>> we think the opportunities are mostly in u.s. large-cap stocks. >> the debate on nvidia's are they selling razors or razor blades. >> any news that disrupts the narrative can cause volatility. >> any time there is increased pressure on nvidia they can deliver. >> nvidia is 20 times the size of some of these markets. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: live from new york city, good morning, good

morning. "bloomberg surveillance" starts right now. as we come to thursday on a three-day run, your scores look like this. on the s&p -.25%. this stocks, the only stock to watch this morning. nvidia a little bit softer, failing to beat huge expectations. lisa: there year ahead forecast was higher than the average but not as high as some of the highest estimates and therefore we are seeing a 3% decline. it is only up 195%. there is a question of how high is the bar for a company that seems to be gaining market share and transforming a lot of industries. the problem is demand is outstripping their supply. sales are doubling and quadrupling. jonathan: in many ways this is the market. it is 9% of the nasdaq 100. it is 7% of the s&p.

annmarie: bloomberg intelligence saying concerns over the forecast are likely to be short-lived because of everything lease outlined. when you look at this company they missed analyst revenant -- they missed analyst estimates once in the past five years. if you're looking for something to be worried about, the fact their customer base is so concentrated. is it the fact that maybe they are going to do with tariffs or expert controls when it comes to china? jonathan: if you want worries check out the bond market yesterday. yesterday afternoon was quiet. then a 20 year auction happened and it was not very good. lisa: put it this way, demand was horrible. everyone was coming out with drama. the 20 year note has been the best or child of the entire bond market since it was reintroduced in 2020. this is the second largest

underperformance in terms of how much it sold off since the reintroduction in 2020. does this indicate waning potential for treasuries to be a haven at a time of great concern for inflation? is this the hallmark of concerns of the bond vigilantes or is this a messy 20 year auction at a time people do not know where it fits in their portfolios? jonathan: the 20 year is a very unloved maturity. what it did tell me is how concerned people are about upcoming auctions, how sensitive they will be to other auction. lisa: fact that an unloved 20 year auction is the time when other options have done well. this is front and center. the fact that it is fading even on some of the geopolitical concerns that have come back to the four overnight. there is a question of will they be the ultimate check on this presidents policies and are they

actually getting concerned or is it the same story all over again? jonathan: this is why game of thrones in palm beach florida is so important. will it be walsh, will it be rowan, will it be haggerty? annmarie: we still don't know. it went very late into the evening. scott besser having a meeting with president-elect trump after he me it -- after he met with mark rowan and kevin warsh. this is the line that stands out to me. none of the remaining roster of candidates were seen as perfect according to people familiar with the information. no one is seen as perfect. he is still in search of his perfect treasury pick. jonathan: will come back to that story later. in the bond market yield softer two basis points. the 10 year of 4.40. we'll catch up with cameron dawson and we will speak to

former google ceo eric schmidt on the future of ai. we begin with stocks falling after nvidia delivered disappointing fourth-quarter revenue forecast. cameron dawson of new age wealth looking ahead to 2025 saint tech estimates are too high. consensus shows forecasts going from plus 14% to plus 27% next year. even with nvidia at we do not see everything else in tech able to deliver that kind of growth. cameron joins us for more. is the bar too high for 2025? cameron: i think the bar is too high for the acceleration intact. he did not get acceleration from apple or microsoft. you get deceleration from nvidia. it means the market is pricing in everything else in tech truly re-accelerating. if you look at the 272 numbers for 2025 earnings, you look at tech, you also have to look at

health care, which is the other area with the big acceleration priced in. it is set to go from 3% to 20% next year but expectations were 20% this year and all we got was 3%. jonathan: ai and nvidia doing well this year. the rest of the semi space, not so good. cameron: it truly is ai and everything else. the equal weighted index is down 3% which tells you there is still a malaise in the old industrial, old manufacturing part of semiconductors. that does reflect this weak manufacturing environment where we have any historically long stretch of pmi sub 50. we think pmi's will start to recover only because of better sentiment. we saw that post election in 2016. does that translate to better manufacturing activity or do you get this offset from tariffs

where you have seen this malaise take hold and it stays this world where you only have ai demand and everything else is weak? lisa: you're talking about the ai side of the story that has power the market. a lot of people have come on the show and say they agree with you that expectations are too high for ai to keep leading. that gives everything else a chance to catch up. the semis will have their turnarounds day. why do you think that is not the case, that the rest of the market will play catch up as ai does not grow quite as much as people hope? cameron: hope does spring eternal, and we know if you look at these cyclical semiconductor industries, it is the most cyclical industry in the world, ave been in this weaker environment for a couple years. the bar is lower for a recovery but the question comes back to tariffs. will you see companies want to invest in big manufacturing plants that would support the

demand for semiconductors if there is a question about where the tariffs will come from, where should they be? the demand has been week but does it remain weak because of tariff uncertainty? lisa: everyone that has come on the show since the election has said are you bullish on the u.s. or really bullish? and i saw your outlook. you are casting a bunch of cold water on this and saying it will be choppy, stop being so excited. either you get shop that creates drawdowns or you get a bubble. why aren't you more excited? cameron: we are still bullish on the u.s. and we are still fully invested. the point is that if you think about 6400, all of that glosses over the path you take to get there. the path will be important. we think it will be different than 2023 and 2024. what we see is because you're going with high valuations, high

positioning, as well as stretched expectations for earnings growth, you have this high bar to jump over, which suggests get used more volatility. we are talking to clients to say if the volatility comes what will you do with it? the classic line that when it comes time to buy you will not want to. we are trying to get our minds and process of accepting the volatility versus running away from it. we think it is that choppy range , not necessarily low volatility into the right. annmarie: is it choppy because of underlying economics or policy? cameron: probably policy. policy can influence the underlying economics. we think sweeping tariff policy is a dampener of growth. it raises the question of supply chain disruptions which could be inflationary. the policy wildcards of do we get tax reform or not, do we get higher tariffs? all of these things are sources of volatility.

because you are trading at such high valuations today there is not a lot of wiggle room to of that higher uncertainty. annmarie: tariffs for you retail risk. a big tax plan, that would be a boost. how do you think about the sequencing of this? cameron: we think it could be inverse from the 2016 sequencing where we got tax cuts first and then tariffs and that is one of the reasons for the weaker market we had in 2018. this time around tariffs could happen first and we still the big question as to whether or not you get that corporate tax cut because your negotiating 4.7 trillion dollars of existing taxes with a very slim majority in the house. a big question if you can get us down to 18% on the corporate tax rate given everything else your negotiating. jonathan: let's finish on bitcoin. all-time high. a risk acid on steroids, an

important diversifier for per folios, or proxy for a huge shift? cameron: he think it is definitely a liquidity proxy. a proxy for how much liquidity is in the market. we've seen that play out in other cycles. when the fed is removing liquidity bitcoin has done poorly. given the fed is cutting rates with financial conditions, that is supportive of this asset. we think it is also a psychological commodity that captures fears about dollar debasement and the fact that you have high fiscal spending and you're talking about monetary stimulus, which just supports the notion there are people afraid of dollar debasement unless this is their way to get access to that risk. jonathan: some form of inverse correlation between the performance of the 20 year option and bitcoin. lisa: the psychological commodity.

tulips were psychological commodity. i'm not saying crypto is tulips but i am saying a crypto platform founder bought a banana duct taped to a wall for $6 million yesterday. i am looking at this and i'm like is that psychological commodity? tes your fears? cameron: i think that is the bubble scenario into 2025 that we get a spark of speculative fervor and that is the scenario where you could see runaway markets because people start yoloing on bananas taped to walls. that could make its way into broader equities are kids reese evaluations -- into broader equity markets. jonathan: you did not sound like a crypto purist. her member these conversations when we were trading around 10,000 and we are near 100. lisa: everyone who has been bearish on crypto has been humbled.

there is a question on blockchain and how it could be used. there is a lot of value here. jonathan: that is a good cleanup effort. bitcoin 98,000, up this morning around 4%. thank you cameron dawson of new age wealth. with your bloomberg brief, here is dani burger. dani: u.s. prosecutors have charged an indian billionaire with helping drive a massive bribery scheme. the charges alleged he organized to pay 250 million dollars in bribes to indian government officials to win solar energy contracts and conceal the plan to raise money from u.s. investors. it is a stunning blow to one of the world's richest people in india's most powerful businessman. volkswagen is bracing for employee walkout. company leadership is still up odds over how to restructure europe's largest carmaker. vw is -- that it insists are

needed to -- talks will continue to date with strikes expected to start in december. sources tell us starbucks is exploring options for its chinese operations, even the possibility of selling a stake in the business. it has been speaking to advisers about ways to grow its operations in china and put in the introduction of local partner. starbucks is still evaluating its options and has not made a decision on how to proceed. jonathan: up next, nvidia's tall order. >> i think the results are great. you have these lofty expectations and it is hard to beat lofty expectations. it is their game and people catch up eventually. i think they are too far away. jonathan: that conversation is up next. live from new york city, good morning. ♪

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jonathan: equity futures on the s&p 500 negative almost .1%. in the bond market yields down two basis points. under surveillance, nvidia's tall order. >> i think the results are great. you have these lofty expectations and it is hard to beat lofty expectations but they did give you that extra 2% in either direction and they are within the range of outlook for q4. they are the number one supplier of chips to supercomputing to data centers. it is their game right now. people will catch up eventually but i think they are too far away. jonathan: nvidia shares inching lower following the blockbuster earnings report. the sales forecast falling short of the highest estimates despite

reporting strong demand. matt bryson of wedbush writing given the quarters strength with management commentary also addressing any concerns we are -- matt joins us this morning. what did you learn yesterday afternoon? matt: i think we learned nvidia is still executing amazingly well. they beat numbers -- consistently they have been beating by $2 billion. they did better. i think the guide was a bit lighter than the most optimistic forecast. when they came that -- when they gave that guide they've been beating consistently over $2 billion. are they guiding for 37.5 or closer to 40? i don't think anyone would be disappointed with the latter.

jonathan: where are we? you get enough clarity yesterday afternoon? matt: in terms of their current chip, all supply issues have been resolved. there is plenty of availability of hopper. in terms of blackwell, you can call it a supply problem in the sense they will be short product for the next couple of quarters. i think it is rather a demand problem where they are ramping as quickly as they can and they cannot meet the amount of demand from the large customers for that new blackwell chip. lisa: and murray mentioned this. this is a concern that the hyper scaling is increasing. the scale by the customers, microsoft, aws, amazon accounting for 50% of the overall sales versus 45% from

the prior period. does that consume you? -- does that concern you? matt: does not concern me and the sensitive to look at the total i.t. spend the cloud providers are becoming a larger portion of total i.t. spend. also when you think about these large language models that are being trained, i believe at the end of the day maybe there are three, four, five large models that end up dominating. those customers are going to be -- those model builders will be your largest customers if your nvidia. it makes sense there will be some concentration. it is only a concern that if you lose a customer, that is a problem. it is the nature of the market versus their being specific risks to nvidia. lisa: what is your main concern? people are looking for concerns.

