential between the u.s. and europe. what is the why behind the call? thomas: a couple different aspects. last time we talked about the no landings scenario in the u.s. the conversation is now 50 basis point cut, subsequent revisions, data looking stronger.

fiscal is another big address -- aspect of this. you have the qra yesterday which came out toward the end of the day. this quarter, not so big, but the forecast for q1, we have had this upward trajectory in the amount of debt u.s. bond auctions have to digest. that puts upward pressure on yields. that money is crowding into investment. when you look at where this deficit spending is going, it is going into structures, chips act recipients, inflation reduction act recipients. that is bringing private capital into parts of the economy, helping to make it less interest rate sensitive but also giving nominal growth high. we have seen this upward revision in activity.

we think the deficits are helping to keep the u.s. looking stronger. jonathan: this is a transatlantic call. give me the difference of what is happening in europe. thomas: could not be more different. here, you have companies lining up at dick nixon -- to take the subsidies. in germany, we are saying we don't need the subsidies. the news over the weekend of the layoffs at volkswagen, a very different labor market. you are seeing consumers respond differently to that. savings rates are up because a precautionary savings, people don't feel secure in their jobs. investment is not flowing through, keeping growth high. you have things in the german constitution like the debt break tomorrow, big day for the u.k. ms. reeves coming out with her budget. last months, the gilt market has been concerned about a repeat of

the 2022 mini budget event, so that is putting pressure on global yields. we think that is pretty transitory. the likelihood of them making the same mistakes twice actually unlocks some value in u.k. yields, german yields we think should come down on the weaker growth. lisa: we are already looking at a 2% gap between u.s. and german 10-year yield and you are talking about even greater widening out, at the same time the es -- ecb has a talk about why they are not cutting rates, the fed talking about why they are. is this a long dollar, along u.s. bonds come along euro? thomas: the portfolios that we run our macro portfolios so we are trying to time asset classes in countries.

we think this fiscal dominance will pervade asset classes. we think about the themes that will be impactful for fx markets, bond markets, equity markets. we think we are in a fiscally dominant environment here. that will put downward pressure on the dollar. big election next week, tariffs will shift and the winds on the. quarter after quarter, the amount of issuance come to the markets, the u.s. needs foreign bond buyers to be the marginal lawyer. we think over time the amount of issuance coming into the u.s. should weaken the dollar. position for a weaker dollar on the issuance but a widening of long-term yields because of the amount of duration, quarter after quarter of higher bond -- lisa: is this the u.s.

losing its mantle of exceptionalism or the idea that the dollar can weekend but still the u.s. economy can grow at such a pace it is still such a place of equity on performance? thomas: i think the latter is how we would position. prices will adjust. supply own bonds, may be the fed that doesn't cut as much as the ecb can keep the diversions on yields moving wider. with the backdrop that we have stateside, the growth can continue with strong consumers, strong re-industrialization policy. we think the two are structural but we need higher yields to tamp down activity. the yield curve only just on inverted recently. that is a strange situation to have. those lower yields of the long and encourage investment.

positive investments out there when you have 10, 20, 30-year financing at that low rate. how your yields should put a natural damper on activity which will benefit the fed, the u.s. backdrop. annmarie: you mentioned the treasury secretary at her debt issuance. don't you see that continuing regardless of who is in the white house? thomas: entitlements are indexed. you have chips and ira which are multi-progressions into the market. we are in a structurally higher deficit environment. i think that is juxtaposing into europe, talking about impacts, ways to balance the budget. the conversations couldn't be more different when you look at what reeves are dealing with, these nuances. they are talking about the nitty-gritty of the deficit. in the u.s., is it big or really big?

the conversation about can we raise revenue, do we have a home based on how big the deficit should be? six plus percent deficits with this amount of economic activity is kind of unprecedented. annmarie: how much harder it is european jobs going to be if president trump puts up the tariff wall? thomas: i think the response would be a big one but leaders have had time to think through what is our policy in this new environment. we are going to cross that bridge when we get to it. from here, we think leaders are looking to really keep growth going in the u.s., but in europe, keeping bond markets satisfied. jonathan: mind that is if we get those tariffs, your that on long bonds works even better. thomas: if you are thinking

about the german economy, they have levered themselves to exports. global trade has not been growing as quickly. you have companies and countries looking to do more closer to home. that is a tough backdrop for companies like germany, china that want to grow through exports. in the u.s., we are growing with domestic demand and domestic production. jonathan: you said something i want to pick on. you said hi yields may help the federal reserve. is that an odd thing to say when they just cut 50 basis points last month? thomas: the fed controls the front end of the yield curve through policy but they still have skin in the game with their balance sheet. earlier this year, waller spoke about the composition of the balance sheet for the first time, we call it qt light.

