scarlet:scarlet: welcome to bloomberg markets. on the shortened holiday week in the u.s., markets are reacting to trump pick to leave the u.s. treasury. stocks did open higher as did hans. you can see they have given up a lot of their gains. the s&p 500 unchanged. you look at small caps flying with the russell 2000 up 1.6%. 11 industry groups in the green led by cyclicals like consumer discretionary and financials. . you have the 10 year yield moving down 10 basis points. moving further away from the 4.4% level we are stuck at. the dollar is weaker falling against g10 currencies. bloomberg dollar index losing

4/10 of 1% at the moment. are big story today is wall street cheering after the trump transition team announced scott bessent to be nominated to be the next treasury secretary. david beyonca spoke to bloomberg about bessent colors market outlook. >> not just markets. the equity side has been excited since the win. this has been good news for the bond market. the treasury secretary is concerned about the deficits. that is welcome news. scarlet:scarlet: for more on how wall street is reacting to the choice of scott bessent, we are joined by j.p. morgan managing director priya. i'm a little confused as to whether bond market sees bessent as such a positive pick. he is more moderate on tariffs the reporting shows commitment to trump's tariffs was a key deciding factor when the president-elect made his pick.

>> it is a very fair point. i think the president-elect does want to tariffs and the treasury secretary is going to help implement it. the question is how and if it is a phased in approach, the market does not see it as tariffs going place and the world has to adjust. more that it is a process. with the market is looking at more is on the deficit front. for the last month and a half, interest rates have risen significantly. we have priced in a deficit trajectory which is lookingthe o get extended. the idea of more tax cuts. we know scott bessent's view has been deficits have been a problem. . it is not so much tax collection. it is on the spending front. you combined that with the idea waste might be cut back. the bond market is taking a step back and the move over the last month and a half has been about pricing in high return premium

or any to get paid more by the u.s. treasury if i am lending them money for 10 years over two years. that spread is turning to come down as we realize the new treasury secretary if confirmed is likely to be focused on fiscal sustainability. not getting the deficit down to zero but getting it to a more sustainable 3% level. scarlet: that makes sense given we have seen equities of up a lot of their gains but you see treasuries holding onto advances. progress on the deficit front as one reason continue to be positive. as the selloff in treasuries over? the 10 year less likely to go to 4.5% as a result of this? priya: in our view, we have gone from one end of the spectrum to the other. the 10 year in a soft landing is likely to be between 375 and 4.25 or. four -- and 4.25. or four and 4.25.

we all debate neutral. somewhere in the 3.5% range we think would be fair for neutral. the fed continues to cut. the economy is slowing down but stays in a soft landing. that is the rate range that makes sense. we are getting close to 4.5, we were saying that is an opportunity. we get back to 4.5, we would be looking to take advantage. we get below 4%, you need to corroborate it should industry rates are about the fundamentals of the data. we have the payroll report coming up next week. the economy is slowing but still above trend or close to trend. the fed is still cutting rates. it is the reaction functions, the economic data. the 10 year should be in this narrow range. you are getting yield from fixed income. you're getting the hedging property. if the economy slows down more, the fed is telling us they are going to cut more and that is

10 year.ntage of own scarlet: scott bessent has said the current treasury secretary has over utilized t-bills to fund the government. do you see bessent mix to around 22%? priya: the committee has a range ina 15% cap of where phil's should be as a share of total debt outstanding. the boring committee has said the treasury can deviate depending on demand supply, depending on needs. i would argue right now given 7 trillion sitting on money market funds, given the shape of the yield curve, there is more demand for the front end. i think treasury issuance makes sense. to be a subject the treasury studies, market participants have a view. the buy side tends to have a view on this.