they are looking for a reason to consolidate gains after shares almost doubling in terms of consolidation. is there something that does create a concern for you that maybe they are reaching the limit or do you just basically think they are sandbagging the market once again? matt: i think they are guiding the same way they have guided so they are giving themselves a fair amount of cushion and setting themselves up to beat expectations. from a concern standpoint it is not so much about this quarter or next quarter or the quarter after that. we will see those large customers take lots of blackwell chips and that will allow them to grow revenue. if they give us a path to better margins. i think if there is a concern it is end of 2025 or 2026. we are still waiting for a wave of applications based on generative ai to show up. at some point you need those

applications to show up, you need generative ai to start creating a lot of revenue just to buy all of this. the concern is if those applications do not show up, do we get this worry that at some point spending does not continue? that is not this quarter or next quarter, that is not 2025. it is heading into next year. annmarie: you have any sense about tariffs with the incoming administration and how that could constrain nvidia's china business? matt: from a tariff perspective, nvidia has no choice but to use taiwan's. -- to use taiwan's semi. if there is a tariff slapped onto everything, something will be tariff. it might be the nvidia chip. it might be the server the chip gets built into in asia.

i do not see nvidia has a way around last. in terms of the china business, i think it depends on how the new administration thinks about the processors that nvidia is shipping. they already restricted the amount of technology nvidia kinship. things get harsher. nvidia told us china was around 20% of revenues. some of that would be at risk. some of that is gaming so it is not all data center. that is how i am thinking about things. annmarie: what about the idea of any disruption to the supply chain it is using, mostly in taiwan? matt: i don't think there is a substantial risk of disruption to the supply chain. if nvidia supply chain was disrupted in the sense tsm could not produce, it is not a nvidia problem, it a worldwide problem.

at the same time apple cannot make a phone, you cannot by an amd processor, so 30% of servers and a similar amount of pcs are not getting shipped. tsm produces a lot of silicon going into automobiles and consumer devices. this is a problem for the world. jonathan: appreciate your time. matt bryson of wedbush following the latest nvidia earnings. that stock recovering in touch, down a little more than 2%. earnings already this hour from john deere. a tug-of-war between a big beat for earnings and a tepid for 2025. lisa: it is the why that is really interesting. deere is trying to recover following a trough following the boom during the pandemic. this i thought was fascinating. a real question around what

tariffs on goods deere makes. this is the biggest manufacturing goods product. any products they make in mexico will be tariffed before coming into the u.s. and that is part of the reason they had a more tepid forecast with the ceo saying "amid significant market challenges we proactively adjusted our business operations to better align with the current environment." this is what we should be looking for. what type of telegraphing about what kind of analysis cfos are doing around tariffs. annmarie: we know a little bit because in september donald trump told us how he felt about john deere and he said if the company does not abandon its move and idea of putting some production from the midwest to mexico, the walls were going up. this is why usmca, trade between mexico and canada will be so interesting. jonathan: will be interesting to see how the tariff story plays out more broadly, not just to where they produce the tractors.

sentiment for the farmers as well given how much volatility we saw avenue -- off the back of the trade war with china last time around. lisa: the fact that they are not investing enough. howdy plan for planting crops if you're not sure what kind of walls are up in terms of exports. that is the reason why the deere's of the world are important to watch. jonathan: up next, we'll catch up with aditya bhave of bank of america. from new york city, this is bloomberg. ♪

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jonathan: in the commercial break equities very briefly turning positive. unchanged on the s&p 500. on the nasdaq only down .1%. nvidia yesterday dropping initially by something like 4% or 5%. we have recovered since then. lisa: people looking at the numbers and saying they have doubled their revenues and their still beating across the board, they're probably lowballing estimates. how much can we really dampen enthusiasm for this company? there is to be a big seachange in this company given the fact they have still beaten every

single earnings period except for one over the past couple of years. still pretty good. jonathan: the stock down 2.2%. up this year by something like 200%. let's switch up the board and turn the page and get to this bond market story. the 20 year issue yesterday, we had an auction from an unloved maturity. lisa calling it something else. i am far more polite. a very weak auction which triggered a selloff in bonds. lisa: people coming out and saying it was horrible. the auction tailed by about three basis points which means after it was sold the yield was three basis points higher than when it was sold. basically this is the second worst since this was reintroduced in 2020. a question about whether this indicates a broader tempering of enthusiasm we saw with bonds or this is just an unloved maturity

with choppiness. jonathan: some of these issues breathing life back into the u.s. dollar. the euro weaker. also in some way contribute into this move. bitcoin all-time highs come up 3.7% early this morning. lisa: you think the auction had anything to do with bitcoin being up? jonathan: debasement of the dollar of factor -- lisa: it is hard for me to know what is driving bitcoin given we could get a crypto czar from trump, that could be driving this enthusiasm. there is also this bigger gut check that when there were geopolitical concerns bonds were bid, gold was bid, bitcoin was not. when there is a geopolitical hit cup we are not seeing an obvious reaction in crypto. it is a psychological commodity safe haven. annmarie: we know trump talked

to the coinbase ceo brian armstrong and i wonder if we get a crypto czar the west wing before we get a treasury secretary? maybe that is why bitcoin is getting love. jonathan: i would love to know what their policies will be. nvidia's outlook falling short of expectations. the chip mail predicting fourth-quarter sales of 37.5 billion. the company chips are on track to ship this quarter. that stock down 2.2%. lisa: its sales are poised to double for the second year in around. and now notches more money in profit that used to generate in total revenue. you're talking about a company that creeps -- that keeps quadrupling its earnings every year and dorks the market share of all of its competitors combined. when you start talking about can they reach the limits of their exponential growth by virtue of how big they've gotten, you can have that conversation, but will

not rip the rug out from under the name. annmarie: potential issues are the concentration of customers and down the pipeline what will happen with tariffs edited coming administration. dan ives yesterday said print the press release and put it in the louvre, it will be green, the eye revolution is just beginning. he gave his whole it is 9:30 p.m. at a party that ends at 4:00 in the morning. jonathan: doesn't he say that every quarter? i love dan but i basically hear that every quarter. the stock is down 2% this morning. let's turn to this story. ukraine saint russia launched an intercontinental ballistic missile and a central ukrainian city. the strike appears to be the first reported use of an icbm since russia invaded ukraine. annmarie: this is a serious escalation and we can expect there will be tit-for-tat escalation given the fact we

have an outgoing lame duck president that gave ukraine this ability to strike into russian territory and then we have president-elect trump saying he wants to end this. if you know there is an end point from an american president who wants to end the war, you will do whatever you can to get yourself to a better negotiating stance. the u.s. embassy yesterday said they were expecting -- they received specific information they were expecting an air attack and were telling all u.s. citizens in ukraine when you hear those sirens. i've been there. sometimes you hear the sirens and people shrug it off. when you hear the sirens you have to go to a bomb shelter. lisa: markets are considering this the escalation before the de-escalation. what would change that? we are talking about pretty significant moves that would be considered escalations in a prior iteration of this conflict. jonathan: we have seen a series in this week alone. president-elect donald trump's search for a treasury secretary

continues with apollo ceo mark rowen in consideration for the role. if selected it would put a non-founder in charge of apollo for the first time in its history. lisa: there is a bigger issue about whether he makes the market for private assets that much more attractive at a time when there seems to be a battle between banks looking for fewer regulations and the private investment market looking for some sort of further establishment in the financial system. a key question for a lot of these potential nominees, how do they divest assets they have with their firms? jonathan: he is one of the best operators and financial markets anywhere on the planet. if he gets this job it would be a phenomenal pick. there are other strong candidates. any of the four would be tremendous for the united states of america. for apollo we have two copresidents ready to go. ready to take the helm if they need to. annmarie: if he slots in they

will have a succession plan ready to go in place. for mark rowen, this would be a huge tax incentives. you have to sell but you can to further tax payments. when i heard his day being floated around the trump circles i went back to a sit down he may get the economic hub of d.c. with david rubenstein and when he was asked if you were ever asked to serve your country in any capacity would you go, no hesitation, a resounding yes. jonathan: let's turn to the federal reserve. investors bracing for a busy david speak. the team at bank of america revising their outlook for the fed, saying we still look for a 25 basis point cut in december and then expect the fed to slow down the quarterly pace of cots. for next year we forecast two more 25 basis point cuts in march and june. aditya bhave a bank of america joins us for more. what is behind this change and help us understand the mix between better-than-expected data and anticipating policy changes over the next year? aditya: let's start with the

data. we've been really impressed by productivity growth in the u.s. over the last several quarters. starting from before the pandemic we are now growing at 1.9%, almost 2% in just productivity. that is significantly above where we were before the pandemic. acceleration relative to the previous cycle and significant divergence from the rest of g10 for the record. most other countries have slowed down on productivity. there is a combination of new business formations, cap x, hybrid work in certain job functions. you put all of that together that means higher potential growth and higher terminal rates as well. on the side inflation has also been sticky. that is another reason the fed wants to slow down. you heard that from fed chair powell last week. based on that information probably sneaking a cut in december and then we think they slow down to quarterly.

