>> the u.s. economy is doing so much better than the rest of the world. >> this is a period in which u.s. dominance of the global system will increase, both for positive reasons and negative reasons. >> you're going to start seeing the market focus on the impact of tariffs. >> there seems to be something about political leadership transitions that help usher in leadership style transitions. >> markets have trouble pricing election risk. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. lisa: from new york city, good

morning. it is bloomberg surveillance. lisa abramowicz is on assignment and nearly 30 hours of tv last week jonathan ferro is taking a much needed day off. they are still pricing in a trump trade after the s&p 500 secured another record. this is fascinating because the market seems to think we will have a trifecta even though we are still waiting on the balance of power in congress. dani: that small cap rally is so telling. 1.2% on basically nothing, just a continuation of the trump trade. part of the reason it is so significant is we get a lot of data this week. we have cpi in retail sales. for this market the politics is more important than the data. annmarie: politics more important by matching for the fed the data will be important. neel kashkari talking about the fact that the job is not done to get to 2%.

manus: then you have to ask yourself the state of play in terms of the breakevens. the market is hesitant to see the trajectory. it is important to see the context of what is deliverable under the deportation czar. what is the risk for tinted -- what is the risk for tit-for-tat tariffs and deportations could cause disruptions for some quarters. this administration, trump one never deported as many people as obama did. annmarie: it is the playbook. basically say it depends how it plays out. it is different from the jay powell label which was just no. annmarie: and a lot of it depends on personnel. we know in washington personnel is policy. we saw the dollar strength into the weekend because the ft report that robert lighthizer, the tariff czar, will be going

back into the administration. we have the euro-dollar on the news. dollar strength across the g10 for some of this personnel is policy. 1.0669. a lot of strategists say we might see parity. this also to do with china demand. under 2% lower. 69.19 on new york crude. coming up, marvin lowe of state street. former state department spokesperson on donald trump's foreign policy priorities and retailers prepare looming tariffs. we begin with u.s. stocks looking to set new record highs after the election of donald trump. marvin loh of state street writing "markets were always inclined rally in the event of a trump presidency and asset classes have performed as expected. an indication investors were not broadly position for his solid

victory." marvin joins us now. you would think that may be markets were over there skis, especially given the fact we do not have the trifecta yet. yes the republicans are poised to take the house but we do not have the trifecta yet. you think this has more room to run. why? marvin: i think the market is increasingly trading the red sweep. the democrats have not made progress, even though we are waiting for votes. the general momentum that trump brought to the voting booth is something investors are willing to bet on. more important is our investor behavior which looks at real money, both holdings and flows, didn't really see that investor group grow heavily into a trump trade before the election. in a lot of ways they are catching up as it becomes more clear we might have a very good chance we have a unified

government this time around. dani: the past week would have been so painful if you are not in equities. for treasuries we talked the day after the election, yields up between 10 and 20 basis points. you said this makes sense. it did not stick. on the week 10 year yields ended lower by eight basis points. what you make of that? marvin: it will be a choppy process. the market was overly short going into this. we did not get any surprises from jay powell. i would say even though duration outperformed when you look at the term premium components, which is where i focus on in terms of structural shifts in what the market once to value duration at, you still see term premiums picking up. that is more difficult for risk assets once we get to higher levels.

i am still convinced of the market will have to push back, if not the administration will try to grow this deficit. it will view the market is saying it is ok. dani: it is a market that has a lot of inputs it needs to grapple with. you mentioned the fed briefly. we will get data this week. is this a market that will be moved for the politics or the data? marvin: i still think it is the politics that are moving things. in the bond market the short end will be moved by data. that is something we can measure more in terms of what the fed response function is going to be for the next couple meetings. nobody really knows how the fed will approach the ministration next year. short-term, whether or not we talk about december or a continuation into january, that is data. longer-term it is politics. as you mentioned, this might or

might not go down. the other thing might or might not get implemented. once we get an idea of what policy looks like then we can start to pricing what type of term premium we need and what type of valuations should go along with those term premiums. what i should say is right now the term premiums are still relatively low given the history and valuations are still relatively high. that is a challenge if we see spikes in term premiums which we have seen over the last couple of weeks. manus: probably the most shocking things is you saw the 2-10 curve the tightest it has been in months. the bond market started to give itself a breath. that is closed. i liked what rick rieder had to say. venturing out into the wild blue yonder of long-term rates is a dangerous game. marvin: it is -- the leverage

and the way you are able to catch on the curve is a dangerous game with a lot of volatility. manus: the other thing that came across my inbox was talking about the performance in credit and the bloomberg corporate bond. 74 basis points. this is the lowest in a century. this is exceptionalism personified. how do you look at corporate and credit spreads right now? they are so tight and they are priced almost to the perfection of exceptionalism. marvin: if you are a spread investor within the corporate world it gets harder and harder to buy. if you are shorting treasuries and looking for more spread compression you have to wonder how much more you can compress. having said that, income is generally under owned in this market given how poorly overall rates have performed. if you want to lock in income,

it is easy to see how some of these corporations, particularly shorter duration aspects of it will do well under the new administration. it does depend on how much we push term premiums going forward. if you want to lock in income i still think that is a trade from an overall risk perspective people will put on. annmarie: over the weekend we heard from neel kashkari and he said rates -- it could be a little bit easier than previously expected in terms of how far they are going to go on this cutting cycle. he almost put a little bit of cold water on december. you think the fed continues to cut into next year. how difficult is that when you hear these policy proposals out of mar-a-lago? marvin: every data point is live. the fed is trying to deal with a set of known unknowns which makes it incredibly challenging.

having said that, the fed still thinks it can cut. we have had decent data but we have also had mixed data. the jobs market did not look as strong as it did after last jobs report relative to what we saw in september. we are parsing that type of environment, which as mentioned, the low end of the curve is dangerous and it will get bounced around based on a lot of these inputs we have to incorporate. annmarie: when it comes to looking into next year you also say dollar weakness over time, even though we are seeing serious dollar strength across the board. what will drive that weakness? marvin: ultimately we will see how the tariffs evolve, we will see how much retaliation goes along with that policy, whether or not we wind up with trade wars. that does create an environment where inflation can come back.

stagflation becomes more of a concern then we have seen in several decades. all of that creates an environment where you really need to be concerned, particularly if you go significantly overweight. the caveat to that is as these trades continue to make their way into the market, the dollar is one of those asset classes that does have a tailwind. i would not be peg against the dollar at this point. dani: if we could do some scenario analysis, something that looks stagflationary, take me to the middle of 2025. what do fed fund futures look like? are we going to be talking about hiking? marvin: i think three and three quarters to 4%. right now the market has it about 3.6% in terms of how low the fed could go. that is relative to what the fed said in september when he thought it could go to to and 7/8.

the market is already thinking there are 50 to 60 basis points that it cannot get to. if we get tariffs to the extent the administration is talking about, 10% to 20% and upwards of 60% for china and we get some of that immediate retaliation, i think we do wind up with stagflation. i think we wind up with a fit that is somewhat challenged -- with a fed somewhat challenged in getting funds below 4%. you still have that kind of play. more important is the amount of debt in the event the deficit really balloons starts to really come into the market in the second half of next year. you've all of these things going along that still speaks to a steeper curve even though we might not get rate cuts as aggressive as the vent said six or seven weeks ago. annmarie: we know we will get

cpi, ppi, retail sales. what are you looking forward to? marvin: every data point is a lot so cpi is once again expected to be above average, above the 2% target. it will make the fed's job that much more challenging and retail sales, speaking to whether or not the consumer still has gas in the tank to continue to spend even though it is threateningly savings. part of the data that has made it hard for the faint is a lot of this soft data. with the elections out of the way, and with a republican in the white house, a lot of the business data starts to pick up. all of that does spell an environment where you continue to have decent tailwinds, both from the political side of things as well as from an economy still holding on. manus: and most importantly --

annmarie: and most important we got clarity for the market. marvin loh of state street. let's get you an update of stories elsewhere. yahaira: president joe biden will host a donald trump at the white house wednesday sitting in motion a transition of power completed in january. the two will meet in the oval office at 11:00 a.m. that day. one topic to set to be discussed is ukraine. biden's national security advisor try to convince trump not to pull support from the country in war with russia. federal reserve bank of minneapolis president neel kashkari says the economy is strong by the fed is not all the way home in the central bank needs to finish the job of bringing inflation down. this after the fed lowest interest rates by a quarter-point in its second consecutive cut. neel kashkari reiterated another rate cut is possible in december. a rally in bitcoin hitting

$82,000 for the first time. getting a boost by president donald trump's queen -- donald's clean sweep of swing states. the crypto industry expects a more favorable regulatory environment and the approval of more etf's from the president-elect's upcoming government. bitcoin is up 94% this year. annmarie:, biden's final push for ukraine. >> president biden will have the opportunity to make the case to congress and the incoming administration that the united states should not walk away from ukraine. annmarie: that is next. you are watching bloomberg surveillance. very good monday morning. ♪

i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working.

you people are (guitar noises). hand over the air guitar. i've got another one. annmarie: morning.

this is bloomberg surveillance. lisa and john are off. joined with dani and manus cranny as the market continues to price and further room to grow. the s&p 500 secured another record 50th all-time high. a ton of dollar strength across the g10. euro-dollar 1.0 663. biden's final push for ukraine. >> president biden will have the opportunity to make the case to the congress and the incoming administration that the united states should not walk away from ukraine, that walking away from ukraine means more instability in europe and ultimately, as the japanese prime minister said, if we walk away from ukraine in europe, the question about america's commitment to our allies in asia will grow. annmarie: trump's election victory and a potential gop congressional sweep is raising questions about the future of u.s. aid for ukraine.

the president-elect confirming two ukraine supporters will not be joining his administration as biden is set to host a trump at the white house wednesday. former state department spokesperson morgan joins us now. thank you for joining us. your former boss will not be going back into the administration, mike pompeo. there was pushback from a lot of individuals in the maga world about nikki haley and mike pompeo supporting ukraine. they call neoconservatives. what can you tell us about the names being discussed? morgan: it was going to be challenging with the makeup of the new congress to get more ukraine eighth roof. that is why you saw volodymyr zelenskyy said he was going to start working towards a negotiated settlement and had different proposals. it is not ultimately a big surprise to me. when you look at the three names for secretary of state -- susie

wiles, i believe she ran one of marco rubio's senate reelection campaigns, she is longtime florida political hand and he campaigned quite a bit and has a lot of foreign policy experience , senate foreign relations committee. similar for senator haggerty. he was an ambassador in the trump administration to japan and not just ambassador, he had to renegotiate two trade deals with japan and a very contentious military housing treaty with japan for our troops based there. ric grenell does have a lot of experience. he spent over 10 years at the united nations. he was there in the bush administration. he was an ambassador. he would claim to a been with donald trump the longest, to be the most maga, the most loyal. even though he is very close to the former president it is not that he is without foreign policy experience.

