tv Bloomberg Surveillance Bloomberg November 26, 2024 6:00am-8:58am EST
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♪ >> as we look into 2025, shifting from election uncertainty to policy uncertainty. >> there are real risks right now, real concerns in the market that we haven't seen in past years. the markets gotten ahead of itself a little bit. there is still this very bifurcated political environment. it still feels unstable. announcer: this is "bloomberg serveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: for our audience worldwide, bloomberg surveillance starts right now. on a six-day winning streak on the s&p 500. pretty much unchanged and dead flat on both the s&p 500 and on the nasdaq. the trade war commences right now.
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not in equities, not in bonds, but in foreign exchange. a weaker canadian dollar, a weaker mexican peso as president-elect trump comes out on truth social overnight pledging to levy an additional 10% tariff on china and 25% tariff on products coming from mexico and canada. lisa: really focusing in on immigration controls as well as the drug trade as part of the reason why he wants to increase the tariffs 25% on mexico and canada. the key question, our markets correct in taking this largely at the opening salvo to gauge the waters, to see what kind of response there is going to be? that said, there already is a response from the mexican government pushing back against a factory in mexico. so you have to wonder, is there some meat here? annmarie: he says on top of others. on top of the ones that he proposed and put into place in his first administration that biden kept, or on top of the ones he proposed on the campaign
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trail? then when it comes to canada and mexico, does this mean he is willing to rip up the trade deal from the usmca? and not just mexico. justin trudeau got on the phone with president-elect trump almost immediately, so his truths are actually working. jonathan: for mexico, for canada, for china. lisa: to me, this is a teaspoon of sugar. i kept singing that this morning because i was thinking to myself scott bessent, business as usual on wall street. people got the sense that things were just fine and trade is going to be an issue, and i wonder if this is the strategy going forward. placate markets. see how much leverage donald trump has with markets and then go hard as a negotiating tool with some of the potential trade adversaries. jonathan: possibly. i think we have an incomplete pictu going to be the trade ambassador
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as well. i agree with everyone who has written we've got an adult in the room. everyone who has written down in public that we are going to have someone over the understands market. what i disagree with that somehow he is going to take the stink out of whatever is going to come from the white house. i don't see that at all. there is one commander-in-chief and it is donald trump. lisa: that is exactly the point. you have markets and trump is going to take that opportunity to show his boss. it raises this question of will it be palatable to markets that right now aren't moving significantly. they are not seeing some big selloff in stocks or a big selloff in bonds. it is the foreign exchange and the american exceptionalism. annmarie: they were talking about the fact that he had this conversion over the campaign trail from blanket tariffs or from him wanting to be a
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negotiating tool. this goes back to this idea that he is going to have an angel and a devil on his shoulder. we know the angel might be, scott besson at the treasury department. but who is going to use -- some of my reporting is that even peter navarro was in the works potentially to be the nec director. maybemaybe he doesn't get that , but he is definitely part of the conversation. jonathan: just about unchanged. coming up, we will catch up with steve chevron of why he still likes equities. -- as president trump promises new tariffs, and stephen cook of cfr as we get closer to a cease-fire deal. trump vows to impose additional tariffs on china, mexico and canada. saying we view tariffs or the threat of tariffs as a way to encourage reassuring instead of near shoring.
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if this works, this means more capital deepening and growth. either way, we like stocks here. good to see you. what did you make of that move overnight? >> i think the fact that he did it this early, he is getting exactly the response he wanted. he's getting the reaction out of mexico. and again, to the point of what we wrote. the trump administration views the 70's through 90's at this time where communication, supply chain management lead to manufacturing moving overseas and it gutted the industrial midwest. they view ai robotics automation as an opportunity for those jobs to come back. but the problem that they see is that it is more likely for those jobs to near sure, go to mexico. so tariffs are designed to say look, if you are going to leave china, go to alabama. otherwise we are going to make your car so expensive if you
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build it in mexico that it is untenable. if that works, and you do get investment back on trend in the united states, that is not inflationary, that is progrowth and it could rebuild communities that have been ravaged for the last 30 years. if it doesn't, it is inflationary. jonathan: do you think the private channel will be through one particular asset class, and that is foreign-exchange? we expect to see this show up in equities. >> i think he used the word snoozing. the reason why the reaction from stock and bond markets are snoozing as we have seen this game before. there is a strong statement at the beginning with a very difficult negotiating position, and negotiations are tough but ultimately reasonable, and you get to a place that is acceptable. i point out that for all the optimism yesterday about besse nt, the equity market rallied because of the policy proposed
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by trump, not scott bessent. i think they've digested that already. as long as there is not something shocking outside of what has been proposed, and nothing so far has been, i think the market will digest this. annmarie: i their certain industries that are just on investable it tariff war? you don't fully understand what the dynamic is going to be. you look at other manufacturing sectors that are truly in flux and have been and are dealing with regulations that are changing as well as potentially tariffs. does that make you stay away from some places? >> it is not industry so much. for any industry you are going to have a domestic producer that benefits just as a foreign producer doesn't. we think that the big loser here is europe. if you look globally, that is the big loser. you've got a stimulus bazooka that is starting to be fired. i think those concerns are well
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understood. but if you look at europe you've got a scenario where the german economic engine is broken. there's no more cheap energy from russia, no more demand from china. you probably don't have a free u.s. security guarantee anymore. you've got political gridlock in both u.k. and france, having a kind of coordinated response is going to be difficult. if anybody is going to get wrapped up in the tariffs here, it is going to be europe. i don't subscribe to the word un-investable. we reduce that expecting that that would be the big thing. in terms of a pretty high bar for how much u.s. equities can rally. is that truly going to be a unique spot of gains in a sea of red for the rest of the world, or will it percolate out of the
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rest of the world? >> i don't know that it is a green spot in a sea of red but if you look at the fundamentals, you've got earnings that are still growing in the high single digit expected to accelerate. i think we'd seen some fed speak over the last couple of days that still appears committed to getting to neutral, whether or not that it's 3% or 3.5%. it is certainly lower than today's rates. you've got tax cuts coming and even the tariffs are a tax, when you take them in the context of tax cut it is a net tax cut. you've got deregulation likely coming. if we had anywhere close to a 3% fiscal deficit, and that is just pie in the sky, the fundamentals are still solid. the jobs market is still solid. it consumer of the world so there are going to be beneficiaries outside the u.s. of a strong u.s. economy. so no, we don't think it is a
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sea of red. annmarie: equities are under pressure, especially the auto industry. you say you don't like anyone saying something is un investable. would you ever get exposed to european autos going into a trump 2.0 administration? >> what you would look for is who is going to be willing to put their assembly plant in alabama. it is a tariff on less. it is a tariff unless you stop having drugs come across the border, unless you assemble in the united states. there is a path forward if they want it. annmarie: do you see the sequencing of trump to be tariffs and tax cuts, meaning the stick is going to the tariffs, the character is going to be 15% intentional corporate tax rate if you build in the usa? >> i think he kind of has to. facturing base. the issue is that everybody knows he is a negotiator. in order for the threat to have
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teeth, you've got to shoot a couple of pigeons to hang them from the roof. i think you will see some tariffs that are actually implemented to make companies understand that these are the rules of the game and in order to blunt that, i think you will see broad-based tax cuts. that is why i think some concerns over inflation are overdone. if you just look at the tax cut piece, it is inflationary. if you offset that, well, you are reducing government employment, that also is disinflationary. so you kind of look at the policies altogether to understand it is chaos, but it is a strategic chaos. lisa: who is the pigeon? canada, mexico? >> we don't know that yet. i think that if the question. what are the industries where the company -- it looks like maybe it is auto, looks like maybe it is mexico. clearly what you are going to see first is i am going to follow through on some of this and that is going to be the impetus for other people not to
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try. jonathan: i was looking back to last year and looking out 12 months, and the average outlook was 4800 on the s&p 500. the most bullish was 52. what did we anticipate in 2024, what might we be getting wrong about 2025? >> we go through self reviews each year, i just wrote mind. the first one is that investing is both art and science. you can do the work on the earnings, you can understand what the average multiple might be, and that is really where we all start. but then you have to anticipate what is not captured in that? understand you can have a false sense of precision. what might the market discount going forward, where might optimism the? what relationship has changed? should you have 30% of that market cap as mag seven?
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you have to remember there is art and you get back to the 7000 number. science doesn't get you to 7000 next year. what you have to assume is that there is some pulling forward of expectations as you by the rumor of policy and maybe you saw the news a little bit after it happened. it is the art part of this business that is the lesson. jonathan: going to buy some hopes and dreams. have a happy thanksgiving, thank you. just about positive, up by almost 1/10 of 1%. we have an update on stories elsewhere this morning, here is your bloomberg brief. tesla will be shut out for consumer rebates under a proposal by california governor gavin newsom. newsom planning to offer rebates to ev buyers if president-elect donald trump reveals a fed -- repeals a federal subsidy. more on that a little bit later. interest in intel is fading. the complexities associated with acquiring intel have made it less attractive to qualcomm. a deal would likely have been one of the largest ever in tech.
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and finally, president biden proposing a law that would require medicare and medicaid to offer coverage of weight loss drugs including ozempic and wegovy. the proposal could slash out-of-pocket cost by as much as 95%. lisa: president biden is a lame-duck president so he is setting up for a proposal that will or will not, the incoming trump's ministration action want to tak. >> to me, the most beautiful ward in the dictionary isvorite. thousands of companies coming into this country. we are going to protect those companies with strong tariffs, because i am a believer in the tariff. jonathan: the negotiations start right now. live from new york city this morning, good morning. ♪
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♪ jonathan: all is quiet in equity land, at least stateside. firmer by a 10th of 1%. big rally in the bond market yesterday. this morning,and what you see as foreign-exchange is just a much stronger dollar, tickling against canadian currency. under surveillance this morning, the tariff man is back. >> to me the most beautiful word in the dictionary is tariff. it is my favorite word. we are going to have thousands of companies coming into this country, protecting them with strong tariffs, because i am a believer in tariff. 2000% tariff, he is going to put tariffs on the tariff and put tariffs on china, put tariffs on south korea. the threat of tariffs.