we have options every week to look at where the demand comes from. i would argue demand is less on the long end. treasury should focus on the zero to five year. if you find because of u.s. exceptionalism continuing where the dollar, if more demand, trey should always evaluate lowest cost to taxpayer. it would make sense for them to shift policy depending on where the demand is. i do think it is the front end so i don't think treasury is likely to change. scarlet: you mentioned the dollar. scott bessent spoke with wall street journal. his policies to deliver untaxed pledges, cut spending and maintain the status of the u.s. dollar as the world's reserve currency. keeping in mind the dollar is weaker today, does that mean a stronger or weaker u.s. dollar? priya: we think stronger. because of u.s. exceptionalism. the entire policy whether it is

trade, fiscal, deregulation, sometimes at the expense of the rest of the world. sometimes it is a stronger u.s. scenario. the reason we have moved today is positioning into friday. it had strengthened a lot. are just taking some profits? we are seeing consolidation with the dollar. a stronger dollar given the rest of the world, given the policy makes is a lightly outcome. as long as the fed stays credible, independent and there is no intervention which u.s. is too large a country. the dollar should be stronger. scarlet: jp morgan managing director and portfolio manager priya misra joining us. macy's will delay the release of its third-quarter earnings report after an internal investigation found wrongdoing within the company. this is bloomberg. ♪

scarlet:scarlet: this is bloomberg markets. it is time for the stock of the hour along with other equity markets -- other equity movers should go: it's check in with some of the midday movers. you can see lots of stocks in the retail space on the move. macy's down 3.5%. what stands out is the decline is not more given the fact there is an ex-employee who intentionally screwed up the accounting around small package deliveries to the tune of $154 million. as much as $154 million. it has been occurring since 2021. the company found these errors going back when they were preparing for the quarter.

we have had to delay their earnings report to december 11 because of this. because the stock is already down in the real issue since this is not going into their cash management where they don't think it affected vendors. you can see lots of strength for the other retailers. bath and body works in particular. let's take a look at a bigger winner and that is kodak. it is hard to believe they are still around but that is the case. 's shares are soaring today up 26% on the possibility they are going to potentially divest their retirement plan. that would be a good thing. it ranges closer to almost a billion dollars. investors seem to think unlocking value of some sort. the stock is already up more than 60% on the year. amazon, they are continuing their work on chips around data centers. that would compete with nvidia. today up 1.2%. this of course also has to do with the star of the unofficial start of the holiday shopping season on friday, black friday.

scarlet: we will be there for all your coverage on black friday. thank you so much. turning to the most read story on the bloomberg this hour. the price of tuition at bethel university in st. paul minnesota , $34,000. . next year it will be close to half of that. this is part of a trend as dozens of small colleges across the u.s. slash prices in what is being called tuition resets. we are being joined by bloomberg news deputy financial editor. elite colleges like the ivs are charging up to $100,000 a year. we are talking about schools that don't have the name recognition. >> these are not the most well-known schools but we are seeing this as an increasingly popular trend across the u.s. schools that need to find ways to stand out. enrollment is down. so they are looking to these tuition resets to get more people in the door but these are not your brand name schools.

scarlet: we mentioned bethel university. the strategy of tuition resets. is it working in the short-term? are they seeing more interest? craig: they say they are sending a more students. they have more students coming to network events. . there is a school in virginia where the president went on billboards. these schools often cater to local students. they are competing with the state school. these are kids that are staying in the area. they have gotten attention. it is working as a marketing tool. they are getting more people in the door. whether they can stay viable deep into the future with this, that remains to be seen. they are saying i the short-term it is working. scarlet: there is mills college which is that all women schools in oakland, california that cut its tuition but a couple years later got absorbed into northeastern. craig: if you talk to experts, this is not the best sign. if you use a comparison to the retail world, if things are going on sale, what does that say about the strength of the brand?