annmarie: when you think about all the names, all of them have a hawkish stance on china, a little more on europe -- what about isolationism. i do not view marco rubio as an isolationist the way i view some individuals in the far right. morgan: the way i saw the first term play out, i was in the second two years of that as president trump surrounded himself with a lot of individuals who would argue and debate over policy and ultimately he made the decision. i think people often confused what america first foreign policy means with isolationism. i do not think they are the same. trump has always said he does not want to put new american boots on the ground and does not want to see wars like iraq or afghanistan where you end up with people doing multiple deployments over 20 years. i feel like we litigated that as a society. in both political parties there's an appetite to be involved in wars.

he is much more focused on preventing more. whenever he needed to take action, like removing the physical caliphate of isis in iraq and syria. when he needed to take out soleimani, he did that. initially he surged in afghanistan. we will see if his new personnel choices are different from the first term. the first team i did not see him shy away from making tough decisions and he did not shy away with trying to deter people like xi jinping. dani: we have also seen in on musk emerge as an informal adviser to trump. he has been on the calls with numerous leaders. what sort of rolled do you see elon musk having when it comes to foreign policy in the white house? morgan: it looks like it will be an outside advisor role. i doubt he wants to divest into a financial closure and go before the senate for confirmation. maybe he does but that does not

seem like it is in the cards. president trump clearly had a very big ally in elon musk and he is somebody who has been involved around the world. from my understanding he does hold a security clearance. if that is still true he would be able to be in certain conversations. it is very normal for presidents to have outside advisors, especially ones that were helpful on their campaign. dani: in elon musk has experience with ukraine as far as providing satellites. there was some contentiousness. trump has said he can end the war in ukraine in one day. what you think the priorities will be for the trump administration to achieve a goal to that magnitude? morgan: they are talking about people like my dear friend bridge colby who has written a lot of books on china. there does seem to be a sentiment so far to be very focused on china, to be focused

on our allies. if you want to focus on china you have to stop and be able to bring to a close these hot wars in europe and the middle east. we are seeing the worst war in europe since world war ii. that is why i have argued quite loudly publicly that why we have the initial sanctions against ukraine we do not follow up and do secondary sanctions. i think a lot of the biden actions over the past two years have only prolonged the war, have not sought to end that more concretely. when you look at israel as well, you hope in the middle east and europe you can help bring these wars to a close so you can focus on asia. if they remain hot wars he will not be able to pivot as every administration tries to do but gets bogged down. that would be the top of the agenda for sure. unfortunately we still have the nicest problem. isis has the capability to stop

taylor swift concerts in europe. isis has a foothold in every province in afghanistan. we have reported there is an isis smuggling ring at the border. we have not talked about the border. i am sure that will be donald trump's first priority is to get operational control of our southern border back in the hands of the united states and away from the cartels. annmarie: former state department spokesman. thank you for joining us. it is interesting when it comes to how the trump administration will look. personnel is policy. maybe senator haggerty goes to the state department. whoever does not get state will be his national security advisor. manus: this will raise major questions about the overseas situation. think about the conversation he did have with benjamin netanyahu. interesting to hear morgan talk about iran. benjamin netanyahu and trump cii on iran.

this'll be the next evolution because it is about the amount of oil iran is producing but what they are exporting. annmarie: the sections are there. what i hear from individuals in the trump world as they are prepared to enforce them more harshly on day one. coming up, neil a richardson of adp ahead of the latest cpi report wednesday. you are watching bloomberg surveillance. ♪

♪ ♪

with so much great entertainment out there... wouldn't it be easier if you could find what you want, all in one place? my favorites. get xfinity streamsaver with netflix, apple tv+, and peacock included, for only $15 a month. - achieving my goals as an adult was challenging without a high school diploma. with the help of an adult education center, i finished my high school diploma and it changed my life. oh my gosh. - this year's book is a testament to your accomplishments and how they have impacted all of us. - getting my high school diploma made me feel like i can do anything. now i can help the kids in my community achieve their dreams. - when you graduate, they graduate. visit finishyourdiploma.org to find free and supportive adult education centers near you. dad: hey boss. you okay?

son: i said i'm fine. ♪ dad: you can talk to me. son: it's been really, really hard for me.

annmarie: monday morning. i am annmarie hordern alongside dani burger and manus cranny. jonathan ferro a much needed day off. he did nearly 30 hours on air last week. lisa is on assignment. she will have interviews later in the week. the trump train continues after the s&p 500 secured another record 50th all-time high for 2024. you can see across the board it is moving higher, especially the russell 200 up 1.3%. this is the trump trade.

more growth, more productivity in the united states. switch up the board, i want to show the dollar strength. g10 u.s. dollar ripping across the board. 1.0 664 on the euro-dollar, the lowest it has been since june. a lot of analysts saying during a trump administration we might see parity. manus: mark mccormick from td saying there is a certain inevitability of careening towards that. it is a trifecta of issues on the euro. kid shoots said the euro has a problem called germany. olaf scholz looks like he will move up the timeline on his no-confidence vote. you have the lowest since june on the euro-dollar. this is the austrian central banker. it is not just trade, tariffs. annmarie: the political economy

is almost more important than central-bank policies. we also have bitcoin. lisa and john away, annmarie will play. this is part of the trump trade and emphasizes the power of stories and our collective imagination for the greatness the future brings. crypto was such a big part of trump's campaign, going to different conferences. terry haines pointed out there is no bipartisan coalescing on how to approach bitcoin. there's nothing clear on it at this moment. this is an asset that encapsulates what we can do with hope for the future. it is the same thing happening to small caps. manus: it is the personification of deregulation. when you think what the crypto world actually spent in this election, not only did their wealth increase but also you look -- the crypto world spent $200 million on political action

committees. this is a just reward for now. coinbase are powering ahead. there was a bit of de-risking on crypto. annmarie: i always felt like crypto hit the top during covid when my mom decided to get a wallop. she forgot it over the weekend and she was like you have to see my bitcoin. manus: does she have the password? annmarie: unlike matt miller she knows where it is. president biden sitting with donald trump at the white house. it will be the first such meeting since 2016 after trump did not meet biden to meet after the 2020 election. biden is given grace for president-elect trump, something trump did not do provided. to be a fly on the wall of the meeting. dani: we know one of the topics

discussed will be ukraine and it is important for the u.s. to continue to support ukraine. we were just speaking with a former state department spokesperson who said the focused for the trump administration will be ending the hot wars to concentrate on china. it is not clear how receptive the trump team might be for bidens to call to say you need to continue to support ukraine. annmarie: the washington post saying vladimir putin and president-elect trump had a phone conversation. a foreign policy expert said these conversations are not illegal but if it starts to veer into conducting foreign policy, that could be a problem. what you are seeing is rob political power taking place. it is completely shifted downstream to mar-a-lago. olaf scholz is open to speeding up the country's early election to as soon as february. he says he has no problem moving up a confidence vote in parliament ahead of christmas.

polls show his conservative opponent leading in the race. germany is about to get a new government. manus: olaf scholz thought he might be able to play for more time until march, but it looks like it will push up the no-confidence vote in himself so they can accelerate the voting process. you also have to think about the bigger issue for europe. you listen to ursula von der leyen over the weekend. under fresh engagement with donald trump talking about buying american lng relative to russian and then you get these other narratives out of russia, are you prepared to pay 40% more. already trump and europe are talking about what it is he expects them to do more of and of course olaf scholz is very different than angela merkel. angela merkel was in power during the first trump regime. europe lacks the kind of iconic leadership going into donald trump's term. dani: you can argue whether it

is giorgia meloni. she and trump have a great relationship. that is part of the bid to hold a vote of confidence in december. it only moves the timeline up by a month. he will only be able to hold an election in february instead of march. we will already have a month of trump at that point. he said he is going to do a lot of the things on day one. what does it look like to have a lame-duck session in germany, potential infighting fighting with other minority parties. emory, so much for germany, 70 headwinds they will be -- annmarie: they are getting dumped on when it comes to china. potentially they will have issues when it comes to president trump. oliver crook says he just got back from brussels, everyone is saying we are ready to make a deal with donald trump. maybe ursula von der leyen is finally willing to buy even more natural gas from the united states. then oliver crook said is

united's -- is donald trump willing to make a deal with you. that remains to be seen. the fed will look at the policies coming out of donald trump next year. neel kashkari sing the fed may hold off on further rate cuts due to lingering inflation. he also said uncertainty is high into a new presidential administration. jay powell is also due to speak on thursday. they will all be asked the same question. how do you make policy when you do not know will be coming out of washington next year. manus: i think this goes to what kind of models are you running? are you running extreme models of some most extreme policy narrative put out. what would 16% on chinese imports into the united states look like in terms of the inflation narrative and growth narrative. it is about whether the best of the united states of america and to what extent -- the more extreme the response mechanism, the bigger the drag on higher

inflation. neel kashkari talks about tariffs and says it will come from tit-for-tat tariffs. that is a very expensive assumption. if you will level 20% to 30% in tariffs to your enemies, what would you do to her allies? dani: neel kashkari did give himself announced. his tone changed. he said it depends on a lot of things. just him saying inflation is not vanquished, he gave himself in out if the fed is not only pausing but hiking. recall september 23. he said risk had shifted away from higher inflation and towards the risk of a weakening of the labor market. annmarie: we'll see who else may be shifting their tone. it is a busy week of data. uscp in and wednesday followed by ppi and comments from jay powell on thursday. nela richardson of adp joins us

now. she is looking forward to all of this. what are you looking most forward to this week? nela: i am looking at cpi because it will be so important for how the fed conducts itself over 2044. i think the sleeper of the week is -- of the week is initial jobless claims. we saw a really negative private-sector print for october. we should see some indication in this high-frequency data that companies are laying off -- we have not yet. that is an indication the bls number may be revised higher or the labor market look stronger than the last report would suggest. dani: it was the government sector that added to jobs last time around. can we go back to this thing of the last months data, it was all weird, we basically have to discount it all? nela: there are some threads we

can hang our hats on. the very low initial jobless claims number is one of them. we are seeing strengthen labor market at adp. there was hiring individuals report. there are hangers we can use, but coming back to the cpi print, super important, looking at the role labor market will play in -- going forward that will be very important. dani: is it 2025 when the outlook is so uncertain? we do not have any great economic models for what adding 7.75 in deficit will mean. does the u.s. need to start laying out different futures the money -- nela: i think the fed is always looking at scenarios. did i think this a new policy. they have 400 economists.