after that you get to the risk around potential tariffs. huge uncertainty. things will evolve quickly after january. based on the tariffs we think if as much that has been threatened is announced you can get them pausing by june. lisa: is this what you are the -- what you are reading into the fed speak? a hesitance in terms of cutting too quickly because there is a feeling literature rate is higher, the economy has been doing better than previously thought, and there is a policy risk they do not want to say they consider but they do consider and could be inflationary? aditya: they could be considering the policy risk. as you said they do not want to talk about that. just based on the data they can say they will slow down and we will figure things out as policy. jonathan: is your base case -- lisa: is your base case they

will skip next month and will look at whether the risk of re-inflating inflation is once again on the table? aditya: power base case is they do cut in december. after that they skip. they skip january. we have cuts in december, march, and june. december is a very close call. it will depend on the jobs data and cpi and ppi which we get before the december meeting. for now they sneak in the december cut markets. lisa: there is a larger question here and we've been asking for a number of weeks. is there a signal for the fact that longer-term bonds, that yields have gone up so much since the fed cut rates by 50 basis points and then again. do you think there has been a tightening of financial conditions at the places were a lot of consumers who got hurt by it feel at the most like mortgage rates? aditya: we thought the 50 basis

point cut was a mistake. we did not think it was necessary. that is easy to say with the benefit of hindsight but markets are now saying we are concerned about inflation and a higher terminal rate and that means long end yields move up. markets are also concerned about issuance because of the potential for more fiscal stimulus. annmarie: if the trump administration moves quickly with tariffs do think there's a chance we see no cuts next year? aditya: everything is on the table to be honest. one of the things we said in our report is that our base case is sanguine but our conviction is low. everything is on the table and we will only learn more as we get a better sense of where policy is going. annmarie: you think you have a grasp on what the sequencing could look like in terms of tariffs and tax cuts? aditya: there are many ways to think about this. one would be tariffs are easier to do quickly because they can

be done via executive action. another is they might do them simultaneously so a potential downside from tariffs is offset by upside. there are a few different ways of thinking about it. jonathan: they could move really quickly in the first few months. annmarie: when it comes to things like tariffs it is a unilateral executive order president-elect donald trump rely on in january. they have been doing the work leading up to this potential win. maybe not him and his close team , but other individuals who have worked in trump 1.0 that were thinking of might go back in. jonathan: you get the impression they might be ready to hit the ground running. aditya bhave there of bank of america. with your bloomberg brief, here is dani burger. dani: archegos capital founder

has been sentenced to 18 years in for fraud and market manipulation. a new york federal jury found the 60-year-old guilty. the archegos meltdown in the spring of 2021 led to the downfall of credit suisse and caused significant losses at morgan stanley and ubs. the justice department and a group of states have proposed major changes to google, including a forced sale of the companies chrome browser. in a proposal filed wednesday, the doj argued -- google said the proposals would harm americans privacy and security and hinder google's investments in ai. donald trump's transition team is holding discussions on whether to create a new white house role dedicated to cryptocurrency policy. sources say trump's team potential candidates, with crypto executives visiting mar-a-lago with the president-elect's team is

holding personnel discussions and interviewing for -- and interviewing candidates. crypto advocates are pushing for the role to have a direct line to trump. jonathan: thank you. bitcoin this morning briefly through 98,000. up next, the rise of ai. >> the real fight now is ai. >> winning the ai battle is paramount from a military and economic perspective. >> this is potentially an industrial revolution for america. jonathan: will catch up with former google ceo eric schmidt. from new york, this is bloomberg. ♪

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jonathan: welcome to the program. here is a snapshot of the price action.

equity futures on the s&p up by close to .1%. nvidia once down after 4% after the close yesterday recovering through the morning. in the bond market yields down close to one basis point. under surveillance, the rise of ai. >> the real fight is ai. >> winning the a5 -- winning the ai battle for the united states now is paramount from the military and economic perspective. >> this is potentially an industrial revolution for america where the artificial intelligence infrastructure that is wildly inefficient could come quickly. >> whether it is chips or ai, there will be little to no ground for movement with china. we will be in an economic cold war with china. jonathan: jonathan: leaders in artificial intelligence preparing for a second trump administration. the build out in a fueling cash in ai feeling competition for chips and raising tensions with china. former google ceo eric schmidt

joins us with his latest book, genesis, artificial intelligence, hope and the humans. . i want to pick up on that word hope. how much hope should i have that this goes right and started with a quote from foreign affairs magazine. "in cases where humans might face off militarily or diplomatically against ai, humans could struggle to survive or compete. such an intermediate order could witness an internal implosion of societies in an uncontrollable explosion of external conflicts." you have to calm me down. should i have hope this plays out well? eric: let's start with the hope -- your show is incredible. the previous just talked about 2% productivity. imagine productivity goes to 5% per year. there is every reason to expect there is enormous land,

innovation, science, health. the same is also true for the invention of conflict and war. it makes absolute no sense to put somebody in a fighter jet in the air and have them be shot out by another missile. it makes much more sense for that pilot to be sitting on the ground and having a swarm of the equivalent of those jets, powerful drones that act in synchrony to achieve the objective of the attacker or to defend yourself. the future of war is a thomas and network and ai driven. lisa: this is something a lot of people have focused on, in particular how the u.s. will evolve in this manner and how china will evolve, how they will use some of the space satellites to help coordinate that effort. do you feel like right now one superpower is winning versus the other? what is the best way to gain preeminence in a military ai sphere? eric: when dr. kissinger and i

went on his last chip -- his last trip to china i was convinced china it was two years behind us. i am wrong. in the last couple of weeks china has brought out software models, what are called large language models that arrivals of the best american ones, which i never thought was possible. one is called quin and it looks like they have caught up or they are very close behind. it looks like china has decided it is another part of its industrial policy along with its focus on cellular dominating the battery industry and the car industry. they are willing to spend the money. it does frame the narrative of china versus the u.s. as the defining narrative. one of the more interesting questions we discussed in the book is what happens to deterrence and all of the other 195 countries that are not china and not the u.s.. these questions are important. the power of this technology upends society and so anyways.

economically, the way we govern, language, so forth. lisa: there are a lot of questions within this. one of them is who should be financing and who should be leading the national efforts to gain preeminence in this sphere? you talk about china as a state organized state-funded type of effort coordinated in that manner. how should it be directed in a place that does concerts of capitalist like the united states? eric: the chinese model is what is called civil and military fusion where they subsidize their biggest companies. no one in america thinks the largest american companies need to be subsidized. let me make an argument that if general intelligence, that is human intelligence is to be invented, it should be invented in the united states and other control of americans of the american government. i don't mean managed, but under the legal control of our country

and our citizens and our democracy. getting there first is a big deal. a number of us have talked that there should be ai for america initiative for the government works closely with private companies and figures out a way to make sure we are ahead of time. in truth, the financial industry you invented, for which we are incredibly grateful, has been incredibly generous in terms of the ability to fund raise. i should state that you've done such a good job of raising money and we have done such a good job getting the computer scientists around the world and the data and so forth, what we now need is energy. we are prolific consumers of energy and we will run out. one estimate is the u.s. will run out of all source of energy by 2028 at our current growth rate. annmarie: there's another topic you discussed. ai to check ai. how can that work? eric: when you think about it,

one of the things that happens in ai systems is you have compositional generation. you take one piece and another piece and you interlink them. it looks like when you combine those two you can emerge the properties. that is interesting. the question is what is the limit of that? i think it will get there. it is probable we can build systems that are super intelligent where you have a simple system -- a single system that is at the 90th percentile of physics, math, chemistry, and arts. no human can do that. it looks like the systems will be not only available in the next five years. we have examples of passing the tests already but also they will be broadly available for all society. that has huge implications. we have never had an experiment where each and every one of us has a polymath -- an einstein

type scientist -- at our beck and call. furthermore, that scientist is capable of writing code and making things happen. annmarie: how do you think the united states competes with china when we have an incoming administration that wants to put up tariff walls and even this administration has been putting export controls on some of our semiconductors? eric: i am not in favor of broad tariffs. i am the son of an economist and a grandson of an economist. tariffs are taxes. i am in favor of restrictions for strategic reasons. it is really important we win in this race against china. the things the trump administration and biden administration to limit hardware access were smart and i know because i was part of a commission that recommended it. it was adopted. great job. ignoring the tariff question which i do not like and i think it is another tax, how do you

control and limit what china does and how do you amplify what america does? you sit there and you go you are doing pretty well, everybody is making a lot of money, there's all this growth. let me explain what happens. you have a slope like this and it keeps going up and up with humans. at some point the industry believes there will be ai scientists, nonhuman scientists come into you or she gets there first gets a slope like this and all of a sudden we are really growing fast. these network businesses are what we do it our competitive environment against each other under u.s. regulation. i want that to be true globally for the u.s.. jonathan: we are all in favor of having you back soon to continue the conversation. congratulations on the new book. we appreciate your time. former google ceeo eric schmidt. the second hour of bloomberg

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>> there has to be a real rethinking by the new administration of how do you want to interact with the world. >> tariffs will probably hit consumers and corporations. >> the mandate is to move fast and that means more volatility. >> the folks that are cute are absolutely negative and inflation causing or playing checkers. >> the math is easy.

politics is what is difficult for tori 25. -- for 2025. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: last few weeks struggling to keep track of what day it is. from new york, the second hour bloomberg surveillance starts now. equities on the s&p 500 just about positive. on the nasdaq 100 down only .1%. the focus, nvidia came out with earnings. the forecast, tepid relative to the biggest expectations. as the session grows older this stock recovers more. lisa: let's put numbers on tepid. the tepid forecast was fourth-quarter sales of $37.5 billion. that was tepid compared to the analyst estimate of $37.1 billion. it was the $41 billion at the highest end of the estimates and people are trying to figure out

can we start making these grand assumptions they are at the end of their expansionary phase or are we being picky and maybe having indigestion after a 200% gain so far this year. jonathan: attention starts to turn to the data. in 88 minute time we get jobless claims of america. the estimate is 220,000. 217 was the previous read. we heard from aditya bhave who made the point he is expecting fewer rate cuts in 2025 than previously anticipated because the data was better than expected. it was not about the outlook and policy changes. it was because the data has a price to the upside. jonathan: that is exactly -- lisa: that is exactly where i was going to go. there's been a transformation in markets before trump won. he said it was probably a mistake for the fed to cut 50 basis points. when you can attributed to that common economic surprise index has been around april.

better-than-expected jobs, better-than-expected production, as well as this idea inflation is stiff year than people thought. jonathan: we are hoping we can get clarity son of individuals in charge of the policy. walsh, rowan, haggerty. that is the horserace at the moment. annmarie: the president is very picky when it comes to us and our colleagues last night reporting we do not know a name. i would lean into kevin warsh and scott besson because we have reported that people around the president thought those two could be paired very well in terms of fed and the national economic director and that in 2026 they both can move on to other jobs, going from treasury to fed for warsh and to treasury for bassett. there is a lot of 3d chess going on in mar-a-lago but we know the president has yet to find his

perfect treasury pick. jonathan: a lot of people are very excited to see out -- lisa: a lot of people are very excited to see how the horserace continues. there is the idea it will telegraph the sequencing of some of the policies and how they will be put in place, whether we get tariffs first, how significant they will be, and whether they are being used as negotiating tools rather than an end in and of themselves. jonathan: what is prime time for tb's? weeknights? thursday night. lisa: is it primetime or prime tiktok? jonathan: the president-elect is an executive producer. it feels like a thursday night, sunday morning kind of decision. annmarie: if it is thursday night i think you would want it for friday morning to morning shows to talk about going into the weekend. maybe if he wants the sunday shows to talk about it he drops just before sunday morning.

he could be producing this off. jonathan: bramo is laughing. this is all about casting. selecting people from central casting. lisa: who is handsome. no one denies that. it is a good marketing tool and it makes people pay attention. jonathan: it is gripping stuff. nvidia fails to meet very lofty expectations. we speak to monica guerre of morgan stanley and to samantha dark. nvidia recovers after failing to deliver on very lofty expectations. "mag seven earnings premium is forecast to compress and quarters ahead. the gap is said to narrow, catalyst we think and further the broadening out of trade in 2025.

