>> there is a lot of opportunity here, assuming the economy can continue to grow and profits grow. >> the fed is the key story. >> i think will take more fed cuts to push the 10 year above 4.5%. >> getting back to normal. you can see that if you look at overall inflation trends. >> this is "bloomberg surveillance." jonathan: inching our way toward the holidays, good morning. find a winning streak on the s&p 500. equity futures up by 0.5. a performance russell, small caps. in the bond market, a rally across the curve.

i'm looking dollar weakness against the euro. euro-dollar this morning looks like this. posited by .7%. the race is over. we can finally stop talking about it. the game of thrones down in palm beach, mar-a-lago, florida, is all done. the treasury secretary pick is scott bessent. lisa: and that is probably what we are seeing some of this relief rally, that he will be a tempering force for president trump when he does come to office. i will say he will not -- we won't stop talking about it because there is question about someone who was going to modify the signal for president trump who is shown again and again it is his policies and his word that is going to get through. annmarie: we will be talking about this cabinet of rivals. someone like scott bessent really modulating some of the forces like howard lutnick who will oversee trade.

scott bessent has talked about the fact when it comes to tariffs, maybe it will be a negotiating tactic. maybe that needs to be the tool used to get a free-trade and potentially modulating what may be howard lutnick wants which is blanket tariffs. the effect of the matter is, the markets like it because this is someone who really understands financial markets. jonathan: world-class pig. most people in markets agree on that. we have said this a few times so that's paraphrase, the biggest challenge for scott bessent is not executing policy, it is managing the consequential volatility that might undermine the policy changes. we came to see a big realignment in global trade potentially become big moves domestically, as well as managing the fallout of that will be a major challenge for him. lisa: i would say it is unclear he muddies the water would it comes to how tariffs will be used. as a negotiating tool? aggressive negotiating tool and severn trent are thinking maybe

we are going to end up with the situation where it will be an easier person to deal with given the fact he has talked about china being an important ally in certain capacities? a different type of rhetoric in this poisonous one we have heard from other places. a big question mark. i think it is a right what about the cabinet of rivals. we are getting mixed messages about with the policy is going to be. that uncertainty is still present even though there is this relief rally. annmarie: one thing was clear from donald trump, he was to protect financial markets at all costs. that was what you have called, jonathan, the trump plate of the first iteration and that is very near and dear to his heart and very clear with this treasury pick. jonathan: there are many things on my to do list. you've got to oversee maturity profile of the dead, ensure that debt continues to attract financing, maintain their faith in the u.s. dollar which may offset some of the higher terrors the time -- tariffs.

what really stands out for me in terms of a real-world experiment , we are taking an individual that has made a fortune on anticipating policy changes and the asymmetric as they create to getting hold of the levers. i think that is interesting. this is a guy who knows with the right and wrong policy move is. he is made money off that through a long career. finally he gets to control some of the levers. lisa: there's a quote that scott bessent said in june, "we are going to have some kind of grand global economic reordering. i would like to be part of it. i've studied this." the hedge fund manager now rising to become treasury secretary. jonathan: equity futures rising as well. coming up we will catch up with citi as donald trump pigs scott bessent at treasury.

we begin with stocks looking for a sixth straight day of gains as markets welcome trump's decision to nominate bessent for treasury secretary. lucy writes, "our expectation is the current consensus for 2025 is aggressive and this is before tariff concerns can be modeled, so we expect the postelection rally needs to pause and pullback." lucy, welcome to the program. let's located 2025. are you making any assumptions when it comes to taxes and tariffs? clubs ready to be with you. as we look at a 2025, you have shifted from election uncertainty to policy uncertainty. as you say four pillars of policy. you have the progrowth, cyclical levers where you clearly have some expansionary fiscal policy. now we also have scott bessent. feel more comforted that will not lead to too many challenges from the deficit perspective. i you have the progrowth policies around deregulation and

we are seeing them play out and financials in the market. when we look at next year like a lot of people across the street, we are not changing radically at the moment our growth forecast for the u.s. economy. i think most people if anything are slightly edging up their gdp growth assumptions. most us and what we are going to see is it going to be to inflationary and those are big assumptions but right now calibrate those progrowth policies, potentially offset by tariffs trade and immigration policies to some degree. that seems to be where it is lightning. most expect some moderation in u.s. growth next year but not radically so and an element and taste of you -- u.s. exceptionalism as we look at an extra for growth for the u.s.. lisa: and yet you are not changing our view and the market is changing its view. so you have this contrarian moment were citigroup on the margins is leading into some of the weakness in europe and away from some of the u.s. exceptionalism that you see.

can you talk about being contrary and in a moment like this tactically even if long term? you still see theexceptio. >> and i think the parts of our calls that are contrarian come to your point, are this case for the usp was 6100 is our bouquets and we look at next year and we say, 15% earnings growth which seems to be what the sort of consensus forecast still looks like to us is still quite aggressive despite tax cuts and everything else in deregulation. we feel like that when you have a 23 times earnings set up is quite a tool hill for the market to climb to go on from here. the other thing we still had that is a contrarian call is the view we may still get out sized

rate because this year. nonfarm payroll data in december will be key after the weakness we saw in november. because partly by hurricanes and strike disruption. if that is another weak data point, we would not rule out another 50 basis point cut. if you saw 25 or 50 basis points of cut, that is what is support the market but a real rally in the backing of this year, it is going to require more. all of that said, we are not telling people to sell their exposure to the u.s. market. we still say you just had to be a little more selective under the hood. there are lots of pockets and the u.s. market we really like but your point we have coupled that now with a barbell approach. we have also said come to keep the u.s., think about that exposure, pick some new sectors perhaps under the hood, think about the browning thesis in the u.s. but add a barbell approach if you can do have some europe. europe has been incredibly beaten up for lots of obvious

reasons. positioning is like that you are going to see we think that continuation of fairly aggressive ecb rate cut in which is going to support europe and you have this chance of the german elections really triggering a bit of a reset moment for europe. a smaller version of what you are seeing in the u.s. in terms of regulatory reset and fiscal stimulus that could be on the cusp for europe. if you can barbell it, that is what we would suggest here. lisa: are you talking about the bond market with the ecb rate cuts? stock markets i could get beaten up by the idea of tariffs, us exceptionalism continuing, frankly, a lack of innovation in a lot of companies even flagged by christine lagarde? >> you are right. europe has a huge number of structural challenges it is grap european market. things we would like in your would include financials intact. we think there are lots of in sectors like industrial goods, capital goods are going to see some

pretty significant changes. so we would be a little more cautious they are. a recent upgrade we have made within european equities is on the resources side. we feel it has been so beaten up, perform so badly on the back of the obvious dealing with trump tariffs, china, and all the risks around that. but wha although the china stimulus for example has been a little disappointing, we think there would be more to come so we recently upgraded this year's china gdp a little bit to 5%. not a huge confidence on next year but i think to your comments, as this trade policy becomes clear as we go in and next year, it may well be it is much more around negotiations. that looks quite different compared to the more bear case scenario for tariffs which is broad tariffs on everything. there's a huge range of outcomes you can see. some of which significantly less bearish for europe than is

currently priced into the market. this ago do -- annmarie: who is going to be the first? >> great question. clearly, the consensus is china in on most all forecast is going to be the focus. europe is clearly going to be a focus to some degree. sometimes by default. the other one is mexico. this is where we have put interesting trade more recently from an fx perspective because we think shorting the euro relative to mexico might be quite a good trade here because perhaps mexico, although it has performed as you perhaps would expect given the focus on mexico by trump in terms of the narrative, we think relative to china and to europe it is probably going to come off less badly. we think that might be another way of thinking about how these tariffs come through, taking it from that perspective as we look at the next year. you are right, absolutely china is going to be incredibly

exposed and europe but those are the three markets in aggregate that are clearly going to be in the firing line. china builds factories in mexico and try to use backdoor, why do you think mexico will be one of the first countries that trump wants to make sure he deals with? >> i think we have a big debate on mexico that is clearly ongoing at the moment. it is a bridge to china or buffer? i think it will be one of those areas where trump is going to look to mexico to really help the implementation of their immigration policies and -- that is another area of policy uncertainty which is usually of note at this stage. most please bulls face cases are slowing immigration into the u.s. but not an outright reversal at this stage. i think he's going to want to work around immigration. your point he is clearly going to work on not being the back door. in which case i think although we have seen signs of that being agreed between mexico and the u.s., i think they're going to

want to get that agreement in place and implemented well in advance of the u.s. mca which comes up for renegotiation in 2026. mexico is hugely important to the united states. it overtook china as the number one country that the u.s. is importing from. so to try and tackle both mexico and china incredibly aggressively would be hugely problematic for the u.s. from a growth perspective. trump knows that. he does not want to see huge inflation coming back to the united states. he knows that is how he got himself back to the white house. they will be incredibly pragmatic dealing with inflation and to do both china and mexico aggressively from t inflationary perspective. jonathan: good to hear from you lucy baldwin of citibank. china, mexico come europe a factor in all of this as well. euro-dollar 1.0 four. this morning, stronger euro. looking for a move to in

2025. i think the right question ask right now is how little things need to go right in europe to generate a big move higher in europe and the euro and european equities. lisa: that is the fascinating part of lucy's point. there forecast has not changed dramatically we as growth following elections. if there model has not changed dramatically, it may be the dollar on the emergence has gone too far and would not take much for people to have under europe, which is why they are leaning in. that is the right question at the time we get yet another negative economic readout of germany and everyone kind of shrugs. what else is new? turns the other way for a hot second and everyone will buy the dollar -- i the euro. here's your bloomberg brief. in china for the third time this year. the apple bus expected to join foreign see zeros -- ceos.

addressing supply issues. adani and his nephew have reportedly been summoned by the sec to explain u.s. allegations in a $250 million bribery case. news agency pti says they have 21 days to respond to the legal request. wicket and gladiator ii $170 million. wicket finishing and first place with $114 million in ticket sales. gladiator ii grossing $56 million to finish second. quite a week and in the united states. lisa: it is always the redos. i'm looking forward to when they create a new franchise, really go out and there's a new superhero or -- annmarie: i will go back for gladiator ii in the theaters. jonathan: i'm going to watch

gladiator this week in. i love the original. i mention i will be disappointed by the sequel. i still will torture myself with that. coming up next, donald trump's treasury secretary. >> widow trump presidency that delivered low inflation, high wage growth and good economic growth, especially for working americans. i think it is absurd to say donald trump be inflationary. jonathan: the latest on scott bessent. that conversation. good morning. ♪

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let our expertise round out yours. are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star. great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one. jonathan: equity futures are up across the board come a rally in the bond market. euro-dollar 1.04 84 positive

donald trump secretary -- treasury secretary. plus we had a trump presidency that delivered low inflation, high real wage growth, and good economic growth, especially for working americans. i think it is absurd to say donald trump would be inflationary. if by yields go up, they would be going up because there is a great impetus in the market would price in a higher growth trajectory. in my mind, it will not be because inflation will be going up. jonathan: the latest this morning, the wait is over. president-elect donald trump picking scott bessent for treasury secretary. "freddie bessent treasury nomination and economic team of rivals is more evidence that trump's economic policy isn't a settled thing. there are no guarantees bessent is the top trumpet economic advisor or is able to drive trump policy in congress -- both requirements of the job."

terry, let's take a step back and think about the process over the last few weeks. is there signal? >> the signal i take is that the policy is still developing. you have -- that is not unusual for incoming administrations. you have a lot of people as you've seen, people wrestling around what their priorities should be and what the policies should be on all kinds of matters. economic policy is no different. now you have this situation where bessent and lutnick are -- were duking it out over the treasury department. they are both going to be relatively close advisors. they will be joined by some other people as well. that is not completely filled out. the question will be, who is going to be the most effective? who is going to help sell the policy? frankly, who is going to be the lead horse whisper for the president? >> how important is it to have

someone at the nac that can bridge that gap between treasury and commerce? >> i think it is very important. the nac position has grown in stature over time. it has been 70 in the last few administrations -- for somebody in the last few administrations who is been closer the president in one way or another. in a third voice is going to be necessary to make sure the best policy is going to happen. annmarie: given what you know about scott bessent who has won out over this two week soap opera, what do you expect him to want to prioritize on day one? >> well, bessent things about this very much the same way i do, which in the clip you ran says it, trump is not going to politically and practically trump is not going to want to take a situation where he won in part by saying trump can fix

what biden-harris caused and immediately launched into an economic policy that doesn't start fixing things or arguably makes things worse. the three things i would say about bessent briefly are positive, neutral, negative. positive, he is practical. he comes from a practical background and mar. the team of rivals thing we have talked about, i think is very much leaves economic policy somewhat up in the air. thirdly, what you have to remember is the treasury secretary is what he or she is but those people are staff. if you think that bessent is going to have a free hand and some of this stuff, i advise you to give janet yellen a call. markets. four years ago yellen is going to moderate a lot of the more inflationary aspects of the biden policy coming in and oops that did not happen at all. bessent -- nobody is going to

hand bessent the reins. he will have to work for them. lisa: "the new york times" put it as ideologies merging. revenge team, looking at for example the idea of ripping apart the justice. and the government shrinkage team which is elon musk and vivek ramaswamy. any world where these three ideologies peacefully coexist? quotes "the new york times" is big on ideology. i think this is less so. what it really is is a scrambling for what their priorities of the administration are. one of the many ways -- i don't dis debrief that musk and vivek ramaswamy have. i wish them well. i wrote in a piece a week ago, i am for at least half of what they want without even knowing what it is. that is how over bloated the

washington bureaucracy is. they have a big job in front of them. but the likelihood they achieve any of those, as everybody is pointing out, is slim to none. ronald reagan found that out and what he focused on was economic recovery and that makes most sense for trump as our president, it makes most sense for trump is a lame-duck president who is trying to become their bridge into a next republican president whether that his fans or someone else. annmarie: one ideology stood out to me that is in all the health care nominees. this is a bit far afield but you see the s&p farm and biotech index down some 6% because since the beginning of this, is there some real sense when you talk to market participants are you telling them, yes, this is going to be a real breakup of the norm when it comes to health care? >> i tell them i think it is going to be incremental at best. what you have in bob kennedy --

and he is not alone h put congrn are meant to be disruptors but at the same time don't really have any experience or serious idea about how to disrupt and how to do it effectively and well. the biden administration is useful in this as a comparison here, drug pricing was a very big deal to these people. and after four years, pretty much all they got was an agreement on renegotiating the prices of a few drugs under medicare part d. they did not even roll that out quickly. people underestimate the time and the effort that it takes to turn the battleship around. jonathan: terry, thank you for your input, terry haynes. manus cranny was talking about this this morning, markets move really quickly.

washington, d.c. does not move quickly. annmarie: the one hurdle for scott bessent. does he understand how slow the washington complex actually works? jonathan: that conversation will continue. i'm next, we will catch up with michael darda. that conversation is just around the corner. ♪ ♪ ♪♪ the black friday sale is now on. visit sandals.com or call 1-800-sandals

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jonathan: five-day winning streak on the s&p 500. equity futures up. outperformance on the russell. there is a rally in the bond market. two year yield is lower. lisa: scott bessent has made a real the reasons why he is so passionate about getting into service which is the reason why treasury markets are relieved thinking this is somebody who is not going to allow president elect donald trump to actually get this deficit sky high. how is he going to do it? he has talked about issuing debt as opposed to concentrating issue to the short end. can you affect that with this kind of -- jonathan: can i offer some

different framing? ffer some different framing? this move today is not about who he is come it is about who he isn't. we had a really good list of four people. there was a fear there may not be one of them, might be someone from way out there. who knows, like the dark horse candidate we were talking about was senator hagerty. could have been completely different. if you look at some of the other cast characters come actually plopped from fost -- fox news. could have been a financial journalist. who's to say? i think that is right. everyone talking about a dark course being someone who still a topicality of her individual who the market would have embraced a seven to steady the ship. the real dark candidate was someone no one was even talking about. if this tension continued to brew at mar-a-lago, potentially would've seen that. jonathan: unlocking dollar weakness. you see that across on the dollar weaker against everything, including the euro,

yen, and sterling. trying to extrapolate these moves a year, six months, three months, days. lisa: this is in a brace of someone who wall street really has raised. i think that is the issue. there is a nod to the idea that donald trump does not want to disrupt markets and to the extent he wants to rip up the norm, that is not the case when it comes to wall street. the details will matter but not right now. that is the reason why for now we can say this is a relief rally. your point, how long can it continue? jonathan: if you're just joining us come the top story over the weekend, donald trump nominated scott bessent for treasury secretary, he is telling -- annmarie: economic lollapalooza when it comes to boosting energy dependence and offering up some

of these tax cuts into lisa's point cutting the deficit. how does this, what is the sequencing of this remains to be seen, especially if there is this cast of characters and it is arrival character. he made his money looking six months, 12 months out. huge bets. we are talking about trades this man put on with the likes of george soros and stanley druckenmiller betting against the bank of england, betting against the bank of japan. it is interesting. in one of opinion pieces on bloomberg it talks about his colleagues talking about his uncanny ability to read newspaper six months ahead of time. now will have the ability to potentially be on the others of those trades. jonathan: guardrails, checks and balances. really important observations over the past week alone. we have had some people come out with conspiracy here is that elon musk is somehow some shadow vice president.

elon musk we've ended up with scott bessent. .2, some other people it made this point donald trump my president-elect will have unchecked power in congress. i think we have to make two observations there as well. one, we ended up with a very different set of those arguably some of the people closest to him wanted. two, they are not just going to fold over in the senate and give him everything he wants. that is why matt gaetz has dropped out, while we had a second aging pick. i think we are getting a better read as time passes by on just how strong the checks and balances will be in certain places. lisa: this is giving people a sense of calm in the markets that you cannot move too quickly. i would caution that it is early days. maybe he did not have influence with the scott bessent pig. at the same time, there was a call with google over the weekend with donald trump and elon musk was on that call. that was an unexpected -- this

is according to reporting by the information. i don't still have a clear sense of what the first but he actually is and what kind of influence that is. at the end of the day, donald trump makes his decisions and that much has been made clear into the extent elon musk had unfettered access, well, that was just tempered. annmarie: scott bessent is the most recent but rick scott with the other one. elon musk was pushing for this individual. you can see his political influence goes just so far. at the end of the day, it is donald trump's decision. jonathan: just reading the tea leaves. the biggest customers are looking to reduce the reliance on the chipmaker. amazon web services, alphabet google cloud platform developing their own chips. amazon standing with the broadest portfolio of custom chips. lisa: first, amazon wants to

counter nvidia. how much do all of the big tech names want to actually support that effort simply because they don't want nvidia to have such an upper hand? there is also this investment and made with his ai start up. they invested something like $8 billion in his ai start of basically saying to them, please, one crew i can say it is use our chips. that ai start up i said, ok, we will but it is important to have all chips, including nvidia. so there are limits to how far you can use nvidia -- excuse me, amazon's chips in the at large thing which models. jonathan: i wanted her to the story as well, nato saying they discussed a range of global security issues. waiting to see how the next administration will approach the war in ukraine. we caught up with the former judge prime minister a few times on this program over the years -- judge prime minister a few times on this program over the years. he asked the dutch prime minister's head, donald trump was right, and you said at the

time a close relationship there. and if he to become the head of nato, we would have a different relationship at the top between president-elect donald trump. annmarie: he was one of these individuals in the first iteration of trump that was almost a trump whisperer. he was able to do with president trump in a way you are not able to see say with angela merkel. when we spoke to him in january he said the u.s. accounted for about 50% of nato economic output during trump's term and about 75% of military spending. that is why they let him to bleed trump had a point. to this meeting, i'm not surprised they met alongside walls. january said you have to dance with whoever is on the dance floor. whoever that partners and that is who the american people elected. lisa: i want to know what this means for ukraine. margaret has been a proponent of ukraine's independence and ability to fight back. does that tempered? does that offer some sort of check to your points earlier that were spot on to donald trump's impulse to withdraw funding altogether? jonathan: we have got a lot of

issues on the last five minutes and they are big issues for 2025. these are issues think that has to grapple with most of investors are waiting minutes out tomorrow as uncertainty of the incoming administration's policies because the outlook for interest rates. michael darda writing "headwinds to the supply side from the terror struck and so are labor force growth will make the pet's job of getting a nominal spending in a non-inflationary manner much more difficult." mike, welcome to the program. i want to talk about labor force growth with you. take a step back from the conversation about 2025 and think of the last 12, 18 months. to what extent has labor force growth yelled out jay powell -- bailed out jay powell? >> great discussion this

morning. fed chair powell has said on many occasions that a rebound in the supply side of the economy has been very what has been a soft landing. the last six quarters we've had a situation in which real growth, real gdp has accelerated but nominal gdp has slowed down. one is the demand side the fed controls and the other real growth has been doing better because productivity growth has rebounded. part of growth potential is up, productivity, the other is the working age population. with stronger immigration flows, that is certainly helped on that side. what we see, nominal wage growth has decelerated pretty significantly. recessions typically happen when topline growth nominal gdp falters relative to slower moving cost variables that puts pressure on profit margins, leads to layoffs, and rising unemployment rate. so far the fed has been very fortunate that we have it ended up there.