annmarie: i thought it was the easiest one is in washington. manus: you flip a coin. nela: scenario analysis is built into their policy framework. what will be important for a data-dependent fed is to have a consistent framework and that is the task of the next few months is to reevaluate -- the last time they revisited was in 2020. it was a different inflation picture than. now they have to rejigger that to fix the situation they are in. the idea inflation may bounce back, it might be bumpy, and that trajectory is very different than too low inflation. manus: the narrative around tariffs, we will know whether it is 20% or 30% that could be on your allies for not your enemies. currently is 2% on the

trade-weighted assets imported into the united states. that will go potentially to 20% of the imports into the united states of america. extrapolate that for me in terms of potential inflation. nela: the u.s. has benefited in the soft landing outlook but it looks like we are still on that trajectory from a very steady global picture. the has called the global economy underwhelming. it is not been ahead wind, is not been a tailwind. tariffs can change that event whether global growth becomes a tailwind or a headwind in the short-term versus the medium term versus the longer-term. it is important that people remember that the administration during the first trump term had a product -- a product exclusion

wrist -- a product exclusion list. the carveouts matter and they will continue to matter as we go to these more macro tariff policy implementations. what is on that list? until we know what the product exclusion wrist looks like we cannot handicap what will happen with the economy. manus: i saw some pretty good articles talking about canada and the amount of energy imported from canada. that would be one of your closest allies and closes trading partners. as you look at the fiscal narrative -- this was one of the big things into going into the election. under trump it was going to before put $8 billion, -- on a slightly more serious note, that is a deficit of $7.75 trillion. we not get everything he promised.

he was talking about carveouts and one he will have to walk back. nela: what is said on the campaign trail and what is actually done in d.c. -- as someone who spent almost 20 years in d.c. trying to translate that policy into law -- they are very different things. the sausage making his real, democracy is hard, putting it together means what you said and done -- when you look at the big picture, -- the path forward is a stable u.s. economy. the big dragon in the room is the fiscal deficit. no one talked about that on the campaign trail. nobody wants to talk about it because it is such a big dragon to slay. that is a problem not just in the united states, it is a problem throughout the world. it is a problem that can

reignite inflation by crowding out investment and crowding out the ease of capital allocation to other parts of the world, which leads to a below capacity productivity. it is an issue. dani: paying off your debts does not win elections. it wins economies. there is a tension. could we be on the downward trajectory of this idea of u.s. exceptionalism. i think there's plenty in the u.s. that gives the strong growth narrative alive. worker productivity is lower now than was growing into the pandemic. the way this country grows is there more workers in the workers become more productive. when otheray of echnology that can make the u.s. worker more productive. will it get translated into the companies, especially the small

and medium enterprises they need to see that productivity enhancement with their workforce. there is a big open question. also the inner it -- also the interest rates we have to pay to move the capital is an open question and fiscal debt could affect those rates. annmarie: the real sausage making. thank you so much for joining us. let's get you a on stories elsewhere. yahaira: japan's prime minister will stay in office after winning a runoff election. he failed to get a majority of the votes but did win a plurality is a runoff to prevail against its main opposition party leader. his position was uncertain do -- need to make concessions to opposing parties to pass legislation. meanwhile, president elect trump has chosen his so-called border czar.

he previously served as the active head of immigration and customs enforcement. in opposed untruth social trump said hofman will be in charge of all deportations of illegal aliens. firefighters continue battling a major wildfire in new york and new jersey. rain overnight is offering relief. the deadly blaze started last week and said over 2500 acres on fire. this amid the worst drought in the northeast in 20 years, with 94% of the region listed as abnormally dry or experiencing a drought. that is your bloomberg brief. annmarie: i was so excited this morning when i woke up and saw it was raining outside. devastating, these fires. i could smell it in new york. dani: not only could i smell it, i could see it. you saw the fog from new jersey. there apparently fires in prospect park. for people who strike to hit

home this is a problem that cannot be ignored. annmarie: we wish the firefighters good luck. manus: this autumn relative to last year is a historic drought. not only the fire burning on top of the ground, it is burning underground. annmarie: scary stuff. up next, trade under trump. >> i think you will see an escalation because the new tariffs are on top of the ones the trump invited administration put in. it is not like we are just back to trump's tariffs. annmarie: potential trade wars 2.0 coming up next. you are watching "bloomberg surveillance." ♪

annmarie: good morning. trade under trump. >> i think you'll see an

escalation because the new tariffs are on top of the ones the trump and biden administration put in. it is not like we are back to trump's tariffs. biden never took them away. when a country like china is so good at manufacturing, very hard for businesses to avoid using that. annmarie: president-elect donald trump proposing 60% tariffs on products from china and between 10% in 20% on all foreign goods, sparking retailer concerns. "the truth is u.s. manufacturing has been gradually moving away from china for years. mexico has been growing and that makes the most sense for everyone." thank you so much for joining us this monday morning. we have personnel potential announcements on it comes to trump 2.0 administration and what that might mean for tariffs. when it comes to tariffs, is this a negotiating tactic or do you think there is going to be across-the-board board blanket

tariffs? >> it is really hard to tell. it is true there were some more tariffs in the first trump administration on categories ranging from steel to washing machines to shoulder panels. the truth is they were not as broad spread as they were claimed to be. the question will be will this be another border wall where there was lot of saber rattling in the election but the execution was less, or will it be like abortion rights where promises were made and capped? there is a lot that remains to be seen. it were likely be some more tariffs but the truth is there is a region that a number of business executives called to congratulate trump right after, because they have a very vested interest in trying to reduce the number of proposed tariffs. dani: there has been a lot of reporting some of these

businesses retailers have pulled forward their demands, not just tariffs. where'd retailers stand on the ability to whether some of the tariffs and where inventory stand? sucharita: this has been an issue for the last several years. what we started to see was gradual movement away from china , where companies were diversifying their manufacturing base, either in the far east or in north america and south america as well. we have started to see that and any company that has not already started to move some of their production to other regions of the world is probably either in denial where they may not have a risk mitigation and security strategy they probably should be having in place and i would question whether that management team is really doing what they need to do. we have gradually been seeing that. at this point we have less and

less production in china. what -- there are economies that you can probably bolster in this region like mexico. that would not only support some of the immigration and border issues but it would also support some of the challenges with the length of time it often takes to get imports from the far east anyway. it is also something that many of these u.s. businesses and u.s. consumers could also benefit if they could get to some levels of building out some of that manufacturing infrastructure. manus: we have already seen removal of production from china into india for apple. the next most important policy we will get clarity on next year is the tax rate for bring it back to america, build it in the united states of america. i don't know who will qualify for that were not.

a lot of that is assumed to be around manufacturing. is that a five-year maneuver for industry and manufacturing rather than a short-term response? sucharita: these are all things that are still highly speculative. it is hard to know what exactly the impact will be, the timing of the impact, and even which products will be effected. when we look at the retail industry there are still sectors like the toy industry. that is a sector that has not diversifying outside of china. that will absolutely be impacted. that is a sector that has been challenged for a number of decades that even long proceeded tariffs. there are certain sectors that will be and then there are others that have been diversifying for some time and will likely be well insulated. annmarie: thank you so much for your time this morning. coming up next, chris harvey of wells fargo, henrietta treyz,

and the former obama economic advisor jason furman. that is coming up next. ♪ so, what are you thinking? i'm thinking... (speaking to self) about our honeymoon. what about africa? safari? hot air balloon ride? swim with elephants? wait, can we afford a safari? great question. like everything, it takes a little planning. or, put the money towards a down-payment... ...on a ranch ...in montana ...with horses let's take a look at those scenarios. j.p. morgan wealth management has advisors in chase branches and tools,

like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management. it's our son, he is always up in our business. the answer is 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.

>> the rate path will have to be slightly higher than what the fed had been selling. >> we are a distance away from what the neutral rate is. >> the fed has over escalated how tight they are already and underestimated the strength of the u.s. economy. >> by the fed's own admission, there are upside risks to inflation. >> the trend and yields started with the fed cut in

mid-september and is intact. >> this is "bloomberg surveillance." annmarie: good morning from new york city and to our audience worldwide. i am alongside dani burger and manus cranny. jonathan ferro took the day off. we are holding down the fort. the trump trade continues. you see these markets continually pricing in the policies president-elect donald trump has been talking about, especially with small caps. friday we had the s&p 500 hit another record for 2024. the question i continuously have is, how are these markets contents -- continuously rising in tax cuts, especially corporate tax rates of 15%, when we do not know if the republicans have actually won

the house of representative? dani: it is all fives now. animal spirits reawakened. 50th all-time high this year. a note says, on average, this market usually does 18 all-time highs a year. even before this election and before donald trump real look into the animal spirits, it was a pretty bullish markets. the fact that we can keep going higher, even though equities ran up into the election, it shows you the sentiment and bullishness of this moment. manus: you will hear people sending in notes about valuations, 22.5 forward earnings, excess equity risk premium. the risk-free rate is the lowest in 22 years. this goes back to what we talked about last week, at what point to the bond yields actually begin to challenge equity allocation?

not there yet. annmarie: it depends on what the fed does. manus: of course, and fiscal policy. annmarie: neel kashkari over the weekend, i feel like he was pouring a little cold water on december, said we are not done yet when it comes to the inflation target. dani: i agree. i think this is more notable than a lot of us realize, the fact that his tone has changed. last time he spoke in september, he sounded like he had confidence, not even the confidence, but the labor market was his top priority. he did not talk about that this time. has the fed changed its tone to a pausing bias? annmarie: and to personnel, i say in washington, personnel dictates policy. you can tell what president-elect donald trump is thinking depending who he puts in these positions. we still do not have treasury secretary. manus: we know he is corralling

various personnel. at 80%-odd, it is looking toward scott bessey. when looking at there is names for financial positions, the people at state street say these are professional people from wall street who know how to run numbers and know how to think about markets and what they will take away from it. annmarie: the prediction markets got trump 2.0 accurate, said he was going to win. coming up on the program, chris harvey of wells fargo as the s&p 500 hits its 50th record high this year. former obama economic advisor jason furman on the risks with the economy, and charles evans on fed policy. we begin higher. chris harvey of wells fargo

saying fed accommodation and tuesday's election results are bullish as republicans likely achieved the red sweep, which is seen as progrowth. third quarter earnings have been mostly constructive. chris joins us. hats off to you. you have a lot of this talking about what a trump 2.0 would look like and what it means for the market. i cannot get my head around that the market is already pricing in this trumpfecta, but we still do not know who has the house of representatives. >> betting markets say it is a red sweep, and if you look at the odds, pretty tough odds for the dems to take the house. so we are playing with a red sweep. that is small caps, procyclical, local over international. that is what you are seeing playing out. and something you said, if you think about what is happening,

