>> the betting markets have gotten way ahead of themselves. >> there is concerned a trump administration mean more inflation. >> try to understand what is a press release, what is a meme, what is implementable remains a question. >> both parties say to establish -- the economy. >> no matter who takes charge. >> this is "bloomberg surveillance." jonathan: live from new york city, good morning, good morning.

equity futures on the s&p 500 pulling back here across the board. we are still poised for about six months of gains on the s&p 500 come the longest monthly earning streaks is 2021. nasdaq 100, down by more than one goal percentage point. names to watch the premarket, microsoft and a little letter on cloud revenue, down 4%. annmarie: is a capacity or demand? we heard from the cfo this has to do with limited capacity to fulfill the ai beds. that's a short-term issue if they can get those chips. the question is, are we seeing google take on a greater share of the business as they seem to have more capacity? annmarie: the quarter was good. microsoft revenue was up. cloud computing, up. how much more these companies

will have to spend on a high also because of ai that this entire year those stocks were flying high. jonathan: quarterly, $15 million. the record, up 50% from the same period last year. they're going to keep on spending and it 2025. lisa: we talked about how we are seeing investors pushback. is this going to be a problem. i flip the switch and say if you can show the money, it is not a big deal. are you showing the money with that? microsoft ,eh. facebook, meta, eh. is there a fear that mark zuckerberg is going to go back to the mark zuckerberg of yore before the efficiency moment and going back to spending it, burning cash? jonathan: meta is down by a little more than 3%. let's talk about the bond market. yields are coming in a little bit.

on the month, to year and 10 year yield up around 50 basis points a year. everything we have talked about the last four weeks, the economic data or their politics? if it is the politics, there seems to be i would say some divergence between the conversation on wall street and the posters -- pollsters. lisa: the people say, well it is the economy which is affecting yields which you do see now. yesterday, looking at the trump media and technology stock and that is the cleanest view yesterday it takes, although up something like 300% so far this year. how much one pole or another kinship betting odds. i'm not getting a clear answer from anybody on how much you can really dissect the different features into the bond market. annmarie: blaine -- a brand-new blue wall. pennsylvania is where they are

tied. fox news comes out with her battleground poll, pennsylvania is where they are tied. if you look at the research done by oxford economics, where inflation hurts the most is in a place like pennsylvania. this stood out for me. everyone percentage increase of inflation before presidential election is linked to tens of thousands of pennsylvanians voting against the incumbent and for the challenger. this state is so important. jonathan: a huge week coming up for financial markets worldwide. tomorrow morning, payrolls. next tuesday, the election in america. two days later, federal reserve decision of the fomc looking to reduce the interest rate by 25 basis points. we will catch up with lori calvasina, heidi crebo-rediker and the follow-up from biden's garbage comment, and stefan slowinski as amazon and apple prepared to report results. we begin with disappointing tech

earnings weighing on stocks. or a losses and microsoft predicting slower cloud business growth. lori calvasina with this to say, the early s&p 500 stats are now pointing to o'malley disappointing third-quarter reporting season. remaining mixed as has been the case throughout 2024. she joins us now. good morning. what a week. what do you make of what we have heard from text so far? >> at the beginning of the week, i felt like maybe it could be a bit better than what we heard last week. i came out of last week and felt good on week one post the financials and then i felt like i got beaten down. we are broadening out this week. i think the issue is coming into this week, there's been a lot of nervousness on the ai story. if i think back to last week, i was docketing a whole lot of ai commentary in the transcripts i was reading through so i felt like maybe this was the first big week we are going to get some real meaningful insight and

investors obviously are not liking what they are hearing out of the gate. jonathan: if i am company x -- >> i think the issue of the ai trait is that it is very, very messy and investors are worried about overbuild so they are looking at the long-term and short-term and the short-term it does not sound like it is satisfying and went and a longer term i think it's a little unclear. but if i think back to the big tech companies, and users of ai, that is where things are getting messy. if you look some of the end use cases, and we are getting more the last reportings, business services companies, data intensive companies and i say, ok, they are doing some stuff here. other companies, i have been hearing about catalogs. all in all, feeling small potatoes to me. i think that may be part of the problem. lisa: i love speaking with you because you analyze that transcripts to get that

guidance. how much was a i mentioned versus previous earnings cycle so far? >> i don't have good stats yet on october. we like to run the stats on a quarterly basis. it gets lumpy month-to-month but we use the bloomberg transcript tool to measure this. when we crunched the numbers through september on a quarterly basis, extremely elevated levels on ai discussion. it looked kinda like the chart we read -- went on the fed interest rates where it gapped up and then plateaued. the big drop off or surge, maintaining steady at high levels. lisa: i think what you mentioned it's important which is companies are in the same place that investors are in. show me the money. show me the efficacy and how much is how effective these ai tools are that is going to determine the fate of the stock. i'm thinking with an eye toward apple which will report after the bell today. >> if you look at s&p 500 bottom up consensus forecast, they have come down a little in recent

weeks but normally they don't do much in the second half of the calendar year. we have done the study and you go to the summer of the prior year, they get worked down in the first half of the year in question. by the time they are get june or july, they are set. they are similar to where they were last summer. we are starting to see them nudge down a little. it feels like we are getting some pent-up downward revisions we should have already had. that is not speaking to anyone specific company, but these big mega cap tech ai secular growth names are big contributors to that. i feel like we are just catching up to something we should have done already. annmarie: how much of the commentary is focused on the u.s. election? are people still staring into the sun? >> i feel like i need to be looking for my eclipse glasses right now. we need something a little bit stronger than sunglasses. we ran a similar analysis looking at the quantitative trend and we saw a spike in the last couple of quarters on election commentary. we felt that in our transcripts.

i will give you comfort in that it was on par with what we saw late 2016 and late 2020. so no more than usual. the element of uncertainty is enormous. that is what we see companies talking about in the last reporting season, the uncertainty is huge. it is waiting on business activity. -- it is weighing on business activity. annmarie: a trump trade developing. do you still see that? >> we saw that in the fall and it disappeared i know we are starting to see it again. i have been getting the question of how much is baked in. i don't think you can put percentages on it. i will give you qualitative and quantitative. the qualitative is when i talk too long only investors, they are confused about what is going to happen on tuesday. they are confused about what to do once they do know who the winner is. they are talking but not doing much. they are trading on earnings but

not really the election. portfolio managers, hedge funds have not quite as short. i'm starting to see questions come in where people are trying to gauge in the different scenarios, what is the s&p 500 going to do. it is starting. quantitatively, small caps, dollar, 10 year we are all starting to see very close correlations between pulling data or betting data specifically looking at trump and those assets. i can't sit here and tell you it is the only thing driving those, but i have seen enough in the data to know somebody somewhere is moving something. i don't think it is widespread. it is that then market. it is getting pushed around. jonathan: look at some of these traits. you mentioned if you come along dollar short, bonds, equity versus the rest of the world. vulnerable or enough till was beyond politics? >> it depends on your time horizon and the specific set up we have. this was talking about betting

markets earlier. does betting markets are not all uniform. i am going to brag about you. you have this fantastic page where you can track the betting markets and you're not saying the same thing in predicted bond market right now. you're starting to see the data shift toward harris and the predicted data. i don't know what is going to happen over the next five days. i do know that traders are queuing off those betting markets regardless of whether or not you think they are useful outcome predictors. i do think if we sort of keep where we are and we end up having a harris win, i think you will see some of this stuff unwind. longer-term, what does that mean? we did a survey in late september so we are not making every crime in there because if more will come out, but we ask our analysts, gauge the outlook to your industry under these four different outlook scenarios. two sweeps and the winners split. it was interesting because when i average all the scores together, they were basically hovering around usual.

trump had a little bit of a bullish bias. i think it was like .38. very bully would have been plus 2. the harris win with this what congress was -0.04. when i talk to investors, they struggle with things on the trump side -- this is a long only crowd. corporate tax cuts are good most of individual extending those tax cuts are good. tariffs are bad. i think the conflicting crosscurrents really is at the heart of what has the longer-term investors confused right now. lisa: there is an idea that it's got a lot of popularity that the bond market is moving around much more than the stock market. you agree that is going to be the note of volatility postelection? >> i am an equity person not fixed income and i joke i don't speak on market well. the reality is i have four charts in my deck that are

looking at these correlations right now. we really just focused on the time period after harris came in. the cleanest, tightest correlation going on for the longest period of time is the one between trump and the tech field. jonathan: lori, we appreciate your time. looking ahead to next week with dread. for many reasons. lori calvasina. this could be a very long week next week. an update on's results were, here is your bloomberg three. dan ed: some specifics on this big tech earnings, microsoft falling nearly 4% in the premarket trade. earnings and revenue beat estimates but it did forecast lower quarterly crowd revenue growth. -- cloud revenue growth. the ceo reiterated he is committed to expanding ai opportunities and winning new customers. meta-shares also lower premarket, 4%, despite a narrow earnings beat.

zuckerberg said it will ramp up heavy investments in ai and other futuristic technologies which he says are court of the company's future. they cautioned that it will continue to widen this year. labs reported $4.4 billion operating loss in the quarter. the l.a. dodgers are world champions once again. after falling behind 5-0 in game five come the series of defensive mistakes by the yankees opens the door for an l.a. conduct. -- come back. shielding the chairmanship of the game ending strikeout. it is there eighth world series. freddie freeman was named m.v.p. after record-breaking performance at the plate. that is your brief. jonathan: world champions come is that what we say?dani: canada, two, it is the world. jonathan: champions? annmarie: i went to the bed and yankees were

sleeping. i woke up to this terrible news. what happened? jonathan: truly global. up next, reclaiming the garbage narrative. pres. trump: joe biden's comments were the direct result of kamala's decision to portray everyone who is in voting for her, which is a lot of people come as evil and subhuman. jonathan: that conversation up next. ♪

♪♪ ♪♪ the winter escapes sale is now on. visit sandals.com or call 1-800-sandals. jonathan: the longest week of the year begins tomorrow. payroll is just around the corner and then onto the election in america and after that federal reserve decision and hopefully we have the result from that election and we can

trade with some clarity. equity futures on the s&p down by 8/10 of 1%. bond yields are lower by two basis points. later this morning, some jobless claims data. reclaiming the garbage narrative. pres. trump: joe biden's comments were the direct result of kamala's to portray everyone who is in voting for her, which is a lot of people, as evil and subhuman. they treat our whole country like garbage. jonathan: donald trump leading to president biden's garbage remarks. kamala harris dissing soon himself -- distancing herself from the president's comments. >> i strongly disagree with any criticism of people based on who they vote for. jonathan: heidi crebo-rediker writing, final days come down to turn out. as the floating island of garbage insult remind puerto rican voters in swing states of

trump's poor treatment of the island after hurricane maria? sing massive backlash but will they vote on it? this can make or break the election. heidi joins us now. elaborate. your thoughts on the last few days? this word "garbage" and how it may shake up election race? >> i paying a lot less attention to the trump comments on garbage than what happened at madison square garden on the floating island of garbage comments. the reason i'm thinking that is because right now it really does come down to turn out. the polls are razor thin in the states that matter and the communities that matter. if you are undecided and you have not voted yet, what is going to make you decide if you are ambivalent and you need an actual reason to vote -- is what trump is talking about going to actually turn the dial for you? i think his supporters are pretty -- they are pretty

committed and if they have not voted already, they're going to vote for him regardless of the garbage comment. for the puerto rican community, i think it is a wildcard. that is what i am paying attention to because that comment at the event at madison square garden, even though trump did not make it himself, he never apologized for it. it insulted and reminded puerto rican voters in swing states of trump's poor treatment of the island after hurricane maria come about the way he delayed aid and then when he got there two weeks after a devastating hurricane, he threw a bunch of paper towels at the crowd. it is a question of whether or not these very large puerto rican-specifically populations in the swing states maria is talking about, pennsylvania, half a million puerto ricans live in pennsylvania in a state when joe biden won last time it was on 80,000 voters.