what we are trying to say is anything that disturbs the supply side of the economy in this rebound in the supply side that we have enjoyed over the last six quarters will make the fed's job more difficult. jonathan: the federal reserve would prefer labor force growth. republicans have called it what it is, illegal immigration. republicans have been elected for many reasons. one is immigration. do you have any expectations come in a bestase assumptions on what 2025-2026 will look like in that regard? >> it is cloudy now. you've had a lot of verbal proposals out there on the tax side and the immigration side. obviously, i think there's going to be a strong effort to secure the border. beyond that in terms of deportations and how significant that is, i really think it is up in the air. lisa: basically were talking about how there are a number of checks on some of their

broad-based assumptions initially with the trump trade. you raise immigration and the question of the unknowns of how that will affect the labor force. but also the tariff trade. the i did this would somehow amplify inflation -- that somehow this would amplify inflation. that tariffs will be the opposite, deflation. and that could pressure things downward whether it is >> absolutely. you have to go back about 100 years to see an environment where tariffs went up dramatically across the board. that happened in the 1930's. that was a deflationary period. the fed was really responsible for that. it allowed the money supply to collapse by one third in nominal growth to collapse by almost 50%. those two things are not going to be repeated this time but a tariff is a relative price shock that is different from monetary inflation. a tear in and of itself is not going to lead to sustain higher

inflation on a repeat basis -- unless the fed is conducting inappropriately. the tariff shock makes it tougher for the fed i think in terms of trying to see through those supply-side shocks but in terms of what would drive inflation higher in a sustained way, it is really a matter of the fed and how it conducts policy -- monitor operations. lisa: a lot of people have been saying it is confusing to get a clear read. they make a lot more difficult. nonetheless, the consensus is the neutral rate will be significantly higher, at least somewhere between 4% there in about's. do you agree? do you think basically this means the fed just can cut rates as quickly because of the lack of certainty of what the end target is? >> great question on the neutral rate. that is really the answer to why is the economy not crumbled with

all these fed hikes and that there starting to cut rates and reversal. the answer is the neutral rate and a hot business cycle with higher inflation, we saw in the previous cycle, is much higher. so when fed chair powell began this rate cutting efforts, what was he saying? he was saying our policy rate is above all estimates that are mainstream of the neutral policy rate. that is no longer the case with the fed having cut rates 75 basis points in nominal terms. in real terms it is a little more because inflation expectations have bounced back modestly. now the fed has the policy rate sort of right in between the highest and lowest estimates out of the mainstream to quote a reference fed powell. it is going to be data dependency from here on out. the fed isn't sure where the neutral rate is. my sense is there is modestly will -- it is modestly

restrictive. if you look at cpi inflation from the sticky price sector, core, excluding housing, it is running about 100 basis points above the average from the last cycle. so if you tacked on 100 basis points to the peak fed from the last cycle come that takes you to the low and mid threes for the nominal fed funds rate. so that is below where we are today but much higher than the fed policy rate peaked in the last business cycle. the neutral rate is higher. that does not know exactly where our star is. probably now more confident that they are not above all estimates of neutral. lisa: what does that mean for the fed in december, michael? >> it means we could be getting close to a pause. it will really depend on the flow and data. markets still think there's more of a probability they cut another 25 basis points but after that, i think things

really slow down and it depends on the flow of data. probably more weighted to these labor market reports. we have had some strange reports. going into december come and look like the labor market was altering into potential recessionary pattern and most recently, the unemployment rate has pulled back. october dado was storm distorted. i think we will need more information, the fed will need to see more data. i think they could be getting close to a pause here. jonathan: mike darda, thank you so much. little bit later this week on the bond market this morning camille yields lower by five basis points on a tenure. with an update on stories elsewhere, here is your bloomberg brief. israel's ambassador to the u.s. saying the country's close to a cease-fire deal with hezbollah in lebanon. unclear whether hezbollah would accept a deal. they fired at least 250 rockets and drones into israel yesterday alone. $11 billion share for bpm.

would make into the largest lender by total assets. the ceo also pursuant a merger with germany's commerzbank which is facing opposition in berlin. securing fourth consecutive f1 share in the grand prix over the weekend in las vegas. managing to outscore the rival, making them only the sixth driver and f1 history to win at least four titles. lisa: is an it kind of boring? he won again. jonathan: is a boring it that the fastest car? we can agree he did not have the fastest car. i think max is a beast and deserves a ton of credit. lisa: he will be the michael jordan of f1? jonathan: i would not go that far. up next on the program, a sigh

of relief. >> bessent has to remember the relative story here which is u.s. economy is doing far better than eurozone and others. the key is delivery. and also how does he reconcile what he aspires to come does that always align with what present electronic aspires to? you are watching bloomberg tv. ♪

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jonathan: the equity market rallies following a week of gains. a day of gains every single day last week. winning streak on the s&p. this morning, a sigh of relief. >> bessent has remember the relative story here which is u.s. economy is doing far better than eurozone.

the key is delivery. and also how does he reconcile what he aspires to come does that always align with what present electronic aspires to? the thing that was save, if i come it would be if the u.s. economy continues to perform well. growth covers a multitude of sins. jonathan: president-elect naming scott bessent to run treasury. safe hands candidate. really friendly in bonds. dollar witness following eight consecutive weeks of strength. jane foley is betting it to be temporary, looking for the dollar to move to parity around the middle of next year. jane, welcome back to the show. good to see you. let's talk about the dollar strength you expect to resume. what underpins it? >> thank you for having me. i don't really see an awful lot of carryover from the pullback we have seen today. we were still trading just above the 1.09 area quite briefly so

the dollar has made a huge amount of gains in the past few weeks. we did not know what the trigger would be. you can look at this pullback in a slightly different light and site isn't it amazing that euro-dollar has not gone further? that we are still trading below 105 this morning? and essentially, i think it is really important to not just look at the u.s. fundamentals but actually to cast a strong light on the euro zone fundamentals, too. and what we have in the euro zone is i think a week euro story and i think that is something that will pull euro-dollar lower. >> you said it is surprising not sing a bounce back with a catalyst. when it comes to the fundamentals, there was german as does confidence that came out overnight and it was worse than expected. so the actual data is it really backing up this move. do you get the since the bar is pretty low, that if given would get a little economic data that

is positive, get a bounce given the fact we have stabilized a little bit, maybe, for half a day in the dollar? >> i'm not so confident with the euro. one of the stories i think being really quite exceptional for the g10 affects market most of this year, certainly the first half of the year, in the summer months, too, was the resilience of the euro. the euro wasn't going down. i think part of that was this expectation that germany was going to bounce back in the second half of the year because we are going have incomes push higher, consumer was going to return. that hasn't happened. i think the market is going through this adjustment now of expectations which is fundamentally the german structural issues are going to take a lot longer to work through. so these adjustments with respect to the energy crisis for instance come the loss of russian energy come the fact that labor market is very different, much more constrained

in germany, the fact -- i think this is really important that the chinese market has not really changed. german manufacturers were exporting tools and a lot of that manufacturing, cars, ev's particularly come is coming back right at germany. if you look at what vw is saying and mercedes is saying, this big structural problems and i think they can probably welcome a weaker euro. lisa: given that we are seeing a bit of a relief rally, it is worth looking at scott bessent and the treasury secretary pick and what some of his views have been on the currency. in the past, is made a point of saying it is important to maintain the status of the dollar as the world's reserve currency. do you think that will underpin maybe a greater strength, maybe a move away from gold on the margins, and a structural shift toward parity for a longer period of time? >> i think it certainly could. bear in mind the dollar come dollar index has been slowly climbing higher since around

2010 anyway. i think this could accelerate the move. if we look at the rest treasury historically, there has been a strong dollar policy. we know there's a question mark with respect to trump's view because he was to address u.s. trade deficit in goods with countries such as china, etc. we know in is previous administration was a reason he would've favored a weak dollar but trump recently said he wanted the dollar to be maintained as a global reserve currency. part of having a stronger dollar is part of that because it requires confidence, implies it is a currency that other central banks want to have in the reserves. that does reinforce that view. trump gave the implication that rather than using a weak dollar to sort out the trade imbalances, instead it was tariffs that became that beautiful world. maybe trump, to come has changed his view for the u.s. dollar.

jonathan: jane, thank you for your perspective. jane foley. we are talking about how quickly donald trump might move. let's talk about a region that moves slowly. europe. on the morning where we are talking about $11 billion bid for bpm, they say commerce bank the probability for commerce big deal is lower than expected. the probability has been reduced but not zero. it is just and reduce. lisa: the german government doesn't want this and are basically going after a domestic company because it is likely they can get that through at a time when there is political turmoil across the continent most of jonathan: timeline will be longer. up next, the second hour is next. ♪

>> tariffs will have an impact on pricing behavior by companies. >> there has to be an offset. >> tariffs will probably the consumers and corporations. >> we definitely see consumers still being choiceful. >> the value shopper is working. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: the second hour of "bloomberg surveillance" starts right now as we face down a holiday shortened trading week, the right kind of week, the week that we like. you will get jobless claims on

wednesday. that is important. typically falls on thursday. we will not be here. you will get that wednesday. fed minutes in the next 24 hours. a really condensed trading week. lisa: the focus will be on pce. that comes out on wednesday. do we get the sense the ottoman disinflation will allow the federal reserve to cut by 25 basis points next month? that story that feels like an old tired sweater you are bringing out because suddenly you have nothing to wear because you have gone over all the other items. we have to see whether the fed will be colored by some of the changes in market expectation about the path ahead for policy as they give some of the projections next month. jonathan: we at least know who the treasury will be. equity futures up byt, this is e rally. can we call this a bump? two-year year, 10 year, 30 year. lisa: how long did you work on that? jonathan: came up with it over

the weekend. those moves unlock some dollar weakness. let's see how temporary this might be. euro-dollar a little bit higher. back around 105 at 10481. annmarie: he is the man for the job after two weeks of jockeying at mar-a-lago. everyone thought he would get the job and then tension brewed and other names were thrown in and donald trump went back to an individual who has been on the campaign trail with him, an individual who has been advising him for the past year about economic policy. things he talked about, deregulation, boosting american energy independence, and cutting the deficit. i imagine cutting the deficit is music to the ears of this market. jonathan: you could literally hear the sigh of relief from financial market participants. is it more about who he isn't than who he is? lisa: it is a good question. you made an argument about

removing some of the less friendly candidates from the scene. that on its face gives you the bessent bump. but on the other hand you have to wonder if the way he plans to reduce the deficit starts to come into focus. start to come into focus -- start to come into focus. this will be the year we make auctions great again, and scott bessent will be sure of it. jonathan: he will pick up from those changes and have to decide what he will do about it. lisa: he has been particularly critical that this secretary-treasurer janet yellen has been focused on issuing short-term paper. the expectation that long-term rates were going to come down dramatically, that this was a short-term transitory inflation and bump in rates, that has proven to be less so the case. now it is to determine out the curve and what people are questioning. jonathan: coming up this hour