this underscores our preference for a neutral approach to quality rather than tilting more deeply towards tech." explain to us. good to see you. explain to us what you mean by broadening out. is that domestically, international? are you thinking about that? >> we are thinking about that very much in the u.s.. what we are going to continue to see is outperformance of equities. one of the things we've been focusing on on the last couple of months is seeing this earnings growth coming through, not just in tech. certainly not away from tech, but broadening out besides just tech. thinking about areas like financials which this quarter have had close to 10% earnings growth. looking at things such as -- very specific value sectors which are closing the gap to growth. i think that is the trade. do not move away from tech but

consider other parts of large-cap value that we think good habits moment for the next couple of months. jonathan: let's sit on financials a little bit more. there seems to be exuberance, the idea the incoming administration can unleash this huge burst of capital market activity. is that how you are thinking about it? does this unexpected policy change or something else? gargi: i think it is something else. if you look to our fall -- even from september, were we obviously did not have an idea of what the regulation where the deregulation would look like. it was much about the expected earnings growth coming back, m&a activity coming back, maybe steepening of the yield curve which we have not gotten so far, but if that does arise that could be better for banks. i will say that now there might be more tailwind from expectations of deregulation.

that alone does not make the trade. you have to have the earnings growth which we are beginning to see and beginning to talk about. lisa: you point to another area that has not been as loved that you like which is small caps because of some of these dynamics. what i find fascinating is there was a time when the yield curve steepen. that was bad for small caps. when you saw the long end go up there was also negative because these were the more leveraged companies that were not necessarily profitable. why is this time different when people still expect yields to be high? gargi: we are telling investors to move away from small caps. i think small caps have had a few periods of outperformance. it is hard to see that sustain. we have seen the flows into iwm but we do not think it will be a lasting rally. it is hard to see the profitability come through when

much of the small-cap names are still suffering from pretty high yields. yields have begun to come down. if you look at what has happened since the fed has moved rates, rates are higher. small caps are unable to benefit from rates coming down. as of right now we think any rally in small caps to be short-lived and investors have been playing that upside as well as focusing on etf's, which you can get in and out with. i do not think it is a sustained rally. lisa: at the same time when you start looking at active management, how much are you actually looking at companies that get most of the revenues from the united states and that might not be as exposed to tariff regimes as some of the other policies that could come down the pike? gargi: that is exactly right and that is something we've been focusing on more recently with respect to some of the active managers that are focusing on

u.s. policies and especially whether it pertains to manufacturing, focusing on re-shoring, whether it also looks at independence as a theme. very top of mind given news from last night. all of that is pointing to my u.s. -- to my comment which u.s. first nus exceptionalism will be with us for some time and we are telling investors to step out of cash and u.s. equities, keeping a focus on large-cap. annmarie: we have already seen the markets pricing in a lot of trump policies so when they actually come down the pipe in 2025 is that a cell moment or do you want to get more invested? gargi: this is not just about the election. if we look into the second half of this year we had three things going for us. one was much stronger-than-expected gdp. getting that to put it percent

of expectations based on the gdp now forecast, that was one. on top of that, corporate fundamentals continued to be very strong and if anything surprised to the upside. the last factor was the fed has begun easing. they have told us they still believe in restrictive territory, which means they are poised to cut more. all of that is very good for risk assets. this is not just about the elections. this is not about the gop sweep. it is about the fundamentals being very strong underpinning the risk rally. annmarie: powell also opened the door to pausing in december. at least the market has interpreted as such. how do you think about the fed for 2025? gargi: i think they did open the door to not being in a rush. i don't know if that necessarily

applies to the december meeting. i would like to see them conduct another 25 basis points of easing. next year it depends on how sticky inflation continues to be. you made that point. we saw another point in core cpi. if we do not see that deceleration come through with water services inflation, i think that allows the fed to be slower in their approach. i think from the end of fixed income and lopping in yields you have this incredible opportunity to hold -- to own securitized assets and high yields at these levels of 6.5% and 7% in the fed has allow that to happen. i think that makes sense for investors. lisa: there is a question mohamed el-erian crystallized, which is the economy in the u.s. he sees as bigger and not hotter. the idea it could grow and you could see that investment without an explosion of inflation. do you see it in that way?

gargi: i think so. based on the data we have in hand with of the u.s. economy -- given our expectations -- think back to 12 months ago. many of us thought we could have gone the recessionary outcome. not only did we not have that but we had seven straight quarters of above trend growth. on top of that you have deregulation and fiscal policy and some concern around tariffs. maybe you end up with growth above potential when interest rates are normalizing and corporate's are strong. jonathan: i was going back over your last appearance in september, nothing to be nervous about. in december we were having the discussion about the start of the rate cutting cycle and here we are having a discussion about the end of one. how quickly this cycle keeps moving. lisa: no landing, hard landing, soft landing. we have been on this repeat.

it seems like an increasing number of people are saying their views for secure inflation does not have to do with donald trump but that the data has been better and this is a more resilient economy. jonathan: know it stands out to me so far? if you look at the forecast for bond yields in 2025, i cannot find a single person who thinks we are going to 5%. the top end i see is from socgen. the biggest i've seen is 4.50 at socgen and they think that is the upper end of the range. lisa: i've not seen one person raise the specter of a rate hike or real acceleration in inflation. a number of people keep pointing out that tariffs tend to be disinflationary or deflationary when in practice in prior uses. fascinating if you are contrary into look at that. jonathan: let's get you an update on stories elsewhere with some breaking news. dani: we begin with breaking

news. the international criminal court has issued an arrest warrant for is really prime minister benjamin netanyahu and the former defense minister. the icc accused the two of crimes against humanity. the icc unanimously elected israel's appeal. that means the 124 member states would be obliged to arrest net yahoo! if they were to enter the terror -- to arrest benjamin netanyahu if they were in their territory. ukraine's air force command says russia launched an international -- an intercontinental ballistic missile. the strike would be the first use of an icbm in combat since its development during the cold war. ukraine the missile traveled over 600 miles and damaged an industrial facility. the development follows an earlier report of ukraine firing u.k. supplied long-range missiles at russia for the first time. the bank of japan governor

hundred -- the bank of japan governor tinted the bank may raise rates. -- hinted the bank may raise rates. that is your bloomberg green. jonathan: up next, the search for treasury continues. >> i want to see exactly who is in that role because the tax policies, the debt limit all come back. they do have a conversation with capitol hill and we need to see how that person has a relationship with the federal reserve. jonathan: we catch up with monica guerra of morgan stanley and get you the latest report from amory -- from annmarie. ♪

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-- check out nvidia. equity future starting to drift higher as well. s&p 500 up one third of 1%. the search for treasury continues. >> i want to see exactly who is in that role because the tax policies and debt limit come back and need to have a conversation with capitol hill and we need to see exactly how that person has a relationship with the federal reserve. it will be a cabinet that was probably somewhat similar to the first and ministration where there was a team of rivals. jonathan: donald trump has yet to solidify his pick for treasury secretary. the president holding interviews and mar-a-lago with top contenders including apollo's mark rowan and former federal reserve governor kevin warsh. senator bill hagerty of tennessee remitting a dark horse candidate for the job. joining us is monica guerra of morgan stanley. the to do list for whoever this

person is is so long in 2025. have you established any underlying assumption on what the sequencing will look like, how long the timeline is? monica: when we are thinking about policy generally it is about the magnitude and pacing. if there are policies that drag on the economy, on markets, that could be exacerbated if it is then followed by inflationary policies. we will be tracking that closely as it relates to some of these picks. annmarie: when it comes to these picks, we will have to wait for that. it is narrowed down to four out of the -- to three out of the four. what will be the first job of the individual? will it be pushing back on some of trump's impulses when it comes to broad tariffs are going down to the hill and trying to get that extension of tcja. monica: congress will be battling out over these details. even though we have a unified

government the thin margins in the house mean the negotiating around of the tax agenda will be critical. the next treasury secretary will be a part of that equation. as far as figuring out what is the point of the debt and deficit becomes untenable. that number is what they will have to suss out through their initial conversations. annmarie: with such slim majorities the republicans will hold, to they potentially get democrats to vote for this if they include things like expansion of salt or an expansion of the child tax credit. you are laughing so i think that is a no? monica: it is a no. they have a slim majority. it will be about the party coming together on what the priorities are. maybe we do not see every single thing in tcja get extended. maybe we have an argument on how low do we cut corporate taxes. it will be those details we see

get fleshed out in those first 100 days. annmarie: when you look at the makeup of congress to see individuals who will push back and say we have to get our fiscal house in order? monica: yes, you see that with the selection of john thune as majority leader in the senate. on the house side you have johnson who is still trying to get business done, and then in the senate you of john thune who is old guard. he is one of the last men standing of that old tradition. we think there is pressure from the top to move quickly to try to get these negotiations done as they had through 2025. lisa: based on who has already been selected for different cabinet positions, do we have a sense of what the priorities are and the order they will be rolled out in by the trump administration? monica: it is pretty clear the immigration piece will be one of the first day one issues that has -- that is under the purview of the executive branch.

there are legal frameworks that come into play that could slow down the pace of their action and we get a less aggressive approach then initially considered. deregulation will be on the agenda from an executive branch perspective. that does give us the progrowth policy piece. our view is that even though there is potential in the way we've been thinking about immigration and tariffs, there are these big magnitudes. the reality will be much more tempered and you will get something that is more tolerable to markets and the economy over the long run. lisa: sticking with immigration, do we have a sense of what it will look like in practice? for millions of people to be deported would take budgeting of $1 billion according to some estimates to get the infrastructure in place to do that. we have a sense of what could actually get done and how that would affect the population? from an economic perspective

this is been a big question. monica: you citing one billion people is exactly what i'm talking about as far as large magnitudes that are out there. i've heard everything from one billion down to 400,000. if you're looking at a more realistic 400,000, because annually you get about 300,000 folks deported through the legal system. is that 400,000 in addition were on a net basis 100,000 in addition? it is how are they going to be messaging this. i think the actual practicality of it as far as moving these cases through the court system is going to be at a much more tempered level. jonathan: i don't like to advocate for certain policies but this is a view we share. i hope they do something about legal immigration. the process is so difficult. if i was not as fortunate to have the attorneys we have access to and company like bloomberg i would find it harder. i do not think i would be able to do it. it is that hard. lisa: when i've talked to tech

executives they say we need the h-1b be said of come through. other executives say the same thing. this is an administration that is sound and more amenable to that. will they move that in parallel to some of these other immigration policies? annmarie: on the campaign trail trump said foreign students who graduate from top colleges and get a degree they should get a green card. jonathan: for just the. appreciate your -- good to see you. appreciate your time. monica guerra. the search for the next treasury secretary. "the issue in selecting treasury secretary is not who can make changes, but who can best manage the market response and volatility that could undermine those changes." that is so important. it is not about who can push the policy, it is about who can deal with the consequences given the

policy shift we might see over the next year. lisa: which takes a lot of massaging to communicate it and make it sound amenable on a day-to-day basis where some of the policies are inherently volatile. jonathan: which is why you need a real market technician in a moment like this one which is why am encouraged to see names like rowan doing the rounds. lisa: are you about to make an endorsement? jonathan: i have said what i think about the list. very strong names. lisa: let's see your list. jonathan: that is all i am going to say. up next, jason draho of ubs on the outlook for 2025. this is bloomberg. ♪