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we are going to pay 100% tariff. jonathan: here's the latest, a new front in the trade war. the president-elect writing untruth social he would impose 25% tariffs on all products from mexico and canada and an additional 10% on all goods from china. indicating they are needed to combat the flow of drugs and influx of migrants across america's borders. welcome back, it's been way too long. perfect timing, your reaction to this overnight? >> i break those tariffs up into two. china, very likely to happen, very little pushback from congress. that process was already established in 2018-2019. those are very likely. companies with exposure to china are going to take a hit from this and we expect the supply chains to migrate out faster. india will likely be a beneficiary. mexico and canada is more complex because you are already bound by the usmca agreement overall and i think what trump
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is trying to do is get ahead of the a caravan that is starting to come into the u.s. and basically saying that we need you to lockdown on immigration. he does not want a surge at the board before he comes into office. he also does not want to have to deal with a lot of issues as he begins to shut down the border on his first day of office and he is trying to get ahead of that. my sense is that is a little bit more complicated. it is more of a negotiation strategy but it is one that is very significant because investors have been very focused on europe. they have not been as focused on mexico. two other key point i would make. if i was donald trump, i would be looping in congress right now. what we found is that canada and mexico are very good at coming up with retaliation strategies so if i have congress on board it makes it harder. and second, personnel is policy. without robert lighthizer you really don't have the key personnel to be able to move these tariffs pretty quickly. they are going to have to figure
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out how to get that structure in place because there is a bit of a learning curve for howard let nick -- lutnick and scott bessenton this. as you get into the specifics and the details, this will be done through interagency committee, and obviously the treasury will have a very big impact on that, and that is where i think some investors think these ideas could end up getting watered down a bit from the initial conception states that we saw last night. annmarie: when it comes to canada and mexico, did this truth social post actually work? we had justin trudeau make a phone call last night almost immediately wanting to start that negotiating process. >> this process has been going on for weeks. canada talking about block ing mexico out, knowing the direct investment had become a land of the thracian they were ahead of it, they were planning for it. we also see mexico starting to say how that none of this
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chinese investment, particularly from the ev companies. you are already seeing that posturing anything that is the whole point, there's going to be changes from the u.s. side if there's not changes from the mexico and canada side and canada side you are already seeing it. but it is a bit more complicated than that. they are not saying we are going to put american cars in berlin. that is what trump ultimately wants. so this going to need to see real results rather than just his initial posturing that he saw yesterday. but i actually think it is an encouraging sign. that is why the market response is a bit more muted. dark out that basically january, where does that leave usmca? >> i think it is complicated. there will be lawsuits in the force of law is in place. we also think there is some
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legal issues due to the international economic emergency power act. that is why he wants congress to institute tariffs as part of the tax bill and get your revenue for the tax bill and make it legal to be able to do this. some of this is posturing but i'm not really sure that he can move quickly on mexico and canada tariffs, the same way we know he can move quickly on this china tariffs. and why we have been advising our clients that the china stuff is real and not about a negotiation. he sees that as a true national security threat and he wants american companies out of there. the difference in intensity is that china is a lot more real and mexico and canada because of the constraints you are listing particularly around the usmca lisa: a note just popped into my inbox and he had this point, the softer the market reaction, the greater the likelihood of more tariffs. the first trump administration show that the more benign the market reaction, the greater the likelihood of further assimilation. do you think that is right, a
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fact that markets have been more tempered means we are likely to hear a little bit of a ratcheting up of some of the rats? -- some of these threats? >> i think that is a great point but i would also say we are not playing with live ammunition yet. now joe biden is president of the united states, donald trump not come into office, he doesn't even had his full trade and economic policy team in place. these start becoming a lot more real in january 20 right around noon. i would be careful not to interpret the reaction as a little tempered. yesterday is a. significant day for us to get the monday before thanksgiving and 2016 a media report came out that the more adjustable tax could be included in tax reform. that was the first they were able to show the honeymoon of the post-trump victory start to go away. i just found it to the ironic that we were at the monday before thanksgiving talking about the same type of issues overall, and that hovered over
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the market for months and became a lot more real in january 20 comes. if we are still having this conversation on february 1, i think that point is really salient. it is still salient right now, but let's see what happens when he gets into office. lisa: let's build on that, the fact that he is issuing these threats on truth social about certain tariff limits and that this is happening before he truly takes office, as he names his cabinet picks. what is your interpretation of the timing? >> well one, i think that he sees caravans coming through mexico and he wants to stop those caravans. this is more of an immigration point, almost like these tariffs could be stopped if you fix the immigration system. but the second is it is showing you exactly that this president knows what he wants to do. what i've been advising my clients throughout the treasury secretary debate is that donald trump got 75 million votes, scott bessent got zero. he is telling you that is internal staff are the ones who
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are driving policy. those are going to be stephen miller and some other folks and as the cabinet gets there, they are going to shape with the details are and move the process forward on how to implement it. but trump is very clear about what he wants to do and investors need to take that seriously. he's moving forward even without his full staff in place. jonathan: always great to catch up with you. good to see you, sir. we've learned a lot over the last few days, but the real objectives are. ultimately, the border. immigration, narcotics. the tool to deal with it, tariffs. opening up negotiations at of january 20. lisa: do you take them seriously or do you taken literally? maybe the answer is yes. how do you interpret this ahead of his even taking office in a time where headline risk is very real? jonathan: something bank of america said yesterday morning, that investors are underestimating trade war risk under a dumb trump presidency and emfx specifically is
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underestimating trade war risk and looking for a 5% slide in emerging market currencies including, of course, china's currency. lisa: is this going to be isolated to the currency market or does it have broader effects across asset classes? we don't know yet with the application is going to be. jonathan: this is just the beginning of a long journey. we are going to hear a lot about this for several years. equity futures up by close to 1/10 of up with stephen cook on a potential cease-fire deal between israel and hezbollah. ♪
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i can't believe you corporate types 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.
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jonathan: six day winning streak, the longest in september. equity futures just about unchanged. small caps down by .4%. in the bond market, a better tone. yields lower. some clarity on who will lead the treasury. cease-fire deal proposals in the middle east. yields of a single basis point today. 428.48. looking at this asset classes you would not have a clue what is taking place elsewhere. let's turn the page to fx. dollar strength. mighty dollar strength against the canadian dollar and mexican peso. advancing by 1.2%. lisa: this will be the playbook
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by which a lot of people are going to be looking to trade some of the headlines we are getting on trade. the announcement on true social, the pathway for announcements for the president-elect these days talking about a 10% additional tariff on chinese goods and 25% blanket tariffs on canada and mexico. really affecting the fx channel. the opening salvos. is this negotiation or a taste of what is to come? jonathan: the dollar index pushing 107. eight consecutive weeks of strengthening. donald trump going to impose additional 10% tariffs on goods from china and 25% on all products from mexico and canada, saying it's necessary against migrants and illegal drugs. annmarie: he is still in mar-a-lago. he's not an the white house -- in the white house what you see movement. justin trudeau wanting to start
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the negotiation. he is saying there will be an executive order when he comes in . is that the opening salvo or going to be a real executive order at the end of january? he comes after he put his treasury secretary in place. he loved the market move yesterday. you saw that across a number of trump twitter posts and talking about how this rally was up. he had a moment in time to show everyone was talking about how scott besson is pragmatic when it comes to terrorists -- tariffs, but on the men that will be in charge. lisa: i will go up this morning thinking i need to speak the whether it is -- the markets are up and we can hit them with this -- or it's a matter of i need to take the reins back and show it is my agenda and this is what i'm going to do. annmarie: i think trump would call this either coordinated chaos or leave. you can move from one thing to
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another with things are slowly living in place. the market is up so maybe i can hit them with this. jonathan: i think he has been consistent on this point. i don't think it is a back-and-forth. we are not playing multidimensional chess. we heard this from the campaign trail. selecting a treasury secretary, polls suggested this was the clear goal to have someone who agreed with his views on tariffs. i think he's been very consistent on this. he's brought up mexico a million times, as have we over the past few months about what we see in the coming years. lisa: the question is how much the market acts as a check. how much is he sensitive to not unraveling some of the gains experienced in equity markets. it's a question mark. e way he's going to do it? will this calm the market will going heart of the policies he has stated he's ready to go on? jonathan: possibly we saw that a few times in the first. president biden is still the
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president. this could all change again on january 20. lisa: he tried to remind us of that this morning. a few times. i'm still here. just letting you know. jonathan: an important story for tesla. gavin newsom unveiling plans to offer rebates to ev buyers of trump repeals a federal subsidy. newsom's office telling bloomberg the proposal excludes tesla's popular ev models. there has been tons of pushback against this proposal, including for the democratic congressman in california disagreeing with his own governor. annmarie: ro khanna. he is saying how many tesla's are made in his district, more than 500,000, employing 20,000 people. "let's not play politics with keeping manufacturing in california. it would be foolish to exclude tesla. have we learned nothing from snubbing tesla at the ev summit? took it for a spin around the
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south lawn. tesla was notably missing." where we going to snub this individual once again? lisa: it comes when people are saying policies are becoming transactional. i wonder about that. it's easier to be transactional when you're in the white house. that is one clear message. this does feel like a high school spat were newsom and musk are going after each other because it had a long-standing tif. tesla -- customers are allowed to buy tesla's without subsidy. why would use lose him now -- with that subsidy. jonathan: you are producing teslas in california. i don't see a big resins from gm, stellantis and ford on the west coast. it is bizarre they are doing this. it appears they have truly learned nothing.
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lisa: it becomes personal. you wonder how much and people take the upper hand by trying to strip out personal vendettas. newsom and musk have a long-standing personal vendetta and that seems to be coming out and policies. jonathan: and that vendetta continues. investors digesting fed speak ahead of the latest fomc minutes do it 2:00 p.m. eastern this afternoon. we heard from neel kashkari saying it's appropriate to consider a december rate cut. goolsby making the case for easing. i'm thinking back to the news conference with chairman powell where he said to the news conference and participants watching there was nothing to model yet on the tariff front. do we have something to model now? lisa: can you model it from the true socials? interesting to see how the message that. both goolsby and kashkari came out and said it's appropriate to cut rates, with goolsby saying the neutral rate was going to be 2.9%. he leaned into that assessment
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of fed officials. it signals maybe they will not come out with modeling. when it comes to tariffs there are 70 people who said they are disinflationary or deflationary and it becomes difficult to know how to begin to model these from an economic perspective. jonathan: the respect to see fed chair auditions in the next 12 months? lisa: it'll be curious to see we have that before then. kevin warsh is the likely successor. he has not been a raging dove. jonathan: i would say a raging hawk. lisa: is that the qualification that makes it ok? becomes muddy. jonathan: that name is always circulating. ideologically incompatible with donald trump from the campaign trail. lisa: absolutely. drupal was prudent -- jerome powell was put in place by donald trump. we are talking about this.
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sometimes people can become less appealing to the president-elect post facto. jonathan: i will go through the calendar. december 6, payrolls. december 11, cpi. israel and hezbollah engine closer to a cease-fire agreement. the security cabinet meeting today and may vote on the deal. steven cook writing, "like everything since the conflict began back in october of 2023, leaks and reports of progress should be handled with great care. prime minister netanyahu is motivated because he was to deliver for president-elect donald trump." we have seen plenty of head fakes in the last several months on this front. does this feel different? steven: it does feel different. the reports coming out of israel, lebanon and washington are more detailed than the eminent cease-fire deals we have heard about for the last six months with regard to gaza. there is actually a fair about of opposition to a cease-fire
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with hezbollah. the mayors of the northern communities of israel are in a rage believing this cease-fire will leave them vulnerable once again to attacks from hezbollah and even october 7 style attacks. those towns of taken a beating from hezbollah rocket fire and missiles over the course of the last year. the folks who live there just don't believe the idf has done enough in order to push hezbollah back to make this community safe. annmarie: there are reports that netanyahu approved this planet principal, but what does it take for the cabinet to get on board? steven: that is the rub. the security cabinet will be meeting at about four hours from now and there are members who are raising questions about it. notably the agriculture minister who used to be the director of the internal security services, who has said and vowed to the
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mayors in residents of northern communities he will not vote for this agreement if it is a cut and paste job from the u.s. security council resolution 1701 back in 2006, which was never fulfilled and was in agreement on paper. the israelis are looking for -- the opponents as it currently stands are looking for actual action, not just a piece of paper that commits hezbollah to staying far away from israel so we can't attack it. annmarie: do you think it does enough to ensure that israelis can return to their homes? steven: once again, the deal calls for the deployment of the lebanese army up to the israeli border. it ensures hezbollah has to say north of the river 18 most north of the border. there is a committee led by the united states that will monitor violations. all of this to parental goodwill of the parties -- depends on the
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goodwill of the parties. you can imagine the israelis cite a violation want to retaliate, yet the united states does not agree with that, creating tremendous tension between washington and jerusalem. this is a complicated deal. netanyahu is motivated to get this done because he wants to deliver something to president-elect trump before inauguration. he just politically can't bring the gaza conflict to an end by the time the president-elect takes the oath of office. lisa: how much is there a bigger takeaway? people are exhausted by the wars, with israel and in gaza and with hezbollah, as well as well you're seeing in ukraine. with more than 800 deaths of israeli soldiers in ukraine, hundreds of thousands of people having been killed, there's a real question here about whether the populations will even tolerate an ongoing conflict. steven: that is the case. we seating ukraine.
