♪ >> where markets are right now is maybe you could say in the easier phase of the optimism curve with no policy change yet implemented. all options are still on the table. >> when you look at the promises which would grow the debt, policies like tariffs, this is not going to be an easy situation. >> the market is on economic announcements. >> you make a lot more fiscal stimulus before the end of the year. policy air probably is our biggest risk whether it be from the administration or the federal reserve. announcer: this is bloomberg

surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: let's get your trading week started. good morning, good morning. coming off the back of the biggest one-week loss on the s&p 500 in more than two months. equity features attempted to bounce back, up by a 10th of 1%. the nasdaq last week down every single trading day. a five-day losing streak going into this week ahead. tons of earnings. you will hear from walmart and target but the big one from the nasdaq 100, you will hear from nvidia. right now the eyes of wall street on a battle royale in palm beach. kicking it off of the weekend, money managers throwing their support to scott besson, triggering this response. business as usual or real change. our very own anne-marie. where is this?

>> that tension is spilling out onto twitter and that has caused some nervousness when it comes to the former president and potentially the president-elect on who he is going to choose for this top job because now, the tension is so high between howard let nick and scott bassett that they are expanding the search. we are hearing other names now. scott is still there and they are still potentially looking for an offramp for having let nick. >> so there is a fascinating paradigm right now pitting the idea of shaking everything up, elon musk tearing up the status quo, and people like kyle bass, like some of these other big finance heads coming out and saying that the market has chosen, and what we understand right now is we are getting a real test of whether the market is the ultimate test for donald trump at his policy. manus: just how sensitive would trump be too equity markets this time around?

are we finding out if it is not the likes of scott, that sensitivity has shifted somewhat? i think that is a really important question as we wait for this decision. >> wall street journal editorial board, i'm sure donald trump will be looking at this. cabinet nominees so far desire deal to disrupt washington and disruption is needed in many places, but the question that markets will ask is whether he will disrupt the policy nets that were successful in the first term. and you can see other names coming to light. potentially peter navarro is in the mix. so you have these two camps of those that are a bit more traditional, a bit more judicious when it comes to tariffs, and those who want to go blank iteris day one, 60% on china. manus: thought the approach to the first term is highly effective. the national economic council, the director at that time, fantastic salesman. but you have someone a little

more sophisticated and a little more quiet, someone who connects the work diplomatically with some of your allies to get where you want to be in the treasury and that was steve nguyen. this time around, do you want the guys a little bit louder to be over at the nec? you would want someone to bit more sophisticated over a treasury. that is why a lot of people thought that was the direction of travel until the last week. lisa: peter put out a note saying 3d chess or 52 card pickup? is there some sort of cohesive strategy here or if this giving cabinet positions to all the people who hopped out and basically payback for loyalty? that is one key question for markets, that if taken about 60% of the postelection euphoria out of markets. manus: this is the individual that's got to oversee a $28 million bond market. this is the bond price action right now. we last spoke, your 10 year

yield is a whole lot higher. we breached that level on friday for the first time since may. 4.46. lisa: basically you had a whole host of issues while i was gone including better-than-expected retail sales, the revisions, some of the inflation on the ppi side, but then some of the fed speak where suddenly it seems like different fed officials led by chair powell himself seem amenable to not cutting rates as quickly as they were before. they are concerned about some of the better-than-expected economic data. there also is this feeling that the sequencing of trump policies may not be that favorable to the bond market. either way you have retraced most of your gains with a real thinking of just how low these rates could go. jonathan: the two year yield, 4.31. coming up, the bond market in a two-month slump. terry haynes of pangea policy on the search for a treasury

secretary and europe's complicated position. we begin this hour but stocks coming off their worst we can more than two months. 4.5% for the first time since may. stephen mager adjusting his outlook. reflecting uncertainty over the floor. a reversal looks overdone, so we keep the near term conviction bullish. steve, welcome to the program. let's start with that near-term bullish call. when a lot of people are bearish, give us a reason to be bullish. >> it's all about the forwards and what is priced in. we've spent the last two months pricing and what is just happened. it's no longer an uncertainty in terms of foods going to win the election, is it? in fact, we've probably removed some of the uncertainty from a few months ago. we actually know who the president is going to be next year. but as you were saying just

then, the sequencing of these policies is still a bit uncertain. the only thing that we've got to really go on is the valuations, and markets are priced much higher equity rate than the fed has been indicating. for percent or more for the longer run equity. and in the recent piece that you referred to, i gamed out a scenario whereby the fed even reversed its rate cuts of this year. i'm not saying that as our baseline, it is not a forecast at all. i'm just signed -- saying to try to gain out with the yield should be, you have to imagine a scenario whereby the that gets really hawkish rather than just pausing. and i think if that was to happen, and it is unlikely, but if it was to happen it is the front end that is the most mispriced, not the backend. so the 10 year yields look at a decent level to me and probably a good entry point for bond investors.

jonathan:jonathan: plenty of discussion about the prospect of increased supply, more deficit spending. you've written about this a million times. i know your thoughts have evolved. how do you think about supply and its influence on price in the bond market? >> you know very well that i think that the idea that you can look at the future supplier and say that the yield will go up or down doesn't make a lot of sense. you mentioned $28 trillion. on trump 1.0 back in 2016, it was about half of that. so the stock has doubled, but i don't really see how that has driven the bond yield. today's bond yield is about the policy rate and expectations for the policy rate. every dealing room in the world has to deal with concessions around syndications. but that should not be confused

with a strategic view on bonds. so there is a term premium factor into the long end, and that is about the supply and demand potential in balance. but it is priced in, and i think the risk is some people could be double counting that term premium. lisa: what is unique about your view is some degree of conviction. i was reading a whole host of outlooks over the weekend and there's very little conviction. morgan stanley had a range on the s&p with the possibility of some sort of hot read acceleration of inflation, or potentially stagflation. what gives you the certainty that on a longer-term trajectory whether it is supply or just even the possibility of growth that exceeds expectations, that long end is pegged, that you can see yields come in? >> there is no certainty around anything. these are scenarios. my point is we are priced for strong growth and additional

term premium. so for example, forward real yields above 2%. that is above the trend gdp. it could be that all these policies mean that we are looking at a much higher trend gdp, but they haven't changed their view on that yet. and frankly, i doubt it. i think it is more plausible to be talking about a sugar rush than it is to be talking about an upward shift in the trend. if you think about the aggregate of the policies, some of them will give, some of them will take. i doubt that the longer run a trend is being revised up. and for that reason i will stress that longer run real yields are above that trend. in that case investors are protected. they go into some risk premium by receiving long insecurities. lisa: i think about your call over the past 10 years and youth in the perennial bond bull and

you've mostly been right except for this new regime that is causing a lot of people to question whether yields will continue to go lower. i'm just wondering what makes you think that this time is not different? the fact that you've got yields rising around the world, japan suddenly not becoming a peg in a negative yield land. even germany engaging in fiscal expansion. >> some very good points and you're introducing the global angle to the forecast. and thank you for that. over the last decade or so, we've also had neutral calls. we haven't always been flat out bullish the whole time. i think that whilst i might be badged to something regarding my view, we are quite tactical as well. it is true on balance we tend to be more bullish than bearish. but the global point is well made. you introduce the idea that japan could be contributing a different impulse to yields in

the future. maybe japanese investors led by treasuries as much, maybe they are going to repatriate. but we have to take into account what is happening in china and in europe. to me it is pretty unambiguous that the longer run equity rates , the all-stars, if you like, for china and europe have been going down. and therefore it makes it difficult for me to see how the u.s. can be so exceptional. these rates tend to be cointegrated. so yeah, you can always find an anecdote or a particular region that says that something might change, but it is on aggregate i think the china and europe contribution to the global rates call is unambiguously pulling yields down. ann-marie: when it comes to this exceptionalism and his idea of policy impacting the bond market, how concerned are you about the fact that before we even get the policy, we don't

have the personnel and we see messy transition when it comes to appointing the top post at the treasury department? >> that is an important point. we are just sitting here in some regards, speculating. we don't know what the policies are, we are not going to know for a few months. so it is completely rational to say we are waiting and watching the data. and if you do that, you've got the potential in the next three months before we don't have any certainty about the policies or things softening up. today's bond yields are caught in this trap whereby they been pulled higher by putting a heavy waiting on the no landing and trump 2.0 scenario, and they are not really reflecting the fact that hard landing is a possibility for 2025. the fact that people have stopped talking about it hasn't

actually shifted the probability. in the coming months whilst we are all waiting on the data and the personnel, i'm not going to say what the event will be because i frankly don't know, it is just about probabilities and that is how bond markets work. the bonds are priced as if everything is going to be perfect, and all the policies are going to be on the hawkish end of the range, and therefore bullish for the stock market and bearish for the bond market. i think we had a couple months pricing that in already. jonathan: steve, good to hear from you as always. a lot to chew over. andrew echoing some of the stuff saying just last week markets are underestimating labor market weakness and overestimating the inflationary effects of upcoming tariffs and fiscal policy. lisa: especially because what we've heard over the past couple of weeks for members of the house and senate who are republicans is you need to offset some of the tax cuts and other plans with potentially cuts elsewhere.

this isn't about some sort of physical impulse and there does seem to be restraint. it's not necessarily going to be another fiscal expansion with at least lipservice being given to some restraint. jonathan: if you are just joining us, welcome to the program. equity futures up by about 1/10 of 1%. dani: t-mobile's latest victim of a cyber attack. the company reported a breach by chinese hackers in an attack on multiple telecom companies. u.s. officials said the hackers infiltrated the network in an attempt to steal customer call records and compromise communications belonging to a limited number of people in government and politics including president-elect donald trump. a report from the information says that nvidia has asked its suppliers to change the design of its server racks for its new blackwell chips because of an overheating problem. shares down 2% in the premarket. the changes came late in the production process that the chip giant hasn't told customers of a production delay.

nvidia report earnings post market on wednesday. and the widely anticipated fight between jake paul and mike tyson may have failed to live up to the hype, but that didn't stop it from surpassing expectations from a rating standpoint. netflix reported an audience of 65 million viewer that rivaled some of the most-watched sporting events. still, many took to social media to air frustrations around glitchy and buffering streams. the 27-year-old paul easily beat the 58-year-old tyson after eight rounds. paul took home a $40 million paycheck. for tyson, it was $20 million. and that is your brief. jonathan: absolutely ridiculous numbers. up next, besson vs. lutz nick. >> you are going to have the possibility of balancing the budget for the united states of america. jonathan: the race for treasury secretary getting just a little bit chaotic.