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jonathan: two hours away from the opening bell in new york city. 60 minutes away from some jobless claims. recovering on the nasdaq 100. we will get to why. the nasdaq is up by .2%. small caps up by .6%. with your morning movers, here is manus cranny. >> maybe we have all become a little complacent, expecting these drop the mic moments from nvidia. we have cloth back. the premarket this morning since we went on air. what is our complacency?

this is a company that delivered revenue growth of 94%. the margins? are you complaining about the 73% margin level? the demand for blackwell is staggering. one of the few that has cut his price target still has a buy. we have traveled all the way back up and that is giving have to the index. -- giving heft to the index. those hyperscalers have gone to 50% of revenue. terrace to come on anything you sell into the united states of america. this company has managed to eke out a small gain this money. they are going to make $5 billion to $5.83 billion. maybe some of the bad news is already in their on the risk from tariffs. the rhetoric can be more aggressive than the actual fact. we know that. let's roll it over and finish

off with snowflake. how do you put your data into one place at one time? that is what snowflake does. revenue is the ramp way. $906 million. this is a relief, i would say. investors were frigid going into these numbers, but this is about stabilizing demand. jonathan: good morning. looking forward to catching up with you in about one hour from now. under surveillance this morning, nvidia revenue continues to surge, but it is not enough for markets. failing to live up to lofty expectations. it's blackwell ships are still on track to ship this quarter. we were talking to analysts yesterday about what to look for. look at how the market response to the numbers. initially down 4% to 5%. we are down by only .8% this morning. lisa: it was not that much to dislike. doubling revenue in terms of

fourth-quarter expectations, talking about the incredible rise have seen in adoption and the fact that demand is outstripping supply for the black chips. you have to think people are trying to nitpick about the consolidation of the hyperscalers as purchasers. but at the same time they are minting money and it is not clear they're going to stop minting money. annmarie: you look at me, but you are trying at the margins, trying to find reasons to not like this. i love this stat. they have only missed analyst estimates once in the past five years. the bar is too high for this company. dan ives, bloomberg intelligence, got it right. it is not green yet, but we are on the way to the stock being green again. jonathan: only one sell now. just one. annmarie: who? jonathan: i'm not going to call them out. elsewhere, the port of los angeles moving record levels of imports last month as businesses prepare for tariffs. the executive director your

saying 905,000 containers passed through the country's diseased port in october. annmarie: this is supposed to be a quiet time for ports. you see companies build up for the holiday. this is about going into next year and potentially is a double whammy for these ports. they want to build up inventory. why? because you are unclear about how far president-elect trump is going to go when it comes to things like tariffs. then january 15, that is the new date for the port workers and the strike. do they go on strike? do we see port workers on the eastern seaboard saying, we are not working, then we replay this all over again? jonathan: it is so hard to run a business in this environment. he saw an inventory disaster at target yesterday, with that stock cratering. lisa: that is where i was going to go. it shows the hazards of stockpiling ahead of potential terrace. i wonder if that is one uncertain. which is what people are looking at retailers which have

struggled through the pandemic and stockpiling disasters. investors are running out of patience. jonathan: that is the danger in the sector for the next few months. some landmines for some selected names. he saw that with target yesterday. we did not see it with tjx. elon musk and vivek ramaswamy looking to force federal workers back to the office. the pair leading trump's new department of government efficiency say the move will lead to a wave of terminations, writing in the wall street journal, if role employees do not want to show up american taxpayers should not pay them for the covid-era privilege of staying home. annmarie: this might actually be a welcomed opinion piece for d.c. mayor bowser, who has asked president biden to bring federal workers back. because you have less of a local, robust economy when it comes to restaurants. you also have office vacancy

rates that have been an issue in washington, d.c. this may be welcomed in washington, d.c., but a lot of federal employees, the majority, work outside d.c. that is potentially going to have a fight with the incoming administration. lisa: the majority of federal employees actually go to work every day. that is an important gut check. why half work in person because they are food safety inspectors and health-care workers that have to physically be there. of the rest, even those who work remotely some of the time, an average of 61% of their hours are in the work lights. they still are going to the office. my question is, do you get the attrition you are looking for? is this their idea to cut staff? number two, do you get the attrition you want. because you have to wonder, is there a coherent look at which agencies have which people that are important for the functioning of government? jonathan: it is an important point and we will find out, because we are going to see this

experiment play out over the next 12 months, potentially. looking ahead, ubs expecting solid growth in the united states. our base case for 2025 is benign growth in the u.s., still near or above 2%, but moderating from the pace this year. expect the fed to cut rates by 25 basis points in december and another 100 in 2025. jason draho joins us now. want to start with december. some people believe the federal rate -- the communication from the federal reserve has shifted over the last few weeks and may be consistent with a pause in december. how do you see things? jason: i think they are still going to be data-dependent. it is still going to be noisy because of the aftereffects of the october data being distorted. a lot of focus on powell's comments were patient, but it was consistent with what he said at the fomc. looking for breadcrumbs on what they might do, my inclination is they would still want to cut

unless the data comes in hot in some way. jonathan: let's set some thresholds. start with payrolls. i'm looking at the estimates. i can pick up one over at deutsche bank, 175 thousand. what is really strong for november given the bounce back we are looking for? what gets them to back away from a rate cut? jason: something over 200,000. october ends up being something 100,000-plus. that seems unlikely, but something along the lines when we got the revision numbers for september. i think that is probably not the labor market that is going to cause them to pause. if core inflation ticks up on the high side and you are looking at core pce at the time we get into december getting close to 3%, that is when they start to get iffy. lisa: when you extend out there is a real question about what the highs and potential lows are for 10-year yields.

we were talking earlier have very few people are calling for 5% or higher 10-year yields, yet you say the most underpriced market scenario is actually the opposite, it is continued disinflation and this idea you could see yields shift lower with a fed that keeps cutting rates. i do you think that is the more under-priced scenario? jason: it is a situation where investors are looking at, what are the policy implications of a trump administration? you are worried about tariffs. all of that could be inflationary. people are focused on the upside tail risk for inflation. perhaps tariffs are not that significant. inflation could go lower if that happens. the fed keeps cutting, rates go lower. it is more of where investor focus is. more of a risk on the upside. the -- that might be reasonable hedging scenarios. confidence that things could be ok on the right front. lisa: there are a lot of implications for risk assets.

that is the opposite of what people are pressing in on the equity side of things. are you less bullish of those sides, while getting more bullish on bonds? jason: i would say moderating, not cooling. these are semantics, going to 2.3 percent growth, something around 2% or higher is still a robust economic environment. if you have inflation going lower and the fed cutting rates that is a benign macroenvironment. that should be good for risk assets. annmarie: you said that potentially people are thinking it is too inflationary. but what about the retaliatory measures we could see from some of these countries even if the tariffs are not as big as some are expecting? jason: you have to think about it from the u.s. perspective. how inflationary are tariffs? the estimates from 2018 were .3%. you could be talking about a bigger inflation impact. you would get measured response by -- responses by countries.

for the fed if this ends up being a relatively modest tariff shock the fed is going to look through that. they are going to think this is a one-off increase in the price level. as long as the drivers of inflation are still disinflationary that lets the fed keep going. that is why we are sticking with 25 in december. the markets are down to only three cats. annmarie: we hear a lot about tariffs, cutting of taxes, deregulation. what about immigration and this potential for deportations. could that mean for the labor market? jason: the past couple of years the immigration surge has been positive for growth. it has been positive for wages. what the incoming administration is likely to do is curb immigration to some moderate level. given the backlog of people who have emigrated who still have not worked i think there is still a positive immigration story and terms of the labor force well into next year. you are looking at by 2026 that

is going to start to impinge. it is hard enough to predict next year, so that is a story down the line. it is not a key driver for the next 12 months. lisa: in your macro outlook you go to the rowing 20's and say there is a lot of evidence we are in the roaring 20's. i keep wondering how many of these year ahead outlooks, how much have they changed from the election we have gotten in the united dates? people have been pushing back against that. how much of your benign outlook really does hinge on what just happened versus the momentum we are seeing play out in economic data that is backward-looking? jason: if we set here a month ago our benign outlook would be the base case. details have gotten fatter because of the policy extremes on tariffs, tech -- tax cuts, or they don't go as extreme and there are benefits in deregulation, things of that sort. the range of outcomes have gotten fatter.

ultimately we don't think it is going to be the most extreme situation on tariffs. we think on tax cuts they extend the existing tax cuts, but the deficit is too large for any significant stimulus. the bond market may be more so than the stock market could be what president trump thinks about. i think about a trump put not somewhat on equities, but treasuries. -- not so much on equities, but treasuries. that is going to be the discipline. jonathan: if you believe there balance of risk around the base case have shifted and you are in the position of a policymaker that has to manage risk, shouldn't you approach the policy shift as well? jason: i think ultimately the right policy is don't make extremes either way. staying the course, to me, with modest adjustments at the margins, is probably the thing. wrote is still solid, the fed cuts rates, it is hard to plan

for uncertainty. non-extremes would be for me. the markets don't like uncertainty. don't give uncertainty. jonathan: appreciate your time. jason draho of ubs looking ahead to the next 12 months. we will do that over the next few weeks and we can enjoy some holidays. let's get you an up date. here is dani burger. dani: the white house is seeking to forgive half of a $9 billion loan to ukraine. according to a letter obtained by bloomberg news the administration told congress it plans to cancel $6.5 billion of the debt. it is another move to support ukraine before president trump takes office. i'll trump has said his priority is peace negotiations there still is a concern he might cut off eight as part of that push. bitcoin is nearing $100,000. it is currently under 98,000 dollars. optimism on president-elect trump's -- trump's transition team holding

discussions over a crypto rule. the market has gained $900 billion since trump's election win. digital currency entrepreneur justin sun lockhart yesterday at sotheby's for $6.2 million. the art in question is a banana duct to a wall. titled "comedian," it debuted in 2019. attendees could not figure out if it was a joke or art. that is your brief. jonathan: you can eat it, and people have done that. i'm sure you've all got the same question. i have an answer. from vogue magazine, who say this. what happens when the banana goes bad? apparently the owner can replace it, according to the artist instructions. [laughter] lisa: sorry, i can't even.

i actually did an art project in college where i put bananas in a bag and people smudged it. i got a bad grade on it. annmarie: no comment. jonathan: best not to comment on this one. next up, going for gold. >> ultimately if inflation comes back gold will be a good place to be. i would say maybe by the in gold. $3000 an ounce is the place to be next day. jonathan: goldman sachs come up next. -- goldman sachs, up next. ♪

jonathan: live from new york city, welcome to the program. equity futures recovering as the session grows older. we are positive by .25% on the s&p 500. under surveillance this morning, going for gold. >> in the short run we think

gold could go up to $2500 an ounce. by the way, those tariffs, downside risks, we are also seeing interest rates going up in the u.s. gold was pricing in a pretty steep rate cut path. it doesn't happen, it is going to be choppy for gold for bed. if inflation comes back old will be a good place to be. we still think we thousand dollars an ounce is the target for next year. jonathan: gold catching a did through this week, rising alongside demand for haven assets as policy uncertainty hits markets. samantha dart writing, u.s. policy uncertainty and recent consolidation provide an attractive entry point for our high-conviction long gold view. we keep our $3000 through 2025. good morning. before we talk about where we are going we need to talk about where we are right now and what is behind it. you have identified a host of tailwinds for gold.

fiscal sustainability, trade tensions. of all of the reasons, what is the dominant factor for you in 2024? samantha: it is central bank buying. it has been the dominant driver of the upward gold move since 2022. the moment that russian financial assets were blocked, and that sparks a lot of concern from a lot of emerging markets and china in particular that, who knows, this might happen to them one day. central bank buying has stepped up significantly. five full from the average we observed prior to 2022. jonathan: do you see that continuing in 2025 and do you see policy changes in the united states that will exacerbate some of the trends we have seen? samantha: on the central bank buying, we see that continuing. when you think about how much reserves they have in gold it is still very low compared to what dm's hold. the structural driver is there. on top of that the other interesting story is that for

the longest time etf's were not part of the story. i think the moment the fed started cutting then that is what opens room for etf's to come in as well. when you think about physical buying, central bank buying is the primary driver, but you have on top of that this cyclical support from etf buying as well. so, safe haven is just the cherry on the top, right? lisa: this is actually a really important point. at the time sometimes when gold goes up people call it an inflation hedge. sometimes people call it a haven trade if there is geopolitical risk. are you saying that is creating a narrative around the fundamental structural story playing out central banks and what they are doing with gold? samantha: yeah, i think especially the safe haven aspect is very much a part of the risks ahead. there is a lot of policy uncertainty ahead. clients have been very focused on, will there be a tariff

escalation scenario? and that can bring uncertainty, and that is what usually triggers higher positioning and that notion of safe haven buying. lisa: the reason i ask it this way is, you're wondering how clean some of the previous haven trades are. we ask that about treasuries, given people are worried about the deficit. he asked that about oil, given the supply-demand dynamic has changed. and we ask that about gold, given their set -- given there are other unique benefits. do you think gold and oil in particular are still the best hedges for that uncertainty? even more perhaps than other asset classes? samantha: i think even gold more than oil. we think about inflation oil is a fantastic henchman that inflation is coming from a supply disruption, to be sure. but the risks ahead, i think, include more than that. there is a concern with what is going to happen to uranium supply. that is fair. on top of that tariff escalation

risk for even as you mentioned earlier, growth fears. i think gold offers more reasons for investors to belong right now, and really what i think the dominant driver has been is this structural support from central bank buying. tons being bought, and we just got the data for september which shows that high rate of buying has continued. so, this is the primary driver and safe haven notion, the hedge against inflation. when we think about the highest risks associated with tariff escalations, with fears, we think this can take prices even above our 3004 forecast. it is a risk we have been highlighting. annmarie: when you put these tea leaves together, is this the start of the dollarization that

we could see bleed out in a bigger way? samantha: we don't see it that way. we see and as may be a rebalancing of the way that financial and monetary authorities hold their reserves. so, just being a little bit or diversified. jonathan: i was talking about this. i still remember something kashkari said when he was asked about the deficit and whether the bond market was starting to get concerned. he pointed to the foreign exchange and said, the dollar is not getting sold. if the dollar was getting sold you would have that e.m. dynamic where you were -- you would worry about the deficit. were not seeing that again, but you are seeing it in gold. it is the dollar depreciating against gold, which people are flagging. lisa: because it is not necessarily that there is another currency that is gaining

that haven trade. it is that these central banks are buying gold. that comment to me, is a structural change maybe you cannot play in the currency pairs, but you can when it comes to precious metals. jonathan: where else are you going to go? europe? lisa: i do want to go to europe. [laughter] jonathan: for the record, keep it at 105. i don't have trade recommendations but i would love it if euro-dollar stayed at 1.05. lisa: i would go there. what other currency could you really get your head around? jonathan: samantha, we will let you miss out on that one. samantha dart of goldman sachs on gold. gold going back to $3000 according to goldman. we will catch up with the former nec director gary cohn. we will state -- speak to dana peterson and kristina campmany. the third hour of berg surveillance, up next. -- bloomberg surveillance, up next. ♪ ♪ at morgan stanley,

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>> we think that the opportunities are mostly in u.s. large-cap stocks. >> the debate on nvidia is are

they selling razors or razor blades? >> as good as this bull market is, any news that disrupts the narrative can cause volatility. >> any you increase pressure on nvidia, they can scale back. >> nvidia is 20 times the size of some of these markets, which is why it is so critical to the portfolio. >> bloomberg surveillance with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: live from new york city with equity futures on the s&p 500 recovering higher by one quarter of 1%. no losses so far. closing yesterday almost completely unchanged. positive on the nasdaq 100 even with nvidia yesterday afternoon down 4% to 5% after hours. that stock recovers in early training. nvidia stock at the moment is lower but only by 1%. lisa: at a certain point, you have to wonder what was bad in this forecast?they beat the

average estimate, they just did it supersede. this is a company that likes to sandbag wall street. they like to set estimates low and blow them out of the water. people see a pipeline that promises to do the same. jonathan: 2025 and the year ahead for nvidia, basically low bar and big beat. the bar is 220. that is the median estimate. the previous week was 217. the data is quite decent. as you anticipate the year ahead and anticipate policy changes, we anticipate the lineup for the next treasury secretary. you know the names by now. it is still those four. annmarie: yesterday he was with three of them and some of the meetings went late into the evening. he has not come out and decided who he is going to pick. our story alongside nancy cook, josh green, is he is looking for

his perfect treasury secretary. he is picky. now people are speculating potentially, does he go an unorthodox route? there were names that he could've paid for attorney general and he went with someone controversial, matt gaetz. lisa: the base case hasn't changed for the economic outlook, but after the election the tales increased. the extremes of these policies could make the scenario different one way or the other. it will highlight the risk or not of one of those tales and how much that could be moderated. jonathan: the range of outcomes is this wide and getting wider by the day. we will catch up with gary cohe n. dana peterson reacting to jobs claims. we begin this hour with trump's

treasury picks up in the air following meetings with mark rowan. waiting for president-elect donald trump to make a final decision. joining us is the ibm vice chair . gary, good morning. thank you for being here. i think that we need to take a step back to 2016-20 17. frame what you had to face down going into 2017 and how long the to do list was. gary: we should take a bigger step back and remember with the environment was. if you go back to the economic environment as we were going through this exact period, we had an environment where we had just started to come out of the fed's zero interest rate policy, quantitative easing, and a

decade of fed articles of will there ever be inflation again? we were just starting to turn that corner. you come through an obama eight years of basically saying that there has been a very tough business environment, highly regulated, how do we get business reengaged? it looks very similar to where we are today except fed funds were 76 basis points then and they are 4.5% today. national debt was 20 trillion. we are at $35 trillion right now. we are in a pretty fundamentally different place. we have not only a decisively different position in rates and debt, the president-elect is walking into an environment with that high interest-rate environment where housing prices have gotten out of touch for most americans and there is a

push to make housing more affordable. you look at the way the treasury has decided to fund that additional debt. we worry about the refunding of treasury, so we have to have a real refunding situation where we rollout maturities. i remember talking to the president-elect eight years ago doing a 50-year and 100-year. i think we should have done that when rates were low. state and local governments were not in great position eight years ago. now, think about what is going on with the migrant population and how much money some of these cities and states have spent on immigrants. they didn't say anything prior to the election, but i would be shocked if there is not a huge outcry from some of the major cities in this country about the amount of money that they've spent and how much help they will need from washington to make their budgets come together.

that is literally day one. january 20. 12:00 noon. you walk into that. there's a fundamental difference from where we are, but a similarity to coming off of the obama administration versus the biden administration, the excitement of business, the opportunity going forward. then you go back eight years ago and say, what did we walk into as well? the number one policy that we really wanted to get done initially was tax reform. tax reform was our number one objective. unfortunately, the house had gotten ahead of the white house. during the last few weeks of the prior administration, the house had gone ahead with the repeal of obamacare. we walked into repeal and replace without really a replace. jonathan: which i have to admit i totally forgot about. i forgot about the mccain vote, that you walked into that in 2017. how did that complicate things to get taxes done?

gary: it highly complicated it. we thought that january 20 we would start tax policy, tax policy, tax policy. we were thrown into health care, health care, health care. none of us were health care experts. none of us had been doing work on health care for the prior three months. we have been working on tax policy and trying to figure that out. everyone got derailed for the better part of two months or three months knowing that we wanted to go through taxes in year one, because we wanted to use the budget that existed, or budget reconciliation to get taxes done that year. every day we were spending on health care we were losing a day of tax policy, which -- it was anxiety create -- anxiety creating. annmarie: will it be tariffs or cutting taxes? gary: two priorities day one.

i think it will be taxes, because you have a deadline. the personal side of the tax policy ends at 12:00 midnight december 31 2025. there is a forcing function. washington operates really well with a forcing function. they need deadlines. annmarie: they are like journalists. gary: i don't know about journalists, but i know washington. there is a hard and fast deadline. they can extend it but it would be another act of congress. they have a firm deadline. the other thing on the economic policy front is they will deal with taxes. two, simultaneously, we can argue that this is economics as well, they need to deal with the immigration policy. we will see trump come back to many of the executive order signed policies he had going out on january 20.