over the next 60 minutes, we will catch up with david bianco with stocks on a five-day winning streak, about to be six. and henrietta treyz and clint henderson. we begin this hour with stocks higher and bond yields lower as the treasury pick scott bessent might be hailed as a stabilizing force. david bianco looking ahead to next year and writing this line. while a recession is not the base case, risks of overheating and macroeconomic uncertainty remain. good morning. let's talk about the risk of overheating. how very real is that risk for next year? david: the economy likely stays strong. i do think it accelerates. it stays at about 2.5% gdp growth. inflation being sticky, particularly because of services. that is an overheating risk. the other is excessive fiscal

spending. that is why with bessent markets, not just markets, the equity side has been excited about from ever since the win but this is good news for the bond market. concerned about the deficits. that is welcome news. the message of 333, that is good messaging so far. jonathan: let's get to the 3% growth, 3% deficit, and 3 million barrels of oil equivalence. that is important. you think that can be met, can be achieved? david: with the right balance of things like tariffs versus deregulation and lower taxes. 3 million barrels over a few years time additional to the about 14 million, that would hurt profits but is within reach. the 3% deficit, that is out of reach. but i am glad he is reaching for it and pointing to it, and i

think the bond market is excited to hear the secretary treasury being concerned about these deficits. lisa: how do you translate ideas in a muddied set of signals from some of the cabinet members have gotten selected? scott bessent market friendly crowd. others talk about ripping up the justice department. how do you put this together to understand whether you need to change or forecast for next year, whether washington will tap down any extremes and keep things the way they are? david: we are still learning so much about these policies but i am a markets guy so we are feeling good today. but this is an environment where who is to say where these policies are going to go in the right mix and balance of them and how other countries in the world respond to our policies with things like tariffs. it is still a risky geopolitical world. on one hand, prices might go down because of the mystic supply, but there is still a -- the domestic supply, but there

is still a geopolitical threat. probably still upwards. lisa: was this treasury secretary pick crucial? pending bond yields with someone at the helm who will be very trained on what exactly the markets say. david: the candidates were all good candidates. i don't think there is alarm in this area, but i do think this is a selection that people like myself say this makes sense, this is a thoughtful person, and experience with markets. one of the things the secretary treasury does is deal with problems, particularly problems with markets, problems with funding, keeping confidence in the u.s. bond market is an important thing, so right person for the job. lisa: he has been very critical -- annmarie: you think he will push that out to longer data debt? david: if you go back to a few years ago when 10 year were where they were, 1%, everybody

has to wonder, why didn't you take more advantage of that? why didn't you do what mortgage borrowers did, but that is hindsight. and from here, making sure efforts are made to bring the deficit down. i think the deficit is almost like a high pe multiple on a stock and the only way to keep markets calm about that is to deliver growth so that is why i think delivering growth and the 3% on real gdp growth is an important part of the three-point strategy. annmarie: the one thing you do not think he will be able to encompass as cutting the deficit by 3% by 2028. if you were to get it, how long do you think it would take? david: to get the deficit to 3% under the entitlements we have, it is very unlikely. annmarie: ever? david: it is unlikely in my view. if it is achieved over a handful of years or the next four years,

hamilton will go down as a great secretary-general. jonathan: at a time when unemployment is close to 4% and gdp is really robust. the idea we could get down to 3% is a worthy goal, but is it achievable? lisa: this is why people are skeptical of it. what is your most contrarian call going into next year given that a lot of the goals to reduce the deficit and keep growth at 3% seem unattainable? david: being contrarian or even skeptical has not been very useful the past few years, so i looked for, where are good fundamentals still at a price i will not bicker with? i would say for the coming year that is still financials. i would not bicker with those health care is an area that i think has still been overlooked for a long time because of so much excitement in technology and digital, but very good earnings growth, very good long-term prospects and tangible assets, very high in valuations.

so capital goods companies, that is what i like. more oil, perhaps lower oil prices, but it is good for everything combustion whether oil services or a fighters, but also diesel engines, things like that. lisa: health care stocks have been down since the election because of some of the picks and the quesu lean into that at allr see it as an opportunity? david: we see it as an opportunity. the health care sector has generated really good earnings growth over bigger challenges than this. we know with the republican sweep, they will probably make some changes to these policies, but health-care spending is going up and the innovation we see at most medicine makers and medical device makers, we are encouraged with that and the valuations. jonathan: it is good to see you and to see you in person as well. slightly distracted around the table in the last few moments

from macy's numbers. the numbers themselves, absolutes news relative to the headline -- absolute snooze relative to the headline. a single employee with a responsibility for small package delivery expense accounting intentionally made erroneous accounting entries to hide approximately $132 million to 154 million dollars from the fourth quarter of 2021 to the fiscal quarter ending in 2024. the individual who engaged in this conduct is no longer engaged by the company. shocking. lisa: it is shocking and why they are delaying their earnings call until they finish the internal investigation of what happened. to put this in perspective, macy's recognized 4.3 6 billion dollars of delivery expenses. this is -- $4.36 billion of delivery expenses.

it raises a question of why someone would intentionally hide more than $100 million. what are delivery expenses? is it basically when you ship and get it returned? jonathan: many questions and not many answers at the moment. macy's stock lower by 2%. any more headlines, we will share with you. here is your bloomberg brief. a dhl cargo plane flying from germany to lithuania crashing. one crew member was killed and three others were injured. the boeing 737-400 was attempt to get emergency landing when it crashed. an investigation is underway to determine the cause. a rally in the s&p 500. scott saying the index could hit 6200 by the end of the year with euphoria accelerating across equities and crypto. he also pointed to increasing demand for buybacks, another typical year in trends.

according to aaa, a record-breaking 18 million people will be traveling for thanksgiving this year. a lot of gas prices may influence people to hit the road. $3.06 a gallon average as of yesterday and it could fall by thanksgiving. that would be good news. lisa: yeah. i am googling right now, worst thanksgiving traveling days. trying to figure out when to guard. jonathan: thursday morning is the best time to go. lisa: is that your prescription? jonathan: i have been on a thursday morning flight before. lisa: you think lights are good? jonathan: that flight was good. lisa: wednesday, terrible. don't do it. jonathan: i don't think i have ever done a wednesday. annmarie: what about driving? jonathan: i can do some research for you in a commercial break. i would imagine thursday mornings are pretty decent. up next on the program, a safe pair of hands. >> it is not bad news definitely because with trump's

appointment, it could have been somebody very pro tariffs, cutting taxes, the worries wall street had. jonathan: that conversation up next that conversation up next. , good morning -- live from new york city this morning, good morning. ♪

jonathan: live from new york city, welcome to the program. equity futures on the s&p 500 firm or by 0.5%. a rally in the bond market. let's see if this sticks. 4.3649%. under surveillance this morning, a safe pair of hands. >> it is not bad news because with trump's appointment it could have been so many very pro tariffs, very much cutting taxes but no offsetting fiscal

discipline. those are the worries wall street had. based on what we know so far, that alleviates some of those. jonathan: this morning, traders trump's next treasury secretary who will prioritize economic and market stability. looking for republicans to hit the ground running. as early as january 3, investors could learn the deficit appetite of the republican party as it prepares to write a massive tax bill to stave off tax hikes on january 1, 2026. this is the single most important variable in the 2025 tax debate, in our view -- in their view. henrietta: january 3 is when the next senate is seated. we will have a speaker in the house. you can get to work with the budget committee members with the senate numbers and house ways and means committee members

and start legislating. the first step is the budget, and that could start as early as january 3, and that will include the authorization that they are willing to swallow going into next year and the tax bill. annmarie: how much do you think the text ceiling fight will be a nothing burger this year because we have congress and the executive branch all withheld by glb hands? henrietta: right. historically, it is the problem specifically in the house but there are a number of senate republicans who did not vote to increase the debt ceiling so this is a tricky issue. i think the path of difficulty but least amount of democratic incurred pain from the democratic party is going to be if they include this in a reconciliation bill to pass the tax cut extension along with the debt ceiling at the same time. we all know you could do a debt ceiling increase with only 51 votes in the senate a few attach it to the reconciliation package. this has the other political but

if it of needing to be done by roughly july -- benefit of needing to be done by roughly july. and that is six or seven months before i expect the tax bill to pass, which would otherwise be december. the debt ceiling actually serves to pull the tax bill forward to july instead of december. annmarie: this is really interesting because you are saying they will loop all of this together. i am thinking to myself treasury only has a certain number of months they could pay the bills. we could see a tax cut much sooner than people were expecting. what do you think gets in? because donald trump proposed a ton of tax cuts, and obviously not all of them will become policy. henrietta: this is where i really want to see what scott bessent does at treasury. it is easy to think of the republicans controlling everything, but next year it is very much going to be the white house versus the house versus

the senate. and scott bessent will be responsible for trying to drive some of the president's tax agenda, which includes things like eliminating taxes on tips or social security. that social security component costs $1.8 trillion. so adding that onto the bill at trpetite have to expand in congress, or it is going to increase the scale of the bill from $4.6 trillion to over $6 trillion. i really am interested to see what the treasury secretary of prioritizing some of the things trump wants in this reconciliation bill that house members and senate members have no interest in. lisa: we always say personnel is policy and we finally got the key personnel decision of who will run treasury. with that in mind, how do you see the sequencing of tax cuts versus tariffs? henrietta: the tariffs have to come first. but only because the tax bill will take all here to write, it will be incredible to -- incredibly difficult to get this

over the finish line whether or not they include the debt ceiling. those fights will start january 3 but there is a false impression that this will somehow be easy. the tariffs will be run by a trade czar at the white house, ustr, or a combination of pieces. my execution is they label china in violation of the phase one trade agreement and that kicks off a process that roughly by april 6 according to my calculation of the mechanism in the phase one trade deal you start to see tariffs increase april, may, june. lisa: we are talking about how the republican congress will potentially push back against some of trump's policies. we have seen some of the picks vetted significantly. matt gaetz dropped out in part due to opposite the republican senate in particular will not just give a blank check to donald trump? henrietta: i think that is a great point.

the list is growing expansively. there are at least five to 10 who are willing to come out publicly and say in my home states of the dakotas or iowa, kevin cramer, rand paul is permanently against tariffs, who are coming out and saying not on my watch. then there are others who are incoming senators. i think john curtis is interesting to watch, a new senator from utah, to see how he responds to some of these picks. members who are up in 2026. thom tillis will have the most expensive senate race in the country in 2026 and is already preparing for a general and primary campaign. and then you have susan collins in maine, who could retire or announce her retirement, and that would put her into a much more kyrsten sinema, joe manchin type of place . lisa: how much will they push back against some of these cap nitpicks, especially the controversial ones -- some of

these controversial picks -- some of these cabinet picks, especially the controversial ones? henrietta: i think there are a lot of members that they are already raising issues with and this will all come out in the senate confirmation hearing process, and the more controversial they are, the more it eats into trump's agenda day when initiatives. annmarie: how long will confirmation take place? henrietta: they usually do the big ones first so defense, state, treasury. those will be done by the end of january, i suspect. the president will be inaugurated on the 20th. some of these names have been sworn in by the 26th for example. a couple of those will move quickly and the rest will take the remainder of the first quarter. annmarie: i would love to briefly get your thoughts about the one position that is key to donald trump's economic

policies. what is going on with ambassador lighthizer? henrietta: i think if ambassador lighthizer were to come back, that would be a lateral move. i would not be surprised if the general state of chaff or general counsel took over that role. i am at disappearing something like a trade czar component which oversees commerce, which has authority over section 232, i think given the import and scale of tariffs on trump's economic agenda on offsetting the cost of the tax america faces the world, it makes sense to have a czar and he has shown a willingness to do that with doge, these sort of not normal and not necessarily sworn in cabinet member positions and not necessarily sworn in cabinet member positions.

