♪ >> i think the hawkish tariff stuff is already in the press. >> the markets traded trump as a yield curve steepen. >> the markets la paz stand out of the geopolitical risk. >> when we talk about exhaustion, we are talking about really high sentiment. >> nvidia is a number one high-quality stock so we want to continue to embrace quality. >> this is "bloomberg surveillance" with the jonathan ferro, lisa abramowicz, and annmarie hordern. jon: live from new york city, for our audience worldwide, good morning. "bloomberg surveillance" starts right now. your equity picture looks a

little something like this. s&p futures on the snp up 0.06%. nasdaq 100 much flat, unchanged. the two names you need to wash, one is target, earnings dropping from them, and nvidia after the closing bell with 68 buys, six holes and two cells, embracing a ton of career risk. >> anybody who is saying cell, these are the statistics i would be looking at. january 2020 nvidia and 4.4 billion dollars over the preceding 12 months. the expectation is for them to have earned 61 point $4 billion over the preceding 12 months. it is a sea change for a company in an unprecedented rise in earnings at a time when this potentially could be the new railroad. >> in many ways, it is negative market. this came from bank of america. it remains the most dominant stock in the market, driving 20%

of the s&p 500 return over the past year, expected to drive nearly 25% of the s&p 500's eps growth in the third quarter. >> the issue say people say it is an expensive stock but you see the growth and profitability over the past 24 month and all of a sudden, people make an argument that is cheap. we don't even understand the seismic shift that nvidia represents or what potentially it's cashing in on, that's why people say this will be the ultimate gut check at a time when yesterday, nvidia shares were up 4.9%, and that lifted everything along. jonathan: might as well be log. want to talk about game of thrones? president donald trump nominating howard lutnick to, secretary. this is what he said -- commerce secretary. this is what he said.

he will lead our riff and tra agenda with additionl direct respsibility for the office of united states trade presentative. that's a big job. >>does this mean the ambassador of ustr reports now to howard lutnick? for anybody that wants to do a trade deal with the united states, this is so you want to talk to. wilbur ross was at the head of those trade negotiations but pretty quickly you realize the individual who really understood the legality of traders robert lighthizer and he quickly moved onto him. and a lot of questions on what executives means because it looks like he has an expanded portfolio beyond commerce. >> legality smegality. is there a cohesive strategy? what is that cohesive strategy and how is that going to get through? i think ultimately, the legality, ok, we can negotiate and figure out what's going to happen. what is the strategy? that i think is not so clear sometimes. manus:manus: the guiding light for a lot of people, cabinet

appointments. this is the strongest signal yet of how seriously they are taking tariffs. this is somebody who has had a conversation with us a barrel tariffs, someone who want to madison square garden and reflected on 100 years ago, if there had been no income tax, all we had were tariffs. will there be carveouts? will apple get a carve out? what did he say, no, they want. >> you saw these waivers given to certain companies when it came to tariffs. that's not going to happen, according to howard lutnick, and now this individual is at commerce. he seems to be the man behind donald trump's tariff agenda. jonathan: we are going to hear from kevin warsh and marc rowan down and publish, florida -- in palm beach, florida. donald trump interviewing them later. we will catch up with julian emanuel from evercore, ed

mills and robert welch on russia ukraine tensions. julian emanuel of evercore sing the bull market is not over but there will be volatility ahead. the relief that the election was clear and uncontested has given way to a correction that acknowledges the policy and interest rate driven challenges ahead in 2025. let's talk about some price targets. bmo, 6700 2025 year and, morgan stanley 6500. you think mid-2025, 6600. what's behind that? >> we think there's a lot of parallels in the way the market has digested the election moving beyond to not just president trump's first year in the first term but the second year of the first term. think about that, 2018, the year of tax cuts, the year of tariff and trade wars, and they are of

gently rising interest rates, until there is a bit too far at the end of the year -- until they rose a bit too far at the end of the year. that's what really makes sense to us. the other part of it is a fed that would like to not be at loggerheads with the president, but the data and policy were inflation and growth may be going may cause them to have to sort of up on the rate cutting as opposed to the counter where they were hiking in 2018. jonathan: in the days after the election in the immediate aftermath, you speculate on the prospect of a melt up in equities. the rally has since stalled somewhat. what's year view on that now? >> i think there's a digestion phase going on processing all the change. the american people voted for change. we are getting change fast and furious. and there is clearly a bit of, i think the other aspect of it is, is that going into the vote the

very clear preference among our clients was to see a divided government. but you have the unified government, the mandate is to move fast, and that means more volatility. and again, there is a lot of uncertainty about how policy is going to be implemented. we talked about those dynamics. and there is a recognition that the bond market is going to call the tune for the next year at least. >> that's what i wanted to pick up on. that was the expectation, you could say whatever you want, find whatever loopholes, but the big check will be the 10 year yield that's going to come in and rule the roost. the rise we have seen in yields has not impeded the rally we saw postelection. at what point does it actually start to exert his pressure? >> if you look, the last week or two, the bond market has been a bit better. but hey, as we are trying to digested the saw and we stalled

out below 4.5 on the 10 year. . yield for now we think if you start moving towards 4.75 and of course the psycho high is at 5%, and that is not our base case at this point. because frankly, what we think on the secretary-treasurer is announced, whoever that person is, it will likely be a person who understands the dynamics of the bond market and the need to project policy and concern there. because frankly, as the bond market is moving, that tells you how far you can go, as it did in 2018. >> is this a paradox? somebody who is going to be a treasury secretary that gets some of these policies across that also is sensitive to the bond market? >> there's a lot of constituencies to please. and you know, the main constituency is going to be the occupant of the white house starting january 20. it's made even more challenging by the fact that as good as this bull market is, we have to

acknowledge that at 25 times earnings, stocks are expensive. which is why we have seen the volatility as of late because any news sort of disrupts the narrative can cause volatility. >> my reporting overnight is that kevin warsh and marc rowan will be down in palm beach today for interviews. scott bessette is also in the running and senator haggerty maybe a dark horse candidate. those men, would they be sympathetic to what you're talking about? will they understand the market dynamics? > i think the market interprets the answer to that to be assets -- at this point. i think the reason this has taken longer than expected is to fully appreciate the difficulty of the dynamic and the importance of making sure that the bond market is not runaway so the policy initiatives are not limited and we get the change that the country voted for. >> when you're talking about this 6600 and of june 2025 for

the s&p 500, at some point, our tariffs going to bite into that? >> it depends on how it enfolds. if you think about 2018, and look, the numbers that have been put out there i think most people would acknowledge are sort of bid offer type spreads. and what you are likely to get is not necessarily those extreme numbers. it was much that way in 2018. at a certain point, again, i go back to the bond market, the president likes to keep score with the stock market for sure. but the bond market will call the tune for the stock market aslan tell you how much tariffs and that biting. jonathan: let's talk about nvidia. it makes up about 9% of the s&p, about 9% of the nasdaq 100 rather and 7% of the s&p 500. should i be comfortable with that or uncomfortable with that? does that bring you comfort or

anxiety? >> both. ok. because you cannot get away from the fact that the mag 7 has been the driver of this bull market over the last couple of years. and you cannot get away from the fact that the concentration of the tough five or the top seven stocks is, you know, so far surpassed the bubble 2000 peaks that it's almost not even a benchmark anymore. it's just of the weighed the index and investing have evolved -- it's just the way the index and investing have evolved. jonathan: nvidia is the clear winner of the year so far. does the tariff story compromise that? >> it could, ok. but i think what's going to happen is you are going to figure out as part of the negotiation a way to work around that. and if you think about that company in particular, any of the friction that we've had that has essentially been building

for the last several years with china has not been a major impediment to the progress in the ai revolution itself, which we think has a lot more to go. there >> is a larger question here >>. is donald trump going to celebrate the biggest company, sort of the american champions and have carveouts for them and enable their growth and expansion? are will -- or will there be an effort to break up some of the big tech, cater to some of the more populist aspects, the jd vance approach, to some of these industries that have been the main drivers of profitability and stock returns? >> i think it's going to be let's see how devolves. our baseline view is that you are going to get deregulation, which is actually going to spur capital markets and m and a. what you might see is a smaller cap companies, particularly those that do not have international exposure, that don't need to worry about regulatory regimes in either

europe or china, you know, blocking any type of transaction, that's probably where, wish informs our view of lacking small-cap stocks, i think that's where that's going. jonathan: yo hopefully get a treasury picked before the end of the week? >> would be nice. jonathan: then we don't have to talk about this anymore. can i just say this, senator haggerty stood us up yesterday, and then i put the tv on in the afternoon and there he is standing there with elon musk and donald trump. >> may be if we had offered some kind of ufc fight, may be a space landing with iron because, maybe he would have come. >> when you get an emailed assess scheduling conflict and you see what the scheduling conflict is, he got to go see iraq a large. jonathan: let's get you on she got to see a rocket launch. jonathan: let's get you an update on your stories. >> sources tell bloomberg president-elect trump is holding interviews with potential picks kevin warsh and marc rowan in florida today.

yesterday, trump nominated co-lead of his transition team and former treasury secretary hopeful howard lutnick to lead the commerce department. scott bessette remains a contender for the post with reports he met with trump at mar-a-lago last week. spacex which launched its sixth text flight of a rock yesterday did scrap its anticipated cash of the rocket booster. elon musk and president-elect trump watched the launch as it started its voyage through space from brownsville, texas. in a sturdy career came to an end last night at the davis cup in the netherlands. emotional rough young adult waived 2 -- emotional rafael nadal waved to the during fans as he completed his final match in tennis. nadal leaves a legacy as one of the greatest to ever play, winning two grandsons, 14 of those -- winning 22 grandsons.

jonathan: i have shed -- grand slams. jonathan: i have shed too many tears over this. roger federer with the beautiful tribute. you challenged me in ways no one else could. >> do you feel emotional? jonathan: up next on the program, fighting for trump's economic agenda. >> at the turn-of-the-century, our economy was rocking. . we had no income tax and all we had it was tariffs. jonathan: is that a sneak peek at a future? that conversation next from new york city this morning. good morning. ♪