they have not sold as much duration back into the market as they did during qt1. that mean they are holding onto these long dated 10-bonds on their portfolio. lori logan is on point for the balance sheet. usually she talks about liabilities. she mentioned our asset side looks long compared to where the issuance is. we will have to have a conversation about this. there is a potential that the bond market is also looking forward to may be some of the compositional changes that may impact long dated yields versus policy. jonathan: is there a conflict in that? aren't we meant to be unlocking the housing market? thomas: the inflation target and the unemployment rate, jay is pretty clear about that.

what do you think mortgage rates are going to do? he didn't have a great answer on it. but there are treasury rates and there are spreads. you could see a situation where the yield curve gets upward sloping, more attractive to mortgages, so the spread versus the risk rate is something to think about. but you have a lot of short inventory, a lot of demand in housing. other factors besides just the yield. it's important to think through the totality of the economic backdrop, not fixate on individual suck doors or individual parts of the economy. it is so big and diversified. jonathan: i appreciate it. looking for increased divergence deficits and on growth as well. let's get an update with dani burger. dani: benjamin netanyahu says he is open to a short truce in the

war with hamas. egypt proposed a two-they cease fire in the freeing of hostages in exchange for palestinians held in prison. he said he had not received a proposal but is willing to agree to such a deal if offered. apple's iphone exports from india jumped by a third through september. the u.s. tech giants exported nearly $6 billion of indian made iphones. that puts annual exports on track to surpass the $10 billion of 2024. india is a crucial part of apple's efforts to lessen their exposure to china. jetblue shares are plunging 7.5% in the premarket. it's a loss for the third quarter was better than feared but the forecast for the current quarter and full year fell short. the outlook also suggests that efforts to reduce expenses through reduced revenue have been progressing slowly.

jonathan: thank you. next on the program, the morning calls, plus catching up with john murphy from bank of america as ford lowers its full-year forecast. that conversation, up next. ♪

♪♪ ♪♪ the winter escapes sale is now on.

visit sandals.com or call 1-800-sandals. jonathan: equity futures on the s&p 500 down by .1%. bond yields higher by two basis points. the 10 year, 4.30 43. dd callan downgrading tapestry to hold citing worsening trends in china.

next up, barclays raising its price target on tesla to 2.35, maintaining an equal weight rating, citing improving fundamentals. that stock is unchanged. ford lowering its full is earning forecast after reporting underwhelming 3q results. john murphy reiterating the buy rating saying combined with management's focus, we expect that our profits and progress in 25. john, welcome to the program. can we start with the contrast that we heard from gm, tesla, and ford after the close yesterday? john: thanks for having me. the real delta particularly versus a gm, execution at ford is ok, not great. we are still dealing with the bogeyman of warranty issues which they cannot clear the decks on completely. on the ev front, gm is about two

years in front of ford. the improvement we expect in ev losses at gm will probably be executed between 24 and 25 at gm, over the next three years at ford. those are the major differences. mid to long term on the autonomous future, tesla is making a lot of noise about this. we think gm will on a cruise in the coming quarters. there is still a void that need to be filled. there are a number of deltas but the truck franchise is still very strong at ford. jonathan: can we talk about the difficulties in the ev business? gm was more reluctant to lean in. ford was less so. where are they placing the emphasis on the company on where they want to be several years out? john: we have a much heavier lean at gm with their platform.

ford is working on a platform out of california by mostly non-auto folks, mostly in the tech world, which will address the small and mid crossover segments, car segments to some degree. ford will continue to use a multi-propulsion strategy for trucks and large crossovers. that puts them in the near term in a pretty good position in blue, but a little bit behind on the model e. lisa: reaction we have seen in shares, really underperforming, going to push for more cuts at ford. john: in the near term, all companies are focused on cost-cutting. they have to do that to drive there earnings and cash flow, not just for satisfying investors in the short run but also investing the future. here is a difference in cap