we are talking about very large numbers who could decide they are really not very happy about what they saw 4 -- more than four years ago in the treatment of puerto ricans. he was insulting and it could move the dial. annmarie: the flipside is, a large part could be turned off on the president of the united states comments that half of trump supporters are "garbage." kamala harris is now having to clean up joe biden's comments. is he doing more damage to her every time he goes out and speaks? >> i think it was unfortunate he used that language. it obviously hearkened back to comments that were made during the campaign with trump and with hillary clinton. but again, if you are going -- it is really about a narrow swath of voters and what can motivate them to change their

decision or if they are turned off of politics and just want to sit this election out, what can make them get out of their house and actually cast that vote. i don't know if president biden's comments, which were not -- we are not reelecting president biden. if they actually are going to move the dial for that very important group of undecided or ambivalent voters. lisa: how do you think she sticks the land when it comes to the economy? the ft calls kamala harris's other foe inflation. how does she distance herself in these final days in these swing states from the current administration when it comes to inflation? >> it is a hard narrative. people are generally hurting from the fact the everyday goods cost more than they did pre-covid. i guess what i would suggest is

that it is not just looking back over the last four years, it is looking forward to when a blanket tariff policy across all -- the world of 10% to 20% and 60% of china, what that could mean for inflation. well, those kinds of tariffs are inflationary. tariffs we have had for many years. we know what they do. they are inflationary. it depends on if they are tactical and targeted versus across the board. i don't think that voters really understand that trump saying he is tariff man can get into the oval office day one and actually, without any checks and balance, he can actually implement his across the board tariff policy that would be inflationary. what does that mean? it means it is going to impact

consumers intermediate and puts for every business it is part of a supply chain, you can count on retaliation. you will blow up all of our fta's with countries and our allies will push back pretty heartily against us in a world where we actually need our allies. we don't need to alienate our allies. so i think it is not only inflation, but you could have both commercial inflation and geopolitical reactions that would be highly negative. what does the fed do? we are talking about the fed for next week. what does the fed do if they are facing challenges to inflation on one side and then spillovers that might impact markets, mortgages, company borrowing? you are going to be in a very different dynamic come january

and have massive across-the-board tariffs imposed. lisa: what are you watching in the final days of the election race? >> again, the markets are not a good protector of who is going to be in this election. who is going to win this election. but i do think that the fact you've had a lot of women show up in early voting, you have had -- generative ai plays very much into harris' camp. the fact you do have these narrow populations who can actually really determine the election one way or the other. we just don't know. anyone who tells you they know who is going to win, doesn't know what they're going to talk about. we are neck in neck right now and we won't know until the votes are finally counted and that might not be next tuesday. it might not be next week. jonathan: don't say that, heidi.

i appreciate your time as always. heidi crebo-rediker. seth believes tariffs implemented on the campaign trail would lead to slightly higher inflation, slightly lower -- stagflation wins for the market to do with potentially and potentially doing a lot of heavy lifting whenever we talk about this stuff. equity futures right now and s&p 500, negative by 8/10 of 1%. we will hear from stefan slowinski. that conversation up next. ♪

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jonathan: equity futures down 8/10 of 1%. nasdaq 100, down by one full percentage point. more on earnings in a moment. let's take stock of the month so far. s&p 500 headed toward six months of gains, the longest winning streak on data since 2021. utilities have been a major winter so far. a difficult month. bond market board. a move of almost 50 basis points in and around voted to year and 10 year on the month so far.

big surprise of october. lisa: the index doubt the highest level, continuing to climb, going back to april. that jobs report from adp, normally we dismiss adp and then everyone points to it. really highlighting quite a bit of strength. what happens if we get corp. a set also comes in hotter than expected? the key metric, the federal reserve looks at for inflation? jonathan: adp is now flying solo. jobless claims of the last weeks post of jobless claims, look out for that. do deficits matter? look at this move. two year, 10 year, 30-year. united kingdom, let's call it a basis points. this is what the debt management office has got to say. second biggest target on record.

this is what we are thinking about coming off the back of the budget post of investors are pointing to the official projections that imply 142 billion sterling of borrowing over the next five years. does that supply matter in the u.k.? apparently, does. lisa: it was not a liz truss moment i guess that was the goal of the whole affair. deutsche bank put this while saying this marks one of the largest physical loosening of any u.k. fiscal event in decades. it erases the question you raised yesterday, which is essentially you had this divergence between the u.s. and u.k., is u.k. going to move more to the u.s. then the u.s. in terms of fiscal restraint toward europe? jonathan: not yet, not yet, not yet. let's see. other things were going on and financial markets at the time that contributed to that move.

i would pinpoint this when november 7, federal reserve decision. also be of the decision. how is the bank of england going to think about these numbers? the move is a market is assuming this bank of england is going to back away from rate cuts. we will find out next week if that is truly the case. lisa: and that was underpinning some of the moves earlier we had a bit of overreaction. you also have to see with the growth projections are. people understand how much growth does offset the increases. jonathan: med and microsoft delivering disappointing results. meta-recording losses as it continues to ramp up spending on ai. microsoft forecasting slower cloud revenue growth. the stock is down a close to 4% on microsoft and meta. on the year so far, the stocks have been flying. annmarie: year to date, meda has been flying. microsoft has seen its lead chipped away and chipped away and suddenly year to date it is

up some 15%. you see this feeling come are we really reaching a tipping point where companies are reassessing how much they need to invest in this? i wonder how much microsoft is hamstrung between the expense of nvidia chips and the ability to really innovate and roll it out and compete at a time where you see company's income ok, hold on, let's see how good some of these apps are. jonathan: being constrained by capacity is not necessarily a bad thing. it becomes bad when investors are losing patience. how much patience is left going into 2025? lisa: especially at a time where the data in the technology is changing so quickly that people might say, if i wait another extra couple of months, maybe i can get something better. what you did see was also a very high bar set by google and microsoft just failed to meet that very high bar and was penalize significantly. annmarie: it is not just the expense on chips or the

products, it is also the expense on the actual energy to run all of this which we have seen a number of these companies go out and ink their own energy deals. "clearing 10 billion annual run rate of revenue next quarter." that is pretty incredible. jonathan: we will pick up on that story in a moment plus at the latest out of japan, bank of japan keeping rates unchanged but allowing for the possibility of another rate hike in the coming months. the yen gaining strength after currency markets have had a major impact on the economy. heading toward the worst month going back to november 2016, erasing some of those losses but still on the month, 6% move onion this month. for anyone familiar with foreign exchange market, 6% moves are monster moves. lisa: the yen has been in a world of its own for the past

couple of months. the question is, how much does the bank of japan realize they need to explicitly say they are targeting the yen to try to prevent it from weakening too much. economists surveyed by bloomberg expected if the yen it's 155 against the dollar, the prime minister will probably say, you know what? go ahead, hike the rates. jonathan: let's stay in asia and move to china. china's economy showing signs of stabilizing following stimulus measures. the national bureau of statistics same factory activity expanded in october after five months of contraction most of pmi data higher than expected. things improving slightly but still waiting for the boom. i think in the west we are waiting for the boone. does not seem to be evolving over china just yet. lisa: the fact that came out with stimulus before the election makes me think in's were worse than people were expecting. you are seeing that in a peripheral level with earnings coming out. number two, just the fact they are holding their meeting from

november 4-november 8 to figure out how big the bazookas going to be after, guess what, the election is supposedly rolled out and maybe we will know who won, raises the question how much more will they have to go and stimulate if one person gets elected over another who might go harder on tariffs. jonathan: looking at a 2025 and what might be in store for this policy makers. welcome to the program if you're just joining us. teachers on the s&p down by eight tencent 1%. meta-and microsoft. amazon and apple on deck is those countries report after the closing bell later on today. stefan slowinski, aftermarket favorite 2023 in early 2024, sentiment has coded a bit with concerns over margin progress. we see the outlook as balance. we are neutral rated. stefan, let's get to later this afternoon after the close. what is the first thing you look for? >> today on amazon post close,

three things people will be looking at. amazon web services group. 21% is the buy side expectation we believe with those good google cloud results and as you're being pretty good, maybe should be looking for more upside. as amazon finally catching up with a are relative to google with the genai model and microsoft with that gpt model access. the second thing is north american margins. that was such a big driver of the story last year. stalled this year. you have had things like project kuiper, satellite launch is pop up and hold back margins a bit. consensus is expecting a big step up in q4. the third thing is overall top line. what is the consumer like? we saw ebay disappoint last night. there's been mentioned and be consumers holding back because of the election. last quarter, third party

sellers that amazon seem to be holding back. we could see revenue growth guidance fall into the single digits. with the stock of 30 times plus earnings is high single-digit growth enough? jonathan: the politics two -- two, you think there could be a basis point cover some democratic voters? >> i don't know about that. we are starting to field questions run amazon and potential impact from tariffs. what would that mean for the price of their goods and also what would it mean for the pocketbooks of those shoppers shopping on amazon. as we head into next week, amongst the larger cap tech and software coverage, that is probably the one people are starting to get a little bit concerned about from a tariff standpoint. lisa: some more important in regulatory actions? i ask this because we have heard a lot in a number of different reports about what the specter of potential breakups or restrictions could be with respect to either candidate depending on who they put in

their cabinet positions. >> in this space, google is the one on the most imminent regulatory threat so that is an overhang that we have seen on google stock this year. i think when you look broadly, there are questions around amazon, meta, microsoft in the u.s. and internationally about regulation. we will see if that changes under a new administration. m&a is a big topic. these companies have been a bit gun shy after amazon got blocked for buying irobot and so maybe they're holding back on that. we will see if they open up the m&a guns postelection. lisa: with respect to apple, there are interesting questions about how high the bar is for them to show outperformance at a time where there still is lingering skepticism about their ability to really implement ai with any kind of speed and efficiency and frankly, use cases that will encourage some sort of upgrade cycle. how high is the bar at a time

were apple's may be the most exposed to a number of different issues that are out there? >> i think genai data is important for all of these companies. what kind of usage are we seeing. apple intelligence launched this week so a bit early to get that data. last night we heard meta-talk about 500 million monthly active users are ready for meta-ai. google talk about rolling out there ai capabilities across 15 different apps with 500 million users. that is something that is in focus. ai monetization. i think microsoft reminded you last that we are the monetization kings when it comes to ally software with that $10 million ar are they expect this upcoming quarter. and because. apple is not the one spinning the most on capex. will that change? will they invest more in language models? for now it is still meta, google, microsoft leading on the

front. when are we going to see light at the end of the tunnel in terms of growth slowing and revenue growth potentially accelerating? lisa: we are a week away from the u.s. election. john was leading to this when he talked about the boycott potentially of prime because we have seen of boycott and jet basis washington post, people canceling subscriptions. the past two weeks we have learned about tim cook having a check-in call with the former president donald trump come amazon ceo doing the same, google ceo. are you seeing a tactical shift in the ceos hedging their bets for a? >> i think when you highlight the data points about those ceos, obviously, remaining neutral and courting both sides of the campaign. that is something they are continuing to do. like i said, we don't know what the outcome will be. these companies are hedging their bets. regulation is an area of focus. m&a is an area of focus.