he will reinstate all of those policies to shut the border and stop the flow of illegal immigrants in the united states. they will work on both of them simultaneously. i think there will be some tariff policy going in as well. the tariff policy will be relatively easy for them to go in, to tariff things we are currently manufacturing in the united states. you would put tariffs in place to protect jobs and the products we are currently making in the united states. annmarie: we have two out of the three. we have a border czar and howard lutnick going to commerce. the treasury pick. you have three men who the president thinks is high-caliber in palm beach yesterday having these conversations with the president. why is this pick taking so long if he ran an economic agenda

campaign? gary: he ran an economic agenda campaign. in his opinion this is the most important pick he is going to make so getting it right is important. we will go back to eight years ago. the economic pix were made the week after thanksgiving. i was hired the week after thanksgiving. steven mnuchin was putting into his job the week after thanksgiving. the transition team is a couple of weeks, probably a month ahead of most of the picks. this is a second term president so he knows how to get things done quickly. if you think about eight years ago, they were made in the last week of november 1, and we were ready to go by 12:00 noon january 20. there is plenty of time to get it right. the president-elect knows that getting the right person is more

important right now then getting the pick done today or tomorrow. annmarie: do you think that it's a name i have not reported on? gary: i'm not involved in the process. i think the president will put every name that he thinks can do the job well on the list and will choose who he thinks is the best person for the job. lisa: do you think it's feasible for president-elect donald trump to achieve the tariffs he has put out there while creating some calm in the bond market? gary: we will see what actually happens on policy. as i remind people, what you say to get elected and what you do in actual policy are two different things. americans like to hear what your ultimate idea is to get done, but we have a very rigorous policy process in the united states. we have a house, senate, a lot of constituencies.when it comes , exactly -- when it comes to

implementing policy it's not exactly what the president wants. there is no perfect piece of legislation because at some point people have to compromise. we will see what the president can get done. i think we are confident that there will be something on taxes. we are 100% confident there will be something on immigration. there will be something on tariffs. each of these will be a compromise. no one will get 100% of what they want. lisa: people want to understand what the compromise might look like and the individual might give insight into that. will this be the ultimate test for you how much congress pushes back on some of the picks that have already been announced that are controversial even among republicans? will that be a test of the checks and balances work? a lot of people are saying this is different and this president-elect has something of a mandate that is different than 2016. gary: i think every congress and

every president when they come in and put their nominations through and go through the consent process, it's different every four years. every president goes through a different process with the different makeup of the senate. a different body. the body will be different at the end of this year and then will transition january 3, the swearing in of the new senate, in the middle of the process. some of these nominees could go through an approval process with the current sitting senate. some may go through with a new senate. the vast majority will probably go through with a new senate because it takes time to get the paperwork in the vetting through. every one of these events is uniquely different because there are different personalities involved. different people went through different elections. certain states changed and became redder, so the senate may or may not be more comfortable taking a certain point of view.

you have to watch each as an individual, unique event. lisa: you mentioned the financing of the deficit, and that is unique at a time when you talked about the short-term nature of a lot of the financing. do you expect that to change? for there to be longer day-to-day issuance of where the yields are at with the next treasury secretary, whoever that may be? gary: i think that it is prudent risk management to start elongating the debt in the united states and not have to live off a very large a short-term demand for treasuries. what could happen? as a person who grew up as a risk manager running a large balance sheet for large percent of my life, you would want to do you risk that -- de-risk that. you rollout maturities for as long as you can and cut down the amount you have to fund at each auction.i would think that this administration would want to get that done and roll out

maturities. jonathan: if you're just joining us, welcome to the program. with your stories elsewhere, your bloomberg brief. dani: the international criminal court issued an arrest warrant for benjamin netanyahu and the former defense minister accusing them of crimes against humanity and war crimes pure the icc unanimously rejected israel's appeal. the war means that the icc 24 member states would be obliged to arrest them if they enter their territory. isaac herzog called the decision outrageous and a dark day for justice. the u.s. consumer financial protection bureau will supervise apple and tech companies who offer digital wallets and payment apps. according to a statement, the agency will treat those companies like banks as long as they handle more than 50 million transactions per year. the role take place 30 days after it officially is published

in the federal register. uconn women's basketball coach made history last night with the husky's victory. 1217 victories. that surpasses the legendary stanford coach. for more than 60 former players came to the game to support their former coach. jonathan: up next on the program, the morning calls plus the latest on u.s. economic data and more from gary cohen. this is bloomberg. ♪

jonathan: we are one hour and 10

minutes from the opening bell in new york city. s&p 500 up by .3%. the bond market, a pretty soft 20-year auction pushing yields higher. this morning, back down almost a basis point. 4.40. nvidia. jp morgan raising the price targets to 170 citing stronger ai demand. the second call from wells fargo raising the price targets 185, recommending that investors buy the weakness. that is what investors have been doing. the stock is higher by .5%. morgan stanley raising the nvidia price target to 168, expecting a strong ramp-up through 2025. with us, gary cohn. a conversation that we were having earlier, the race to be the next treasury secretary. you've been in the room with president-elect donald trump many times, including to

interview. what is it like to interview with donald trump? gary: it is always a stressful experience. you're sitting there with the president-elect. usually, there are multiple other people in the room. i always reminded myself, i'm speaking to the president-elect and not the other people in the room, so you have to block out the other people in the room. but he is rigorous in his questions. he tends to go multiple directions. he will go from topic a to topic b, two topic c, back to topic a. you have to be on your game. he is thinking in multiple directions. he always has an interesting spin on things. i think president-elect trump is one of the best marketers and branders i've ever seen. i'm talking about an answer and how i would think from a policy

standpoint. he is thinking, how is he going to sell this to america, how will it affect people, and how is it good for the country? we are always having an interesting conversation where i'm thinking about it from an economic and markets policy standpoint and he is thinking about how do i sell this and get momentum for this? jonathan: some of the media are describing this is looking for a yes man. someone who will say yes to policy proposals, including trade. you had open disagreements about trade. we were aware of it in the first term. how open is he to those disagreements? gary: i believe that it is the job of an advisor in the white house to tell the president the truth. to tell him things that he doesn't want to hear. it was always fun to go in with the economic data you get the night before it is released, and there were many nights that i got to talk about the economic data and how good it was and how the markets would react. those are great conversations.

along with the great conversations come you get to have conversations that say, look, if we do x, i don't think the reaction will be this. are we prepared for this intended or unintended consequence? those are the jobs of the people who sit in the white house advising. to make sure when the president does something they understand the intended and unintended consequences. a president should never be blindsided by a decision. annmarie: it comes to the pushback on trump to point out -- trump 2.0, the trump put. he would reverse course on something that he wanted to do an executive order because he saw the fallout from the financial markets. what will be the check this time? gary: i think the trouble care as much about the stock market these next four years as the first four years. that is a benchmark that he will measure. that is a very public benchmark. it's one that he uses. he talks about in every speech.

he has already started talking about it in the transition. how well the markets have done since election night. i don't think that will change over the next four years. jonathan: do you think that the bond market takes on additional importance, now versus 2016/2017 and fixed income is in a different position? gary: i think the bond market deserves a long discussion. when i talked a little bit about where fed funds were and where they are now, that is half the story. we had a flat yield curve. we have an inverted yield curve over the last for years because everyone is worried about a recession. now we are going back to what we forgot, he normal yield curve. jonathan: how steep is a normal yield curve? gary: you have been around long enough to ask how steep is a normal yield curve? a lot of people don't remember a normal yield curve is steep. i'm not surprised it has gone

up. we are real normalizing a yield curve, taking recession fears off the table, and it's going to go to a normalized rate of 3% to 3.5%. there has to be at least a 100 to 125 basis points and fed here 10 years. if we are going to 3%, that is 4.25%. we are talking 4.75 and we will continue steepness out the curve, and that is before we get to what i consider to be a large refinancing wall coming up in 2025 and beyond. i think many people forgot that 2020, the covid dear, we did a lot of -- the covid year, we did a lot of refinancing and a lot of them were five-your refinancing. a lot of the covid paper that was done at favorable rates because the fed went to accommodative policy, a lot of that covid paper comes to do next year. we have a lot of refinancing

coming due in 2025. the yield curve started to re-anticipate what will happen in the bond market. jonathan: it is good to see you, sir. the ibm vice-chairman and former director of the national economic council under donald trump. next, jobless claims are just around the corner and we will get reaction from dana peterson of the conference board and we will catch up with katrina from invesco. this is bloomberg. ♪

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some people think that's worth more than my skills. - i've run this place for 20 years, but i still need to prove that i'm more than what you see on paper. - you gotta be so good they can't ignore you. - it's the way my mind works. i have a very mechanical brain. - analytics and empathy. that's how i gain clients. - i am more... - i'm more... ...than who i am on paper.

matt: equity futures up by zero .4%. the nasdaq 100 up by one third. small caps up my 0.1 seven. jobless claims, the estimate is 220. the previous number is 217. the 10 year just about unchanged around 4.40. the two just about unchanged at 4.31. the 30 year at 4.6023. michael: the trend continues, two hundred 13,000 is the jobless claims number, down from

the prior week. we saw a revised 219 for last week. our philadelphia business outlook dropped to -5.5 from 10.3. the new orders index is at 8.9 from 14.2. employment eight point six. up from 2.2. i put that out because there is an interesting aspect and in september we had a 219 and then we had a very big payrolls report. in october we had 246, hurricane related but had the low jobs report. that will give you the suggestion that things could be better and then you look at that and then the employment number goes up. if you are trying to put your

forecast for december 6, here are some of the input you might put into it. i am talking about jobless claims last week was the reference for the jobs number survey. matt: 213 is phenomenal. equity markets up zero point 5%. in the bonds, yields stay unchanged to down a basis point for a 10 year. to 13 is ridiculously low for jobless claims in america. lisa: it is the lowest -- 213 is ridiculously low for jobless claims in america. lisa: it is the lowest going back to april. it seems like the upward trajectory is taking hold which is the reason i find it interesting that the bond market isn't moving more on this. was that already being baked in?

matt: i was trying -- jonathan: i wanted to go back to the chairman powell speech from jackson hole. at the end of august there was worry that the labor market was starting to weaken and they wanted to get ahead of it and didn't welcome weakness. this whole conversation shifted quickly. it was going to be a counting cycle, 25, 50, a string of 50. here we are 75 basis points of reduction later, maybe a pause in december. there are still some people wondering whether it september was actually a mistake. from bank of america, he said the labor market weakness we saw in the summer was a head fake. that is the view of people on wall street. the response in the federal reserve was a mistake. lisa: that is why the tone is changing again. maybe not the fed chair jay

powell himself but yesterday she came out saying while easing is needed, they need to be able to deliberately before they move again. there is a real question here about whether it they have run out of room to cut so easily and the future is going to be more difficult. matt: we didn't have much of that over the last few months with the hurricane disrupted number the exception. joining us to discuss is dana peterson. 213 on jobless claims. how high is that? dana: it is significant. it is a number of people actually receive benefits and are staying on but they are coming off and we are not seeing very high continuing claims. it continues to suggest the labor market is doing ok. annmarie: i things lining up for

a pause in december or is it to jonathan: -- -- jonathan: are things looking up for a pause? dana: even away from core and shelter, i'm sure the fed will want to make sure that played out in their favorite gauge which is the pce deflator. it depends on how strongly we see employment bounce back. when we look at retail sales they were slower but we had a feeling they would be in october given the hurricane effects but consumers still went out and spent. i think they can go ahead and cut by 25 basis points in december but next year is rather uncertain. lisa: especially when we are not clear on the inflationary changes in policy. tom bergen in an interview said this, we are somewhat more

vulnerable to call shocks on the inflation side whether they we wage related or otherwise then we were five years ago. this goes to the heart of the feeling about an initial rate higher in a post-pandemic era once we have normalized. it we have a sense, do you see evidence that may be we have reached a disinflation and when it comes to the wage front as well, that could once again be one of the pressures? dana: we have been saying for several years that inflation is probably going to be tougher to beat post-pandemic than before and it certainly you have many more upward inflation pressures. some of it is structural from demographics which is also influencing wages. yes, we continue to have shocks like on shoring, deglobalization, we could have more tariffs, all are highly inflationary and will resist the fed's efforts to get inflation back to 2% and keep it there. in order to keep it there, we realize the federal funds rate

is going to be higher, maybe about three sent in nominal terms going forward. lisa: we were just talking with a number of different people close to people in the trump orbit. gary cohn was talking about how immigration will be the first one to tackle. how do you factor that in given that was one of the reasons why you could see full employment and disinflation at the same time. dana: we don't know exactly what is going to happen. all we have our promises made on the campaign trail and what is being said over the airwaves. thinking about what could be the scenarios. we might have a renewed tariffs. those tariffs could be broad. if we see large amounts of people being reported or even the announcement of that, you could start seeing people leave their jobs and that would cause shortages in key areas. we don't know what is going to happen but certainly something

we should look at in our risk scenarios and potentially at some of those might become the base case. jonathan: how difficult will the dot plot be in december? dana: i think it is going to be very difficult because all of the fomc participants are just like the rest of us and hearing the same things and know about all of the different risks there could be to the economy. there could be spending cuts in order to work out a deal for the debt ceiling or to pay for extended tax cuts. all those things factor into the outlook. it is really what you think is most likely and you have to go with that in terms of your dot plot. we could see a wild dot plot with numbers all over the place given the uncertainty. lisa: given that you focus on consumer confidence and just business confidence, how much are you actually seeing a real shift upward in terms of confidence post election to make investments, to do certain structural changes that could

increase growth versus the same constraints that were there before, which was a high rates and is still a lack of clarity? dana: we don't have any hard data. our consumer confidence measure comes out next week. that may capture some elements. it is for ceos and executives and we speak with them and are hearing a mix of things. some are excited there could be more deregulation which would potentially help cut red tape for them. certainly not of the uncertainty around the election is over and we know who won and what the composition of congress looks like, they may start investing again. others are working -- worrying about if industrial policies that were passed for reassuring and hoping building factories and infrastructure are still going to be there. but the big one is tariffs and what we see increased costs passed on to the consumer. so it depends upon what industry you are in and what your

expectations are for next year. jonathan: looking for your cash forward to your data on the jobless claims -- looking forward to your data on the jobless claims. i am looking forward to consumer sentiment. the reason we have seen evidence of this repeatedly, the overnight republicans will feel better about the u.s. economy and overnight democrats will feel worse. lisa: a wonderful reality check. annmarie: paul donovan, every time they got surveys he said it ignore them. look at the real data, things like retail sales. jonathan: are people going out and spending or not? based on retail sales, they have been decent and revisions have been strong.

remove target out of that and warmer in t.j. maxx are decent. lisa: that is because of the economic data that preceded the election and that is what everyone is coming to. the outlook has been change for the federal reserve on the margins because of potential trajectory of an economy that has shown improvement itself. jonathan: a series of upside prizes. where did you see where it was? lisa: teetering on the highest level since spring. matt: joining -- jonathan: joining us kristia campmany now is -- joining us now is kristia campmany. kristia: i think it is prudent to maybe go in december and then because. and then talking about 100 or

150 basis points and then you pause. we have clarity of the red sweep but we don't know what the policy priorities are, what is the order they are put into? we expect you can get one or two things done right away and then you have some bogged down in the legislative process but how do we prioritize and what is the speed and magnitude and what is the reaction function in the economy. the market had this dialogue in september that it was the trump trade and that is what we were at pricing but were we pricing the underlying resiliency and data? jonathan: a little bit of both. gary cohn was with us earlier and we talked about how accommodating are not financial markets would be for policy decisions. can we sit on fixed income? credit spreads are tight, how accommodating the fixed income be to any administration that wants to come in and start

spending more money? kristia: when we look at rates, both the front end and long end have done work to replace -- reprice higher. i think if we get the 25 basis point ease on the front end, policy is basically flat to two years and that leaves front end securities offering value and whether that is securitized products or corporate, and spread levels are tight but i still think there is money happy to park and pick up yields at 6% or 7% in that spread. out the curve, there was definitely support for the market at 4% and i don't think people expected us to get up and push the 4.50 levels. that is what we have been looking at is there needed to be more steepness in the curve and we have been surprised we haven't been able to. but the risks are still out the curve and what are the inflationary impacts of all of these policies come of tariffs,

deportations, changing the labor force dynamics. the economy has been to hold the soft landing but now we will have melding so let's see what we get. lisa: gary cohn made an interesting point that this administration would likely try to term out some of the u.s. debt. the current administration has been selling a lot of short-term debts and the next one will probably look for longer dated bonds. he sees the bond market starting to sniff that out. how much of that has been priced in and what would it do to the long end? kristia: it is something we always talk about like why are we not terming out the debt and certainly with the curve still inverted it feels that there is an opportunity there to term out the debt and lock in at rates. rates are higher than they were five years ago but still to term out the debt, i don't know that

the market is sniffing it out because the curve is still inverted. we haven't really had the buy-in. the same thing, throughout the last number of years post-covid you had realized inflation and the markets expectation of breakevens has been incredibly retained because it has credibility with the fed. lisa: what does an orderly steepening look like at a time that preserves your long call on a number of credit and securitized instruments while still allowing the u.s. government to term out quite a bit of debt. how much could you see a steepening without a massive market disruption? kristia: i think the consensus for steepening in the market is different now than it was six months ago and the market as a whole was looking for the fed to cut policy through neutral and it was much more of the front end move. can we still see some gradual leak higher?

yes. i think you still have a story of u.s. exceptionalism and that is where money is happy to come to the u.s. and be parked here. we don't believe in the case for disorderly steepening of the market. annmarie: you talk about the markets are digesting and some of the names we hear out of mar-a-lago, particularly looking forward clarity and treasury. if this drags on, is that a markets negative event? kristia: inauguration is the middle of january and we still have some time. if anything the first two weeks coming out of the election results it was a rapidfire of names coming out. and i think the market is digesting who is in offices and how they handle trump and are the mediator between the markets and what trump would like to accomplish is part of it.

i don't think the pace is an issue at this point. i think we are just all looking for clarity because there is so much uncertainty. what is the magnitude and order. annmarie: do you think it is the policies -- the personnel that could be checked on for the policies that they want to enact next year? is that the stock market or the bond market? kristia: from what we know from trump 1.0, he knows what the levels are and will be cognizant of it. and market perception of unfriendly policy will be reacted to. jonathan: it was good to see you. thank you so much.

the s&p 500 making it great again. let's get an update on stories elsewhere. dani: house ethics committee voted against releasing the sexual misconduct probe of matt gaetz for the ethics committee has faced more pressure to publicize the findings of the president-elect donald trump elected emma for attorney general. house democrats plan to force the issue but need at least a few republicans to back them. matt gaetz has denied allegations. the new government task force for efficiency has its first proposal. elon musk and vivek ramaswamy said they will require federal employees to come into the office five days in a week resulting in a wave of voluntary terminations that "we welcome." bitcoin 100,000 dollars, now

just under 98 thousand. optimism on president-elect trump's crypto support and plans to accelerate purchases fuel gains great people familiar said the trump transition team is holding discussions in the market has gained $900 billion since trump's election win. jonathan: a lot of people buying the dip in nvidia, higher by 1.65% in early trading. dropped below the biggest expectations. drop by for or five percentage points. equity futures pushing toward session highs. jobless claims exceptionally low. the right kind of downside surprise. we will set you up for the day ahead and catch up with manus cranny. from new york, this is a bloomberg.

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jonathan: if you are just joining us, welcome to the program. we are 37 minutes away from the opening bell with equity futures positive by .4%. the nasdaq up by .5. small caps russell up by almost .8%. today fed speak. friday, s&p global pmi and consumer sentiment. tuesday next week, consumer confidence, home sales and fed minutes on wednesday. a second gdp read and the second round of jobless claims because the markets are closed for thanksgiving on thursday and we can't wait.

that has happened quickly. before we get there, with 37 minutes away from the opening bell, here is manus cranny morning movers. mannus: nvidia, you have the first flesh wound which was the knee-jerk cell here traveling all the way back to 5%. leave it to don ives's at producing the lebron jame of chips. you have gone from a cell first ask questions and it turned around. roll it over and have a look of the microstrategy, touching on big points. they will sell more convertible notes to what i told you yesterday at $2.6 billion of convertible bonds sold to do what? by more bitcoin. i leave you with a quick snapshot of snowflake. one stop shop. $911 million on the guidance.

they had the largest language model to help you clean the data efficiently. jonathan: we appreciate it. thank you. lisa: i want to emphasize what gary cohn says we don't spend a lot -- enough time in the bond market. i think that really is going to be the focus and is the reason why we care about the treasury pick. annmarie: gary cohn may be nursing remember the first time of trump and it was thanksgiving where he got the nod to lead the nec and then mnuchin's nod came out. can we do this for another week? jonathan: we meaning you. annmarie: can we actually do this as trump looks for his "perfect candidate." jonathan: i think gary's point is what we have made that the election was only two weeks ago

and the transition team is operating well ahead of schedule. lisa: i think people are anxious because they want to understand. the base case is not change post election. that is why people want to understand the policy and what the sequence will be and what the personalities will be around some policies. jonathan: i am looking forward to thursday night special at mar-a-lago later this evening. look out for reporting from annmarie and the team down in washington, d.c. in the race to be the next treasury secretary. tomorrow, mohamed el-erian will speak to the ecb governing council member mario santini. we will catch up with tiffany welding of pimco. thank you for choosing bloomberg tv. this was a bloomberg surveillance.

this was bloomberg surveillance. ♪

matt: disappointing on the sales forecast. 30 minutes until the start of trading. katie: will work open interest starts right now. sonali: coming up, chip superstar nvidia staging a comeback this morning after its forecast failed to impress demanding ai calls. matt: