>> welcome to "bloomberg markets." i am scarlet fu. we just moments away from an interview with phil murphy. first, let's show you where we are in terms of the market action. it is rare we lead with the dow jones industrial but that is where most of the action is. there is also a bid here for small caps with the russell 2000 gaining. fairly modest moves in the treasury space. he of the 10 year yield coming down almost to basis points. 4.47 level really acting as a magnet for the 10 year. bitcoin just shy of $100,000 and

99,000 right now continues to climb on optimism a trump white house will be pro crypto. i want to move on to our individual midday movers and bring in abigail doolittle. abigail: take a look at this stock. up 75%, best week ever going back to 2007 since the company was public and is all having to do with a big relief rally. there is a 20% for short interest so some of this could be the bears getting out on the possibility the company may stay on the nasdaq. we don't know that is going to happen but they did get a new auditor this week after losing their prior one. bdo usa. they filed the appropriate paperwork with nasdaq to stay listed and to make plans to file their delayed 10k so investors clearly very relieved about this. let's take a look at today's big winner and that is the gap of the highs but up 10.4%. they put up a good quarter, beating earnings. the sales guide up 2%. not a huge growth number but

better than expected. scarlet: that is a quick market check. we know big investors have been trimming their stakes and big tech names during the u.s. stock markets record run and that is according to the latest filings. among those making changes, warren buffett's berkshire hathaway that cut its exposure in apple by a quarter were about a quarter. with the founder of -- it is always good to see you. when you look at the 13f, but trimmed apple, and a domino's. your take is, sure, these are interesting, but it is a sideshow compared to the cash flow brookshire has a cumulative. now 325 billion dollars in cash. why is this such an important tell? >> thank you for having me posted more important than the actual dollar number is the allocation to cash among berkshires assets. i looked at the cash relative to

total assets going back as far as i could and it is at a record high now, about 28%, the percentage of cash, percentage of total assets of the books the reason that is interesting is because if you look at warren buffett's history or berkshires history, what you see is a very consistent raising and lowering of the cash allocation that seems to fit very neatly with the market cycle. he is not trying to time the market. he says himself he cannot time the market, and no one can, in my opinion. it appears he is making thoughtful allocation decisions about where he think the returns going forward will be highest. he is not doing it necessarily on a market by basis because he is a famous white stock market but it tends to be heavily influenced by the price of the broader market. you have this neat dovetail of his cash allocations. what the market is doing is cash allocation going or expensive and drying down cheaper.

scarlet: people fixate on his cash holdings which is always in the hundreds of billions. you are signed by looking at it in proportion, get a better sense of what his thinking is in terms of where the market is headed rather than when the market is going to turn. in terms of his valuation gauges, when he decides there is value to be had in the overall equity market, he looks at what the stock market values relative value to gdp overall. what is the principle behind that? >> it is interesting to think about because one thing to note is in general when markets are very cheap or very expensive -- i think you can say this market is on the expensive side -- all the valuation gauges tend to say the same thing. it is price that drives devaluation more than fundamentals. in other words, when you think about pe ratios are priced

ratios or warren buffett's case the market cap to gdp ratio, what you have is the price of the market on top and the fundamentals on the bottom whether it is the economy or whether it is individual companies are market wide or whatever it is. because it is the price that moves the ratio more than the denominator, the fundamentals, it does not matter what you use. what i would say is i don't think anything special about the market cap to gdp ratio. i would say the recent gdp -- the reason gdp is useful for buffett is gdp tends to be a relatively stable denominator, stable fundamental, and allows the price to express the changes in devaluation. which is ultimately what you want. similar to the k ratio. the magic of it is by taking a 10 year telling average of earnings, you have a stable denominator and it allows the price in the numerator to drive devaluation. scarlet: going back to the idea of looking at cash as a percentage of berkshires assets

overall, in retrospect when you look back, has warren buffett been wrong when he is raised or lowered his cash allocation? >> he has been directionally right, although it also does show his timing is not perfect. like i said, he can't call market terms and admits it. in the.com run them, he did add to his cash allocation in the late 1990's but he is also buying opportunities in 1999 and lowered the cash allocation. the bus came a year later. i am sure it is quite moments he wished he had more cash laying around in 2000 when the blast came. but deals were attractive for him. he also ran up his cash allocation in the run-up to the financial crisis in the 2000's. in that scenario come the cash allocation went down because the value of berkshires assets went up not necessarily because he was going out and buying, however, in the crash came he did use considerable cash allocation that had gotten him 25%. just a hair shorter of where it

is now to go and buy all kinds of stuff, famously, investments in goldman and bank of america and stuff that was distressed. his cash allocations do align neatly with white in hindsight have been moving bust cycles in the market. scarlet: always appreciate it. bloomberg opinion columnist. you think about the billions berkshire has built up, he is been itching to fire his elephant gun when he is looking for some kind of big acquisition or big investment so we will keep an eye on that. a lot more coming up on "bloomberg markets." exclusive interview with phil murphy coming up next. this is "bloomberg." ♪

scarlet: i am scarlet fu and i want to welcome our audience for special interview. with me is my close coanchor romaine bostick. we are pleased to be sitting down with new jersey governor phil murphy here at our global headquarters in new york city. governor murphy, i want to start with a topic that hits close to home which is congestion pricing in manhattan. last week the mt approved a revised plan to charge drivers nine dollars much of the city versus the original $15. he opposed both versions and are fighting it out in court.

are you seeking an emergency rule to halt implementation? do you think you will be able to stop this? gov. murphy: i can't speak for the judge adjudicating but we will try like heck. it is not -- listen, i think with the strongest environment a record of any state in america for the past seven years and i'm proud of it. we are not against lowering pollution. we are for that. but there a time, place for a deal that works for new jersey commuters and ones that down. this displaces the pollution to new jersey. it does not get rid of it. it is an enormous burden financially on our commuters. lastly, none of the money comes back on our side of the hudson. we also had transit fiscal challenges. with all due respect to the mta, we want them to solve their problem within the four walls of the mta just like we have with nj transit in new jersey and perhaps when the gateway tunnels are finished and you have four tunnels with rail tracks as opposed to two or when the port authority bus terminal is

finished, the new one, which we are both going at long last, there is a time and place perhaps but not now. scarlet: i'm going to follow-up on those questions but when it comes to congestion pricing, you've said you're open to a form of it. what with that plan need to look like for it to gain your support? gov. murphy: i don't have the parameters but it would need to be a reasonable price, discounts that make sense, amount of money that comes back to jersey, and a timetable that allows our commuters to look at what their options are. i think that is a reasonable -- we have asked a federal judge -- we are not asking for the moon, we are asking he forced the federal administration to do an environmental impact study and we will live with the results of that. romaine: have you had conversation specifically with the governor of new york as well as the mayor of new york about those issues? if so, what was their response? gov. murphy: we start in a good place with our relationship with

both eric adams and kathy hochul and we do an enormous amount with both the city and the state together. yes, we have spoken person to person, team to team. this has been a multiyear process. our ask has always been, let's do an environmental impact study and at the same time let's get at the table together will stop while that is playing out, let's talk about what the contours could be of a deal that we could all live with. romaine: this is more than just the environment, this is to alleviate congestion as well, the idea there are a lot of folks coming into the city that -- maybe they should take public transit into the city. if you don't have the congestion pricing, what is the solution to alleviate the traffic condition? gov. murphy: the mta wrote this themselves, the number one objective here is to solve the fiscal hall. they said that themselves. don't take it from me. lowering pollution is a noble

objective and certainly one of their objectives, the number one objective is to solve their fiscal whole. we have the same issue at nj transit. we have chosen to solve our problems within the four walls of new jersey. we put in a corporate transit fee while new jersey transit takes a few years to get back on their fiscal feet, which will take all of the big transit systems -- all those in the country going through similar reality. we found a fee which we don't do likely that will allow a bridge to a better fiscal future for them. i don't know with the alternative is for the mta but i strongly would like to encourage them to pursue other avenues. as for new york city, we work for new york city. -- we root for new york city. i don't know why for the life of us when people are working from home, still digging out from a pandemic, why new york city would want fewer people in new york city then more but that is not my domain.