all of these companies essentially are trying to stay neutral as we head into next week. jonathan: stefan, thank you. stefan slowinski of bnp paribas. 250,000 subscribers lost to "the post." annmarie: to your point, "the atlantic" came out and said, don't cancel "the washington post," cancel amazon prime. this is going to be a potential problem for a lot of ceos. they want to stay out of politics because they don't want to pull back on their companies. jonathan: we will see if that comes up later. with an update on stories elsewhere, here is dani burger. dani: stellantis reported third-quarter revenue that slumped 27%. fewer cars and factories in most major markets. still higher premarket, nearly 3%. european revenue helped offset north american weakness. stellantis has seen delays in

new models, product recalls, trading market share in the u.s. and europe. starbucks reported its third consecutive decline in same-store sales, shares little changed this morning. the new ceo said he is focused on the future, aiming to reduce think customization, trim the menu come and bring back tight like ceramic mugs and a condiment bar to make sure the starbucks experience feels less like fast food. he also set a goal of getting drinks in store to customers in less than four minutes. president joe biden and first lady jill biden hosted the final white house halloween event on wednesday. yes, that is the first lady dressed up as a giant panda should greet trick-or-treaters. her costume was a reference to her participation in the washington nationals do's announcement that pandas would be returning to the nation's capital. the animals arrive two weeks ago. the white house at her costume was "welcoming gesture." jonathan: thank you.

more in 30 minutes time. up next, the economy front and center on the campaign trail. vice pres. harris: i will give a middle-class tax cut to 100 million americans. pres. trump: no inflation we have the best economy in history. jonathan: that conversation up next. this is "bloomberg." ♪ if your business needs a new application, then developers will have to write code. a lot of code. if an application needs to be modernized, then you'll need time, resources... and caffeine. if this sounds daunting, then use watsonx code assistant. built with ibm's granite code model, it's ai designed to multiply developer productivity, so you can generate code quickly. ibm. let's create.

jonathan: tough morning so far coming down on the s&p 500. buses on meta and microsoft. in the bond market, yields a little bit lower. the economy, front and center on the campaign trail. vice pres. harris: i will give a middle-class tax cut to 100 million americans.

enact the first-ever federal ban on price gouging on groceries and fight to make sure that hard-working americans can actually afford a place to live. pres. trump: i had no inflation and we had the best economy in history. that is a nice combination. she did nothing about it. jonathan: the latest come here central honing in on the voting issues, economy. less than a week until election day. saying the next u.s. president should inherit an economy with farming activity and declining inflation, although price levels remain a comfortably high. kurt, welcome to the program. let's deal with the here and now cost of difference between the way we talked about the economy around this table, financial market perspective, gdp is great, unemployment is low, this economy still resilient, doing well. the word "solid" comes up

repeatedly. how big of a difference is there between that conversation and what you see in the polls? >> the number one issues that americans say they think about when they go to the polls, it is extremely important. there is a disconnect between what we talked about where we say the economy is decent and when we are talking -- what we are talking about is a year ago, recession. today it is not a recession. if you look at indicators like inflation that came down, people are feeling less miserable. they are not feeling better or euphoric. this is an economy where people are going to reup their car insurance or home insurance and are reminded of the high inflation rates over and over again. this is not an issue that is going the way for them. if you're looking at what the fed is thinking, they are saying the economy is balanced, growth is looking better than we thought it would look six months ago. the consumer is in decent shape. but if you ask americans how they are feeling, a very different reaction. lisa: when you look at the swing

states, is there one that stands out where inflation may be is hurting americans more? >> not particularly, no. i would not say you can pick that out from the states. what you do find is there is a very big difference between what voters in the swing states feel are important issues coming into the election. a gallup poll from september ranked what republicans thought were the five most extremely important issues going into the election, it would democrats thought were the five most important issues. there was no overlap whatsoever. republicans by a much larger majority find the economy is annmarie: the top issue. annmarie:democrats, not even in the top five. annmarie: it could bring higher inflation which they said they're going into cell. is that landing? >> not -- what i would say is when you think about the outcome

of the election, what is likely to turn into policy. we first have the presidential election, which is a tossup. when you go to what is going to be enacted, what is going to happen with legislation -- whatever majorities we have in congress are going to be razor thin. so whenever you think about deficits, that is a constraint. but there is also what is happening in the bond market. rates have been rising. deficits as a share of gdp are double what they were in 2016. the idea that either candidate is going to get everything on their wish list i think is a limiting factor with respect to how this could paint out for inflation and for the economy. lisa: when it comes to the bond market, that because of what you said, it is going to be difficult to enact -- single-handedly that gills are going to come back down and realize any extra premium to put in regardless of who wins is

going to come out? >> in the last several weeks, there's been a certain fear factor in the bond market with rates rising. we thought when rates had gotten down on the tenure to around the 365 level, it was fully valued. so we were advising our clients to not get too far over their ski trips in the bond market. we thought rather we would extend some duration but really out into the belly of the curve, not further out the curve. we have had that backup and interest rates. i would say to continue to lead in here at these levels. but not to the point where you are overextending on duration. with the election result, if you get a trump victory, i think the odds of a bear steepener, yields rising on the backend more than on the front end, pretty likely. under a harris administration, more likely to be a bowl steepening. either way, are not doing as well out the long end.

in bonds today, you're getting 4.25, 4.50. that is a gift compared to the last election or the election before that will stop lisa: a lot of people agree with that and have the same idea about a bear or bull steepener where there is legs conviction is relation -- this conviction is the relation to the dollar. will higher yields from a trump administration in particular lead to truly a stronger dollar? >> i think what we need to consider here is the short term versus the longer-term trajectory. we have seen today some news out of the bank of japan talking about over the longer-term lifting rates, china is working to resuscitate their economy. the u.s. is in a position where over the next year we should be expecting rates to come down. that is what the fed is telling us. there is question about how much

that comes down but next year, rates should be lower. that i think altogether, dollar weakening. it is of historical range. i think it is expensive but on a trump victory, i think initially, if there some safe haven flows, that would benefit the dollar but only on a short-term basis. jonathan: we have a lot of work to get through next week. good to see you, kurt reiman. on the difference of what we see in the data around the table like this and what you see in the politics, the politics is speaking to the despair takes, bifurcation amongst the consumer. we saw that yesterday breaking down spending. the main growth driver yesterday has been narrowly boosted by upper income households with lower income ones who have grown more price-sensitive. that is where the anxiety comes from. we are talking about prices going up less fast. that is what we do around this

table when it comes to the bond market and federal reserve post a post of everyday people living in this economy thinking about a price level that is materially higher than five years ago. annmarie: and reminded of it with a good to potentially pay their auto loan or pay their rent or grocery store. those prices are not coming down even though the rate of how much they're going up is. jonathan: which is why the conversation is very different on the campaign trail versus wall street. equity futures and the s&p 500, little bit softer. weighing on the market, earnings from big tech. we have heard from microsoft and meta. later, amazon and apple. we will catch up with darrell cronk and the latest coming out of blackstone with a big push to build out data centers for mega cap tech. how those worlds collide in just a moment. this is "bloomberg." ♪

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>> investors have views that are lightly held. >> if you take a look at the low-end consumer, that is where you have seen a lot of the weakness show up. >> there is a lot of signs of disinflation. >> to have supplies online, productivity higher. this really is good news. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: closing up sober.

equity futures on the s&p 500 down by .70%. the nasdaq 100, down by almost one full percentage point. thank you, meta and microsoft. those two down in the premarket. later, we will hear from amazon and apple. microsoft down by 3.50. meta down by 3.4. so the front-end and the long end of the two year and on 10, yields down by two or three basis points. 4.27 on tens, 4.16 on twos. later this morning, jobless claims. lisa: i do time when every economic data point has been surprising to the upside. there is a real question among investors, which is how high is the bar for the fed not to cut next week, especially given a

fraud circumstance? annmarie: you look at adp, potentially jobless claims, and depending the payrolls report, if it is not on the lower end with bloomberg economics, it is on the higher end, and the u.s. presidential election and potentially no results when the fed meets, i think the bar is high considering the fact they already cut 50. jonathan: our survey coming down just a touch. the estimate is down to one no one. the low -- 2101. the medium is dropping back to 101 going back into tomorrow. lisa: some people say the reason why the flip to job openings is partly because you can read the job openings anyway you would like and you can interpret that the labor market is getting a little more calcified. one of the reasons why the job openings have come in is because people were hired in big numbers last month. so taking out the hurricane disruptions and strikes, it is the question on whether we are

reaching a stasis. it could go one way or the other. jonathan: how to be clear that risk over the next week? the s&p down by .70%. coming up, we will catch up with wells fargo, speak to evan roth smith of slingshot strategies, and pierre ferragu later this afternoon. we begin this hour with meta and microsoft. amazon and apple set to report this afternoon after the close. equities remain on track for a sixth consecutive month. david cronk writing that strength looks durable and sustainable. the key will be to maintain some semblance of stability in the three e's, earnings, elections, and employment. darrell joins us now. darrell: you could draw your employment piece anyway you would like to, to the point of jobless claims better, adp better, but if i also took

facebook, bad, so there is a dichotomy which we face and we have been facing for quite some time. on the earnings front, we think the quarter ends somewhere around 5% to 6% earnings growth, which is above the 3% we walked into but probably underwhelming. you get 49 companies today, which is 10% of the companies and 70% of market cap alone today. so it is going to be a busy day, not just within tech, but beyond that, we get to see a lot of good data today. jonathan: two names are responsible for that percentage, and we will hear from amazon and apple. how high is the bar for big tech stuff the back of the earnings from yesterday? darrell: i think it is pretty high. if you backed out and looked at tech, this would be the weakest quarter earnings growth the last six quarters. still robust, but you can look

at the dichotomy and simply look at what is happening within tech, google strong on cloud services, amd strong on checks, so you get this intense eye for creation starting to separate, and if you broaden out tech, what is happening in the stock market as a whole is the double beats, if you beat on sales and earnings, your stock price is killing it, like you see five, 8% moves in a single day. obviously, a double miss, same symmetry to the downside, so the moves as we separate the haves and have-nots with a bifurcation , to use that as the word of the day, seems to continue, not just in the delivered sales and earnings but the price action. lisa: this is something julian emanuel pointed out, the magnitude of this single stock move on beats or misses has been notable. is that healthy? does that indicate stockpicking

or that people really have no idea, and expectations are where they are, and people are willing to sell or buy trigger finger? darrell: i think it is a little extended positioning, so positioning has been robust, strong, everybody is on the bullish side, so you have had to calibrate that back, and i also think, as it always is in earnings season, it comments on the outlook. if you are not providing good transparency or a good outlook number, your stock prices getting hurt badly. lisa: when it comes to these specific stories, how long does it take to get a mac are overly? i think of big tech being the macro overly that led to so many gains we have gotten so far in the stock market. cannick continue to gain if it loses that pillar for a fundamental reason? darrell: yes, it can because we

have seen the rats the widen. so financials on relative basis are doing extraordinarily well on the back of the steel curve and what is happening with interest rates. industrials are probably the best performers on the board, so tech has actually stepped back. if you look at the relative basis, tech probably falls in the 7, 8 category today as far as leadership goes. it already has stepped back. what it cannot do is decelerate materially, and where people are holding tech, feet to the fire, they would like to see where the next incremental growth will come from. we have priced in a lot of the ai and the capex spending will happen in 2025 because we know that number this year was 40% and 60% and next year, it is probably 30 to 50%. it is down but still robust.

