>> momentum is a powerful thing. >> the way the stock market and bond market have acted is logical. >> the election result is reinforcing a narrative already in play. >> if you do get the shift back to rate hikes it could go against the bullish sentiment. >> sentiment was already very strong. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: live from new york city this morning, good morning. "bloomberg surveillance" starts

right now with a sneak peek of the price action which looks like this. s&p futures slightly firmer not even .1%. coming into thursday with this equity rally through the week. here is the bond market. price action yesterday really interesting. cpi comes out. 10 year, yields continue to creep higher. 10-year 4.4551. the 30 year 4.62. the next way for hours looks like this. 8:30 eastern, jobless claims. this afternoon chairman powell speaks at 3:00 eastern. the main event in the last 24 hours, a trifecta in washington. annmarie: the republicans are poised to have this trifecta and now they've got it over the finish line. we do not know how big that margin will be or how slim. historically this might be one of the slimmest controls of

congress speaker johnson will have to deal with. with that said he already has problems. he needs to fill three seats. elise stefanik is being trumped to represent them at the united nations. they you have congressman waltz of florida who will be trump's national security advisor. late last night matt gaetz resigned. many will tell you on the republican side he resigned because he is being tapped for attorney general. no. punch bowl news reporting a house ethics committee was going to come out with a report and once you resign that report dies. dani: the thinness of it the market needs to be paying attention to. we have gotten so excited about the regulation. if you have such a slim majority can you deliver on the promises this market believes it will have? jonathan: have to work out the sequencing as well. will it be the push for tariffs,

the push for tax cuts? futures positive .1%. check out the fx market. euro-dollar very close to a 1.04 handle. -.5%. more dollar strength and more euro weakness. we'll catch up with keith lerner, robert casey, and elsa lignos of rbc. stocks on hold ahead of fresh economic data. jobless claims at 8:30. keith lerner of truest writing markets are pricing in most of the positives though the backdrop is complex. the weight of the evidence indicates the bull market has longevity left. keith joins us for more. why do you believe this bull market has legs? keith: great to be with you all. i think the bull market has

proven time again it deserves the benefit of the doubt. we still lean bullish. i also think the range of outcomes as we move into next year will be wider for the reasons you discussed. when we look back historically the bull markets has less than 70%. the earning trends for the markets are still moving higher so i think that is positive. the fed just cut rates. global banks are easing. valuations are rich. sentiments are stretched. it is hard to make evaluation call by itself. as we moved into next year you talk about the regulation and lower taxes likely. that will be offset by the unknowns on the tariff side. we lean bullish. jonathan: we know the risk factor. we have the trifecta but very small margins.

have you taken a view on what the sequencing will be for policy? keith: no one knows for sure but we know tariffs can be done unilaterally to a certain extent. i expect you will see that upfront. when you go back to 2017, the corporate tax rates did not get passed until the end of the year, it is almost good it was out there lingering. let the market continue to move up. i think tariffs first and then you will see more discussion around the tax cuts. also part of the reason why the bond market is not responding more vigorously is any type of tax cuts will be a lot less than what we saw back then. annmarie: when it comes to the tariffs you have a base case of whether we will see 10% around the united states, 60% on chinese imports, or do you think it will be a negotiating tactic? keith: we are all guessing. history suggests it will be a

negotiation and there will also be a difference. when we talk about tariffs a lot of this is lumped together. there has to be a difference between china and the rest of the globe. president trump china as a national security risk and therefore implementation is likely to be quicker and faster. the rest of the globe, that will be part two. all in all we have to be careful. if we go to 60% on tariffs, it is a sales tax. on the consumer side we will see that move up. how much does president trump want to see prices moving up right away? part of it will be a negotiation. i expect some tariffs to go into effect and china to be number one on that list. annmarie: we got a number of nominations yesterday, and many are saying, especially many lawmakers in the senate are shocked and think some of them

are unconventional. you think that could degrade trump's priorities and be market negative? keith: as we have continued political uncertainty, leading bullish by the policy outcomes is wider. i think we will have to deal with this on a day-to-day basis. there good and bad aspects. maybe with such close margins transformational change will be challenging, but if he does not get something done through congress he may look at what he can do unilaterally, and some of those things are tariffs and immigration. we will have a lot more to write about next year, a lot more twists and turns. when i think about the market perspective, i have to go back is the economy likely to go into recession next year? our answer is no. there might be more policy uncertainty but i do not think trump who probably campaigned on a better economy wants to see the economy in recession the

first year. that is a positive for the market because that could then support corporate profits which are expected to grow double digits into next year. dani: when it comes to corporate profits, if we have a scenario where global american companies are abroad and confronting a scenario where they need to move back to the u.s. or face higher tariffs, is that not going to be an issue with margins? are they not going to have to do more profit sharing with american workers? are we about to see a squeeze on the horizon? keith: the question becomes what industries. on the margin, yes, but on the others, if you have someone lower taxes there will be offsets. also going back to margins, another part of the margin stories interest rates. a lot of corporations are locked in at lower rates. we think the fed moves lower next year even if they do it at a slower pace.

what we are talking about this morning is a huge range of crosscurrents. i have confidence that once we know the rules of the game, corporations will adjust. the last five years we had a once in a generation pandemic and saw the highest inflation since the 1970's. corporations have had record profits. some industries will get hit more than others but eventually corporations will adjust. dani: how difficult is it to be a medium-term investor right now? how difficult is it to build a portfolio for the next four years when we do not know how things will shape up? keith: the future is always uncertain. as you extend your time horizon from four years to 10 years, the probability of success improves, regardless of who is in the white house. i know there is so much focus on

the policy out of washington. we also have to remember that institutions and corporations are a big driver of the overall economy. from that standpoint we are still positive on equities on a relative basis for the next 10 years, even though as we move into next year this really serene environment we have seen this year like the market up 25%, low volatility likely going to shift. the underlying trend is still positive for u.s. corporate profitability as well. the one thing is technology, ai an interesting note out of the palantir earnings report. they talked about one of the major insurance companies for underwriting, they cut their process and automated it from two weeks to three days and then talking about the government side, they talked about disclosures the government has to give to foreign governments around intelligence sharing that they cut that from three days to

three hours. there is also a productivity side of things i do not want to get lost because of what is happening in washington. jonathan: i want your thoughts on nvidia. reports are weak today. how nvidia dependent do you think this equity market is given the changes we've seen postelection? keith: as we move a couple weeks past the election we will get back in focus. it is a very important report because technology is over 30% of the market. semiconductors have been making relative lows. nvidia, broadcom, and everyone else. there is a huge divergence within tech. with such a big allocation at the magnificent seven being such a big part of the market, that report next week will be important. also our thoughts there more to go in this rally. if that were do not meet expectation, which they think we

will, that could be a risk. jonathan: youth learner of truest. -- keith learner of truest. with an update of stories elsewhere, let's get your bloomberg brief. yahaira: donald trump continues to fill out his cabinet. former congressman matt gaetz has been tapped as attorney general designate while former congresswoman tulsi gabbard is the pic for director of national intelligence. marco rubio is his pick for secretary of state. treasury secretary is still unknown. the wall street journal reporting can't are fitzgerald ceo is making a late play for that role. the sweep is complete. republicans have maintained their majority in the u.s. house , giving them unified control of the government. the republican win strengthens their hand to enact immigration controls and reduce regulations. the trifecta control sharply

diminishes any hope for democrats to control trump's sway over trillions of dollars in expiring tax provisions. manhattan apartment rents climbed in october to the highest level in three months. the median rent in the bureau rose to just under $4300, a 2.4% increase from a year ago. analysts say would homebuyers put off by high rates are keeping the rental market active with high demand. new lease signings in manhattan surged 24% in october from a year earlier. that is your bloomberg brief. jonathan: more in about 30 minutes. up next, the republican trifecta. >> i believe it will be the most consequential congress in the modern era, the most consequential administration. frankly we have to fix almost every area of policy. jonathan: that conversation is up next. live from new york city, good morning. ♪

at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real.

jonathan: euro-dollar seconds ago 1.04 handle, the low of the session. 1.0 497. right now .0504. the target from jordan rochester 1.03. i don't know if we make it to the end of the year before we get to parity. dani: it could get even worse than all of the estimates. deutsche bank says if we see the full force of trump policies we will see below parity. a very basic trump tariff, slight tit for tat would be parity. jonathan: elsa lignos of rbc joining the program later. under surveillance this morning,

the republican trifecta. >> the theme you will hear from all of our members is we are unified and energized and ready to go. serious times call for serious leadership. it will be a policy driven administration and congress. i believe it will be the most consequential congress in the modern era, the most consequential administration. frankly we have to fix almost every area of public policy. jonathan: a red sweep taking over washington as republican secure a house majority, holding at least 218 seats with a razor thin margin. donald trump's priorities coming into sharper focus. bob casey saying "we believe president elect trump and trade advisor robert lighthizer are committed to implementing an executive -- an aggressive tariff agenda." the sequence is a big focus for financial market participants. you think it will start with trade and start with europe.

rob: they will not wait on china for very long. we think europe is the day one priority. we do not think trump likes europe a lot. essentially we are dealing with what is not a net neutral landscape but annette negative landscape. deforestation, steel, all these tripwires. the pro-eu presidency of joe biden was not able to handle. we think trump comes into office with all of those tripwires laid out, not looking to avoid them. annmarie: the governor of florida is in italy on a trade mission. who do you think trump abuse is someone he can work with in europe? rob: i think it is victor or bond first, and that it will be giorgia meloni second. annmarie: when it comes to tariffs, personnel is policy. where does he put robert lighthizer? rob: we think he could go back

to ustr. if i am robert lighthizer i am looking for a larger portfolio. a bigger role. jonathan: let's talk taxes. let's talk about what can actually get through congress in your view on what took place in the senate and the senate and last 24 hours. how constrained will this presidency be by a senate that for some people stare down the president-elect and made some decision about going a different way? rob: we can be relieved it will be john thune who is an institutionalist. to the extent it is not rick scott john thune presents a little bit more of a constraint but he has 53 votes in the senate, so i do not think it will be a huge constraint. annmarie: but senator thune has said he will not get rid of the filibuster, but the only thing the senate can do with that kind of majority is tax and budget? rob: totally. we think it will be a very big budget reconciliation package. they are talking about getting it done in the first 100 days of the term.

we also have to realize we are running up to a budget cliff in december. they will have to pass acr in the short term. if they pass it after january in february they will have to deal with the first larger reconciliation package after that. there is talk about extending the cr to september, october, november to give them that first 100 days latitude to get the budget reconciliation deal done. annmarie: what you make of how the confirmation hearings are going to go? rob: i would predict matt gaetz does not get confirmed as attorney general. he may wind up in the sacrificial lamb of the cabinet picks. everybody else probably gets through. trump can lose one or two republicans and still passes nominees. hegseth will probably be a more difficult process given he is not on the books regarding policy at all. i think matt gaetz get struck down and everybody else gets through. dani: hegseth and matt gaetz

show trump is willing to nominate people not on anyone's list. does that show us we are too sanguine and when we get a treasury secretary we will get a market pick? rob: on treasury i think it will be bessemer or latin. -- or lutnick. that is sort of good news. we have to be honest that trump received a national mandate and he is going to put people into these jobs that he likes and are very loyal to him. he is not going to apologize for it, he does not have to. he won the national popular vote. do i think we could get more surprises from here or more trump acolytes from here, whether or not it is a surprise? i think we could. dani: does thune's lifting up as leader say there is some

resistance to trump? rob: it is clear the senate will not roll over for trump every single time. i think john thune will be a strong majority leader. to the extent he wants to stand up to trump i think you will be able to. on tax policy and on tariffs, think most of the republican majorities are in line with trump. john thune will not stand up on policy. you may stand up on some of these personnel decisions. annmarie: when trump went to the house and also had the meeting with joe biden, he brought elon musk. i wonder what the presence of elon musk does to affect sentiment in capitol hill? is there a almost an element where the to follow the money and mosque represents a -- and elon musk represents a greater threat and funding challengers to those who do not support trump. rob: one of the biggest stories of the next two years will be trump and elon musk falling out. that only works for so long. it seems as though elon musk is

attached to donald trump's hip at this point, he has this government efficiency mandate, we will see how that goes. the republicans want to keep them on sides until the midterms, definitely. will trump be able to keep him friendly? it is easier said than done. jonathan: you think democrats could have avoided this if they had shown as much love to elon musk as they have to mary barra of gm? would this have been avoided? rob: in terms of trump's broader universe, it was there for the taking. for elon musk it was there for the purchasing. to the extent democrats were nice or not to elon musk, less important because trump was able to give mosque -- to give elon musk what he wanted, which is power. annmarie: yesterday there was a report that the reason kamala harris did not sit down with joe rogan's because they were worried about the progressive pushback.

how does the democratic party pick up the pieces? rob: there will have to be a reckoning. in this global landscape it is hard for any incumbent in ministration to get reelected. we've not seen that happen across the board. i think kamala harris was running from behind from the get-go. that being said, democrats have installed this message that is incredibly left on social issues and pretty moderate on economic issues and i think most voters want the opposite. they want a populist economic policy that will lift up manufacturing at the working class and they want to hear less and less about some of these social issues. i think democrats have to inverse the messaging. annmarie: the midterms are in two years. how do they prepare for that? rob: in two years i think it'll be hard to turn the party around 180 degrees. it is hard to steer a big boat. for the next two years they will tit-for-tat against trump.

they will be able to run against trump in the midterms. most of the time and incumbent party does not do well in the midterms as you well know. for democrats the biggest challenge is what is the proactive positive message for their democratic nominee? it will be a major fight we will see. 10 to 20 folks in the nominee race. what is the message from the primary that emerges? it is four years from now. jonathan: i was going to ask, do you have a name to watch? rob: i think pritzker from illinois is my dark horse candidate. not adc figure but he can be democrats billionaire in relation to trump. he is tough talking, he has come outpost 2024 strongly in favor of many democratic messages and strongly opposed to trump. i think it is the strong figure that has to be at the top of the ticket for democrats in 2028. jonathan: bob casey of signal

level advisors. next year not much clarity. very cloudy outlook. where you have conviction right now is in foreign-exchange. most people believe the policies out of this white house will lead towards a stronger dollar and a stronger dollar is what is being priced. euro-dollar dropping to 1.04. right now .05, a new low. seemingly headed towards parity. i cannot find a single person right now who is bullish on europe. we'll catch up with elsa lignos of rbc on a riproaring dollar rally. this is bloomberg. ♪ 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. ♪ ♪

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

jonathan: a week today we get earnings from nvidia and then we will not be talking about a trump election win and policies for the white house for the best part of five minutes, we'll be talking about the nasdaq. the nasdaq up .1%. outperformance on the small caps. small caps on the russell up .5%. fascinating price action in yesterday's session in the bond market. the tug-of-war between the front end of the curve and what was developing farther out on the curve. seemingly the fed has a bias to ease and seemingly the cpi data

of yesterday leaves the door open to cut rates in december. for many people that easing bias is contribute into longer rates pushing higher and they pushed hire a bed in yesterday's session. dani: because you get 50 basis points of cuts and we off to the races. the market was happy to price and 80% odds we get a cut in december. it is almost as if this market is talking out of both sides of its mouth. part of the problem is the fed itself. we heard from a lot of fed speakers and they are having a completely different conversation than the market is having. jonathan: europe having a very different conversation to the one we are having stateside. the same policy producing diverging consequences for europe and the united states. euro-dollar breaking down to 1.04. it is a fifth day of euro weakness and we all understand the policy. if america puts big walls up around its economy, most people assume that will lead to higher interest rates and a stronger

u.s. dollar. what it means for europe, what aspect of this story, there is overcapacity out of china? we will have to eat it? it will have to be the europeans. this could mean a disinflationary boston the european economy. -- this will meet a disinflationary bust in the european economy. dani: click because of the stronger dollar you get tightening conditions in europe and in ecb that needs to respond by cutting more, it is a doom loop that could be exaggerated by china. the pain is in the euro. the yen is under stress but not nearly as much as europe. jonathan: look out for elsa lignos of rbc in just a moment. president-elect donald trump nominating matt gaetz to be ternium general, matt gaetz resigning from congress after the announcement. trump also tapping tulsi gabbard

for national intelligence and marco rubio secretary of state. annmarie: on that board you have a conventional name like senator marco rubio. then you have these unorthodox names like tulsa gabbert who has been very friendly to russia, and individual who has down with bashar al-assad and said he is not an enemy of the united states and that there is matt gaetz. terry haynes said trump second time around started looking like a more professional operation. that was on monday. matt gaetz resigned and that house ethics investigation, there were going to vote on where to make it public, that dies. jonathan: this is very distracting. the market is still very focused on one position, treasury secretary. the producer of the show wants to be the star in the producer of the transition team, the co-chair is harold let nick who is putting his hand up and saying i want to be treasury secretary. annmarie: wall street journal front page is saying he went to

trump and said i want to be the treasury secretary. he set around this table and i've had conversations where he said he is out there looking for the best names possible to staff this government. it turns out he is looking to staff himself which is why i said he is the producer, he is supposed to be organizing the staff and now he is throwing his name into the ring. dani: who knows how well received that will be from trump but is a real risk with matt gaetz appointment, with hegseth that we get someone totally unexpected. going back to matt gaetz, nobody was betting on him. there is a real risk that could happen for treasury secretary. annmarie: then you look at the other most important cabinet pick, arguably for the market the most important pix will be secretary of state and secretary of the treasury. secretary of state went with someone who everyone in washington is saying this is someone who is serious, this is someone of significance who has serious depth on the policy

issues. if you are donald trump and you know the markets and we sit around the table and talk about how he is regulated by the dow jones industrial average, if you note those are the most important places where personnel meets policy, that is one where will not take summit out of left field. jonathan: which is why most people think the favorite is still scott besson. maybe we get an announcement. if you wanted to schedule this as a tv producer when would you do this? annmarie: i would do it either this evening or sunday evening. jonathan: hopefully we get it this evening. let's talk about republicans keeping control of the u.s. house. the win limiting curbs on trump's and making it easier for regulation controls and tax cuts. what can we get done with this limit geordie we have? annmarie: tax and budget -- with this slim majority we have. annmarie: tax and budget.

everything else will need 60 votes. other than that it will be very difficult. that is why the market likes it. there looking at tax cuts. jonathan: this is the trifecta of the market was looking for on the evening of the election win of donald trump. the washington post reporting israel is rushing to advance the cease-fire deal in israel, aiming to deliver an early foreign policy win for president trump, calling the deal a gift. annmarie: this after individual went to mar-a-lago. this is the name brain trust for benjamin netanyahu. little be interesting is the work is being done on the cease-fire with lebanon agreement of the biden administration. if they were gifted this when trump walks into office, you will have both sides taking credit. jonathan: this new cycle is moving so fast. remember this in 2016 and 2017? you step away from the phone for

an hour and you come back at it is headline after headline. dani: the other element is so much of the news happened overnight. even tracking the market, the volatility overnight was bigger than during the day. we need to get used to not sleeping or maybe waking up early and saying that is a new policy. annmarie: when president-elect trump was 45 i was in places like iran and moscow and he would tweet and meetings would move. oil ministers would freak out about what he was saying about the oil market and go into another room and decide we need to change our approach. jonathan: he has a seat at opec, not literally but kind of. dollar strength continual's -- dollar strength continues in the aftermath of donald trump's wind. elsa lignos of rbc writing "the fact that the u.s. dollar is already strong creates a high hurdle for further gains but a few things make us think dollar gains are not get exhausted."

elsa, welcome to the program. share some of those things. what are the things they give you confidence that maybe this is not exhausted? elsa: we first have to take into account what the starting point was. for some people it was 1.12. that for me is not the starting point. that was a condition where we were pricing in real weakness in the u.s. economy. people it freak out over the softness in payrolls. people were talking about back to back 50 basis point cuts. that is not the neutral starting point. we were at 1.08 just a week ago. i was on bloomberg with some of your cohost three days after the election and the euro-dollar was just shy of 1.08 and it felt strange with trump having won the trifecta, the fact that euro-dollar was still sitting at 1.0 848 hours after the election did not make sense. here we are, 1.05. we have gone further towards

pricing in a more aggressive version of trump. as he has shown with policy pix this will not be a conventional administration. there is room for this to run a little bit more. jonathan: i cannot find a single person that likes europe or the euro -- we all like europe, but that likes the european economy or the currency. i am looking at spreads. two year. the differential between europe and the united states. that is 2.20. that is the spread between the front end of the german curve and the back of the u.s. curve. rates have done a lot of work. you think it is sufficient to say we have priced in a lot of the rate divergence, maybe it's time to get long the other side of the trade? elsa: funny enough i was asked that same question a week ago and back then i was definitely no way. today it is more two way. here is why think it has more room to run. we have had a lot of people

talking about the german election in the room for fiscal stimulus. i think you will get easier fiscal policy on germany but it will not be the game changer that leads to real rewriting of european growth expectations. what we are talking about in terms of tariffs, i do not think trump will aggressively go after europe. if he goes after china we are talking about diversion of trade. europe will be competing with china for the rest of world export market and we know a lot of europe's growth in the last two years has been driven by exports, not domestic consumption. until we see signs of that changing i do not see this of having run its course. dani: which is the bigger loser, is it euro or next in and the peso? elsa: reason people are positioning in europe and are more cautious with the mexican peso is this is the trade that is hard to time. a lot of the initial policy moves may take three months to

play out. the mexican peso is a different currency to sit in and wait for to play out, paying the negative carry. with europe you do not have problem. we have not talked about the korean you want. -- the korean yuan. we have the perception the central bank is sitting on dollar korea. that is what investors are looking for at the moment, these positive carry trade that also benefit from potential escalation in the trade war. annmarie: how do you decide a rate at the moment when it comes to the dollar? how much of that is about preparing for tariffs and the strong data has been the robust growth we continue to enjoy in the u.s.? elsa: for me a lot of the move from 1.12 to 1.08 was more about the data than anything specific to trump. in the first few days after the election a lot of investors i spoke to were saying this makes no sense or were saying he will not be an active interventionist

. he will be more chairman. he is regulated by the dow jones. if he pursues policies that aggressively weaken the equity market then he will stop and pause for thought. the reality is there is a lot he can do that is quite damaging to other countries without damaging the u.s. itself, if anything help in the u.s. and equities, particularly small caps. when you look at where we stand at the moment, a lot of what we saw through up to over was about the strength of the u.s. data, even early november. it is now we are starting to price and the more extreme trump policies. annmarie: i would love to get your thoughts on the yen. you expect verbal intervention out of tokyo? elsa: absolutely and i think we have seen a low bit of that already with the comments earlier in the week. the yen is interesting because it was the biggest loser last

year when we were seeing the real rate raising of u.s. rates. for me now i am a little bit more cautious. you know we've been yen bears for a long time. that is not to say i do not see dollar-yen going up, i do, it is just not the most obvious way to express the dollar strength in the trade war world. not least because up a look at the yield japanese investors are running on their overseas stock assets it has been creeping up over time. unless you get the fed back to hiking rates dollar-yen is not the runaway trade to the topside it was in years previous. annmarie: then what is your favorite in terms of the top three to express that dollar strength? elsa: i think dollar korea has the real room to the topside. euro-dollar for me has more room to run to the downside. for the yen i would also -- i would almost be taking the other side of the trend. swiss-yen is one we've been watching it while.

it appears to be breaking that rising up and that is when i have my eye on. jonathan: always appreciate your time. elsa lignos of rbc following a new low for the euro in the past 15 minutes on euro-dollar, breaking down to a 1.04 handle. numbers from disney, beat on the top and bottom line and the three-year outlook, disney projecting high single digit growth in earnings for fiscal 2025, double digit increases in tory 26 and 2027. the stock is falling just a touch. we are down 3.6% in the premarket. with an update on stories elsewhere, here is your bloomberg break. yahaira: shares fell in taiwan for a pi phone assembler despite the company reporting stronger-than-expected quarterly profits. boosted by high command for its servers powering artificial intelligence. the company expect ai server

sales to make up 50% of its total server business in 2025. it did caution it smart consumer products business will show a decline this year. meanwhile the pennsylvania senate races headed for a recount. right now republican dave mccormick reit's republican bob casey by 30,000 votes, which falls within the range for an automatic recount. over 80,000 provisional and mail-in ballots have yet to be recounted. casey's campaign has yet to concede the race despite multiple news outlets calling it for mccormick who gave a victory speech in pittsburgh. mccormick's when would give republicans a crucial 53rd seat in the senate. new york governor kathy hochul plans to relaunch congestion prices for drivers entering parts of manhattan months after she abruptly pulled the plug on a $15 charge just before it was set to start. she is expected to announce a new initiative today with a nine dollar charge. donald trump opposes the plan

and with his inauguration scheduled for january 20, the governor has limited time to avoid the incoming administration blocking the program. jonathan: this is why people do not like politicians. that story. they wait for the election, a week later they start going through with it. annmarie: they will have an opportunity at some point to vote politicians out or in. i do not see anyone in new york being on board with this congestion pricing. jonathan: absolutely not. up next, inflation back in focus. >> i think inflation is headed in the right direction. the bigger risk is if we are landing around the 2.5% level instead of back down to 2%. jonathan: that conversation up next. live from new york city, this is bloomberg. ♪

jonathan: let's check out the price action together. equity futures just about positive. bond yields still very close to 4.45 on the 10 year. under surveillance, inflation back in focus. >> right now i think inflation is headed in the right direction. i have confidence but we need to wait. we have another month or six weeks of data to analyze before we make a decision. the bigger concern is if we are landing around the 2.5% level instead of the 2% level. i think those risks existed before the election there continues to be uncertainty now and we need to take our time and let the data come to us and let that guide us. jonathan: traders adding to bets the fed will deliver another rate cut in december following yesterday's inflation data. changes from the white house clout the outlook.

cassie barrow writing "the fed remains on track to cut in december even after cutting the last two meetings. the fed still judges current policy as restrictive and the labor market no longer to be an inflationary force. we agree with the fed's assessment of the current state. " you disagree with the fed on the outlook? you get to speculate even though chairman powell says they do not. kelsey: the current state is all we can really know. beyond that there is a lot of uncertainty about what comes next and that is why when you look at 10 year yields and a fair value model, the fair value model, just looking at the current inflation data, the current labor market data and the path for the fed funds rate prior to the election would have told you the 10 year yield now is fair, around 3.5% to 4%.

that is obviously not the environment we are in. we are dealing with a lot of uncertainty come increase in term premium, a range in that environment where everything is on the table for now until it gets taken off the table. you have to anticipate a much wider range for the 10-year treasury yield. jonathan: what kind of guilt? kelsey: 4% to 5%. we are right in the middle and where you reach resilience is if you get to a certain level on tens and 10 year real yields which i am watching. you get around to percent on those and that is were risk assets start to wobble. you will see some resistance. on the bottom half as well you will also see some resistance. we are still in this environment where anything is possible and nothing has been fully taken off the table. dani: not only did powell dismiss the politics, he

dismissed the move higher in long-term yields. there -- they are where they were when we last heard but is this a bond market that will try to find those levels that does concern powell and make him pay attention? kelsey: not necessarily. it depends on how the data will flow from now until the next meeting. it was interesting the reaction you sought to cpi, there was a lot of concern cpi was going to come in hotter. the debate we were having before the election was all about slow down versus read acceleration. we are still having that debate today. that has not changed. we look at inflation report that says things are fine, we are not worried about read acceleration, we will have the same back-and-forth ahead of the payrolls report as well. we think the more likely outcome is you will continue to see things slow down, you will see things moderate.

in the event that things look like they are re-accelerating, and that is even before any fiscal stimulus, then the market will try to test the upper bands of those levels. dani: one asset class this has been notably absent from the debate is the credit market with spreads the tightest of the century. as we go back in the debate and of three acceleration narrative picks up again, where does the market cap? can it get tighter than it is now? kelsey: i think it can. i was here on election day and we were talking about the fact we did not have the information advantage to be taking a directional view on duration ahead of the election. we are hoping to see dislocation. in the rates market we have seen a lot of dislocation. the move has been fairly orderly. what are we doing instead? on duration if you're in benchmark account we are staying close to home. if you're a non-constrained

account move that duration somewhere else like europe where the story is increasingly diverging from the u.s.. outside of your duration positioning, the one area where across-the-board we have continued to embrace throughout the year has been credit. that is because most of the year credit has been grinding tighter because we have been in an environment of the soft landing. we are still debating that soft landing, but we have the tail wind coming from certain parts of the trump agenda. while i think we can debate from now until the end of the show the direction for treasury yields, where we do have a lot of confidence is on the corporate fundamentals, the strength in the credit market, and the one thing i've taken away from the last few weeks is there is always this battle between those who care about spreads and those who care about all in yields. i think is clear who has won

that battle. does the all in yield buyers. they have been coming in, the demand has been incredible, and that is why in the month where we have the red sweep everyone was talking about that was going to blow the bond market out of the water, high yield total returns have been positive. spreads and moves have offset the move higher in risk-free rates. jonathan: it is hard to argue with that. spreads are super and keep getting tighter. kelsey berro of jp morgan asset management on treasuries and on credit. the next month looks like this. the payrolls report december 6, cpi december 11. the fed decision september 18. this will flyby. this is the road to year end. up next week catch up with mohamed el-erian, eric lee of citigroup on commodities and dan ives of wedbush on why tesla is flying high. from new york city, this is

bloomberg. ♪ ere ya headed? susan: where am i headed? am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence... the answer is j.p. morgan wealth management

drop everything and get some magic of your own when during the xfinitywith black friday sale. xfinity internet customers, our best deals of the year are back! switch to xfinity mobile and get your choice of a free 5g phone, plus your next unlimited line free for a year. get amazing savings and connect to wifi speeds up to a gig on the go with xfinity mobile. fly don't walk to get our best deals of the year. connect to the world of wicked this holiday, only in theaters november 22nd. - 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.

>> there is unknowns out there in the unknowns are all around inflation. >> higher tariffs, deportation, and fiscal stimulus will boost inflation. >> what is getting messy is try to figure out tariff impacts. then you have the dollar moves which make it even messier. >> policy uncertainty will continue. at the same time the 40 will continue as well. >> a terra for a tariff will

make the whole world for. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan:, good morning. the second hour bloomberg surveillance begins right now. the outperformance on the small caps continues. the rustle up .7%, the s&p up only .1%. in the bond market interesting price action. two your yields declined, 10 year yields keep climbing. the 10-year stabilizing. the spread between europe and the u.s. bond market widening over the last week and producing a much weaker euro. euro-dollar breaking down to 1.04, a new low for 2024. in the next 24 hours, this is where the attention will be in financial markets worldwide. we get jobless claims data at 8:30 eastern alongside the latest read on ppi and this afternoon we hear from chairman

powell at 3:00 eastern on the outlook for the u.s. economy. annmarie: i am interested whether he takes the bait at all the talk about the markets. he can ignore the politics but the markets are sending a clear message. lori logan set at some point the need to be concerned about the rise in bond yields because it is making financial conditions too tight at a time they are trying to ease. it is a question she posed. powell has stayed away but maybe we can get to the point where he cannot avoid it. jonathan: the market is speculating on the future of policy changes. what did we hear from chairman powell? we do not speculate. this is why we've seen so much daylight ever how the fed's talk about their future and how market participants are. annmarie: the political economy will lead the central bank in 2025. they will have to start talking about it when there will be policy changes. what did we learn overnight? they were able to get the trifecta. the question is how big of a

margin republicans will have in the house. what did they do with slim majority has to do with the taxes and the budget. jonathan: priorities, what you think the sequences, where the priorities now that the trifecta is secure? annmarie: please get us the 40% tax rate you promised even with conditions. the issue is it could take a while for this to turn through congress, especially if they have a slim majority. you cannot have 218 kings walking around and wanting something to receive for their vote. potentially it could be tariffs because that trump can do unilaterally. s&p futures up .1%. a snapshot of things in the foreign exchange. the dollar has been strong. euro-dollar down a third of 1%. a fifth consecutive day of euro weakness. we catch up with mohamed el-erian on inflation concerns, heidi of the council on foreign

relations come and dan ives of wedbush on tesla's postelection surge. we begin with the equity market rally stalling in 10 year bond yields inching lower. as the tug-of-war between the latest economic data and policy changes from the white house clout cielo for the federal reserve. joining us to discuss is mohamed el-erian of queens college, cambridge. i will start yesterday morning, 8:30 eastern time, cpi drops, we were looking for you and you were not here. what is your response to that data? at the moment the market is gravitating to paying more attention to levels. the federal reserve seems more gripped by the current trend that encouraged by it. where you focused on? mohamed: sorry i was not with you yesterday, i was on the road. what i am focusing on was summed up really well by john authers of bloomberg opinion. today he had three messages.

one is the fall in inflation is stalling. two, if you look at the components, they suggest it will continue to stall. three, if you look at the work being done in different groups of economists within the fed. they confirm the group got a sleep percent inflation rate. i think the equilibrium inflation rate is between 2.5% and 3%. if you continue to target to percent you will have difficult choices and that is what is facing the fed right now. jonathan: you think they are slowly realizing they are not as restrictive as they think they are? are you seeing evidence of that start to creep into some of the speeches you are hearing from fed officials? mohamed: i think they are backing away from the view they expressed in the last meeting and i think what we are getting is maybe i can live with 2% plus for a while because otherwise

they are in a really difficult situation. the market was relieved because the market did not look at the fact that core inflation is stuck at .3 for the third straight month. the market was worried the numbers would be higher than forecast and that cannot happen. dani: the bls reported that over half of the inflation we saw came from shelter prices raising. claudia sahm said we did not have an inflation problem, we have a housing problem. we have seen the fed cut rates in mortgages move higher. how do you solve inflation problem underpinned by a fickle housing market? mohamed: i don't think that is the only issue but it is an important issue. i will point you to john authers's note, you can tell i really like it because he does such good detail work. when he looks at the measures,

the problem is services. within services is wages. it is a good thing for the average american their real wages are glowing -- are growing more than 1% but it is feeding into services. that is the big issue. it is happening at a time when grocery inflation has come down a lot. negative price increases for certain food items. the concern is services will not come down fast enough inflation wires before goods inflation starts going up. annmarie: if we will be in environment -- dani: if we will be an environment where trade is the priority of the white house, tariffs will be put on, and american companies are forced to come back and pay american workers, is this problem not going to get a lot worse? mohamed: i am in the u.k. when the companies say the minute my costs go up i will pass it on.

you hear that over and over again from companies in reaction to the budget. there is this mentality in the corporate world that forget about your profits, forget about all of the dividends and all of the shared buybacks you do. if your costs go over you should pass it on to the consumer. there is that risk. i want to stress that it is hard to model the president-elect's economic promises. first you have to decide how many will be implemented, and then you have to decide the counter forces. tariffs are inflationary. the higher budget deficit will tend to put pressure. on the other side, you of major deregulation and a major promise to act on the expenditure side of the budget. when you look at these things, even when you start to knit it

out, and then the second round effects get complicated. i tell people regardless of what happens, we now have inflation that will not go to 2%. before you jump immediately to what will happen next, understand you have to wait because it is really complicated economics sorting all of this out. annmarie: you have a new piece out and you say once again it was the economy, stupid and product syndicate. are you trying to answer question our own colleague asked jay powell in the press conference, which was did you learn anything about americans think about the economy from the election results? mohamed: it is fascinating. there were two economic messages sent and they are both correct. there was the one the republicans pounced on, repeating the 1980 rake in are you better off, they were talking about the price level. people still have sticker shock

when they go to the grocery store. that is what the average person focused on. annmarie: you asked a question in your piece, will the democrats and establishment "experts" get the message. will they? mohamed: they have not so far because they are focused on economic exceptionalism. in a k shaped economy that does not trickle down. the democrats stuck with economic exceptionalism and did not understand that message was not getting through for good reason. people were concerned about the price level. you know the more you tell someone a message that does not speak to their reality the more they question you, the more they lose trust in you, and the economists did a terrible job of trying to reconcile the two views, which are reconcilable. unfortunately the reality is

people will focus on the price level because this is been such a large shop. that has not gone away. jonathan: head of the election you are looking at what was happening in the bond market in this line came up in your bloomberg opinion column. "while most analysts agree on the list of potential contributors to this unusual development, there is little consensus on the relative importance." he went on to say that over the next week we should get clarity. you have clarity on what is driving long rates? mohamed: i have more clarity on what is driving long rates and it is exactly what you've been talking about. the market's front running economic announcements, including who will be in treasury and that will be important saying that really matters. just the economy has continued -- and in europe, -- things have

gone the opposite direction. the yield differential between 10 year treasuries and 10 year german government bonds are over 200 basis points. there has been a massive move. the market has understood that divergence is a major story going forward. jonathan: how much more divergent can things get? we've already seen aggressive widening. i was saying that the front end only back in september that was trading around 1.30, now it is up 2.20. almost a 100 basis point move. how much wider can things get? mohamed: i think they can get wider. if you look at the good and the bad and the ugly of the global economy, europe is in the ugly. cyclically they are challenged. secularly they are challenged. there is no definitive political

leadership in the two countries where you need it most, germany and france. there is a roadmap, the mario draghi report, but they are nowhere near talking about implementation. these dynamics today mean if you are lagging, you are likely to lag evermore. it would not surprise me if you see the differential go higher in the euro go weaker. jonathan: that makes it easier to call the ecb for 2025, they will cut interest rates. there is overwhelming consensus the fed reduces rates in december. i would love your base case for 2025, how you are thinking about how much work this fed can do and whether you think ultimately in terms of how the communication has evolved we are setting ourselves up for applause into 2025? mohamed: i agree with you that we are likely to see another 25 basis points cut in december and we should see another 25 basis

points cut. longer-term, the range if you look at the dots of where is the terminal rate, wherefrom -- we are at 3.5% -- 2.25% to just over 3.25%. i suspect that now is about 4%. that is -- we will have a couple more trots and then it gets really hard to cut more unless you're willing to have the difficult discussions. this is not a fed that is willing to have a div up discussion. this is a fed that will continue to stand behind this notion of data dependency and this is a fed -- a fed that may be bailout by inflation the wrong way meeting inflation does not go to 2% and they will say is not our fault. jonathan: i could talk to you all day.

what you mean about the difficult discussion? what is the discussion you would like the federal reserve to have as soon as today? what would you like to hear from chairman powell at 3:00 p.m. eastern? mohamed: i am not expecting to hear the question is 2% still the right inflation target. he will not touch this. hopefully behind closed doors they are. even if you do not want to change your inflation target, the path to that really matters. i am hoping they are having a discussion. what is the right way is economy. that discussion if you had it without the historical context and without the legacy of having missed so badly on your inflation target since 2021 would be between 2.5% and 3% that is not a discussion he will ever have publicly.

not this fed. jonathan: appreciate your time. mohamed el-erian. he mentioned john authers's column. you can find that online and on the bloomberg terminal. let's get you stories from elsewhere. yahaira: disney shares are rising in the premarket ever fourth-quarter sales and profit beat wall street estimates. the star behind the solid results was the company streaming business, with subscribers for disney plus climbing to over $158 million. disney also saw strong growth from its film studio with hits like inside out to -- inside out 2 and deadpool and will reign. -- underscoring the turnaround efforts put in place by ceo bob iger. capri shares are lower in the premarket and tapestry shares are rising 6.6% after the fashion companies agreed to call off their merger. the $8.5 billion merger is set

to end after the u.s. court froze the deal due to objectives -- due to objections from antitrust regulators. tapestry had wanted to join forces with capri, whose biggest brand is michael kors, but the ftc oppose the deal on the grounds it would harm competition in the market for luxury handbags. crypto predictions betting by form poly market is under investigation by the department of justice. the platform allegedly accepting trades from u.s.-based users which -- the fbi search the company ceos apartment and seized his phone just over a week after the election betting platform successfully predicted president donald trump's win. jonathan: thank you. up next, the transition begins. >> look forward to having a smooth transition. we will do everything we can to

make sure you are accommodated. >> i appreciate it very much. >> a transition that will be as smooth as it can get. jonathan: we ought the same question. who lived that fire? -- who lit that fire? that conversation coming up. this is bloomberg. ♪

i can't believe you corporate types are still at it. just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars.

(clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah. jonathan: equity futures positive .1%. later on this morning, ppi did an jobless claims. under surveillance this morning, the transition begins. >> mr. president-elect and former president, congratulations. >> thank you. >> i look forward to having a smooth transition. we will do everything we can to make sure you are accommodated. >> politics is tough and it is

in many cases done a very nice world. it is a nice world today and i appreciate very much the transition that is so smooth it will be as it can get. jonathan: president joe biden hosting donald trump in the oval office calling for a smooth transition as multiple reports indicate the man overseeing trump's transition team howard lutnick is making a late play for the role of treasury secretary. joining us is heidi from the council on foreign relations. welcome to the program. people or policy? what are the signals you are taking away from the current transition? heidi: on the transition, the irony of the conversation between president biden and trump is the incoming biden administration had anything but a smooth transition. it was a complete restriction of access to various agencies having been on the others of

that. there is a bit of irony in that statement. we have had quite a few surprises in the past 24 hours. for treasury secretary everybody is jockeying in the press and lobbying the president and his advisers for this very key treasury secretary position. given the past 24 hours i would be open to surprises that are on nobody's bingo card. we have seen, in particular the naming of matt gaetz for attorney general and kelsey gabbard for director of -- and tall see gabbard for director of national and -- and tulsi gabb ard for director of national intelligence. those are surprises. annmarie: trump did name of conventional pick when it came to secretary of state, marco rubio. when it comes to treasury maybe

we'll get a more conventional pick. if it does come down to howard lutnick and scott bessette, who you think the financial markets would like to see? heidi: i think either one of them would be a welcome pick. i am in the same position as you are in speculating as to which one is more likely. the challenge with scott bessette is he might be perceived as not fully on board with the very significant tariff policy coming down and the use of tariffs as a bludgeon that is coming down the pike right now. that is absolutely where president trump is. if you see a treasury secretary walking that back in the running for the job, i am not sure that

will play to this advantage. annmarie: he might need to regulate ambassador lighthizer somewhere in the ministration. where you think trump will be placing him? heidi: he will certainly play a prominent role. he is the key behind the scenes on crafting the tariff policy and trade policy for the president. if he has a general senior cross agency platform on trade. that puts him in a powerful position but he will not have all of the resources of an agency he would govern directly like ustr for the treasury department. it comes down to who has authority, who has resources in those positions. he will be -- trump thinks in

deals and on deals you have lawyers and robert lighthizer is the chief lawyer on all of the deals trump plans to do using tariffs. dani: you mentioned some of the more surprising picks including ones like matt gaetz that are polarizing even within the republican party. what you think the confirmation process will look like? how easy or difficult will it be to get some of these nominees through? heidi: i think this is a huge loyalty test to the senate and to senator thune and the incoming republican leadership. the senate has a serious advice and consent role meant to check the balance of the presidency. it is something that is in the constitution. trump has asked as a loyalty test for the republican senate to bypass this process and just

use recess appointments so there would not be confirmations. that will be extremely difficult. there's a lot of attention on matt gaetz for very good reason. he is super controversial. he took down kevin mccarthy. there is a big chance you'll see a lot of leaks around a matt gaetz nomination. and tulsi gabbard is a risky foreign-policy choice because she does not have the intelligence background and -- michael: tough decision -- jonathan: tough decisions to make. 're just running up against the commercial break so we have to run. this is bloomberg. ♪

jonathan: in 60 minutes time we will get ppi and jobless claims. equity futures on s&p is higher by 10%. manus: two different sense of guidance. lighter than the market would have liked. 55 point three to 56.3 is lower than the estimates. they are battling inventory build slower government contracts. when it comes to the magic words, ai, it will make a

billion dollars in 2024. that is the magic of ai to come. i different set of guidance, bob iger trying to sprinkle a little bit of a whole new world at disney, high single digit adjusted earnings per share growth 2025. they typically don't give guidance. they are given for 2025, 2026, 2027. double-digit growth, that help them. experiences, paris olympics, two massive destructive hurricanes, that gives you a flat number there. the new york times, stunning line on linear tv. lina khan blocked the deal between tapestry and capri. that dominance in the handbag world will be a literal free-for-all. get ready to grab your market

share. what happens next to capri is the critical question. tapestry is at the bottom of your screen. they are going to do a buyback to soften the blow. how long does lina khan last at the ftc in the next administration and what would that give to the tech world? you can ask your next guest. jonathan: our next guest is an oil guest. you are dropping aladdin lyrics into your market checks. if you don't know manus sings before the show every morning. dani: everyone should watch the 5:00 a.m.. i am laughing because at the start of the 5:00, manus would always sing to me. jon: accusing hackers of broadened extensive espionage campaign stealing customer call records from at&t and verizon. the new york times reporting that donald trump, jd vance,

harris campaign staff members were targeted. annmarie: i was going through the release yesterday from the fbi and they're talking about private medications from a limited number of individuals involved in government or political activity. you can see the two campaigns. jake sullivan over the weekend was asked about this on face the nation and he said, of course. every american official that sits down with their chinese counterpart will bring this up because it's a significant attack. guess who is sitting down with president xi jinping on friday? president biden. dani: rarely does a week go by and we don't get a warning from some western intelligence official that china is looking into something. the journal piece underscored how unprepared we are. for every china-backpacker there are 50 of them to one fbi cyber personnel. we are so unequipped from the growing threat and it will be a tricky situation. most countries cannot afford to

throw out a chinese diplomat or put on sanctions. we will get some round of that with trump and it will be interesting what balance he tries to strike. jonathan: the cabinet will be packed full of china hawks. annmarie: has national security advisor, china hock. he is an individual who is for the tiktok ban and says tiktok's chinese espionage in an app for social media. what donald trump doesn't want to block, he is worried about competition, but the individuals around him are china hawks and individuals who want to see something like a tiktok ban. jonathan: the nippon steel vice president will meet with u.s. steel workers as they weigh a decision about the nippon transaction. president donald trump saying on the campaign trail that he will block the deal. annmarie: he said he will block the deal. joe biden says he will block the deal. it is still living in purgatory, pretty much used to have a

hiding place for the deal because they didn't want to disrupt the election in pennsylvania. you can see nippon steel trying to get ahead of it. they are going to the union plans, talk to the workers, maybe there is a window to get something done. jonathan: a scaled-back trial over social media dominance. rejecting meta's argument that it's acquisitions of instagram and whatsapp were good for consumers and not an effort to monopolize the market. manus mentioned what will happen for tech. it is a big focus for meta. annmarie: who will be leading the ftc? lina khan's term is technically

over. she just stays on until there's a new chair appointed. it will likely not be lina khan even though jd vance says that she is one of the few individuals in the biden administration who is doing good work. the lawsuit was filed under trump on plano in 2020. one of two by the first administration to curtail the largest of the u.s. tech platforms. jonathan: knowing all the way back to when those transactions were made, we have to go all the way back. i remember that morning in london going on european tv. we have a host of guests who thought that they were overpaying for the asset. that is how people thought about the transaction at the time. here we are, 10 years plus later, and we are saying, should not have allowed that to go through. annmarie: because they are pervasive now. whatsapp was young and not a lot of people were using it. especially in europe. now it is used more pervasively around the world, even in the united states. dani: tiktok is not a monopoly. there is real competition and president-elect donald trump has mentioned as to why he wants to keep tiktok around. this speaks to what environment we will have. these were filed under president trump but maybe it is less energy put towards these.

more things are allowed to fall by the wayside. i think trump doesn't see it as a monopoly because there is tiktok. jonathan: here's the latest elsewhere in the commodity market purebred crude, 7264. the bti, 68.79. "a trump presidency and red sweep is likely to be marginally net bearish for oil. as oil's fundamental outlook was already bearish we continue to see brent oil prices averaging $60 per barrel during 2025." eric joins us for more. marginally net bearish. what is it about this presidency that is marginally net bearish? eric: three things. one is trade tariffs. negative for the economy and oil demand. second, a second trump administration is looking at releasing the fetters of the oil and gas industry.

they might be on the margins for supply, net bearish for oil. thirdly, claims of a stronger relationship with opec-plus, may be getting them to release more oil to the market as well. he's talked about having energy costs. the other side of the energy letter is whether there will be harsher sanctions on iran that would cut supply there. it is looking like that might be less of a probability at this point in time. annmarie: the second point donald trump would call drill, baby, drill. acceptable for consumers to have a low enough price but not bus the shale industry? eric: i don't know that number in his head, but you could probably be at $50 prices, and that would be the point where the u.s. oil production would probably flatten out and stay flat on a sustained basis. dani: what kind of production do you think opec is willing to add to the market? we have iea data that says the market faces a surplus of more than one million barrels a day next year. eric: we have been calling for

this kind of view since earlier this year that drives a $60 price view for next year. what is opec-plus willing to take? it is hard to say. last year and the year before, saudi arabia and other producers were reacting at $90 oil and $80 oil. we are now in the $70. there are important producers that are probably itching to use their spare capacity. uae and maybe even russia over time as it is developing its production capacity. dani: it's oil output under opec-plus, it is a saudi that had a difficult time exerting that leadership. we saw in the first trump administration come he was able to come in with sharp elbows and get them to do things that he wanted. as he possessed that ability now when they are still struggling to maintain the block? eric: on the saudi side, it in a

sense seems like part of the group's agreement to unwind cuts. the agreement is probably in part hinging on the fact that these producers need to comply more. iraq, kazakhstan, russia. the some extent, they have. other than that, these producers are itching to bring things back. if prices keep moving lower, demand is weak, it may be tough for them to continue to hold prices higher. dani: so much of this will be down to geopolitics. i know that a lot has gone back and forth, a lot of volatility as to whether we price that in or not.what environment do you think we will deal with with the middle east and trump coming into the white house? eric: there are concerns over iran. harsher sanctions on iran what would that mean for exports, would it tighten the oil market? it could be offset.

similarly for venezuela sanctions. on the others, if there is a quicker resolution to the russia-ukraine crisis, in some ways that could ease energy prices as well. annmarie: the sanctions on iran are there. will this trump 2.0 have the appetite to enforce them? eric: that is a great question. iran is exporting somewhere around 1.5 million barrels a day. sanctions have been on for a long time. more sanctions were put on recently by the biden administration. it has gotten to a point where most of the buyers of oil are chinese refineries that are not particularly exposed to the u.s. financial system. that is the main source of leverage for the sanctions. unless there is a different tool to be wielded for this, it may be tricky to reduce iran's oil exports that much further. jonathan: it is good to see you. thank you. eric lee of citi.

wti, 68.84. here is your bloomberg brief. yahaira: lvmh is shuffling its leadership. he was previously at the new york-based jeweler tiffany & co.. lvmh names a group human resources head after the previous head after the previous had left the company. this is feeling more succession as bernard renault remains ceo but his children have key positions. an initial public offering in the u.s., submitting a draft registration statement to the fec. the shares and price range haven't been determined, but the valuation is about 14.6 billion dollars. sources tell bloomberg that the ipo is expected next year and that the company is working with goldman sachs, j.p. morgan, morgan stanley to a range offering.

no longer having to pay broker fees assigning a new apartment lease. in a measure passed by the city council on wednesday, the fairness in apartment rental expenses was approved. landlord to hire real estate agents will have to pay the agency themselves instead of passing them on to tenants. there is a 30-day window for the mayor to sign the act into law and it will take effect 180 days after. that is your bloomberg brief. jonathan: i'm not in a position to advocate for things, but good. next, supercharged by a trump won. >> america is going to reach heights that it has never seen before. the future is going to be amazing. >> com on a pair, elon. he created the first major american car company in generations. takeover, elon. jonathan: that stock surged over the week. that conversation, next. ♪

where ya headed? susan: where am i headed? am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence...

the answer is j.p. morgan wealth management

jonathan: equity futures are positive by .1%. the bond market going into ppi data and jobless claims later this morning dropping at eight: 30 eastern. the 10 year is down, 4.44. supercharged by a trump win. >> president trump is the only one who can save democracy. >> america is going to reach heights that it has never seen before. the future is going to be amazing. >> where is he? come up here, elon. he created the first american car company in generations. his rocket company is the only reason we can now send american astronauts into space. come here. take over, elon.

jonathan: tesla shares are surging nearly 40% over the last week as president-elect donald trump awards his ally elon musk a role in government efficiency. writing, trump will fast-track the autonomous and ai initiatives over the next 12 to 18 months. that will be a game changer to the tesla story. dan, good morning. let's talk about these numbers. up 36% and 12 trading sessions, 200 $80 billion of market cap. we are talking 5x of volkswagen in a week. why? dan: get the popcorn out. i think it is just the beginning because of the autonomous and ai piece. i believe with trump in the white house and musk a very big seat at the table, this is the start where i believe autonomous will get fast tracked over the next few years. i believe the ai autonomous piece alone is worth $1 trillion

of valuation. jonathan: what is fast tracked mean, by who? dan: the federal agency side, that has been the spiderweb that has been holding the autonomous fsd. a key part of the valuation for tesla, because my view is if you significantly increase fsd penetration, and you have cyber cab, which isn't coming out until 2028, you fast-track that two years and you see the autonomous story play out. donald believe ending autonomous valuation is factored into tesla even today. jonathan: it has to work. they have a playground in california. have they demonstrated that it works? dan: waymo, the scalability for tesla is the key. when you look at the fsd, and you look at what i believe we will see over the next six to 12

months, i believe autonomous, when we talk about level four troop autonomous -- level four true autonomous, the spiderweb disappears, this changes the tesla story. we will be talking about tesla, $2 trillion and so on as the ai and autonomous piece plays out. from musk, this is a bet for the ages on trump. ultimately now he essentially becomes not just a big seat at the table that someone who will have a huge influence on china tariffs and others. annmarie: the department of government efficiency has no authority and no money. they will just make recommendations. you are actually just betting on elon musk's proximity to power? dan: this is just the start. i think he will be essentially ai ambassador. he will have a huge piece when it comes to china tariffs.

annmarie: is he? jonathan: why do you think you will be a huge piece when it comes to china tariffs? ambassador lighthizer is on board, a big china hawk. senator rubio, a big china hawk. you think someone outside the government in elon musk with a fake department will have influence on tariffs on china? dan: no doubt he will have an influence on tariffs on china. everyone in the trump transition team, tariffs is the key. they can talk tough on everything else but when it comes to chips, tesla, apple, that is the crux of the ai revolution and the crux of big tech. part of why you see big tech so resilient is ultimately this now leaves the groundwork for tough on tariffs, but i believe there will be carves ou -- carveouts when it comes to tesla and

apple. no one understands the jigsaw puzzle of china as well as musk. annmarie: have you seen reports that elon musk is wearing out his welcome around the trump transition team? dan: i feel like i have a pretty good pulse on the situation. i strongly disagree. i think this is an alliance in terms of musk and trump that gets stronger, not weaker. our view is i think we will sit here year or two from now and say why is musk involved index, y, z -- in x, y, z? with the stock has done so far, i think it's justified because it is a new age, a golden era, not just for big tech and regulation, but for musk and tesla. dani: elon has sparred with a lot of government agencies when it comes to spacex calling on the faa chief to resign, has

accused the california coastal commission of targeting spacex. will we see changes without enforcement for spacex? dan: inc. about it like musk was a student and he is a detention. and all of a sudden he becomes the principal. this will shift things a lot in terms of the federal side. i think that a lot of the federal spiderweb, there will still be issues, but a lot of that disappears under a trump presidency. i think that musk will have an outsized influence when it comes to a trump presidency, which is key for tesla. when it comes to tesla, this will be one where you can say even own it goes to twitter and x, you talk about maybe $30 billion that he lost on that but he gained, what i view, as probably $1 trillion of value in terms of his twilight zone -- annmarie: you say that he will move to this principle role and he will have the proximity to the president-elect.

is it appropriate that he doesn't divest his personal financial holdings even though he will have such an influence, you say, on american policy? dan: it is a nonofficial cabinet position so there is no change in terms of the ceo or his stockownership. will there be noise? will there be criticism? yeah, but i believe this is something where the benefits far out weigh the negative. we will have the bears for tesla sitting -- jonathan: are there bears left after last week? dan: the bears sitting in hibernation in their caves. they cannot find ai in the spreadsheets. annmarie: wearing black. dan: they can't find ai in the spreadsheets. in my opinion, the most undervalued ai play in the market. jonathan: one final question because we stress tested your view on tesla.

it's hard to disagree with the price action. what is your other pic that is under the radar that is not shining brightly that you think will? dan: ai continues to be what i view from when it comes to ai where everything is going. i think another name that sticks out even further going that i'm not getting credit is salesforce.com. when it comes to the ai story, where they will do is not even touching the base. jonathan: we have one minute. what is he doing that is underappreciated? dan: the install base. at first it was disrupting sales cycles. now, from a monetization perspective, this could be an incremental 20% of revenue over the coming years. betting against him is like betting against the godfather of ai. it's the same crowd. i think next wednesday when the

watch party starts, and we have nvidia earnings, it shows that at 10:00 p.m. the ai party goes until 4:00 a.m. jonathan: we are covering nvidia, looking forward to it. looking forward to the f1 as well. dan: next friday i will be wearing all of my ferrari gear. jonathan: yellow as well. sprinkle of yellow. classic ferrari colors. dan ives, very bullish on tesla and that stock. that stock has been flying over the last week. coming up, we will catch up with brian weinstein of morgan stanley who thinks that credit yields in america, investment grade, can traded through treasuries. we will catch up with brian in about 30 minutes. from new york, this is bloomberg.

♪

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

>> momentum is a powerful thing. it is hard to fight against that train. >> one thing that we can say is

that the election result in what is coming after that is simply reinforcing a narrative that was already in play. >> if you get a shift back to rate hikes, it could go against the bullish sentiment. >> the sentiment and the news flow was already very strong. at some point you think, there's got to be a breather. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the third hour bloomberg surveillance starts now. in 30 minutes you will get economic data. jobless claims in america are still exceptionally low speaking to a labor market that is still ok. ppi data at the same time. this afternoon at 3:00 p.m. eastern come you hear from jay powell on his economic outlook. his economic outlook is very different to your economic outlook, because his doesn't include anything of about what's about to happen in this lighthouse by donald trump -- this white house by donald trump. dani: it is a completely

different world that they are living in. i should say that not just in the conversation but from what the market is doing, longer-term yields keep pushing higher and powell has been writing it off saying that it's not an issue. the market is pricing in inflation and tariffs and powell is not thinking about it. annmarie: the market is pricing in the political economy and the fed has yet to price in the political economy and they are in for a potential rude awakening in january. the first business could be tariffs. when tariffs were part of the agenda in the first iteration of trump, everyone said this is a one-shot hit. you can look through the rest, there won't be a vicious cycle. if these walls are so high, will it remain the same? jonathan: the former vice chair of the federal reserve was on the program last week going into the fed decision and news conference with chairman powell. ahead of that news conference, the point that rich made was that the fed will probably look for optionality, or look to find some, to give them the choice to

pause if they need to going from december and beyond. you get a sense that that started in baby steps in the news conference and you've heard more of that from fed speakers in the few days. dani: lori logan talking about higher yields might be an issue for them. neel kashkari saying that they sure inflation is vanquished. it's clear that they are talking about it necessary in politics yet. they're talking about in the abstract, that we care about inflation in this market. i want to know when they will more directly say that we are watching what tariffs are doing and will react to that. we need to react to that. neel kashkari did that slightly, but we haven't had an honest conversation yet. jonathan: small steps to that destination. equity futures on the s&p 500 firm by .1%. the bond market, yields a little lower, down by almost a basis point but near 4.45 at 4.4452. the foreign exchange if you are tuning in on the west coast, the

euro-dollar is 1.04 handle. 1.05, another day of euro weakness. we will speak to brian weinstein a morgan stanley looking ahead to comments from chairman powell this afternoon. we begin with a equity rally losing a little bit of steam as investors look ahead to the latest economic data at 8:30 eastern. coining us is liz young thomas of sophia. i was mentioning at the start of the hour that the outlook for chairman powell is different to the outlook of many people on this program precisely because he won't speculate on the future of policy changes. how much has your outlook changed since we last spoke? liz: i would say that the thing that you have to respect in the market now is the momentum and optimism surrounding growth for 2025, or starting in 2025.

the idea that even though people recognize that there are question marks or headwinds possible in inflation in the form of terrorists coming through, and the slowing economy that was happening before the election and could rear its ugly head again in 2025, i think that the general consensus is that any growth uptick next year will circumvent any of those headwinds. that is the way that the market has been behaving. what we saw after the election was a very strong relief rally and cyclical rotation because of the excitement. we've taken a pause, which is natural. maybe we give some of it back. if you look at the charts of a lot of the asset classes that have done well since the election, the lines are straight up to the upper corner. usually, when you see something like that you have to let rationality come back in before we can resume another uptrend. jonathan: i know you wrote

-- a note you wrote, yields are creeping higher at the long end and yesterday session. we've had this conversation before. i wonder how you're thinking is evolving on the subject when that becomes a constraint around equities? liz: it is starting to become a constraint because we are knocking on or on the doorstep of the next mental threshold, 4.5% on the 10-year. the first one was 4.25% and equities were questioning it but didn't have much of an issue and stocks continue to rise. we get to 4.5 and people get a little more trepidations about where we are headed. the big question that investors are trying to answer is, why is the 10-year rising? is it because the economy is strong and we have an improved outlook? then that is less of a concern. the prevailing wisdom would be that equities can withstand a tick up if it is for good

reason. there continues to be a narrative about the deficit increasing, because of debt, because of inflation fears, because of other central banks taking action and not buying as many treasuries and buying things like gold instead. we don't have the answer to the question yet. it is a good one for investors to be asking. if we get close to 5% in the 10-year, i would expect equities to struggle between now and the for suren. dani: you can make an easy argument, not saying that it's right, about growth. cyclical stocks have outperformed. our we may be overstating how much of this is about pricing in president trump? liz: that is the thing that you want to pay attention to. you need the equity market to confirm your thesis on the yields. if the 10-year yield is rising

because of growth, you will see what we've seen since the election where cyclical sectors have led. i would caution people that if we are trying to mess with the trading balance at all in 2025, we are in an environment where the dollar has been strengthening and continues to do so. if we had an environment where the dollar is strong, we would consider that one standard deviation from a long-term average dollar strength level.if we are in an environment where the dollar is strong, you see defensive sectors start to take over.where we are at the precipice of that strong dollar environment. if we see a rotation into defensive sectors, you have to question if the yield move will start to change the way that investors have appetite for risk in the equity market. dani: if that happens, what becomes the haven? it is usually bonds. we are starting to find some

floor under these yields with those fears of expanding fiscal deficits, of inflation. what do you turn to then? liz: initially come investors still want equities. there hasn't been a big rotation out of the equity market even in times of stress through the cycle. you still see investors trying to rotate within equities rather than coming out of equities. start to look for the defensive to come back first, like utilities. that was the usual suspect in 2024. staples, seemingly expensive, but paying a good dividend in the defensive category. health care and health insurance could see a nice bid. we get more fear in the market or concerns of yields going further, then you see a rotation into other safe haven assets. the first way would be gold. you have a lot of appetite for gold from institutions and central banks, there hasn't been a lot of appetite for gold from the retail investor yet.

we could see that pick up as well. jonathan: i want to finish international. it was a month or so ago that we had people talking about dollar weakness, dollar bears, let's get long china. the csi 300 and hang seng are down. i can't find a single person stateside who wants to even talk about going long europe. how are you thinking about the international story versus the u.s.? liz: i'm not going to say that i will be the only one, but you have to question. when there is no one saying it, is that a good contrarian indicator? what is happening has a lot to do with the currency market. looking at asian currencies in particular, japan and china, don't underestimate both of those nations' ability and willingness to support their own currency. i don't think that there is a lot more pain they will take before they start to take measures to support their own

currency. i would expect currency volatility to pick up over the next few months because of this dollar strength. we are seeing a lot of weakness in the euro as a result. there are other issues in europe, but there are measures being taken in order to stimulate as well. we need the european consumer and european luxury to come back. some of the dollar strength is confusing the issue for now. jonathan: appreciate your time. liz young thomas of sophia finishing on the fx market, dollar strength against the euro. a fifth consecutive session of euro weakness. let's crossover to your bloomberg brief. yahaira: we start with the latest on president-elect donald trump's cabinet. matt gaetz has been tapped as attorney general designate. former congresswoman and democrat tulsa gabbard is the pick for director of national intelligence. tom confirmed that senator marco

rubio is his pick for secretary of state. yet to be announced is who he wants to run the treasury department. the wall street journal reporting that the cantor fitzgerald ceo in transition howard lutnick is making a late play for the role.the vice president of nippon steel is going to pittsburgh next week to meet with u.s. steel union workers. the move signals that the japanese company is making a push to persuade rank and file employees that is $14 billion takeover bid will be good for their long-term prospects. the news comes as both companies await a decision about the deal. during this campaign president trump said that he would block the deal. u.s. officials say that chinese hackers breached multiple telecommunications companies and a broad espionage campaign reportedly targeting the phones of president-elect donald trump and jd vance among others in politics. china's foreign ministry spokesperson says the nation opposes misinformation due to

political agendas. jonathan: next, the morning calls and we will speak to bloomberg intelligence as disney gets a box office boost. their stock is up in the premarket by more than 8%. ♪

we invent them,

we design them, we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪ jonathan: in 15 minutes, economic data, ppi, jobless claims. a 10th of 1% of the bond market. the bond market stability just short of 4.45, 4.4472. hsbc's hiking nvidia's price target to 200 with more upside in data momentum up by another

1% in the premarket. barclays is upgrading american airlines to equal weight saying that the carrier will regain share in corporate travel next year. the stock is up by 1.6%. execution this year has been a real problem there. evercore adding target to a tactical underperform list expecting further sales trend deceleration with the stock softer, negative by .4%. disney beating expectations thanks to a streaming boost. this year's box office performance. underscoring the turnaround set in motion by the ceo bob iger. joining us is plum rig intelligence. that stock is up nicely in early trading. it is rare to provide not only a one-year outlook, but a two and three year outlook for profits. where's that clarity on the future coming from? geetha: investors are loving it. this is what the doctor ordered. the problem with the disney was the lack of clarity on how

things would pan out in fiscal 25 and the future. with them giving the detail line by line item-type of guidance, they set the tone. giving us a lot of visibility into high single digit earnings growth. good momentum sustaining into fiscal 2025. into fiscal 2026 and 2027, they are projecting double-digit eps growth. a lot to look forward to for disney investors. dani: a lot of the success came from their box office, inside out 2, deadpool and wolverine. it wasn't that long ago that disney was rethinking the spend on content. given that it was movies, with the covid era lagged behind and was impossible to go to, it was a thorn in the side of disney. what is it mean how willing they will be able to spend on content going forward? geetha: they had huge problems

with covid with the pandemic shutting down theaters completely and them almost over investing in their streaming business. when bob iger came back he said that the problem was not just content and subpar content, it was too much content. it was almost over saturating and leading to the franchise of fatigue or exhaustion among investors. that is something that there has been a course correction on. they are focusing on paring back content and taking the focus back to quality rather than quantity. you see that in the multiyear strategy that they played out for their biggest franchises, marvel, star wars, avatar. they have a good, strategic plan in place and we will see that it is not just inside out and deadpool. in the next month or so you have two highly anticipated movie setting the tone with moana 2

and mufansa, the lion king live-action movie. dani: they had a clear plan and outlook and guidance through 2027 which at that point we should have a new ceo, or at least a new one announced by bob iger. given the strength they are coming from and the plan that they laid out, does that change the type of person that we might see? geetha: that is a great point. disney has historically looked inwards. they have always had a deep bench, a pool of candidates to draw from. a few days ago we got news suggesting that they are looking outwards. the ceo of a gaming company has been thrown into the mix. it will be interesting to see who. they have all of their division heads in the running, the espn head, the parks, so it will

be interesting. they're choosing of the new successor will tell us which path the company is going to go forward on. is it going to be more operations and parks driven or is it going to be content, which is an ip, the driving force and engine for all of these companies's segments. annmarie: do have a timeline for how long this will take? geetha: they initially said it would be 2025, but they pushed that out. they have pushed it out to 2026. by 2026 we should have the name of the new ceo. by the end of 2026, bob iger is set to finally leave the company. annmarie: we have seen that story before. what have they learned from that episode? geetha: too many things. this has been the biggest misstep for disney and they want to get it right which is why they have james gorman leading

the process and they have expanded the search to include everybody. having james gorman there inspires confidence. he has orchestrated a fantastic succession at morgan stanley and is said to be the right person for the job. he is also the chairman of the board, so there's a lot of confidence they will finally get it right. dani: why isn't the lesson that they learned that they should just be looking internally? isn't that the lesson of bob iger coming back. that widening the tent misses the culture at disney? geetha: it is hard because disney is such a diverse company. they tried internal candidates. they tried one who was running parks and a veteran, but he didn't know a lot about handling things with the creative and hobnobbing with the hollywood talent.that got disney into a little mess. before that we had the situation

of two very successfully groomed internal candidates who went through the process, but at the last minute it didn't pan out. it will be interesting. the internal candidates have a lot of experience, but with the divisions, parts on one hand and a different animal when it comes to content, the studios, and espn, they are very big shoes to fill. it will be a wait and watch. dani: the parks, they did report weakness but they are projecting 60% operating income growth in the quarters to come, the year to come rather. what is the environment with consumers and willingness to go out to parks and on cruise ships will we be seeing? geetha: fiscal 2025 is interesting for disney, because you have a big competitor coming out with epic universe, the universal park in orlando. for disney, they have seen a

moderation and demand across the parks. at the same time, they are launching cruise ships. what is really driving that big high single digit increase in profits in 2026 will be the launch of three new cruise ships. in the beginning of the year it's going to weigh on profits because of launch costs, but when they are up and running they will be big profit drivers. annmarie: on the content side, we are seeing the growth and streaming offsetting the decline in cord cutters. comcast was talking about spinning off their cable networks. any change for disney? geetha: they were asked this a few minutes ago. the cfo said that he likes his linear tv portfolio as is. they do have a big event in fiscal 2025 with the launch of a streaming standalone espn product. this puts everything in play. one of the reasons they may have

been reluctant to offload the tv networks was because of espn, the glue that holds the bundled together. once that goes over the top, it's a fair question. why not spin off the tv networks? they have nothing holding them back in my view. they seem to want to hold onto it until the espn launch goes off. jonathan: how much more money do they think they can charge us for hulu? every few months we get the email. geetha: a lot more. you look at their profit projections in the streaming division, not only have they turned around the division after a $4 billion in losses. this year you have a modest amount of profit. next year they are projecting $1 billion. what is interesting for fiscal 2026, is they are projecting almost a tripling of that profit

from $1 billion to $3 billion. that will be driven by a pretty big price increases. jonathan: i will pay up if they release another season of shogun in the next six months. i forget what i'm paying now, but it's ridiculous. we are basically back to the bundle plus $50. dani: i want to know if sports venture will come out, the thing the judge blocked with espn and fox. i wonder if this would be a better environment? there are so many different things you have to bind. annmarie: go back to school, $1.99 a month for students. jonathan: i should sign up for a free course? what should i study? that is the question. annmarie: that is up to you. jonathan: disney up in the premarket. we turn to the economic data, ppi around the quarter with jobless claims. we get the market response and reaction. we will catch up with brian weinstein of morgan stanley.

a brief check of the markets, equity futures on the s&p 500 are up by .1%. no drama. the bond market is down by a single basis point or 2, 4354. the fx market, more your weakness with new lows for the year on euro-dollar. at the moment, 1.0538, the fifth consecutive day of euro weakness. we are trying to find a euro bull. if you are out there, we will do an interview and have a long conversation about why you like europe now. this is bloomberg. ♪

it's our son, he is always up in our business.

it's the verizon 5g home internet i got us. oh... he used to be a competitive gamer but with the higher lag, he can't keep up with his squad. so now we're his “squad”. what are kevin's plans for the fall? he's going to college. out of state, yeah. -yeah in the fall. change of plans, i've decided to stay local. oh excellent! oh that's great! why would i ever leave this? -aw! we will do anything to get him gaming again. you and kevin need to fix this internet situation. heard my name! i swear to god, kevin! -we told you to wait in the car. everyone in my old squad has xfinity. less lag, better gaming! - it's something aboutge having that piece of paper. some people think that's worth more than my skills. - i've run this place for 20 years, but i still need to prove that i'm more than what you see on paper. - you gotta be so good they can't ignore you. - it's the way my mind works. i have a very mechanical brain. - analytics and empathy. that's how i gain clients. - i am more... - i'm more... ...than who i am on paper.

jonathan: annmarie wants me to study the beyonce course. $60,000 a year and your kid studies beyonce? 0 you get the student discount -- annmarie: you get the student discount on hulu. jonathan: some economic data seconds away. ppi and jobless claims. let's cross over to mike mckee. mike: we have a little bit of a surprise in ppi, up .3%. stronger than anticipated. the headline is up .2% on a

year-over-year basis. headline, 2.4%. the core is higher than anticipated. jon's favorite number in the world, initial jobless claims, to 17,000 -- two hunted 17,000. -- 217,000. it looks like we are still in the throes of a strong labor market. which sets us up for an interesting retail sales report tomorrow. we still have more money than we thought we had. overall we still have the question about, what is the fed doing? jonathan: it is what it is and it is really low at 217,000. we had that gap in jobless claims last summer. free gout. came back in. out more recently, freak out. comes back in. this is setting up for a pause going into 2025. is that how you see things? mike: it could be.

december, obviously we are adding a lot of part-time workers, so you will have fewer claims. what it does show is the hurricanes have washed out of the data. the november numbers should be relatively strong if we get a rebound from what we saw in december. that will also raise questions about what the fed does urine so at this point it looks like the labor market has not moved at all. stays about where jay powell thought it was. it is the inflation numbers we are watching out. what we see here is sort of a confirmation of cpi, that we have stalled out at a certain level. do we continue to stall out? final demand goods, we are only up .1%. services up .3% in the api -- the ppi. where do we go from here? that is the fed's dilemma. and then you throw on top of that the policy questions. dani: i know you need to look to

the details, but when i look at ppi, it feeds into pce, i look at a number like 2.4% year-over-year. stocks have gone up. they have been pumping out money. they have been adding to that. mike: we do want to look that up. the thing about ppi and the day ppi comes out, the astronomer -- the economists that are nerds leg in the data like that number into their forecasts. i was reading this morning a pce forecast that said it is going to be stronger than people expected because of asset management. there has been so much trading that it pushes up the cost and that is going to be something -- that is the old pogo trade. jonathan: yields inflating just a little bit higher, up a single basis point. ppi hotter than expected. to weigh in on all of this joining us now is craig? of ey -- greg daco of ey.

they are going to cut interest rates in december. you think that pause has left the building and is there enough here and in the next four weeks to disrupt this bias at the federal reserve? greg: the fed is still on board with this gradual easing cycle. you still have if you look underneath the surface fundamentals that are pointing toward this inflationary pressures into early 2025. you heard me say this in the past. where a look at consumer prudence in terms of facing these higher prices -- i look at consumer prudence in terms of facing these higher prices, strong productivity, those are fundamentally dis-inflationary and will continue to push inflation underneath the surface toward 2%. whether there is bumping us in the near term, that is going to be a guaranteed element of the outlook. but i think the fed wants to recalibrate closer to neutral,

and as to your question to mike about, does it start to ease more slowly in 2025? i think, yes. the upside risk in 2025 and 2026 and the fact they are going to be looking for that neutral rate will likely make them go at little more slowly in 2025 in terms of easing. jonathan: do you think that neutral rate is closer to 4% than 3%? greg: we don't really know and the fed doesn't really know. powell has expressed that. with regards to traveling toward that destination if you assume that by the end of the year we have a fed funds rate around 4.4 percent, that tells you they are going to be more cautious to navigate these easing cycles with a little bit more prudence. not necessarily going 25 basis points at every meeting, but perhaps skipping one meeting, pausing, waiting for the data to confirm the direction of travel and also waiting to see any policy developments. we know some of the policies

that have been pushed by the incoming administration risk being inflationary, whether it is immigration restrictions, deregulation that could favor stronger growth, or even later on tax cuts and tariffs could all be inflationary over the course of the next couple of years. dani: the bond market has started to price both that and the good data we have seen. is it not a problem for the fed? as you say, they want to start normalizing. it as they are attempting to normalize the financial conditions are getting tighter. greg: that's right. that is one thing they have to play -- pay close attention to. powell did not want to wade into that, whether this was driven by the term premium, by expectations of stronger growth, expectations of higher inflation . there are a number of factors that could play a role. but the short end is if there is persistence in this tightening of financial conditions all else equal that would favor the fed easing more because it does not

necessarily want to have a more restrictive set of financial conditions, and that is really the way they are going to approach this. if there is persistence in this tightening of conditions then they might lean toward more easing in terms of monetary policy. we are not there yet. have to see how things evolve over the next couple of months with more clarity on the upcoming set of policies in 2025 and 2026. dani: do you think it is right what we have heard from the fed, that they do not include any assumptions whatsoever? is that the right kind of language you want to see coming from the fomc? greg: that is absolutely right in the context of the uncertainty with regards to policies. but i would have liked -- and we talked about this in the past -- i would have liked to have seen a more forward-looking perspective in terms of economic dynamics. just like fundamentals being this inflationary, i would very much like to hear the fed and

fed policymakers talk about how they are looking at inflation dynamics rather than just comment on every single report we get and comment on past data. i would have liked to have seen much more of that forward-looking perspective, because that is important when you are guiding monetary policy. what are your perceptions around the future of inflation dynamics? where do you see neutral? you don't have to be pinpoint as demanding where it might be, but how are you going to get there? that ford-looking perspective has been lacking in this data-dependent world. jonathan: hopefully we get some of that from chairman powell this afternoon. greg daco of ey. welcome to the program. some economic data, ppi coming in hotter than expected. looking at initial jobless claims lower-than-expected. 217,000. off the back of this in the bond market we have seen yields starting to creep higher at the front end of the curve.

and at the long end getting closer to 4.50, a level we have rejected a few times over the past week. 4.4788. yields up by two basis points. mike, you have had another look at the data. what jumps out? mike: the question dani asked me, an investment brokerage down for the second month in a row, a significant drop. it is not wall street's fault, but we do see health insurance up .2%. property and casualty insurance up .1%. and then airline passenger services, 3.2%. those will go into pce and things will not look great. the other thing i have to point out to you guys, because you are talking about cable tv service, cable tv services and bundled services, up 6.5%. that is one of the biggest increases in the entire ppi. jonathan: not a shocker.

mike mcgee, thank you. brian weinstein with us around the table. if we get a cut in december, is that the last one? ryan: it is the last one for a while -- brian: it is the last one for a while. there is a lot of things they have to sort through. this 100 we got was automatic. but we did not react to it. the data was stronger. the reaction was, 550 is probably too high. i think that is where we are, but i think it is time to watch and let the policy take effect. jonathan: what concerns you? is that the current level of things? are you looking less at the trend and are more concerned that we get stuck around these levels? brian: i think we get stuck for a little bit. the money is coming in. you are getting a decent coupon. it should be a hedge for equities. although now at the act of the

highest-end yelled equities are doing ok. i instinct tells me that we are going to seek out the higher end of this range. call at 4% for next year. i don't think we get there quickly. if we get there, hang out at 4.5 percent, i think the market will be ok as long as it is a growth story. we have all the debt stories, inflation, but at the end of the day the growth story is the important one. annmarie: can you touch duration at all? there are so many unknowns for 2025 and it is playing out on the long end of the curve. brian: history is a great guide. i look at the yield curve and go, if twos are going to be stuck at 4.5%, you make a big gulp. those are some big numbers if that is where we are going. i think duration has a place in

a portfolio. i could be wrong and yields could fall 100 basis points. i don't see a reason to rush into it if you believe we are going to go back to normal-looking yield curves and you don't think fed funds is going to go back to 3%. dani: that is still not the most comforting for something that is usually behaving usually something that is uncorrelated with equities. brian: on the front end of the yield curve you still get income without the duration. we have seen big flows into floating-rate. short range, municipals, fixed income that have less duration and more coupon. i think you can get coupon without taking max duration risk is how i would look at it. that is what investors have been buying. jonathan: i was saying you were coming on the program and i.t. up the credit conversation, so let's do it. the spread for investment-grade credit is like this big. it is as tight as it ever has been for the whole of the century. i want to understand from your why you think you can get

tighter from here. brian: i think it gets tighter from here. there are two major regions. one is the buying. if i'm right and yields drift higher there is a lot of government debt. there is less corporate debt relative, so people will continue to buy corporate that if the growth story is good, equities do fine, so credit gets tighter. the other piece people truly don't focus on, which is the market structure has changed in 100 years. how hard was it to trade corporate bonds in the early 2000's? now you have etf's. credit is much more liquid. if there is less default risk, too much government debt, and it is easy to buy out with think there is a mathematical limit somewhere around 50 basis points that is a pretty aggressive call. i don't think we have to get there, but i do think an orderly selloff will frustrate people. jonathan: your call is so much more aggressive than that and you are burying the lead. you think this can happen. that treasury yields could go above what we could see in corporate america.

maybe not across the index, but possibly on a few credits? brian: there are so few higher-rated credits. i don't think you have triple d 's trent reebonz. i do think there will be a select few -- some of them are really close right now -- to go through government bonds. do i think it is logical? no, the government can print currency. you can make an argument that if you have physical response -- irresponsibility that maybe i'm wrong, maybe they should trade through. they will in certain credits and we have not seen them yet. dani: corporate credit is one of those markets people look to it to get a signal for overall health. you mentioned the etf's, but i also wonder how much of this is a really distorted risk premium? not only with etf's, but the risk stuff. can we really use corporate credit as a signal anymore in the way it once was? brian: it is a fair question.

a lot of the risk has moved to private balance sheets. does that leave higher quality stuff for the markets? we can debate. investment-grade credit market is a little less affected by it, so i do think it is kind of a chicken and egg question. is credit going to be wider? of course. it would be caused by the credit market check on how to know this time around. i think investors are happy to buy the extra spread and yield you get from treasuries plus corporate sand i think there is some logic. i don't need to own treasuries. there is not a lot of upside to doing so. we are tied. i think they will get tighter. if yields are 5.5% in six weeks it will be a different story. but if it moves in an orderly fashion i think that is where we are going. annmarie: december might be the last cut, and maybe next year. could we see hikes next year? brian: it is fun to talk about. [laughter] i don't have a great -- i don't think i could sit here and

outline exactly how we get there. if yields run .2 4.3 do we get back to hiking? i don't think so. i think it is possible. i think it is likely they want to sit here and let government do the work. that maybe we will say for .5% looks more like neutral and we thought. -- 4.5% looks more neutral than we thought. hikes require all of these things to happen. and equities making new highs. i could tell you a story but i don't think sitting here, i don't want to bet on a rate hike in september as my base case. jonathan: you want to be the headline? don't worry, it will be something else. on credit. appreciate the dates must serve. speaking to 4.5 percent, very close to that level on a 10 year. we are up by two basis points. with an update on stories, here is your bloomberg brief with yahaira jacquez. it has been hit by a fine from

european union regulators. it is a small fine, but its first-ever penalty for eu antitrust violations. the european commission has ordered meta to stop tying its facebook marketplace service to its sprawling social network. meta was also ordered to refrain from imposing unfair trading on rivals platforms. the company has vowed to appeal, a process that could take several years. capri shares are lower and tapestry shares are rising in the premarket after the fashion companies agreed to call off their $8.5 billion merger. they are saying it is in their best interests, since they were unlikely to get regulatory approval before the deal was set to expire in february. tapestry, the owner of coach, had wanted to join forces with capri, but a court blocked the deal after the ftc opposed to the merger on the grounds it would hurt competition in the market for affordable luxury handbags.

asml shares are higher in amsterdam trading after announcing its bullish long-term outlook. the chipmaker projects sales to range anywhere from $46 billion to up to 63 billion dollars according to a statement issued as part of its investor day taking place today. the announcement is a relief earn -- leaf after order intake took a hit in the third quarter, falling short of estimates and triggering a selloff in the stock last month. that is your bloomberg brief. jonathan: up next, we will set you up for the day ahead. looking ahead to chairman powell at 3:00 p.m. eastern time. and we will catch up with a familiar face. the latest with brammo after the break. ♪ ♪

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.

jonathan: equity futures right now just about unchanged on the s&p 500. some developments in the bond market. ppi came in just a touch hotter than expected. that unlocked high yields by basis point or two. on a 10 year we are back to about 4.47. he was the trading diary. today we get fed speak from powell. tomorrow some retail sales data. a sneak peek of earnings next week. tuesday walmart, wednesday the big one, nvidia reports. a quick programming note for later today. lisa is sitting down with jamie dimon at the ceo summit. i'm pleased to say that brammo joins us for more. lisa, what is coming up later? lisa: i will tell you that it is interesting to be here at this moment, given the fact that right now you have the chinese

influence very dominant in a country with a long history with china. i'm going to be speaking with jamie dimon today. the key question is, what do you think of the election? what has the response been from the companies you speak to? the on that there is a vacuum of power. he is a lame-duck president at a time where there is a question mark about what the trade relationship will be between the u.s. and other countries at a time where china clearly is being aggressive trying to make inroads they host of nations, particularly if they have precious minerals, like we see in peru. annmarie: xi jinping and joe biden will be sitting down on saturday. i'm sure that agenda list is long, but with biden showing up as a lame-duck how much inroads is china making on a global stage? lisa: this comment to me, is the most interesting aspect of these meetings. what i'm hearing from trade ministers, from all around the world, particularly in asia, as they are seeing direct

investment from china, particularly when it comes to technologies. particularly when it comes to copper. they are opening in newport, christening a port. xi jinping is here to celebrate the opening after 10 years of work and this port is going to shorten the time for goods to be transported from peru to china, to asia i some 10 to 15 days. it really shows how china is trying to lock up some of those economic ties at a time where it is really unclear what the u.s. relationship is going to be, and what i hear from trade ministers all over the world is this question to u.s. companies. are you going to be investing more here? and are you committed at a time where policy is a bit more ambiguous? yahaira: i'm looking forward to your conversation with jamie dimon, especially because you sat down with him a month ago. i wonder what changes we might see? i remember him telling you that the u.s. is becoming anti-m&a. are you going to get a more bullish jamie dimon this time

you think? lisa: that is a great question. we are going to address that. how much are the floodgates open? we did hear about that from the citigroup ceo, that basically it is game on in the m&a market. i'm curious to see how big the pipeline is. a much companies are saying, let's expedite this so we can hit the ground running early next year. but this is a real question. how much does this revive some of the animal spirits we see from companies that have been waiting for some certainty? he is in the position to have a sense of that. and right now is the moment. i do get the sense from people here that there is really a clear sense of, start making investments now. certainly you are hearing that from china, and i'm certain u.s. companies feel that as well. jonathan: gracias. lisa: muchos gracias. jonathan: we got there eventually. tomorrow morning, andrew sheetz

of morgan stanley. phil kemper really of jp morgan. and we will speak to steve or shoot up. do not miss that conversation with jamie dimon later. if you do we will play some of that for you tomorrow morning and catch up with lisa later in the program. good morning to you all. this was "bloomberg surveillance." ♪

katie: bloomberg "open interest" starts right now. sonali: fresnillo data, trump's agenda, and earnings rolling in. mike wilson is going to share his playbook. matt: disney delivers. streaming success thanks to blockbusters like "inside out