the schools will say under the short-term it is working. one of the big stats that is hard to believe is something like 20% of kids pay full price across the u.s. there is a lot of aid. what they are saying as these prices don't have to be as high. it is working on a marketing level. are they doing it from a place of strength? harvard, dartmouth, these places are not cutting tuition. everybody still wants to go to the ivys. scarlet: as much as people complain about university prices being too high, when they are lower, they get a little suspicious as well. there is one school, minerva university, which charges and all in price of $50,000. it is different because the price at -- the classes are online. there is no physical infrastructure. craig: it is an interesting school. they traded a school from scratch. they wanted to go at cost. they wanted to take out some of the things that drive up the cost. there are no fancy dorms. they don't have a lot of the frills we think of at the elite private schools. . it is a 50 k all in price.

we had the president in the office talking to him. he thinks the price has hurt them. they don't have great name recognition. they are trying to establish their brand and people are looking at it like how we look at wine and food and saying if it is more expensive, it is better. what he is saying is we did all the stuff to keep the price down and it is hurting us in the marketplace because people think it is cheaper it must be worse. very interesting psychologically how you appeal to families and students. scarlet: the big backdrop is there is a demographic cliff coming were a lot of these schools need to brace themselves for years in which they are not enough students for the colleges that are out there. craig: there been a lot of school closures across the u.s. often the small religious schools are closing. these places in rural america that cannot hold on anymore. state schools have done well because the value proposition. there are not enough. students come increasingly young men are not going to college. there interesting numbers there. as a business higher education

has an issue as far as the cost. this is super interesting as these schools try to navigate that. scarlet: team bloomberg's craig giamonna. we have the future of office in real estate. our next guest says not all cities are created equal. this is bloomberg. ♪

scarlet: this is bloomberg markets. many commercial real estate properties are at high risk of default heading into 2025. for more on the commercial estate market, i went to bring in the founder and ceo of united capital john deveney. things like cms, you have been calling for a considered implosion of office building collateral. before we get to which cities those are, why is that with interest rates heading lower and

transactions in the space picking up? john: one of the biggest forces are the 10 year treasury moving from 2% to 4.5%. just that alone the appraisals from 10 years ago at a 4.5 cap rate to go to a 6.5 cap rate today. for the best properties, that winds up being a decline of 25 to 30%. these are huge headwinds for these companies to refinance. inflation made all the property taxes and expenses go up. inflation made the buildings go down as well. we don't need to get into work at home. work at home is a big issue for the whole country that has led to a lower occupancy some of the observations i have are the trickiest for me to try to analyze and forecast into the future. what i have now deemed for 15 of the cities i can talk about, what i consider to be flawed social policies. scarlet: you're talking about

policies the mayor for instance implemented and prevents the downtowns from thriving? john: exactly so in my opinion, a lot of these flawed social policies, they are open-air drug market. giving out needles for heroin. adding fentanyl and opioid trade. the police look the other way. . defunding the police. there was the big issue in california and san francisco. they reversed it. 950 or less you get a ticket leading to smash and grabs of shoplifting. all the pharmacies were closing. the homeless problem has become a huge issue as well. some of these policies in these cities -- i have spent so much time thinking about this. los angeles, oakland, san francisco, philadelphia, chicago. scarlet: you have new local governments in some of the cities. san francisco for instance elected a new mayor in november. that does not affect your outlook? john: no it is going from implosion to now glimmers of.

hope see. , -- glimmers of hope. see, these other forces change commercial real estate. these things are making it so many of the employers are not renewing lisa's. it is the crime and the blight. the fabric of society in some of these city centers like philadelphia. it looks like a war zone there. nobody is renewing any leases. they have to clean up these cities. the outlook as well for my opinion, the municipal debt in a lot of the city should be put on negative outlook. all the tax revenues are going down. the cities are in trouble. scarlet: do you see demand from your clients based on which cities -- john: they won't touch the stuff with somebody else's 10 foot pole. get me away from the conduit deals that have anything to do with these cities. it is too hard to call. for example, there of buildings like 1500 market street in

philadelphia, it is like 700 million mortgage. they're going to be lucky to sell this thing 450 a foot which is going to be like 50 million bucks. it is going to lose 80%. scarlet: let's talk about not just office buildings but a lot of these office billings are mixed-use buildings as well. they have commercial businesses too. some of them are malls as well. let's talk about the state of malls. there seems to be a bifurcation between the strong performers were in prime locations and have an appealing tenant mix and those that lack those trades completely. how is that playing out in what you are seeing? john: malls are another big topic. they got hit bad by covid. they all closed. they suffered lots of bankruptcies. bankruptcies of the anchors. the malls are better than ever. they still got hit with a fixed rate malls with interest rates going up and some of those guys are going to put money into refi. it is the b malls.

brookfield. they are not committed. they had 115 malls. they are going to give a third back. they have only given back 10 or 12 so far but they have 30 more to go. they are not committed to the mall industry. scarlet: that is a bad sign? john: it is touch and go. with anything, there is opportunity within a changing marketplace. to be honest with you, if you asked me to bet on one of these b malls or in office, i am taking the b mall all day long because the debt yields are eight or 9%. the debt yields on the bed offices or four or five or negative. there is cash flow to let the malls get extended. scarlet: before we let you go, i know there is something -- you are in town for a specific reason. it is one of your passion projects. it is the premier of the movie city of dreams. you helped fund this film. what is it about this film that drove your involvement? john: i was super touched by this film. i saw the film.

. and i really cried i don't really cry in movies. scarlet: what is it about? john: it is about a young boy traffic across the mexican border. who was held captive in sweatshop. it is about the courage this young boy had. he fully against the captors and freed himself and the other children. child trafficking in the united states is up right now in six or seven years 400%. we are talking about hundreds and hundreds of kids. i met the director. i talked to him. i talked to him until 2:00 in the morning. they were looking for five or six my inbox to make sure it had a worldwide and a big release. the next morning i said i will give you the money. now, that i have realized all these kids are in trouble and so many of them were trafficked across the border and given to these bad guys. i am using my voice along with other big leaders like tony robbins, nearest her vino -- mirus or vino.

a lot of folks are joining our group and trying to raise awareness. it is the right thing to do. scarlet: you have another film you are involved in. the prints starting the cage and giancarlo esposito. is that tied to the subject? john: that film is about wealth, power and politics. it is a lot about addiction. i lost my brother to crack cocaine addiction when i was 25 and he was 26. i am sober. i was touched by that film. that is going to be coming out in may. you know, really excited to have my new film company backing a number of these films that are going to incite conversation and have some kind of purpose and meaning. scarlet: and tied very much to your passions. thank you very much. founder and ceo of united capital. a wide ranging conversation. that does it for bloomberg markets. we are looking at the s&p 500 up by a 10th of 1%.

the russell 2000 getting 1.7%. this is bloomberg. ♪ ♪ ♪ ♪ something has changed within me ♪ ♪ it's time to try defying gravity ♪ ♪ ♪ (ominous music) (bubbles rising) (diver exhaling) (music intensifies) (diver yells) (shark roars)

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>> from the world of politics to the world of business, this is "balance of power." live from washington, d.c. kailey: a scott bessent bid

comes into the bond market. welcome to "balance of power" on bloomberg. i am kailey leinz on this first trading day since we learned donald trump has tapped bessent to be the next treasury secretary. financial markets seem largely ok with that but we get reaction from the house financial services committee. its ranking member, democratic congresswoman maxine waters, will be with me in a few moments. we will get reaction to the other cabinet selections donald trump has dropped with our signature political panel rick davis and jeanne sheehan zaino. inclusive of a tapping of vote for the director of office of management and budget. we will have a former director mick mulvaney joining us as well. we begin as always with a check on the markets. charlie pellett is tracking the trading. charlie: we have got the dow, s&p, nasdaq all advancing. nasdaq has been swinging between gains and losses but right now we are looking nasdaq up 23,