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people are going quite tired of it and the idea of a cease-fire in place is growing there. in israel, this is a doctrine busting conflict. they never contemplated fighting a war on multiple fronts for over a year. there doctrine is to fight short devastating conflicts on enemy territories they don't last much longer than three weeks. there's a revolving door of reserve duty in which only about 70% of the population takes part. the others are exempt. there is a real burden on the population, on the kids and reservists who are as old as in their 40's and 50's who have been in and out of the gaza strip, in and out of southern lebanon. people are tired of it. if the northern communities in israel are opposed to this deal, there are many who want to bring at least the conflict in the north to an end. so long as it brings the rocket
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fire to an end, which has not happened yet. lisa: what are you looking for to know this is eminent? steven: for the cabinet to vote for it and not be delays or postponements. i'm looking forward to be successful for the lebanese army to actually deploy and the israelis to be satisfied they can retaliate should hezbollah violate the cease-fire, which is only supposed to last about 60 days. jonathan: well hope for peace and we hope we get a deal sometime soon. steven cook, thank you. i think crude was down 3% across the board. lisa: the markets are taking this seriously. is this a time to be trading the headlines? every single time there's a head fake and something goes wrong. is there something we can look for that could potentially signal it is real? annmarie: there's a lot of momentum going into this deal. israelis want to get this done now. the impetus is there to deliver
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a win for president-elect trump. one thing off his agenda as he enters office. jonathan:'s second term has already started and we are in november. annmarie: it has. lisa: it was intentionally done that way. i wonder where we will be on february 1. jonathan: based on the policy pushes over the last few days. lisa: i wonder how much she is trying to basically take some of the wind out of the sails. try to take this little bit of candy away from the population. jonathan: welcome to the program. equity futures on the s&p positive by .1%. here is your bloomberg brief. the doj and google making closing arguments in an antitrust case. the justice department accusing the company of monopolizing the online ad market. google claiming it is due to its superior products. a decision is expected by the end of the year. president-elect donald trump is considering appointing an ai c
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zar responsible for correlating policy and government use of technology. elon musk reportedly will not take the role but expected to be involved in discussions on ai use cases. starbucks sang its software supplier has been hacked, forcing the coffee cherry to manually lock employee pay at hours. the supplier saying systems were disrupted last week in a ransomware incident. that is a mess before the holidays. annmarie: wow. that is so much time and labor you have to use their instead of paris step -- baristaing. >> in this environment where cpi, inflation across different products is eating away at the wallet, the consumer is looking for someone who will provide the ability to stretch the dollar. jonathan: is that even a word? that conversation continues. this is bloomberg.
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jonathan: equity futures pushing higher. yields higher by a single basis point after dropping by double digits yesterday. 10-year back to 428.48. inflation set to squeeze holiday shoppers. >> we like to separate value versus -- price paid for quality received. if you look at the retailers winning in the environment, they are giving back real value to the consumer. cpi, inflation across the different products is eating away at the wallet. consumers are really looking for someone who will provide the ability to stretch their dollar. jonathan: holiday shopping
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expected to break records this year, signaling how higher prices are impacting consumer spending. nela richardson writing, "higher prices could dim holiday cheer. wage growth for hourly employees was outpaced by inflation." nela, great to see you. what is the outlook for spending this holiday shopping season? nela: it's at record highs. the national retail federation expects the consumers to spend $900 per person -- for family this year. that is up $15 from last year. strong spending this year is expected. the problem is, we are on a knife's edge when it comes to wage growth versus inflation. we only expect for hourly wages -- hourly workers, the 60% of the labor market, we'll expect their wages to trend just above
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cpi inflation. that is 30 basis points. as prices are going higher, wages are keeping up. jonathan: how do they feel versus how much they do? how they feel has been awful for quite a while. i look at retail sales and they are really robust. what he swings that? cash explains that -- what expands that? nela: the labor market. people are employed. layoffs are very low. there is not a threat and pending threat of doom when it comes to what will happen after the holidays. will they still have their jobs? many workers feel confident about the labor market. what they lack confidence in is in prices. they go highertiment. lisa: has there been a behavioral shift? whether it is the financial crisis or simply the time of high inflation and feelings like you need to get your personal
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finances under control, you are not seeing credit card delinquencies pickup in a material way. is there a message from that? nela: consumers are being sharper about their finances. we can't go to overboard and optimistic with the low delinquencies relative to the past. we have to look at savings rates which are also low. we are in this purgatory in terms of consumer balance sheets. they are getting by but living paycheck-to-paycheck. ting away savings at the same rate they used to. credit card to link with these are not picking up yet. this is a happy period for the consumer but a sensitive period. you don't know if it's way the consumer into more debt and less savings than they have been. lisa: it's taken a long time for the average worker to catch up with inflation and they feel like they have been left behind. jon was talking about the sentiment service. that people caught up? what would it take for them to catch up with wage gains that
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could put them at least on the same track they were or relatively close as pre-pandemic? nela: we look at data all the time at adp. hourly workers. i was reviewing 14 million hourly workers and their average pay. for the better part of the last four years the worker has been underwater. there wage growth is not keeping up -- their wage growth is not keeping up with consumer price inflation. we have not kept up as a workforce. there is pockets of light. we are finally starting to see a little bit of an increase in wage growth above cpi inflation, but it is tenuous, vulnerable, and anything could trigger a reversal in the wage growth versus cpi. no, the worker is not keeping pace. consumption is being led by wealthy, more affluent households. the average worker is still trying to keep up. that is why you are seeing lower
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savings rates. yet not spilling over into delinquencies. that will be the barometer to watch. annmarie: they are spending more this holiday season. december last year inflation was north of 3%. the prior christmas it was north of 6%. is there an idea the consumer is just getting more used to inflation? nela: they are certainly spending like it. they don't like inflation. they may rally against inflation when it comes to our sentiments, but it has not dented the enthusiasm in spending. what consumers want is cheaper prices very quickly. we are used the real-time consumption. they are getting that right now. after the holidays, it will be a good benchmark for the real status of the consumer. people tend to go over their skis a little bit during the holidays. will they pull back in january or will companies pull back in january? that is what we are looking for. lisa: some of the gains are fragile and could be derailed.
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look at derailed them? nela: higher prices. if consumers or businesses who were betting on lower interest rates going into ting into the r don't get that bet realized. there are indications inflation is sticky, not moving down in a straight line that was expected. if we see as stalling in interest rates, to of consumer credit becomes more expensive, if it costs more for consumers to borrow, to buy cars which are also seeing price growth, that could stall some of their spending behavior. we're hearing a lot of fed speak suggesting just that. there has been no fed speaker i have heard recently that has come up definitively and said inflation is going on the right track and we are confident enough we will lower rates in december. there is uncertainty around the decision. jonathan: it will be an interesting few weeks.
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nela richardson of adp. up next, we catch up with stuart kaiser of citi and congressman french hill. we will catch up with him in a second. the next hour of "bloomberg surveillance" and just a moment. and we will speak with thierry wizman as the trump trade were commenced very quickly overnight. this is not what i expect of this morning. we are higher by .2% on the s&p 500. the bond market is a snooze. the action is in foreign exchange. the dollar is a whole lot stronger. from new york, this is bloomberg. ♪
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>> 2025 is a critical year. we are walking the tight rope to the soft landing on the other side. >> if the fed keeps stimulating and the economy doing well, some liquidity will pour into the equity markets. >> stick that soft landing. they don't want to overdo it. >> he told me inflation is in the process of getting stuck in the 2.5% to 3.5% range.
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>> maintain economic growth. i can't stress how important that is. >> this is "bloomberg surveillance," with jonathan ferro, lisa abramowicz any and reorder. -- and annemarie hordern. jonathan: the nasdaq pushing higher. the nasdaq 100 positive by .27%. some drama in the foreign exchange. check in with the dollar is doing to the mexican peso and the canadian dollar. vicious rally for the u.s. dollar over the last two months. we added some weight this morning after terror threats from donald trump. lisa: an additional 10% goods from china. 25% on mexico and canada, why you're are showing the canadian dollar and mexican peso. the idea of what are the goals? he cited the fentanyl crisis
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sang a lot of drugs are coming in from china through mexico and talking about immigration. the timing of this, it's been three weeks since he was elected. he has a long time before he gets to the white house. annmarie: he is wielding this raw political power out of mar-a-lago, not the west wing. two things and focus. it's about illegal immigration and narcotics. two, the remedy will be tariffs. canada and mexico are more interesting. usmca, and the response. when it comes to china a number officials come out. when it comes to canada, you have your leader actually make a call last night because they were so concerned about this 25% tariff. jonathan: coming up this hour, we catch up with stuart kaiser of citi. we will speak to congressman french hill on the fallout in washington, and we will catch up with matthew luzzetti on what he thinks they will pause the
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federal reserve for the whole of 2025. we begin with the equity market rally losing some steam as president-elect trump's tariff escalation fuels dollar strength. stuart kaiser writing, "the flux of markets has been trump policy and geopolitical events that shifted risk specific pricing but not reached critical mass to drive rod based de-risking." good morning. do you see evidence of that this morning? stuart: we will see how futures react with tariff announcements. the market has been on top of this. it has been in precious metals, china exposed equities in the currencies. the market has viewed those as pockets of risk. they will be surprised by the magnitude of tariff proposed on former nafta country members. without a doubt we will see how the futures react. this is what we are in for for the next couple of months. jonathan: how credible do you think the threat is?
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stuart: you have to read it as credible. increased tariffs in his first term. this was part of his campaign. you have to view them as credible. some of his inner circle are talking got these big negotiation tactics and that's potentially true. it's only effective if you use it. you have to view them as credible threats. lisa: the reason why you're seeing people trade on this even if the trade gets faded in a couple of hours because of another headline that comes up. is this a good time or bad time to be a traitor? -- trader ? stuart: it is good if they like market volatility . it is not payrolls released at 8:30 a.m. on december 6 and i am positioned to trade around that. it is kind of random in terms of timing. and it's also coming from a lot
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of directions. traders are dealing with potential impact on food policy and tariffs, etc. nobody can say this is totally surprising. these were discussed during the election as priorities to deal with. it is a difficult time to be a trader unless you get it right. lisa: specific headlines affected health care and appointments that have affected the health care sector. you had a great note talking about how different sectors have traded differently from the overall headline in tandem with people's belief. do you think one of those moves is stickier than the other in terms of health care given the fact some of the potential nominees for cabinet positions have talked about disrupting health care in america? stuart: two sectors that were wildcardy were herdy were healtd energy. it is hard to decide what will go on. you have to go down a level. even within health care that is the case.
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pharma impacted in one direction but you have biotech potentially, fitting -- benefiting from m&a. it is a complicated sector in terms of the policies being proposed impacting different levels as you go around. energy is the same way. we will drill a lot. that might push the price of oil over. those two sectors in particular are very complex right now. it will be difficult to trade. the markets are telling you they think banking is persistent. that is were comfortable -- where people are comfortable being long. health care and energy are the two that will be more pulled in multiple directions. annmarie: changing policy in washington, d is like moving a massive tank. it takes a long time. would now be a good entry point given how they have fallen with some of these announcements? stuart: it's possible. our view on health care has been it was going to be difficult
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going into the election. at the top line, relative to the credibility question, how much of this stuff is more pie-in-the-sky or rfk junior personality things versus what they will push through? there is potential -- it will be a time to fade this stuff. right now when things are so uncertain and more wishlist than actual policy might not be the time. it is three stages. the initial risk on reaction to the election, then what we are now which are nominees and policy proposals, and next year when it's actual policy implementation. will be get closer is when you can think about fading some of these things. annmarie: in the transition wire u.s. markets taking it in stride and european markets are down across the board? stuart: great question. u.s. markets are still benefiting from the risk on repositioning part.
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a lot of the policies on the tariff side are viewed as more pro-u.s. and hurt europe to some extent. of both the middle east and russia-ukraine. if there's one thing the trump administration is focused on, it is domestic growth. america first type situations. if you believe he will be successful at that, by definition u.s. markets should benefit more. in a wash? we will have to see but that's part of your now. jonathan: what is your read on domestic growth. kohl's and best buy both trimming their outlook. what is your read on things right now? target hit a landmine. inventory problem. that is a retailers? what about consumption and how good u.s. growth is? stuart: the retail folks did a survey of pre-holiday season. it looks pretty solid. that is a good story. with williams-sonoma, they put up decent numbers on their
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earnings. it looks like how it has been. the underlying growth momentum seems pretty positive but you are at that level where you get some good news and bad news. because of that the bad new stuff is getting punished pretty bad. over the summer we were treating decelerating growth. you have to trade at a solid growth level but close enough to borderline that when you get bad news you get a ton of reaction. payrolls will be massive on december 6. growth is solid but, you know, not exemplary. we have to trade it that way. in those environments you have risk reward and volatility. you are close to trigger points in a lot of spots. lisa: you talk about winners and losers. the winners being the walmarts, the losers some of the big tech names. i want to read commentary from the coals ceo -- kohl's ceo.
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the expectation for a highly competitive holiday season. is this a new time with a big will get bigger? anyone who has that platform can basically dominate when it comes to data, some of the technological advancements and deliveries are going to outperform at a time when they can offer better price competition than some of the other companies that have not had the scope to really expand that way? stuart: i think that is true and it brings the tariff discussion in. are the bigger companies better set up to deal with any potential tariffs than smaller competitors? the big winner is hard to say. target is a big company. they clearly got something wrong based on how the stock price reacted. maybe a walmart or an amazon gets a little bit of an advantage but there still an execution risk. i'm not out of the question this is a more competitive holiday season than last holiday season. i feel like these things are always competitive.
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there is an advantage there. lisa: the bigger question is, how much of a macro tell are any of these given the fact there are winners but some pretty big losers? we are pointing to competition, who are pointing to unwillingness for consumers to buy things and prices are too high or the quality is enough. stuart: the macro reit has been tricky. you had a period when the dollar stores did really poorly. that would have reflected you are having pressure on the lower end consumer. in that same period walmart did great. there was some discussion. that is just because people are trading down to walmart and that is all bad news. i have my medium and higher consumer trading down. i need to be worried about that. the retail sales numbers are ok. this gets back to jon's question. economic growth is fine but slowing to where you will get
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good results and bad results. that will create volatility in the market and you need to risk manage that a little bit. annmarie: are there more anecdotes and more consumers are trading down and potentially that is the start of something bigger? stuart: it does feel that way but i can think back to last august. 2023. you had some weak data out of some retailers on private label credit cards. this was the moment. credit cards under pressure and credit balances are rising. the anecdotes, yes, they are stacking up. i feel like people have been trying to fade this for an extended period and it's always been too early. yes, the anecdotes are stacking up but i'm not sure that is out of the blue. this is something people have been expecting an ongoing process. we have to -- i have to say it -- weight on the data. -- wait on the data. jonathan: we have had somebody
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had fakes. it is good to see you. have a happy thanksgiving. stuart kaiser of citi. futures posited by pointing 25%. -- .25%. jack smith asking the judge a motion to dismiss the case. the decision coming due to a long-standing doj policy barring the prosecution of a sitting president. intel securing $7.9 billion in federal grants for the -- from the biden administration, the largest direct subsidy to boost u.s. chip production. people familiar telling bloomberg intel get money for arizona, oregon. formula one set to expand to include a new american team partnered with general motors. the 11th team will be called
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cadillac f1 and will be run by andretti global. lisa: i'm excited for this. because of netflix, f1 is gaining popularity. i want to pointed out. jonathan: good luck to them. personally not happy about it. i think the grid is already full. that is a problem with new teams because they are never good. it takes a while to get better. lisa: you just don't like american grids. jonathan: they are racetracks. it is different. donald trump's terror threat. -- tariff threat. >> i would be looping in congress right now. candida and mexico are very good at coming up with retaliation strategies. jonathan: sports. speak for yourself. from new york, this is bloomberg. ♪ ♪
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you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com 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. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah.
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jonathan: two stocks to watch in the last five minutes, best buy and the other name is kohl's. they are trimming their outlooks. kohl's down by 13%. we are seeing significant weakness on either side of the trade. dollar strength the story this morning off the back of the tariffs proposed overnight. under surveillance this morning, donald trump's tariff threat. >> if i was donald trump, i would be looping in congress now. canada and mexico are very good at coming up with retaliation
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strategies. if i have congress on board, it makes it harder for them to do specific congressional areas. personnel as policy. without robert lighthizer you don't have the key personnel to move these tariffs quickly. jonathan: president-elect donald trump vowing to impose a 25% tariff on products in mexico and canada. an additional 10% tariffs on good from china. calling it necessary to clamp down on the flow of migrants and illegal drugs crossing america's borders. let's loop in congress with the republican congressman french hill of arkansas. welcome back to the show. always wonderful to hear your perspective on things. we want your reaction to this. how credible is this threat from donald trump overnight? rep. hill: good morning and happy thanksgiving week to you and everybody at bloomberg. this is a critical threat by president trump. we have unprecedented border problems with particularly mexico on fentanyl and 9 million
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people that crossed the border. we have not been able to secure the border under the biden-harris administration. this was a major campaign point four president trump. i believe -- for president trump. i believe he is making the statement to tell canada and mexico we have got to get our border security in the united states squared away. secondarily, he's very concerned about imports from other countries that are going to try to take advantage of the usmca and bring in products the manufacturing in mexico that may skirt some of the requirements of the usmca. both things are on the table. border security. trying to strengthen the parameters of usmca for some exports from outside manufacturing companies. annmarie: president-elect trump sees illegal immigration as the problem and tariffs as the
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remedy. you just mentioned usmca. the exit if order overrides usmca. should the president-elect beginning congress on board, members like yourself? rep. hill: it's important to bring congress into the discussion with the president as soon as possible. remember, when he was president he worked very hard with canada and mexico to renegotiate the north american free trade agreement and create the usmca. during that time he had strong cooperation from mexico on his remain in mexico policy, which was to say if you are seeking asylum in the united states, our law says you have to do that from a third country. president biden just waved that rule and allowed millions of people to come into the u.s. while they seek asylum. probably 90% will be required to be deported because they are not eligible to seek asylum. i believe president trump's is
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using this tariff threat to tell the new government of mexico let's get serious about migrant flows and get back to are remain in mexico policy or remain in a third country policy. annmarie: is it a threat or do you think come january he will follow through with 10% tariffs on china on top of others he says and 25% on imports of mexico and canada? rep. hill: we know from his first term in office he's willing to deliver on his threats on tariffs to bring other countries to the negotiating table, both an economic and trade issues and other matters. i consider borders acute or -- border security atop issue. people are sick and tired of the crime impact, the fentanyl impact, the death in our communities, and the overwhelming loss of control from tijuana to brownsville on the mexican-american border. yes, he would deliver but he's also using it as a lever to get
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serious conversations in ottawa and mexico city with washington as we turn the page and avenue presidential administration -- have a new presidential administration. annmarie: we are looking forward to hearing who will get the top committee post. in two weeks we might know that. i know you are up for potentially leading the finance committee. what is the status of that? rep. hill: i am making the case to my colleagues, republican colleagues on the house steering committee that i believe because of my long-standing bicameral communication and collaboration capabilities with the senate, my leadership in the house over the last decade, and probably most importantly the fact i was in the private sector for decades and was regulated mightily by the federal government through the securities regulators and the banking regulators that the private sector experience, my
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experience on capitol hill and communication and collaboration, and my work and executive branch at the treasury and white house makes me an ideal candidate to service the house initial services committee. what is amazing about this is based on my research, were the steering committee to select me i would be the first person with a banking and finance background before i entered congress to service chairman since the teddy roosevelt administration. it is a long time ago. i hope my background and resume will carried the day for leading the committee. lisa: face of what we heard from donald trump and his priorities when it comes to the financial sector, a lot of people point to the potential for crypto being the first on the agenda of any chairman. is that your take on it as well? rep. hill: i think that's very important. if we don't get our policies for digital assets completed during
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the lame-duck, it will be a top issue for the house financial services committee and looking forward working with the new banking committee chairman tim scott of south carolina. we need a market structure built that gives us the framework for digital assets so innovation, coding, company formation can take place in the u.s. and not push that innovation offshore to other markets. secondly, we do need a dollar-backed stablecoin as a tokenized payment of the u.s. dollar for youth on the blockchain. both innovations will help support the future of web 3 and make the dollar this strong's currency in the world and america the leading technology innovation capital of the world. lisa: is your background in finance and attribute or potentially not really even weighing in on this race at a time when a lot of people are pointing to simply pass
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allegiance to donald trump? -- past allegiance to donald trump? rep. hill: the chairmanship is important. background, communication, collaboration atop issues. i worked with the trump administration in the previous time in office. the vanke supervisors were a major source of collaboration for me in reforming our regulatory systems for capital markets and the banking system. i believe that will be the case in the second term of donald trump. i will work very closely with what i will presume to be excellent nominees for the ftse to the cfpb to the sec. we will in fact make community banking great again through that regulatory legislative cooperation. jonathan: i'm not in the endorsement business and i don't intend to start but it would be nice to say this on behalf of our audience, nice to have some of financial services experience
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run the house financial services committee. we appreciate your time this morning. thank you. congressman stuart kaiser -- congressman french hill of arkansas. annmarie: unlike most people that work on wall street and the big banks, he actually come from a community banks issues. jonathan: coming up, matthew luzzetti on why he things it is a close call in december, rate cut pauses, ny 2025 is nothing but pause -- and 2025 is nothing but pause. this is bloomberg. ♪
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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.
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jonathan: equity futures on the s&p 500 posited by .2%. up by close to a third on the nasdaq 100. things ok and the equity markets this morning on the back of a six-day winning streak on the s&p 500. let's get you some morning movers with manus cranny. manus: what is not grant is the department store land. you broke the news but we are looking at the stock down 36%. the language used in the guidance is conservative. the ceo will leave. the guidance down 6% to 7%. that was originally 3% to 5%. i don't need to lecture you on the bifurcation of the consumer. we are going into black friday
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with some banging bargains. to understand the threat of tariffs, extrapolate the flow of autos. 25% possibly on mexico and canada. mexico delivered 16% of the vehicle sold in the united states in 2024. 2.5 million cars, trucks and suvs. canada delivered 7%. this is an example. this is gm down 4%. are we heading towards a rewrite of 2020? the rewrite of nafta, the usmca. autos definitely on the sideline. as a parting gift from president biden, peter weight loss drugs and you can have them. 7.4 million people can access glp-1s, spending $35 billion over nine years. what is the rollback risk? jfk junior -- rfk junior gets into power and changes some of this proposition. yes, a proponent of
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healthy diets. jonathan: we will touch base with manus and about 60 minutes. our top story, donald trump vowing additional tariffs of 10% on all goods from china. 25% on product for mexico and canada. posting on true social, "it is necessary to clamp down on illegal drugs and migrants flowing across the border." lisa: interesting to see the reaction in markets. stocks and bonds are not really responding, except for a couple of select names. it really is in the currency market. it highlights to me how the market is going to be responding in real time and how trump will respond to markets responding to his tariffs. your head is spinning and so is everybody else's. deutsche bank saying the previous playbook was the last that market reacted, the harder he wanted it when it came to
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negotiations, the greater escalation there was. will that be playbook in february, not now because it's only three weeks after the election? annmarie: he's getting some negotiating done. we saw that with justin trudeau making a phone call. a trump official has messaged me and said you guys are reading too much into it. this is about illegal immigration and drugs. if you look at some of the polling done postelection, the top two issues were inflation in the economy and immigration. more people voted for immigration than they did when they voted for trump in 2016 and 2020. jonathan: is the southern border, an the northern border to some extent but ultimately the southern border. narcotics from china into mexico and the flood of illegal immigration in this country over the last several years. lisa: if you are the ceo of a company that depends on the supply chain from mexico and canada, let's say it is a messaging tool. what do you do with that? it is one thing for marcus to respond, as a biggest -- for
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markets to respond, but as a business executive do you try to cater to that? mexico doesn't want to anger and get ahead of angering trump. they are saying we don't want to chinese car manufacturing creating a car factory in mexico. annmarie: the new york times has a stat about the northern border. although illegal border crossings from mexico plummeted over the summer, the number from canada is at an all-time high. now they are trying via canada. jonathan: the latest on the trade front and security. israeli officials say the cabinet is expecting a proposed cease-fire agreement today. the passage is considered likely and could be announced almost immediately. annmarie: we will see that cabinet sit down in about three hours. everyone says this will be a
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green light but admiral kirby said nothing is done until it's done and it is not done now. why? we have been here before with false starts when it comes to negotiations in the middle east. what is interesting based on what steven cook was saying, who is the credit for this? brett mcgurk and joe biden or president-elect trump who's been wheeling an immense amount of raw power sitting in palm beach? jonathan: based on reporting from the israeli side, it's a gift to who? annmarie: trump. jonathan: not president biden. annmarie: they want one less thing in his agenda when he walks in. both sides will say the are the reason why the deal get done. jonathan: republican lawmakers expressing concern over the national security reveal of nippon steel's taking over u.s. steel, raising the prospect of a congressional probe. this carries on and on. lisa: japan's prime minister asked joe biden to approve the nippon steel deal before he
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leaves office. it raises the question of just how much of a security issue this was, national security versus a transactional or election related issue for unions. this is going to be a very interesting time when we talk about transactional types of trade issues, national security issues. watch the space going forward. annmarie: i don't know why the letter came out now. we have been talking about it for weeks, actually months. it feels like speculation is obvious that it was used for a political use case because of votes in pennsylvania. twice a letter coming out after the election? it was president-elect trump who was the first essay he would block this deal. if the gop is asking for documents now and trump says he would block the deal, it will complicate how far the republican house members get. jonathan: i think a lot of people agree with you. it has become a political tool in await is not meant to. annmarie: it is meant to be
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a national security position to make sure you can protect some of these deals going into the united states. basically you can put anything into sify us and becomes a black hole. jonathan: here's the latest on the federal reserve. investors are debating the outcome of the december meeting. matt luzzetti writes, "i 25 basis point cut in december but that's a close call. thereafter we expect an extended pause which keeps the fed funds rate above 4% into 2026." matt, good morning. been looking forward to doing this with you. 2025, a pause for the whole year? matt: the details of the underlying economy we see now, the consumer has made resilient, provisions the household income, the labor market looks more stable than what we thought. inflation has been higher over the past several months. i think you will see that when
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the fed updates the forecast. growth will come up and inflation will come up. that dynamic definite support the extended pause. overlaid with that, policy changes we expect, extensions of tax cuts, further tax cuts, tariff policy the lives inflation. that leads to stronger growth we think. higher inflation that stays above 2.5%. a neutral policy rate closer to 4% and the fed above 4%. jonathan: you will see that when the forecast you will see that when the fed updates the forecast. ? the december meeting or do they wait until march? matt: i don't think they reflect that in december. they have historical precedent to reflect economic policies. we look back to december of 2016, they ramped up the discussions around the policy look for tax cuts. half of the officials built it into their policies. more officials sought is a shift in the distribution risk. they are reflecting stronger growth risk.
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for december, that is where to look. . officials will think about inflation risk to the upside and growth risk to the upside and it will take details in march or june for them to fully reflect that. lisa: what policies are inflationary? please read from people who talk about tariffs being disinflationary. it reduces growth. what is the most inflationary of the policies? matt: for us it is the combination of the policies. demand-side policies via tax policies, including tax cuts built into the forecast. we see tier four policies as inflationary. there's a lot of margins that can mitigate that impact. if you go back to the 2018-2019 expands, you saw it. look at household appliances in 2018. there was a steady downtrend. tariffs hit and there was a steady uptrend after that. we think both will be inflationary. to your point about the market responding and now must
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response, there is uncertainty about what will be in plummeted. from a bond market perspective you have negative growth affects the same time you have positive inflation effects. it is difficult for the market to digest. it creates tension in the fed's dual mandate. lisa: where are we in terms of economic momentum? people got this more wrong than the expectation of policy given how much the economic data has outperformed in with more momentum than the fed realizes or pretty much the fed understands there is momentum that is made re -- maybe overly confident in how disinflation can continue? matt: absolutely more momentum than what the fed built-in in september -- built in in september. growth has outperformed expectations. for 2025, growth comes down below 2% again.
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the fed has a close to 2%. there is significant momentum. a business supportive administration helps sentiment. that leads the growth of 2.5% or above next year, a continuation of the 30 economic growth we have seen. lisa: when it comes to the policies out of washington, you say of scott besson did not get treasury and that went to robert lighthizer, what do you make of literally the last 48 hours? we get scott besson but then donald trump says i still want tariffs. matt: we take two views. we believe tariffs are coming. we have built into the forecast a 20 percentage point increase in tariffs on china next year. to 10% that was floated overnight would be fully consistent with what we built in. we spec the universal baseline tariff in 2026. the second question is about how it gets phased in. we have it starting smaller than
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the maximalist approach of getting phased in over time. the past 48 hours i would view as the market took scott besson's treasury nomination as a very positive sign on tariffs. president trump perhaps did not like the idea it was received as being watering down the tariff focus and doesn't with the have a perception the treasury secretary will be the one setting policy. he is setting policy. i think we intentionally got this announcement overnight following that nomination. annmarie: eisai personnel is policy and scott besson, how he thinks, what that means for the treasury or pushback on individuals that will want to implement tariffs. who are those individuals? doesn't matter? -- does it matter because trump is making the decisions? matt: trump will be the driving force with trade policy. where robert lighthizer ends up
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will be important and we don't know that yet. if he ends up within the administration. if you go back to trump and lighthizer, it's a several decade focus on terra policy and trade policy. it is not something new that they baked up. trump was writing articles in the 1980's about japan. in the 1990's about nafta. we should not anticipate this goes away when he gets elected. he will deliver on some policies. we can view the voices in the room as a counterbalance to that and not something that illuminates the policies. lisa: everyone is bullish. nela richardson said people have not caught up when it comes to their salaries, when it comes to the inflationary impact and how real wages have not caught up. you are seeing gains but they are fragile and they could be disrupted if prices do go back up. if you see another bout of inflation.
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they could torpedo some of this momentum when it comes to consumer sentiment but the melt up in a way that is not getting priced at all. matt: we have a population that is far more sensitive to inflation than it has been in decades. i think tariff policies are different than tariff policies back in 2018. we had inflation that was low, a little bit of a bump and inflation but it did not really a factor into psychology and sentiment and household confidence. it is a different environment and greater risks around it. we should view that inflation bump is being offset by other factors. strengthen the labor market and nominal wage growth. savings are substantially revised higher. wealth income ratios are at record high levels. i think at the margin that is something that is adverse or negative but there are other factors that are quite supportive for the consumer. jonathan: matt luzzetti, good to
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see. interesting call 425. equity futures positive by .25%. here is your bloomberg brief. kohl's shares falling. a 9.3% decrease in comparable sales and cutting the forecast for the year. soft sales continuing to wane. that stock is down 16%. check out this. walmart joining a growing list of businesses reversing course on diversity, equity and inclusion initiatives. the company will no longer consider race and diversity when considering supplier contracts and financing eligibility. in sports, the baltimore ravens beat the ela chargers monday night. lamar jackson throwing two touchdown passes and running for a third with derek henry adding 140 rushing yards. lisa: the what my take on
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sports? jonathan: on walmart. lisa: there was an anti-ddi activist who threatened to boycott walmart heading into black friday. -- anti-dei activist. companies said you can't cow u s. this was the target moment seen in the past. jonathan: important lessons. it was never about virtue. it was about selling things. if they thought -- they thought going in a certain direction would support sales. you have seen a much more aggressive conservative consumer making their point saying no, your company is not aligned with my values and i will not shop there anymore. walmart is trying to get out of front of that. lisa: there has been a vibe shift. is highlights how much there has been a vibe shift. jonathan: a massive shift and they are try to catch up quickly.
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for a lot of companies they have fallen out of sync with the average voter. we have seen that in the election in the past few weeks. lisa: let's see how this shakes out when the cabinet nominees are everything from latino but is not talked about. there's a question of how we talk about inclusion in the new society. jonathan: back to meritocracy seems to be the argument a lot of people are making at the moment. tariff threats feeling the u.s. dollar. -- fueling the u.s. dollar. >> the dollar is the cleanest way of playing not just the tariff story but this tariff-physical-tax story. jonathan: this is bloomberg. ♪
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the foreign investment by way of exports. is that going to backfire in the internals? >> it might. it does not seem based on what president-elect trump said last night that the reason they want the tariffs is to make the was economy more competitive. the single that other reasons. the indirect method of drug interdiction and also to help control the border. it seems he's moving away from the use of tariffs as a competitive story. he's trying to raise revenue. he wants to justify cutting taxes.
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a little less emphasis on jobs and competitiveness. more on the use of tariffs for other things. maybe that's why he will get tariffs what he wants despite the fact that as a result of the dollar appreciating by way of tariffs we may get a diminishment of u.s. competitiveness. lisa: is this a negotiating tool? do you fade all these moves we see with the peso and the canadian dollar? >> not necessarily. let's say trump on day one slaps the tariffs on mexico, i don't think they will be effective. they will be a court challenge to be daily and a judge may issue an injunction. as it pertains to this decree.
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that could take many months or many years for this to work. they don't know which way it's going forward. i think they will be under a lot of pressure. whether the tariffs, into effect on day one or not to concede to the new administration's demands. annmarie: don't we already see that with canada and a phone call from their leader? >> and we see it with mexico. you can read the stories in the press about the mexicans not issuing licenses to chinese factories that want to set up next to assembly plants in mexico. i think they will concede. the question is how quickly but ultimately it's a game of chicken and it has to be treated as such. jonathan: it is only just the beginning. it's on the border, narcotics,
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immigration. for now europe has been spared. lisa: the consensus is europe will be the victim. it is how badly and whether you can really do anything to counter that. that is what you see in the price action. could it go below? what is your base case? jonathan: i think it is parity going into next year for a lot of people. happy thanksgiving. thierry wizman on the u.s. dollar. the u.s. dollar following two months of strength. eight consecutive weeks of gains. come up, we will chec -- catch up with liz ann sonders. the third hour of "bloomberg surveillance" his of next. -- is up next. ♪
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ep it down. great job putting finance i'm working. you people are (guitar noises). hand over the air guitar. i've got another one. gotcha. take that. whoa! bruh! i'm fine. that smack looked bad. not compared to the smack down i'm giving you. you sure you're, ok? you know you're down 200 points, right? lucky, she convinced me to get help. i had a concussion that could've been game over. in actual reality, you've only got one life. don't mess with your melon. if you hit it, get it checked.
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>> we are looking to 2025 you have seen shifted you from election uncertainty to policy unsirnt. >> there are real risks right now. real concerns in the market that we haven't seen in past years. >> markets are likely going to be volatile for the coming year. >> markets' gotten ahead of itself. there's this bifurcated
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political environment. it still feels untable stable. >> this is bloomberg "surveillance" with jonathan ferro, alix steel, and lisa abramowicz. jonathan: day six, day seven this morning. so far so good. equity futures on the 16789 and p500, up by a quarter of 100 ers. nasdaq up by a third. moves, foreign exchange, king dollar. as larry cud low used to say, king dollar. look at it against the canadian dollar. look at it against the mexican peso. trade at the epicenter this morning. .a. lisa: the threat of additional tariffs on china and potential on canada and mexico. the question people are asking is how muc negotiations? how much is this a signaling tool to indicate where his priorities are going to be when he takes office which is still months away. it's only been about three
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weeks. >> this is a signal that d.j. king is in chancht president trump elect is in charge. not the one who got the nod for treshry. this is an individual who might be pragmatic, yes, potentially he will be that voice in the room. at the end of the day this is going to be the trump policies he's campaigned on. but he is a deal make earn negotiator. that is probably why it is coming out right before he's going to be inaugurated. already you see leaders lining up to get those talks done now before january 20. jonathan: they said repeatedly they are looking for a great realignment of things like global trade. to balance that the channel is really important. i expected the strong jess dollar top offset much of the impacts from tariff that is do get implemented. you are seeing the dollar doing some of that work this morning. lisa: think what terry was saying. the strong dollar is necessary to tamp down inflation.
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that u.s. can import goods for cheaper. so essentially because of the strong dollar which will tamp down inflation which essentially torpedoed the chances of democrats' wing. on the flip side, you have to start wondering what this means for inflation to still be picking up. there is other -- there are other challenges in very different moment than back in 2016 in terms of deficit, and also just how much strength there is. jonathan: obvious tension. successful reindustrialization of the u.s. requires a weaker dollar and reduction of the trade deficit. buckle up. annamarie: when you look at some of the export data for the united states. fallen to the lowest since depth of the pandemic. can you see it collapsing because people don't want to export or import goods from the united states. because it is getting too expensive. again, a lot of tensions with with the market pushback in
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response to trump policies. we are seeing that finessing that by whack a mole? you get tariffs. what's tomorrow? which is the reason why people are wondering what kind of check there is. lisa: you mentioned larry cud low. he was the former n.e.c. director. we are still waiting on who is going tonight n.e.c. director of trump 2.0. and then of course where does ambassador lighthizer come into play. does he enter into trump 2.0 given how lut nick has taken on an expanded roll. we are still missing the trade ambassador. trump is about trade. jonathan: what larry cud low did with that position was equally as important. he turned into a position to almost be the cheerleader of the administration. something for the biden administration's been lacking for the last four years. he was always at the forefront of every policy decision is and celebrating it and spinning it in a positive way.
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lisa: that's a reason why the cabinet members are former tv personalities that are communicators who can act in those roles. i look at the number twos in all those potential cabinet positions. jonathan: equity futures, up by .2% on the s&p. we'll catch up with with liz ann of charles schwab. sarah house of wells fargo why the fed will continue to ease. stocks looking to add to a six day winning streak even as trump's latest tariff proposal introduced a little bit of market volatility. charles schwab saying momentum favors the bulls near term. this could foreshadow consolidation. expect volatility. may generally remain low. increased likelihood 6 more volatile strikes based on policy announcements and implementations next year.aunde. always great to catch up with
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you. what are we seeing this morning? do you think we are comfortable with tir riffs in a way we weren't a year ago? liz ann: perhaps. i'm surprised we got a decent opening per futures given the announcement. the commentary you guys had in the last few minutes was really spot on in terms of all of these crosscurrents. the stronger dollar putting downward pressure all else equal on inflation via commodity price that is are priced in dollar. yet tariffs are essentially stagflationary. then you got on the other side, potential tax policy and corporate tax cuts. that actually we are an importing nation. leaving the tariffs aside, that actually serves to potentially worsen the trade deficit. one of the goals of tariffs is to improve the trade deficit. we dealt with this in 2018. maybe there's different reasons for tariffs this time. but we are going to have to deal
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with those crosscurrents. and plus-minus on the magnet how these impact the broader macroback drovment. lisa: you pointed to frothy sentiment. i'm wondering if everyone is taking in the positive from the policies. what are the negatives you don't think meme are baking in that could lead to consolidation? liz ann: enagain the inflationary side of things. and the fact that i'll say it again, all else equal, tariffs put upward pressure on inflation and downward pressure on growth. one of the most amazing things to me in this election season, one of the reasons why i bristle at some of the short-hand that is is done in headlining tariffs. i saw a headline this morning that said, united states based on trump's proposal is going to charge canada and mexico. that's not how tariffs work. it's a charge on u.s. companies
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importing those products and goods from china and mexico. i guess the endgame of what it's trying to effect, i have had so many conversations with with people who have this aha moment and didn't realize that's how tariffs work. if they are not in the business, living and beating it every day like we are. the actual impact on things like inflation, the pass-through that happens to consumers like we saw in 2018, the fact that tariffs off the goods where we had from the point those were enacted, you saw the inflation in those particular tariffs impacted goods go straight up versus the rest of an index like c.p.i. fairly flat. i think an actual increase in inflation is something that is not anticipated in general by market participants. that could be the big surprise.
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lisa: one thing i don't have a clear view is how resilient the consumer is to potential upparticular in inflation. as we get different -- uptick in inflation. as i say that you have wal-marts of the world and kohl's and best buy down playing their expectations for the year, talking about in particular weaker clothing spending. how much do we get a sense the consumer is vulnerable, is fragile to even a small uptick inflation in a way that they haven't in the past when we saw inflation come up or frankly when tariffs went on? liz ann: i think it depends on where are you on the spectrum for the consumer. i don't think we can look at the consumer through a monolith i can lens. you have seen it in confidence measures and spending in some of the details spending. big difference up the income spectrum, wealth spectrum, versus down the income and
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wealth spectrum. that becomes a factor. we have to fine-tooth comb analysis of the consumer. also, i think the overarching support for the consumer beyond those traditional metrics like the savings rate, which has come down and the post pandemic to more normal levels, the excess savings story, upper income spectrum. the labor market holds the key. if we were to see any weakening in the labor market beyond some of the hurricane related impacts we have seen, i think the feed through to consumption would be a bit more swift than maybe what we might have expected jonathan: the time of the year where wew year. market cap versus equal weight. on the november 2024. in november 2020 it was also up by a similar amount. something like 18. going back to november, 2016. double-digit gains as well.
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what is it about november of an election year that gets people excited about small caps over the last three cycles? liz ann: a lot has to do with stimulus. and also tariffs. and the perception that domestic oriented companies are better served in a trade war environment. but it has been fairly short lived. there are traditional seasonnals that kick in for small companies. small companies generalry do fairly well in the november to april or may period of time. the knowledge of that may kick n much as i said, about the consumer, don't think we can look at small caps through a monolithic lens. russell 2,000 is is a large index, 43% are negative earnings com percentage zombie companies. in the past year to two years, we have seen a very, very widespread between the performance of the the nonprofie companies. there is opportunities down the cap spectrum. don't think you can sacrifice
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quality, especially on that profitable scale. jonathan: if you do a christmas quiz in the office this year, for anyone. not just charles schwab, ask them to name five companies on the russell. good to see you as always. have a very happy thanksgiving. lisa, we played that game before. i can't name five. i'm not sure how many other people can. lisa: give me more time. i'm looking at the membership. jonathan: good work, guys. lisa: crushing it. you look at the entire market company and it's dwarfed by nvidia. that's why we talk about nvidia as much as we do. in a market cap basis it matters. that said, it is the direct read through of fed policy, some of these other effects on the consumer into the economy. these are the proxy for the private companies. i'm killing it because i didn't know nims. jonathan: underperformance on the russell. update on stories. here's bloomberg brief. best buy shares falling in the premarket.
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the company reporting third quarter earnings. the missed wall street estimates. sluggish demand for electronics and other appliance. elsewhere, rivian receiving preliminary approval for a $6.6 billion federal loan to support the construction of its plant in georgia. plans toear in a decision aimedt cutting costs. the company still needs to meet certain conditions. that stock is up by close to 10%. city is cutting back on a number of year-end promotions. the 2,000 employees could get a bump in pay and tight in the next months, down from 8,000 in previous rounds. that's the latest from city group this morning. we'll catch up with dan yierves on musk versus newsome. as the easy tax credit battle continues to heat up. that conversation just around the corner. lisa something loog at me like she's worked out five names.
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lisa: duo lingo, car vanna, microstrategy, microcomputer. looking at the biggest names. aim sure shake shack is there. you can't give me -- jonathan: you looked at me like you wanted to say something. we'll be back in two minutes. we'll have a breakdown of the membership of the russell. stay tuned from new york, this is bloomberg.
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and revenue strategy, that stock is down about 1%. hsbc, think high market expectations are leaving room for disappointment. that stock is negative. tesla, california goff gavin newsome excluding musk's company that would offer e.v. rebates to buyers if a subsidy is repealed. it's due to the plan's market share limitations. musk calling the proposal insane. in a post on x. with with the majority being sold in california being teslas this is a risky political move in our view. good morning. you look -- dan: you got newsome and musk. this will be a battle, right? ultimately it's a political battle. the overwhelm e.v.'s -- the only e.v.'s made in california are teslas. if they go down this path, i believe this could be some
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threats where more and more jobs move from fremont to austin. at the end of the day federal tax as we talked about, that's going to get ripped away. that's bullish for tesla. you are going to see this back and forth. jonathan: get into that. what is behind it? we know what's behind it it with with biden. what it came down to was union workers not being paid the way were at g.m. and ford. what's this about? >> musk was iced out of the biden administration for years. he was focused on detroit. if you look beef clearly between musk and newsom, but essentially this is about you are going to have these federal perspective taken away, california clearly trying to do something to stop that. the reality is is that this -- money ran out on this program in california.
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jonathan: this is support at the federal level is with elon musk. at a state level in places like california, it looks like he's losing. how important is that relationship with with both the state and federal level when it comes to things like autonomous driving? >> we view it as much less than from a federal perfect spective. the golden goose here is autonomous. the autonomous piece is worth $1 trillion alone to tesla. federal regulatory spider web gets ripped away. i think that's significant. california, newsom will try to fight some of the unsuper advised f.s.d. this is going to be something that's relittle going to continue. i believe tesla will have significant room to, what i view, elevate themselves within autonomous. that's what i believe is is the key to this tesla story. about a.i. and autonomous. what newsom is doing here when it comes to california, this is
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essentially almost a sideshow to the broader story here with tesla. which is why it's been a cinderella story since trump got in because of the miles. lisa: when it comes to autonomous driving and federal regulations, it's not a light switch. it has to go through congress. elon musk and proximity to power cannot get this over the finish line. dan: not in itself but could move it significantly toward. he gets it to the 2-yard line. right now it's' 40. 50. mid field. he gets to the 2-yard line. that's also why with the red sweep and what we see coming out of the beltway, being there over the also week, we feel like there is a groundswell for autonomous when it comes to e.v.'s -- >> in congress as well? dan: the reason i think there is a groundswell based on our view and what we hear is because what's happened in china. china is now going so far ahead of the u.s. when it comes to
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autonomous because of the lack of regulatory spider web, that's why trump, you have an a.i. czar come n who is going to be from an a.i. perspective, musk will have a front row seat to everything here. that's why it continues to be the pooker bets of the ages for musk betting on trump. lisa: base clirks this goes to the heart in some ways of the beef between newsom and musk, is it's one thing to be transactional in your 308cies. another if are you in the states. the white house will probabl pry trump there. that is theres a question how far that will go. do you believe there will be policies crafted specifically to benefit tesla over some of the rivals in the united states because of musk's closeness to the white house? dan: clearly -- tesla is just a much different situation tellive to autonomous. firstly, they have the scale and scope on e.v.'s.
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you pull the tax credit. gives them a huge advantage. relative to federal subsidies. but autonomous, everyone else pays rents, along with waymo. when you look at other automakers, they have to license fr newsom, does this end up in a u.f.c. fight? i don't know. this has been a continued to play out between the beef. annamarie: this goes beyond tesla. saying google c.e.o. called trump and elon musk was on the phone with him and he was surprise bide that. you talk about space, some of the space exploration and what's going to happen with the nasa budget. how much can you extract out that the musk is you have to get something on the bandwagon as as an investor simply because there are going to be certain policies that will just defactor benefit him because of his closeness to
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the president. dan: you said it. this musk and trump this is not going away. i actually see this something that will continue to expand. and it's going to be from -- when you look at musk's ability in terms of president xi and his relationship there. when it comes to a.i., when it comes to autonomous e.v.'s. that's why it comes down to detroit. musk, he wasn't the cool kid's table. now there is a knock at the door it's elon. that's the issue right now that's starting to happen is that everyone's starting to realize that this musk-trump alliance is going to continue in a lot of ways. newsom is trying to get into that. i continue -- that's probably going to be a battle he'll lose because you continue going down that path, ok, more jobs go from fremont to austin. second thought, maybe we won't exclude him. jonathan: you also cover g.m. what's your reaction to the tariffs that have been threatened on mexico, on canada
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given we know these automakers have a presence south of the border? dan: if you are mary, here it is you have musk that's going to be front row on trump. now you got these tariffs. talk about heartburn from a g.m. perspective. for company right now that's -- i think it's some of the best execution i have seen in years. to me if you look at execution, i still don't believe the stock is getting the right value relative to -- jonathan: how exposerd they to the tariff story? if he goes through with it can you still outperform on that? dan: they are exposed. we have to see how it plays out. continue to think bark will be a little worse than the bite. for "g.m.a." company that's humming, it's -- for g.m.78 a company that's humming. jonathan: it's not about tariffs it's f-16789 you wouldn't veterans day goes over the weekend. what was your impression?
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dan: my first f-1. that was just an epic -- in terms of just being experience f-1, being part of the ferrari team there. just an unbelievable experience. i recommend everyone -- went from farro to the netflix show. he's an f-1 influencer. i went from farro to net licks show to going to an f-1 race. next thing i know i could be in monaco. you never know. jonathan: are you a signed up member? dan: i am a signed up ferra it starts with -- jonathan: that's a contrast. penn state and -- dan: both elite. you barbell the strategy. jonathan: thank you. good to see you. thank you, sir. lisa: penn state,er if rar require, both are elite. that's wait to go. i now what the grid is.
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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.
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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. ♪ ♪ ♪ it's time to try defying gravity ♪ ♪ i think i'll try defying gravity ♪
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jonathan: 60 minutes away from the opening well. equity futures right now on the s&p 500 positive. positive across the board, almost. up by .2% on the s&p. nasdaq up by .2%. russell which lisa is deep diving on at the moment, down about a third of 1 percent. morning movers. we can do that with manus. >> very good morning. abercrombie and fitch. i don't buy the t-shirts. it's a generational thing. here you go. a squeak in the numbers. the margins just -- 16%. market was looking for 16.8%. the brand itself sales 11%. lighter. hollyster finding a way up 21%. it shows you the slightest off in your report can be injurious to the numbers. you had a conversation with
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wedbush, talking about mary have double heartburn from trump-musk relationship and the tariff narrative this morning. 16% of the autos that come into this country come from mexico. in 2024. 2.5 million vehicles. from canada, 7% of the u.s. sales come in from canada. this is as much about flicks or free trade as it is about gunning for so u.s. auto companies. a quick name check for zoom. they no longer use the word video. whatever you look at it, stock is down 7%. the bar on this is high, jonathan. they guided in line, a buck 29 to buck 30. that's in line. you have to deliver better than that to get a boost on your report day. it's the lowest churn ever in this company. they have an a.i. and a.i. assist. ding, ding, ding. 59% increase in monthly users on that. jonathan, good morning. jonathan: thank you. 60 minutes away from that open with equity futures here up by
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.2%. house of wells fargo writing not only will tariffs weigh on u.s. real g.d.p. growth next year, but economies will significant exposure to the united states likely will be negative affected as well. under a tariff assumptions we forecast the global economy will grow only 2.5% in 2025. down from 3% in 2024. sarah joins us for more. talk about your tariff assumptions, what are they for countries like mexico, china, for europe, the e.u.? sarah: sure. of course there is still uncertainty over the extent and timing in which tariffs go into effect. but we believe that this is a foundational policy tool in the world of trump. we saw that with last night's announcement. and we do think that we'll get some tariffs. right now we are modeling that we get effectively about half of the 60% tariff threatened on
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china. and about half of that universal tariff. we see that probably sometime late in the year. second half of next year. whichhe second half as well as make it more difficult for inflation to get all the way back to the fed's 2% target. jonathan: are you expecting the federal reserve to dot same exercise in december. is that still too early for them? sarah: i think it's too early. we saw in powell's press conference he's still reticent to actually begin to nod until some of these assumptions. they want more details, closer to implementation. i do think that it will start to maybe color how fed officials are interpreting some of the incoming data. also i think more importantly some of the balance of risks. i don't think it will be necessarily part of the baseline assumptions, i do think it's going to play into how they are viewing the risks around their current projections and current expectations. lisa: this is such a complicated thing to bryce pryce ow.
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you are talking about suppressed growth with companies that have big exports from the u.s. getting hit. at the same time that inflation goes up. i want to start with the strong dollar. how much could that dampen the inflationary impact of some of these tariffs? sarah: i think that is one of the aspects that could actually help mute the overall impact on inflation. we think about tariffs we think of an initial price bump. think of this as more or less a one off shot. part will be muted by the fact that we are expecting the dollar to climb further. in fact over the next year and a half or so we could see it climb to some of the highest levels we have seen since 2002. and so that's going to have some offsetting effects. the same way i think the overall weaker growth dynamics come interesting the fact that consumer purchasing power isn't going to be stretching as far under this higher inflation is also going tweigh down on inflation.
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maybe some of the segments that aren't directly exposed to tariffs. lisa: are we having the wrog conference on tariffs? should we focus on immigration and read through with inflation. even the latest announcement by president-elect donald trump addresses some of the immigration issues and asking basically for mexico and canada to clamp down on illegal migration across the border. is is that potentially the more inflationary of the policies? sarah: i think it's a discussion about the timing impact. we see the tariffs go into effect. i think you are likely to see the upward pressure on inflation more quickly. i think some of the implications from tighter immigration policy, the slowing neact will have on labor force growth, that's going to take longer to show up. there is a bit of a temporal mismatch when we think about the timing of these policies. it's not just about tariffs in terms of the potential policy changes and what that does to
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inflationary pressures. what that does to growth. it's about the immigration policy. it's also about the tax policy. there is a lot of different crosscurrents and factors to consider in the current environment in the upcoming year. lisa: when it comes to the upcoming fed meeting does truth social posts counts as the totality of data? sarah: i don't know if they are going to be -- i think taking the threat of 25% tariffs on mexico and canada as part of announced policy. need to probably get the administration started. i think it goes back to where some of the risks lie that toolt trump. he's also prepared to move quickly on it. i think for the december meeting i think they are still looking at what do we know about policy right now, what are we seeing in terms of incoming data. we think it will be a close call in terms of whether we go through with that 25 basis point cut or see that slower pace as
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early as december. jonathan: quickly, best case for 2025 on fed action. what is it right now? sarah: we are looking for another 100 basis points in easing. we think they will end up going in december. that would bring the fed funds rate to a range of 3.5% to 3.75%. still likely a little restrictive in our view and estimates. jonathan: air ray house of wells fargo. looking for mother 100 basis point of easing cuts from the federal reserve over the next 12 months. over deutsche bank making the argument maybe they go 25 in december and are done for 2025. his expectation force policy changes from the incoming administration, what would it mean for growth and inflation, leading him to believe the federal reserve has to back waivment how quickly would the federal reserve put 245 in their forecast. he thinks they are going to start doing that at the december meeting. lisa: he believes this economy has more momentum than the fed
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thought back in september the last time with projections. it's sort of different across the street. there are people saying there is still weakness coming down the pike. we haven't seen it yet. deutsche bank saying we are start interesting a stronger position than people realize. these policies will have a different impact than last time around because of that. jonathan: we are all reading the same tea leaves. we'll read more later. joining us now to have a look ahead is mike mckee. good morning. mike: i don't think are you going to get what you want to get out of the fed minutes. sarah house put it well. jay powell at his press conference was talking about it's too early to look at what the new president is going to do. and the minutes of a meeting that was before powell's press conference. i think we'll see the same thing he said that if anything members agreed it was too early to start thinking about that. the question is is, what are they thinking about inflation?
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do they think that the sudden uptick we have seen in c.p.i. and p.p.i., essentially what we are going to see in p.c.e. tomorrow, does that mean go in o 2025 with inflation problem again. what does that mean for their outlook? it's probably too early to say. they'll probably look past it. that's the only thing you might get out of the minutes this time. lisa: we have gotten commentary over the past 24 hours from chicago's austin and minneapolis fed president, both saying they probably will cut by 25 basis points and believe there is this feeling that inflation is is continuing. its downward trajectory. can we look to those as
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representing the mainstream as reflected in the meeting minutes that get released today? mike: i don't know that they would be in the mainstream. the mainstream isn't going to be very wide at this point. the mainstream is basically going to call for continuing with what they are doing. these two are more on the more doveish side. the problem here is, again, information. all forecasts are valid until january 20 of next year. and then we just don't know. you look at what happened overnight with the tariff threat. the gas buddy guy put pensle to paper, told "the washington post" that those tariffs if imposed would add 35 cents a gallon to gasoline in the upper midwest. that would be an inflation problem for the fed. that would also be a problem for donald trump. are these things going to happen? the fed doesn't know. jonathan: why some people think 23 they do go forward with this there will be carve outs. i imagine there will be plenty.
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joining us to continue this conversation, brett schuttle of western mutombo actual. we have a threat of tariffs from china. 25% tariffs from products on mexico and canada. would it change for you overnight if anything? brent: i think the market is pricing in a loft smooth sailing going ahead. you have seen the market up to the right. the conversation you have had back and forth with the different guests shows there is tons of uncertainty still tout there. the political uncertainty, even though the election is over, is high. i remind you back in the first term there was big spikes to over 30 a couple different times as tariffs came on. as they came off. as we had tweets. just in general i think the market is going to be a bit more volatile in 2025 as we try to sort through all the different things that you are pointing out on the show this morning. lisa: it's difficult to catch the signal from the noise. that's something that people are
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trying to do. you aren't necessarily changing any of your acouplingses -- assumptions based on tariff proposals what will you adjust to? what kind of policies would you potentially change your allocation? brent: that's always an unknown. bottom line we are later in -- the unemployment rate has risen. we are still short of workers across the board. to me later economic cycle inflation is a risk. the fed will they cut or won't they cut? there is still weakness within the economy. you can see the bifurcation. that raises risk. you have an equity market priced for perfection. except the s&p 500 which has a negative earnings -- equity risk premium. given these different variables we remind investors to stay diversified and parts of the market which are treep. 1345u8 and kid cap stocks. those are parts of the market i think no matter what your time horizon is will do better, especially as you stretch that horizon. lisa: we have been looking all
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at 1-800-flowers. and super microcomputers. extensively in the russell 2,000. i'm wondering, you are talking about how we are at the end of a cycle. you said there is the risk of inflation and a host of other things. typically the end of the cycle has ended with some sort of recession or down turn or growth dip that we aren't seeing. i think that's how do you view that in terms of the biggest risk? is it a down turn in growth or increase in inflation? brent: i think those two things go together. the demarcation line between who has done well and who hasn't is the impact on interest rates. to me one way or the other rates have to go lower otherwise stock valuations doesn't make sense or inflation comes down. to me that's where the rubber meets the road. the risk of an economic slowdown are still out there. if we don't have an economic slowdown, i wonder if inflation can stay sustainably at 2%. i think those two are connected
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and ultimately at some point we are going to have a recession. the question is when. we have had economic cycle overtime. i don't think that lasts indefinitely. annamarie: next year, next 12 months? brent: this is the hard question to answer. there are certainly risks out there. i think as an investor when are you later in a cycle, when valuations are elevated and no one wants to pay attention to those, when investor exuberance is out there, you want to be more careful. that's why we skewed a bit more towards on the fixed income side for that safety and security have higher inflation. there certainly is risk of u.s. debt that's been rising. at the end of the day i think we have seen recently that when stock markets falter a bit, people still do run to the safety of the treasury market. that's going to be the path as you look into 2025 and think about potential economic weakness on the horizon. annamarie: when you look at 2025 and expecting weakness, i imagine you have scuts priced in. brent: that's going to be hard for the fed to continue ut cutting rates absent some
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economic slowdown. that's where i think it's this binary outcome. if you expect a lot of rate cuts that's because you expect an economic slowdown that continues to evolve. if you don't expect a lot of rate cuts,conomic cycle overtime. i don't think the fed can aggressively cut rates without that slowdown. jonathan: it's that time of year where we reflect on 2025 not just look ahead to the following year which is 2025. we had this conversation to start the program this morning. i'd like to firn the program with you on the same point. when we looked at 12 months this time last year the average forecast on the s&p 500 was 4,800. i think one of the most bullish forecasts out there was 5,200. we are up to six k. what didn't we anticipate? i know there are lessons to gather to learn from 2024 to apply to 2025. brent: i think the big lesson that comes to fruition here is that no one knows for certain what's going to happen. that's why i think investors need to remain diversified. i think overall the economy did stay stronger. if you look at different charts,
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different graphs, things that have historically predicted recession in the past, they didn't come to fruition. that's where the psychle is unique. i don't think tends differently than the other cycles unless we figure out a way to do that. as you look into 2025 you need to be skeptical about continued economic growth. a stock market that trades at 23 times bond ierntion with a boned market yielding 4.8%. those things don't go together. we are out of economic equilibrium and market equal lib bring yawm. as lisa noted in other opening comments, typically that is through a recession. maybe this time is different, i typically don't utter those words because they don't come true. jonathan: good to see you of northwestern mutual on the equity market. headlines for you, cross over to this quickly, if you are just joining you you have seen the news already. an additional 10% tariff proposed on china coming from president-elect donald trump. 25% tariffs on products from
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mexico and canada. we know that the canadian prime minister got on the phone quickly to contact the president-elect. and the mexican president is going to have something to say was well. lisa: the mexican president send ago letter, being reported to have sent a letter to trump on migration and fentanyl. probably saying, look, we are your ally. we are going to cooperate with you. we are on your side. it goes to all of the measures that they are going try to have bipartisan negotiating hand. annamarie: within 24 hours the threats are actually working in terms of canada, mexico getting on the phone or sending a letter to make sure that they can work with the incoming president and maybe they are going to have to give something up to not have that hard of a stick. the issue is, what all our guests have been saying, something has to bite at some point to the threats to continue to work throughout the trump presidency. lisa: to be very clear some of this was already in the works. how much of this is an advertising ploy on all sides to sort of shore up to a dog-and-pony show. we are on your side and trump saying everybody else is look
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i'm take ago hardline. they are coming and kowtowing to me. i don't know how much to read into this versus the noise factor. jonathan: the message is pretty clear. shut it down. equity futures right now 500 positive by 30.2%. markets up. get an update on stories elsewhere. here's bloomberg brief, israel and hezbollah getting closer to cease-fire deal. and as both sides keep firing rockets and artillery at each other. israel's security cabinet is expected to vote on the agreement. it's unclear if hezbollah will agree. elsewhere, the russell, abercrombie and fitch reporting sales in boosting its forecast. as analysts were expecting stronger growth after seven straight quarters of year over year revenue gains. that stock is down just a touch by .5%. finally, intel, securing 7 $7.9 billion in federal grants from the biden administration. the deal marketing the largest direct subsidy from a program to booths u.s. chip production.
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people familiar with the matter telling bloomberg intel will get money for projects in arizona, oregon, and new mexico. lisa: what else can we do to remember that there is still a president in the white house trying to get things done. annamarie: the chips and science act was voted on in a bipartisan fashion. it was supposed to be north around the eight handle. now they are coming in lower with $7.9 billion. intel needs theseg poorly. some people are surprised they are getting anywhere near that e of retailers going to the opening bell. you're watching bloomberg tv. ♪
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jonathan: 37 minutes away from the opening bell. stocks still doing ok. six-day winning streak coming into tuesday. a quarter of with one percent on the s&p 5 mund. consumer confidence coming at 10 a.m. eastern time. followed by fed minutes at 2 p.m. tomorrow, another round of jobless claims. thursday, u.s. markets closed for thanksgiving. nordstrom reporting after the closing bell. following disappointing results from kohl's and best buy. what's going wrong with kohls? >> there is something happening on the execution side. i think what this explains, jon, is that yesterday after the close the company announced a new c.e.o. who is going to join effective in january. i think january 15. and ashley buchanan, the new c.e.o., he's come interesting
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michael stores. he's attributed with right siding that business. he also has incredible tenure from wal-mart where he was the chief merchant and also the c.e.o. of e-commerce for the u.s. business. i think that he's known for improving profitability and generating precash flow. he's coming to right size kohl's. whenever you have a company reporting a high single digit or double-digit decline in comp sales, it's alarming. it's particularly alarming for kohl's, because they have see fora. see -- sephora is a real draw and generates revenues. that goes to show you that the core business is down in the double-digits. that's what's concerning. thus the transition with the c.e.o. we are seeing there. lisa: is this a specific execution story? or is this a story of competition ratcheted up across
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the retail sector by the behemoth of wal-mart and amazon? >> i think that's exactly what we are seeing. what's happening is they are losing share likely to off price. likely to the mass merchants. we saw great numbers coming out of wal-mart. they also sighted apparel was one of the better performing categories for them. the other thing to consider is i'm sure they were negatively impacted by warm weather. that's something we are seeing across the board. for most retailers that are executing, if there was a miss, it was a slight miss. we saw that for example with burlington with numbers out today. their comp sales rose just 1%. analysts were expected a rise of 2.2%. but the company said, look, cold weather gash, that makes up about 15% of our sales typically in the third quarter. if you exclude that comp sales were up 4% in the quarter. not as weak as it sounded given
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expectations. then if you look at abercrombie and fitch, they were out with great numbers this morning. their comp sales rose 16%. and the big news out of there was that hollyster was up 21% and analysts were expecting that to be up in the low teens. they did miss a little bit on the abercrombie side. whether it could have been an impact, we'll learn that more when the conference call starts shortly with abercrombie. otherwise they are hitting on all marks. jonathan: we have to go. names to watch going to the opening bell. bloomberg spence there. tomorrow, john of oppenhimer. forester research, lindsey of stifle. thanks for bloomberg tv this was bloomberg "surveillance."
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>> futures higher at the moment despite new tariff threats from president-elect donald trump. i'm katie greifeld. sonali: bloomberg "open interest" starts right now. matt is off today. katie: coming up it's deja vu, president trump rhettles -- rattles markers across the world. and president biden rules out a plan that would require the u.s. government to weight loss drugs. we have a cartful of earnings as the holiday shopping season i kicks into high gear. let's look where markets are trading. 30 minutes until the best ring. future hi
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