-- not normal and not necessarily sworn in cabinet member positions. jonathan: appreciate your time as always. when i think of tariff men, i do not think of trump. i think of ambassador lighthizer. still waiting to see what position he has if any at all in this administration. annmarie: 301 lives in ustr. when you talk to people in washington, d.c., whether they like tariffs or not, whether they like bob lighthizer or not, no one knows trade like ambassador lighthizer. interesting to see if he comes back in trump 2.0 because he was monumental when it came to the first iteration of the trump administration. jonathan: we have part of the picture with scott bessent this morning but we have to wait to see who will be the director to complete the pitcher of what economic policy is and what the emphasis will be. lisa: the pitcher we have gotten is a team of rivals and early

reports on what goes on in those rooms consists of a lot of yelling and name calling. i have to imagine on one hand it is bringing it back to the old parliamentary days of screaming at each other to hash out policy. one is that a positive thing to try to hash out policies that canjonathan: it worked so well n the united kingdom. what are you talking about? they want to see more of this. i would love to see that. coming up, clint henderson as the holiday travel season begins. ♪

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jonathan: two hours away from the opening bell. equity futures with a little bit of a lift that fades. on the s&p we are still up by 0.4%. session highs on the russell. a robust gain of 0.8% on the small caps. >> good morning. when it comes to squeezing the return on your insurance capital, blackstone does a deal with eqt. what is the deal? blackstone gets their hands on the cash flow from the pipeline deal. natural gas pipelines, a joint venture with eqt. what does eqt get? they have to pay down debt. for them, it is all about paying down the debt.

for blackstone, it is about generating. just think back to intel and apollo. you will probably see more of these deals. macy's. an erroneous accounting issue. an employee hit $132 million to $154 million of delivery expenses. down 3.5% at the moment. was down worse. they have actually delayed the official release of their results, but for the third quarter they told us sales are down 2.4%. same-store sales in the lighter than -- sales a little lighter than the market expected. tesla up 2% this morning. ubs have a note out and raised the price target from $197 but still have a sell rating on this, saying you have an exuberance, animal spirit in this stock.

over the weekend, elon still promising. driving but offering -- promising full self-driving. at the same time, you still have 0% financing on some of those models. good morning. jonathan: good morning. we will see you again in about 60 minutes with movements toward the opening bell. president-elect donald trump his pick for treasury secretary.hedge funds manager scott that hedge fund manager scott besson -- hedge fund manager scott bessent will have his hands full. celebrating another adult in the room. lisa: it is not as good. bessent bump is better. kudos to you coming up with it over the weekend. this highlights the key question, how long will this take? the bessent bump will last in the market at a time when he has proven to i don't

want to say a fiscal hawk but at least a rhetoric giving people comfort. annmarie: he cares about the deficit unlike others who throw ideas at the wall and want to increase fiscal spending. they worked with scott bessent at george soros and put on some of the most famous trades in the world. a lot of that was looking at the micro. he said the micro leads the macro. why they made this massive bet on the pound. he is not only a market participant was very fluid and comfortable in academic circles. the one criticism about bessent or hurdle will be dealing with washington, washington speak to how slow things work, and being comfortable academic circles will help him. jonathan: literally the most well-known macro trade of all time was the bank of england. soros gives the celebration and handclapping and he becomes famous for that went it is miller and beneath bessent that

come up with the trade. lisa: you cannot underemphasize just how long he has studied the macro trends and how good he is at it. here is the question. really to me i have to go back to his quote from an event in june. we are going to have to have some kind of a grand global economic -- grand economic reordering. what is that grand economic reordering, and what is his vision for it? that is a key question right now. jonathan: i can tell you the tariffs are part of it. look at where the apple ceo tim cook is, visiting china for the third time this year as officials in beijing prepared to meet with top ceo's. trump's threat of 60% tariffs on trade goods. apple makes the majority of its iphones in china. lisa: tim cook is a stealth diplomat. this is his third visit to china this year.

this morning, front page of the wall street journal, how he dealt with the personality of donald trump. that is why he is a great executive, because he calls and others don't. tim cook got a lot of what he needed in terms of carveouts during trump 1.0, and it is because he went in with and ask -- an ask and focused on the ask he needed and was successful. can he be successful this time around? we have had others come on and say there will be no carveouts. jonathan: it is fair to say they are calling out. lisa: they are calling out and saying, find me someone who can make an iphone. find me who can do it whether it is in india or somewhere else because i am looking. jonathan: u.s. officials saying israel is potentially days away from a cease-fire deal with hezbollah. the ambassador to the united states saying a deal could happen "within days." his real continuing strikes on

beirut overnight after has below fired 250 rockets -- after has below -- after has below -- after hezbollah fired 250 rockets. annmarie: the 60 days is interesting because you are dealing with a lame-duck president and basically what he wants to do is at least get a cease-fire and potentially open the door to a cease-fire in gaza and a hostage release before he leaves the white house. jonathan: that is the latest on the middle east.let's turn to holiday travel . nearly 80 million americans expected to travel. travelers have lots to say on price versus convenience. clint joins us now. good morning. best day to travel, which date is it? clint: not, tuesday, wednesday, or sunday after thanksgiving. jonathan: thursday.

clint: thursday morning is perfect. jonathan: is that driving? clint: driving too. lisa: thank you. im screwed -- i am screwed. clint: we polled, and 50% said price, so price wins overall. but a lot of people are traveling. a lot of people are worried about things so the poll results were interesting for us. people were willing to use their points to get a deal and their miles and that kind of thing. lisa: all i can say is the deals i am getting are worse and worse with points. can you work on that? it is becoming annoying. they are becoming meaningless like the argentinian peso. clint: you have to start finding the outside the u.s. programs. air france, that is where you find value these days. annmarie: i imagine if you did

not book for thanksgiving, you are screwed this week. one is the best time to book for thanksgiving and are we too late to book for christmas? clint: here is the thing with christmas, every day from now until christmas will be more expensive. while we passed the sweet spots, you wanted to have booked about a month ago.we say book christmas by halloween and try to book thanksgiving and little earlier than that. every day you wait from now on will be more expensive every day you wake from now on will be more expensive. -- every day you wake from now on will be more expensive. here is where points and miles come in. the other thing we found with a company called points path is you will get less value per point generally for holiday travel. but if you are looking at a $2000 flight and you can use points to do that, then you are coming out ahead. >> so who is giving the best deals? clint: right now, we are seeing

cash deals are the best. we do deals every day at the points guy and i rarely find flights to europe under $500 round-trip, which is pretty good. the one area of the round that is expensive right now is asia. a lot of people want to go to japan especially, but the u.s. dollar is superstrong so that helps ease the burden of higher airfare. but if you want to go to hawaii during the pandemic come out of the pandemic, or florida or las vegas, those places are much cheaper now than they were two years ago when the search of travel demand happened. lisa: i love that we all had revenge travel that when in waves in tandem rolling from one part of the route to the next. i am wondering how much of your time you spend and feel like a credit card and a list more than even a travel specialist at a time when airplanes are increasingly just apparatuses of the credit card companies. clint: it is really interesting. i got into this hobby. i was a tv news person.

i got into miles and points because of my credit cards so my credit cards were my entry point. but to your point, points inflation is a real thing and we are sweet spots everywhere. you have to do more research. that is why my company where i work is such a fun job for me because i get to find the seats to paris. jonathan: do you find one more than others, finding the best seats, finding the best deals, one company more than others? clint: right now, air canada, air france flying blue, you can find some insane deals. american, aadvantage miles, i still find a lot of deals. you have to be flexible these days. i was just looking for flights from estrella. 350,000 points one way -- from australia, 350,000 points one way. i will not do that so i will

time my trip to get the best deal. knowledge is power. jonathan: let's talk about experience. there is a big business audience listening and watching right now. who has the best experience out of the big three carriers in the united states? clint: delta is certainly charging a premium because they are sort of building themselves as a premier airline. jonathan: don't worry about price. clint: i would say delta and united are fighting it out. american has had some struggles. and i think the value in the program is still with american. lisa: there is also critical to inflation in terms of the number of credit cards trying to get in on this. how do you decide when it is worth it to get involved? is it really worth it? clint: there are a lot of credit card sign up bonuses that you do not have to pay for. one has one where you get 60,000 miles for paying the annual fee.

it is pretty remarkable. there are plenty of sign up bonuses that do not have spend requirements. if you want to be the top-tier and you want to have all the privileges, you have to spend a lot of money these days. annmarie: please ask you before about price or convenience and you said everyone is doing for convenience. is that because it is thanksgiving and the holidays and stressful? do you see times were people leaning into wanting to get the best price? clint: yes. the consumer is very sensitive to price and one of the reasons prices have come down slightly for airfare is the airlines get a little ahead of themselves on some of the pricing, especially out of the pandemic when they could. i think people have rationalized their spending and little more on travel. you have seen a return to normal along with capacity increases from the airlines. we are seeing price normalization i would say and the consumer is always the most sensitive to price. jonathan: can you reveal the concierge key secret on-air, the

actual threshold to be treated real well? clint: it depends on what hub city you are flying from. if you are from dallas, they will probably not invite you to be a concierge key, even if you spend a magical $60,000 to $80,000 a year. jonathan: just on tickets? clint: just on tickets. jonathan: if i pretend i live somewhere other than dallas, i have a better chance. clint: if you live somewhere where they are trying to build their business, they are more likely to invite you. but the people that are spending $60,000 to $80,000 on airline tickets, they don't need upgrades. why are they rewarded the most? it is not fair. jonathan: i agree, it is not fair at all. they get to board first. that is what i think it is about. clint: they do, ahead of people in wheelchairs. jonathan: they do. lisa: what is it called, gate lice? i love this. basically if you get to board

with group 1 and you do not have a group one -- [laughter] clint: i am one of those people. jonathan: people that fly business class for the first time and assume they are boarding first. i know those people. good to see you. let's get you an update on the stories elsewhere and did some news. macy's is delaying its third-quarter earnings due to an investigation. the company is saying a single employee responsible for small package delivery expense accounting intentionally made erroneous entries to hide about $132 million to $154 million of expenses. macy's saying the employee no longer works for the company. that stock is down 2.5%. hired smbc nearly all of japan's top banks poised and what is to be the biggest buyout deal of the country. andy murray is returning to the

tennis court to coach his longtime rival novak djokovic. he told the associated press he will have djokovic repair for the 2025 -- prepare for the 2025 australian open. very cool. lisa: interesting because he dropped out from injuries and a list of things. he is a eaer, but how could he stay away? jonathan: looking forward to it. up next, the bond market finding stability. >> this nomination is really good news in that it takes away some of the tail risks and really sets a path for the u.s. economy onto something that is really strong growth but also good news for the rest of the world too. jonathan: columbia threat needle, up next -- thread needle up next. ♪

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jonathan: welcome to the program. national price action for you. equities right now in the s&p up by half of a percent. the 10 year, 4.35%. the bond market finding stability. >> in the last week or two what we have seen is an unwinding of the trump trade but more because of concerns about some of the extremes of the policies. this nomination is really good news that it takes away some of the tail risks and really sets path back for the u.s. economy onto something which is really strong growth but also good news for the rest of the world too. jonathan: the bond market showing signs of steady. with inflation calling and that federal reserve conditioning from rate hikes to a cycle of rate cuts, bonds are poised to perform well in 2025.

welcome to the program, sir. let's talk about your call for next year on the federal reserve because it is different from what i will hear from deutsche bank tomorrow. they have been through the whole of 2025 and maybe one cut in december next month this year and then he things they are done. why do you think they will go to three and even lower next year? gene: good morning. thank you. the difference is the fed has to disprove 1996. 1996 is that example when the fed after a period of having raised rates aggressively started reducing rates in 1995, did so by three quarters of a percentage point, which is what we have seen so far, but then they stopped to the markets's surprise. why? was it inflation reemerging? it wasn't. it was a reacts on the ration in the labor market -- it was a

reaction to the labor market. you have to believe the labor market is going to be accelerate again. it is possible but we have not seen it yet. lisa: do you believe the market has gotten ahead of itself and pricing in the election will be to really change the economic outlook for next year? gene: look, policies do have real outcomes, but i think the market has gotten ahead of itself a little bit. we have seen this administration before, but we also have to remember the starting point is different and the starting point matters. we had negative real interest rates in trump 1.0 in 2016, and now we are starting at a much higher place in terms of interest rates. we are in the unique position we have not seen many times in the last decade were interest rates are actually above the path the fed itself is forecasting. even if that forecast path moves up a little bit, i don't think it will structurally change in this environment given how much inflation has declined. lisa: this is almost contrary and given what we have heard and what we hearing tomorrow

in terms of the fed's path and what that does for benchmark rates across the curve. i am just wondering how much conviction there is, how much you are seeing and going into longer-term treasuries at a time when other people are saying maybe europe. gene: i would not say going in with both fists, but i do believe that there is value in high quality bonds. and i think it is a very easy thing to sit back and lazily say interest rates have to be heading higher because inflation will be heading higher due to tariffs for instance, but i think if we look at the treasury secretary pick this morning, i think it relates very well to what i would classify as the two scoreboards the administration will be looking at, and those are the equity market and the inflation rate because frankly inflation is part of the thesis that helped this at ministration get elected. i don't think they will let inflation get away. i think in that environment it is likely to continue towards lower neutral interest rates towards that 3% area.

annmarie: when you look at how the market is reacting to scott bessent, is it because he is a known quantity or they think this is a steady pair of bands and not someone that is on -- hands and not someone that is on a different list that no one was expecting? gene: i think it might be a ladder -- the latter. it is a comforting signal. there are actually alarmist characters that were considered. so in this sense, the markets are comforted for now. the truth is we don't really know. we imagine someone that takes deceit assigning up to a pretty aggressive tariff policy but hopefully one that is a little more targeted than broad-based. annmarie: do you think with a name like that when you say broad-based that tariffs will be a negotiating tool and not a blanket response? gene: i suspect so. you will certainly hear the headlines every single day, but again, we had material tariff conversation in the trump 1.0 administration.

we saw a material decline in china's share of u.s. imports. we have seen also the growth across a providing of countries including mexico, canada, and others. that will gradually continue to be the case. but it remains to be seen exactly how broad-based they are in terms of that initial rifle shot. lisa: one company after another has come out and said they preferred credit to the ration -- to duration at a time when it looks like the economy will be pretty good in the united states, and there are questions around the duration component. would you reverse that? are you confident about the duration than credit, which has been up considerably? gene: i would probably take the other side to be honest with you. i think it is easy to say i feel good about credit from a fundamental standpoint. we would agree there. leverage is in a healthy place, particularly if we look at the investment-grade universe from a margin and leverage perspective. those are each about the

healthiest they have been in the last decade. but the question is, what will you generate from an excess return perspective when the credit is at the most extensive it has been in more than two decades? from a direction or real interest rates standpoint, it is the other way. all of the indicators are leaning on the cheap side rather than the expensive side. i would be careful about getting too excited on credit. we like the fundamentals but like to stay shorter in the credit markets. jonathan: have a wonderful thanksgiving. reminds me of a quote from goldman sachs shared with you last week. it is worth repeating. investors will likely enter 2025 severe valuation constraints in more than two decades in credit. lisa: basically looking at spreads that in high-yield lead is the tightest going back to 2007 so you are talking but a price to perfection type of moment at a time when there are real questions around what higher rates for longer would do two profiles that have not yet

been tested because the debt has been termed out. jonathan: gene was talking but the differences between now and 2016 about why rates got lower and i thought, is that not an argument for why rates should go higher? this is not a market crying after stimulus. quite the opposite. gdp still robust and the budget deficit 7%. lisa: the one flight in the ointment is if they have to reduce the deficit, that will become something that constrains growth as well and that will not necessarily turbocharge things in the same way. jonathan: up next on the program, we will catch up with mike wilson of morgan stanley, a guest from barclays, and noel dixon. from new york, this is bloomberg. ♪

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

>> in the u.s. is the only engine of global growth right now. >> there is a lot of opportunity

of assuming the economy continues to grow and profits continue to grow. >> i think it will take a few more fed cuts to push the 10-year about 4%. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: taking of a brand-new trading week. shaping up for day six. equity futures on the s&p positive by 0.5%. outperformance on the small caps, the rustle up by one full percentage point supported by yields lower across the curve. 10's down six basis points, 4.34. the euro against the u.s. dollar, 1.0492. lisa: simply because it was going to be a progrowth scenario

from donald trump. now you have scott bessent who is aware of the deficit, he cares about the deficit, so people say he will put a ceiling on how high yields can go. and that, too, is good for caps. annmarie: the market is welcoming someone who understands and has a deep knowledge of financial markets like scott bessent, put on famous trades of our time. someone who cares about the deficit. this will be the face of trump's policies, but what is interesting is this cabinet of rivals. how much will there be push poll when it comes to tariffs, tax cuts, and the sequencing of both policies? jonathan: the missing piece, national economic trade council. where does bob lighthizer fit in it at all? lisa: it's a great question

given that scott bessent wants to use tariffs more as a negotiating tool versus robert lighthizer, as you said, is the tariff man. wants to create a bigger division between the u.s. and the west. annmarie: does he go to ustr and welcome throughout one tariffs, or does it become this trade czar? this is an individual, donald trump, who ran on the idea that tariffs is a beautiful word, should be using them. we don't even know if lighthizer is entering trump 2.0. jonathan: coming up, mike wilson of morgan stanley. adrienne yih as a short holiday shopping season begins. frances donald looking ahead to this week's economic data. the postelection rally picks up steam. investors welcoming the pickup scott bessent. mike wilson writing, with hard landing risk reduced this fall,

business cycle indicator showing signs of life and potential for animal spirits rebounding past the election, the path of earnings growth should be upward. good to see you. how unusually wide are the outcomes for 2025? mike: about the same as midyear. the outcomes of the election, economic outcome, rates, policy, is also wider. we have to take that into account. we did a pretty good job moving that around this year. as the economic outlook changed, that is the game now, trying to get ahead of these pivots. it will remain uncertain. you were discussing the new cabinet positions. they don't even know yet, they are going to try to figure this out. as usual, the markets will trade that. jonathan: your advice for clients going into 2025, be nimble. the sector that you don't like,

consumer. staples and discretionary, what is not to like? mike: the consumer has been softer, fit into our call that we have had for a while, which is government is crowding out a lot of the economy. that is something that we are now thinking about. this is why trump won, the republicans won, consumers want change. let's see if they can execute. we are looking to maybe upgrade cumer stocks if they can pull off these policy challenges. on the financials, we have been overweight. it's been a terrific group. the question is how much further can it go? policy and deregulation, these are all positive drivers that should continue to help that sector at least on a relative basis. jonathan: what changes would you need to see to upgrade a bigger cohort of those names? mike: this is a big picture

view, but if they can shrink the government size -- by the way, this will take years, not six months. if you are able to shrink the size of the government, can they get them off of the back of small businesses to some degree? this animal spirits thing israel. -- is real. if you can get term premium in balance with the budget, those things can spur consumer spending, consumer confidence, which has been in the doldrums. lisa: how much his tax policy? if people pay fewer taxes, they can spend on gucci. mike: or anything else. quite frankly, the consumer is having trouble spending on food. let's get inflation under control, getting people's confidence about the economy, spending, investing on things. one of the biggest areas that

has underperformed is consumer durables because the level of rates are too high. i don't think we will see rates come down any faster because of this administration but over time that is the key. we can get wages increased to offset the increases in the economy, the consumer will fare better. lisa: questions about tariffs and how that could affect companies but specific sectors will respond differently to policy changes going forward and don't necessarily have the same macro economic overlay they have had in recent years. i wonder how much you are seeing that play out. i .2 health care in particular because it has been an outlier in the past couple of weeks. you see some of the picks for cms, hhs. do you lean into that or do you see that as an opportunity? mike: both. by the way, the markets are smart about this.

they have punished big food companies. perhaps because of robert kennedy. the positive story is just an efficiency story. this will take years. if we can make the deployment, delivery of health care more efficient, that will create great opportunities for certain businesses, but this is why we need to be nimble and think about, it will not all happen at once. there will be moments of fear and doubt and uncertainty. annmarie: do you think elon musk and vivek ramaswamy can't doge-ify the economy? mike: not necessarily cut all the spending they are talking about but if we can freeze spending. the key is fiscal sustainability. if you can get into that position, as scott bessent has said, let's get the fiscal deficit down to 3%. we are not talking about zero. that is a much more sustainable

place, which is why the bond market is reacting initially somewhat positively to this. one of the key risks we see in the short term was. term premium. i am encouraged by the reaction initially but not confident to say that this will be a straight path from here to there. annmarie: what do you think thes and also tariffs. many could say it could be inflationary but they ran on getting inflation down. is that a number one thing that trump wants, to make sure inflation comes down? mike: his mandate was prices are too high. probably three issues. prices too high, immigration, we have to fix that, and this idea of never ending wars, spending many unnecessarily. he will try to take all three of those. it is kind of an america first policy with the added twist that

we will also try to redistribute the income. taxing people and redistributing is inefficient. if you can reduce taxes and get the income redistributed at the wage level, that is good. that would be the goal. once again, it comes down to execution. lisa: when you say be nimble as an investor, does that mean trade frequently? will this be the most active year for the team in 2025? mike: that is a good way to put it. we have been active. we will be offering more trades for clients. when i say trades, not day trades, three to six months. rotating the portfolio where you can do that in size. three to six-month trades is faster than a 12-month vehicle. lisa: do you see the breakdown of correlation that have held true, yields, the effect on stocks, macro economic

overlay's, when they become less relevant? mike: i think they become more important. mcaro will always-- macro will always play a role. i hope that we can see more micro opportunities. by the way, this is not just the last four years, it is the last 20 years. the big gets bigger, the k economy that everyone is familiar with. can we move from a narrow participation in the economy to something that is broader? if that happens, that create more micro opportunity, but that doesn't mean that you can ignore other policy changes. jonathan: where does that leave the mag seven? mike: you are seeing it, they will be separation of winners and losers there, too. one thing we know about cycles, the big winners of the last 10

or 20 years are not the next winners. ai, the big exciting part to me is not the guys that are building ai today, the picks and shovels who have already won, it is the application layer. who will deliver the solutions that take advantage of this new compute platform to deliver for corporate america, consumers? much like email dude or software as a service. you think about the winners of the internet, it was the company that built the application layers to build better mousetraps. jonathan: you said the focus of the equity market was on the ai enablers, the chip companies. where are we in that process, moving away from that yet? mike: companies are still benefiting but that is very narrow. not many beneficiaries from that spend. it is different from the 1990's where we get hundreds of

beneficiaries. we will transition now to the adopter phase. who can use this stuff? so far it is only the hyper scalers. it, the ones who can take this platform, deliver it to dummies like me and make me more productive. the average person saying, i don't need to be a technologist, but i understand how this can make a more efficient at my job. jonathan: we have known each other for a while. you sound pretty excited about next year in a way that i have not heard for a long time. mike: we have been excited about this for six months, it is just know that we can see it in a way that we can see a broadening out. we see it in the numbers. the last two quarters, we have seen a broadening out of the earnings story, even before the election outcome. this is a two-step process. it will be noisy, stocks are

expensive. the markets are ahead of this already. let's not think that we are discovering the lightbulb, the markets have already done this. but there is a wider set of opportunities which to me is more exciting. jonathan: you spent a lot of time talking about the outlook for 2025. what is the biggest pushback you get? mike: valuation. people are still skeptical about the valuation in the equity markets. but what else is out there? you look at the u.s. versus other markets. the second one is it still feels unstable. geopolitics. the political angst in this country is not resolved. there is still this bifurcated political environment. people's economic situations. that makes people feel uncomfortable. it is hard to get uber bullish

when you have all of these things holding you back. jonathan: finding it difficult to divorce their political bias away from their economic views? mike: most clients are more -- investment clients are more objective because they have to be. price makes them be objective about the outcome. that doesn't mean that they don't hold personal biases, we all do. i think 2016 may be changed that a little bit but we are all forced to perform. her it is a political bias or style bias, you have to navigate that and be flexible. jonathan: the essence of this conversation when you talked the potential for real change. when i asked about whether clients are skeptical about 2025, are they skeptical about anything in the agenda that we should be paying attention to? mike: there is a tremendous a new idea.

it is difficult. we all know about these roadblocks built into the system, appropriations, the way that you have to spend, civil liberty laws to protect people's rights on jobs. it is like you are fighting against this giant blob and people are skeptical. that is where we need to be more open-minded. i am more open-minded about that. forget about talking to investment clients, when i talk to people on the ground, they look at the government and say the government does a lot of great things for me. but i have to worry about my job. why should they be operating in a different environment? this is also potentially liberating for people in the government. there are really good employees in the government. they just play for a bad team. let's put them on a better and probably you get more productivity out of that person. it is a lot of risk.

it will be a really messy road. but that to me is interesting. jonathan: good to see you, mike wilson of morgan stanley. equities on the s&p higher by 0.5%. with an update elsewhere, the uae arresting three suspects in the murder of an israeli mold ovi rabbi who was found sunday after being reported missing in dubai. apple ceo tim cook returning to china for the third time this year, attending a supply conference. he is also expected to join a meeting of foreign ceos with the chinese premier. the meeting is expected to address supply and treating issues. in sports, the chiefs survive a scare against the carolina panthers. elsewhere, the eagle dominated the l.a. rams on sunday night behind a ranch on record russian performance from saquon barkley.

adrienne yih on her taught retail picks for 2025. that conversation just around the corner. from new york, this is bloomberg. ♪

jonathan: the opening bell, one hour 10 minutes away. equity futures higher by 0.5% ubs raising its price target on tesla to 226, warning the rally has been driven by animal spirits. da davidson upgrading procter & gamble to a buy, highlighting

greater confidence in china sales. oppenheimer adding target back to its topic list, pointing to very attractive risk reward. rebounding by 1.5%. retailers preparing for a shorter holiday shopping season after a major earnings week including gap which is seeing wealthier consumers search for value. adrienne yih writing, gap is our top idea for a cyclical recovery name into 2025. welcome to the program. can you tell us what you think they are getting right at the moment, what is leading to this big share gain? adrienne: what they are getting right is the value equation for the consumer. if you look at the retailers who are winning in this environment, it is those walmarts, tjx, old navy in this case, and they are truly giving back real value to the consumer.

with regard to the gap brand, they are also finally starting to hit their stride on connecting with the consumer. it's been at least a couple decades, the last time we saw them do positive comps was 2011, 2012, when it was the skinny leg craze. it really focused on the fundamentals. they have solidified their store base. for lack of other things, they also have a silhouette shift that is a denim-based one. lisa: you talk about pairing that idea, the lowest prices with style, getting influencers, getting wide leg jeans out to the masses. what does value mean, who is in creating value? adrienne: great question.

we like to separate value versus cheap. valor is price paid for quality received. when you go to an off-price or old navy, you are paying something but you don't mind paying $50 for something that you think is probably worth more than that. but what you do care about is paying cheap prices for something that you think is worth exactly that or less. that is the huge differentiator here especially in this environment where cpi, inflation across these products is eating away at that wallet. the consumer is looking for someone who can provide them the ability to stretch their wallet. lisa: something we woke up to this morning, suddenly a renewed focus on shipping costs and how they can come back to bite. for an e-commerce organization, which a lot of these retailers seem to be coming, how important

is minimizing shipping costs, how much is that becoming an increasing drag on the companies that you cover? adrienne: the e-commerce piece of it, that last mile delivery that you are talking about, we can think of those like wages. they perpetually go up. the essence of that shipping is employee based where their wages are going up, whether it is ups, fedex, any delivery company. you can think of that as a permanent inflator. the way to combat that is to get ever smarter and better about your inventory management, trying to buy and see what demand is, sell at full price. it is a tough equation, but just on the store side, payroll will continually go up, it's about oiently. jonathan: i know it is not a company under your coverage, so i will not name it, just talking

about the story in general terms. a company this morning where a single employee was responsible for accounting, made these massive erroneous entries to hide about 150 million dollars worth of expenses. how unusual is that to happen at a company a size like this? adrienne: it is a breakdown of the disciplines. it is pretty unusual, frankly. let's put it into perspective. 150 million dollars is on $4.3 billion of total expenses, so it is a real number since 2021, but it's about 3% of their delivery not a good look for said company. i will say, there is a lot that goes on. that p&l has thousands of lines, thousands of employees,there was

particular incidence of the oversight in that department, for sure. jonathan: thanks for being with us. adrienne yih of barclays. if you are just joining us, that company is macy's. lisa: that is $3 billion worth of packages to account for $150 million of shipping costs. that is massive. jonathan: we have all got a lot of questions and very few answers this morning. from new york, good morning. ♪

jonathan: equity futures near session highs on the s&p 500, higher by 0.5%. the opera performance is on the russell. small caps higher by 1.1 percent. 60 minutes until the cash open. good morning, manus cranny. manus: eqt has the lowest investment grade rating available, bbb. what do you do to protect that and protect the debt? you do a joint venture with blackstone. they get to deliver a return on the capital within the return business -- insurance business. $750 million. eqt gets the money to pay down debt. that is what you call a perfectly symbiotic deal.

microstrategy. we have talked about it many times. this morning, a note from bernstein saying this company could be on track to hold 4% of the bitcoin market in a decade. they have already been slightly behind the curve but they talk about the capital plans by this company to buy more bitcoin well ahead of schedule, and it will not impact the long-term unsecured convertible debt. a nice bid from bernstein on that. you just talked about macy's. as your last guest said, 3% of the overall expenses we are dealing with. an employee hiding up to 150 $4 million of delivery expenses. why was that person hiding those expenses? sales coming in just a smidge lighter.

same-store sales down 2.4%, a little bit lighter than the original estimates. jonathan: what a crazy story, named toouch going into the opening bell. a busy week ahead of us. frances donald of our busy writing we have relatively high conviction that the federal reserve will cut to more times before pausing, the less conviction on the exact meetings. we don't think the month-to-month meeting outcomes matters as much as what happens after the fed pauses. francis, good morning. what does that mean, what happens after? frances: we are spending more time thing about what happens at the end of 2025 into 26, rather than the economist game of is it a december pause or not? we are thinking about is there a scenario that leads to hikes by the end of 2025? that is a big change in the way we have to think about things.

i will spend a lot more time talking to my clients preparing for that possibility, stress testing that scenario which very few are considering right now, than i will telling them it is a december pause, january hike. jonathan: how high is the bar to resume hiking? frances: i don't know it is as high as many think it is. inflation is still relatively sticky and we have some shocks coming down. tariffs might be coming through. more important, immigration policy could be really important to the growth outlook and to the inflation one. i think immigration will matter more than tariffs over the next three years but we don't spend much time talking about that. we have to recognize we cannot have our cake and eat it, too. we are not going to get a strong resilient economy and get back to 3%. that is not a reality that will exist in 2025, so pick your

lane. there is still a possibility that u.s. economy doesn't make it to the soft landing. we still need consumers and small businesses to feel better about those ra fat in the forecast. now is the time to prepare for multiple eventualities, more so than even six months ago. lisa: i want to dig into immigration potentially more important than trade policy. a lot of people thought wage inflation is on the wane. implicit in your statement is that wage inflation could be the driver to get the fed to raise rates again at the end of 2025. walk us through the threshold that gets us there. frances: tariffs, we have to do a lot of work, a nuisance for economist to calculate. but what keeps us of our labor supply shortages. price level shock occurs one

time, falls out of the inflation statistics, but the more nefarious inflation come from not having enough workers. that is what scared policymakers after covid. remember, this is happening in the context of record retirements. we don't talk about that. we have three retirees for every one new entrant looking to get into the market. this is a 2025 issue that is changing and mechanically impacting things like unemployment and wages. if we add on mass deportations, if we don't make wages rise, that is a more difficult wage pressure, more difficult inflation that the fed will have to respond to. tariffs are more of a one-off. lisa: looking back at deportations -- and they are not unheard of -- around one point 5 million people deported under the first trump regime.