people are policy. fcc, ftse, occ, he has a lot of room to play with, and many of these people, either terms are expired or they are waiting for the next person. so he will have a lot of opportunity to put people in. people ask about the regulation, and it comes from those people. dani: it is interesting to hear you talk about these betting markets. we mentioned how right they got a called. the market moving in lockstep heading into the election with the betting markets. is this anything we will pay attention to? are betting markets going to be a thing to move equity markets or bond markets? >> i think they will not move in tandem. i think they were much more predictive than the polls. they are much more helpful, very granular, and i do not think there going away. i think this is the last time you see an election without a big influence from the betting markets. do they interact and play off of

each other? yes, which is also a concern because there is a type of momentum that could develop and get things wrong in the future. dani: interesting point, so how do you position if you're just a daily trader or long-term, then you have one eye on the betting market in be positioning? >> a lot of times in the betting markets are capital markets, it is not so much about actual but is about perception. if perception is swinging one way, until you know the answer, that is the answer. we talked about perception becoming reality here. it won't, but in the short-term, it is. so you have to pay attention. manus: bitcoin is flying high. and i look at banks. it is about changing the status quo. if a leg up into this election was nims, there could be a paradigm shift for banks. >> mike and i talk a lot, and we

have had 15 years of upward regulatory pressure. last 12 months, he had basil three going down a little bit, the chevron decision, and now the first thing we will have as different people in places of power. again, policy is personnel, different personnel, and you will see multiples that will begin to expand, but then we will have more amanda bank, more ipo's, more trading. manus: we can ring a bell on banker bonuses, maybe even on dividends and buybacks. let's be fair, give something to everybody. we talk about a paradigm shift in banks, but in all seriousness, we look at bitcoin this morning -- going into this election, gold took on a new level of its own. you look at the regulation and crypto, and people start talking about alt dollar.

how do you look at that kind of asset? it has been given credibility this year with etf posco etc. >> i have to plead a little bit of ignorance because gold and crypto is not in my wheelhouse. but crypto is becoming institutionalized. the other thing happening is that when you look at government and government balance sheets, not so great. people talk about currencies and put pressure on governments. where would you go? if i am less than four years old, crypto market. more than four years old, gold. manus: make sure you write down the password to keep his summer safer, because i have no memory. but when it comes to your world specifically, i am looking at this equity risk premium number, and it is the low, the lowest and 22 years.

last week, we talked about screaming bond markets. we're trying to assess equity risk premium and the all-time highs. >> we have almost a 22 multiple, and we are still below the market. we were high on the street earlier this year. we are not high on the street now. we are over 5800 and still below the market. we can push up that multiple, but you are right, it is not justified at this point in time. which is why it is pushing down to mid-cap and small-cap, that is where the opportunity is. that is great you could see multiples expand. does it mean things will come crashing down on the large cap space? no, it just means i find better value down the capitalization, that is where we think the opportunity is. dani: small caps at 90% the past week, highs level since november 2021. what earnings do we need to see to justify that?

>> we need to see pretty good earnings. what we saw during earnings season is, is bad news still bad news? the answer is yes but not as severely as it was. you are also seeing is if we go to 2025, gdp numbers are less than 2%. at the beginning of the year, gdp numbers were 1.3%. in april, ended up 2.4%, 2.5%. and small caps went up around 9%. i think they will also continue to outperform here because we will find out growth going forward is much stronger -- it is really underappreciated. annmarie: the market is pricing in all the good things of the trump trade. what about the tariffs? >> yep, that is a great question. because, what is trump's motivation? is he trying to bring people to the table or trying to bring revenue in? one thing to think about is maybe what they want to do, if

it is to bring in revenue, number one -- everyone uses amazon. amazon, airbnb, ebay, it is a sellers marketplace.you are charged a fee for selling your goods there. what you want to do to the american people and you do have a red sweep, you say we are the biggest market in the entire world, there is a fee for doing business here. don't want to pay that fee, that is fine, but there is a fee for using our infrastructure. i think that is a great way to sell into the people and to think about this and a great narrative and also a good way to raise money.but is f your goal is to negotiate and get the people to the table, if that doesn't work, you want to talk about much higher tax. and we really do not know at this point in time if it is negotiation, for revenue, or

both. annmarie: full-circle, personnel is policy. when you look at who will be the top post of the treasury, betting markets have scott bessette about 80%. robert height highs are -- robert heidheiser's name has also been there. is that wishful thinking, someone who is antagonistic towards china, that that person can maybe get the top post a treasury? >> another area i do not have a ton of expertise. it is interesting. this is what the market are beginning to think about and talk about and react to. and great if he was to be at the treasury, would that be market negative? >> hard to say, really hard for me to say. what is going to be market negative, if trump comes out and institutes right away these tariffs and is very aggressive about it. that will put a ton of stress on the marketplace. that will put a lot of uncertainty into investors upon

stream mind and will upset the apple cart. you should see some reaction to that, and that will not be real positive because people do not have a plan. annmarie: the market might push back on some of trump's potential plans. chris harvey, thank you for joining us, chris harvey of wells fargo. let's get your bloomberg brief. yahaira: president-elect donald trump announcing key figures he will not be part of his administration when he returns to the white house. he said nikki haley will service -- who served as u.s. ambassador to the yuan in his first term will not be invited back and neither will mike pompeo, who was both secretary of state and cia director in trump prost first term. german chancellor olaf scholz is open to moving up a parliamentary confidence vote before christmas, potentially speeding up the country's early elections to february. his government collapsed last week after he fired the finance ministry ♪ and he expressed

confidence he can win the election despite posts suggesting his opponent as the front run or trade surplus on track to hit a record high this year, potentially reaching a most $1 trillion ahead of donald trump's return to the white house. export prices are falling, and it is relying more and experts to make up for weak demand that asia has tried to address recently through stimulus. this is generating pushback from other countries, including u.s., and may lead to tariffs and currency war. that is your bloomberg brief. annmarie: next, closing in on a red sweep. >> we are going to change the way this city is run, get trump's agenda down. we have to get 60 votes in the senate, so we have to have someone who will sit down with democrats. annmarie: that is next. rick scott has a chance to be the senate majority leader. you are watching "bloomberg

surveillance." ♪ ♪ startin is never easy,

but starting it eight months pregnant, that's a different story. with the chase ink card, we got up and running in no time. earn unlimited 1.5% cash back on every purchase with the chase ink business unlimited card from chase for business.

annmarie: good monday morning, just after 7:00 a.m. here in new york city. annmarie hordern alongside dani burger and manus cranny. lisa and jon not in today. jon is having a rest, and lisa will be in peru. s&p 500 up .3%, securing another record, 50th all-time high. usually only get 18 all-time highs when it comes to a normal year. 2024 has been anything but normal. a ton of dollar strength. euro lowest since june. a weaker euro against a stronger

u.s. dollar. stronger u.s. dollar across the g10 as the trump train continues. all of that depending on whether or not we get a trifecta. under surveillance this morning, closing in on a red sweep. >> we have got to change the way the senate is run. we need to get trump's agenda done. it will take some want to take the time to sit down and bring people together. for a lot of things, we have to get 60 votes in the senate. so we have to have someone who will sit down with democrats and say, how do we balance a budget? how do we do these things? that is what i have done. i am a deal guy. and great republicans preparing to vote for new majority leader. three senators vying for the job. control of the house still up for grabs, with 18 races yet to be called almost a week out from the presidential election. the gop maintaining its lead with 214 seats.

should republicans take the house in the days ahead, they will secure the ability to enact a fiscal year budget and unlocked the reconciliation authority needed to pass legislation with 218 votes in the house and a 51 in the senate, by henrietta treyz. she joins us now. we still do not know the makeup of the house exactly, but republicans same poised to take control. one hiccup, we have overnight that elise stefanik, congresswoman of new york, will likely be joining the administration, was likely to be the new u.n. ambassador. so republicans will have to get another republican in that seat. how hard will that be? >> yeah, they need a couple republicans on the house side and then i expect quite a bit of change on a senate side, as well, with key senators going up to the white house. jd vance is already going, as well. so there will be a lot of state-level decision-making to put more republicans in those seats, new, freshman

republicans. annmarie: you say republicans could theoretically use reconciliation twice next year. how? >> the whole process walks through the budget reconciliation instruction. they have two fiscal years to work with, 2025, and we do not have a budget enacted for that year, and also 2026, which will start right after we finish 2025 and whatever reconciliation bill they pass. this is like 2017 where you had reconciliation available for health care under fiscal year 2016 budget and taxes under fiscal year 2017 budget. dani: 2017 is a good example that even if you have a majority, it does not mean you have control. in-fighting amongst republicans meant certain trump policies cannot be passed. do you need koshy -- do you need cohesion with republicans this time around? >> in the house, that is really

smart. the majority republicans will be operating with in the house will be as few as two seats, 220 seats look relatively safe. that is a bare minimum, even worse than the majority they have now. and the struggle speaker johnson has gone through just to keep the government open. there is a since on the street this will be quick and easy and will come together. we are talking $1.2 trillion from coastal states, that is the path republicans have to the majority in the house. goes straight through california and new york. you will immediately upset that apple card. another roughly $1 trillion on energy tax credits. funding going to red states and job creation in those districts. it will be hard for lawmakers to adapt next year. i expect they will tether into the debt ceiling, which is something you can also do via reconciliation. that might be the best way to pull forward the bill.

otherwise, it will take all the way to december. tariffs will be on very quickly, i am expecting. manus: multiple things to trip over next year, which will make it difficult. part of the debate around the desk is whether robert lighthizer makes a comeback. there is a lot of debate. the betting markets has a low head risk, scott besser has treasury. what is the most aggressive underestimated thing in the market, and the market perspective? is it that lighthizer comes back at treasury or comes back as trades czar? >> o think trade czar is more realistic. scott besser would be more likely. the benefit for lighthizer being a roving trade czar is he can oversee the expansion that has gone on at ustr and the

department of commerce, which has tremendous authority over tariffs. i think he will be upper echelon but not necessarily a cabinet post. that would speak to have critical tariffs are a part of the foreign policy of the president-elect and the trade policy agenda. if anything is clear this election cycle as americans are supportive of trump's agenda on tariffs, and lighthizer is the most competent person to run that strategy. immediately calling china out in violation of the phase i trade deal they did in the 2020 i think is the first thing that will happen. annmarie: when it comes to cabinet picks, they need to go through senate confirmation hearings. i was stunned over the weekend, rick scott surging now when it comes to maybe becoming majority leader. and donald trump on his truth is showing rick scott surging. do you think he has a big chance not to beat out the johns?

>> i do not. this is a secret ballot, so all that stuff sort of happens in the ether. people can talk to supporting scott, but end of the day, the senators will go into a room and it is a secret ballot. i think rick scott will maybe get 12 votes, but one of the johns will win, more likely to be john thurn. annmarie: henrietta treyz, thank you so much. where will robert lighthizer go? treasury secretary? financial times talking about maybe taking on the czar program. or does he go back to ustr? manus: a reprieve the next day, and as soon as lighthizer's name came up on friday afternoon, this thing went around again. i think mexico is ground zero,

not just for the politics with china this administration but in terms of its relationship with the u.s. dani: the fact that trump is looking at these prediction markets, i think it's fascinating. how much will he be moved by thinking this is what wall street wants, this is what assets wants, and i want to follow prediction markets. annmarie: and what if he does what markets are not predicting, like treasury secretary right now, scott bessette the lead, maybe if he does not get that post, what happens next? coming up, former obama economic advisor jason furman will be joining us. you are watching "bloomberg surveillance." ♪

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.

annmarie: good morning, and happy monday. welcome to "bloomberg surveillance." jon and lisa are off today. no major drama with equity markets this one. futures still higher. s&p 500 got a 50th all-time high. market seem to be doubling down on trump to point out. i find this fascinating given the fact we still do not know the composition of the house. yes, poised to be a trifecta. but this could be the difference whether they get over the finish line or whether or not there will be expansion of tcja and tax cuts.

small caps 15% tax rate. dollar strengthening this morning across the g10, most notably to the euro. we are all going to travel to europe this summer. manus: for sure. they are worried about a 158 billion dollar surplus they have in the united states. so easy be helping the situation along, as germany, talking about the euro has a problem, not just on rates but also called germany. germany and france. that takes us closer to the risk of parity, tariffs, trade war, along with rates and politics. and great also have bitcoin. it has actually been a darling of the trump trade. dani: it has. because he really went to the crypto audience and courted them and said this is something i will do as president. i am going to be your crypto president. 82,000, we are above that, easily a record. it if the sizes the animal spirits in this market.

our ability to have this narrative forms, even though there is nothing concrete yet. markets happy to trade these things even though we do not know the makeup of the house and do not know his appointments, even though there does not seem to be any sort of willingness in congress to pass legislation about crypto, just the fact that trump has won is enough. and great you called earlier, fives. that is what it is for bitcoin. it is veterans day, and we wish military families and those veterans a happy veterans day and hope you were able to take off. qatar is stepping back from its roles as mediator between israel and hamas, saying efforts have stalled and the talks will resume when both parties show willingness and seriousness to end the war. i spoke to a diplomat over the weekend involved in this, and they said, from all sides, israelis, hamas, and the united states, no one is willing to get this over the finish line. manus: there is a sense that we're going to go into this

period of time or nothing really gets done. in the same vein, you ask yourself where trump stands. he and that yahoo! had a conversation over the weekend, netanyahu saying they saw eye to eye. a person in the u.s. administration saying the presence of doha is no longer acceptable if they do not let go of hostages. the relationship with qatar has been full prong negotiations, and that may splinter with hamas. annmarie: if qatar is kicking at hamas, were do they go? doha to tehran, and what do we hear over the weekend with netanyahu? manus: they are in alignment, netanyahu and trump. then there is the question of stepping up not just tariffs on iran but a much more aggressive regime.

and great the washington post reporting that donald trump told russian president vladimir putin not to escalate the war in ukraine, reminding putin of the sizable u.s. military presence in europe. the kremlin denies that trump and putin spoke, calling to report pure fiction and saying there are no plans for them to talk. dani: not wild to think they would talk, an incoming president talking with a world leader. but asking him not to escalate in ukraine, not sure what it means for this war. so many things have already taken shape. one of the big risks that was laid out, trump clearly wants an agreement here, wants the war to end. he says he can make it end in one day. we know with putin, agreements can be broken. in 2022, he violated a 2015 cease fire in order to do that. what does an agreement look like with trump? manus: the bigger question is,

what is the compromise for nato in europe? you sat down with zelenskyy. there was a what's on your mind president-elect, and here we are getting closer to the end game. what europe is worried about is what is ukraine forced to give up? is it a deal of putin's terms are ideal on real agreement and compromise, good compromise? annmarie: all of this as the new york times said russia's military is assembling a force of 50,000 soldiers, including those north korean troops, to go after and potentially reclaim some territory ukraine got back. you have to think putin is thinking we want to get as much as we can now before potentially this conflict is frozen, and zielinski wants to continuously push them back. speaking of trump 2.0, the next cabinet beginning to make shape. trump saying he will nominate new york congresswoman elise

stefanik to serve as u.s. ambassador to the united nations, and also nabbing a former ice acting head as his next border czar, opting not to offer rose to first-term cabinet members nikki haley or mike pompeo. a shift when it comes to foreign policy, putting distance between himself and those in the republican party who wants a little more of an isolationist approach and get away from the new conservatives. manus: this cabinet will have room for all parties on the bench, just a question of waiting on that bench, whether it is maga, his family, or people from the past. the question is to what extent treasury and who will be the next secretary of state. antony blinken with 10 or 11 trips to the middle east and no movement. so what kind of foreign policy are they prepared to deliver to the middle east next year? dani: we are getting these names floated quickly in comparison to last time around. in 2016, it was chris christie

being fired, disappointments because he appointed globalists to different positions the fact that we are getting more names more quickly and there seems to be more agreement and more certainty and more trump allies suggests, at least for these markets, that trump has priorities and will be able to get them through. maybe that is part of what we are seeing, this animal spirit reawakened. annmarie: and personnel is policy, which is why i am focused on who he picks her treasury secretary. the betting markets think it will be scott bessent, who runs a macro hedge fund. other names like robert lighthizer, what would that mean in terms of trade? would it be market negative because it is a very antagonistic approach on china? i think it is a market endorsement potentially first scott bessent. donald trump is paying attention to poly market because he is tweeting about it. we have to wait. senate majority leader could be one of the next to come, and we may see it in a tryst post.

remarks from fed chair jay powell on thursday, just one week after the fomc cut rates by another 25. basis points former obama economic advisor jason furman writing this, monetary policy is going from very contracted tory to reasonably contractionary. this makes sense given that inflation risks are much lower than before but are still higher than recession risks. i expect another cut in december, but core pce inflation is likely to rise, making a continued process of consent every meeting difficult. jason furman at the harvard kennedy school joins us now. thank you for your time. i know you're looking at potentially this cut in december. but give us some clues on what the heck 2025 is going to look like when policy can be vastly different that this fed needs to recap alert -- recalibrate for? >> separate from anything related to policy changes coming from donald trump, we will probably end the year with a core pce inflation rate at something like 2.8%.

that is usually your best bet for what inflation is going to be going forward. then you add to that some fiscal expansion, some tariffs. we do not know the magnitudes of those, but they both push in the same direction. adding more to inflationary pressures. i think that will make it hard for the fed to continue its process of rate cuts and at anything like in every meeting pace next year. maybe every other meeting, at best, with the exception that if the economy starts to weaken, they will be there. hard to keep cutting with strong growth. dani: should they even be cutting in december? does that even make sense with the environment you just laid out? >> yeah, interest rates will still be contractionary after one more cut. the way the fed operates is they always wait longer, so until there really sure, then they start a continuous process of change.

and that is where they are now. it would be too shocking to the system to pull that one back and would almost look a little bit political. but yeah, after december, they need to take a hard look at the data, and i do not think it will say keep cutting. dani: if we can go to that environment where you have higher yields and a stronger dollar because of trump policies and because they are not cutting every single meeting, that means you globally have tighter financial conditions. it might force rate cuts elsewhere, which feeds this feedback loop of stronger dollar, higher yields in the u.s. what is the likelihood of that kind of level environment where you get this sort of doom loop with rate differentials? >> look, in some ways, it is useful to a lot of countries around the world which is struggling with demand, higher dollar, in essence, is shifting demand from the united states to those countries. in some ways, that will help with the global equalization.

europe is in a very different place than us right now. they have really weak growth. we have really strong growth, and that means monetary policy should be different in those two economies. manus: jason, good morning. you wrote in september that trump often listens to sensible advisors and walked away from some terrible economic policies as a president. what do you think he will walk away from? anne-marie has been making this point, he is on betting markets, twitter, truth social, watching everything. what will he walk away from from the campaign trail? >> my guess is interfering heavily with the federal reserve. i think he will walk away from that. the market would punish that very severely. second, i hope he walks away from across the board tariffs in every country in the world. on the one hand, he has a deep-seated belief on that, on the other, it would be really

destructive to the u.s. economy. where i do not think the market will put much pressure there was on fiscal expansion. we think he could do the a $20 he proposed on the campaign? probably not. but $5 trillion to the deficit, absolutely, yes. so it is that fiscal expansion that i think is the most likely to make it through this. manus: i am curious what you define as tanking the market. my inbox is littered with 5%, a number that keeps ringing up on a cash register the moment on bond yields. >> look, we get to 5% on the 10-year, i think that will get attention, probably from the president, and if not, from republicans in the senate. that is what our fiscal conversation to date, when we have too mu iit increase over the last four years, harris

was proposing too little deficit increase, both parties have group -- purported this. part of why they have is that interest rates have allowed it and bond markets have allowed it. let's see if the bond market vigilantes come back when they start hearing about these multi trillion dollar deficit increases. annmarie: larry summers said it may be up to the bond market to educate lawmakers in washington dc do you think that is what forces washington to coalesce around a little bit more disciplined when it comes to the u.s. trajectory, the fiscal health? >> yeah, i think that is pretty much the main thing that will get peoples attention. i would have felt the social security and medicare trust funds being exhausted within a decade would get peoples attention. i would have thought nearly $2 trillion deficit at a time when the economy is really quite good get peoples attention. but those haven't, so yeah, i think we need the market. annmarie: is there a timeline,

jason, that you think this could happen? with a republican trifecta there, nearly, once we get the results of a house, do you think it could happen in 2025? >> it can always happen, but it can always not happen. i realize that is super unhelpful, but it is not like there is a mathematical link between here is the quantity of deficit and debt and here is discontinuance change in interest rates. they need to see where they feel policymakers could go or would go in future actions, and with list trust, there was a sense that she was completely reckless ignoring any sense of discipline around this. that interacted with corks around insurance companies regulation and the like. things like that are hard to spot in advance. yeah, that is what i would be worried about in the unlikely event that someone picked me to be donald trump's treasury secretary. annmarie: i hate to say that, too, but it is a very unlikely

event that a former obama economic advisor -- jason furman, thank you for joining us. an update on stories elsewhere. here is your bloomberg reef with --brief with yahair jacquez. yahaira: republicans have secured the majority of the senate with 53 seats currently called, compared to 46 for the democrats. still waiting for arizona, where democrat is leading the republican by around 2%. but that senate race is still too close to call. in the house, the majority is still up for grabs with 18 races still being counted. the latest tele show republicans ahead with 213 seats compared to 203 for democrats. hedge funds betting against tesla are feeling the brunt of a trump win. firms short tesla between election day and friday's close on paper hidden over $5 billion, according to our calculations. those hedge funds were among the few holdouts that were affected

since many of their peers unwound bets against tesla over the past four months as markets started to price in that trump would win. since election day, tesla shares have gained close to 30%. china is on track to become lululemon's second-biggest market after the u.s., hitting $1 billion in china sells for the first time this year and selling more expensive items than in the u.s. the growth comes at a good time for lululemon who had seen a slowdown in north america. the success in china comes as other western brands are struggling in the country amid a rising nationalism and a strained consumer. that is your bloomberg brief. annmarie: thanks. lori l, cannot get it done in china, but lululemon? dani: reuters has this story where they talked about how lululemon has positioned themselves as the hermes of yoga

in china. manus: i wonder if they would charge more if they have -- annmarie: maybe it is because their canadian. manus: difference between $150 pair of yoga pants and a handbag. could be $13 billion of sales. more than apple, nike, r-star bux. annmarie: maybe for chinese consumers, this is an affordable luxury. never knew lululemon was an affordable luxury, bracing for the next administration. >> u.s. dominance of the global system is going to increase, both for positive reasons and for negative reasons. and great that conversation coming up next. you are watching "bloomberg surveillance." ♪

you know what's brilliant? boring. think about it. boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. boring makes vacations happen, early retirements possible, and startups start up. because it's smart, dependable, and steady. all words you want from your bank. for nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled... which is pretty un-boring if you think about it.

annmarie: good morning, bracing for the next administration. >> the direction of travel is clear, more growth, slightly higher inflation, higher public sector borrowing requirement, and a huge sucking sound were a lot of foreign capital would end up in the u.s. this is a period in which u.s. parts of the global system will increase, both for positive reasons and for negative reasons. annmarie: traders split on donald trump's economic agenda and what it will mean for the economy and the federal reserve. charles evans writing, there is substantial optimistic commentary for the economy owing to lower taxes and more business friendly deregulation. but higher tariffs could affect inflation outlook for 2025 era

charles joins us now. thank you for your time this morning. let's get into that now, when it comes to the inflation target and tariffs on how to balance the two. 2% inflation target, is it doable with the higher tariffs president-elect donald trump was promising on the campaign trail? >> good morning. 2% is the feds inflation objective, and ever since they were raising rates and when they put the funds rate, they said they needed confidence to get inflation backed up to 2% we have seen improvements in inflation and a lot of optimism. most recently, the cpi data a little bit pumping, and six jackson hole when powell said it was time to cut rates in the fed has cut rates 75 basis points, things have been bumpier on inflation than expected. so i think they will be cautious. in this new environment with the prospect of tariffs, that would increase prices.

one-forthcoming not necessarily inflationary but with a longer period of time, but a rise in prices around importing goods and things like that can create a problem for the fed. a challenge in terms of interpreting the inflation data is what i mean. annmarie: it is a cut -- dani: yesterday, they said it depends on what things look like. powell saying we do not speculate and we do not assume. you have been in the room with conversations. what do you think is likely the conversation era politics and the type of environment they will be facing? >> i think powell described it well in the press conference. he said when you have new fiscal policies that have been floated, the fed is going to be paying attention to what is put into the law, what is actually enacted before then, and paying attention to what possibilities are, looking at alternative simulations and what policy responses are likely to be, but

they really need those details. i actually thought back in early 2021 that the biden policies were not quite as inflationary based upon early things we had seen, and then as you got them into play, they were more stimulative than i thought and others, too. it is really in the details of the implementation, and that is what they are waiting for. you will hear a lot of talk about that until you see proposals on the table and moving forward. manus: good morning. you were there for the first trump administration. you lived through those tariffs and the conversations you had around the table. here is a fed dealing with unemployment 4.1%, inflation theoretically coming back towards target. should there be a case to build pause into the narrative, or does the fed continue on its trajectory until we see the detail on these tariffs?

>> they are going to need to see details on the tariffs. it is the case that the economy is really quite strong. unemployment is 4.1%. employment growth on average has been pretty godhe last -- the last month a little weaker, but there are revisions to gdp. that looks good. i think the fed is recalibrating, but they are not quite sure how much they need. maybe they need a little more than they thought in the jackson hole days. now you bring tariffs into play and you begin to wonder, in that environment, businesses were able to raise prices. back -- it has just been hard for businesses over a long period of time to raise prices unless there was an identifiable reason. tariffs could be an identifiable reason, and that could change behavior in a way that makes it more complicated in terms of assessing inflationary pressures.

annmarie: does that mean potentially no cuts in 2025? >> no, i think they're still quite restrictive. they do not want to get ahead of themselves. they want to be cautious. powell said they will go into december and asking themselves, we have done 75, does that need -- is that where we need to be? they will follow through, but i think they will adjust the pace in 2025 and will be ready to move in either direction, depending on if the economy is weakening or if inflation is holding up and is a concern, they will probably be even more cautious. but they will reduce rates in 2025. annmarie: charles, thanks for your time, charles evan spiegel coming up, michael o'rourke, greg trejo, and others. you're watching "bloomberg surveillance." ♪

>> the u.s. economy is just doing so much better than the rest of the world. >> this is a period in which

u.s. dominance of the global system is going to increase, both for positive reasons and negative reasons. >> you are really going to start see the market focus on the impact of tariffs. >> there seems to be something about political leadership transitions that usher in leadership style transitions in the u.s. equity market. >> markets have trouble pricing in risk in general. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. annmarie: good morning. this is "bloomberg surveillance ," this morning alongside dani burger and manus cranny, i am annmarie hordern. jonathan and lisa are off today. jon is getting much needed rest after doing 30 hours last week on television, so he deserves a bit of a break. the story has not changed since the presidential election, and that is the trump train on the trump trade continues. 50th all-time high.

the market thinks this rally has more room to run, pricing in the regulation, tax cuts, even though we do not have the makeup of the house of rep is that it is a yet. my question is when the markets price in the tariffs, and is not going to be an issue for the fed to say we might have to pause the cuts? dani: the market is pricing in all the good stuff and none of the bad stuff. at what point does the start to look like 2016? in 2016, we have this big rally post trump. animal spirits come up here then we kind of pause and move sideways as we try to figure out what policy actually looks like. that could be when you start to get tariffs priced income especially when you start to learn who will be appointed, what the cabinet will look like, what the priorities are. manus: and depending who is appointed, that could restrain, not stopped, some of the extreme policies that have been floated on the campaign trail. that has repercussions for the yields, which you saw abating

last week, but nothing can stop the dollar at the moment. the euro-dollar the lowest since june. the euro zone has germany and france, and that is the narrative from kit juckes. you have an election in germany, a trade surplus of $158 billion. if you do 60 percent tariffs on your enemies, what would you do to your pals, your bmw pals in germany? 20%, 30%, lighter? either way you look at it, there is no growth in europe, and we are careening towards parity. annmarie: and mike mccarr brought up a point last week that -- we really see that bleed out when it comes to the trump trade. we also note today is veterans day, so the bond market is closed. the rest of the week, cpi, ppi, jobless claims, retail sales. coming up, michael o'rourke of

jones trading as the trump trade continues to gain steam. kathy bostjancic of nationwide looking to cpi. and oksana aronov as traders ponder whether -- reaches 5%. stocks once again higher as investors remain bullish on the back of donald trump's election when. michael o'rourke of jones trading remaining selective. the postelection market is euphoric. banks and energy have been beneficiaries of the trump trade but still have room to rally and already relatively attractive versus the s&p 500. investors should be cautious and single stock selective going into year-end. tell us what you like and what you want to be more cautious on, because the market right now is still euphoric, and they are still pricing in more of this trump trade as we begin to see the personnel taking shape for trump 2.0. michael: dani made a great point

that everybody is seeing the bright side of every one of these traits. is that -- it is as if every trump trade is in a vacuum and we are all going to be winners, and that is a big mistake. if we think back to 2016, i remember after the euphoria died down, there was a lot of volatility, because you get headlines about one policy will pass and another will not. you have to view the market signal -- with tesla up again today, that group is trading about 50 times earnings. the rest of the s&p find -- s&p 500 trailing two times earnings. the index is expensive. there is a lot of stocks out there that are not as expensive. i think that is why you have to be selective and not get wrapped up chasing this euphoria we have seen in the past week. dani: you remind us of an era a

lot of us forgot about. in 2060 odd words, when markets moved on different tweets and with a bit more as the initiation try to figure out exactly how to implement what trump wants. does that turn us all into short-term traders? do we need more agility and flex ability -- flexibility? michael: people are acting like short-term traders pay that is why you want to be more thoughtful. i describe it to my clients and coworkers as expect to grow coaster ride. even though we know what the trend policies will be and what the intentions of the policies will be, they do not work out that way. for example, in the first trump administration, the president wanted to put the tariffs on chinese imports for the biggest imported from china was apple, and he of course gave apple a waiver for iphones, because he wanted to be able to compete with samsung. to make a broad-based judgment,

it is a dangerous game to play, and that is why people need to be more thoughtful. dani: in that thoughtfulness, i want to ask about energy. energy was one of those sectors that ripped higher, the assumption that trump wants drill, baby, drill. but with domestic oil production already -- michael: it is the cheapest sector in the s&p 500, and you have very excellence of, so there is potential there but also, we are all hoping for a good growth situation in the united states. we are hoping that, if we shift investment domestically or inwardly, that should also help grow. there has been a lot of headwinds in the space. the current administration has not supported this space. we have had that china slowed down here that have been a lot

of negatives, so there are room for upside surprises. manus: the kbw index up $220 billion since trump's win. the next leg of that trade is a lighter capital touch. how do you see banks, what are the repercussions for that and buybacks, dividends, never mind the bonuses? michael: i think the silicon valley bank story highlights how wrong regulation has been. we have three major regulators, the fed, the occ, the fbi see. they all knew the problems. the fed told the bank to correct the problems. the bank never corrected the problems. then the fed's policy response was to increase bank capital requirements on everybody else that is exact what is wrong for that is what it should be viewed as a major positive to see a new administration come in and hopefully change this from that regulatory structure pay from that perspective, the financials, the bank

specifically are another actually an extensive group relative the -- to the market. the banks as a group are probably 12, 13 times earnings. their instrument is potential for upside. manus: can we go back to dani's point. dani was talking about energy, oil addiction, is there capacity? from an equity investment perspective, if i do not look at the oil majors, why look at the supply chain into that? the narrative of who builds u.s. energy inc.? michael: absolutely. you want an environment more friendly to exploration and production, and as long as there is demand, we will see more infrastructure buildout in the u.s. obviously, with china slow right now, they are still -- there are still questions out there, but when you look at the next several years, you see more strength in that group and more about buildout. dani: we started this

conversation with the postelection winners being the winners that have been much of this year. you mentioned tesla flying higher in the premarket, big tech doing well. you write we are in bubble territory. what pops the bubble? is there is anything realistically where if you cared about valuations much of the past decade, you probably would have been wrong. is there anything that reverses the enthusiasm in tech, tesla specifically? michael: it is interesting because tesla was year -- west flat year-to-date 10 days ago, so that is a specific scenario. as far as the big tech and their rally, that is an exposure grab. we know the likes of meta and google are not president trump's favorite companies, so -- we know warren buffett has been selling apple. for all these headwinds, the group hangs in there. as we see a shift to other groups, as we see a shift to small caps and mid-caps -- that

trend started over the summer in july when we got the june cbi come up until tesla rally last week, the only mag 7 names outperforming the s&p 500 since then were nvidia and meta. we are seeing that shift already. it is these megacap names in bubble territory. for the most part, the standard stock in the market is not extremely expensive. the s&p is still relatively attractive. there are places to be in this market. that rise in 10 year yield is an interesting story. i personally do not see it in the sense of your worried about deficits and whether it is tax cuts etc. driving yields higher, we have japan with the 1% 10 year. i believe there government debt is 260 5% of gdp.

where we are at now, the 10 year yield is about 40% -- 40 to 50 basis points above the s&p 500's earning yield pair that is what shows stocks are expensive. it is driven by those mega caps. dani: is there a point where yields get high enough where it upsets the risk trade? is there a level you start to get worried, and what is it? michael: absolutely. everyone is talking 5%. i think if we approach 5%, equity start correcting. and for all this investment and growth we want, you do have to borrow money. that is a cost of capital. when we talk about the mega caps self-funded for the most part, they are already exxons of, so if you want to have growth in this economy, you cannot talk about interest rates shooting higher and still having a strong economy. it is just unlikely and probably not going to happen. i think the 10-year is very attractive, 35% yield, but if

you see that move towards 5%, expect equities to get unsettled. manus: how much consumer do you want to take on board now? we are in this rate cutting cycle, we have run out of covid money. we have the capacity to leverage at eight cheaper rate -- at a cheaper rate. michael: the consumers interesting because the consumer does seem a little stretched. obviously, we had great expansion. we had a phenomenal bull market, so we had somewhat of a wealth effect. i think the tariff situation makes that tricky. imported consumer goods will be one of the places that get targeted. put it this way. if the consumer is strong and retail, it may be under margin pressure. annmarie: do you think the market is taking trump at his word when it comes to tariffs? it does not seem like it. michael: i think the market is taking trump at his work he will

try to do something. again, if we have a massive tariff structure, it will hurt parts of the economy. i talk about it all the time. the pre-globalization, 1960 to 2000, china and the wto in 2001, gdp was cut in half, and we wound up trading gdp and jobs for lower consumer prices, lower inflation, higher corporate profits. if we start flipping things the other way, it starts becoming more of a challenge for stocks. i do not see that totally reversing, but it is some thing trump started on in 2016, and now he is back in office and gets to build on that, so -- it comes up to sell activity. you have to be selective in what you are invested in. annmarie: michael o'rourke of jones trading, thank you so much for joining us this morning. let's give you an update with

sores elsewhere. here's yahaira jacquez. yahaira: the kremlin is denying a report that president putin held a phone call with president-elect trump. putin's spokesperson says part of the call were pure fiction for this comes after the washington post reported putin and trump spoke first and discussed the goal of peace in europe. for any future calls, the spokesman said there are no specific lands yet for any contact between putin and trump. signa shares are rising, -- cigna shares are rising, up a .5% after cigna announced it will not pursue accommodation with the insurer. cigna says it is focused on confirming its capital priorities and would only seek acquisition strategically aligned and financially attractive. the company will continue purchasing shares through year end and through 25. cigna saying it intensities proceeds for its medical

business for the buybacks. and the carolina panthers kicked a game-winning field goal in overtime to beat the new york giants in germany. meanwhile, the steelers hold onto their division lead after a dramatic fourth-quarter finish against washington gate as for the chiefs, their undefeated season marches on after they blocked what would have been a game-winning field goal in denver in the game's final seconds. and the lions improve 8-1 despite an intervention -- interception things to a team winning field goal. what a comeback. annmarie: thank you. look forward to your update in 30 minutes. up next, the morning calls, plus bloomberg's craig trudell on ev's in a second trump administration. elon musk hanging around mar-a-lago all this weekend. you're watching "bloomberg surveillance." ♪

annmarie: good morning. after the s&p 500 hit another record high, 50th record high, torsten slok writing in, on average, for some reality check, on average the stock market closed at an 18 year high. we're already at an all-time high 50 times this year. s&p 500 futures up nearly 0.4%. we should note the bond market is closed today for veterans day. crude, wti down more than 2%. has to do a lot of what is going

on in the lack of demand we are seeing coming out of china. new york crude $68.80. -- that stock up more than 3%. next up, morgan stanley raising its price target on dell, noting its strong ai server momentum, giving some weight to the stock this morning, up more than 2%. finally, no surprise here. wedbush raising teslas price target. expecting a trump white house to be a game changer towards autonomous and ai ambitions pair let's stick with tesla. the auto maker continuing its postelection surge, its market cap now back above $1 trillion. bloomberg's craig trudell joins us now. over the weekend, a source close to me the that has been hanging around mar-a-lago says elon

musk's secretary of everything. is that what is behind this move? craig: yeah, if the simple thing to do is buy the shares of the companies whose ceo's are hanging around donald trump, it stands to reason you would buy tesla. i think it is remarkable in the sense that everything we heard out of donald trump on the campaign trail would sort of lead us to believe he will be anything but a proponent of electric vehicles. so how exactly the market squares that after this postelection enthusiasm is going to be interesting to watch, because there are a lot of ways he could hurt the ev market going forward. annmarie: that is what i am struggling with. this would mean more tariffs, potentially climb back the inflation reduction act which had subsidies to american consumers for buying electric vehicles. at the same time, maybe his 70 to power means more autonomous

driving and deregulation. is that what the market is looking at come all the good things, none of the bad things? craig: with tariffs, musk is sitting pretty there, in the sense he makes all his vehicles that he sells in the u.s., for the most part, in california, in texas. there are plans to make semi trucks in nevada. you have seen some limited imports from tesla, but quite limited in the u.s. maybe there is a case to be made that you stand less of a challenge to the germans in particular if trump follows through on his threats on imported cars from mercedes and bmw. then again, those companies make a lot of their vehicles now in the u.s. so trade wise, maybe it is a plus. in terms of ev policy, you mentioned there is a lot of attention on tax credits for

purchases, but what often gets overlooked is manufacturing tax credits as well. tesla is a huge beneficiary, as well as panasonic, because all all the batteries they make domestically. it is not just a matter of consumers potentially losing out, it is also tesla directly. dani: how does that timeline change, if at all, for autonomous vehicles and ffsd for tesla as a result of this election? craig: it is really difficult to answer that at this point, because we have heard musk himself talk about the idea that he would want to try and put his thumb on the scale toward a federal protocol or procedure for approving autonomous vehicles, getting them on the road. there are challenges that companies have run into, when they have wanted to take a steering wheel out or pedals out, because if you make a car

in the u.s., it needs to meet federal motor vehicle safety standards. those standards include those sorts of controls. there have been efforts, going back years, for companies to try to change those standards that have gone next to nowhere. perhaps, musk would be able to throw his weight around there, but it is unclear at this point just how much that is actually holding tesla back, as opposed to whether it is technology -- whether its technology is where it needs to be in order to safely take out those controls from its vehicles. manus: good morning. as annmarie said, elon musk is everywhere. we spent a lot of time talking about the tariffs, the bid for tesla this morning. 22.5% of the revenue is in china. we are talking about all the upside and none of the potential headwinds politically in china with its relationship with

trump. craig: i do think the potential for trump to necessarily put a huge dent in that seems limited in the sense that a lot of the vehicles they are making in china are for china, to the accent they are exporting, not exporting to the u.s. it seems unlikely that would change, given trump's china rhetoric. but i do think it will be interesting to watch just how much musk tries to assert himself as someone who speaks for china, because we have not seen him as a hawk on china at all. in fact, he has been quite an ally and kind of been dissing to from the trump camp -- and kind of been -- whether he continues on that

path will be something i am watching closely, because he is so far apart from trump in this respect. annmarie: thank you so much for your time this morning. bloomberg's craig trudell. dan ives maintaining that over performer saying autonomous clear significant under a new trump era, because proximity to power for elon musk is there, present for us all to see across twitter, especially over the weekend. coming up on the program, kathy bostjancic of nationwide and oksana aronov of jpmorgan. you're watching "bloomberg surveillance." ♪

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.

annmarie: equity futures up nearly .4%. so-called trump trades in full swing. maybe they will test a new record on friday. much of this has to do with the trump trade darling and that is elon musk and tesla. manus: how much of this is elon musk, secretary of everything, and how much has to do with the reappraisal of tesla's trajectory?

raising the price target to $400. this would be the game changer for autonomous and ai. ai and autonomous will be worth $1 trillion for tesla. there is other powerful news this morning. this is a reflection, if you ever wanted to understand the concept of deregulation and trying to get donald trump elected, this is the manifestation of that. you have the digital currency flying to $82,000 this morning, up 92% this year. daily flows are at a record at blackrock. the exchanges and etf's are trading higher. cigna confirms it is not pursuing a combination with humana.

in terms of what they are saying, they would consider acquisitions that are strategically aligned and financially attractive with a high probability to close, the company says. annmarie: let's see how they open up in an hour when we have equity markets opening. we should note it is veterans day so the bond market is closed. investors awaiting plenty of data this week including fedspeak with remarks from fed chair jay powell. kathy bostjancic joins us. what are you most excited about? kathy: i would say all of the above. the data matter most. you mentioned the consumer price report due wednesday. that is the critical data to

watch going forward for us. the federal reserve still retain the recent stickiness of the inflation reports. it has not dissuaded them from thinking they can continue to gradually lower rates. i think the pace and timing will be dictated by these incoming inflation reports. if it comes in higher, it dampens the odds they will go in december or january. annmarie: what is the level we could get for the cpi this week that would mean we do not see cut in december? kathy: it is a close call in general. we are right in line with consensus. we are looking for .2% headline increase. the headline is going to be softer because gasoline prices have come down the last few months. the core is right on the

borderline. anything higher than that is going to knock down the chances of the fed cutting in december. they could easily pause and say we need to see more data. on .3%, they can go. it depends on what is happening in categories and if they are affected by interest rates. that is a key determinant as well. annmarie: powell was at pains to avoid talking about the politics. kashkari saying it depends on what policy gets passed. stocks and equities having a good blast moving higher. their 50th record this year. is there a point where the fed needs to start talking about financial conditions moving away from them? they are op with the easing bias, but -- they are ok

with the easing bias, but does this become something they want to pull back? kathy: they take into consideration broad financial conditions. the riskier assets and even small caps rallying strongly as part of the trump trade but we are also seeing long-term yields have moved higher. they are up 50 basis points and then fall the next day. there is a lot of volatility. one that is a reflection of stronger economic growth, also inflation premium coming in, and concerns about the deficit. that was rising even before the election. as long-term yields go up, so do mortgage rates.

housing is still a powerful part of the economy with a multiplier effect. that is where we have to have a holistic view of financial conditions and how it is impacting the economy. manus: johnny suggested new the end of our conversation that the fed work in recalibration mode. they may go in december. could you see in extreme gum -- an extreme scenario where there are no rate cuts in 2025? kathy: they are recalibrating back down to what they think will be eventually a neutral fed funds rate. they still believe they are in a restrictive stance. they want to get a healthier balance for the economy.

as they see inflation trending lower, they see some softening in the labor market, not to the point where it is alarming but they want to support that and keep that kind of strength going forward. 2025, there is so much uncertainty right now. we do not know what will happen on the trade front, immigration, and we do not know how the fight over taxes will play out. they do not expire until 2025, the bulk of it. 2025 will be all about deciding these policies. that will have some impact. my sense will be that notwithstanding all of these changes that we are likely to see the fed continue to cut rates and maybe me more gradual. the market has priced that in. we are looking for the fed funds rate around 375.

i think it is still supportive of the economy overall. manus: dealing with the known knowns an unknown unknowns, it sounds like there will be a hard rub up against politics and the fed when you listen to powell's answer, succinctly, "no." were you happy with that answer? kathy: i was, actually. it was firm, to the point, and no nonsense. i think ultimately i would hope financial markets would be the final arbiter. meaning let's not rock the boat. markets seem to be very joyful right now.

annmarie: are they too joyful? we still do not know the makeup of the house. the makeup of the house could determine if we get the tax cut promised. kathy: i think it is premature to bank on any decisions on any of those key policy fronts. we do need more clarity on the house. the fact that republicans have control of the senate, they could push through things on omnibus. it makes things easier for the republicans if they also have control of the house. we will have to see how that plays out. at this point, it is not surprising the markets are running with the trump trade. i think there a lot of information we have to dissect going forward to see what this means. annmarie: thank you so much for

your time, kathy bostjancic. joining us around the table, oksana aronov. we just heard about the markets pricing in the trump trade. rising yields, is that economics or politics? oksana: we spend a lot of time trying to predict rates. the reality is that when we look at the history of how good the market is, when we look at predicting it, it is terrible. if you look at the dot plot, in 2020, they expected the fed funds to stay at zero through most of 2023. even though you know what the fed is going to do and they do it by cutting 50 basis points earlier this year, what has

happened to the long end of the curve is the long end of the curve moved up with 70 basis points. i think everyone needs to have a little humility and focus on the economy and data. jay powell himself said last week rather than prejudging anything, we will be looking at the data. i think a lot of what is in the mix with the new administration coming in is potentially short-term looking quite inflationary. that means possibly higher longer-term rates. we are looking at the balance sheet. that process started before the election. we have said regardless of who occupies the white house in january, there is no focus on fiscal spending. everybody wants accountability in theory, but everyone wants to spend. if you look at what the market is currently pricing in for the fed funds rate, we have about a

3% rate by the end of next year. historically, the spread between fed funds and the treasury is 175 basis points. you do the math. even if expectations come true, is a 5% 10-year more likely or 4% or 3%? if you believe in a positively sloping curve, the 10-year will likely be higher, not to mention all of the longer-term issues that are inflationary that we could talk about paid that is just the math. as for what will actually happen, your guess is as good as might. we do not pin our process on the directionality of rates. we have tracked it over the last three volatile years. dani: many people have talked

about the reinvestment risk, that you need to be going into bonds because yields will come lower. what psychological impact because it had for investors for that not to play out? how real is theestmnt risk if there is some potential for yields to go higher? oksana: as we look out, it seems a higher for longer environment is more likely. the extent the data continues to be strong and we see even an uptick in inflation, they may stop cutting or take some cuts back. we believe there is nothing wrong with cutting or not cutting. flipping the coupon at the front of the curve has been the right trade. we like things like high-quality corporate floaters. they still give you a yield above the traditional front and money market type yields an incredibly high quality. in the lower credit market, that

same thinking has pushed people into junk rated parts of the market. you have high spreads today sitting at 285 basis points over treasuries. it is extremely rare to see a spread inside of 270. this is incredibly tight. the last time we saw spreads at these levels were just before the bubble burst in the late 1990's, early 2000's. not to say we are headed there but to say these valuations are pushing against historic. dani: i.g. even more so. the level since 1998. jon likes to ask this question. are we heading into an environment where we could see yields below treasuries? oksana: we have seen a lot of unprecedented things unfold. i would point out the yield on double d's are within a

hair's distance of each other. why would you buy the 5 or 6 when you can get risk-free in three-month t-bills? i.g. is quite tight. about half of it is triple b rated so you have this enormous cloud hanging over the high-yield market and you have names like boeing and paramount. you are reading headlines around their credit quality. are they going to drop into the high-yield index that has serious ramifications for valuations? investors will have to ask themselves, what is priced in and do i want to let an index drag me through the experience of repricing, whether it is caused for higher for longer, or

do you want to have an active management approach that can take advantage of different valuations? one of the cheapest trades right now is buying protection on credit via investment-grade. all-time low cost. we are taking advantage of that. that is not the sort of thing you will see in a market risk driven strategy. manus: you said credit is expensive and there are a number of risks. 74 basis points is the lowest in the century. what is the biggest risk? we talk about the fund flows that will come in, not just migration to the dollar but the flow to the dollar has been immense. what is it that challenges credit? oksana: interesting you mentioned flow to the dollar. if you look at assets coming into the u.s. 15 years ago, they

were overwhelmingly going into treasuries and credit. today, they are overwhelmingly going into equities. there is incrementally less dollars going into the dollar, for less money going into the dollar on the credit side. when we talk about pricing being very tight, spreads being tight, it does not mean we are expecting a recession. the economy appears strong. the problem is when something is priced for perfection, it takes anything other than perfection to move the price. lower rated credit is notoriously volatile. the higher for longer environment, if it does not materialize and we have to live here longer, that is a problem for cash-strapped junk rated companies. manus: steve was with us last week.

steve said there are not very many bond vigilantes left. he talks about a migration to other markets. do you think bond vigilantes can be reborn? are there so few of them? oksana: i like to stick to the facts and the data. where does the demand from treasuries come from overwhelmingly? the fed, u.s. banks, and foreign investors. u.s. banks cannot get rid of treasury holding fast enough. foreign investors are dominated by china and japan. china, we know the issues around the relationship. there are not enough stores of value in the world so china has continued to buy our treasuries but at a lesser pace. the major sources of demand for treasuries are not what they used to be. therefore we are seeing weaker options. i cannot speak to the bond vigilantes but we are seeing some underpinnings in the process of change.

these things happen slowly, and then suddenly. that has been part of the reason we are seeing the long end of the curve migrate higher, along with better growth prospects, and somewhat of a return to inflation. all of these things are not going to allow the 10-year significantly lower, and the absence of some exide goodness shock -- exogamous -- exogenous shock that comes out of nowhere. annmarie: jonathan will be disappointed that he missed this. let's get you an update on stories elsewhere. >> qatar announced it plans to step back from the cease-fire. 10 days ago, the gulf state senate with stalled mediation efforts if the agreement was not

reached in the latest round. now according to a statement from the ministry of foreign affairs, talks will resume when both parties so willingness and seriousness to end the war. let's check in on the congressional races still underway. republicans have secured the majority in the senate with 53 seats called compared to 46 for the democrats. we are still waiting for a final result in arizona where the democrat is currently leading the republican by around 2%. that senate race is still too close to call. in the house, the majority is still up for grabs with 18 races still being counted. the latest calley's so republicans are had with 213 seats compared to 203 for the democrats. bitcoin hit another record high topping $82,000. we are trading below that now. the rally boosted by president like trump's -- president-elect trump's sweep of swing

states. there is potential approval of more etf's from the upcoming government. the value of bitcoin has risen by 90% this year. that is your bloomberg brief. annmarie: thank you. next, we will set you up for the week ahead. you are watching "bloomberg ♪urveillance."

i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one.

annmarie: good morning. . here is the trading diary for the week ahead. tuesday, fedspeak from waller. wednesday, cpi opening remarks. thursday, ppi, plus fedspeak from powell. disney reports after the closing bell we get retail sales. president biden is set to host

president-elect donald trump at the white house on wednesday. mike shepard joins us now. what can we expect from that meeting? mike: it is certainly not the meeting joe biden was hoping to have a few weeks ago. he really has since he took office defied the man as someone unfit to hold the highest office. here we are with biden preparing to host him for a peaceful transition of power. that is a contrast from 2021 when donald trump was refusing to acknowledge the results of the election and even refused to invite biden in for a visit ahead of returning to office. trump is not just going to measure the drapes, he is already plotting out what his new administration will look like.

priorities. annmarie: i'm not sure he needs to be worried about measuring the drapes since he already occupied the office. for me, it is about personnel. this week, we also have a ton of data. manus: we have talked about where robert lighthizer and scott bessent might fit in with other names. who is it that chastens donald trump's policies and interprets it for the markets? dani: are we off to the races? annmarie: the bidding markets were accurate again. thank you for joining me. this was "bloomberg surveillance." and this is bloomberg tv. ♪

>> taylor fritz took out danille medvedev in straight sets. the victory was his 50th of the year. he is making his second appearance at the season finale after reaching the semis two years ago. you can watch all the action live on tennis channel. our daily coverage starts at 5:30 a.m. eastern. ♪

dad: hey boss. you okay? son: i said i'm fine. ♪ dad: you can talk to me. son: it's been really, really hard for me.

matt: we are up again after the 50th record high of the year on friday. 30 minutes until the start of the cash trade. katie: i am katie greifeld. "bloomberg open interest" starts right now. sonali:, have, the trump trade still going strong. the best performance of the year following donald trump's election victory.