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board. goldman 6500. morgan stanley 6500. 6700 year end 25 on the s&p 500. julian emanuel from evercore looking for 6600 in the middle of next year. fighting for trump's economic agenda. >> at the turn-of-the-century, our economy was rocking. we had no income tax and all we had was tariffs. we took down our protection. we took down arrow tariffs -- our tariffs. and we taxed. americans were letting the rest of the world er lunch. jonathan: donald trump tapping the counterfeit showed ceo to lead the commerce department and oversee the white house's tariff

push taking him out of the running to be the next treasury secretary. . the president-elect interviews kevin warsh and apollo's marc rowan. ed of raymond james joins us now. what are the signals you are taking away from the appointment so far? ed: we have a number of people who are loyal to donald trump, folks that are hawkish and foreign policy. people who are going to be very aggressive on tariff policy. as i look to the treasury secretary race, i want to see exactly who's in that role, because the tax policies, the debt limit all come back. they need to have a conversation with capitol hill. and we need to see exactly how that person has a relationship with the federal reserve, because monetary policy will quickly figure into all of this. >> when it comes to my reporting alongside some of my colleagues in washington dc, it was obvious that howard lutnick was given the know when it came to the

treasury role and now he's in commerce. this is an individual who has been touting this idea of tariffs. what's going to be the push pull with someone at treasury like a scott bessette, kevin warsh, or marc rowan? all of which have either had interviews with the president are going to have interviews today. ed: it's going to be a cabinet that was probably somewhat similar to the first administration where there was a team of rivals, to a certain extent. i think howard lutnick at commerce does not signal we are going to go weak at all on tariffs. but ultimately, the treasury secretary can be the person negotiating with capitol hill as it relates to tariffs in the tax bill next year. one of the wildcards for next year is, does congress decide to legislate for the first time in about 100 years specific tariffs globally? it's a question i get all the time at raymond james. there's concerns about the economic and inflationary

impacts of those but the congressional concern is that it cost a lot of money, for $.6 trillion, to extend out -- $4.6 trillion, to extend out the 2016 tax cuts, and tariffs are becoming an increasingly attractive option. there are going to be some folks in the administration pushing for that, probably some folks pulling back on those rents. trump will probably be the final factor. >> we should add to senator haggerty who was with trump yesterday into the treasury race. who is best for further the role you are describing? ed: if you're thinking about legislative experience, having senator haggerty would be the best person to coordinate with the hill. if we are concerned about being the back channel communications with the federal reserve, kevin warsh as a former fed governor would be someone who is very well received by the market. scott bessette certainly kind of exceptionally well-known by wall street and would calm some of

the concerns within wall street. the things i would highlight about both scott bessette with the other candidates, especially warsh, is that these are fiscal hawks. these are folks that are looking to shrink the budget deficit. that fits in very well with the department of government efficiency, doge. i just question whether or not what their goals are would match with the first administration of trump's term where he was not someone who was a fiscal hawks. he's put in place some fiscal austerity here. but once the market kind of digests that, if there's perspective that, does congress go along with that? those are the open questions i have. >> when it comes to the announcement yesterday with howard lutnick, and said he will lead our trade and tariff agenda with additional responsibility within the office of the united states trade representative. where does this leave ambassador

lighthizer? ed: i got that immediately from clients at raymond james, is bob lighthizer now out? and see going to want to report to now lutnick? the u.s. trade representative is an independent agency that historically has coordinated with commerce. one of the questions i have is that at commerce, there's 45,000 full-time employees. are they looking to use the resources of commerce to help out ustr? are they looking to hobble what the ustr would be? when i look back at lighthizer's term during the first trump administration, he was really aggressive, so i would think you would. want those expertise to come back. someone who has done this, who has been able to implement change, someone who can kind of go on day one and hit the ground running. if we don't have bob lighthizer but we have lutnick in commerce secretary, do you actually have to extend out some of the

timelines here over the tariff implementation? i think it is, once again, a pretty important open question that this market will want to really know what the answer to that is. >> the game of thrones, the bachelor, it's all very exciting. i want to make it more boring. i want to understand the framework, what the goal his of these opponents and the checks and balances in the stock market and i want to understand the framework that you are looking at that will ultimately govern some of these decisions. do we have a sense of what the overarching strategy is and how much of a check the stock and bond markets can actually act as on some of the policies that come through? ed: i think the goal is to go fast. i do think when we look back to the first term, the equity market is a daily voting mechanism that donald trump loves to look at, and often times, whenever devoted positive, he would remind us of that. whenever we had volatility, i

would remind folks back in his first term over the u.s. china trade fight, there was multiple times when the s&p 500 was off more than 20% and then we had donald trump say we are making great progress and was pushing markets higher. the big question for me is, how much of it is going to be the equity market this time versus how much of it is going to be the bond market? when i talked to clients at raymond james, they ask what is the binding constraint for trump to be able to enact his agenda? i think it's a move on the long end of the curve where we would be seeing kind of possible concerns of a second wave of inflation bringing up the cost of government debt would be probably the thing that would cause donald trump to pull back on the reins and tell his commerce secretary, tell his treasury secretary to do the same. in trump 2.0, i think the

bond market takes center stage. jonathan: the trump pope was the equity market. a lot of people making the argument it is the bond market. >> any time something leaked, it was quickly negotiated or a phone call happened to make sure the stocks moved in the right direction. >> i want to get a hat that says mycga, who make yield curve great again. jonathan: from new york this morning, good morning. ♪ you know what's brilliant? boring. think about it. boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. boring makes vacations happen, early retirements possible,

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jonathan: two-day winning streak on the s&p 500. a snapshot of the price action this morning. up by .1% on the s&p. higher on the nasdaq 100. the big one for the nasdaq a little later. almost 9%. nvidia reporting earnings. that is nvidia coming later. we will hear from target after walmart did pretty well yesterday. target dropping right now. lisa: is a huge disappointment across the board.

looking at fourth-quarter adjusted earnings per share of $1.85 to $2.45. the estimate was $2.65. eps between $8.30 and $8.90. there is a real question across the board, comp sales lower, sales in general way lower. inventory buildups that seem to hamper their ability to turn a profit. what strikes me when we were talking about the beat and raise from walmart, is it a management issue? is it a product issue? simply how much of business can diversify so it's not as dependent on the fact it is a retailer? jonathan: walmart beat and raise. this morning cut the outlook over a target. inventory. managing inventory is difficult now. managing inventory in the face of what could be a strike. we will face another went in

the middle of january. you have the tariff issue on top of that. target getting hammered by close to 13% in the premarket. it seems to men was not there either going into the holiday shopping period. lisa: it shows the difficulty of the pandemic and post-pandemic of understanding the right product mix. potential for clothes and home products, things not essential at target that they stockpiled ahead of that strike and not being able to move as quickly. how do you gauge the fast-moving demand at a time when you have to plan ahead to get ahead of some disruptions we are talking about? jonathan: we will have this conversation in the next hour. target down by 12% or 13%. nvidia reporting results after the closing bell. estimates from analyst covering a wide range spanning 8 billion u.s. dollars reflecting

uncertainty of supply the company's latest chip lineup. lisa: the idea here is nobody expects nvidia to say anything other than demand is incredibly strong. the question is what are their new innovations they can come out? how much can they keep raising their expectations? can they be a moonshot in terms of quadrupling and quintuple in their respected earnings going forward? this is the market. it could be the most important macro event of the day. annmarie: there are questions about blackwell, this new product. they want details about one that will ramp up. following the insane demand management comments, we are keen to hear data points on the black will ramp up. where are they with this new product that could have been facing hurdles? jonathan: we are talking about politics and the trump treasury secretary pick this is the

market. lisa: i want to repeat the numbers from earlier. in january of 2023, nvidia earned $4.4 billion over the prior 12 months. the consensus for today, just $4.4 billion, today, $61.4 billion in the past 12 months. it is hard wrap your head around how much this is an expansion when this company went from being essentially a videogame processing chipmaker to the linchpin for a lot of the technological advancement we hear from every company across wall street. jonathan: i think the biggest issue for this company is the patience of investors and the biggest customers. we know with the biggest customers are, individuals spending huge money on ai, on chips. i'm thinking of the alphabet ceo, who said a number of month ago the biggest risk was under investing, not overinvesting.

if you don't demonstrate return on that investment, investors pushback. that is the risk for this dock. lisa: -- this stock. lisa: that is what we saw from others. there is a lot of existential questions about ai in terms of exactly what it is going to be used for. predictive models? mostly cloud computing? the banking industry? how much will you see it expand outside of hyperscalers for people to have faith in the long-term trajectory? jonathan: let's talk about game of thrones again. donald trump taking howard let nick to lead the commerce department. the search for treasury secretary underway. trouble interview kevin walsh and apollo mark roman layer. annmarie: he really wanted treasury. he was told no and got commerce. now the fight is between these three men.

scott besson, kevin warsh and mark rowan. if you're playing chess, peter kevin warsh and everyone talks about long-term gain for this individual, he has been consulting the transition on economic issues, you want to be fed governor. powell's term is up in 2026. scott besson was to be treasury secretary. maybe he becomes the national economic director, the larry kudlow job. in 2026, there is a shift. that can be a 3d chess move. we still have two men that need to sit down with donald trump and we don't know yet. lisa: amid all these decisions, these are fiscal hawks. they try to reduce the deficit which is where the bond market is saying this is great. the problem is, does the stock market like it? does that gain the approval of the person in the oval office who wants to see the stock

market keep ripping? the dow jones climbing to the moon. ultimately, this is the tension. can they satisfy some of the agenda while satisfying the checks and balances? jonathan: every time i hear that phrase i laughed. physical hawk. extending the tax cut and jobs act will cost him his $5 trillion. -- will cost nearly $5 trillion. it is ridiculous. lisa: fair enough. if you buy a lamborghini and don't say the money on lunch -- kevin warsh was a hawk. he did not with the cut rates quickly. he was concerned about tamping down inflation. what is that influence going to be at the treasury department? annmarie: a lot of people in the past decade, their views have changed, especially people moving into the hawkish camp when it comes to things like tariffs. you mentioned expanding tcja.

that is the base case. what about no tax on tips, no taxes on social security benefits, expanding child tax credits? how does a apprised -- that get priced in? jonathan: we are talking about high-caliber individuals here. senator haggerty as well. ideological differences are pretty big between kevin warsh almost consistently on monetary policy and trade over everything i have seen come from mr. warsh over the last decade. lisa: everything you've heard from wall street has not been consistent with high tariffs, huge walls. some of the other policy proposals we are hearing from donald trump, you have to wonder how much it will cohere. a cup of noodles totally upsets lamborghinis. it is one dollar. pour in the hot water.