if you do not monetize that into incremental revenue, then i think tech does struggle to lead, and you have seen that in the multiples, coming from 31 times in the sector down to 28. and in the last 90 to 100 days. annmarie: we hit two out of the three e's, do we have any semblance of civility when it comes to the u.s. election? darrell: probably not. i think you seeing smalls outperform, expectations of, emerging markets week, china, x ago, all that stuff. if you end up with a red wave, i think u.s. exceptionalism continues. the globe struggles, global trade policy, which you cover will, rate transactional.

it is taiwan, you need to pay for your defense, europe, you need to chip in your fair share, we have to go conflict by conflict, and how the administration will try to portray policy outside of the tariff issue. annmarie: you don't think exceptionalism continues with a harris administration? darrell: not as much. annmarie: do you know the rest of the world is weaker? darrell: on a relative basis but not to the extent you would see out of the red wave. you really push to the tales, so, in other words, if there is a red sweep on tuesday, i think you have to think about china's woes and european woes getting worse because you are going to limit their ability to export goods through the tariff mechanism. you have to think about the near shoring of canada and mexico that has been happening the last few years as you think about renegotiating all of the north america trade agreements, which

will be on the table with a red wave. i do think it gets weaker under a red wave and it stays weak under harris but not as weak. annmarie: let exceptionalism within the u.s., is that going to be hard if there are tariffs and inflation goes up and there is a constraint on immigration and it starts hitting the labor market? darrell: yes. look, you guys know well, tariffs at their core are friction into the global trade system. but i also think people fear it worse than it is. if you look at the numbers and say, let's take china, today, the average tariff on china is 19%. we import $430 billion from china, so if i take it from 19% to 60%, it ends up being about 8/10 onto inflation, so it is inflationary but it doesn't tip the boat over, hypothetically. same on trade, if i take 10% on

2.7 trillion, there are real numbers. you can understand economic impact, and don't think it is quite as bad as people extrapolate. jonathan: stocks and bonds, you preferred large over small, you are not chasing small caps, the 10 year call, four point 50, what is the stock and bond for you now? darrell: i would say semi stable , we are about 6300 on the s&p, so a decent return. the pound to table trade we have been trying to get our people to pay attention to is now is the time to take the duration. summoned the 430, and a lot of people -- a lot of people were gnashing their teeth when it was down i 360 and they thought the fed would keep cutting rates, the curve is going to shift all the way down. i missed my opportunity and the reinvestment risk is real because we have not had to deal with it since 2006 basically

with the danger zero interest rate environment. we are trying to tell people not to be asleep at the switch end crowd all your money on the short side of the curve. start fighting on intermediate long-duration. maybe go to 4.50, 4.75 but not much higher. jonathan: the only thing that a consumer runs away from. the 10 year down two basis points. good to see you. darrell cronk of wells fargo, looking ahead to next week. a monster week around the corner. we will get an update on stories elsewhere with dani burger. dani: more earnings, uber shares falling nearly 6% premarket. it delivered a record operating profit but had weaker than expected ride bookings. they also issued a more muted forecast for the holiday quarter, writing that they struggled with fx headwinds which weighed on their business. they have also invested in new offerings, seeking to transform itself into a consumer super app. peloton shares jumping

premarket, 5.3%. the company named the ford executive peter stern as its next ceo, effective january 1, in charge of turning around the struggling fitness company. peloton recorded second-quarter results, including revenue that missed estimates. the grammys are relocating. the walt disney company won a 10 year deal to broadcast the awards starting in 2027, ending cvs' more than five decades as home to the show. the grammys will air on abc and disney streaming that, including hulu and disney+. the grammy specials and other programming across disney platforms. jonathan: i have things to say about hulu pricing. i will save them for after the election. next on the program, a message to swing state voters. >> allowing russia to go to ukraine october 7 and israel, all of these things would never have happened if you had a different president.

>> donald trump trying to keep us divided and afraid of each other. that is not who we are. jonathan: a conversation of the next. live from new york this morning, good morning. ♪

jonathan: equity futures on the s&p 500 softer, down by .70%. yields two or three basis points,4 4.273. under surveillance, messages to swing state voters. >> inflation that should never have happened, allowing russia to go into ukraine october 7 and israel, all of these things would never have happened if you

had a different president. >> we have an opportunity in this election to turn the page on a decade of donald trump, trying to keep us divided and afraid of each other. that is who he is, but, madison, that is not who we are. jonathan: here's the latest, the trump and terrorist campaigns making a final push in swing state rallies with early voting underway. evan roth smith of slingshot strategies writing the decisive vote is in the final stretch of this election are left-leaning people in right-leaning environments. he joins us now for more. good morning. we are chasing a few hundred thousand voters and you suggest across a handful of swing states, elaborate on chasing left-leaning people in right-leaning environments. what would they like to hear? evan: we dialed in on the people who are casting decisive votes, people who are undecided and

what we found is that a lot of them as we say are people who are inclined toward usually splitting their tickets but they are little more democrat and republican, but they are surrounded in their lives by trump supporters say most people in their lives are trump people. one democrat at the table situations, and are they going to break from their family? are they going to vote against their environment? we have not released this yet, but we found a lot of them are obama-trump voters, and that is what is left on the table. they are anti-immigration, they are pro-choice, they don't like corporate greed, but they also don't like government spending, so they have a lot of pressures working on them. and 60% of them, when we ask what you need to hear to make a decision, a lot of them say i just like to wait until the last few days. and that is what they are doing, they're waiting. annmarie: could you think they will break for? evan: it depends on how these

two candidates close. the in person rallies, where they go the last few days has a lot to do with it. these voters are more internally focused than is donald trump or kamala harris in the zip code next to me? harris, if she closes on the economic stage has a way in, and if she closes on something more nebulous, these are not voters who vote on january 6 or anything like that, if she closes on something more nebulous and donald trump closer strong on immigration and the safety of these other crimes, more in-line with republicans on, they will do well. annmarie: let's talk about where the candidates are going. donald trump is going to mexico. we have never seen -- donald trump is going to new mexico. and then he's going to virginia. do republicans think they can play in the states? evan: i have no idea, but i'm

glad they are making these choices as a democrat. it is a extensive put them there, if it were for a rally, a show or a podcast, i'm not sure why he's in these places. harris is in the swing states. whether it really makes a difference comes down to a handful. annmarie: the closing argument it comes down to, how much did biden undermine her this week? evan: it did not help. annmarie: and then trump went off and made a meme about it. evan: trump is doing this garbage thing. the only people who are strongly reacting, joe is reviled. jonathan: sneak peek. evan: these swing state swing voters, joe biden is -45 favorability with swing state voters, so it not like they were waiting on the final word from the president. and donald trump doing the donald trump shall not persuade them either. if i'm donald trump, i'm probably more concerned about the puerto rican impact of my

comments in a state like pennsylvania where there are half a million puerto ricans, joe biden won pennsylvania by 80,000 votes. i don't love those numbers if i'm donald trump. lisa: i would like to dig into that comment that joe biden is reviled. how not well has kamala harris distinguished herself from him? at this point, her response to that whole situation was, look, he walked him back, but that is not how i feel. is that enough? evan: i wish she had hid it harder. i don't think there's much time for her to redefine her relationship to the president. all of her research showed strong distance would have been better. they never really got there. this week, when she was responding to what he said about "garbage" or whatever he was trying to say about it, she sort of did the distance, but that is always where she has kind of been, she sort of have drawn the

distance. when we look at these voters, the people are going to decide the selection and as of today, have not made up their mind. they will make it up in the voting booth and they will see one ad monday morning and go, that is my guy or gal. lisa: i was in an uber last night going home, and the guy was listening to hot 97 on the radio host said he was going to stay home because he was not feeling it. how much is that something you're hearing quite a bit? evan: i hate to get turnout projections, claimed the early road game and the cabdriver game, but what else is there to do at this point? lisa: let's not call it again, let's go. evan: but, you know, it is hard to know. i think there are pockets. a terrible answer, there are pockets of voters who will be extremely activated. there are voters who are going

to be less likely, and donald trump strategy basically, they have done some work to expand the coalition a little bit, but he gets 40%, 52% of the country will not vote for him. you have to make sure they don't coalesce around one person. if some of them stay home, great, that is a win also. that is where they are, having a low turnout election, there was no countervailing. evidence around what lower turnout voters may do, i still think trump benefits from a lower turnout election. jonathan: one candidate has got to lose, but what is interesting about this is that candidate probably will not run again. donald trump will be too old, and it is likely harris will be given another shot, given that she failed the primary last time around and was gifted this opportunity. the question is how each party will pick up the pieces something about the future? what you said that stood out is that swing state voters who don't fit into that ideology that they are pro-choice for anti-immigration, how does the

republican party pick up the pieces and explain to the population what they're going to be in the future? perhaps that is a difficult one, much more so for republicans than democrats, but how are you thinking about that beyond next week? evan: if trump loses or eventually accepts a loss, what will happen inside the republican party will be a bloodbath, you have traditional conservatives trying to assert themselves, people like jd vance who are now paragons of the trump movement, trying to retain control, and his sons will probably try to retain control, relatives running the party. if the democrats lose, it will also be very messy. no question about it. the democrats did a pretty decent job of trying to move the party toward the center the last year. we wound up with the messenger, kamala harris is an uneasy messenger for california senator, a diehard liberal, she was comfortable pivoting left in

a way that joe biden did not prove it as far left in the 2020 primaries. if the democratic party can stay on target with a slightly moderated on fiscal policy or immigration, you are a little more getting credit for the policy, and low inflation, we are not allowed to say that the economy is incredible. annmarie: on paper, but it is not what people feel. evan: no. annmarie: but isn't that the problem with voting? evan: yes, but it is also about leadership. if donald trump were president right now, he would be like this is the best economy in american history and he would be pretty close to right. annmarie: why don't the message that better? evan: because democrats are poor messengers. jonathan: this administration has been shocking at it. i can compare and contrast the two administrations that the access to get to the economic speakers from the trump administration was constant,

every single month. you barely hear from this administration. that has been to their detriment. i think about strong payrolls reports, where you say that if donald trump were still in the white house, we would have had a rose garden address and that idea like today, we would have had pumpkins, halloween, and we have not seen that from the biden administration at all. annmarie: i wonder if they try to bury it because they know people are still so concerned with inflation and they cannot say in their face that this data is really good because they are not feeling it? jonathan: possibly. insightful stuff, thank you. evan roth smith slingshot strategies. next, we catch up with apple, set to report earnings. this is bloomberg. ♪

♪ ♪

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jonathan: equity futures pulling back by .70%. we will get to those names in a moment. the nasdaq 100, -0.9, two hours away from the opening bell. let's crossover. >> i know we cannot throw everything into the monolith of everything is tech, but we'll talk about the efficiency of ai. the stock up 62% into the opening trade, we have a conundrum. they will raise the, and

advertising is 96% of the revenue numbers. revenue is going to slip ever so slightly, so that differential is something to keep an ai, he spent 60% more time on instagram, that let's look at microsoft. a constraint in our issue, this is capacity constrained in ai. the current quarter, you will see usage dropped to 32%. let's start from 34% in the first quarter. what do you do, build more data centers question mark that is the issue for the market in terms of sorting that capacity and strength. this business is going to be the fastest growing in our history, the pace and the size of that. i leave you with microstrategy with a bitcoin twist, the stock is up this morning, 291% this year, outperforming because they

have a lumpy position, but they are going for a capital race today. other words, ready much at the stock price at the moment, raising $42 billion, but they have to buy more bitcoin. the business that they do, the software business fell by 10%. jonathan: what a shocker. appreciate your time. manus cranny with movers. under surveillance, let's recap, meta and microsoft trading lower in the premarket. microsoft slipping on lower forecast for cloud revenue growth. later this afternoon, more mag seven earnings. microsoft, let's talk. if you have not been through these numbers, quarterly capex at microsoft is almost $15 billion, a record of 50% for the same time a year earlier. lisa: that was once a great thing because a lot of the tech giants say they cannot invest

enough in the ai behemoth that is becoming a dominant theme, and now there is a question of show me the money. the fact that the club forecast came lower was a big concern for people, especially given what we saw from google, which was the opposite, over the amazon. what is their aws platform do? jonathan: the biggest risk for ceos given the trend they are anticipating is under investing and not over investing. we saw evidence of that yesterday, constrained by capacity over microsoft. we talked about this, they are also constraint about the investor base, and at some point, they have to show something for it and show a lot more, so encouraging them to keep investing in their equity. lisa: as i read through the microsoft and meta results, it strikes me that microsoft is coming off a high bar google set and they did not meet that high bar, but they are still delivering. with meta, there was a concern about doubling down on

investments that are losing money. that is a different characteristic and it shows how specific people are getting with the stocks. jonathan: down about 3% in early trending. down on president biden's garbage comments, kamala harris continuing to distance yourself, saying she disagrees with criticism of people based on who they vote for. quite a scene yesterday afternoon. annmarie: i don't know what this will land, and i do look at politico in the essay who won the day. those undecideds are going to make their decision, even when they wake up on election day. they have different issues that they care about in both camps. they say trump won because he forced harris to do cleanup, cleaning up joe biden's comments on garbage, and that he change the subject and made a kneeme of it that was viral -- made a meme of it that was viral, so even if

you do not know why he was in a garbage truck, you are forced to google it and you realize she was poking fun and doubling down on what the white house was saying. jonathan: harris is between a rock and a hard place. i've heard that she should distance herself to do more, and if she did, she would be accused of being untrustworthy and disloyal. lisa: this is the reason why she has not really divided herself as much from joe biden and something that people are saying could hurt her chances for swing voters. jonathan: here's the latest from automakers, vw with a plan to avoid factory closes in germany, saying it includes a 10% pay cut and revised bonus system. the next round of talks between management and labor leaders are set for november 21 ahead of also will strikes in december -- ahead of possible strikes in december. lisa: it talks about all the woes to get that 10% pay cut they are talking about and a revised bonus system.

a question of if they will finally get the leverage to be viable? jonathan: we have seen the back-and-forth publicly the past few weeks. that's turned back to big tech, results for amazon and apple after the closing bell. a neutral rate on apple from pierre farragut, and he joins us now for more. looking forward to the numbers dropping later, share your thoughts on how the new iphone is doing and what you are seeing in terms of sales relative to the same thing last year with a new product. pierre: yes, so we are just taking the very early innings getting feedback from the market , and as we expected so far, the feedback we get is pretty creative. we have already heard about we consumer reception and apple booking are getting older with the supply chain, but it is

still very early. what we expected late november and early december, and more evidence of that coming, and if the supply chain is going to become very tangible in the first weeks of january. so far what you see is that a lot of market share has been gained in china, and what you see his demand in the auto industry being very weak, and last but not least, in terms of innovation, it produced ai, and what we see is that these features, even if it is about travel, they have a significant impact on consumer preferences. jonathan: a lot to unpack.

can we pick out the geographic piece? is there a struggle across luxury? is that the wrong way of looking at things? pierre: that is an interesting one. when you look at it globally, it looks like consumer weakness tends to be on the lower end of the market with a higher and being better protected, and that is what we saw on the feedback, like a week and this -- like a weakness. in china, you have a different situation, and maybe the higher end of the market could be slowing, but it is still very early, and it probably will be more specific to china. annmarie: how much has the bar been lower for an apple than a microsoft and a google and then even a meta just because there has been angst about how it is going to deploy ai and whether it can really get some sort of

upgrade cycle going? pierre: good question. i think you have a lot of excitement around ai and ai being deployed by apple. over the summer, you saw the stock market significantly, and expectations are intangible, people are excited about ai, but nobody is really hanging onto any kind of situation and microsoft is putting a copilot at the end of their users, and they are monetizing it and charging for it, and the feedback is it is very different. on one hand, it is a bit

disappointing, but on the other hand, it is like, yes, it is ai, so they need to get used to it, so that is really easy and everybody would like to hear ai or try ai, but nobody is really coming up with stronger evidences. lisa: a lot of people are talking about apple as the underdog when it comes to people truly understanding their services revenues. it is not going to be something that will surprise yet again as a major driver? there was time when people thought this would be a services company. pierre: if you look at apple and ai in the medium-term, that is the right way to think about it. apple has done a very good job of encouraging its user base to create high positivity with service revenues.

and, you know, as ai use cases are getting a bit clearer, apple will have a fantastic distribution power with the ability to put ai in terms of users, and they should be able to at some point charge for it, but i don't think technology is ready for that yet. you don't have a high value ai use case to start charging on a basis for it. annmarie: i know we talk about china and the potential growth impact this will have on apple, but recently, the former president said tim cook complained about the european union, how much are those penalties weighing on apple and tim cook? pierre: it is not a significant moving path. when you compare the risk of these penalties to the market, it is very insignificant, and we

know that it is unlikely that any jurisdictions for the european union could really take steps and apple has a strong power because consumers launch their products. jonathan: looking forward to the numbers when they drop later. pierre fara go -- p.r. borrego -- pierre ferragu. here is your bloomberg brief with dani burger. dani: the israeli prime minister will talk with the white house senior middle east envoys about brokering a truce in lebanon today. the latest plan calls for a day positive fighting to make sure hezbollah does not receive any more weapons from iran and moves further away from the israeli border. hezbollah has not singled -- signal debt whether it is interested. taiwan is suspending trading.

powerful storms are making its way to the island. a super typhoon has intensified as it skirts the philippines and tracks toward taiwan, where it is expected to make landfall thursday afternoon. it is the third storm this year to disrupt stock trading and taipei is also shutting offices and schools. elon musk is doing a philadelphia court at 10:00 a.m. eastern this morning and must attend their emergency hearing to address a bid by the top prosecutor to stop the super pac from awarding one million-dollar prices to registered voters to sign a petition supporting the first and second amendments. the lawsuit alleges elon musk of illegally trying to influence voters in the presidential election. that is your brief. jonathan: more from dani burger in 30 minutes. next, the boom. >> it is clear there are a lot of new opportunities to use new ai advances to accelerate strong

roi over the next few years. jonathan: that conversation around the corner. from new york, this is bloomberg. ♪

jonathan: move from new york city, good morning. a snapshot of prices, obsession those, down .70%. the earnings from microsoft and meta weighing on the market a touch. yields down a basis point on the 10 year. on the month, up by 50 basis points. 4.2844. boom under surveillance this morning. >> it is clear that there are a lot of opportunities to use new ai advances to accelerate our core business which should have strong roi over the next few

years, so i think we should invest more there. second, rai investments continue to require serious infrastructure and i expect to continue investing significantly there, too. jonathan: big tech wrapping up spending, data centers fueling ai services. microsoft in the first quarter, 14.9 billion expenditures, a record of 50% from the same time a year earlier. our equity and debt strategies operating in multitrillion dollar markets that generate enormous flow of ig debt, often where blackstone is deleting -- the leading player, including data centers, energy and for structure and real estate, john gray -- jon gray joins us for more. we are hearing from some companies that big tech is constrained by capacity and that means we will see more spending. can you walk us through how you and the team our position to

succeed and how big the opportunity might be? jon: i think this opportunity set is massive, and one of the great things about working at blackstone's we are long-term investors and we try to spot these megatrends. clearly, ai infrastructure is one of them, and we played on the private equity side and it feels like q2 yes -- qts, and we are also doing it and credit, and you have these long-term contracted assets that are fantastic for financing, but also all the picks and shovels around it. we like the datacenter the structure company, a services provider of that market. we can take advantage of the entire ecosystem given the scale of our capital business. jonathan: what will the relationship you like with the tech firms? clearly, they do not want to become energy companies or real estate companies. what will the relationship look like? jon: for us, it is a financing counterparty against a long-term

high quality assets with incredible strong counterparts, and the ability to do that in scale and deliver what we deliver private investment grade solutions to clients, were there getting access to high-quality spread, that is one of the strongest tailwinds we see. it is $38 billion of what we call private investment grade assets with a a credit rating but with excess spread, versus buying a liquid a rating corporate bond. lisa: why go to the private market for this financing? jon: this is part of a long-term toward private credit and what is driving it is this farm to table approach, and we bring investors right up to borrowers, and doing that, we can provide speed, customization, which is incredible for borrowers but also great for investors because

they can capture access spread that comes with providing that specific solution. lisa: i ask because typically i think of a blackstone or apollo as a company that looks for lower rated deals. it is as a result of significant yields. the focus has been more on investment grade. why is the focus for these debt company so much more highly rated on investment opportunities? jon: three big reasons. one, the sheer size of the opportunity set. and that is a true billion -- 2 trillion dollar market. second, it is so much earlier in its transition to private capital, maybe 1% or 2% penetration, so you have a superlong runway. and the mega-things that are driving it, we spoke about

energy transition, you have incredible mega things that are driving it, and that is a meaning to that solution set, which is attractive for clients who are looking at traditional markets that are at all-time tight spreads, so the ability to capture access spread without incremental credit risk in scale creates the opportunity. lisa: 19 back -- i'm thinking back to the 1970's were a lot of the modern cellular infrastructure was financed that popped up. how much is entirely funded through companies and not connected to public financing? is this not predicated in any kind of public intervention or is this often fueled by that type of activity? jon: the healthiest capital markets, where you have both public and private. this year, you have seen that. even in the year where the public capital markets are open where you see strong issuance, and you've seen private capital deployment for blackstone, record year-to-date implement in

investment grade and some investment grade private capital businesses. this notion of a healthy capital market of borrowing public and private capital is when we fully subscribe to. lisa: you have to wonder, i noticed with blackstone, how much credit was deleting and biggest unit after really growing up as a private equity company. it raises the question of a new model where there are fewer mergers and acquisitions and the transaction is not necessarily attractive to certain people. is that the model going forward, that m and a is not suppressed on they will not be the same role for the investment company that is to have? jon: when you look at what drove our ins and outs on the credit side, you have three important things. there is 17% growth return across our private plot from the last 12 months enter default rate stayed less than 50 basis

points. and then performance drives employment. you have had record deployment. i nearly $40 billion committed indirect learning -- lending year-to-date, nearly double of all of 2023, and when you see strong performance, when you see strong deployment, that meets strong flows, and that is why we are seeing clients trust us with more capital, increased by 20% year over year with $32 billion across credit last time. annmarie: when it comes to m&a, people are waiting on the sidelines because they would like clarity to next week's election. jon: when you look at m&a, you have all the uptick, you have the strong and resilient member economy, you have cost of capital going down, you have a lot of pent-up demand and you

have record private equity, so all of that is fueling what i believe will be a start uptick in community into 2025, and when we get past the election, hopefully -- annmarie: you see that regardless of who wins? jon: i do because the ingredients i mentioned cause pent-up demand and a strong macro. fundamentally, those will be the drivers regardless of who wins next tuesday. jonathan:jonathan: it is not sound like financial conditions are tight, wise of the fed reducing interest rates? jon: i think they are looking at inflation data, and what we see in our proprietary data, we are fortunate to have access to so many portfolio companies, and for blackstone, it is still healthy well wage is slowing, and it is coming down in our proprietary data. as inflation comes down to where the fed is looking for it to go, that will give them fair cover and the ability to take short

grades down and i expect to see that in the near term. jonathan: really thoughtful stuff, a massive opportunity and a big thing for big tech this morning. appreciate it. michael zawadzki there a blackstone. bouncing obsession lows, down by .60% on the s&p 500. in the next hour on "surveillance," we will catch up with and we people who gonna -- we will catch up with northern trust, and we have heard from meta and microsoft after the close apple and amazon. and we catch up with seth carpenter of morgan stanley esther count you down to payrolls friday, 24 hours and 34 minutes away. that is before jobless claims, so another read on the jobs market going into the big one tomorrow morning, and then bond market reaction on a massive month for extend come with two year and 10 year treasury markets higher on the month by around 50 basis points. from new york city this morning, good morning.

the third hour of "surveillance" is next. ♪

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>> the markets have gotten way ahead of themselves.

this is still a tossup. >> there is concern that there will be more inflation. >> trying to understand what is a press release, what is a meme and what is implementable remains a question. >> both have platforms to stimulate the economy. >> many of the >> big issues facing this country >> are facing us to matter who takes charge. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: we are 90 minutes away from the opening bell in 30 minutes away from economic data in america as we round out the month of october. on the s&p 500, down by .60% on a six-month winning streak, the longest since 2021. mastec futures down by .60%. earnings from meta and microsoft this morning, down in the premarket, down three on microsoft, down two on meta. later this morning, economic data in america, with initial jobless claims, 2.27, during the

adp upside with a surprise yesterday, and it looks like this labor market looks ok. lisa: if you get a labor market that continues to confirm the upside bias, and you get an upside surprise in the inflation rate that the federal reserve looks at, how much is that change the narrative about how much and how long the fed could be the cut in general and also next week. annmarie: especially when we know that everyone is saying that the federal have to look through this data because it is so noisy and because of the hurricane, too, and because of what is going on with boeing with workers on the picket line? yet, the data for the most part looks good. and depending on how friday looks, either campaign will use it to their advantage. jonathan: we have been through the data millions of times and we are on the cusp of a monster week, payrolls tomorrow morning, onto the election next week and

then two days later, and if bio -- fim c meeting. estimates right now, the range is wider, and the previous number, 101 k the estimate for tomorrow morning. coming up, we are catching up with anwiti bahuguna with big take earnings on equities, we will speak to seth carpenter of morgan stanley on why he thinks the fed will cut in november and december, and we will catch up with ed ludlow, looking at earnings from amazon and apple. disappointing results from microsoft and meta this morning. later, the latest jobless claims numbers and another read on inflation. we expect to see a soft landing with strong economic growth, strong corporate earnings, and a software and labor market. this scenario is historically constructed for equity markets. we are joined now for more. so do you stay longer u.s. equity market given everything you've said?

anwiti: yes, and with a 12 month outlook, i would say that is still the case. i expect near-term volatility. jonathan: the election is one of them. anwiti: the election is one of them. it is important for us to acknowledge the labor market will be noisy, and it is not always clear that people look through it. we hope you look through it, but things can happen. jonathan: when you say look through the noise, does that mean look through weakness? anwiti: exactly. jonathan: what if it is strong? anwiti: that is our biggest risk case. that is the reason we are underweight bonds in our portfolios because that soft landing scenario, if that translates into the goldilocks scenario that we have seen so far, where inflation has continued to come down while growth has remained well above trend, if inflation does not come down, that is literally the only risk case that worries me

right now because that ties the fed's hand and then you have a sticky inflation. lisa: some people argue that that is positive for these. you end up with a situation where the economy is growing, there is no landing scenario, yields are higher, but we have seen equities look through that. and leaning into equities is to hedge against non-regulation, and leaning into equities if you think the federal cut rates, so how much can you push back against that? anwiti: there is a range of inflation where it is still ok for equities. and equities can weather that. but the stickier .70 is what it the fed stops cutting rate at that time? and they're so much expectation a fed rate cuts, and if inflation is higher, their hands are tied, that is one of their mandates, and they are back in

an environment where they are debating what is the neutral rate, should they not be cutting anymore, or maybe there is another 50 basis points? and even though it is constructive in the short term for equities because growth is so strong and there are more growth driven assets, what happens when companies are not able to refinance at the lower level that they have been? lisa: underscore what you are saying, we have seen a lot of volatility when it comes to big tech companies and other companies reporting. have we reached a point where yields pressure companies to really out deliver and perform on their earnings? the earnings have to come in to justify the differential in some of the valuation methods? anwiti: i think the longer the yield stays higher, the longer,

the longer that stays elevated and those factors will come into play again. annmarie: how are you advising your clients not to panic? why do you think the market is already pricing in one scenario over another? anwiti: that is a puzzle to me. all the polls i see are within a marginal 1% or 2%. that does not give me enough confidence to have a strong view one way or the other on why certain sectors and stocks, for example, oil and natural gas may be outperforming solar and things like that. there is still so much unknown about exactly which policies will get implemented, exactly what legislation will pass, how water down it will be, and i keep going back to this one part where people behave as if it is single factor, but we are in a multiple variable world, where we may have this regulation and that is good for certain

production companies, but we may also have massive tariffs, and we are still not clear what the exact microeconomic impact of that is or the growth on inflation that may have. you may have immigration policies, so-and-so's two wait and see how these interplay. annmarie: you say also an upside surprise in the payrolls report could be the biggest risk, especially when it comes the fed. what forget that and we don't have a decision on tuesday and they meet on thursday? there will be a lot of answers that they are probably not going to have when the reporters are grueling jay powell. anwiti: that could be a hairy situation. again, short-term because we will get more clarity. annmarie: but what if they just cut? anwiti: on the fed? hard to say. inflation will be more important than the volatility around the election. jonathan: a lot of people are making a big deal. do you think the next week has the real potential to redefine the micro outlook for the global

economy? anwiti: yes, absolutely. jonathan: why do you push back against that? anwiti: because if you look at 20 ministrations of who is on the top line, the president, the legislature and the combination of republicans and democrats, there is no clear pattern. what really matters is the macroenvironment. so was the republican presidency under bush but? no, we had a financial crisis in 2008, so everything looked terrible. there are other factors that we will not know next week. it is not that they don't matter, they do, but it takes six months to nine months to have clarity on policy, fermentation, applications. jonathan: to understand a range of outcomes, we could go from having a corporate tax cut at 15, and we have gone from letting millions of undocumented migrants into the country, who

may be deporting millions in the future, and this could mean the changes for the economy operates. anwiti: absolutely and i agree with that. i think you will have clarity. companies will figure out how to work through those different things, and what we really need to stay focused on is how are the companies we invested in dealing with different interstate environments, dealing through slowing of faster inflation, and these immigration policies, which will have an impact. jonathan: i've got a good friend who will say they will adjust and adapt in the future. lisa: well, maybe they will, but it seems like right now corporate executives are not making big moves because they are afraid to go, adapt to quickly if it could change significantly, so we shall see the adapting and adjusting. jonathan: appreciate your time, anwiti bahuguna of northern trust. equity futures on the s&p 500,

down .60%. with an update on stories elsewhere, dani burger. dani: shares of norwegian cruise lines rising 5.3% premarket, reported better revenue and third-quarter profit that beat expectations. they continued robust demand and raised its full-year year outlook for adjusted eps, rallying more than 19% this year. hedge fund manager returning to oil, in a letter to investors, it says it renewed a position in crude after quitting the commodity a few months ago. the change is due to "expectation of higher oil prices as a result of the ongoing conflict in the middle east." he goes on to say that he expects further escalation. a chaos after a dodgers when in downtown l.a. -- win in l.a.

a city bus was also burned to the ground. police ordered crowds to disperse before making a number of arrests in connection to the gathering. that is your brief. jonathan: i don't know, this is what i was told, this is something i was told eagles fans do, as well. they riot when they win. annmarie: philly fans are an interesting crowd, that's all i'm going to say. lisa: i will just say, it is bizarre. i have heard that at the philly stadium, they have a holding pen underneath. jonathan: they destroy things when they win? lisa: i don't get it either. it is the one outcome you know. annmarie: you win or lose, there might be riots. jonathan: that's ridiculous. next on the program, the morning calls and we catch up with mandeep singh, looking ahead to earnings from apple and amazon. that conversation around the corner. equity futures, up 5.60% on the

s&p, bond yields down by -- up by .60% on the s&p, let's call us around about at 4.17, and in a moment, jobless claims in america. from new york city, this is bloomberg. ♪

jonathan: here is the cross asset pick sure. equities negative by 0.6% on the s&p 500. in the bond market, another read on jobless claims in 15 minutes. bonds a bit richer, yields lower, the 10 year, 4.2743.

let's get you some morning calls. citi raising the price target on meta to 705. that name is down slightly now, recovering, down 1.9 percent. second call from barclays raising the price target on meta , saying artificial intelligence is improving the business, and just to turn to microsoft, a lowering price target to 475, and that stock is still negative by 3.4%. let's stick with tech, amazon reporting q3 reports. analysts expect to see that sales growth at 10%, fueled by computing and advertising. mandeep singh joins us now. what are you looking for from amazon? mandeep: aws, and that goes without saying that that is going to move the stock along with its guide.

we are seeing a common theme across all big tech earnings, their guiding to sequential capex increases. for some, it is translating to revenue. for companies like that are, it is more about how it is improving their products internally. that is the big difference. in the case of amazon, their capex is getting redistributed in their centers, as well as the buildout, and they are investing in satellites, so their composition is very different from a microsoft. that is going all in on the generative ai side. lisa: numbers at -- jonathan: numbers out of microsoft, this is up 50% in a single year. what is going to be 2025? mandeep: the question you have to ask is what are they spending $50 billion on and why cannot fulfill their needs? that is what i cannot reconcile.

everything is a constraint right now, but why would there be a shortage when you're capex is going 50%? maybe nvidia is raising prices, i don't know, but that is bullish for nvidia. clearly every company, meta called out a cluster. the biggest cluster so far was 25,000, and meta called out 100, so that is what these companies are doing. and for a company like alphabet, that translated into google cloud celebration, and in the case of microsoft, it was more flat for azure. meta did not have any real separate ai revenue to show, and that is why i think the market reacted the way it did. for amazon, the growth rate will probably be lower. you will not see an acceleration like you did with google and that is why i think google was the big winner. lisa: i would like to dig further, is this a good thing?

we've talked about this. is this a good thing for microsoft that essentially the only reason why they are expecting and earning from cloud revenues that is bigger is because of capacity constraints? mandeep: it is. and if i model the second half and capacity constraints go away, then the azure ai contribution, they said it is a $10,000 business now, and it will accelerate area we don't know what that second half is going to look like because the company guides conservatively. and meta last night said there would be a significant increase in capex. what does significant mean? 20% is already embedded in their consensus. is it 80% or 50%? that is the uncertain part about the spending. lisa: especially when you are not seeing monetization from others on reality efforts. how much is that weighing on the idea of how much do have faith in mark zuckerberg, the truly frugal and cost-cutting

executive? mandeep: you would bet that they had learned her lesson with what happened with over hiring in 20 21, spending in 2022, and the correction they had to go through, so i would be surprised if there is a repetition of overspending here, but, clearly, nobody knows the extent of scale you need when it comes to investments. everybody sees the next version of the model is better, and that is why they continue to put your clusters, but is there a cap in terms of how much improvement we are going to see when it comes to building these clusters? we don't know that yet. annmarie: is that active clarity as to why some investors are punishing the stock this morning? mandeep: with 25 times forward earnings, the set was such were you had to beat and raise, and everybody would like to see a nvidia type earnings. clearly, with microsoft and meta , it was more in line in the

valuation was rich, and in the case of google, it was trading at a discount, and that is why i think they saw it. annmarie: the company's ai business is on pace to clear a $10 million annual run rate of revenue next quarter, as anybody in that space with them? mandeep: when you look at google cloud, they said it is a multibillion cloud contribution from ai, so we are modeling it around 3 billion to 2 billion. amazon, given that it is under 100, my guess is they are in the five to $6 billion ballpark. the fact that amazon was the leader and google cloud was small, and out amazon is behind azure when it comes to ai monetization, that is what we are watching out for tonight, is amazon able to catch up when it comes to ai services revenue? jonathan: alphabet, 181,000 employees, 25% of the coating

now done internally by ai. what will that number look like? do you get to 50 overnight or 75 and we stay at that number and a be even decrease? mandeep: look at what they did this quarter. they grew revenue 15% with flat head count, and that is a set up you can expect, given how many businesses they have, they are able to maintain that growth had a $300 billion revenue rate without growing headcount, that is a sign of what is to come. jonathan: these are the internal efficiencies, what does it mean for customers going forward? i just for the googles but the microsoft's. i would like to understand the future a few years out because this could have massive implications for the labor market and this country and beyond. mandeep: that is the sort of promise that copilot has. in some cases, the tools are further along when it comes to eat they can bring. in other cases, you are still in the early stages but that is why they are spending 80 billion on

capex. jonathan: we can say things that ceos cannot, give me your unvarnished view, when you hear ceos say people can have more time off if they would like to, do you think they are only explaining one side of the story? is there a darker side and years to come? could there be a lot of people without a job? mandeep: everybody has to adapt. i think change is always hard when it comes to technology and anything else that goes around, and overall, i think there would be more types of profiles that will make us more efficient in some areas, but there will be a lot more automation. that is the only sense -- jonathan: how is education going to change to address this? mandeep: kids at school are a lot smarter than i think, and everyone is using specialized kind of tutors now, and some of this is driven by ai in terms of

customized tutoring, so those are the types of personalization that you do not have before. jonathan: kids are going to graduate and we will not need coders, sort of the going to do? what are the politicians going to the u.s. to stick knology rolls out and we end up with a lost generation? i raise this question last year, is ai going to do for services what globalization did to manufacturing? you think about the political moment in this country, off the back of what we have done to manufacturing the past few decades, i would like to understand what we are doing for because this is moving faster and more quickly than globalization ever did the way it ate up manufacturing. how quickly are going to sit here before we see massive cuts to back office staff, banks on wall street, cuts compliance, big cuts at tech firms, how close are we to that moment, a year or five years away? mandeep: you have to look at the

accuracy of these tools, so you're going to implement these production use cases only when you are fully sure that you can work with 99.9% accuracy. that is what we are seeing with autonomous driving. the reason why it is taking longer to roll that out is that these cases cannot be solved, and it is a lot more integrated. that is what companies are looking for, but the models are getting better and better. jonathan: a big discussion on the campaign trail one decade out. annmarie: you have heard elon musk talk about the fact that he is nervous about ai, the dark side of it, and he has said at tech conferences that it can take all of our jobs. this is someone going through autonomous driving, and that is the direction of travel. he says it can take jobs away. jonathan: with remote controls on the back. appreciate it, mandeep singh of

bloomberg intelligence. coming up, breaking pce and jobless claims data. joining us to react, seth carpenter of morgan stanley. all of that and more still to come. mike mckee will break down the numbers. the scores and financial markets 60 minutes out from the opening bell. equity futures down. yields lower by basis point or two. 4.28 on tens, on two's, 2.18. from new york, this is bloomberg. ♪

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

jonathan: had some pushback about the comments involving the philadelphia eagles, which i apologize. that was not my intention to throw shade at philly. equity futures on the s&p 500 look like this. we are down .5 percent. on the nasdaq, down by .6%. the russell, the small caps just about unchanged. make a cap tech and focus later when we get earnings from apple and amazon with some economic data right now, including jobless claims in america. let's cross over to mike mckee. mike: we have a lot of numbers to go through. jobless claims, 216,000, a big

drop back to where we were about three weeks ago. that is down from 228,000. no problems in the labor market. let's see on the inflation mandate. the pce price index comes in .2% higher, which is above last month, but as predicted, which leaves us at 2.1% for the headline number on a year-over-year basis. the core, up .3%. that is what was forecast and that leaves us at 2.7 percent, the same as last month. it was an expectation it would fall. spending, up .4%, stronger than anticipated. that is real personal spending. give a personal spending on adjusted 5%. that is also higher than anticipated and significantly up the prior month. personal incomes up .3%. that is as expected. the other number we have outcome of the employment cost index, up

.8%, down from 8.9% gain. to sum it up, before i go into all of the underlying numbers, we have no problem in the labor market, no problem with inflation, and it looks like companies are getting either some higher productivity, but they are spending less money to get done what they need to get done. jonathan: michael mckee, i want to sit on one number. the number is 216. -- 216,000. a word that has been used a lot over the past few weeks about the labor market, noise. what noise really meant, though, was weakness. what weakness you can look through. we are going into payrolls with jobless claims at 216,000. how on earth are we at 216,000 and economists are saying, get ready to discount jobs numbers tomorrow, you will see a strike impact, a be some noise regarding the election? how do you frame 216,000 this morning? mike: it is hard to put it in

the context of a feeling you are going to see a problem in the labor market, but the thing you can look at is the fact that the jobless claims present last week and the hurricanes were at the beginning of the month. this represents unemployed people who were filing first-time claims versus people who are no longer on the payrolls. which we will find out about tomorrow. two different things, but companies are not laying off people yet. does not look like the economy is going to be in terrible shape. the thing we need to look at when we look at this is the number of continuing claims and continuing claims do seem to rise up to -- actually they have come down to 1,888,000. so, i live. it does look like we are not even seeing hurricane kind of stuff left in this. jonathan: yields at the front and just a little bit lower.

initially jumping off of the back of that economic data. on the 10 year we are down two as well. seth carpenter is with us around the table. 216,000. should i ignore the random number generator tomorrow if it is weak based on the fact that jobless claims are this low? seth: absolutely. even if today had not been to an and 60,000 you would have ignored the random number generator. the labor market is pretty healthy. i think 216,000 is consistent with that. the fact that you are getting a drift up in the continuing claims as may be people are not getting rehired as quickly, but there is not a wave of layoffs, and that is what is fundamental. jonathan: the hurricane impact does not seem to be there. last week already predated those numbers, the pre-hurricane hit. then you have the strikes. how do you frame a downside surprise like this? what are we doing here? seth: this is the question we

keep asking ourselves. this whole expansion we have been on the constructive side of things. we said soft landing. when it was late summer and we got a week jobs report we said, don't worry, and people through rotten garbage and told us we were ugly and stupid. if we have been wrong is because we have been insufficiently optimistic, and these numbers are consistent with a healthy job market. lisa: why should the fed cut rates next week? mike: seth: the fed's view on this is going to be, inflation is coming down. it is clearly off of its peaks. this turned down. the number today is wobbling around, but the trend is clearly down. from their perspective you can still lower rates from where we are, the restrictive, try to take a little more steam nine of economy without jeopardizing the prospect of growth. i think they are trying to walk this very fine balance of being tight, but not too tight. lisa: i'm looking at the pce data. you see a strong labor market

and you see pce inflation data that came in slightly above expectations. at what point does that get people's attention? at what point to central bankers start caring about the inflation rate again? seth: i think we saw in q1 of this year everyone was gearing up for them to start cutting in the beginning of the year, and then q1 data were strong and they pushed off the rate cuts until september. i think it needs a couple more months of upside surprises, because we really have had things come down. chris wallace from the fed said the reason he went for 50 basis points was because inflation data had surprised to the upside. a month or two to the upside is not going to change the fundamentals. then you need it to be compositionally the stuff we know has a lot of inertia, housing inflation. that wobbled for a little while and then came down, and i think as long as those really core pieces -- no pun intended -- on

inflation keep trending down, i think they are going to feel comfortable. annmarie: most voices on the fomc said they did not want to see deterioration in the labor market. seth: mission accomplished. [laughter] annmarie: what did they say in terms of the assessment of the labor market on thursday? seth: i think you were going to see awards along the lines of solid, robust, healthy. the unemployment rate is 4.2%, so it is up off of the lows. we have had an unemployment late -- an appointment rate around 4.7%. if you look at the jobs data you have to say there has been some cooling. i think in that regard, you know, they are fine. the pendulum had swung too far. people got too breathless over a couple of months of jobs data. we are not deteriorating. annmarie: let's talk about the election. you are spending a lot of time talking to clients, and something i was interested in is there seems to be a differential

for clients in the united states and abroad. seth: one of the key parts is terrace. the election is going to have a key three policy applications. tariffs, immigration, and fiscal policy. and to a person when i am overseas, along -- all investors are convinced president trump will go back to putting in tariffs and there is just no doubt in their mind. there is no debate and difference of opinion on the side of the atlantic. people who think it is going to be a negotiating tactic, or if he announces it and it ends up being bad for the market, for the economy and it will not come through. i think that is an interesting dichotomy. jonathan: you've got to work out who wins, the division of government, if there is one. then you have to work out whether the promise becomes reality. once you have got there, let's deal with this.

[laughter] if you take everything that has been set on the campaign trail, is stagflation a repo proposal from the trump site? is that how you see things? seth: if you were to literally take everything that was said -- let's deal with tariffs. if you had in january 60% tariffs on everything imported from china, i think that pushes up inflation and probably happens first. the numbers we have calculator in the .9% kind of boost, but the drag to growth could be as much as 1.5%. i think it is important, and that ignores the immigration side of things. the reason we had three-plus percent growth for a year, year, and inflation continuing to fall, is because we have had this big add to the labor force. jonathan: harris proposals, when you go through the 82 page document on the website -- 82 pages -- how is that? seth: i look at what the biden administration has done. they put tariffs on electric

vehicles coming in from china. that is almost entirely rhetorical. there are not that many that have been imported from china, so it's not going to have near the same effect. you can look back to 2018, 2019 and see hit to industrial output from that way above terrace. i think there is a meaningful difference. jonathan: market participants are running around saying, not a big deal. up into the right, that is what the chart looks like over a long time. you think this has the potential to redefine things years out? selection? seth: i do think so. the rejiggering of the global supply chain, the economic interactions, that has been going on for some time. it got accelerated with tariffs. i think this is another round of tariffs, another trade war could accelerate that rejiggering in ways that we cannot fully anticipate. jonathan: it is good to see you, as always. seth carpenter of morgan stanley, going into payrolls tomorrow. tuesday the election, two days

later the federal reserve decision. we just got some data and this is what it looks like. jobless claims coming in at 216,000. we were looking for 230,000. 216,000 was the number. tomorrow this is the estimate we are looking for. 101,000 in our survey. equities right now down .6% on the s&p 500. on the nasdaq we are down about .7%. in the bond market heels look like this. still lower, down about a basis point on a two-year. on tens we are down two basis points. jumping in the seat, lindsay rosner of goldman sachs. good to see. is there anything not to like? jobless claims, gdp, looks good. lindsay: looks fine, looks quiet. that is something that is a big relief right now. there is a lot of volatility priced into the market. if you look at the move index, it has gone top to the right for

equities. it has made a move, for sure in october. this is a good day of quiet. i think it will be month-end at the end of the day. jonathan: walk me through why. lindsay: this going to be a decent rebalancing. if you think about how bonds have performed a memo october versus equities you want to shift your portfolio given the outperformance in equities. you have a normal extension that always happens with indices in the bond market. there has to be this natural buying of duration, but there is going to be this big thing of asset allocation. lisa: are you saying that essentially this is noise and it is the technical underpinnings that will drive yields lower regardless of what happens with all of these different events next week? lindsay: today's story is going to be the month-end story. the things that happen over the next week are big. aside from the data prints we have auctions, we have the bond, we have come obviously, the election, and then the fomc.

not necessarily that euros are going to go lower for the week. we are in a lot of volatility, but today's movement is really more band. lisa: do you see a shift in the narrative where people have been underestimating how strong this economy is and that has been that team again and again as we wait for potentially weakness that may not show up tomorrow in the jobs report? is there a sense that there could be every acceleration in inflation in more meaningful ways? is that starting to come back to the discussions you are having? lindsay: that has been a big explanation for what has happened with yields. the fed cut 50 basis points and we are now 60-odd basis points higher across the curve. that is tremendous, and a big part of that is concerned about inflation because growth is that good. but i think on going forward we have a lot of noise that is going to happen in the next week, but things are going to calm down and i think we'll have a lot more certainty. the way we are talking with

clients is, you have a huge opportunity with this move up in yields. the fed has the power to do what it needs to do and where we were a month ago was much lower yields, or a little bit past that, earlier than the cot, was, you are waiting on the fed to see if they are going to go and how much they are going to go. now you have an entry point of higher yields and you know the fed is growing. this is a great opportunity to be in fixed income. annmarie: is there a chance they skip and push this to december? lindsay: there is always some probability, but we think the conversation around skip is something in 2025. we feel pretty good that the fed is going to go 25 next week. they are going to go 25 in december. they have done some hard work of 100 basis points. and they can pause and survey what is going on. annmarie: they have to pause, right? because policy in 2025, does anyone know what that is going to look like? lindsay: i think you are right, but they will start to have an inclination.

we may not no one election day who has won and how everything shakes out, but we will know pretty soon what those policies look like. it is going to take time to implement that. for us i think a lot of people want to talk about how you trade the election. it is not about trading the election, right? it is about, where do you want to be from long-term portfolio allocation? think it is important from a value perspective to get bonds in a share portfolio and there is no time like the present. jonathan: treasury is a big piece of that given the rise we have seen in yields. high-yield spreads are supertight on a historical basis. how do you frame that for clients? what does the opportunity look like in corporate credit? lindsay: corporate credit is tight but what is amazing right now is you have a ton of volatility in the rates market. we have had no volatility in the credit market. what is behind that is, there is no recession. balance sheets are strong, management companies are doing the right thing. you look at what is happening in

high-yield something that is flagging for us is how well the lowest of the low in high yields have performed on the past month. that to us as a little bit of a complacency indicator. not all of those companies make sense. and it has been off to the races for triple c's. that for us says this is important to have an active manager in this environment, because maybe triple c's did well this month. long-term there are a lot of companies and you want to make sure you are in the right spot. jonathan: how are you navigating? what are the right spots right now in corporate america? lindsay: for us it is a curvy thing and quality thing. we like the front end of the corporate curve. we think that is going to do a lot better than the back end. then we are down in quality and investment grade. triple b companies are doing all of the right things to be investment grade. and in high-yield we are up in quality. in specific names we like.

lisa: you expect more tech-related issuance? not necessarily tied to attack, but some of the investments and the infrastructure around them that they are talking about having to make? lindsay: there is definitely going to be capex. it is interesting you bring up the capex expenditures on tech. that is back to areas of corporate credit where you have to think about and be more cautious, one of which is utilities when it comes to spending. that is a spin we are concerned about in terms of the capex needed for going green. so, the drivers of needs to spend and are they going to be worthwhile projects, that really guides the sectors we like and those we stay away from. jonathan: it is a fascinating sector right now. it is wonderful to catch up with you. lindsay rosner of goldman sachs asset management. equities at the moment recover a touch. we are down .6%. with an update on stories elsewhere, here is dani burger.

dani: just a recap of some of that data. jobless claims fell to two and a 16,000. that is a figure below every single estimate from economists and the lowest since may. elsewhere core pce rose 2.7% year-over-year, slightly hotter than expected and the biggest gain since april. inflation-adjusted consumer spending advanced to .4%. tech earnings are weighing on the nasdaq. meta and microsoft both revealing disappointing results. meta continues to ramp up spending on ai. microsoft forecasting a slower cloud revenue growth. those shares down 3.5% premarket. investors now looking to earnings from apple, amazon, and intel after the closing bell. brian niccol is working on plans to turn around starbucks. wants to trim the food and beverage menu and bring back ceramic mugs and a condiment bar. the goal of getting drinks to

in-store customers in four minutes or less. that is your brief, jon. jonathan: big changes. are you happy with those changes? annmarie: they are bringing back the fact that the breeze to will write your name. sometimes they are creative and add little characters or hearts instead of this very corporate, steroid printing of the name on a machine. jonathan: very defensive about all of this upper or at starbucks, are you? we set you up for the day ahead. payrolls around the corner. some big earnings after the close. you will hear from apple, we will hear from amazon. ed ludlow, just around the corner. ♪ ♪ ♪♪ the winter escapes sale is now on. visit sandals.com or call 1-800-sandals.

jonathan: the opening bell, 38 minutes away. equity futures down .6% as we

cap you down to the opening bell. he is the calendar the week ahead. today we will get resorts -- results from apple, amazon, and intel. payrolls data tuesday. the u.s. presidential election. thursday the federal reserve. and on friday you miss consumer sentiment -- university of michigan sentiment. ed ludlow joins us. based on what you have seen and heard over the past few days what you looking for later this afternoon? ed: it would have been excellent to have consistent reaction in the markets to meta and microsoft as we saw with google, but there is a consistent storyline. you take the commentary or forecasting for capex and then the commentary and forecasting for growth come and in alphabetic's case they demonstrated that they could sustain growth while spending. microsoft told us that the top line for its cloud unit would decelerate sequentially into the current quarter, but still have gone 30% growth, which is enviable. they are also supply have

constrained. in meta's case, the same thing. they lowered the range for this year but it is almost $100 billion spending on ai and warned that next year's capital expenditures would increase. however, their losses will also increase. the market is saying, is ai still really a thing? it seems like it is, just more expensive than anticipated. lisa: we got the ai behemoths, the cloud providers, and then we are going to hear from amazon, as well as meta -- as well as, excuse me, apple. these companies are much more leveraged to the consumer. how different will the nature of these earnings be to the ones we have already gone? ed: yes, although amazon likely to be held to a similar standard because a ws is the market with -- aws is the cash cow. what is so interesting about google cloud, which is the number three player, and microsoft, number two, both of

them seemed to demonstrate they have taken market share, which would follow that amazon seated market share to them. -- ceded market share. if we would like we would let -- we could talk about china, but that is what it comes down to. annmarie: it is about the timeline for getting an ai partner for intelligence. what is that timeline? ed: it is so interesting. i just upgraded my ios and i am on the waitlist for apple intelligence. and it is frustrating. apple has not yet told us how they make money from this, because they are all brian terry technologies they come with your phone if you have an iphone. the reason why china is so interesting is there is evidence the iphone 16 has sold well there. even though the ai tools will not be available because the regulator does not permit them. the question is, is the chinese consumer buying that handset in

anticipation that at some unknown date in the future they will be able to use apple's ai offering? that is a fun one for executives to explain away. jonathan: stop having so much fun. the four to the program later. ed ludlow alongside caroline hyde on "bloomberg to knology." anticipating some big earnings after the closing bell and we hear from amazon and apple. we will also hear tomorrow morning from sarah house of wells fargo, mohamed el-erian of queens college cambridge, because tomorrow morning is the big one. payrolls friday. the estimate in our survey, 101,000. the previous month, a blowout upside surprise. 254,000. this morning, jobless claims much better than anticipated. to hunt at 16,000. is the risk tomorrow a big upside surprise or downside surprise? that debate tomorrow morning. from new york, thank you for choosing bloomberg to be.

this was "bloomberg surveillance." ♪

matt: futures are down. it could mean the first monthly loss for the s&p in seven 30 minutes until the start of trading. i'm matt miller. sonali: i'm sonali basak. katie: and i'm katie greifeld. bloomberg "open interest" starts now. sonali: coming up, results from microsoft and meta fail to impress investors and raises the stakes for earnings reports today from apple and amazon. matt: this morning we've got