scarlet: let's go back to new jersey transit. commuters who rely on it, very frustrated by their breakdowns, especially this past summer. you have pledged to fix the system even if it kills you. gov. murphy: i am still alive. scarlet: perhaps to support mjt and also raised fares not so long ago. how much of this is a funding problem versus something bigger? gov. murphy: it ultimately will be a big funding problem if we did not find the solutions that we have found, which are multiyear. we did not raise fees -- fares for six years, the longest stretch in new jersey transit. we finally raised them this year. we put in place this corporate transit fee. i'm not making the excuse for what we are calling the summer of hell, it was unacceptable to commuters, unacceptable to me, period. we put a free week at the end of the summer as a tip of the cap for the fact it was a miserable

summer. if you look at the mess we inherited when we first got in office almost seven years ago, nj transit has made a lot of progress of on-time performance, safety, customer satisfaction. we don't like anything on those less than 100% and we will keep fighting until we get there. scarlet: romain mentioned congestion. the gateway tunnel project to build those two new tunnels out of your the hudson river. donald trump halted federal funding during his first term, stalled it will stop how concerned are you these funds will be stalled once again or held up were pulled during the second trumpet administration? gov. murphy: the funds are obligated, a word with heavy definition around federal funding. that is as close to cement as you get. having said that, we have found -- scarlet: obligated and dispersed are two different things. gov. murphy: this is an eight to 10 your project so you can expect it will all be dispersed at the moment.

having said that, big part of the project is the portal northbridge. greenlight by donald trump as president in june 2020. i spoke to him last week. the average is going to be complete next year on-time and under budget. i asked if you would cut the ribbon with me. i don't want to speak to the president but privately he said he would very much like to do that. i think he is someone who understands this region and understands how important infrastructure and moving people and stuff around is. i am at this moment with a high degree of confidence. it is a huge union job. tens of thousands. i think the president will be in the right place on this. romaine: and you think you will have a decent working relationship with the next year you are in office? gov. murphy: we are going to fight -- when i walk out in january 2026, i will have been the longest democratic serving governor alongside donald trump as president. we have already done it for three years. we fought like heck on where our

values were challenged, our communities were assaulted or challenged, and will continue to do so but that does not mean we will not aggressively look for common ground. i have a good relationship with him personally and i will continue to do both. romaine: when he first ran for governor, ran on the platform of bringing jobs and companies to new jersey. what has that progress been? i am curious if you find yourself in competition with your neighboring states, primarily new york and connecticut in attracting companies and jobs? gov. murphy: our story is a good one but incomplete. we have made an enormous amount on gdp growth, job creation growth, unemployment numbers have been coming into a very good spot. we have a lot of magnets in place that attract both companies and families. number one public education system in america. from income -- romaine: what

about new companies? gov. murphy: we had really lost our way as the state and the start of community and that is changing dramatically. we have these strategic innovation hubs in a number of fields. venture capital, top during the nation in the first half of this year behind only california and new york. that is one area in particular where we had a lot of wood to chop. we are not satisfied by any means but a lot of good progress. scarlet: pharma has a stronghold in new jersey and talking about startups as the next big area of the state. gov. murphy: life science in new brunswick is being built as we speak called the helix. life science focused both big companies, big hospital systems, rutgers and princeton with the research as well as a big startup component. scarlet: new jersey has long been a true blue state by donald trump won or vote in 2024 than

2020 and the state feels like it is shifting read. their questions questions whether new jersey is the next battleground state. i wonder if you could talk to that in the single most important lesson you think the democratic party must learn from the 2024 election. gov. murphy: i don't see it as a battleground state. i don't. that doesn't mean we are complacent about it. you are right, president trump's margin was about five points in new jersey. joe biden won new jersey 16-ish points. romaine: that doesn't concern you? gov. murphy: it concerns me. romaine: why did it shift? gov. murphy: a number of reasons . it did not impact us down ballot. i would be hyper concerned -- i'm not saying i am complacent about this because i'm not. we have to be sober, look in the mirror, analyze what happened. but i would be really panicked if it had down ballot impact.

he did not for the most part. -- it did not for the most part. democrats had four countywide candidates that all won handily. we have to figure out with the lessons are but also figure out what was at the top of the ticket and lessons that were unique to the top of the ticket versus democratic party down ballot lessons. scarlet: what is a lesson that has worked down ballot that did not work at the top? gov. murphy: be on the side of working families, a period. we are the number one state to raise a family. own that space. invest in it. he present. -- the present. romaine: some would say the democrats have done that at the national level. the issue was how that was communicated to the voters. i'm sure you know there were a lot of voters democrats and republicans alike who looked at the economy the last four years

and did not feel that investment y.s there from the democratic gov. murphy: the notion is a guide to abstract. nice soundbites but where is it for me? inflation is still in the system. that is the data point i think that matters the most. what am i paying for x today versus four years ago? romaine: is that still what you hear from your people? gov. murphy: top of the list. the fascinating reality in new jersey and nationally both is president trump got more votes in new jersey than in 2020, a lot fewer people voted on our side. that to me -- scarlet: people set out the election. gov. murphy: nationally and in new jersey and that is something we have to get our arms around. 2020 was in all vote by mail election. record turnout across the board including in new jersey. but to me, that is sobering. why did you stay home with so

much at stake? how can you set this out? to me that is the question we need a crisp answer to. scarlet: what is on your to do list as the state gets ready for elections next november to determine whether there is a democratic governor to follow you up or perhaps the democratic -- republican governor takes your place? gov. murphy: while we have not been a swing state at the presidential level or the senate -- u.s. senate level, we have been historically back and forth as governor. we will see how that plays out. it is a crowded field on both sides of the aisle. a lot of talent running for governor so we will see how that works. i think in terms of us, more of the same. number one public education system in america, keep investing in that come expanding pre-k, make sure you continue to be top health care -- top five health care in america. a big clemency initiative. i want to do parole reform. more broadly, criminal justice reform. we got elected to grow the

economy but also to make it a fairer economy. address those inequities. romaine: you'll have about one year left. i assume you will be involved in politics poster gubernatorial run? gov. murphy: i have no idea. romaine: it sounds like it. gov. murphy: i was ambassador. public service is important to me. the job of a lifetime has been new jersey governor. i love doing what i can do to serve the public. scarlet: for mercy, thank you. we've been new jersey governor phil murphy and here with me as romaine bostick, my coanchor from "the close." scarlet: and now doolittle. abigail: we have a bullish day for stocks and a bullish week, s&p 500 up very healthy amount. we have had positive earnings reports including from the gap with that stock of more than 10%

on a better outlook than expected. you can see weakness for china stocks coming down 1.3 percent. chinese stocks in the asian session falling between 2% to 3%, having to do with geopolitical tensions plus some of the tech selling that happened yesterday and then tumbling into an asian session weighing here in the u.s. on the adrs. interestingly, not saying bonds at all. there is not a haven bid. this means bonds are selling off. bitcoin, o, my gosh, close to $100,000 in about $99,000 per bitcoin, up 1%. the trump trade was stocks up on the weekend bitcoin higher, it seems that trump trade is still in place. scarlet: little stopping that momentum in bitcoin and cryptocurrencies as well as those companies involved in cryptocurrencies as well. abigail doolittle, thank you. as for bloomberg markets, that does it for this hour.

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

>> from the world of politics to the world of business, this is "balance of power." live from washington, d.c.

>> it is down miss the third rail of politics and we are about to touch it. welcome to the fastest show in politics as washington girds for grand debate over debt and deficits when sit down with a man who rents a social security administration. i'm joe mathieu alongside kailey leinz. welcome to the friday edition of "balance of power." and it all the talk of tax cuts and deficits and tariffs, very few politicians want to talk about the greatest expense really of them all and that is social security. >> it is bears as we try to get our arms around with the deficit pictures going to look like. this is a democratic party trying to get his arms around how it moves forward in general after such significant defeats of the presidential level and congressional level as well. martin o'malley would like to be the next chair of the dnc.