jonathan: one dollar of payment is what you're going to say. russia and ukraine. vladimir putin is willing to talk to you was donald trump about a cease-fire deal in ukraine. you could roughly freeze the war along the current front lines. joining us now is the retired tenant general robert walsh. welcome to the program, sir. we appreciate your time. i would like your perspective on how dangerous this new phase of the war actually is. gen. walsh: good morning. it is nice to be with you this morning. you just talked about with putin willing to negotiate for talk to donald trump. talking to trump is -- the group said they are looking to have a cease-fire. that cease-fire will be something that both putin is

acknowledging and president zelenskyy is a knology. -- acknowledging. that is a key step as we see things recently this week the biden administration is now allowing zelinski and his military to use the attacks inside. anytime we can get the two forces together talking, as we are in this case, this is an advantage to both sides to try to bring this conflict to an end. annmarie: how concerning is that we have seen this change of language yesterday from russia as it updated its nuclear doctrine? lt. gen. walsh: it is concerning in the sense there was an escalation by the trump administration to allow the use of them inside of russia. we have seen the prudent administration used -- putin administration used the threat of nuclear weapons consistently.

he considers that crossing his redline in bringing nato in. if the u.s. uses it, it will bring nato into the fight. we have seen this before. it is posturing. in a lot of ways it is the same blessing message they have used before. -- bluffing message. it can be used as we move closer to negotiations that he can try to use as leverage that he has. annmarie: how difficult is it departs between a true escalation that should be concerning and what is just rhetoric for the use of leverage down the road? lt. gen. walsh: obviously his threatening to use nuclear weapons is posturing. he has used that multiple times. the use introducing north korean troops were both escalations, clear escalations by bringing for the first time

troops from asia, north korea, into the fight. besides just using russian troops or chechen troops, he's now introduced another government's troops into it. that is an escalation and that is where sec. blinken and president biden said that crossed the line for us now we would escalate by using -- allowing the ukrainian military to use attackems inside russia. a lot of times these escalations occur to de-escalate the situation. lisa: what are you looking for to understand if this truly is an escalation in its own right and some threats are actually true versus an effort to get resolution? lt. gen. walsh: with the trump administration coming in with the standpoint of we will end this, i think trump's discussions with president zelenskyy and president putin, he's coming in with a strong hand he will in this.

both sides realize this and now they are seeing the opportunity to come to the negotiating table. what we see happening now in the next month is both sides trying to pause -- posture to get the best position possible that they can have to get to that negotiating table. the ukrainian military, when they attacked inside russia for the first time in the kursk region and grabbed some of that russian territory, that was a positioning to get them closer to having leverage at the negotiating tables. this has been a stalemate basically along the front, with small movements either way, but this is driving towards the negotiations and who can have the most leverage as they get to the negotiating table. jonathan: this is fantastic framing and we appreciate your time. we look forward to having this

conversation again with you sometime soon. that was a retired lieutenant general robert walsh. the price of target in early trading. getting absolutely hammered. down in the premarket by almost 20%. with an update on that, here is dani burger. dani: the details of the earnings, they cut the full year outlook and posted flat sales for the quarter, target that is. they said the u.s. consumers spent less on discretionary items. target was hit from a buildup in inventory. they stockpiled more products in anticipation of what was ultimately a short-lived u.s. port strike. as result stand in contrast to yesterday pose strong showing from walmart'-- yesterday's strong showing from walmart. comcast is spinning off some of its cable channels. bravo and the peacock streaming tv business will remain with the parent company. according to the wall street journal, the separated networks will produce about $7 billion in annual revenue.

comcast shares of nearly 3% in the early trade. emergency crews have extent was to brush fire in upper manhattan that burned over a dozen acres in the city. the fire broke out tuesday afternoon in the washington heights neighborhood and was brought under control three hours later with no reported injuries. the blaze left the closure of several lanes of the harlem river drive. it is one of her 300 brush fires reported in the city since early october amid historically dry conditions. that is your brief. jonathan: you can smell it across the city over the last few days. let's draw your attention back to target, getting hammered in the premarket. down by almost 1% of the back of pretty weak earnings. cutting their outlook, having problems with inventory and demand. this reminds me of may 2022. the same difficulties with inventory for different reasons. lisa: they have had issues again and again. people have been waiting for

target to turn the corner on all of that. the ceo said again we encountered unique challenges and cost pressures that impacted the bottom-line performance. shares are showing you do it too many times, whether it is unique or not, dockworkers strikes, the other issues they faced, people are losing faith. jonathan: the market cap gone just like that. starship blasts off. >> 5, 4, 3, 2, 1. [cheers] jonathan: that conversation just around the corner. live from new york city, this is bloomberg. ♪ ♪

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jonathan: early mover, target

hammered. down by 19%. they missed. they cut their outlook. they have problems with inventory. the broader market doing ok on the s&p 500. up by about .1%. if nvidia reports numbers like this later, this is where the stock market is going to be. the stock market is doing ok. under surveillance, starship blasts off. [cheers] here is the latest. spacex achieving a successful launch of its starship rocket. chet enders same big things ahead for space expiration. "under the new administration, expect a greater focus on providing the space economy and on commercial space integration into government programs." chad has pioneered investment in the space economy for more than a decade and joins us for more.

good morning. we have talked about the halo effect over tesla. what is the halo effect for a company like spacex? chad: it is a potent combination of having that kind of access and influence to the president, to the incoming president and having the paramount solution in space. spacex is the apex player. if they have capability the government needs, spacex is most likely to solve that. jonathan: government contracts, what proportion are they of overall revenue? how much bigger could that be? chad: government contracts play big role in all the companies across the space economy. that's weitzman's are resilient over the last couple of years when the equity market has struggled. revenue has been hard to come by. government contracts have increased. conflicts around the world, geopolitical considerations, this is all pushing dollars to

capabilities. space technologies are essential for our economic growth and national security. governments, including the u.s. are leaning and hard on these capabilities. lisa: when it comes to tesla you wonder what the halo effect for other car manufacturers. you talk about spacex and what kind of regulatory advantages could benefit other companies. whether any real competitors right now to spacex? chad: you don't want to be in spacex's way. there's a lot of benefit to the building the railway and benefit that now new opportunities become available that work before. you don't what to be building something on their roadmap. they are the apex player. we are starting to see some composition, online i think -- come online in 2025.

others are using the blue origin engines. rocket lab is bringing out their new vehicle to compete with falcon 9. as they start to compete with spacex's falcon 9, spacex is leapfrogging them with this new starship. lisa: other than the battle of billionaires, what is the goal? to go to mars? tourism on the moon? what is the purpose? chad: did you ask us, we are us interested in the essential services from satellites. not a luxury item. most people think about the international space station, space tourism. we are investing in gps positioning which runs our financial markets. the modern global economy runs on gps. geospatial intelligence. information about the movement of goods and what is going on on

the surface of the planet. satellite medications.if you talk to elon for the president-elect, they will say mars is the most important. we will have a shift in priorities from the moon. his prior administration. they will go more direct from mars and leveraging the spacex starship infrastructure. annmarie: when it comes to elon musk and the president-elect, they have been joined almost at the hip since the election. as an investor, does that outweigh any concerns you have that maybe elon musk should be paying more attention to his businesses than hanging out at mar-a-lago? chad: well, you want -- as americans we want somebody who is knowledgeable to be in the post. you think back to the social media and congressional hearings, the ai congressional hearings and the questions congress were asking and you

can see how out of touch they were. you want people in that role to be knowledgeable. the challenge here and the interesting thing is that a tighten of industry is not retired and advising government -- titan of industrle businesses that will benefit. the administration is comfortable with conflict of interest. as someone with a vested interest in these companies' success, selfishly, that will be good for the company. annmarie: it goes beyond spacex and tesla? this is broader for space expiration in the industry writ large? chad: the space economy will benefit from this. spacex is likely to be the largest beneficiary given his proximity. others are going to benefit. we -- a lot of new novel capabilities are coming online.

regulation is having a hard time keeping up with all this innovation. the president of space -- it is regulation holding them back. their test program would move at a faster pace. we think we will see some of that pull-through. jonathan: are they going public anytime soon? chad: a lot of people would like them to. there's a lot of benefits to being a private company. starship is going to add a zero to the evaluation. the most valuable private company, we will add a zero to that. jonathan: not struggling for capital, that's for sure. chat anderson of space capital. coming up, the former world bank president david malpass. target getting hammered in the premarket. we will speak to the china beige book a little later in the hour.

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♪ ♪ ♪ something has changed within me ♪ ♪ it's time to try defying gravity ♪ ♪ ♪

>> the name of the game is quality at a reasonable price. >> was some of the momentum story we are not working estimates down as far as we normally do. >> we are digesting the possibilities for the trump administration. >> going into 2025, will inflation be to sticky or accelerate? >> it's a better outlook for 2025. >> this is "bloomberg

surveillance." jonathan: the second hour starts right now. equities on the s&p doing ok. the main point of focus on nvidia earnings after the closing bell. right now these only one name to talk about, target getting hammered in the premarket. the stock is lowered by 17.5%. the numbers from 30 meant to go not great at all. annmarie: this was a cut. a miss. what you are seeing is comp sales, expected fiscal year earnings, all that worsening specter because of inventories, the build they could not sell. there are larger questions. is walmart eating their lunch? are they eating the lunch of the others like dollar tree and kohl's? is this a question of the not able to meet the moment that is

uniquely difficult that bleeds through the others in a significant way? jonathan: some pain over a target. ahead of possible closures. they will be really difficult to manage inventory for this retailer in the next several months. another deadline in the middle of january. then donald trump takes office. we will see some big moves on tariffs. annmarie: january 15 will be the day were basically the union has suspended strikes until that date. will they have to rethink some of them not going as far as target? it will come at a time where we are in the middle of a transition of power. you layer on top the idea of tariffs and a new man at the helm. that will be howard lutnick and this commerce plus agenda tariffs and trade policy. jonathan: the prospect of a red

wave in washington, d.c., it was on a positive growth chart with the regulation and tax cuts. the focus of the appointments so far, the battle over treasury secretary, it's about tariffs. lisa: this will matter most to people like these retailers. if you try to think about tariffs and how to get ahead of it and preorder what you are seeing, what do you buy when styles are moving so quickly? in the pandemic people raring yoga pants and sweatshirts and then they had to go back to work. you go back to work and you have to buy dress pants but they are not stockpiled. how do you assess the rapidly shifting fashions? jonathan: it is sweet that you think people don't wear lululemon pants to work. lisa: stop trolling me. jonathan: many people have not given that up. annmarie: we have seen a change in what is acceptable and office attire post-pandemic.