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♪ jonathan: equity futures on the s&p 500 firmer by a tense of 1%. a little bit of a lift again on bond yields. under surveillance this morning. >> in a trump 1.0, we got a demand shock from the private sector fueled by the tax cuts, and that was met with the regulation. that's why we have not inflationary growth. >> the possibility of balancing the budget of the united states of america. no nonsense, it can happen because he's focused on not wasting the vast waste that is our budget. jonathan: the battle to be the next treasury secretary

intensifying over the weekend as money managers took to x to advocate for scott bennent before elon musk imply that he would be business as usual while lutnick what actually enact change. trump is reportedly looking for alternative. during a snap to discuss his terry hammond the pangaea policy. let's dive right into this mess. what is your base case for who gets this now? >> goodness, i have no idea. i am just going to follow anne-marie and see what we have. i wrote about this 18 hours ago and everyone on the streets convinced it is bessent or lutnick but last week you couldn't have gotten a bet. i don't think anybody knows frankly. ann-marie:'tis the lack of a treasury pic in itself a drag on markets, the fact that this tension is actually now bleeding into the twittersphere? >> one of them is that first of

all, these staffers remember who got elected president, and it is none of them. it doesn't serve the principal very well at all for them to be going out in public. it makes them all look bad, including trump. so that needs to stop. beyond that, all it does is actually stoke continued uncertainty about what the policy is actually going to be going forward, number one. number 2, 1 of the things that trump has on last week is made this more important by the nominations of people for other things. it emphasizes that they need to get the treasury pick the economic team right because there a lot of head scratching and concern in markets about the pix that seem not up to the task. >> i always say personnel's

policy but in your latest note, you disagree. i'm curious to know why. >> i'm not disagreeing with you, i'm suggesting that process is policy much more than anything else. you got a situation where the markets were thinking a week ago, well, we are going to install person x into this position and that is going to drive policy. well, not so much. and you saw big reminders of that the last few days from the senate where the senate said look, we are going to take this very seriously, we are going to do our jobs, and essentially the consistent method from the senate is going to be we are going to do our work, nobody is going to get a free pass and we are going to see where this goes. that means trump doesn't exactly get who he wants, so there is the process right there, number one. number two, on taxes, the degree to which the senate can agree on a deficit number and markets can

be ok with it is a whole lot more important. those set parameters, that process sets parameters in ways that trump frankly can't affect. in the senate, the congress generally is much more important on the specifics of tax policy than the president will be. precisely for that reason. annmarie: you mentioned the senate. do you think there is any appetite in the senate right now to give trump recess appointments? terry: not even a little bit. that is what you heard from people like john food, people election anymore capital in the last few days. i saw senator mullin of oklahoma on one of the sunday shows saying exactly the same thing, that the senate would do its work to properly vet and figure out whether these nominees were qualified and whether they could be installed with no difficulty.

that is the senate saying we are going to do our job, i don't even want to hear about recess appointments. lisa: if you take the appointments so far as well as frankly the squabble over who's going to be treasury secretary, there is a real question about whether some of the campaign promises by donald trump are truly what he wants to see implemented when it comes or tariffs, energy policy. from what we're seeing right now, is that your sense? that basically he is making good on some of these policies and that frankly with a treasury secretary we are going to see a greater emphasis on tariffs than some of the other issues that people were looking for? terry: i think you all make valid points. but i am on team lease of this morning on the most valid points. you really summarized it very well. what you get here i think is a classic old-style flight between whether or not when trump says

fix it, whether or not he is going to prioritize the really important stuff that is going to define his presidency, things like debt and deficit, defense, managing and lessening geopolitical risk, or whether we are going to have fights over whether or not we are going to have deck chairs on the luxury liner, whether we are going to throw them overboard, the fight about the size of government. this is the time when any incoming group will say we could handle all of this, it would be really good, but they are going to have to prioritize really quickly what you get out of the last two weeks. i think they haven't begun to make up their mind. trump particularly hasn't begun to make up his mind. that is bad for markets, i think. jonathan: appreciate your time and your thoughts. terry haynes of pangaea policy. this got messy over the weekend and largely because howard lutnick has pulled a little bit

with dick cheney. annmarie: this is supposed to be the producer and at the last minute you throw your name into the ring and then you want to become the star when you are supposed to be vetting the candidate to take on the role. you are supposed to be guiding the president-elect on who should be putting in those roles and then all of a sudden it becomes a fight because you want to roll yourself. jonathan: the race continues. exclusive reporting from annmarie this morning on this race. the g20 summit taking off in rio. good morning to you all. equity features on the s&p attempting to bounce higher by 1/10 of 1%. ♪

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♪ jonathan: five-day losing streak on the nasdaq 100. the longest losing streak since the start of the year. 4/10 of 1% on the nasdaq going into the big one, nvidia on wednesday. equity futures unchanged. the bond market, the two year yield, up, up and away. higher this morning by not even a basis point. just this direct feed of better economic data, just waiting, starting to erode the fed's

easing bias. lisa: the highest level going back to february. the index climbing higher. that surprise index takes a bit lower. future policy the keywords last week. the economy not sending any signal that we need to be in a hurry to lower rates. that set the bar for next month's rate cut or not we might get from the federal reserve. jonathan: cpi december 11, payrolls, december 6. check out the u.s. dollar, seven straight weeks of strength. lisa: there's a real question of why it should change and how many people came out over the past three weeks talking about parity as being a likely call. how much are we overestimating what the ecb is going to do to offset some of what we are seeing in the u.s.? are they going to cut in response to tariffs?

will they have a little bit more strength? that is the wrong word. jonathan: euro-dollar, and this will strengthen strong. this morning, the search for donald trump's treasury secretary continues to heat up. former fed cabinet mark walsh also emerging as contenders. reporting on the story throughout the weekend. annmarie: i was on the phone the entire weekend. the mess around this pick is starting to unnerve a lot of people including the president-elect. he appears frustrated there is this fight between howard let nick and scott pesek. howard lutnick felt like the first one to draw the knife. because the president-elect is annoyed, they are starting to expand the search, are they

expanding the search so howard lutnick could accept something else? scott pesek is still in the running. they are prepared to offer him a fancy ambassadorship. are we going to talk about a dark horse candidate that emerges by the end of the week? jonathan: tariffs seem to be the epicenter of all of this right now at least from the market standpoint. this is where i could get a little bit messy. i think the market now believes there was a huge amount of information with whoever he selects for this appointment. you end up in a situation where the market believes they care about financial markets. i think this market turns around and says ok we understand the process, it is tariffs. lisa: that's what hedge fund managers have been saying to the trump campaign. if you want to see that run, put

in the place of treasury secretary, someone like scott pesek. in all the names that are all the front runners, is that something that tells you where the emphasis is on and howard let nick -- lutnick might be outlier? annmarie: peter navarro is in the mix for the top job at nec. an individual who was drafting the order for the president to come out and remove the united states from nafta. the markets push on this. there was a phone call and instead of removing themselves, they said we will negotiate a new deal. this individual is being considered to be in the west wing. maybe that is a bounds for someone wall street likes and

treasury. jonathan: donald trump nominating chris wright as energy secretary over the weekend. he's a vocal proponent and downplayed climate change. the priorities are pretty clear on this front over the weekend. annmarie: bloomberg saying he would be positive for u.s. shale. i was not surprised about this individual. about 24-48 hours, a huge donor to the trump world said chris wright was his number one pick. it was obvious the direction of travel on the campaign trail where the transition team was going when it came to energy. lisa: what's fascinating is how much this sets up a divide between shale producers and big oil. exxon, chevron, committed to the u.s. staying in the paris climate accord. all kinds of green energy.

chris wright basically saying that is ridiculous. this is a fascinating paradigm where it's not clear how much the policies will be good for all oil players. jonathan: i don't know chris wright, based on the comments i have seen, strikes me as very pragmatic about the energy needs of the world. putting far more emphasis on energy poverty and what is needed to lift people out of poverty whether they like it or not. that is the emphasis for me this morning. lisa: i think a lot of people would agree. when i was in peru talking to producers, how much energy is necessary or whether it is the ai adoption or lifting people out of poverty, it is a question of how you get there. whether it is mandated by the government or simply the market. that will be the big divide. do oil providers stick to their

promises if the requirements are listed because of these economically advantageous? annmarie: they place a key role in these project for liquefied national gas getting done. something president biden put a pause on. he's also going to be added to a new energy council alongside doug burgum. the only person on my bingo card that got a job that i thought was going to get a job. jonathan: i want to turn to this development in the last 24 hours, the united dates lifting some restrictions on ukraine's use of western made weapons authorizing long-range missile strikes in the biden's duration looking to bolster volodymyr zelenskyy's position before trump takes office. annmarie: this has given the green light to something

president zelenskyy has been begging for. there will be restrictions on how far ukraine could go with these missiles. we saw a bard bartman -- bombardment over the weekend. he said words are words, i will believe it when i see missiles. lisa: how much of this is trying to be preventative of further missile attacks? how much is it to seize more land for a deal is negotiated by donald trump that says russia could take the land it has taken over. china is annoyed north korean troops are in russia and might not necessarily get involved, it might now widen in the way it would have. a lot of interesting questions. jonathan: this will be a big focal point, the g20. david, welcome to the program, we know president biden has met with xi and went to the amazon over the weekend. the eyes of the world are shifting back to ukraine and a

decision the white house made over the weekend. how much of a focal point is that this week? david: we know it has a lot of conversation happening on the sidelines here. going into the summit i talked to a senior foreign policy advisor to president obama who is here. he was here in 2016 when donald trump was coming into office. he questioned -- he cautioned to watch how much the trump term would be like but watch how they are interacting with each other. to your question about ukraine, it looms large here. we had this development over the weekend. look at who is here and who is not. president putin declined, he thought his presence would be more of a distraction. volodymyr zelenskyy really lobbying hard, petitioning to invite him here and make him a guest of the summit. that didn't happen.

at a summit like this, the goal at the end is to get to some form of agreement that all of the parties involved agree on. the weirdness of the g20 is unlike the g7. the g20 has countries that are not allied with united states and making their opinions known. it will be these conversations on the sidelines in these bilateral meetings. the conflict in the middle east will loom large and what is happening in ukraine as well. annmarie: mohammad bin salman decided to cancel his trip to the g20, reportedly doing something with medic -- reportedly something medically wrong. is this just world leaders deciding to skip the g20 because it doesn't really matter? it's an exit interview for president biden and the individual they need to speak to is sitting in palm beach? david: i think that's absolutely

right. this is important because there are new faces and world leaders want to know. the united kingdom, they are the host of bilateral meetings including with president xi, here in rio. this is a swansong for the current president. someone over the course of his career in politics has moved along multilateralism. it's not as en vogue as it used to be. i think they are trying to figure out what the future looks like and what the reliance's will be like and how they will change. to your point about the action being in palm beach and south florida, a number of leaders stopping on their way to rio, the president of argentina among them. going forward, that will be the person who is the real changemaker. the person they will have to deal with. figure out how he's dealing with issues of trade and broader alliances of geopolitics.

i think they are trying to firm up their thinking on that and get a sense of his ability going forward. annmarie: when it comes to probably the most important bilateral relationship, it is between china and the united states. what did we learn that -- from that meeting between xi jinping and president biden heading towards 2025? david: i will start with what president biden said, he was quick to say he has improved that relationship, there is open dialogue. he sort of sees that as an achievement. there was some sorrow in the way he spoke about the relationship. not into the fact that all that he has done to bring that relationship back to life could change on a dime when donald trump returns to the white house. listen to what president xi had to say around that meeting as well. he nodded to the fact that he thing sits in the interest for the superpowers to have a

cordial relationship with one another. dialogue is good, friendly competition is good as well. he drew these red lines when it came to trade, democracy. things china would fight back if they needed to. he's taking a position and going into this moment of transition globally where you have donald trump returning to the white house. china is prepared to fight back if donald trump follows through. he promised over and over again on the campaign trail, the economic war he waged against china will only deepen when he comes to power. lisa: how much are they fighting back in terms of taking advantage of policy and washington, d.c.? going aggressively after trying to be the champion of free trade , however ironic that may be. trying to bolster their relationship in places like south america and around the world? david: you were in peru last week, i'm in brazil this week. it's evident to me as it was to

you the role china is playing when it comes to development financing, philanthropy, infusing a lot of money into this continent and others around the world. it's trying to wield a lot of influence around the world. talking about the diminished role of president biden at this summit, president xi has a much more front and center role. countries trying to meet with him as well. we are seeing that transition underway. it is not something happening overnight. the role china has been playing in south america, this is a long game for china but it has come to fruition and established itself as another pillar on the global scene. jonathan: wondering when i get to go to latin america as well. david, thank you. lisa is back from peru, i'm here in new york. lisa: do you want to go to peru? jonathan: did you enjoy yourself

over the last week? lisa: great food. jonathan: let's get an update on stories elsewhere. here is dani burger. dani: hundreds of managers of hsbc have been up -- asked to reapply for their jobs. senior staffers competing with each other for jobs at the new division. job cuts are expected to be announced in the next couple of weeks. morgan stanley strategist mike wilson, known for his bearish views on u.s. equities as surprised wall street with a bullish outlook for 2025. he expects the s&p to end the year at 6500 points with gains driven by economic growth and fed cuts. he had a 5400 target for mid-2025. the new outlook calling for 11% gain from the current levels. warner bros. discovery has settled its lawsuit with the nba after it lost its decades-old

broadcast rights. the tnt and max owner will be allowed international rights. the company will continue to produce its flagship studio show "inside the nba," hosted by earnie johnson, charles barkley, shakeel o'neill, it will be licensed to disney. jonathan: up next on the program, europe under pressure. >> if you look at the good, bad, ugly, unfortunately europe is in the ugly. cyclically they are challenged. sector early they are challenged. these dynamics today, if you are lagging, you are likely to lag even more. jonathan: how much more? that conversation up next. ♪

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jonathan: the highway to the danger zone, hsbc, the danger zone for equities, the 10 year, 4.46. the 10 year, just about unchanged. europe, under pressure. >> if you look at the good, bad, ugly, unfortunately europe is in the ugly. fiscally they are challenged, there is no definitive leadership in the two countries where you need it most, germany and france. these dynamics today mean if you are lagging you are likely to lag even more. jonathan: here's the latest, the outlook for europe's economy looking bleak following donald's election win. the eurozone will find itself in a complicated position.

the ecb will need to look through a not entirely spotless short-term outlook for inflation. welcome to the program, everyone on the show over the last week overwhelmingly bearish on europe. what could go right for europe over the next 12 months? >> what could go right? the positive thing is wage growth now exceeds inflation. if households are not completely obsessed, there could be additional consumer spending. that's a possibility. another thing that could go right is instead of the massive trade war, which we are bracing ourselves against, there could be a more benign stance coming from washington, d.c. and an economy that is reliant on exports.

that really is it. otherwise, most of the agents of growth are switched off at the moment. lisa: do you think the negativity is warranted and not enough is baked in for the european region? >> to me, the euro and outlook for the european region are two different things. they move in different directions, a weaker euro is definitely what europe needs. if we need to deal with tariffs on european products in the u.s., if we need to deal with slower traction from china, heightened china's projects on the markets, weakening of the currency is what we need to avoid that outlook that is already quite mediocre. we have regions for that.

the signals we could perceive from the ecb is they are taking the measure of the downside risk. there has been a clear change of tone the last few weeks. lisa: if you are saying that this is basically a region that needs a weaker euro, how weak is necessary to got some of the exporting back into gear? gilles: if you look at what we used to have as a reaction, if you think we will end up with a 10% tariff on european product entering the u.s., usually you kind of offset half of it with price appreciation. you probably need another 5%. some of it is already priced. what the market is talking about is something that probably makes sense. annmarie: when it comes to how trump will deal with europe, he likes to deal with nations on a bilateral basis.

maybe he won't do it with the european union as a whole but go country to country. who is in the best place to deal with donald trump? gilles: i will use a phrase that jay powell used himself, trade policy in europe is a european matter. the treaty is pretty clear on that. i understand why it would be tempting for foreign governments to try to negotiate bilateral deals with germany, france, whatever, trying to work on their perceived weaknesses and interests. down the road on any kind of magnitude, you need to deal with brussels. the treaty is perfectly clear on this. the decision to try to leverage on the u.s. capacity often to move berlin in certain directions. we have seen germany has opposed

the european commission's retaliatory tariffs on china. the tariffs on china moved. you could get into it with national governments. if they cannot actually build a commission around themselves, it is not necessarily following through in brussels. it may not be the right solution for anyone trying to negotiate with brussels. lisa: listening to your theory, i wonder why european bonds aren't a screaming by right now. fiscal thawing in germany is overstated, they will not engage in any kind of big stimulus. why wouldn't people go headlong into european bonds? they are probably going lower. gilles: we have probably reached the point where it's going to be quite sensitive. the risks on the downside.

the risks to inflation are on the downside, even if the data hasn't been pure on that front. there's going to be probably some overall restriction in the supply related to what would happen with the bau situation. we will probably see a correction in yields in europe. as i expect, it's increasingly clear about this. cutting rates, they need to move to another step and i think they will to engage in forward guidance as a way to steer the market towards a proper curve. jonathan: appreciate your time. the ship that is required from this european central bank. up next on this program, francisca blanch of black rock.

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>> in the background, you've had a lot of those macroeconomic uncertainties be resolved. >> we think the inflation problem is in the rearview mirror. >> i'm skeptical about if the fed will be able to carry on cutting interest rates. >> one of the things i don't want to see is a 50 basis point rate cut. >> the problem has not been the fed for the economy, it has been the fed and the way the market has been pricing.

>> this is "bloomberg surveillance," with jonathan ferro, lisa abramowicz, annmarie hordern. jonathan: the second hour of "bloomberg surveillance" starts now. s&p found -- 500 bouncing by not even 1/10 of 1%. the russell we are up by 0.3. the weekend dominated by earnings from walmart and target. the big one coming from nvidia. game of thrones down in palm beach. let's talk about the name. howard lutnick, scott bessent. the list is getting longer. annmarie: at a time when people are looking at the linchpin, is it tariffs or is it some sort of strong american, strong dollar, is it weak dollar? what kind of policy are they

looking for at a time when the other picks don't give a lot of clarity about the overarching priority? annmarie: why are we having a game of thrones episode when it comes to the treasury picked? president-elect donald trump ran on an economy pitch. this is probably closest to his heart. why did he come out with the economic team first? the source of the tension has to do with howard lutnick. he is the cochair of the transition. he wants to be the star. putting his name in the ring for treasury. a lot of tension between him and scott bessent, his key advisor for president-elect. tension not just in palm beach but bleeding out to social media space. on twitter this weekend, they are starting to expand the search for other names. jonathan: did you see the walkout at madison square garden over the weekend? none of those candidates were there. annmarie: potentially howard

lutnick was there but there were no photos or images of him. i was told he was on the plane but he was not in that now infamous photo of them all having mcdonald's. he was not in the walkout to msg. jonathan: he doesn't strike me as a ufc guy. lisa: who will be the first buddy? who will be the person sitting next to him at ufc? we will do this again and this is what markets are focused on. jonathan: as economists, we should've gone to madison square garden. the atmosphere looked amazing. i'm not sure they wanted me to walk out with them. equity futures up by 1/10 of 1%. we catch up with black rock, at two month bond slump. francisco blanch of big america -- bank of america. after reaching their highest

level in six months friday, investors wait the next move. blackrock saying uncertainty around policy in 2025 is elevated. while not our current base case, re-acceleration of pressures materializing from fiscal trade policies following the election could cause the fed rate to land higher. good morning. it was only a few months ago we were talking about the fed getting ahead of the curve. maybe they needed to get accommodative. now we are back to normalizing except that might be closer to where we are a month ago? amanda: we would not be surprised for the fed funds terminal rate to land somewhere around four. that is because growth is holding up really well. something the credit market could digest. inflation is re-accelerating and it is yet to be seen on policies coming down the pipe. we have some clarity the path is

widened about potential outcomes. especially if it's coupled with slower growth. the bigger risk is what we are characterizing as a disorderly selloff in treasury yields. if we have a backup because of good growth, that is a tailwind for credit because it brings in yield based buying. it is coming back to the fall of 2023 when that gives investors some pause. jonathan: could you define how disorderly things are at the moment? amanda: that 4.60 is really the area where they become concerned. if you see the velocity really be swift, gaps of 15-20 basis points in a day for a consecutive period of time. not driven by policy of growth surprises but more driven by downside risks on the policy side or upside risks on inflation. that is where i think we would be concerned. if you are a yield based

investor, you may come to the conclusion it waits to deploy capital on corporate credit. in the context of all of this dependency, credit spreads have made new cycles tight. that tug-of-war between spreads and yields is very much in place. lisa: what constitutes a disorderly move at a time where 15 basis point moves are something we have seen. this is not abnormal. let's say howard lutnick gets chosen as treasury secretary. people view this as an endorsement of stronger tariffs and the enforcement of other tax cuts. do you foresee that type of disorderly move in treasury yields? amanda: i think leaving some of the candidates to the side, if you have a situation where you have upward pressure on inflation, what really concerns us is not the targeted tariffs but the across-the-board tariffs

that could spike retaliation. you are moving to a discussion of the one time price level argument that has been floated. i'm not sure i agree with this. if you have retaliatory tariffs back and forth, then you have pressures feeding on themselves. it becomes much less certain. we take a step back and say where do we go from here? we like exposing portfolios, they would not be exposed to a certain degree because they are more service based. we like domestic facing companies actually. ironically, that may bode better for high-yield leverage loans. financials are really important. they are 33% of the ig index and they are trading wide. if we think they could tighten, that could pull index level spreads tighter than what they are. lisa: we were focusing on this last week about at a certain

point, if you see the companies out there as being in pretty good shape and continuing to be so, could you see spreads narrowed to such a degree that investment-grade companies trade within treasury yields? amanda: we had that conversation last week. i think there is room for spreads to move tighter. i don't think there's a world where triple b corporate's are trading tight. you do have some aa and a few aaa companies left standing in the corporate credit sphere that are trading pretty close. i think the net net here is corporate credit is in a pretty good place. it all boils down to growth. i would say manageable tariff risk, i would say the continuation of yield based support cross -- plus favorable technicals. he could stay in a tight range or even move tighter.

waiting for a significant catalyst for spread widening and credit would involve a combination of persistent upward pressure on inflation, a slowdown in growth, that disorderly self. the volatility of the bond market has been moved relative to what we are used to in past cycles. up to that 5% range that would catch our attention. annmarie: i'm thinking about how disorderly this treasury pick has come to be. if you talk about the impact of tariffs. peter navarro is really in the mix, this trade -- skeptic. howard lutnick coming on and using tariffs as a yes-man to donald trump. robert lighthizer already worked for him. what would that mean for this bond market? amanda: leaving the specific individuals aside, the issue we have to come to grips with is what does this mean for ongoing

upward pressure on inflation? the worst case scenario for credit is across-the-board tariffs that is also coupled with retaliatory tariffs and upward pressure on inflation that corporate's can't manage. that is the case that if corporate's are feeling if they have significant cost input pressures, they are not able to manage through, then you have a situation where corporate have been hoarding labor. if you get to a point where corporate's need to use the layoff tool to protect their margins, you start to get concerned. you have the weakness in the consumer extend beyond the lower income segment. annmarie: the fact that it already seems chaotic and is already messy based off every phone call i had over the weekend, is that a market negative? amanda: i don't think so. we are bracing for this to play over the next couple of months. heading into the election we were not expecting ultimate clarity once we knew the outcome

of the senate and house. personnel is policy. we have been watching for these appointments. we are expecting this to be a longer-term trend. the fed has said they are not reacting to policies once they are implemented. more poised once you see the economic impact which will take some time. this will be a drawnout event into 2025. lisa: that has been the other big shift over the past week. some of the rhetoric has been talking about how they could afford to wait. they don't have to cut rates as quickly. how much is that a game changer on some levels? there isn't the same kind of dovish bias there has been. amanda: a lot of what chair powell said, he said during the november 7 press conference. we may set the pace, we are not in a rush. there will be a 25 basis cut -- point cut in december. it all boils down to what you are alluding to, if they are not

cutting because growth is above trend, which we are tracking above trend. if they are not cutting because they are concerned about upward pressure on inflation or disruptions and supply chains, that sort of thing would cause inflationary pressures. they are also focused on growth. it's not a foregone conclusion that tariffs could cause them to not cut or even hike. there could be a growth that they are focused on. jonathan: we could see some major changes. amanda, good to see you. it is good news that the president-elect is taking his time with an important decision. it has only been two weeks since the presidential election. when you use words like messy and chaotic it is important to identify why we are using those words. it's not because of the president-elect, it's because of the cochair of the transition

throwing their name in the hat to become the treasury secretary. annmarie: now it has bled on social media with elon musk coming out, the self-proclaimed first buddy who seems to be attached at the hip with donald trump. at mar-a-lago all the time, at ufc over the weekend came out in support of howard lutnick. this is something donald trump would like to keep in the family. the fact it is spreading beyond the gates of mar-a-lago is what is unnerving them. it is why they are saying if we can keep this in the house, we will have to look elsewhere. jonathan: with an update on stories elsewhere with your bloomberg green we have dani berger. dani: spirit airlines filed for chapter 11 bankruptcy after its failed merger with jetblue. listed assets and liabilities are between $1 billion and $10 billion. spirit reached an agreement with a majority -- federal

contractors should expect massive cuts in the president-elect's inefficiency -- efficiency drive. the billionaire is leading the efficiency task force with elon musk. he added there is massive waste, fraud, abuse. we expect certain agencies to be deleted outright. in sports, the steelers held off the ravens in a matchup of top teams. pittsburgh pulled off the wind without scoring a touchdown thanks to chris boswell going 6-6 on field goals. in march the eighth over baltimore -- marks the eighth win over baltimore in the last nine games. the chiefs undefeated season is over. josh allen scored a touchdown to improve the bills record to 9-2. jonathan: if you notice the trump dance going down in college football and the nfl.

lisa: you are going to really get on top of celebrations? it's about sportsmanship. jonathan: you get on top of celebrations all the time. lisa: the trump dance was all over social media at the ufc event as well. jonathan: i saw. the joyless nfl. up next, the fight for the top job in the treasury. >> they need to get the treasury pick right, the economic pick right. there's a lot of head scratching and concern in markets about the pace. jonathan: don't you prefer the elaborate, over-the-top celebrations? annmarie: my favorite part is when they try to celebrate without seeming like they are celebrating so they can get crackdown on. jonathan: beautiful new york city, from new york this morning, good morning.

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♪ jonathan: equity futures right now on the s&p 500 up by not even 1/10 of 1%. check out the bond market, yields higher by 10 basis points. the fight for the top job in the presidency -- treasury. >> it doesn't serve the principal, president-elect trump, very well at all for them to be going out in public. they need to get the treasury pick right. there's a lot of head scratching and concern in markets about the picks that seem not up to the task. jonathan: the eyes of wall street on a battle royale in palm beach florida. the race for the treasury secretary between scott bessent and howard lutnick. president trump elect --

president-elect trump saying to be losing patience with infighting. henrietta, the big question, where is this one going? henrietta: the most important decision is about what happens with robert lighthizer. there is very limited amounts the treasury secretary will do in terms of tax progress. this isn't the first time around , that tax bill will be written by the senate finance committee and the house ways and means committee. the treasury secretary will be influential but in terms of the massive pieces of legislation, it is tariffs and taxes. i'll be looking at where robert lighthizer will go. lisa: according -- annmarie: according to my sources, robert lighthizer is still in the mix. what would robert lighthizer at the helm of treasury mean? henrietta: i wonder if you will

do something in the trade czar universe, the main theme of the trump cabinet so far. whether it is government efficiency initiative, crypto, or robert lighthizer in a role that is a trade czar. he doesn't need to be treasury secretary. i think it's unlikely he will be the elect. we definitely saw this last time around as well. i think it will come as a surprise. a roaming czar that has influence over the department of treasury then the treasury secretary itself. annmarie: sources are telling me the team is trying to give this offramp to howard lutnick. offer him a fancy first world ambassador ship. perhaps that would lead the way for scott bessent to get the nod or they are going to expand the search. this is becoming a little too

messy between these men? how do you read the tea leaves right now and you think there will be a timeline where we could get this nod? henrietta: the trump transition folks and people i have spoken to or trying to get as many names as possible. we know they are trying to get ceos, someone with stature to fill that role. they have not been able to find that particular human yet. we are still in the realm of scott bessent, howard lutnick. bessent for the most part has been out on the street the most meeting with big hedge, banks, talking about a slow, phased-in 5% increase in tariff rates. those are the things that when the details come out will spin folks. the president-elect has moved very quickly in transition. i would expect the treasury secretary to be confirmed within the first two weeks in january.

they want somebody to be able to get through with matt gaetz, someone who will run into ethical problems. annmarie: when it comes to the senate, we think the treasury post could sail through. the president-elect is moving quickly, why is it taking so long when it comes to treasury? one area that is not moving quickly even though he ran on economic agenda? henrietta: there's not a clear loyalist he is putting into place. whether it is tulsi gabbard, they were in place on the campaign trail. they already said they do not want to take on the position. when you hear things like going through the ethics component in the background track -- check is preclusive, it gives you an understanding of how difficult it is to make a decision to go through the ringer with the fbi, background checks, disarming of their funds. i think there's a lot of

personal decisions that go into the treasury in this role that are a little bit higher than the attorney general pick. lisa: how much do you see this as a test almost of how important the market response will be to trump policies as sort of the ultimate check? henrietta: the street is heartened by the fact that they are playing a role in this. investors in the stock market whether it is going up and down has a real niche on the president. i don't think that is true to put it bluntly. it is a view that they have a say in what the trump administration does. specifically how donald trump responds. the bond markets, should his tax and tariffs go into effect in the same year, it's my expectations that tariffs will go on in the first four or five months. you will get these massive finance pictures. what i hear often is the bond

market will send a message and stop that. it's not the way d.c. typically works. they are more concentrated on quarter over quarter gdp growth, unemployment rates. that has never led him to not impose tariffs as we remember from 2018. lisa: we did hear from mike johnson, house speaker, that there would be offset in the tax cuts. we heard a couple weeks ago that he will be careful about not necessarily expanding the budget too much. why do you think the market does not play the role and thinks it does? henrietta: it's not what congress is watching. that is not designed to boost the market on a day over day basis. president-elect trump will be at the very beginning of his term. just four years. not every single day matters. it is a fundamental

misunderstanding of the u.s. economy and the stock market in general. while i think president-elect trump tweets about it, it's different than writing and crafting legislative policy that will increase the deficit by at least $2 trillion by next year. that's what it will take. that's what it costs. when you talk about the government efficiency, what i hear is exactly the wish list we get from administration on the first monday in february. it is very optimistic. it includes a lot of offsets to the cost of spending that you want to roll out. very little of that actually gets effectuated. the president, elon musk, talking about government efficiency, this is something we like to do in a perfect world. it will not actually happen. it's part of the conversation necessary to making the appearance of deficit on the magnitude of $2 trillion, if not more. jonathan: we will see. it's good to see you.

the philosophy has shifted in trump's first term, the focus was on reciprocity, leveling the playing field. the first term of joe biden was about national security and protecting industry. this time around it has changed. it feels like they are looking at trade as a source of revenue to offset tax cuts. the relationship between the two is worthy of more attention. lisa: do your point, trump 1.0, does the bond market become even more important? jonathan: coming up next we talk energy with francisco blanch from bank of america. from new york, this is bloomberg. ♪ ♪♪ the black friday sale is now on. visit beaches.com or call 1-800-beaches

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jonathan: to-day losing streak on the s&p 500. on the nasdaq 100, 5-day slide, bouncing back by .3%. in the bond market, breaching 4.54 the first time since may in friday's session. the 10-year closer to doing that again. 10's at 4.47. lisa: positive surprise that we've seen from economic data, also rhetoric from fed officials that they may not need to cut as quickly.

then questions around the policy and with the sequencing will be. all of this leads a jittery bond market and nvidia, dear earnings, target, walmart to me might be the most data points we get. if you get strong earnings from walmart, what do you get in the bond market, 4.55? jonathan: just going to reinforce u.s. exceptionalism again, at whose detriment? europe. sliding back to 1.0 540. europe not in a good place. the ecb vice president saying risks have shift from inflation to growth. lisa: talking about how this is a region that needs a weaker euro in order to get the growth they are looking for, talking about how just on the terror of proposals alone you can see the euro depreciated to about parity and then actually be necessary. in all leads the question is where is the offramp, has this

been priced in, our people pricing in the over pessimism? jonathan: the next ecb meeting december 12. inventors awaiting donald's treasury pick. a lot of chopping and changing through the weekend. annmarie: this weekend you really saw the tension that has been building in palm beach screwed into the twittersphere, a number of market participants say they are going to back this individual. that seems to have narrowed donald trump and may be the staff looking at other names they should throw into the ring. i have a question for whether or not, howard lutnick, i am told they are looking at another place for him. if he accepts this ambassadorship, can scott bessent rise to the role or will

they start from the drawing board once again and start interviewing fresh candidates? lisa: there is a larger question here. peter put it well. 3d chess or 52-card pickup. there is a question of whether there is a cohesive plan on getting a plan through or just payback for people that contributed to the campaign. that is the question in markets. maybe because you have seen the postelection you forgive fade, there is lack of certainty about what is real, what is lip service. lisa: even when you were a kid, i have don't want to talk about that, i want to talk about the bond market. jonathan: house speaker mike johnson saying congress will do the math to make sure president-elect donald trump and his plan to and tax on tips is enacted. johnson vowing to swiftly enact

a policy once the new congress is in place. back to a point we made 10 minutes ago, the connection on what happens in trade and what happens here is important. annmarie: you want to use tariff s as revenue raising, they pay fors for what donald trump promised on the campaign trail. the list went on. 50% corporate tax rate. there will be some new ones that if your production is made in the united states. the list goes on. 's peter johnson is saying that you cannot have everything without doing them at. i do wonder if this is something he directly spoke to president-elect donald trump about maybe this weekend maybe when they were walking into nsg. lisa: also the issue of how much congress will act as a check on donald trump. how much of this will be a push back, matt gaetz not getting

through, as henrietta was saying, or that he has a clutch over congress and can get through some of his proposals pretty clearly. that is a real question mark when it come to the other fiscal proposals. where there is pushback saying that we are worried about the deficit. jonathan: ringside, talking about the deficit. my goodness. never change. trump's transition team also making a framework for full self-driving capabilities a top priority for the new administration. any rules likely to benefit elon musk who is currently positioned in trump's inner circle. that stock is up 6.4%. annmarie: this is giving a boost to tesla, other companies looking for this autonomous driving that need the regulation but a federal auto safety standards, this needs approval. even if this is the idea that

elon musk will push for, you have to go through congress. what i think individuals like elon musk need to be educated about, the u.s. congressional system, political system, there are checks and balances and everything has a process. jonathan: bank of america's francisco blanch writing the oil market has been pushed and pulled by geopolitical risk and the surplus next year. opec-plus faces a difficult challenge which likely requires additional curtailment is balances deteriorate further. francisco, good morning. good to see you. new energy secretary potentially in the next year or so. what are you telling clients about how different things could be under donald trump? francisco: there are a number of things that will likely come out of a new administration. most likely we will see some of the lng export permitting come back to the four.

that was postponed under the biden administration. there will be others potentially. the paris agreement discussion, will the u.s. pullout of the agreement? in terms of the immediate impact on production, in america, price is determined by how much output producers ultimately pulled out of the ground. the bigger risk to prices really is coming from tariffs. we have potentially a trade war here. to me, the euro, you talked about it going to parity, the chinese yuan, what will happen once tariffs get implemented, if they do, these are downside risks. america first means commodities second. we start from that point. it doesn't mean that we are going to produce more oil and gas, but prices will determine that. lisa: you are saying we are in a

range, u.s. production being the potential balancing fact, but ultimately you cannot see prices going up too much, cannot see them going down too much either. francisco: also some geopolitical elements, the trade war, there is the potential price war. opec announced that they could bring production back. there is also the military wars. we have israel-gaza, russia-ukraine. whatever happens to those political events we are going through right now will also determine the path. under the first trump administration, we had pretty severe sanctions on iran, venezuela. marco rubio appointed as, nominated to be secretary of state. he is anti-iran, and to venezuela. that could have an impact. we are 2.2 million barrels a day

about production levels when trump left office four years ago. that is one upside risk to the market. lisa: i have to be honest, the energy market has been so confusing the last couple years, so hard to get a handle on it. i am wondering how difficult it has been to get a handle on the supply demand dynamic at a time when there is increasing use of renewable energies, different cars, vehicles. you see that in particular with china. how does that money the picture in understanding what the reaction function is in the market to growth and the potential readthrough of these politics? francisco: you make a great point. at the beginning of the year, opec was coming out with 2.5 million barrels. right now we are likely under a million. a lot of it is coming from the chinese moving to electric vehicles. 53 percent of vehicles sold in china are ev's. they have a lot of cars to sell,

they are piling up. they have also moved a lot to lng, which is cheaper than diesel as an energy source. chinese demand for diesel is down this year. gasoline demand is flat. china has been 50% of the band over the past few years. that is why the trend of substitution efficiency, trade war, price war potentially with opec, trying to get market share back again. then there is the military conflict. annmarie: let's pick up on the price for. opec-plus, we have seen them put the price above market share. 2025, you think that changes? francisco: in terms of bringing production back on the opec side? it will be a tough call because they have delayed the increased was already. they have increased production. you know the spot price will

fall because we have a surplus coming next year. a fair amount coming from brazil, guyana, even the u.s. is increasing production. if you bring more barrels, the spot price will fall, inventories will build, which is contrary to what opec says they want to do. i think that will get us into a price war type of scenario. if opec increases production, prices could go up $10 or more. annmarie: your point on tariffs, how that could be a drag on the energy industry. could it also be a solution? ursula von der leyen called president-elect trump and said we still have a lot of russian lng, maybe we can buy more american lng. can that be a solution to some of these potential trade wars? francisco: 100%, great point. they will use their u.s. energy purchases in negotiations against tariffs. we will see more purchases from

the european and chinese side to try to negotiate a trade regime with the u.s.. that is for sure a key part of it. lisa: if i were sitting next to you at a ufc fight, i would be asking you, should i buy gold right now? a question of whether the run-up was a head fake or not, will be permanent because of how much the dollar has gone up? francisco: in the short run, gold could go to $2500 an ounce. part of that is the tariff downside risk. we also see interest rates going up in the u.s., you talked about how the fed may or may not cut in december. gold was pricing in at a pretty steep rate cut. if that doesn't happen, it will be choppy for a bit. longer-term it's about the budget deficit. will we find a solution to this budget deficit we've been running the last couple years? we have to ask mike johnson the question. lisa: he will say yes.

francisco: i think the point is, gold, if inflation comes back, gold will be a good place to be. i would say maybe buy the dip. i would still think $3000 an ounce is the target for next year. jonathan: 2594 right now. moral of the story, don't go to a sporting event with bramo. lisa: maybe somebody want to talk about this ringside. jonathan: absolutely no one. lisa: other people basically shoot the wind. this is one of those things. jonathan: gold is higher, silver is, too. here is your bloomberg green with dani burger. dani: cvs health is adding four new members to its board and an agreement with glenview capital management, a had fun for changes.

the ceo will be one of the new board members. firefighters in new york set a voluntary evacuation over the week and helped them protect more than 160 homes from a wildfire near the new jersey border. the fire was 90% contained. a state of emergency was extended yesterday. the fires because remains under investigation. liberty energy shares are rising in the premarket 6% following news that president-elect trump has nominated ceo chris wright to lead the energy department. he has no previous d.c. experience, is an advocate for oil and gas development including fracking. trump also said that he will serve on the newly created national energy council which will be chaired by the secretary of the interior nominee doug burgum. jonathan: thank you. i think it's a good idea for the

energy secretary to have some energy experience, even if they don't have d.c. experience. annmarie: most people would agree with you. also most people voted the way they did wanted to see outsiders instead of the washington complex reading into itself. jonathan: the american consumer gearing up for holiday shopping. >> there is a lot of moving pieces and that is why i say even though the consumer is in a better spot, will be slightly better into next year, it is certainly not a v-shaped recovery. jonathan: looking ahead to earnings from walmart and target just around the corner. from new york, this is bloomberg. ♪ investment opportunities

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jonathan: let's check out the equity market. the s&p 500 up by .1 percent.

we've all been waiting for the same thing and it finally starts to happen, outlooks for 2025. morgan stanley. i was surprised by this one. 6500. lisa: you could also drive a truck through the range. 4600 to 7500. this is like the potential bare cases, bold cases. highlights how the crystal ball season is particularly muddy. jonathan: that is the number on the board, it is a start. under surveillance this morning, the american consumer gearing up for holiday shopping. >> there is a lot of moving pieces and that is why i would say even though the consumer is in a better spot, will be slightly better into next year, it is certainly not a v-shaped recovery by any stretch of the imagination. the consumer is willing to spend but very cautious and value focused and they want to see newness. what we have seen is amazon,

walmart, costco so far have combined for 70% of retail dollar growth this year. jonathan: big retailers reporting this week ahead of a shortened holiday shopping season. kate mcshane writing target customers are resilient yet on a budget, while walmart is well-positioned to continue driving solid earnings. kate, welcome to the proga how battle hardened are these companies from the trade war of a few years ago and how well-prepared are they for more of the same? kate: i think frankly the more discretionary goods you have, the more you are importing from asia, the harder it is to manage. specifically to target and walmart, about one third of what target cells is domestically sourced, so not subject to tariffs. walmart, about two thirds of what they source is domestically produced and not exposed to tariffs.

there is still quite a bit there in terms of exposure. the last time that we did see tariffs happen both walmart and target dictate prices up. frankly most retailers did. that is probably what will happen this go around as well. lisa: i have to ask ahead of walmart coming out tomorrow with earnings, is walmart still a retail company? kate: it's a good question. yes, it absolutely is, but more of the success they have seen recently is with their alternative revenue streams which is them building out a media business, fulfillment business, marketplace, data ventures, and they describe it as an ecosystem to better serve the customer with. but there certainly is a lot more tech, understand from an e-commerce standpoint than there has ever been before. lisa: the reason i ask him to also get t.j. maxx and target. i wonder if those are cleaner

reads on the consumer pushback with price increases, those kinds of consumer trends that people look to in the likes of, previously, walmart. kate: you still get the true rate of what sales are doing, comp store sales trends which they report every quarter. we get color from target and walmart about what consumers are doing on the discretionary side. for all the success walmart has had in terms of growing and taking share, their discretionary still remains a somewhat flat, has not been growing similarly to target's. annmarie: i know that we talked about this when you joined us in september, when this was one of the story lines the consumer sector, do you still see individuals in the higher income cohort trading down? kate: we still see consumers being choiceful.

the train down has not happened to a degree. the story of the consumer is they are employed, they have cash. the goldman view is that the consumer will stay to healthy into 2025 based on how strong the labor market is. where we are seeing a little bit of weakness is the lower end consumer as they continue to deal with higher prices. prices are still higher than a few years ago. at the mid and higher income levels, you are still seeing good demand. again, just using that word choiceful. annmarie: going into the holiday season, why does black friday know if you like an entire week? it was supposed to be one day. kate: i would argue it feels like the entire month of november has turned into black friday. we are contending with five less shopping days this year.

you are even seeing differences year over year of what you see black friday ads. it is all in the name to engage customers. lisa: have there been any signs yet -- i see the christmas trees up, wreaths. it is basically two months, black friday. i wonder if we have any early signs about what the appetite has been looking for the holiday season? kate: we don't quite yet. that is my earnings are so important for target and walmart. they will have a read into their first couple of weeks of november and hopefully will comment about how sales are going, how they were relative to october. we will definitely get a better read when we speak with them this week. i think data has showed traffic data at the retailers has showed some acceleration into the end of october, early november, so

it looks like you are seeing growth in traffic which is a good sign. again, we will get it straight from the company this week. jonathan: the tree went up this weekend. i knew that was aimed at me. saturday afternoon. ready to go. lisa: i walked by whole foods, i saw the trees outside. i saw the prices were the same, which is interesting. i thought, jonathan ferro is putting up his tree. jonathan: kate mcshane on the latest in retail. home depot, a number of years ago, the tree is still doing well. t.k. gives me hell over the fact that it is not real. lisa: what happened? jonathan: going into the streets of new york, every year didn't really appeal to me. lisa: does the shedding bother

you? jonathan: you know me too well. i like them clean. i do miss the smell. but the lights are perfectly positioned on the tree. lisa: this is my shocked face. jonathan: next on the program, tom kennedy. we do this every year. mandeep singh of bloomberg intelligence. kyle bass of hayman capital management, who started this on twitter over the weekend, endorsing mr. bessent for treasury secretary. elon musk responding to him. and we will catch up with the former st. louis fed president jim bullard on the fed's path forward.

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>> where markets are right now is maybe you could say in the easier phase of the optimism

curve where no policy change has yet been implemented, so all options are still on the table. >> when you look at the layers of promises which will grow the debt, tariffs, this will not be an easy situation. >> the market is front running economic announcements. >> policy air were probably is our biggest risk, whether it be from the administration or whether it be from the federal reserve. >> this is "bloomberg surveillance" when jonathan ferro, lisa, and annmarie hordern. jonathan: equity future this morning positive by only a third of 1%. going into the big one this week, earnings from nvidia on wednesday. that stock this year higher by 187 percent after climbing 238% the year before. at the moment, the focus is on this right here, the race to be the next treasury secretary in

the united states of america. the list is long. lutnick, bessent, kevin warsh, marc rowan, senator haggerty. annmarie: president elect according to my conversations seem to be frustrated about this fight that has broken out between howard lutnick and scott bessent, described to me as a knife fight. this all centers around howard lutnick, supposed to be the producer of this transition, vetting these individuals, throwing his name into the ring. now you see the staff around the president-elect potentially looking at other people. the question i have, is this potentially an offramp? people are looking at where else howard lutnick can go community in ambassadorship, so that scott bessent rises to the top, or do they go with a dark horse candidate? the problem with these dark horse candidates, warsh, marc

rowan, senator haggerty, where did they stack up with tariffs? lisa: this has been part of the backdrop for why we have seen the fade in the performance of equities since the election. you have seen retracement of a lot of it as you have this question around policy, but the reaction function will be in the bond market. ultimately my question is, the markets are thinking they have a role, they have a seat at the table. do they actually? jonathan: based on experience, they do. yes, they put tariffs up but they backed away every time tensions balled up between the u.s. and china. as for this race to become the next treasury secretary, i think this is really important to financial markets. kyle bass, who joins us later, is making the point that it is already starting to dent equity markets. the s&p 500, nasdaq 100, the

russell, bullish calls on small caps, all trading below that level one day after the election. lisa: do you get tariffs first before you get the other implementations, mother be across the board tariffs from the beginning? is that the priority for this next president or is there something else on the table? jonathan: coming up, tom kennedy of jp morgan. kyle bass of hayman capital management on the flight over trump's treasury secretary. and jim bullard on why the fed is in no hurry to cut. stocks mixed as investors focus on the fed's next move. tom kennedy saying we expect policies under the new administration to be progrowth and continue the era of u.s. exceptionalism. seeing a year and 2025 s&p 500 outlook of 64 hundred come

expecting u.s. stocks outperform the rest of the world. welcome. why has this rally started to fade, what is behind it? thomas: we are still digesting with the possibility of outcomes could be from the trump administration and there are wide-ranging expectations. so much uncertainty. what we did need to price is a progrowth environment where you will see deficit spending, deregulation, some offsets from tariffs, but how far that can go is a question. jonathan: that is what it felt like in the markets, pricing in this positive goal stock. goldman is arguing the new policies will not change the path of the economy. we expect a slower pace toward the cutting cycle to a terminal rate of 3.25, 3.50. let's put you on the spot, why

are they wrong? thomas: i don't think they are wrong. in our baseline we have the fed cutting to 3.5. the fed is focused on getting their dual mandate to 2%, labor market at maximum employment. that will be the focus. will the policies of the trump administration matter? certainly. for us, it matters more in the sector orientation of the stock market. this decoupling from china requires an industrial bill. that america has not seen in a long time. we can look at the equity market and say as the rates come down, that should help catalyze some of this capital investment. lisa: so what is in your target higher? that is not a big gain. you are talking about less than 10% gains next year. why not kick it up to 7000? thomas: you are seeing the range on wall street be very wide in scenarios but our baseline of 10% total returns from here

is above historic averages despite rates being high and building on the steam of strength. today we are launching our outlook to clients: building on strength. a remarkable 2024 from a macro perspective. still think you can do more but you have to get focused on the policies that matter. industrial capacity, ai, those other things that should drive alpha in that market. lisa: the thing that people have talked about, there is a real range anxiety, yield anxiety? amanda was talking about this disorderly move in treasury yields. what is the threshold for you, where that starts or impede some of the bullish outlook for markets? thomas: the speed of the move. historically you saw a two standard deviation move in one month for treasuries. right now given how much volatility there is, that is a 75 basis point move in one month. will it matter?

we are as worried as anyone about the deficit, but finding the catalyst where it matters is important. i walk around with a big deck, a lot of it on the deficit, and i have not been at the fed for seven years. worries can be around for a long time but what you do about it is the question. a lot of clients will say i am worried. i can trade you this dollar and take you to europe. they will say no thanks. investors are worried, and that will be the catalyst, and so far i do see a little bit of change, more interest in gold. but a broad worried that there is a better place to go in the world, i don't see it. lisa: how worried should the rest of the world be? thomas: we will talk about this for the next several years. i don't think this is the catalyst that will drive a risk off move. but it doesn't mean that you don't adapt and change. you can think about gold,

shortening duration. jonathan: more specifically my question goes to global financial markets. if it is not a problem for the treasury market, is it a problem for everyone else? mohamed el-erian said that sound is money coming from the rest of the world into the united states. who is missing out on that capital, that investment they are not getting any more? thomas: mostly europe. you have a decoupling of china and the united states. what is stuck in the middle is europe, which doesn't have the innovation that america has come a doesn't have the manufacturing process that china has. referencing your quote, that is not deficit woes. that is just the natural progression of deglobalization. as long as money is being sucked into america, it is hard to say that the deficit is the bigger worry. annmarie: can you have u.s.

exceptionalism when there could be disorderly policy personnel picks? individuals that are unorthodox that trump wants to join his team, we are unclear on where he will land when it comes to treasury. thomas: certainly a risk. can you have exceptionalism? yes. what underpins exceptionalism is a common law set of rules that we can agree upon and the central bank. we need those things to perpetuate exceptionalism and make sure that sucking sound of capitalism into the u.s. exists. annmarie: the good policies that the markets are picking up on, deregulation, tax cuts, they have basically two years to get this done. but when you look at these pix, matt gaetz for attorney general, bobby kennedy for hhs, does this show that they are basically wasting time getting some unorthodox views through the senate when they could have been hitting the ground running on these proposals at the market

hears about? thomas: potentially. when you look at the history of cabinet members, there is almost always someone who is out there and you have to say there is no way they getting pushed through. this is the politics and not necessarily what i do. is it going to change the economic landscape of what we have next year and how to think about markets? i don't think so. lisa: to that point, i am looking at this. people should look at your charts, the outlook ahead, it is wonderfully collated. was this put together before the election? did this hinge on the election on, or was this written before then and then at least after to make sure there were not surprises? thomas: this was written before the election. the election is not what will drive markets in the long run. big segments of our outlook were made after the election where there are policy changes that will matter, incentivizing

decoupling from china means a ton of investment into ai, power. the big point of this piece is to give our clients a sense of confidence to still invest, stay invested after an historic rally. it has been a monumental last 12 months. it is a fantastic time to be an investor. how do you adjust from that? different spin on the problems that we do as investors. lisa: people have been coming on the show for quite a while saying we need to get out of cash. you will lose out on returns. we just saw a new record for money market funds. people are saying more is going in because yield will not be going down that quickly. do you think you need that pile of cash to come down in order to achieve some of the gains in risk assets or is cash on the sideline simply a fiction? thomas: i don't think you need

the money to come out of money market funds. generally only happens when rates are getting cut aggressively. what we do need to see is the cash in the system start to have more movement, seymour lending, see more capital that we can see m&a and broader financial position have been. that will fuel the growth and return to markets. dealmaking is a key piece of our outlook, too. even with higher rates, we should see dealmaking come back, and that is where deregulation comes into play. jonathan: a ton of people watching may have the question, market weight or overweight? what is the best way to do it? thomas: equal weight is our call for next year. broad and small cap was our call for this year. only recently did you see broadening out. we should have been optimistic.

we came into 2024 more optimistic than consensus. we were not even close. it is such a remarkable phase of what we do. still think there is more strength in the outlook. jonathan: if you look back last year to the 12 month forward, this is not the 12 people were looking for. 20% gains on the s&p, they would have been laughed out of the room. lisa: big tech dominance also would have been laughed out of the room. also no recession anywhere in sight. there are so many aspects of that that have been hard to gauge. annmarie: and how many fed cuts were we supposed to have in 2024? jonathan: we be priced at three different times in the first quarter. good to see you. the inflation had fake turned out to be a head fake, then we got forward about the employment situation come and gone back and forth a million times. let's get an update on stories elsewhere this morning with your bloomberg brief. here is dani burger. dani: president-elect trump's

transition team said they plan to create a framework for full self-driving vehicles, clearing the way for mass adoptions. people familiar say the talks are still in the early stages but it is welcome news to one of trump's early -- closest advisors, elon musk, who says production will go into place before 2027. goldman sachs predict more upside in gold in 2025. the firm reiterated a target to hit $3000 per ounce by december of next year. the strategist cited the man from central banks and fed rate cuts. gold is one of the firm's top commodity calls for 2025. gasoline prices are set to fall below three dollars a gallon and are already a few sets above the lowest level in 2021. holiday travel is expected to climb back to pre-pandemic levels. 71.1 million people are expected to drive by car for at least 50 miles in the seven days around thanksgiving, the most since the pandemic. jonathan: thank you.

up next, the morning calls, and mandeep singh of bloomberg intelligent looking ahead to the big one this week, earnings from nvidia. that stock is down in the premarket by 3%. 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.

jonathan: outlook season is finally upon us. 6500 at morgan stanley, year-end 2025. we just heard from j.p. morgan. 6400 on the s&p. let's get some morning calls. hsbc upgrading moderna to a buy, . the stock is up 2% in premarket trading.

needham upgrading robinhood to a buy, expecting shares to benefit from a. trump presidency. the barclays raising its price target on tesla to 270, saying attractive policy changes for autonomous vehicle efforts. the stock is up 6% in the premarket. nvidia, reportedly basing a design snack for its chips. that report is sending shares lower ahead of its earnings on wednesday. a stock is down 3%. mandeep singh joins us now for more. let's get to wednesday when we get the earnings from nvidia after the closing bell. what is top of mind for you? mandeep: everything that we have heard so far this earnings season from hyper scalars that been very constructive in terms of raising the capex models, spending still holding up, so that should translate into

significant feed in rates for nvidia as we have seen the past six quarters. with the change in administration, i think it's a positive for nvidia in the sense that they are exposed to crypto and autonomous driving with elon musk's involvement in the administration. net-net, we are in a much better spot when it comes to nvidia visibility now than we were already days back. hopefully that should translate into quite a bit of a raise this quarter. lisa: that may be the case going forward, but i want to dig in deeper from where it comes from. how much of it is from the hyper scalars, google, microsoft, or do we need to see that broadening out in order for nvidia to keep its gains? mandeep: you are right, nvidia

has a 40% less revenue exposure to the hyper scalars. i would quote sundar pichai saying 25% of the new code is written by ai now, mark zuckerberg saying meta llama will be 10 times bigger, the next model. those are two very constructive data points when it comes to the overall market. that is what gives everyone the optimism and visibility into 2025. still there are concerns about the 26 number because the companies training their large language models, the field is narrowing. no one has the capex that these companies have. even if apple, tesla are two incremental players, six or seven companies focusing on model training. concentration is never good. at the same time, the scaling laws, as long as they hold, it's

a big boost for a company like nvidia. lisa: when do the hyper scalars reach the limit of how much they can expand in the u.s.? there is a real question around national security and expanding some of those data centers overseas when there have been restrictions on certain ai chips. ultimately those data centers and other countries could be considered exports of chips. at what point does not become a headwind to nvidia? mandeep: absolutely that is a concern given there is so much sensitivity around the training of these llms. elon musk just set up a data center in memphis where he has a cluster of 100,000 gp use. that was built in 20 days. if the scaling walls were to hold, even 100 k cluster is not enough. do we have enough power in the u.s. to supply that kind of data center? that is what seems to be the bottleneck, the power aspect of

it. i think it is the same outside the u.s., as well, but as long as we talk about nvidia benefiting from march of demand, do we have sufficient power to power that kind of data center now? that is where there is still uncertainty, whether we have the power availability. jonathan: nvidia is huge so we all have exposure to it one way or another. explain the story this morning, reporting the chipmaker is facing a design snack for the blackwell chips. we see that dropping in and out of the news repeatedly, shaking up the stock from time to time. mandeep: yes, it happened, i would say two months back, the stock reacted negatively since earnings, but it ha been up 40% since then. the reason that investors are still optimistic, even if there are delays, those companies that are training models, there is no one else to go.

it is not that intel is doing better. nvidia is still the only game in town. even if it is delayed by three months, companies will wait for it. from that perspective, i don't worry about the delays or the snags that much because nvidia is so far ahead when it comes to the gpus they have developed. jonathan: looking at the five-year performance, 270 5%, that is ridiculous. it reminds me of this note from a couple months ago. he said it is not bigger than the total market cap of five of the g7 companies. foreigners own 80% of the u.s. stock market. global equity markets including retirement allocations and equities are basically leveraged to nvidia. lisa: jim reed of deutsche bank came up with a similar point, saying this 3.5 trillion dollar

market cap company accounts for the entire ftse, dax, cac, as a market cap of all these countries. basically it is a g7 country stock market reporting at the same time on wednesday. jonathan: nvidia, stay tuned for that. we talk about the time. chairman powell and the power he has over financial markets, jen-hsun huang, just as much over the equity markets. lisa: what we have seen in recent earnings periods, the reaction in the nvidia stock is the opposite of other stocks in the equity market. does the rest of the market matter? we were talking about how wrong we were about our outlooks this year. i am wrong every year but i was especially wrong this year. the biggest question was how much big tech could continue gaining. they were the leaders again. can they continue to be in 2025? jonathan: always difficult to

put together an outlook. even harder this time. next on the program, don't miss this conversation. kyle bass of hayman capital management on the race to become trump's next treasury secretary, and a little spat on x over the weekend. yields are higher by close to five basis points now on the 10-year. another look at 4.50. 4.4869.

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jonathan: 60 minutes away from the opening bell. equity futures on the s&p 500 down .1%. the nasdaq still higher but way of session highs. positive by 0.05%. with your morning movers, here is manus cranny. manus: i know you were digging around nvidia but it is a drag on market this morning. back in 2018, the stock crash by 30%, the big shot that came through, but 50% of the revenue is from a global perspective, so

tariffs may matter and the relationship with china will matter. china has gone from being 25% of their business to 12%. fast money taking a little bit off. some word about blackwell overheating. fast money takes it down but it has had a hell of a run. tesla, nice headline on the bloomberg this morning that the trump team may look at easing rules for self driving vehicles. this just invokes a new rampage to the upside. this is about invoking change at the transport department, change around a whole host of administrations. of course, they don't have a self-driving car yet. liberty energy. chris wright, tapped for energy secretary. he has knowledge of fracking,

has worked in nuclear, geothermal. this is his stock wrapping higher. the question is, how will he manage the opec relationship? jonathan: that is a man who knows his stuff. let's turn to politics. a better roi on playing out in palm beach, as the infighting over trump's treasury picked continues. kyle bass calling scott bessent eminently more qualified than howard lutnick. elon musk responding, bessent is business as usual whereas lutnick will enact change. joining us now is kyle bass. welcome to the program. let's start with your message, this agreement with elon musk. making the point that bessent it is business as usual. why is he wrong? kyle: i'm not sure if he had ever and spoken to bessent before he made the comment. it's important to understand who

scott bessent is. scott was the chief investment officer for an organization for a long time. for some people that may sound like a negative if you are talking partisan politics, but it's important to note, global central bankers around the world have respect for bessent and his views. scott looks at the world with a 4d chess understanding. he understands politics, people, exactly what investment and economic flows matter and what doesn't matter. when you talk about tariffs, the bond market, which i've had a pretty steep rise in our 10-year rate in the last couple of months, almost 100 basis points, that is a worrying sign. you need someone who understands geopolitics. we have a ground war in europe, and if you have somebody like scott with global expertise, and

investor in global macro events all over the world for decades, i look at that list of potential nominees and the person that is correct for the united states of america, for the trump organization is scott bessent. annmarie: you said that you don't think elon musk and scott bessent spoke before that week but sources say they did have a conversation after this played out on twitter with elon musk responding to your tweet. how much of this is about tariffs, that scott bessent will be more judicious? i am hearing that they are even considering somebody like peter navarro, trade skeptic, to put at the top of the nsc? kyle: i'm sorry for smiling, but the tariffs that got put in place, the biden administration

so that they would immediately remove those tariffs. those are still in place. when you have state actors acting economically like they do, if they want to put our steel business out of business, they can dump their steel into our marketplace and bring us to a breakeven point, bankrupt and entire business. when you are looking at this, forget the economic lens, forget about growing the economy. there are two jobs here. one is to protect the national security of our economy, the other is to grow the economy the best you can while protecting national security. when you look at the terrace put into place, those are not broadbrush, we are going to show china we are strong and they are weak. this was us protecting our steel and aluminum businesses very specifically from the threat of the chinese government putting us out of business. we know we have global supply chain deficiencies. we know all the synthetic graphite is made in china.

all the synthetic abrasives are made in china. we have to unwind that dependency there and we have to start thinking with a national security lens. i think when you look at the candidates here, some are domestic folks that have focused on domestic policy for a long time, domestic business, others, scott bessent, is the one that understand how global trade flows work, understands national security. annmarie: let's talk about the other names. reporting regarding the expanding list. there is kevin warsh, marc rowan, also senator haggerty and robert lighthizer. what do you make of those other names? people would push back that marc rowan doesn't understand how global financial markets work. kyle: i wouldn't make that comment but you know to become treasury secretary, you are asked to divest your holdings. i think marc rowan's dive

register would be pretty difficult. i don't know him but i have friends that know him and think highly of him. lighthizer has been an amazing u.s. trade in the past. i have read a lot in his testimony when he testified before congress in the senate. he is a very thoughtful person, the architect behind the 301, 232 tariffs under the last administration. but someone who focuses only on tariffs is the right person for the single most important financial job other than the fed president in the united states? i doubt it. i look at all of these other candidates, again, scott rises to the top no matter who we are talking about so far. annmarie: whether it is on xor right now, you are really backing scott bessent. we have to ask, how much of this is a personal preference to your

market positions? kyle: i only have one market position in the public markets. i have been short the hong kong dollar since 2017. that just doesn't matter. i say that, meaning, xi jinping has told you since 2017 that he will take taiwan by force if necessary. when that happens, you will see global linkages break. that is not to whatever candidate in the treasury, that is up to xi jinping. my markets have no impact on who i'm pushing. lisa: it raises the question of whether we are seeing the market read from one of these candidates, and whether that will be a check on who gets selected to be treasury secretary. do you believe that president-elect donald trump would be good for markets to at least keep going up? kyle: of course. what i'm talking about is who is best to grow our economy and

also protect our economy from state actors that have maligned intentions. you have to think about people that have that kind of experience, the kind of experience to understand who the maligned actors are, who the good actors are, but also how do you grow given the cards you are dealt? the u.s. has become a regulatory superpower. the trump organization will reappoint key heads across agencies. i think you will see the animal spirits unleashed from the let's say penalty box they have been put in basically by lina khan's ftc. we will go back to old, real antitrust law, business combinations, back to u.s. entrepreneurship, and we are going to see the economy really grow in a place that we have seen hamstrung by the prior administration. yes, trump wants someone in there that will continue to move stocks higher.

yes, trump wants someone in there that will focus on the worrying trends in the bond market. we are still running north of a trillion dollar deficit. we are going to run -- i don't know what the numbers are this year, 1.4, 1.5, maybe more. we have a lot of paws to sell going forward. you have china's economy circling the drain. all you see is stimulus. the beginning of stimulus, you are just filling a whole. the chinese banking system is at least $2 trillion in the hole. there stimulus has done nothing but stabilize their market with regard to investor sentiment but you have not seen any real stimulus yet. it will be difficult. we will not see inflows from china into the u.s. stock market. we will not see a lot of inflows from japan because they have their own problems, and we have a lot of bonds to sell. who we put in as treasury secretary will be vital to the stock markets, bond markets, our prosperity.

i believe there is one candidate that understands all of that. yes, i have known him for a long time, that is why my confidence is so high in his ability to operate in this environment. jonathan: let's finish where we started, that original tweet over the weekend implied you believe the uncertainty over this pic is having an impact on financial markets. where do you see that playing out more acutely? kyle: look at the bond market, the worrying trend in the 10-year, up almost 100 basis points. when trump was elected, animal spirits in the markets took off. we saw what happened in equities, credit, cryptocurrencies. now you see that tempered because the markets don't have a great handle on who is going to be treasury secretary. nothing is mono causal but the markets were discounting a scott bessent win, and now these names are elbowing their way in which is giving the markets a pause.

i think the markets were discounting scott's position and now the markets are pulling back, wondering who else may be put in the position. jonathan: i appreciate your time. kyle bass of hayman capital management on who he wants in that seat. plenty of reason to suggest we are seeing these moves in the bond market. kyle has one suggestion. lisa: there might be somebody not paying attention to the offset of the increases in the deficit that others are mapping out. also the idea of how much we have seen retracement in equity prices. a key question still, and the discussions book and this will, just how much of a checked out this market have on the policies coming from resident allete trump? jonathan: one reason we have seen the moves in the bond market, not just because of what is playing out in palm beach but what is happening at the federal reserve. we can catch up now with the former st. louis fed president

jim bullard. welcome back to the program. we heard from the chairman, jay powell, suggesting to us that maybe they can pause if they want to. this is me inferring what he has told us already, maybe as soon as december. is that what you are taking away from recent communication? jim: if it was me, they could make one more move in december, and then that would put them at 4 3/8, then a debate about where neutral is. but if you thought the meeting of the committee thinks neutral is maybe 3%, maybe then you have to have 100 basis points on top of that, 125 even, because inflation isn't all the way back down to target. normally you would take the inflation difference and then multiply that by 1.20 5, 1 .5,

something like that. that is what the taylor averill would do. that would put you around 4%. that would put you pretty close to where they want to be. they would have another move to make may be in the first quarter or second quarter. then after that it would depend on where inflation went during 2025. pretty good shape here for the december meeting. lisa: moving beyond that, there is a real question, i have not heard about law and variable lags in a long time. there is a feeling that if markets are flying, if businesses are doing fine, everything can check along with these interest rates, and you alluded to it, we could see a higher neutral rate. how much of a tone have you heard from fed officials over the past couple weeks? jim: they made 75 basis points of cuts already so they are not in the same situation they were in june or july. and i think the growth scare

that occurred in july, august timeframe has dissipated. now you have the atlanta fed at 2.5, the last two quarters of growth have been pretty strong, certainly above potential growth rate for the u.s. economy. i think they don't have to go to much further to be at the right rate for this level of inflation for an economy moving along pretty well. retail sales were reasonably good yesterday. lisa: i am trying to extrapolate this out to understand what this means for the yield curve, at a time when suddenly people are rethinking just how much they can cut over a longer period of time. you add to this the progrowth policies we've been talking about all morning. how much are you looking at bond yields resetting not necessarily because of the political overlay but people are realizing if it

is a 4% neutral rate, 5% 10-year yield looks pretty reasonable. jim: to me, this is the last piece of the soft landing, you bring the policy level down to a more neutral level as inflation goes back to target. you expect the yield curve to uninvert which has happened here. eventually i thought we would have a policy rate somewhere in the threes, 10 yo-yo in the fours. that all seems to be developing. that is a part of the soft landing in my view. annmarie: we heard from jay powell, the fact that they are not in a hurry. how much of that has to do with policy uncertainty right now coming out of mar-a-lago, coming out of washington, d.c. in 2025? jim: if you think about this december meeting coming up, we have a summary of economic

projections on that. with the committee will do, various members will protect out for 2020 five and 2026 how many more rate cuts they think. but it will not be that many because they have already made some. neutral will not be as far away as it was. then some people will say we only need two more, others will say four more, but they will spread those out over 2025, maybe even over 2026 as inflation is projected to continue to come down. in that sense it will continue to come down and maybe people talk about once a quarter, maybe once every third meeting will be the right pace depending on how fast you think inflation will go down to 2%. annmarie: you are talking about inflation coming down to 2% but some of these policies could be inflationary. we are talking about deregulation, cutting taxes, and then there is this debate on how

high the walls will go up around the u.s. for imports coming in from china or the european union. if that is the scenario we have, does the fed potentially need to think about hiking? jim: i think we have seen this movie before in 2018-2019. i didn't see much inflation coming from that. we had a corporate tax cut late 2017. i didn't see much inflation from that. i don't think that is the right narrative for this. that is not where the inflation will come from. where it comes from is big fiscal spending, but if it goes straight into people's banks accounts the way it did in 2021, that is almost like printing money, and that cause a lot of inflation. if we don't get something like that, then i think other types of spending, deficit spending,

probably not as inflationary. lisa: fascinating point and goes to the heart of something i've seen in research papers over the last few weeks, which is how we don't understand inflation, why the fed got it wrong and didn't raise rates as early as march of 2022 in the face of real inflation, and going forward, our understanding of read through on things like tariffs. are you saying that some of the tariffs we are hearing about are not going to be inflationary and we should be looking at a cash infusion, helicopter money as the only source of the inflation we have seen in the post-pandemic era? jim: inflation is a monetary phenomenon, that is why they call it monetary policy. it is the job of the fed to keep inflation expectations under control. you could argue about inflation expectations, if people start to worry that the fed will not do its job. that would be a serious concern for the inflation outlook.

but tariffs themselves kind of a double-edged sword. . they rearrange prices somewhat but they also change demand for the imported good. you have also got what is the reaction of the foreign country going to be? a good outcome is that we get serious here and tell the rest of the world, which is pretty protectionist, the u.s. is going to play tougher here. we want you to lower your tariffs. they can say, we agree to lower our tariffs, just lower the whole environment. that would be very consistent with the trump negotiating view of the world. jonathan: we will not ask you for your favorite trump treasury secretary we will let you go. jim bullard, appreciate your time. let's get you an update on stories elsewhere with dani burger. dani: president-elect donald

trump has chosen brendan carr as his next fcc chair. he has served at the agency since 2012. in a statement after trump's victory, he said his priorities include raining in big tech. the fcc does not directly regulate big tech but does oversee certain sectors like broadband access and that neutrality. new york voting on a price congestion proposal which would charge drivers $15 by 2031. the initiative will provide a transit system with a $50 billion it needs to upgrade its more than 100-year-old infrastructure. officials are hoping to start the fee on january 5. netflix has announced that beyonce will perform during its first ever nfl christmas game day matchup between the houston texans and the baltimore ravens. netflix is using the opportunity to put on a super bowl style show, the first time that

beyonce will perform songs from her nominated album "cowboy carter." and that is your brief. jonathan: next on the program, we set you up for the week ahead. a ton of earnings including results from nvidia.

jonathan: the opening bell 35 minutes away. tomorrow, earning from walmart and low's. target in nvidia out with results. thursday, jobless claims and more fed speak from austan goolsbee. friday, pmi and umich sentiment. lisa: ultimately i think the politics is not fading and will not fade for a long time but

people are focused very much on whether we are seeing growth and acceleration in their earnings to figure out whether or not there will be another leg up. whether it is bond yields are in the equity markets. annmarie: i am gearing up for another episode of "game of thrones." it's been quite entertaining. i didn't take any days off this weekend, working the entire weekend. you said it earlier, this dick cheney move by howard lutnick, does it spoil the chances for howard lutnick? jonathan: we are all on the same page from whoever gets the nod, it will go some way. for many people in the market, defining how sensitive the trump presidency will be to equity markets. positive right now by around .1%. bill hagerty of tennessee tomorrow, reportedly in the running for that seat. laura reim of fs investments. big show coming up tomorrow morning. thank you for choosing bloomberg tv.

this was "bloomberg surveillance ." ♪ it's our son, he is always up in our business.

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

>> 30 minutes is still -- until the start of cash trading. >> bloomberg open interest starts right now. katie: coming up, trump's search for a treasury secretary has devolved into disarray over the weekend with contenders tussling for support. matt: tesla shares spike on a scoop that the trump team wants to ease rules for self driving cars. katie: all t