allocation between gm and ford. gm is aggressively buying back stock now. you have a strategy that investors like more in the short term because the share count is shrinking. the earnings environment could drive eps growth. ford is focusing on 50% free cash flow being distributed to shareholders. some folks don't love that, some do. it is a very different strategy in terms of cap allocation. ford has also mentioned that they may not fully distribute that 40% in response to a tough macro, as well as potentially organic investment opportunities, i think mostly around the pro and service businesses, which has higher returns. lisa: four to be outperforming gm, but it is still looking fantastic compared to european

manufacturers. what is the distinguishing feature between the gm's and fords of the world between stellantis and vw? why is this growing divergence? is it the fact that the cost of labor is cheaper? chinese cars are not really coming into u.s. shores? john: on your earlier segment, there was an interesting comment about how germany had gotten intertwined with china not just in the auto business but in the industrial exports, machinery tooling and the like. i think there is a much higher safety level in the u.s. market for the key franchise of gm and ford around trucks than there is on the vw european business, as well as the profit they have generated in china. they have not been as reliant on china as the rest of the industry. they are more protected here at home.

stellantis just got offsides in their dealer inventory. that has been an issue that has been growing for the better part of two years. it helped them generate profits over the last two years, but now it is a real weight. annmarie: you mentioned the warranty cost. why are they so high? they are not coming down as they would like them to be. john: there is warranty and catch up on field service actions, other issues being executed beyond warranty, to make things right for the customer. there have been quality issues in the past that are popping up right now. the current generation of vehicles is apparently much better quality than what has been going on for the last 5, 10 years where these issues are arising, but it is difficult for a management team to go deep

into what is millions of vehicles on the road, wondering if it is truly all clear. that is the sense of caution that the management team has, not sound the alarm that all things are clear, you cannot worry about these quality issues. it is a major question, something coming up in the rest of the industry. hyundai has a big stop sale on santa fes, around the powertrain, the germans have some issues around brakes. there is an increased focus on different types of powertrains and a whole lot more around a.v. the business has gotten more complex, so the eyes have been taken off the ball on these quality issues. it is a broader industry issue, something that we will be dealing with for a while. good ford dealers on the warranty side. jonathan: i appreciate it.

what has to be the toughest industry on planet earth right now. lisa: especially given the uncertainty we are talking about with policy, geopolitical trade relationships, and then there is that consumers are fickle occasionally. jonathan: you will not see lisa for the next 30 minutes. she is going on assignment. lisa: going to check out the car dealerships. jonathan: coming up next, lydia boussour of earnst & young, mona mahajan. and we are catching up with michael mckee later.

♪ ♪ with so much great entertainment out there... wouldn't it be easier if you could find what you want,

all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock included, for only $15 a month. dad: hey boss. you okay? son: i said i'm fine. ♪ dad: you can talk to me. son: it's been really, really hard for me.

jonathan: 60 minutes away from the opening bell. equity futures on the s&p down by a little more than .1%. nasdaq unchanged. big week coming up for the nasdaq 100. 60 minutes until the cash open. that's crossover to manus cranny. >> pfizer has essentially been living in the twilight zone. 2.7 billion dollars for vaccines in the quarter. $442 million of an order from the strategic stockpile of the united states. grappling with what is pfizer after the major coban vaccine rollout.

they are going to with their activist investors to justify the $70 billion of deals. they have raised the guidance to $64 billion. up 1.4%. up 4% for the year. mcdonald's, international profits are down. net profit down by 3%. this does not include the e. coli incident we have at the moment. 75 people so far suffering from this. 7% drop in overall attendance. foot fall is down nearly 10% in the past seven days. 33% drop in colorado. you spent a lot of time on ford, but what do jim farley need to

learn from mary barra in terms of executing on ev? they are still bleeding on ev. it will be a two-year transition until they make money. what else does jim farley need to do that mary barra has done, even as the combustion engine slips on last year's numbers? tough times at ford. jonathan: a few stocks to watch into the opening bill. close to 7% lower. new numbers for you on the two-year and 10-year. the two year is up for a seventh consecutive session. 4.16. the 10 by three, 4.3164. the morning the federal reserve cut interest rates by 50 basis points, the 10 year open top at 3.64. we've had a move of more than 60 basis points. mohamed el-erian this morning, the bond market has reacted audibly to the federal reserve move.

what most analysts agree on, the list of contributors to this development, there is little consensus on their relative importance. which is more important, the economic data, deficit issues, the election? we are going to work all of that out in the next week or so. investors will need to work out the data this week with october payrolls dropping on friday. lydia boussour hour of the people i saying the jobs report will be muddied. two hurricanes and job strikes will render the data much noisier than usual. we expect a nonfarm payroll gain of only 70,000. is one survey more reliable than the other, household versus establishment? lydia: good morning. we are likely to see some hurricane impacts mostly in the established month survey. we are looking for a drag on

payrolls from both the hurricanes and strikes. we already know from the bls strike report there will be 40,000 workers that are going to be falling off the payroll in october because they were on strike. if you layer on top of that the impact from the hurricanes, we are looking at a drag of over 100 k on payrolls. then you look at the household survey, strikers are going to be counted as employed in the household survey, but we will be closely watching a few key indicators. the number of workers that are not at work due to the weather but still counted as employed, also temporary layoffs, which could show some impacts from these disruptions. jonathan: how will you draw a distinction between what is temporary noise and cyclical weakness? lydia: it will be quite challenging to look at that. if you try to look beyond that noise, we have had growth over the past three months averaging

186,000. the trend in job creation right now is around 175 k. if you extract from that noise, you are likely to be around that trend pace in job growth. the october and november jobs report will carry that noise, so i think you will have to rely also on other economic data. we will get the jolts data this morning, unemployment claims, all the other labor market indicators that are pointing to a gentle slowdown in the labor market. annmarie: does all of this other data trump the nonfarm report? lydia: they would be complementary to what we are getting in the jobs report. we are looking at the jolts data this morning, trying to gauge whether we continue to see that slowdown in labor demand, whether labor market turn has also decreased significantly.

we are looking at the quits rate, hiring rates which have declined below the pre-pandemic pace. we know that fed officials are also closely watching anecdotal evidence, data, evidence from the beige book. also quite interesting when you look at what we are hearing in terms of hiring, pricing power. both economic data in the anecdotal evidence are going to be important. in terms of the fed and how they are looking at that child support, i think they will be looking through that noise. we expect to see a 25 basis point rate cut in november based on the economic backdrop. inflation continues to move in the right direction. the labor market continues on the gentle slowdown. annmarie: you think we are getting a thousand jobs added to the market. what kind of number one do you think wood with the fed on pause? lydia: that is not our base

case. if you take a step back from every data point and look at the underlying fundamentals, there is still room for the fed to implement a few rate cuts from here. we have a labor market that has rebalanced, no longer putting upward pressure on wages. we have also inflation that is moving in the right direction. we will get inflation data this week. but there is more inflation in the pipeline. we expect a moderation in economic activity into 25. we know the pricing power has come down. we are also hearing that with clients. we also have more housing disinflation coming in. if you look at that balance of risk with the inflation and employment picture, i think the fed will remain on track. easing 25 basis point cuts at every meeting through the middle of next year. jonathan: i wonder what your thoughts are on the bond market

action since the federal reserve reduced interest rates by 50 basis points? this big move that we have seen in 10 year yields, what do you think is behind it? lydia: you discussed on the show a lot of these factors behind this move. i do think the upside surprise we have seen in the economic data over the past few weeks on the labor front, inflation front, more stickiness, and then on the economic side with the revision to the personal income data. all of that, the fact that we have a more positive growth picture, i think, has been a key factor behind some of the moves we have seen in the bond market. jonathan: lydia, good to hear from you. up three basis points now on a two-year. 4.16 on 10's. joining us now is mona mahajan of edward jones.

we have an upside surprise after upside surprise from the economic data. equities have held in there pretty well. do you think we are entering a zone where this becomes a problem for stocks? mona: thanks for having me. we think some sectors in the stock market will face a little bit of headwind because yields have been stubbornly high despite the fact that the fed is likely to embark on at least a modest rate cutting cycle here. we started to see a bit of that. the value part of the market, certainly interest-rate sensitive sectors like real estate, even areas like utilities and parts of financials have started to move lower because we have had this rapid move higher in the interest rate picture. for the broadening of market leadership team to play out, we needed to see a fed cutting cycle but yields moving lower, in addition to earnings growth

expanding. we think that part of the story is intact. jonathan: alphabet after the closing bell. how high is the bar for big tech? we will hear from four of the mag seven names this week. how high is the bar for these names? mona: the good news is make a cap tech has taken a breather for the last quarter and probably second half of the year. some of the bar has been probably a little bit lower. q3 overall, the expectation was for a 4.1% growth rate. we are actually trending -- only a third of companies have reported -- we are trending below that. it will be interesting to see if tech is a driver of earnings growth, is a driver of the upside surprises we may get this quarter, or it continues to be in line with the rest of the market, numbers come in in line and slightly below what we expect for q3. more broadly we

would say that text, after taking such a breather, could be a part of the basket that investors are looking for heading into 2025, if the fed rate cutting cycle is shallower than expected, rates are higher. still provides outsize growth in an environment of high yields, potentially growth moderating the u.s. economy. annmarie: if big tech doesn't clear the bar, could that be a buying opportunity? mona: after the breather it has taken since the second half of the year, if we start to get more volatility in this quarter, as we are heading toward that election day, we typically see pre-election stock market volatility. we have seen it more in the bond market this time around. if big tech does show volatility after earnings reports this quarter, we certainly think there could be opportunities, especially if you have not participated fully in the ai part of your portfolio.

we continue to like that market broadening theme. we think there are opportunities ahead especially as the yield move has moved very far and fast, could provide opportunities. annmarie: this election impact and volatilities you say we are seeing in the bond market, do you think the market is properly pricing in the election outcome, this idea of a trump sweep? mona: certainly yields have been a combination of factors. economic data has surprised nicely to the upside. this idea that we are getting a soft landing has almost transitioned into getting may be no landing. atlanta fed gdp is looking at over 3% growth for the quarter. certainly not close to that 1.5, 2% trend growth. we are looking at an economy that is holding up quite well. that probably has sparked a repricing of the fed rate cuts

we are seeing in the markets, not pricing in a 3.70 5% terminal rate versus 3% just a few weeks ago. the other part of the story is we have an election. either side of the aisle, neither of them have taken a disciplined approach commemorating in the deficits, fiscal spending, or on the tech side as well. the idea that markets are pricing in deficits may be grinding higher in combination with an economy that is holding up quite well is really leading to this move in the yield market, which is quite interesting, certainly having more of an impact versus what we see in a pretty steady equity market. jonathan: bmo said we started to come up with a challenging reason to step back from high convictions trades the next two weeks could redefine the macro narrative. do you believe next week and the

election in particular has the potential to redefine the macro environment, macro narrative? mona: enacting real policy change we know takes time. despite the rhetoric, first of all, we think checks and balances remain in place on whoever gets into the presidential seat. probably that mean some of the more extreme proposals are going to have more difficulty being passed. real changes on the macro narrative will come around areas like taxes, perhaps on the tariff front, maybe even immigration policy longer-term. again, these don't happen immediately. the near term macro narrative will still be driven by the fundamentals. is the fed cutting rates, is inflation cooperating, is the economy holding up? the overall underpinnings of this bull market had really been a fed that is cutting rates in an environment where we are not entering imminent recession. we know historically that has

been good for stock markets and financial assets broadly. we have had a very strong run, the bull market is up almost 60% since october 2022. could we see moderation in that pace? absolutely. but we can still lean into those fundamentals that remain intact. jonathan: certainly not bad for bonds over the last month. earlier on this morning, we had david malpass around the table with us, and asked him a simple question. how much do you like, how big of the gap is there between campaign promises and legislative realities? he said one word, huge. it is hard to get things done that they are promising on the campaign trail. annmarie: if you want legislative promises, that may not get you elected, which is why you have basically spaghetti known at the wall when it comes to potential tax cuts. any american might be able to

see whether it is no tax on tips or social security benefits, regardless, mona put this well, both camps will be spending more. maybe that is what the bond market is picking up. it is election week and nobody cares about the deficit. jonathan: another warning from citi yesterday. indicating the trump trades have rallied come along dollar, short bonds come along the u.s. versus the rest of the world in equities. less favorable set up for trump trades into november 5, room for rotation should harris prevail. i have seen that last note from a few people. given this run-up we have seen in the yields, strength in the u.s. dollar over the last month. equity futures on the s&p 500 a little bit softer going into the opening bell. with an update on stories elsewhere, here is dani burger. dani: crocs falling 13% the

market. the shoemaker expects sales to grow at 3%, the low end of their prior guidance. they had seen a resurgence in the past few years moving to target teenagers with endorsements from celebrities. now the company has ran into trouble at u.s. schools who are banning them due to safety concerns. a top prosecutor in philadelphia is suing elon musk and his super pac. the district attorney says the daily million dollar giveaway is an illegal scheme to influence the election. the giveaway, which is already under scrutiny by the justice department, reward the voters in swing state to sign a petition from the pac. allies have argued that the giveaway is for signing up for a petition, not supporting trump. los angeles dodgers are one game away from winning the world series. they beat the yankees last night and take the three games to none lead tonight. if the dodgers win tonight, it would be the first world series sweep since 2012.

the yankees are hoping to be the first team in history to come back from a 3-0 deficit in the fall classic. jonathan: thanks for this morning and thanks for that. someone in the troll room -- control room trolling annmarie. we did that story three times. annmarie: how about when they were winning? jonathan: can you avoid the sweep? annmarie: i hope so. the tickets are a lot cheaper. i am considering going tonight. jonathan: next on the program, catching up with mike mckee. really important job data coming out a little bit later. this is bloomberg. ♪

jonathan: the opening bell is about 14 minutes away. -- 40 minutes away. equity futures up by .2%. look at this move in bond yields, 4.32 on the u.s. 10-year. today, jolts data, plus a google earnings after the closing bell. wednesday, initial gdp data, earnings from meta-. there is to come every decision from the boj. another round of jobless and core pce plus earnings from apple, amazon, and intel. friday, october payrolls. monday, you will get some durable goods data. that is pointless to look at because you know what happens next week. selection day, and then the federal reserve has to make a decision. michael mckee will be in that room. can you imagine how many questions about the election

that will be ignored? mike: 8:30, friday morning, we get the jolts numbers, will be know who the president is by the time we get the jobs numbers? it will still be hanging over everybody for days. jonathan: payrolls this friday and then the election on tuesday. federal reserve two days later. how noisy is that data going to be from the payrolls data? mike: a good chance it is noisy because we have the ongoing bowling strike, and it's been going long enough that it may spread to other industry suppliers of bowling, people that have snack bars near boeing, that kind of thing. we also have the hurricane issue. we don't know how many people will be out of work because of the two hurricanes. we saw a one-week spike in jobless claims and then it went back down. is it going to be bad or not? bloomberg economics things we could have a -10,000 print.

there is one estimate for 180,000 jobs created. probably in the consensus of about 100,000, 110,000 will be the way to bet but we just don't know. annmarie: what is the possibility, ramifications if we get a -10 print? certainly going to help with that but how bad is that going into a presidential election? mike: the fed will look through it, the jobless number will not be affected by it -- the unemployment rate will not be affected by that. the question is how do the headlines play it, how do the campaigns play it? obviously you will see donald trump emphasize the weak job creation, kamala harris emphasized the unemployment rate. does it really get through to people in a way that will make a difference right now? everything that happens is being put through that lens of does this make a difference in the

election? annmarie: 50 million americans have already gone out and voted, and many of them will before we got that nonfarm payrolls report. can they look through a strong print? mike: yes, because they are on a path to cut 25 anyway. a strong print would probably just mean that they stick with 25, don't do 50. because this is coming in an unusual situation, november will probably remain on track. they will not have enough details about what happened in the jobs numbers, we will not know who will be president, so they probably go with a 25 this time and then december becomes the big question. jonathan: a minute left which is one minute to long for some baseball wisdom if you are annmarie. mike: did you see the map of the country and who support to? southern california for the dodgers and massachusetts, the

yankees had new york and florida. jonathan: can they avoid the sweep? annmarie: of course they can. mike: they can avoid this week, but can they win the world series? as red sox fans have pointed out, only one team in a seven-game series has ever come back. annmarie: why are we ending on this? who invited him? jonathan: michael mckee, thank you. annmarie going to the game with tickets on discount. annmarie: the discount is pretty big. not behind home plate, those are a few thousand. but you can get some decent seats a lot cheaper now than when they clinch the american title. jonathan: coming up tomorrow, katrina dudley, jack caffrey from jp morgan, emily roland from john hancock. lisa will be back. annmarie, i'm not so sure. this is bloomberg. ♪

matt: one week until my birthday and the election. i am matt miller. katie: "bloomberg open interest" starts right now. ♪ sonali: coming up, alphabet kicks off the week's big tech earnings. $20 trillion in market cap said to report in just a few days. matt: we will take a stock of results from mcdonald's. sales miss to pfizer's big beat. katie: we are live at the future investment initiative in saudi arabia.