around 3 million people deported under biden. how many would need to be deported to create a debt? frances: every one of the matters when labor supply is a critical issue for 2025. like all other policies, we don't know the scale or scope or timing. and the sequencing will matter a lot. what we know is the direction of these policies. we know the direction is toward protectionism, deportation, so we have to calculate the risk that we actually see greater emphasis on labor shortages, greater prices via the tariffs coming through. that is what we are contending with, sequencing and size. annmarie: how much tension do you see potentially from a trump white house and federal reserve if they are even thinking about hiking rates? frances: this is the big challenge that has existed over the last several months.

we have procyclical monetary policy. if the economy is strong, we should see some pullback in physical activity, some fiscal constraint, and we should see higher interest rates. i don't see so much of a tension if the economy is doing well. but if the economy weakens and the fed wants to cut but cannot because of excess fiscal spending. 2025 is a critical year. we are walking that tight rope across to the other side of the soft landing. we are six months away. if we get hit with a tariff or fiscal shock at the end, it could knock us over. if we get to the other side, small businesses come back, lower income consumers feel better. but the next six to 12 months will be critical. annmarie: you see a real chance of potentially no landing after

what everyone is viewing as a soft landing scenario that we are in now? frances: certainly not our base case, but by the end of the year, we have tariffs that need to be priced income inflation still running hot, core inflation running about 4%, small businesses are still struggling. they hire 80% of folks in the united states. they are still dealing with uncertainty. if we get a negative shot before we get the advantages of trump policy like the regulation, there is still 20% where we could get knocked off. that does not merit a base case, but if you are planning your business, it cannot be eradicated as a possibility. jonathan: any thoughts on who is running the fed in 2026? frances:all i know in 2016, powd when the lights are off, you have to move more slowly.

he is probably moving more slowly as we move through this darkened room. jonathan: thank you so much. frances donald from rbc. let's turn to financial markets. the s&p 500 on a five-day run. outperformance on the russell. s&p 500 up by 0.5%. nasdaq 100 higher by 0.6. if you get to the bond market, yields this morning are lower by almost seven basis points now at the front end of the curve. 2-year holding on to 4.30. right there is the 10-year, 4.32. lisa: how much of this is a relief rally, how much is sustainable at a time when the person chosen for secretary cares about the deficit, also well-respected on wall street? annmarie: that is good for the bond market.

for stocks, you said it, it is the bessent bump. i just want to know how long all of this lasts. jonathan: you have to have a more complete picture of who is running policy. immigration is a big piece of this as well, which is the argument that frances donald was making. lisa: especially if we are dealing with an aging population, retirements. at the same time, you wonder about mike wilson's view about ai application, how much that could reduce the need of these workers. this is the push pull that you could argue on either side. jonathan: for now, we are buying equities. the s&p 500 looking for a sixth consecutive day of gains. noel dixon of state street writing, equities looking forward to in normalizing federal reserve, stronger u.s. growth, deregulation and tax

cuts from the new administration. this could change if we have fiscal concerns early next year. noel, good to see you. is that the scenario will will be facing in 2025? noel: i think so. there is some euphoria, we got the red wave, everyone looking to the positive parts of the policy, but we will get into a situation where the fed is easing into strength. you have these fiscal issues. tariffs will be a big risk event. i think those concerns come up in the first half of next year. jonathan: what are you advocating for? noel: i would take some risk off the table coming into next year. i also think the dollar will continue to grind higher. the u.s. will continue to be the cleanest dirty shirt. i think we will have probably lower global growth if we do get that tariff policy implemented. lisa: this might be a dumb

question but what counts as risk? some people are talking about risk in stocks, others say risk in duration, the chance that there is not a controlling force in the deficit and you end up, like frances donald said, with even rate hikes by the end of next year. noel: the biggest risk is in the long end of the curve. duration is what you want to focus on, taking off. equities had a big rally. like i mentioned, what is not to like? when we get into next year, what is there to like? you overvalued equities, you will have this fiscal concern moving into next year, and then you have a fed being forced to posits policy. lisa: so you are not buying the bessent bump? noel: maybe you get a santa

claus rally but once you get a dose of reality into 2025, that is when you want to take risk off. annmarie: you say tariffs are the biggest risk. do you think the administration will view them as a negotiating tool to reset the playing field or do you think they will use them as pay-fors for the tax cuts which means the sequencing has to be in parallel? noel: i think the administration perceives tariffs as a way to pay for some of the tax cuts that will come through. but i think what they forget, tariffs will either impact the consumer, so companies will pass the cost on, or it will put pressure on corporate margins. i think that probably is a misguided focus. but i do think their perception is that it will pay for some of the tax cuts. annmarie: what does someone like scott bessent at the treasury

mean for that impulse that some members of the administration may have whebessent, his perspee wants to ease things in, but i feel like trump will want to implement that policy. jonathan: are these tariffs a bigger problem for the rest of the world and the united states? noel: i think it's a problem for everyone. you will get retaliatory action from other countries naturally. when you look at the first administration, the retaliatory

tariffs actually impacted u.s. exporters disproportionately. jonathan: some of the farming producing states, agricultural subsidies where the big thing then. should we worry about something else? noel: everything should be a focus. it will be a different sort of scenario. jonathan: you expect those blanket tariffs that have been promised on the campaign trail? noel: he promised it. he won the popular vote, that is what he campaigned on. i think he will continue to focus on that path. lisa: just to underscore what you are saying, is that a dose of reality that you think will curtail the santa claus rally and the melt up? noel: markets are waiting for clarity on that. i would augment that with the fiscal spending. we already have structural deficits.

all of that combined is something the fed will have to focus on and when they have to pause for that reason, it could cause some risk off. annmarie: who is the biggest loser in a trade war? noel: probably china initially because their economy is already pretty weak.

appreciate your time, noel dixon of state street. europe is vulnerable, we heard that this morning, which is why

she thinks dollar can drop to parody next year. this from barclays, bridled enthusiasm. unbridled enthusiasm? they say the macro is flowing to healthy levels, should support deceleration from 2023 to 2024. 2025, the price target on the s&p, 6600. lisa: which seems to be the median that we got from rbc overnight. she said the target, 6600 is the median. 6200 to 6700 is the range. jonathan: this line from barclays, go bigly or go home. they were in the morning with that line. let's get stories elsewhere this morning with bloomberg brief. macy's is a loot -- delaying their third-quarter earnings due

to an investigation. a single employee responsible for small package expense accounting intentionally made erroneous entries to hide 132 million dollars to 154 million dollars worth of expenses. macy's saying that employee no longer works for the company. i didn't make this one up. apparently this is real. glicked leading a massive week and the box office. a combined 170 million dollars in u.s. and canadian theaters. wicked took the top spot with 114 million dollars in sales. gladiator 2 finished second. finally, president biden participating in the annual turkey pardon at 11:00 a.m. this morning. turkey speech and blossom will get a meal time pardon and then live out their days in minnesota. it is believed abraham lincoln was the first to pardon turkeys in 1933.

annmarie: a lame duck president will pardon a turkey. i wonder what people outside of america think about this. what is going on? jonathan: one of those that stood by the fence. annmarie: there is no policy involved in this. jonathan: before the holidays, lighten up. setting you up for the day ahead. from new york, this is bloomberg. ♪

i can't believe you corporate types are still at it. just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.

jonathan: you know when a ceo gets fired and the stock rallies and if you like a slap in the face for the person that used to run the company? this is like the reverse of that

for scott bessent this morning, feeling pretty good, looking at markets, knowing that part of it is from him getting the nod for treasury secretary. russell small caps up by 1.3%. yields lower by eight basis points on the u.s. 10-year. that unlocks some real dollar weakness. euro-dollar, session highs, 1.0518 on the euro. here is the trading diary. tomorrow, nordstrom earnings after the closing bell. consumer confidence, new-home sales on wednesday. durable goods come up core pce, another round of jobless claims on thursday. once dr. wants this morning is macy's. shares falling in the premarket this morning, down 1.2%. the company delaying earnings after an investigation revealed a single employee hit tens of

millions of dollars of expenses. emily curran joins us now. what happened? emily: we don't know too much yet. we know that one responsible is responsible for hiding over 100 million dollars in expenses. the company was due to announce its earnings tomorrow. they delayed that, gave us a preliminary look. the stock fell dramatically when this came out. the losses have pared a bit now that people have realized the limited financial impact of the probe. but we don't know a whole lot yet. lisa: is it going to be to everyone's advantage that they are releasing after the thanksgiving holiday, after the parade, when we get a sense of what black friday was like? emily: the fact that they are delaying earnings can tell us more about the american consumer. anything about the american economy.

macy's is often seen as a barometer of how the mass-market american consumer is faring. how those consumers are shopping during the holiday season will tell us a lot about the american consumer. it is kind of nice that the earnings are delayed until after thanksgiving. we actually don't know when it is coming, i think they said before december 11. but if it is after thanksgiving weekend, we may get more color, more of a preview on how holiday shopping is looking. the preliminary earnings today, tony springs said november comp sales are trading ahead of across all of their brands annmarie:. how is the holiday season looking? emily: starting out ok, nothing stellar. this is the big week. the holiday shopping season this year is interesting.

it will be shorter than ever because thanksgiving is falling so late in the calendar. we saw a lot of those sales start into october and even into the summer months. starting off ok, but we will see more later this week. annmarie: this one rogue employee is not ruining the parade. that would be quite the statement. jonathan: nice to see you. still trying to figure out what is happening over at macy's. that stock is down .9%. tomorrow, we catch up with stuart kaiser from citi. matt at deutsche bank thinks the federal reserve cuts once and then they are done. that we are catching up with sarah house from wells fargo. this equity market is starting

to rip. equity futures on the s&p 500 higher by .75%. yields lower by eight basis points. 4.32. thank you for a thanksgiving over at scott bessent's house may be. from new york, this is bloomberg. ♪

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

katie:katie: starts right now.

matt: coming up, the bessent trade. markets are betting the wall street veteran will be able to for stability inside trump's administration. we have shocking news for macy's, delaying his earnings report after an employee hid over 100 land dollars in expenses. amazon is working on one of the tech industry's