jonathan: you come in the office every morning wearing lulu. lisa: then i put on my suit. jonathan: coming up, investors anticipate nvidia earnings. we will check up with david malpass on trump's treasury. pick -- treasury pick. we begin with stocks more broadly higher. equity futures up by about .1%. steve seeing more room for stocks to run. "the trump presidency is likely better for low-inflation and interest rates. this is stock market positive for law -- large cap values and small caps. " basically everything. if you're not a fan of chess, move onto the next election outlook clogging up your desktop

or your mobile phone inbox. you said we are plain chest and not checkers. what do you mean by that? stephen: checkers is a short-term game. in chess you are playing two or three moves forward. a lot of folks think trump is playing checkers. something he's actually not capable of playing chess. if you take the other side of that debate and argue he's playing two or three moves down the board and think through what those moves might be, you can go down the whole list of his policies and come away thinking this is actually going to be pretty positive. if you're a longer-term investor like we are, we think the s&p probably gets to 7500 by the end of 2026. a pretty good agenda here. you can chop your way down the list and see a positive outcome. jonathan: let's go through the

list. tax cuts. focus on the growth and not the deficit. tariffs, focus on the growth and not the inflation. tariffs, why could there be a positive growth impulse off the back of that story? stephen: he is clearly here playing a chess game. he pretty much said that and he's negotiating. people get that. the folks that argue that tariffs are absolutely negative and inflation causing, they are playing checkers. they are multiplying the amount of the tariff times the volume of goods being imported. they feel that carries through to inflation. trump is playing the game that lets negotiate the deal and equalize the playing field. the outcomes of all those things, if they work, should be to bring more manufacturing back

to the u.s., which is growth stimulative. it should bring more volume into the u.s.. on the other side on deregulation, part of the picture, he will get more lng exports, bring down the price of oil to offset some of the price increases you will get with tariffs. you will not get them all. the chinese manufacturers will absorb probably a good hunk of the tariff increase out of profit margins rather than raise prices. they don't want to lose their competitive positions. it is not a simple as just multiplying the tariff times the volume. it is something more complicated. my guess is he will end up with more investment in the u.s. economy. we are starting to see people move the piece on the board for that purpose. you are already seeing companies ahead of trump starting to do that. i think net-that it is growth positive, not growth negative. lisa: you lose your bishop but

it perfectly positioned your brook. -- rook. if you lose your queen, it positions your horse to create opportunities to get the equity market to 7000 by the end of next year. 7500 by the end of the following year. at what point, the one niggling feature is the bond market that curtail some of this enthusiasm. stephen: i'm thinking about another piece, lisa. the double put. one thing -- long term equity investors have boundaries on both sides of potential tales. if, for instance, the republicans go so crazy that the deficits look like they will go through the roof, you have a liz

truss moment in the bond market. you guys have been talking about this. to a certain extent the bond market kind of disciplines how far they can push some of their agenda. the fed is on the others. if things slow down too much, the fed just eases. they have room to do that. the stock market has these two guardrails that i think on a long-term basis make it pretty attractive for investors. that does not mean there will be volatility. we keep a little cash on the side. we are overweight cash today, very modestly. we always keep a little cash on the side in this type of environment for opportunities. target getting crushed 20% today, not a huge fan of target but we like it and some of our dividend portfolios. it's a little overdone. you will get volatility like this for different reasons over

the next couple of years. those will be opportunities. we will end up in a pretty good place. lisa: you can shrug off target as basically a one-off, maybe just overdone. if nvidia reported earnings like this, it would be a huge problem and we would see a different response given how much the markets have coalesced around the ai theme. how much do you think that can keep performing? it has to keep performing to keep this chessboard as advantageous as you see it. stephen: they don't have to -- they have to knock a completely destroyed. nvidia has a very good story. they are a monopolist selling to well-funded customers who have an existential risk if they don't buy nvidia's products. the debate on nvidia is are they selling razors or razor blades? you have got to believe they are selling razor blades.

that is the bull argument on nvidia and why you would pay 30 times three years out earnings for what will be continued double-digit growth because of what they are doing. everyone knows the story and its positive. nvidia could drop 20%. we have seen it before and the market advanced. 65% of the market is outside the mag7. if you get a broadening out trade, which we see as highly likely in this trump progrowth agenda we are about to implement an aggressive way, that's a broadening out agenda. it is good for some value stocks, the financials. good for smaller cap companies. that case has been well made. if you get 65% going up 20% and 35% of the market kind of hold water because it's got pretty good fundamentals, you can get the market higher.

7500 sounds like a big number but it's roughly low double-digit returns. it is not crazy over the next couple of years. you can get plus 10% in the stock market out of that kind of dynamic. lisa: i know you nothing that tariffs will be as harmful as some economists have projected. if we go back to the first iteration of the trump administration and the used tariffs, basically the impact was in response from china that they were no longer going to buy some american agricultural products. we had billions of dollars in a bailout for farmers. what do you see for trump 2.0 in terms of that reciprocity from some of these adversaries who might be putting up the walls for him? stephen: lng. the u.s. has a huge amount of natural gas. it is actually one of the more eco-from the carbon -- eco-friendly carbon products. we have been holding back our lng and gas production under the

current administration. that will be one of the areas he will trade here. he will have the germans stop buying lng from russia, buy it from the u.s. that will be part of the trade, gas. perhaps even china, it will import a lot of oil from russia and from iran. there are things he can get done here that would be a natural quid pro quo or trade-off that could be positive for the u.s. economy. we employ a lot of workers in the gas and oil space. jonathan: before you run, the s&p. what is the target? stephen: 60 607,000 -- 6600 to 7000. this year we got a lot closer to our two-year target in one year. somewhere up there in the high six thousands.

jonathan: we appreciate your time. with an update on stories elsewhere, here is dani burger. dani: the u.s. will provide ukraine with landmines to stop russian troop advances. it is the latest effort by the bided administration to support ukraine effective president-elect trump's inauguration. , they will be nonpersistent meeting -- nonpersistent, meaning they will be inactive after a certain meta-time. california voters rejected raising the minimum wage. it would have benefited 2 million workers like hotel and grocery workers. opponents said it would have increased costs, leading to higher taxes and push businesses to eliminate jobs. netflix's j paul versus mike tyson boxing match attracted more than 108 million live global viewers, the most extreme to sporting event ever. it peaked at 65 million

concurrent streams. it pushed the stock to an all-time high, a closing price yesterday. that is your brief. jonathan: that is a game changer for sports worldwide. thank you. up next, all aboard the trump train. >> i think it will be difficult for anyone to get in front of the trump train with respect to tariffs. you will not find many people out there that are willing to put tariffs in place that president trump ran on during the election. jonathan: you might have found one. from new york, this is bloomberg. ♪

jonathan: we have got to keep bringing attention to what's happening with target. it is down by about 18%. cutting its outlook, missing estimates. pretty dreadful stuff. having problems with inventory.

equity futures on the s&p up 5.2%. -- up by .2%. all aboard the trump train. >> i think it will be difficult for anyone to get in front of the trump train with respect to tariffs. you will not find many people out there that are willing to put the sorted tariffs in place that president trump ran on during the election. we are in a situation now or trump inherits an economy with nominal growth generally slowing down. if tariffs are put on imported goods, tom not sure which goods those would be, the prices would rise. the prices for other goods would be coming down. jonathan: president-elect donald trump naming howard lutnick as his pick for commerce secretary. sources telling bloomberg that trump is in florida today interviewing potential treasury secretary picks kevin warsh and mark rowen. joining us now is david malpass,

former president of the world bank. have you been down to mar-a-lago? david: i was down there last week it with people. trump has the opportunity to put in really good people across the government and i think that's the process happening quickly, much faster than in 2016. i think that's great. annmarie: were you down there for anything specific? you are part of the trump administration. what potentially could you see your role in trump 2.0? david: i want to be helpful in doing that as i can. there are huge problems that need to be solved. if you think about where the u.s. has been left at the end of the biden administration, it is weak on foreign policy. the economy is suffering from inflation. the bank regulatory policy is really mixed up. energy is not doing what it could be.

there are.all these problems to fix there needs to be lots of people to do it. >> you are in the mix when it comes to policy. how do you see the direction of policy in trump 2.0 when it comes to things like tariffs given the fact we have envisioned a tariff hawk in charge of commerce and that individual did not get the not for treasury that he wanted. with this commerce appointment he will have more of a role in ustr as well. >> we have to look at how the president phrases it in what he wants done as far as who is pushing forward the agendas. this idea of commerce and ustr being us -- being attached is a long-standing one. i worked for senator roth when they were proposals to merge them because of their overlapping rules on tariffs. that is not new. there is so much to the whole agenda. think of what has to be built out in terms of downsizing the

overreach of washington. all these people employed to write regulations that slow the economy. there are better ways to do that and that is one of the major initiatives. another is on energy. think of the strength of the team put in place with chris wright, governor burnham and lee zeldin. you have the core of the team that can really create energy growth for the u.s. that is good for everyone and terms of affordability. annmarie: the nucleus of the team is the treasury secretary. there are four names, maybe coalescing around three. two will be in palm beach today for interviews. do you have an idea of what the president is looking for when it comes to his treasury secretary? david: i don't have insight on that. he wants people that will get the job done fast. that is pretty reasonable.

annmarie: what do you think of the three individuals/ -- individuals? david: they are good people that can get the job done. the tax bill will be needed right off the bat. as you look to 2025, i looked at the wall street journal article on the fiscal train wreck. it is a perfect storm coming together. you have to get the tax bill done, get a budget out fast. you have the debt limit coming at you. it is a difficult one. you have to get your party to vote for increase in the national debt. that is always a sticky one. it has been for 30 years. the reconciliation bills will be challenging. all of that has to come together with the clock ticking in terms of market confidence. you want to build confidence in markets as you go forward. lisa: this is the reason why people are saying in the first administration for donald trump the stock market was the ultimate check. and this administration it will

be the bond market. how do you create the growth the stock market is expecting and the fiscal discipline, for lack of complete irresponsibility that the bond market is looking for with that kind of sequencing deadline and the different politics in d.c.? david: it can be done but it goes to this core of models. if you use a kinsey and model, well, if you shrink the fiscal deficit it will slow the growth rate of the economy. you have to break out of that and say no. if we are shrinking the size of government spending, that frees of the money for the private sector. you get faster growth. it's almost the opposite of a keynesian model. same with the phillips curve. the fed is so dependent on the idea of the offset between employment and inflation, it does not work that way. if you have confidence in the dollar as the reserve currency, you can get low inflation and price stability.

that is your dual mandate. then you get full employment out of that. the various tools or levers work together and not against each other. lisa: it is fascinating to get your perspective when you are the president of the world bank. you had a clear sense of the international perspective. in the g20 in south america there was a feeling of who cares what's going to happen here because it doesn't matter. things will change. you get the sense the president will care about where the u.s. land and the geopolitical landscape here? david: i hope so. the u.s. has gone way too far into globalism. besides that on display over the last week. you were in south america. you saw these giant conferences going on. there is no useful outcome. where the u.s. is embarrassed by his physician within the world. china is dominating in those international conferences.

there has to be a rethinking by the new administration of how do you want to interact with the world. that applies to trade. that applies to how you work with the imf when the programs are not working. look at argentina and on down the list. that means the u.s. looking for its national interests more clearly than what we have been doing. there has almost been this view an action to say we want to give power to institutions that are headquartered in europe because they will be socialist. that really has to stop. jonathan: do you think you can change? david: certainly it can. the u.s. is the dominant world economy. people forget that. 25% of world gdp. it has been absent. there is the vacuum in the world. look at africa with the weapons flowing down from the north. russia is putting weapons not

only into north africa but into gaza and everywhere you can look, syria. china is building the infrastructure pipelines and putting on the debt. it is dominating. france is long gone and the u.s. is getting pushed aside. that is the base closings in easier -- niger. the weakness of the u.s. is on full display for the world. that was particularly apparent in lima with the conference. jonathan: good to see you, sir. david malpass, former world bank president with important points at the end. target getting absolutely hammered. ♪ e 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.

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jonathan: two big earnings stories, target out earlier. later today you will hear from nvidia after the closing bell. equity futures right now on the s&p 500 up 5.2%. -- by 20%. manus -- by .2%. manus: today i give you target. wiping out this year's gains. we are down almost 18%. a lackluster guidance. resourceful and strategic in the purchases we are making a target. walmart is sucking up the middle

class, the hard-working people that go into walmart. the breadth of what walmart partaking in is taking market share. that is the basic understanding that target. full year is way below the original estimate guide of nine dollars to $9.75. comcast. remember 2011? they got their hands on nbc. the crown jewels were the cable assets. they are floating the idea and today we will confirm it. they will spin off cable assets. $7 billion in annual revenue. but will stay in the family is peacock, broadcast tv sports, movies and theme parks. the real housewives, that will stay in the family. microstrategy link to what happens with bitcoin, breaking through $93,000. what is michael seiler doing it

microstrategy? not only adding another 51,000 bitcoins on monday and emboldening his capacity to buy more. the stock is worth as much as barrick gold. $97 billion in actual market cap. that is what you call have to. jonathan: manus, thank you so much. comcast the big story. the marketing unit of the dow jones? lisa: all i can say is it is going to be an interesting time. i'm not going there. you will try to put this on me. jonathan: under surveillance, investors are awaiting nvidia earnings. the forecast expected to show whether the world's most valuable company can continue to deliver on a i demand. revenue expert -- on ai demand. it reflects uncertainty over chip supply. the stock is up by about .5%.

it came from bank of america. nvidia earnings matter. is the most dominant stock on the market, driving 20% of s&p 500 return over the past year. lisa: the earnings have backed it up. the beats and expectations have backed it up more so. you did the same cap elation i did. it could fall -- calculation i did. it could fall and be just fine. billions erased in the united states and he is saying every thing is could take over. there's a bigger existential question that needs to be answered by nvidia. how is it being deployed? how internationally is being deployed? can they meet that deployment? do you have the same investment as some of the big hyperscalers to continue even if they are not necessarily showing profitability? annmarie: dan i have success another $2 billion beat and $2 billion guidance higher. you look at what hsbc puts out and is intrigue uncharted

territory. it continues to go on a $3.5 trillion market cap. this is ginormous. jonathan: they keep doing it time and time again. elsewhere, we search for president-elect donald trump's treasury secretary. he's holding interviews today with kevin warsh and mark rowing . annmarie: we will get these interviews today. in the next 24 to 48 hours we could have the final pick for the treasury secretary. we will want to know who's going to be the nec director. i gave an idea of speculation of potentially warsh at treasury, bessen at nec.

people inspect wedding with a think as well. given the fact that howard lutnick is out of the redneck and been given a home and commerce, does this mean scott has a chance to rise to the top over these two individuals meeting with the president today? lisa: i love the excitement as we go through the blow-by-blow. jonathan: the preview of the second episode of "succession." lisa: there is a larger question for markets of the checks and balances. if you get fiscally less dovish, what is that due to some of the market expectations for animal spirits and the joy you might see an relief in the bond market? jonathan: the biggest regulator in trump term one was the dow jones. this time it could be the bond market. we heard that from evercore, raymond james, federated and just last 90 minute alone.

everyone on the same page on that front. lisa: i think this will be the year, the next 12 months to make the yield curve great again. jonathan: possibly. trump appearing alongside elon musk at a spacex starship launch in southern texas. allies including senators bill haggerty and ted cruz joining the group at a viewing location about an hour before liftoff. i company very much in focus. it's a public company on tesla and the halo effect that comes from that relationship between elon musk and donald trump. not enough time talking about this. annmarie: this was successful even though there was on a cupping effect. we have seen a number of largest. everyone is focused on the rockets but it was the second you texted me and said i think that is senator haggerty. he was there. we have seen the president make decisions about personnel when he was with people on airplanes. it was interesting to see him tag to this rocket launch when he was supposed to be having

interview that morning with us. that is what happened. lisa: in the meantime, the idea of satellites and the idea of some of the architecture for the communication system and defense system this brings is fascinating. jonathan: he's a great guy. fantastic i. shares of target plunging this morning. becoming a cutting earnings outlook for the year. the stock is down 18% in early trading. chuck grom joins us. what went wrong at target? chuck: it is a shocker but is below the top line that was a surprise. comps up 0.3%. we were modeling .5%. traffic was strong. digital volume was strong. it's on the margin line for them. it appears to be inventory related, supply chain related.

it seems more company specific than industry related. we will find out over the next couple of days. we will get a lot of reports. tgx just hit and the numbers were strong. don't get me wrong. the company guiding down 9%. stock down 16%, 17%. that looks like a little bit of an overreaction. the stock needs to be down today but we will find it on the 8:00 call what's really going on here. zooming out, keep in mind that target has had issues that are very company specific in the past. they tend to have issues with inventory management, supply chain. my initial reaction is it looks like something we have seen in the past from them. jonathan: it tipping back to may have 2022. the stock cratered on that earnings report. what is the difference between the challenges they face now on the problems they had back then coming out of the pandemic? tracie: you have a great memory

-- chuck: you have a great memory. what's going on as you think about target, expect more, pay less. i do thing they are focusing enough on the expect more side of the equation. they are focused too much on price. it is hard to battle with walmart and amazon and costco on price. they are known for fun merchandise to differentiate apparel and home. i don't think they are doing a good job that now. that is the evidence by their .3% in comp. lisa: expect more is doing a lot of heavy lifting. they need to have higher end goods. are they talking about what areas they are trying to target? that is what is screaming to me when you say maybe less on the price. chuck: i think they are known for their exciting product. whether it be private brands are it be national brands, they have great partnerships with disney and ulta.

on black friday they will have a big taylor swift offering. i don't think they are doing enough of that. you look at their comp, the general merchandise business has been soft. that is the area that tends to be marginal for them. lisa: i wonder how much we can establish a larger story of walmart gaining share or pressuring all other retailers that are the same kind of bucket due to their multifaceted business strategy. that fact they have the steps -- offsets of advertising and media and marketplace an online unit that can allow them to win on price and it forces everyone else to scramble. are we going to be seen that from the retailers? chuck: that will be the case at the low end for donald -- dollar general and dollar tree. they are under stress from walmart which is funding a ton of price investments. the baseball game analogy, we are only in the first inning.

i think when you zoom out, the 1% comp at walmart is roughly $1.2 billion. a 1% movement target is $200 million. at dollar general, $100 million. it is just a comp number but the market share, when the pie is not growing it is magnificent what they are doing now. we are buy rated on them. we have had a buy rating on target. it hurts. it's a cheap stock. the issues are more company specific than sector specific. annmarie: we have the dock workers union suspending the strike until january 15 and then we have this lingering potential for tariffs. how other retailers going to prepare for those two events considering the fact that target potentially overshot here looking at their stockpiling and that the port strike was relatively short? chuck: most companies were thankful it only lasted a couple of days. the role of them was that --

rule of thumb was it was about a week of backlog and inventory. we will see what happens on that front. with regards to tariffs, most companies are better prepared than they were six or seven years ago. that is not to say if it is a meaningful increase in tear prices how they will deal with that will be interesting. it seems very inflationary to me. if president trump was to be mindful of that, bracing tear prices across the board, there has to be an offset. more to come and we will learn more over the next week with a lot of earnings and retail. annmarie: do you see the retailers preparing for things like tariffs down the road? chuck: the one area you will see company's prepare for is accelerating inventory receipts quicker and earlier. that is something that retailers will prepare for. as a result, working capital will be deprived here in the fourth quarter. inventory balances will be

higher at the end of the year. jonathan: we have asked a few guests about this. your regulation of eight years ago with the first trade war with china and the united states led by donald trump. what changed for many retailers? where they source, where they get product from? how much has changed? chuck: a lot of companies, floor and decor comes to mind. they were sourcing 50% from china. last year it was 25%. this year probably closer to 15%. companies are moving everywhere they can. i would anticipate that will accelerate next year. jonathan: battle hardened. chuck, thank you for joining us this morning. target is down by close to 20%. just to go back over what chuck was talking about, industry problem or a single name problem? if you look at the industry, walmart beat and raise. tjx b and raise. -- beat and raise.

take a step back and look at those three things, it sounds more like a single name problem then an industry problem. lisa: he said expect more, pay less. talking about pay less too much. davey it is the product mix they need to focus on and offering more interesting brands and things of that nature. jonathan: the stock is down by 18% premarket. not a good episode for them at all. stories elsewhere with dani burger. dani: i key gauge of euros on wages jumped 5.4%. that is the most since the euro was introduced in 1999. it comes as the ecb hopes to normalize rates and grapples with potential new tariffs coming from an incoming trump administration. the ecb spoke with bloomberg on the threat. >> distortions rise in a vicious circle. if they arrive in a trade war --

mainly for growth but for inflation. for us it is valuations. this could give rise to additional negative impact for growth. annmarie: -- dani: the japanese prime minister has reached a deal on his economic stimulus package. listing this package is set to provide more money to low income households and reinstate subsidies for electricity and gas bills. tesla chair robin denholm cashed in on the postelection surge. filings show she exercise stock options that were set to expire next year and sold the shares on november 15. she knitted about $32.5 million from that stock sale. the ev maker has been with the best performing stocks after president-elect trump's victory. that is your brief. jonathan: more from dani and 30 minutes. trump's secretary of trade tariffs. >> at the turn-of-the-century

our economy was rocking. we had no income tax. all we had was tariffs. jonathan: we can all go with the no income tax stuff. we are on board. this is bloomberg. ♪ ♪ awkward question...

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jonathan: equities on the s&p 500 look a little something like this. still posited by .2%. yields leaning a little higher, up by three basis points. under surveillance, trump's secretary of trade tariffs. >> at the turn-of-the-century, our economy was rocking. we had no income tax, and all we

had was tariffs. we took down our protection. we took down our tariffs. we turned instead and we taxed americans. we are letting the rest of the world eat our lunch. jonathan: president-elect donald trump picking howard lutnick to head the department of commerce, leading the tariff and trade agenda for the incoming administration. "the president has nearly unrestrained authority when it comes to levying tariffs and the republican dominated congress will not be standing in his way. the trump team can move quickly on a package of big china tariffs." good morning to you, sir. we have seen this movie a few times. when a joke about the secretary of trade tariffs, does it belong to donald trump on all top down for you? >> this is absolutely top down.

he will yell out to the staff go get me tariffs and they will work on executive orders. will there be debate discussion? maybe a little fighting this time but everyone ultimately have to bend to the will of the president rather than the other way around. jonathan: drawing the distinction between campaign promise and legislative reality. how much daylight is there between a campaign promise and what the reality will collect? -- will look like? shehzad: reality could mirror promises. president trump my want to make a big splash and say we will go 50% tariffs and everything china and we will do 10% global tariffs. does that actually -- when the orders are written and you start getting policy on paper, that is up for debate. that is what the markets will be having a hard time marrying what he says in front of the cameras versus what ultimately gets done. annmarie: we talk about

personnel is policy. it looks like howard lutnick is giving a lot of scope to run the trade and tariffs. trump in 2016 really put that with wilbur ross. at the end of the date it was actually robert lighthizer where the power light. how do you see this shaking out in trump 2.0? shehzad: we will see a lot of influence from not just ambassador lighthizer, some of his proteges will be part of the administration. some of the work has begun. chances are a lot of this will be kicking into high gear between thanksgiving and christmas as they start putting together some draft orders that potentially the president could sign when he goes back to the oval office after inauguration. annmarie: china is seeing this play out, how are they preparing? shehzad: they have decided to reserve some fiscal firepower for next year. don't call it stimulus. if you having to spend more money just to cushion the blow from tariffs, maybe running in place at best, that is stability. that will not propel the economy

into higher gear. they went to see with the damage will look like before they tell you how they will take care of it. lisa: that is what everyone has been saying but then they can mount with a bazooka and people were disappointed and said wait. they will come up with something more. what is their capacity to respond? is it further tariffs on the u.s.? shehzad: retaliatory tariffs as part of the approach they will take. they could figure out how to go after certain american companies to punish specific entities. the capacity is not the issue. it is what they want to do. they don't want to do big household stimulus. they don't have -- to have the housing market re-flate. it is stability and risk mitigation. not this big bazooka stimulus that the street keeps telling us will happen. lisa: there's a question of the method they have used to try to boost their economy, which is production.

some people say overproduction of certain goods. it needs to be exported because they are having overcapacity for certain their population. what is it due to the balance of exports if the u.s. effectively puts up walls of tariffs? shehzad: there's a lot of rewriting of trade. we have to keep that in mind. this is not like 2016. we could see the chinese export machine still doing all right because it's coming out of ultimately the goods from other jurisdictions into the u.s. the other side of china saving his firepower for next year is that if they just keep making policy easier and putting money to the manufacturer's and commodities producers, it could exacerbate the problem trump and company wants to address. chinese goods flooding the market because beijing is taking care of their factories. jonathan: a not a word if you are janet yellen.

then the other word came in, de-risking. you have to say diversifying. how have they diversified in the last four years? shehzad: china plus one has been talked about all the time, another cliche. you can do china plus one maybe for lower end goods but what do you do if you are apple? what if you're a complex pharmaceutical product or medical equipment providers? there are no other countries were you can go produce those products. jonathan: are you saying that is because of knowledge and not because of the price of labor? shehzad: price of labor is not the main driver anymore. infrastructure is already there. the knowledge and know-how is already there. it will take a long time to retrain workers also. -- elsewhere. corporate ceos have tried to expend that the policymakers which is why you were getting policy makers not talking about it as much. it needs to be done. it will become acadia. jonathan: really important

stuff. you cannot just flip the switch and move somewhere else. lisa: have you seen what goes into some of these manufacturing plants are solar panels? talk about semiconductor chips in taiwan. data such a complicated process. people are trained for years to do that. there's an entire training ecosystem that is hard to replicate. jonathan: which should have happened in this country a long time ago and did not. good to see you. the latest tariff effort for the next year and how china might respond. up next, we will catch up with tracie mcmillion, pierre ferragu as we wait numbers from nvidia after the closing bell. matthew luzzetti of deutsche bank. the latest in the bond market and why it might be the ultimate regulator of whatever policy comes out of the white house. we have heard that a few times this morning. equity futures on the s&p up by .2%. target down hard by 19%. ♪

>> i think the hawkish tear is in the price. >> the reality is the market has

looked past a lot of geopolitical risk. >> we talk about exhaustion, we are talking but really high sentiment, pricing in all this good news. >> nvidia is a number one high-quality stock so we want to continue to embrace quality. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: conking down to the opening bell, 90 minutes away, equity futures positive by .2%. the nasdaq 100 of by .25%. the stock dropping a lot, 18% on target. a beat and a raise from walmart and a miss from target. lisa: fool me once, you can move on, will be twice it becomes a problem. the target points to idiosyncratic problems that

cause inventories to build and provide a bigger drag on earnings than they expected. there are some big questions about how the behemoth of a walmart and other large players pressuring other companies in the retail space to understand what the business model is and target what works, the idea being that may be competing on price is no longer the advantage. annmarie: given the fact that the company stock was hurt by the stockpiling come of this could be a harbinger of what others are dealing with when the strike is going to come to a head january 15. longer down the road, if you start building up stocks or inventory, you are nervous about tariffs. how difficult is that going to be to weigh the policy signals coming out of washington? jonathan: should we be nervous more broadly. i guess 30 minutes ago said it looks like an industry problem, it looks like a stock problem. that is why the broader markets

are doing ok. take a listen to this. goldman sachs at 65, morgan stanley at 6500. at federated, they said we could push to 7000 by the time of the end of next year. there is a big focus on tax cuts and the regulation which is why the cabinet pick men in it -- it matters so much. look at the lineup. check of the caliber of these individuals. kevin walsh, senator bill haggerty, looking at individuals who could be the most knowledgeable of financial markets we have seen since hank paulson at a time when the economy is in a much better position. annmarie: when it comes to the buffet of individuals that donald trump has to choose from for the treasury secretary contenders, each of these individuals are really experts in their field not just in the

united states but globally. but they will have a big job ahead of them, dealing with congress and the debt ceiling and that will be the first order of business. then it will be shepherding donald trump's agenda when it comes to taxes. and then third, pushing back potentially on what howard lut nick might want to do at commerce. jonathan: if we get the dream team material to run the economic policy. lisa: if you get the chicago bulls lineup from 1990's in the white house or cabinet, there is a question about whether president-elect donald trump will like that because whether the policies will actually be equal to what he is trying to put out there, the rhetoric. that is the uncertainty you are feeling in the markets when they look at the pyx to understand is the priority on tariffs or on the idea of how to create the

best mix of policies. jonathan: in palm beach florida, we will catch up with tracie mcmillon as markets await nvidia results. we will talk about the ai infrastructure outlook and we will talk with pierre ferragu. tracie mcmillon saying, nvidia has market moving potential given the sizable postelection stop junk, we want to be a bit cautious over the balance of 2024 but the broader risk opportunities are developing. where are the opportunities right now? tracie: good morning. we think the opportunities are mostly in u.s. large-cap stocks, nvidia reporting later today. and they are a bellwether for

ai. we will see if the pace of ai spending has held up. that could probably give the green light to hold the mag seven stocks. that would indicate status quo. if they fall short, we could see that in the broader markets. jonathan: we shared a snapshot of your outlook into 2025 and is is worth going over we are on track for a 20% plus year on the s&p 500, the very few who saw it coming when we played out the exercise 12 months ago. much harder is at this time around to provide a forecast and projections with any confidence for the next 12 months? tracie: it is actually a bit more difficult, as you mentioned. in fact, the red sweep was not our base case so we are

reformulating some of our forecasts as we speak because we are expecting probably higher growth and higher earnings due to improving regulatory conditions and the potential for tax cuts. so that does have us rethinking our forecast. lisa: which aspect in particular? this is what we have been trying to gauge from a lot of people and i get the sense that maybe people haven't determined what potentially could be affected by the policy changes, is it that yield can be higher, stock prices potentially higher? are there certain sectors you can see upgrading were significantly? tracie: it is very possible that we could see higher yields, higher inflation, higher growth, all of those things. there are certain sectors we like. we liked cyclicals into the election over the past few months. we have favored industrials,

communication services, energy, financials. we think financials are particularly interesting right now because of regulatory benefits, the benefits of a steeper yield curve and net interest margins and the potential for additional mergers and acquisitions which could benefit investment banks. lisa: what you have to see in order to make the changes to outlook? is it personnel issues, just that you are looking to understand what the market is doing and how it is responding already? tracie: there are certainly going to be a lot of things that play out over the next couple of months and into 2025 as well because we don't know a lot of things, like timing, potential tariffs, magnitude of potential tariffs, geopolitical issues is another risk we have our eyes on. it is on the consumers to see if consumer spending starts to pull

back as consumers get more price conscious and perhaps more concerned about higher prices relative to tariffs. so a lot of factors go into those decisions, and right now we are still favoring u.s. over international. we like large caps and small caps. we like those cyclical sectors that are more defensive ones. annmarie: so you're into u.s. exceptionalism and pricing in what you can see from the red sweep. what about the tariffs? how much of a bite could that be on corporate america? tracie: tariffs are probably going to hit both consumers and corporations. consumers in the form of higher prices, corporations in the form of lower margins. it is probably going to be some combination of that right this time around, we wouldn't be surprised if we didn't see corporations passing on more of those higher prices to consumers

because they have seen that they have more pricing power than what they had back in 2018 during the first round. annmarie: so your probability is still for a soft landing but you say a recession, we are not out of the woods. what is the probability or a potential recession in 2025? tracie: we think that is a low probability. we do see some slowing in economic growth. we have seen it slowing for 2024 relative to 2023. we think that slowing continues a bit over the next couple of quarters. then we see the potential for a re-acceleration in growth rather than a recession. jonathan: appreciate the update from you. pierre: --tracie mcmillon of wells fargo. we were not expecting the red sweep and a lot of people having to rewrite chapters. lisa: interesting to see how

people are rewriting them and people are there seems to be ambiguity about how much they want to rewrite them as we were hearing from tom kennedy. a lot was written before the election and there is a real question of what are the applications of some of these policies going to be and maybe it is actually prudent to wait a bit. jonathan: this came from target, target to cut prices of 2000 prices for the holidays. lisa: i just look at the share price and it stayed. and it goes to the point that is that the problem? is it prices being too high or product mix issue or them trying to clear the deck so they can move on? a lot of questions for target. jonathan: stock is down by more than 18% in the premarket. let's get an update with dani burger. dani: the search for treasury secretary continues. sources tell bloomberg that president-elect trump is holding interviews with potential picks

today. yesterday he nominated the co-lead of the transition team and once treasury hopeful howard lutnick to lead. as you can see, tjx slightly weaker, boosting earnings for the year. the ceo said customer transactions across the company drove up sales in the third quarter and the treasure hunting shopping experience is appealing to a wide variety of customers. they are also looking to expand in 2026. comcast plans a spinoff of cable tv channels including msnbc, cnbc and usa. the nbc broadcast network, bravo streaming will remain with the parent company. the separated networks have $7 billion in annual revenue. comcast shares up about 1.4 percent in early trade.

jonathan: up next, the morning calls close research previewing nvidia earnings. that conversation is up next. this is bloomberg. ♪ and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

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jonathan: the opening bell around one hour in 15 minutes away. equity futures, positive by .2%. morning calls, oppenheimer downgrading jp morgan to perform citing lower guidance on net interest income. down by .2%. second call from j.p. morgan cutting hp price target to $41, expecting softer q4 results, unchanged there. citi downgrading target to

neutral after citing poor results and the risk to lose more market share to competitors. nothing changed about this move, down 19% in premarket trading. nvidia reporting after the closing bell the forecast showing one of the most valuable company can continue to deliver on a i demand. joining us is pierre ferragu. welcome back to the program. after the closing bell when the numbers drop, what are you focused on? pierre: the main focus is going to be mostly on how the stock reacts to numbers. we are in an unusual situation you never expect revenues from the data center at $165 billion. we think investors on the buy side and investors who follow nvidia and own nvidia, how are

the expectations for that business north of 200 billion dollars. expectations are very high. what we expect to see is all the indicators in the green and think they will guide the consensus today and the question will be, will it be enough to keep investors in the stock going forward. lisa: doesn't matter why they increased the forecasts? they are able to make demand or whether the demand is just so high that they can charge really high prices even if there is a bit of a production issue. pierre: in terms of operations, that is exactly what you are pointing at. demand is still very good. we follow very closely pricing and availability of cpus in the market and the market is still

tight. there are still plans to increase spending. you see the high place sellers are increasing and we can you to increase. on the demand side, the situation looks good. on the supply side, the key players are ramping up enough capacity for nvidia to continue to grow. now all the indicators remain the same. they are six to 12 months visibility and the debate is going to move to what happens in 2026 much more than what is happening in 2025. we know 2025 is going to be very

strong and maybe expectations are a bit too high but there is no major concern there. what is going to matter is how investor sentiments are. lisa: and it comes down to what is the business model, is a four hyper scalars? is it a benefit that people worry about that that the magnetek accompanies -- the mega-tech companies are investing enough. do you need to see a sign that you are seeing a broadening out in the application, purchases of some of the high tech chips? pierre: yes, it is definitely an important aspect of the story. you might feel the market which only has one supplier, what we have seen is other players like

tesla and smaller players and then you have a very long distance -- list of additional players that want to reload earnings. that part of the market we expect it to grow at least as fast as the large hyper scalars and for 2026, investors, yes, in demand of more visibility and growth beyond the hyper scalars. lisa: how much i focused on the regulatory regime and what nvidia has to say about how the constraints are being put up around the world in terms of who can get chips, particularly the highest tech ones? pierre: there is a specific point of focus on china.

a small move in part for nvidia, let the chinese hyper scalars, 5% to 10% and china as a whole at 20%. it is the same dynamic which is getting an nvidia chimp matters for competitive reasons and every time there is increased pressure on nvidia, they can always scale back and deliver. we have never seen a significant downside on that front prayed in the rest of the world, the regulatory or geopolitical pressure is about and want to have the chips in the data centers in my territory and that is a sovereignty concern. it is a strong driver of growth because usually deployments don't happen to the large hyper scalars but to the smaller

players and that is a good driver of diversification. nvidia management plays that very efficiently and encouraging these movements and making sure anyone in the global looking at deploying locally have easier access to them. jonathan: can we talk about tariffs a little more and cover apple as well? we caught up with howard utnick who got -- lutnick who got tapped to be the treasury secretary. we asked about carveouts and he said no carveouts. what was the experience the experience last time around and how different would be in the next few years? pierre: it is very good question. it is very complicated question, early in the process so difficult to make a forecast. there are two things i will

share with you. the first one is the governments do things too heavily against public opinion and you have never seen china putting that on. that has always been well protected in china. similarly when it comes to looking at what the u.s. government and especially the next administration and what they're going to do, that concern will be very present as well. it is a fun thing that in the transition. we are going to do it but we know very well we have had president trump as a president already and one thing we have learned about him is that he has a very pragmatic approach to problems and he is very concerned about the

competitiveness of american countries. i would find it hard to see him do something that would cause harm. jonathan: are your saying your underlying assumption for the next is that the incoming administration won't do anything that hurts the national champions, the tech firms? pierre: that will be the direction definitely. jonathan: do think that applies to regulation to? o? pierre: if it is about reining in public opinion and information, that is a different story. but doing something that to weaken economically the players, i think based on the track record and what we have seen in the previous trump mandates i would expect pragmatic decisions to be made from an economic

standpoint. annmarie: will we see expert controls, special ed ships? pierre: of course. there is no reason to see that coming down. these export controls are in place and their effectiveness is a? in terms of -- is a question mark. so implementing the controls is very difficult but using that as a weapon to negotiate trade balance between the u.s. and china in the u.s. and rest of the world will remain a very active part of conversations for sure. jonathan: you have been generous with your time. we appreciate it. initially anticipating numbers coming from nvidia later after

the closing bell but ending on the process on tariffs and what it might mean for u.s. major players and will there be carveouts and will the incoming administration do something that hurts the major american tech firms are the operating assumption and underlying assumption of pierre ferragu is no. lisa: is ultimately this will be an administration that will be governed by the markets. it will be interesting to see what companies like nvidia had to say after the bell. jonathan: coming up we will talk to matthew luzzetti and vishal khanduja . you are watching bloomberg tv. ♪

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jonathan: we are about 60 minutes from the opening bell. futures on the s&p, up 5.2% for the nasdaq 100 up by one quarter of 1% as well. with one hour to the cash open, here is manus cranny. manus: when you lose a customer, which is what is happening to target, when you lose a customer to walmart, how hard is it to bring them back? the market is now focused on it. they have inventory they brought forward and they will have to go through discounting and will

that bring them back from walmart? target is resourceful and strategic and that is how they are shopping. a poor set of results, marking them down to 130. trying to regress the shoppers who have already left you. at comcast, 2011 a deal to end all deals come universal, nbc universal, comcast getting their hands on universal. and now there is a spinoff. $7 billion in revenue they will have. but then what is left inside the comcast family, you will have peacock on the streaming business, sports movies and theme parks. the real housewives stays there from bravo. microstrategy, a symbiotic relationship between where

microsoft strategy -- or microstrategy goes and bitcoin. they bought more bitcoin and are issuing notes to help them build the war chest to buy, you got it, more bitcoin. they are offering convertible notes and keep filling the tank with bitcoin. good morning. jonathan: thank you very much. ford, headlines dropping, planning to cut 4000 jobs in europe by the end of 2027. we have had this conversation so many times and just how challenging the auto market over in europe it is, and the amount of cuts we might see and the kids -- hits keep coming. lisa: 4000 positions through the end of 2027, about 14% of ford's european workforce, primarily in germany with a lot of issues in their sector and the united

kingdom. a real question about electric vehicles in particular that have not necessarily had the profitability and raises questions, how far have we already seen the cuts and how much further do they have to go when they are eating a double whammy with -- when they are getting a double whammy. jonathan: i am fairly confident this is just the beginning. this is from ford. vw will be next and others will follow. lisa: then there is the response from policymakers and is there an impetus to come up with framework, subsidies or whatever has to happen and it is an open question and can they do it quickly enough. this is why people are talking about parity on the euro and why outlooks have been downgraded. jonathan: from stellantis he said we are talking weeks not months and we have to have a policy to stop this happening. that is latest from ford cutting

4000 jobs in europe as edie's lose momentum -- ev's lose momentum. let's talk to matthew luzzetti writing, most official's comments leaned at least slightly hawkish suggesting the december meeting is a close call between cutting and skipping. he joins us for more. so barrels, 11 cpi, how crucial are the data points? matthew: the fed is data-dependent, almost to the point where markets interpret them as being data point depended. those data points will be crucial for thinking about the fed decision. if we take a step back and think about how the economy has evolved since september, inflation coming in higher, unemployment lower, growth stronger and conditions are easier. even if we set aside the election and the impact it could

have, there is a case for skipping december meeting anyway. jonathan: do you think the recent communication is consistent with a pause or a skip? matthew: it is consistent with the rate cut still on the table with the december meeting and wanting to have optionality. we have heard a few thing from fed officials that they are in no hurry and with the resilient economy they can be careful in assessing this. and one that is important, as they get closer to the levels of the neutral rate, wherever that may be, they are going to slow the pace and will continue to slow the pace. we heard that from chairman powell in the last meeting. lisa: it raises the question what the parameters are or the framework of growth and inflation they have over the next few years and how they are

moving due to the recent election. you look at your outlook and changed it and increase growth expectation for the united states as a result of the election and talk about the huge wide range of potential increase to inflation that some of the policies would have. can you give us a sense of how much less certain things are now in terms of the economic trajectory? matthew: we have the election outcome and narrow down the policy decisions that are possible. and then around tax and trade policy in the sequencing, both will determine what happens from the growth outlook, labor market, inflation outlook and therefore how the fed response. we do see a backdrop of growth at least in 2025. you will get the tax cuts extended, a deregulation push and possible more tax cuts and that should help support growth. i've on the other sign -- on the

other, we anticipate a trade war if tariffs are increased and that will ultimately have an impact it when you look at the impact on inflation comely benchmark it as being 30 basis points next year and another 60 or 70 basis plays the following year, basically stalling out progress on inflation but the uncertainty around it is huge. lisa: you're talking about the implementation of tariffs could lift core inflation by anywhere from 0.5 points to 2.5 percentage points. what would that mean from the fed perspective and do you think why that is why they are pushing back against some of the most dovish takes in how much they could cut rates? matthew: that was it -- including 50% to 60% tariffs on china and then also uncertainty about the pass-through. i don't think the more hawkish comments are about what is coming for policy but acknowledging what is happening in the data over the past

several months and the diminution of the downside of the labor market, financial conditions easing. when they get to december, they will be thinking about the policy outlook and we know from december 20 16, they were thinking about that very significantly. i think the november in 2016 mentioned fiscal policy 17 times and in december it was 212 times. they raise the neutral rate in december 2016. a forward-looking fed has to think about how the policy changes will impact the outlook. annmarie: you think the priority will be the tax policy and you think actually more gets done in terms of the promises trump talked about. can you tell us what gets left on the cutting floor and what gets put in? matthew: this is assumptions at this point. a few things we think probably could be an expansion of the child tax credits.

trump did acknowledge that. and potentially a modest cut to the corporate tax rate, although that probably comes later. and number three, business tax provisions that have expired that get renewed. it is not anywhere near the size of the tax policy you had legislated in 2017 but we have an economy that is operating quite well. annmarie: we are sitting in new york and you say no change to salt? the president came to new york three times and talked about salt and then has bipartisan support for many democrats in california and new york. you think that stays? matthew: it does have bipartisan support in one of the keys in the prior tax provision. the key will be are the parts of the republican party let moderate senators that become concerned about the impact on what the economy will be when you look at the cbo's they

assume it is expired and we had budget deficits 5% to 6% over the next several years. and counting for the tax cuts, closer to 7%. we think that is ultimately what gets passed but possible to have individuals in congress that have more fiscal restraint. lisa: when we compare 2016 to 2024, the starting point is different and it is important to talk about the inflation and benchmark rates and in terms of inflation how we don't accept the inflation is getting it up and that is where we were on 2016. how much does that change the extent to which inflation could pick back up and the importance of understanding how much momentum there is in an economy that has surprise to the upside again and again? matthew: it is crucial for the fed. going back to 2019, 1 key reason

they moved the rate cuts, the trade war was shaking global markets and a china devaluation that lead the fed cut rates. inflation was close to 1.5% and they are worried about inflation being too low and not too high. this is a very different environment. even though i think they would like to look through another inflation shock, i am not sure they have the luxury of doing so . inflation was already stalling out at 75 or a basis points above target and we are getting rolling shocks. i would imagine the tariffs would not come all at one time, but over a period of time and it makes it more difficult for them to identify exactly what is being driven by it. jonathan: looking forward to catching up to you before december 18. thank you. more fed speak and data through the week. today you will hear from governor cook, governor bowman

and here is michael mckee with more. michael: we are waiting on all kinds of data coming up, we have nvidia earnings this afternoon to keep you busy while you wait for the data to come in. it is as matt points out, a sort of turning point for the fed. they're trying to convince people now that they have options that they don't want the market leading -- leaning into a rate cut because the numbers have not been working out as they have said. and that is why jay said they are not sending any signals that we need to be in a hurry to lower rates. of all the fed officials that have commented on monetary policy, they say the same thing. you have two voters and a bunch of nonvoters saying that and that has pushed down the odds of a december rate cut to 59%, still a little about 50-50 but nowhere near the 99% we saw the day after the september meeting

when they did the 50 basis point cut. now they will be looking ahead. they are not going to be worried at the moment about what the incoming administration is going to do it will be worried about the data coming in and as jay powell said, it is the totality of the data. next week, fed minutes and they will be scrutinized and what they talk about the future and on thursday we get a huge data dump. we get everything from jobless claims, gdp, to pce and is spending and pce inflation numbers are what the fed is looking at. that is their target. coming after that the week after, we get november jobs. that will be important to that side of their mandate. november cpi december 11. the fed meeting is december 18. between now and then, we have a lot of data. you can expect the futures estimate of what the fed will do to bounce around quite a bit. jonathan: and then all over again. thank you.

joining us to have that conversation is vishal khanduja. it is good to see you. let's talk about what the market is telling us. equity close to all-time highs, credit spreads tight, does it signal to you soft landing? vishal: absolutely a soft landing. the credit spreads are telling you that the balance sheets are very strong and growth is robust. some parts of the credit market definitely are pollyanna-ish pricing in and most of the upside comes from growth and inflation doesn't show up. that is where we are pushing back on some parts of the credit market but overall we do think the prices from 250 basis cuts and 50 basis points to barely about three to 3.5.

it is about economic resiliency and a little bit of the republican sweep we have seen. lisa: you talk about a soft landing and i feel like we need to identify what it is because i am losing track of what a soft, hard, no landing is. are we talking about inflation getting back down to 2% on a consistent level in the long term without there being any further real disruptions when it comes to interest rates? interest rates by the fed coming down steadily and everything can move on. vishal: i think that paints a fantastically smooth line down and i don't think it will be as smooth as you painted it. i think it will be bumpy. we do think inflation will come down. i don't think we will be able to repeat the pace of decline we have seen in the past. 2020 three, inflation drastically came down. 2024, nervousness from inflation picking up. we will completely see that in

2020 five, a bumpy line down and they need to acknowledge what has happened in the u.s. in terms of the election results and the republican sweep does change a lot of it. the sequencing and amount and limitation of the policies impacts inflation. lisa: guest after guest has come on this morning saying the bond market will be the arbitrator for the policies of this administration and their reason why yields might tick higher on any given day is because of who is in the lead for the running for the treasury secretary. how closely are you watching all of the incremental moves when it comes to day to day expectations for long-term yields? vishal: we are watching closely and we do need to see the second quarter of 2025 when people come to office and have to effectuate policy with the amount of deficits. so yes, the bond market will be a fantastic harbinger of what

they accomplish. annmarie: we heard from the former treasury's secretary and he said we have potential contenders and maybe we will find out who will be at the helm of the treasury. how important will this bond market be for that person? vishal: super important. there is a huge shoes to fill if you think about it like the entire election campaign was based on its because the numbers are easy, math is easy. it is very easily telling you it is not sustainable at the pace we are about to head on in 2025. not all of those policies will be implementable with the deficit we are sitting on. policies and implementation is what is difficult for 2025 and yes, the person who takes on that role not only has to effectuate that policy but bring all sides of the argument together and sequence it

appropriately. jonathan: the credit call, the risks of why people underwent duration and worried about being in treasuries until we get clarity. the overweight credit, at what point does one compromise the other? vishal: if inflation starts to take over above growth, that is where the combination of those two in which one actually starts to perk up first. typically, growth probably comes and then inflation follows up after that. but if inflation picks up and we get a stagflationary type of environment, i think that is where credit starts to break down. jonathan: that is the dilemma for any central banker. i appreciate your time, vishal khanduja. let's get your bloomberg brief. dani: ford eliminated 4000 jobs in europe are coming to roughly

14% of the workforce and will primarily affect the u.k. and germany. it comes with the ev losing traction and competitors have offered profit warnings in recent months citing a slowdown in sales and ev purchases support. bitcoin has soared to another all-time high. the cryptocurrencies surpassed $94,000 today,. contracts change hands after the nasdaq posted the bitcoin and most were bullish. for delta air lines fires, the first class airline ticket will come with a new perk. delta partnering with shake shack to offer burgers in flight. they will be available to first-class passengers on 900 mile flight out of boston with more markets to follow next year , the verse arrangement of its kind since united partnered with mcdonald's back in the 1990's. jonathan: i do not want to smell

fast food on planes. lisa: i was just thinking. jonathan: you know that one person comes on with fries and you can smell it. lisa: but you're sitting there and you don't want to think, they have gluten-free buns. jonathan: thinking it it what they want but i just don't want to smell it. up next, looking ahead to earnings from nvidia. ♪

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jonathan: the opening bell 37 minutes away. today, fed speak, nvidia

reporting after the closing bell. thursday, jobless claims. friday, although pmi and consumer sentiment. joining us is mandeep singh. give us things to watch. mandy -- mandeep: last quarter there were concerns about gross margin speaking here with the incoming administration, everything looks positive. but if they impose higher tariffs, the impact of that in terms of components for nvidia and with that results in terms of gross margin guidance is one to watch out for. i think as i mentioned earlier in the show, one of the biggest constraints right now in terms of scaling generated -- generative and i and who better than nvidia to answer. lisa: what do you want them to

answer in terms of energy, just in terms of how quickly the chips can process or one that can get around constraint? mandeep: they wanted to know how much today ship and the clusters are getting bigger and how do you supply a power? the companies are already raising. we are in a cap ex cycle, but how do the chips to come online in terms of providing and you need the power. that is the bottleneck that no one has talked about in terms of the scale. people have acknowledged it but how do you solve that problem? that is where the nuclear option and bigger power plants have been discussed but nvidia has the best insight. annmarie: what is the bar? is in-line enough? mandeep: people have become so

less sensitive with nvidia in terms devaluation. in this case, everyone is modeling 50% growth for next year or so it is all about how much will they grow in 2026, whether 25%, 20%, or lower. 20% is jonathan: not sustainable. jonathan:-- 20% is not sustainable. jonathan: yesterday we were worried about nuclear war but nvidia was still up. it is still good to see you. you will hear from him tomorrow once we get the earnings later. coming up tomorrow, we will catch up with cameron dawson. and we will speak to the ipm vice chair on the race to be the next secretary-treasurer and the united states of america. thank you for choosing bloomberg tv. this was a bloomberg surveillance. ♪

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

matt: target really disappoints after walmart beat 30 minutes into the start of trading but it does not look good in premarket. i am matt miller. sonali: i am sonali basak. katie: and i am katie greifeld. "bloomberg open interest" starts right now. sonali: coming up, missing the mark. target tanks after missing the profit outlook, partly due to buildup in inventory. matt: