♪ >> at the end of the day, the best fundamentals are still in u.s. large caps. >> everyone is on the same side of the boat which make the market vulnerable in volatility. >> everything is going the way you want it to go. i think there are significant uncertainties. >> you are going to get some good results, some bad result and that is going to create volatility in the market. a little dose of reality into 2025 is when you want to start to take some risk off. announcer: this is "bloomberg serveillance" with jonathan

ferro, lisa abramowicz and annmarie hordern. jonathan: last month of 2024. where did all that go? from new york city this morning, good morning, good morning. bloomberg surveillance starts right now with equity features on the s&p 500 shaping up as follows. just a little bit lower, down by about 2/10 of 1%. coming into monday, all-time highs on the s&p 500. the best month of the year so far on the s&p. going into payrolls on friday. lisa: december tends to be a good month because people are feeling good. going on vacation and coming off of black friday which evidently yet another success. here's the real question. do we get some kind of kink in the perfect picture here, given the fact that we do get payrolls, we do get a check on the economy at a time when people are still thinking maybe we could rollover? >> the estimate something like 200 k based on our survey. until next week, cpi. the week after that, the federal reserve.

consensus seems to be that you need to be on payrolls and upside on cpi and the federal reserve will pause on the 18th. >> but it seemed like they are going to cut rates this month, and then maybe pause next month. i do think it is interesting that jerome powell is not disposed his feet and then he was slated to speak this wednesday at a conference. there are a whole host of different speakers coming out this weekend normally, what else is new, that is what they do their if this question about whether there is a new message that they are trying to get through in terms of their independence from any political process and the path ahead with the logic behind it. jonathan: tariffs. can the model tariffs? they've got no idea that the market believes they are just a threat, and negotiation tool. now the consensus has become that everything president-elect trump does is just a stunt to his bargaining, and i'm a little concerned the market has become too complacent. a standout call from axios,

trump has been telling friends who denied robert lighthizer's first term a cabinet role because he is too scared to go big. i think we got a pause. if you are buried there and bathroom lighthizer was too scared to go big, just how serious are you about tariffs of the next four years? >> this to me as the alternate question. last week we saw the 10-year treasury yield down in part because of scott benson and his belief that ultimately, the market would be the check to trump and that essentially, we would end up with someone who would be reined in by the fear of a market getting ahead of himself. now the question, is that through the case? are we seeing the opening salvo of something that promises to be big? we see that pretty much on a broad scale so that a certain point we don't know. can this euphoria last another month? he is not even in the white house yet.

>> he is in the winter white house and already getting foreign dignitaries visits including the canadian prime minister. lisa: of course they're going to make promises, although i love the character discussions from the mexican president and whether he actually did agree to anything, but all of this feels like it is kissing the ring ahead of what promises to be a moment of a lot of drama next year, january 20. jonathan: i enjoyed the group photo with the child in the background. i enjoy that as well over the weekend. welcome back, hope you had a wonderful thanksgiving stateside and a long weekend as well. equity features down by almost 2/10 of 1%. lisa was talking about yield a little higher today. coming up this hour, we will catch up with cameron expecting the rally to continue, terry haynes of pangea policy, and tom of rbc at the ceo of stellantis

steps down. we begin with stocks at record highs following the best month of 2024. cameron writing can't fight the moonlight to the end of the year. seasonality remains strong and the train remains robust, supporting markets continuing to press higher through december. cameron joins us now for more. a belated happy thanksgiving. good to see you. how much momentum do we have going into years and? >> certainly chases all that we can see that with how markets are trading. still a very powerful uptrend. that doesn't necessarily need to continue this robust going 2025, but we know the seasonality continues to drive people into market. we had positioning the 85th percentile using the deutsche bank consolidated positioning suggesting there is still more room to draw people in. then you start to have to contemplate wen yu in january and february, stretch sentiment, stretch valuation, stretcher earnings expectations. that is probably a 2025 problem.

jonathan: not too stretched based on what you said and what we've seen so far. nasdaq 100, similar move. the russell of governor ricketts, about 11%. they met move continue? maybe not at that pace, but relatively speaking. >> it has to be supported by earnings. nowhere in this market is there a higher bar than small caps. you have 50% growth based on current consensus so right now this is all about conditioning chase people being underweight small caps, had to show by the end of the year that you are at least neutral. the question is when you get to neutral and you have seen that flow be aggressively strong, that does set you up with a high bar earnings and usually have to deliver. also small caps aren't that cheap. we know the russell is skewed by unprofitable companies, but i think the point is you have to see the earnings deliver but for now we are in that moment of

tension and disbelief. lisa: which could potentially go through december because of the holiday spirit and the fact that december tends to be a good month. did we learn anything about consumers over the past few days other than the american is still the ultimate consumer? >> we see this consumer being extraordinarily strong. i brave the outlets in orlando on black friday and saw lines out the door to get into luxury stores which just suggested that the consumer still have this willingness to spend. i think it is misleading to talk about the consumer in aggregate because we know that they are so bifurcated between the lower income and higher income consumers, but the higher income consumers simply punches above their weight. they doubled their weight in the overall path of consumption just just to say that because that consumer still remains resilient, they are less sensitive to inflation and interest rates and they've been the one pulling this higher. the question is can the momentum continue in 2025?

lisa: there's also this question about the trump trade and whether it is the same time around. whether small caps can continue the outperformance. i've been looking at a study saying smaller businesses are more likely to be affected by tariffs negatively than some of the larger businesses because they don't have to have to negotiate. so you have to wonder if the trump trade is going to have the same kind of contours as 2016 because we are at a very different starting. unless we forget that yields are that much higher. and that is the key other part of the trade which is that there is no implicit expectation in small caps being strong of yields coming down because of refinancing, because of the degree of floating-rate on those balance sheets. so if you or any world where tariffs keep inflation higher for goods prices, ignore any scenario when you have yields that remain higher for longer. the fed may not be cutting as much, and then you have to question that it is not just the income statement for small caps, if the balance sheet the issues you can have the balance sheet it interest rates tuesday

higher. jonathan: this gets us to cpi. use a good reason to continue to bet on moderating inflation through 2025? >> if we look at the big buckets of wages that continue to look like they are moderating, look at leading indicators like jolts, look at housing prices, those in the current rent indices don't suggestive the acceleration, the wildcard is energy prices. an energy prices falling has been the key boon for consumers over the past two years. you are out of the point where they are falling down 20% on a year-over-year basis. the question is do they move higher, and that would be the peak question mark going into next year, can you continue to see energy prices as a tailwind? jonathan: and the key question in december 18, given. on the dot plot entire as well? >> we think the dot plot is going to be relatively hawkish. about 100 basis point of cuts

marked down in the september dot plot, so we think that they are going to cut in december unless we hear from powell and he says think different or we hear from the wall street kernel and they say something different. what we do think that will show fewer cuts. we are thinking two cut slightly over the course of 2025 in the s&p raises the question of what they do with growth. there could be outside the gdp forecast, and unlikely receipts and stickiness within inflation as well because if you look at the sep, they have to percent going out of the course of the next few years. we argan -- we are seeing inflation remain sticky suggesting that has upside as well. lisa: no one is listening. why do we think powell is actually speaking on wednesday? what is he going to say? >> i have no clue. honestly there is the slew of different fed speakers. what are they going to talk about? they been talking all this time.

christine lagarde also getting in the next and they are all lined up, so what are they going to say? >> i think that they are going to acknowledge that the need to get down to a phantom neutral rate, whatever that may be, however, less urgency given where economic growth is in given where inflation is. talking about hundreds of basis point of cuts to get to neutral, and the pace of economic and financial condition that remain near 2021 easy levels, we've been raising the question of why the urgent, why the need to cut so much? so we think it will be acknowledgment of the resilience and growth, but here is the plot twist. economic surprises are starting to turn lower. that is the reason yields are falling. it is less about fiscal prudence than that economic surprises are stunned to bring those yields lower. so it could be that they are saying everything is resilient just at the point that we start

to see a slowdown in growth. lisa: that is what i wanted to pick up on. if the fed still driving the bus, or is that the economics or the politics? we are in this headline whack-a-mole. the market seemed like they are going to ignore the headline because people aren't taking things too seriously when things come out. 100% tariffs, you are dead to me. but therapist pressured going forward about what the focus is going to be from market is it the fed, economic surprises, or political headlines? >> re-think economic surprises is what is going to be whipsawing for long end of the curve, and the short end of the curve, for that matter. that said to us that this was a market that was not pricing and or contemplating any chance of recession. that makes fixed income a very interesting kind of hedge because if you are not pricing in any chance of a slowdown in growth, it means that you're

trying to hedge against a slowdown in growth and that is a pretty good place to do it. so we would watch these economic surprises really closely. that likely matters more than these fleeting narratives about fiscal prudence and tariffs and all of these questions about what is going on in white house south. >> white house south for winter white house, whatever be going with? lisa: i would like to see the prickly the oval office and i was looking for someone to have done that research, but i couldn't find it. if you have, please send it. jonathan: if you are just joining us, welcome to the program. equity futures down by two tens of 1%. >> president joe biden has signed a sweeping pardon for his son, reversing a previous stance that he would not use his executive powers to help his son. the president wrote in a statement "the charges in his case came only after several of my political opponents in

congress instigated them to attack me and oppose my election. no reasonable person who looks at the facts of hunter's cases can reach any other conclusion than that he was singled out because he is my son and that is wrong. stellantis shares lower in the italian trade, down by more than 8%. the company ceo is quitting sooner than expected with the automaker grappling with slumping profits and weaker u.s. sales. the maker of jeep suv and cars will be run by an interim committee headed by chairman john elkin. a new ceo would be named in the first half of next year. disney's milana 2 broke the record for the highest grossing thanksgiving weekend movie 220 $1 million in the u.s. and canada. frozen 2 had held the top spot in 2019. wicked and gladiator finished in second and third place respectively. those that was brought in a combined hall of $168 million during their opening weekend marking a strong start for the holiday moviegoing season.

that is your brief. jonathan: i responsible for that $25 of that grand total of the weekend, gladiator two. wait to see gladiator. as a standalone movie, ok. as a sequel to one of the best movies ever made, it fell a little bit short. the storyline was decent but some of the scenes -- we can talk about this later. i'm not sure there were sharks in the coliseum. maybe i'm wrong. lisa: i'm waiting for oppenheimer two. that is my point. this is the release cycle. jonathan: taking some time to get up to speed with your humor, i apologize. up next, a trump warning to nations. >> if there are ways to satisfy and make the trump

administration be less of a target for them, i think they would do it because that would minimize volatility and allow them to get back on a better route at least going into the next four years. jonathan: that conversation up next. live from new york city this morning, good morning. ♪

♪♪ ♪♪ the black friday sale is now on. visit sandals.com or call 1-800-sandals ♪ jonathan: equity futures just a little bit softer, within 1/10 of 1%. bond market, a little bit higher. you will notice the dollar strength. we could talk, that more broadly in just a moment. the euro weakness, all eyes on france or the week in the government bond market. lisa: marine le pen threatening to torpedo the government, a no-confidence vote as soon as today because the budget is not amenable to certain aspects that

she has proposed including this idea of potentially extending and actually adjusting pensioners salaries to inflation. it just raises the question between iraq and a hard place with a fiscal death of percent with also some of the demands coming from the political momentum right now. jonathan: a time when europe has some big problems. under surveillance this morning, trump warning to briggs nations. >> we need a stable currency in order to basically have sustainable portfolio flows in the long run. so if there are ways that they can satisfy and actually make the trump administration less of a target for them, i think they will do it because that would axley minimize volatility and allow them to get back going into the next four years. jonathan: president-elect trump warning nations not to create new currency to replace the u.s. dollar, threatening 100% tariffs if they do. terry hain the pangaea policy

writing there are larger market opportunities now being triggered by his bid to shed washington's obsolete post-cold war sludge to master the highest geopolitical risk in over 50 years. terry, wonderful note over the weekend and thanks for giving us the time this morning. i want to talk about the way you think we should be doing but is developing an washington, d.c., to move away from the old way of looking at the nation's capital and you've introduced a new way of looking at things. can you just explain that a little bit more? >> i think market makers mistake generally and a lot of washington people make the mistake of looking at these issues in a silo, binary sort of way. will trump do this or that? what trump is trying to do this time out is very much different than the first time out, and to your point, i think it all starts with geopolitics. geopolitics is what is driving all of this stuff. if you think about it, you've

got the statement that just happened, you've got allies in canada and mexico already meeting with trump about a mother of this stuff and meanwhile, you've got two hot war zones, a third one in the south china sea that might break out any minute. you've got chinese vessels captained by russia in the baltic, mysterious drone sw arms, all kinds of things like this. but what i would urge people in the market is that what trump is trying to do is transform washington to deal with the highest geopolitical risk and 50 years combined with this kind of long twilight struggle with the chinese in what is termed competition. trump guesses that is going to take a massively different sort of washington, that is what he is driving at. jonathan: so why go after

canada? what is the objective there? terry: i think the objective is simply to say look, we are interested in making sure our borders are as secure as possible and we are going to talk with both of the nations with whom we have physical borders about these issues and deal with it. i think it is not a lot more complicated than that. lisa: what do you make of donald trump's comments about having an alternative currency to the united states given that they met in russia where they couldn't use visa or mastercard, they needed to bring either dollars or euros to transact because none of those other methods of payment even worked? why would he go after something that doesn't even seem like a realistic threat? terry: i think frankly what this is about is about trump telling china, frankly, this is much more about china, we are going

to contest you everywhere. the trump people judged that that was not happening in the current administration, but the trump administration message to china is we will contest you everywhere. we will contest you on currency, we will contest you geopolitically everywhere that we need to do that and we are not going to miss a trick and we are going to try to maximize our ability to work hand in glove with our ally and we are putting the world on notice as well that they don't have to choose this minute but there is a time for choosing at some point. i don't want to make this sound too dramatic, and the trump people aren't particularly subtle about this, but looking at this through a geopolitical lens provides a frame for which markets and investors can look

at a lot of this stuff and gain some clarity about it. lisa: there is a big question about whether the markets will essentially provide a check on trump as he focuses on rearranging the geopolitical cards, and i just wonder how much that actually is true. is this a president who actually wants a strong dollar policy and will alter a path if he doesn't get it? terry: i agree with those who say that the statements, in pursuit of their logical ends, provides in contradictory signals. but again, i think that what they are trying to do is trying to reorder things in a way that markets were like. one of the signals is on tariffs, another one is on trying to control debt and deficit. they are trying to make both of

those things happen, and that is going to be very difficult. but generally speaking what needs to happen is kind of looking more broadly and coming down more specific. i don't think you're going to get clarity on dollar policy for a little while as you wrestle through both tariffs and the tax bill, for example. jonathan: in the 30 seconds we have left with you, do you believe the terror threats are credible threats that the incoming president would be willing to follow through on? terry: markets think it is all about one side or the other. my view is that investors shouldn't kid themselves. this was never going to be all about one thing or the other. i imagine you are going to see some tariffs in on day one. think of them as performative, but as real as well. i think the bigger action doesn't come until later in the year when you marry this up with tax bill overall.

trump is not going to want to take the economy in the first year. jonathan: good to hear from you, sir. terry haynes on a big 2025 just around the corner. lisa: a whole host of different policies. his point about the reordering of things, i wonder how much they are already on a path to be reordered and i ask this especially with the current administration actually levying either further restrictions on chinese chips. but again, how much of a change is this? jonathan: up next on the program, the stellantis ceo announces he is stepping down. from new york city this is bloomberg. ♪

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

jonathan: equity futures on the s&p 500 a little bit south down by 1/10 of 1%. we are positive on the russell by quarter. following a massive month of gains for the small caps through november. small caps up by almost 11%. lisa: this is the idea that not only will tax cuts beneficially be proportionate to the russell but last time around it was beneficial to these companies. the queen -- key question is will it affect them differently?

yields, definite yields, at what point do that cap the potential gains of some of these companies? jonathan: stateside first and then to europe. two-year, 10 year, 30 year, yields up by four basis points. 4.2129. the median is about 200 k. if you want some fireworks look to europe, the euro is weaker against the u.s. dollar. yields in france just about unchanged. anything other than unchanged the last month or so. lisa: the bond vigilantes are out in full force in some of the biggest economies even though they are absolutely not in the united states. if there's a threat of 6% gdp in city -- france and an opposite government that wants to pull all of the levers and end up with different breaks, the bill

that they had would have provided certain cuts that were not amenable. now you end up with a higher deficit and bond market, how much is that worth the at -- is that worth? jonathan: president biden signing a pardon for his son hunter saying the case was politically tense. a reversal from his stance that he would not use executive powers to old his latest live -- aid his youngest living child. the guardian went with heartfelt hypocrisy, a rather kind way of putting it. lisa: this is my shocked face. i don't the getty when a shocked. it certainly is hypocritical. anybody who thought joe biden would not go after the allegations, i don't think there's a lot of momentum.

last night my kids said would you pardon us? i said please eat your broccoli first and then we could have that discussion. when is he going to pardon commander? jonathan: is that a real question? lisa: i don't know what else to say. am i going to feign horror and outrage? you have to question the legitimacy of some of these allegations and the role of the pardons. everyone is kind of over it. jonathan: i'm not sure what charges commander is up against. the french party could topple the government as soon as this weekend with a nonconfidence motion. all of this going into an important ecb meeting over the next week or so. european central bank with a choice of 25 verses d. politics screaming 50. the latest pmi in the continent also screaming 50, too.

lisa: the people against her are the germans. they are the epicenter of the pain, refashion -- recession. do you get a change in tone from the beacon of austerity in europe at a time when it seems like anything but is really required? you will have a real change in political leadership. feels like it is experiencing somewhat of a similar or parallel path. it certainly rhymes. you wonder what kind of market pushback is different than the one we get in the united states. jonathan: we will be joined by michael on that story in the next hour or so. tesla and byd ramping up sales in china. tesla afferent -- offering five year, 0% loans. byd offering between 1000 and 3000 off some models. one of, if not the most

competitive markets on the planet, the chinese auto market. lisa: is it because you have overproduction? lack of command -- demand? is it because this is the epicenter of the electric vehicle boom considering have the resources seem to be in the region? unclear. the race to the bottom seems really real. the deflation is important in certain regions that open their doors. jonathan: there's a list of companies really struggling, stellantis is having a big struggle worldwide, shares are following to the lowest level of july, 2022. the new ceo stepping down two months after the cfo departure. we are joined now for the latest, you have been following this for quite a while, we have been waiting for something like this to happen. we thought he would fulfill his mandate and be with us through 2025, what happened over the weekend? ollie: what is really

interesting is how quickly we went from unanimous support to basically strategic differences. carlos tavarez is no longer the head. we had a sense since the profit warning back in september. you spoke to him days after that huge shakeup, this automaker has been staggering forward. days after that, he got rid of the cfo, coo. he replaced the brand heads for maserati and alfa romeo. where you get some of the bearishness in the market is the sense that there is some chaos, this is not a managed change at the top. we really expected him to leave at the beginning of 2026. that came a lot faster. what the next ceo will have to inherit while they have the china problem, stellantis has is

a u.s. problem. one of the great criticisms of tavarez is he was very disciplined on cost cuts. they are saying he cut way too much and affected some of the quality of these brands whether it be cheaper, they had a 12% market share at the beginning of last year. that has come down to 8% and that's what the ceo will have to deal with. jonathan: complaining about a lack of models now for quite a while. i will mention for some of the brands here, look at the brands elsewhere, fiat, maserati, the list goes on and on. tom joins us now, good morning. what do you do with that brand lineup? jonathan: investors as well as shareholders -- tom: investors and shareholders have wanted to rationalize this brand.

it is just really difficult to do that politically. we think maybe that could be part of the decision of what happened yesterday. it is very difficult for the family to go forward with that type of path. that might be what happened. jonathan: you get a sense that people are married to particular brands and which do you think they might be? tom: that is probably right. probably more on the european side. that's the number there's the most political opposition to that happening. obviously france, the u.k. in the u.s., that is potentially an area where we have heard that could happen. that could be where cuts could happen. lisa: essentially dodge might go away? tom: dodge, potentially some chrysler, that could definitely be where they target. lisa: you raise another point. you raise the question that what

if the current administration, chair, wants to expedite the wind down of a whole bunch of inventories, one of the biggest issues in north america and creates a fire sale for some of the brands that are less loved? how realistic is that? tom: the first place they will target is production cuts. they have done a good job. they have actually reduced the inventory from a hundred nine days through 84 days. nothing better than an artificial cause of supply shortages. just cut your own production. the family is very smart. they know if you cut pricing and create a pricing war, that is a belt you can't unring. they will start with cutting production. if you look at what the jeeps are priced at, rams, relative to

the competition, it is probably unlikely they could get away without some price cutting. that probably will happen. lisa: one big question has been how much is idiosyncratic and how much is a broader industry issue? stellantis has a lot of european brands. how much does execution, how much does the larger industry trends affecting many other prices as well? tom: it's a combination of both. stellantis was notorious for reinventing brands. give tavarez credit, he thought he could reinvent ram and jeep as more of a premium brand. that has been a good strategy. the problem is how much has been really invested in these brands? the product themselves. if you look at jeep and ram compared to their direct competition, the best since

pre-pandemic. that inflation has far exceeded ford and gm. some people hope this is just coming back down to earth. maybe it doesn't trickle and impacted as much, more of a direct head on competitor. they are likely to see some pain the next year. jonathan: this is a terrible time to send assets. they are not the only company having problems. we have heard the dealerships complaining about how -- not having enough brands to sell. nissan does not have the hybrid offering. a real worry about the future of this company at the moment. who has it right there executing in the moment where we need them to at the right time? tom: you want to have u.s. exposure. gm has a pretty good lineup.

they dominate that large suv category. they were rational when it came to pricing. they did not go nuts when he came to juicing up the pricing for the last three or four years. the other one is tesla. they are well-positioned. they have the best cost structure. we will see what happens with the ira. i think they have the best cost structure when it comes to electric vehicles. pricing is the main pain point. they have half the market of ev's. if we do lose the credit, maybe that disadvantages other ev makers and benefits them. it is really gm and tesla. jonathan: have we been through the recession? deep cuts to capacity, some of the major players the last 12

months. have we seen the worst of that? tom: it could get worse. those were massive. the 10% margins dropping. if that same thing happens, you are a negative, you are losing money on cards, that could be where we go for 2025. what are you thinking? maybe i just go all out, kitchen sink, reset the bar and maybe i lose money for the first time in a long while. jonathan: that kitchen sink moment and that moment where you see some really big cuts. lisa: until you get that, can you get any kind of revival and invest in the space not only dealing with an overhang of capacity but facing the price wars we were talking about over in china. jonathan: good to see you, good to catch up on the real term

market. with an update on stories with your bloomberg brief, here is dani burger. dani: president joe biden arrived in cape verde, his only trip to africa as president. he is scheduled to have a closed meeting with the prime minister, who greeted him at the airport before carrying him to angola later today. patel is a critic of the bureau and threatened to shut down the agency headquarters. the nomination is facing blowback from both sides of the aisle. it is dependent on the income and. either being fired or resigning. elon musk asked a federal court to block openai from becoming a fully for-profit business saying it is needed to protect his own

ai startup. this is the first legal -- not the first legal dispute with the company. they drop the case in june and filed a complaint to federal court in august. that is your brief. jonathan: more from dani burger in about 30 minutes time. a record-breaking black friday. >> it's a shift in the retail landscape altogether. social media players are also impacting how people discover goods, where they shop. jonathan: that story up next, live for new york. you are watching bloomberg surveillance.

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down 1/10 of 1%. under surveillance this morning, a record-breaking black friday. >> it's really a shift in the retail landscape altogether. it is widespread as consumers haven't been shopping as much particularly, the internet has absolutely changed it. social media is impacting how people discover goods and where they actually shop. you are seeing a lot of fragmentation particularly with lesser-known players. jonathan: black friday e-commerce hitting a record high. research showing consumer spent 10.8 billion u.s. dollars as data shows in-store traffic following year-over-year as consumers pick and choose to find the best possible deals. joining us to discuss, who is getting this right at the moment? >> people are shopping more online, they're favoring

convenience and value. the deals are the same so they could do it. jonathan: the dollar players have really suffered. they suffered because they are worried about tariffs. once you get worried about shopping over the next few weeks, january 15, what happens with tariffs and what happens with that agreement in the courts? two very key dates. how are they managing inventory going into that next month when that big tariff might actually hit them after january 20? poonam: some retailers have planned by ordering more inventory ahead. that is a tricky situation because we don't know what the magnitude of the increase could be. we don't want to get into an inventory pick up where you have to march things down. it really depends on the magnitude of the increase, will it be up to 60% in china or

another 10%? that will really dictate the magnitude of the retailers and consumers. lisa: i'm seeing a divide based on retailers and negotiating the efficiencies when it comes to the likes of tariffs as well as the online tariffs it seems to be attracting the gravitational force. poonam: absolutely. if you have scale, if you are amazon or walmart, the way they are being produced, that said if we see tariffs go up as high as they were proposed, no one could escape that. lisa: putting tariffs aside for a second, there's a question generally about how much you have seen the entire retail industry really transform over the past five years. you have seen an increasing share. there's a different type of in-store experience.

i'm wondering about what this looks like going forward at a time where it's more expensive for smaller players to keep up with the larger ones with all of the other perks that amazon and walmart have made us all spoiled by? poonam: retail sales online are 25% of total retail. it will go up to 33% in the next six years. still a greater share. as well as online retailers, it is easier for them to be online today with platforms like shopify, returns are a growing issue but that is a small piece of the puzzle that exists for not just the small retailers but the big retailers. overall it is easier to shop online then it was a decade ago. jonathan: where does this leave amazon as walmart really starts to execute? how much does this squeeze amazon it was a soul winner online.

poonam: amazon still stands out. it is the lion share of online sales. you are talking about one company that is 100 billion dollars online, walmart and then you are talking about amazon, which control $700 billion. they are still very different. amazon leads in the discretionary aisle where walmart leads in the staples i'll. jonathan: do you see that changing in the future? poonam: it will not happen in the next 12 months. over 5-10 years, sure. amazon really gaining steam. it is a different entity altogether when you look at them side-by-side. on the retail front, you are absolutely right. amazon does have growing competition. it is not just walmart, it is temu and shein.

these discount retailers that have climbed the ladder quickly. lisa: tariffs will be a big issue but you are seeing this encore with transformation, target with respect to what value means in a time where it is not just price. poonam: i think the value focus will exist in 2025 like it has never before. we saw it on black friday as well. i think the larger players have an advantage because they have scale. value stays. i think experiences and preferences for what you want also matters. if you have the right product, innovation, you will drive customer interest. everything else in between will suffer as it has been the last five years. lisa: could we put to rest the idea that people like waking up at 6 a.m. -- 6:00 a.m. and like

fighting crowds? poonam: i think the lines are blurring. unless you are going in for that free $10 gift card when the store opens, there really is no reason to be at the store anymore. jonathan: agreed, we are finished with it. happy thanksgiving, belated happy thanksgiving. it just isn't that product anymore that you wake up early, there's no lines outside of the apple store for a new iphone. those days are gone. lisa: black friday starts the monday before and goes until the monday after. are we glad about this? this is a revolutionary advantage not to have people trampling each other. either way. jonathan: they are putting away the railings because they don't need them. the picture speaks for the

story. lisa: there's a real question here about people don't actually enjoy being pent up like animals. it is a very humane thing stretching it out. lisa: there are -- jonathan: there are people that do enjoy this, they get off on the thrill of it, fighting for that 25% off. lisa: i don't think it will be the tv anymore. now would be playstation or iphone, -- jonathan: it is always that toy when we were kids. lisa: it could be an age thing. there isn't that cabbage patch kids that i really longed for. jonathan: the arnold schwarzenegger movie. fighting for that toy. i will watch that this weekend. put it on the list of christmas movies to catch up on. we will speak to ed mills of raymond james, michael kushner

of morgan stanley. we are down about 1/10 of 1%.

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

>> later in the economic cycle, inflation is still a risk. >> one thing we know about cycles over time is the big winners are not the big winners of the next. >> most people expect some moderation but not radically. >> we are on a knife's edge when it comes to wage growth versus inflation. >> the next 6-12 months will be critical. the economy is still wobbly.

>> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz. jonathan: the nasdaq down by 1/10 of a percent. compare that with november, 5% on the s&p, 5% on the nasdaq. the russell climbing by 11%. payrolls on friday, the estimate in our survey so far, around 200 k. how high is the bar for this fed reserve to hit cause? lisa: we will find out because we will be hearing from a host of fed speakers this week including jay powell, who will make a surprise appearance at a conference on wednesday. a key question will be how much will they cut rates? will they set the groundwork for cut now and posit later?

jonathan: the data coming stronger than they thought a couple months ago. that speech felt like it was setting up for adib deep rate cutting cycle. get back to neutral and get back quickly, stories change. stories change because of the incoming data, how much does it need to change? could you really confront that story in a big way? lisa: a lot of people are arguing that they will not address it at the meeting and a couple of weeks time. next year you will have to start considering it. we are getting proclamations and truths from the white house south. there's a question going forward about how that really does increase not just potential inflationary pressures but also what we are hearing from ceos, executives, who are saying we will have to raise prices here. measuring some may be as

important as measuring the policies. jonathan: seeing this across the board. looking ahead to next year. signs of the top haven't appeared. the path of least resistance remains higher even though lots of different things look extended. cameron dawson with us about an hour ago expecting this trend to continue. lisa: unless the earnings stop delivering. between that, december tends to be a good time. how many people want to bet against a president-elect who is looking to markets to ratify his upcoming presidency and some of his plans? the reason people have taken a signal, maybe too much so that essentially the market will act as a check. we did hear from cameron dawson. everyone is shocked, creating a narrative around something.

it is fundamental data. jonathan: you said this last week. you brought up a note from deutsche bank. the market is not responding to these terrorist threats. it just leaves the door open to make even bigger threats after that. lisa: we are less than four weeks away and you have to imagine george's onto something early next year. maybe this is the story for 2025. it is more a matter of signaling priorities and threats rather than actually being in the office. that is a reason why people aren't taking it seriously. why worry now? jonathan: stocks by the way just a little bit lower this morning. following the biggest month of gains on the s&p of the year so far. coming up this hour, stocks at

record highs. they respond to trump terrorist threats and the outlook on commercial banking. stocks at all-time highs. the last fed decision of the year. saying come early 2025, the fed is likely to slow its cutting pace to every other meeting. they don't fall as far as the fed or the market had originally envisioned. welcome back, good to see you as always. how problematic do you expect that to be? i don't know if it will be that problematic. they need strong growth, if it becomes really challenging is if inflation becomes more concerning and then the fed does not cut rates.

that i think would be fine for equities. jonathan: really positive for the u.s. and europe? i have heard europe has been left in the dust. >> the story for europe has gotten worse in the last few weeks. even more so now that we have the election behind us. the economies are struggling. the period is more about u.s. equities in europe and opportunities in other parts of the world. overall i think it will be another year of continued strength for the u.s. lisa: how much are you doubling down on this bet that the u.s. will be the bright spot and

europe is going to be even worse this year? seema: i think for europe, the thing we are trying to watch is this very sentiment. as you just said, everyone is joining into this massive u.s. and becoming negative on that side. it could be a slight improvement . maybe the ecb really stepping in and starting to improve expectations. the stage is quite difficult to see that come through. lisa: you see that with european bonds at the same time as american exceptionalism. the ecb will have to cut rates more aggressively and if there is some sort of downturn, that could be some sort of haven trade. do you think that is premature at a time when the bond

vigilantes seem to have their pens and papers out for france? seema: i think as it is always the case you can't just look at europe as one entity. there are so many different entities. overall, the ecb is going to be cutting rates far more aggressively. there will be a 30 basis point cut thrown in, in 2025. the fed will get maybe a little bit closer to neutral but probably not below. there is raisin -- reason to have that. you have to be really careful keeping an eye on what is going on with the budget deficit in every country that we are looking at will be key for next year. there is so much in the government policy side. bond vigilantes really starting to gear up and keep an eye on what is going on in different countries. we have seen it in the u.k., an

idea of it in the u.s.. i think that is going to be a key conversation for all of the countries. lisa: the trade in the american exceptionalism in the small caps given the fact that they seem the most leveraged. just picking out the window in the united states. seema: i think the small-cap, it is really about valuations. it is catching up with the large-cap. as you were saying before, small caps, they have significant exposure. if you don't see significant rate cuts coming through, that will be the fly in the room. once valuations start looking a little bit less attractive with

large-cap, i think the small-cap agenda starts to become a little bit more attractive. jonathan: new question for the office quiz, do you want the new question? i won't put you on the spot and make you answer that. the dow is up more than 18% this year. as we speak about how bad europe is, the banks are at all-time highs. what is the record highs of things are so bad in europe and things aren't great in china either? seema: it's a great question. from a relative standpoint, it it is going to be big differences. if the u.s. market is doing well , it tends to carry those markets with it. they will be able to use those globally. going into 2025 with so much uncertainty from a policy perspective, it makes sense to

have that global investigation. we do think there's opportunities outside of the u.s. as well. jonathan: it is the banks promo, deutsche bank performing really well. lisa: how much is this because of the rate cuts and the likes of deutsche bank have expanded dramatically outside of europe? if they have some sort of footprint outside of europe, they could benefit. jonathan: on the path forward into 2025, the take away from seema is about how little needs to go right to trigger some of these squeezes in assets. lisa: it is a pretty high bar considering we continue to be disappointed. paris has underperformed the broader european stock market. talk about the splintering of

some of the traditional behemoths in terms of economic heft of the european region. it becomes a little bit dicey because they are kind of breaking down. jonathan: france has been really weak. equity futures just about unchanged with an update on stories this morning, here is your bloomberg brief. dani: syrian rebel fighters are advancing southward. it is the most serious challenge to president bashar al-assad in recent years. the rapid assault is being led by a rebel group based in northwestern syria providence. government forces which are supported by russia and iran have appeared to withdraw from some areas. tesla and byd offering incentives and discounts in china to meet annual sales targets including 0% loans and cash discounts. tesla said it's offering five years, 0% loans and a 10,000 yuan discount until the end of

the month. byd is on track to exceed its sales goal of 4 million cars but its rivals have already met their targets. a major snowstorm blanketed parts of new york, pennsylvania, michigan over the weekend. forecasters anticipate heavy snow to continue throughout the week. it led to an emergency declaration in parts of new york . officials warning of dangerous conditions for thanksgiving travelers returning home. that is your brief. jonathan: name five companies on the russell. i think we need about eight more questions to make this work. lisa: i'm trying to think of what they could potentially be. jonathan: you know the answer to that. lisa: 45 inches of snow so far if you look at some of the totals, it is four feet. don't worry, stop doing research

with that. jonathan: canada and mexico preparing for president trump. >> i believe he's stepping up to tell canada and mexico we have to get our security in the united states squared away. jonathan: that conversation up next. next. where ya headed?

susan: where am i headed? am i just gonna take what the markets gives me? no. i can do some research. ya know, that's backed by j.p. morgan's leading strategists like us. when you want to invest with more confidence... the answer is j.p. morgan wealth management ♪ jonathan: the path to year end looks like this. friday, payrolls, next week on the 11th, cpi. at least we hope, equity futures on the s&p down by almost 1/10 of 1%.

yields of starting the week a little bit higher. the 10 year, 420.91. canada and mexico preparing for president trump. >> i believe he's stepping up and making this statement to tell both canada and mexico we have to get our border security in the united states squared away. secondarily i think he's very concerned about imports from other countries that will try to take advantage of the usmca, it's also using it as a lever to get serious conversations in mexico city with washington. jonathan: fresh off a visit to mar-a-lago, canadian prime minister justin trudeau promising to increase border enforcement to avoid tariffs. the mexican president saying she's confident she could reach a deal with president trump. what does that deal actually

look like? ed: do we pull forward some of that renegotiation of the usmca, which is due to be renegotiated in 2026? there's clear that there will be significant increases in border related items. we see that donald trump will lead off after he's done with a number of immigration related issues. i do think as it relates to both canada and mexico, a lot of changes to the way in which tariffs are done on autos. probably a huge push towards protecting the u.s. auto industry, especially vis-a-vis china. what it really comes down to as it relates to mexico is that u.s. tariff policy states that you put a tariff on where a product this finish. china knows that. china is moving a lot of production into mexico and that is able to bring things into the united states tariff rate.

donald trump will want to make sure that backdoor door is fully closed. jonathan: there's a lot of people listening to what you say. they have heard from the president and believes the tariffs he's threatening aren't credible threats. consensus is this is just a bargaining chip bringing to the table, maybe get a little bit of something done from them. could you see it quite the same way? ed: i was going through this yesterday, the 20% tariffs that could be coming, there wasn't the same market reaction that we saw during trump 1.0. i think there is a long list of tariffs proposed against mexico in particular.

right now i think the market would be surprised that these go into effect. the one thing i'm watching as it relates to mexico is there is a personality clash between donald trump and the mexican president waiting to happen. that is probably the wild-card to watch. donald trump is going to be much more forceful on immigration on his second term then he was in his first term. there is a higher probability for some of these tariffs to go into place at least temporarily, he talked about using dormant authorities that the president has not been using in the past that could put on temporarily tariffs up to 15% without an investigation on day one if you wants to do it. lisa: gauging that a step further given some of the readouts from mexican head,

donald trump as well as the recent meeting with justin trudeau. how much of this is donald trump testing different leaders abilities to come kiss the ring versus actual policy description at this before he enters the white house? >> i think you are right. this is a testing the waters phase of this. i think the readouts have to be taken with a grain of salt. donald trump is not using the traditional ways that we build with diplomacy. not getting the state department involved. each president is able to put out their own different message as it comes to donald trump. justin trudeau is able to put out what he thinks is necessary. you test it out, get some

changes. the issues he is talking about, you put into place, going to be very aggressive on tariffs. the pic for u.s. trade representative, one of the reasons donald trump picked him is he will be more willing to be aggressive with some of those authorities than robert lighthizer. i understand the expectations that this is going to happen on day one. tariffs are coming. it is going to be volatile. we have to expect the unexpected. lisa: how many of these nominees will actually get through at a time where we have a lot of clashes? at least one or two of these candidates. ed: i was looking at the ones you put up on your screen. most if not all of the picks,

howard let nick -- lutnick, fbi director is a big question, health and human services we have been getting a lot of question, probably in that tossup category. donald trump with 53 votes in the senate to get the nominee confirmed, favre more -- far more than normally would get through. donald trump will have a cabinet that he wants. for the most part i've been telling clients expect the vast majority of these nominees. lisa: we still have a sitting president. he tries to remind us with new restrictions on chinese semi

conductors in particular and tools to build the high-end ships. how do you interpret this and some of the actions we are seeing out of the white house at a time where people discounted current president joe biden? ed: as it relates to tech restrictions, this is bipartisan. they picked the torch from trump 1.0 and accelerated it during his term. we will get these restrictions out during the biden term. they probably go even further during the trump term. there are restrictions we are discussing this morning, they have been in the hopper for months. the biden administration has been working with the netherlands and japan trying to get a trilateral deal. there are some ways in which the united states, dutch, japanese enforce these tech restrictions that is an unfair issue for u.s. companies.

the expansion is about making sure china doesn't engage in what is a game of whack-a-mole, as soon as we put out restrictions they move production to a new country or they establish new companies not on restricted lists. i'm anticipating the biden administration to tighten up that game. how much does donald trump come after that and try to end that game and has much more restrictive changes to semi cap equipment going into china, especially on legacy equipment during his second term? jonathan: it is a big question for all of us. thank you. check out the picture of donald trump, president-elect's economic team. we will talk about the name that is not there. . the market was very worried at

one point about ambassador lighthizer coming into the cabinet again or becoming treasury secretary. the reporting from axios over the weekend almost enforced by raymond james that the people that have been selected will be even more hawkish than ambassador lighthizer would have been. reporting over the weekend that lighthizer wasn't selected because he wasn't going to go big enough on tariffs. i'm not sure what that should tell you about how far they are willing to go. lisa: there have been a number of signs that donald trump is not happy with the market when you view some of his tariff threats. it seems like that is going to be at. jonathan: the conversation and that theme, that will be the theme of 2025. wendy stewart of bank of america, up next.

jonathan:jonathan: futures just about unchanged on the s&p 500 after a stellar month of gains for november. the russell up by close to 11% through last month. small caps this morning outperforming, up .25%. let's cross over to manus cranny. >> stellantis has done a full vault face. they have gone from unanimous support to 2020 six to leaving

with immediate effect. he is the master of the auto industry, but did he have a big enough platform to take this company forward? we have a problem. rapid degradation of jeep, chrysler, dodge, reckless short-term decision-making. that was in autumn. sales in united states of america have drifted down. we have gone from the second quarter of about 11.7% market share down to just under 10%, so this is in anticipation of positioning. what you do to turn it around? have a look at nvidia, down by .4%. under the hood, edgewater sold shares at the end of the third quarter. you never really know the rationale or reasoning for these moves. this is a little bit of a kicker

in the nvidia story. we spent a lot of time talking about retailers last week. on earnings day, it was down 9%. jp morgan sat down with management and cfo and talked about a consistency. good morning. jonathan: we will see you again in about 16 minutes. check out the euro and french 10 year and the french equity market. the equity market recovery in the last few moments got positive on the session as session lows are down by more than a percentage point. over the last few minutes, maybe some concessions. lisa: it seems as if marine le pen's argument that don't take away the stuff people really like in the name of fiscal prudence has gained traction. basically, the government will not drop reimbursement in is

2025 budget. they were going to revoke some of the reimbursements that they give out for drug expenses. they are not going to do that anymore. this is sort of edifying the feeling that the government will not necessarily disband as a result of basically kowtowing to demands from the far-right. jonathan: we will keep an eye on that story appearing under surveillance this morning, stellantis ceo carlos tavarez stepping down following a board dispute and a stock slump. sources tell us a new ceo will be named in the first half of 2025. all the crook did a great job of covering this story this morning. clearly the path forward is a troubled one this morning. right now, there is no one steering the ship. lisa: will it be a fire sale of inventories? they do not really want to do that if they can help it.

there is question about spin off and potential brand closure. it seems universally whether it is dealerships or workers, everyone seems happy there is some sort of change in face of the commentary, so the question now is how they turn the ship around. jonathan: we spoke to carlos a number of weeks ago. he laid out the challenge for european automakers. he wanted to see a plan for european officials to incentivize purchase of ev's or we would have to cut capacity. that is not going to win friends in the workforce. we saw this complaint because there was not enough investment, complaints like there were not enough models to sell new models. i want to understand with attention was between the chairman of the company over the last few years. what did carlos want to do that he was upset with? >> did he want to close a

specific brand? you will look for the play-by-play of what actually happened over the weekend. in the meantime, the real question of why he was not the fall guy and did not make all the hard combat decisions -- ultimately there was a question. don't you want to clean house? it is carte blanche to do the them popular things people say might be necessary. >> i am still waiting for that kitchen sink moment for european automakers. canada says it will step up border enforcement as it to avoid tariffs under a new trump administration. prime minister justin trudeau met with president donald trump at mar-a-lago. they look happy around the table. i have no idea what the conversation was like behind closed doors. i imagine it was lightly different. >> play along, just make me look good. canada needs the u.s. as much as the u.s. needs canada. nobody seems to be taking the

threats for tariffs seriously. if there were some sort of massive 25% tariff particularly with mexico, that would torpedo the auto manufacturing industry. let's see what actually happens. it is the reason people are not taking seriously. jonathan: we are not making a judgment about whether they should because that is a different conversation going into 2025. maybe they should be taking it seriously. lisa: especially if the axios report is correct, that he was selected because he will not go far enough. how much is this going to be raising the ante if the market does not take this seriously? jonathan: the biden administration is restricting exports to 140 chinese companies. reuters reported restrictions will be placed on huawei's chipmaking partner. it is another issue the sector

will have to deal with. next year will be a year of change and uncertainty. certain sectors and industries will benefit. others may not. wendy joins us now for more. i am thinking of the long list of things your clients have to confront in the next 12 months, taxes, tariffs, the prospect of interest rates not coming down as much as we thought they would. what is the number one issue in conversations you have at the moment? >> when you think about our clients, we work with over 15,000 middle-market companies that are based in the u.s. and canada and they also do business around the world and recover their international subsidiaries. these clients are publicly traded companies and privately held companies and we see the generation transfer from the second to the third and third to the fourth generation, so when

you think about the things that they have faced, there is uncertainty into 2025 and you mentioned the things that are top of mind for them, increasing considerations around tariffs, taxes, interest rates, inflation, and also geopolitical tensions we have seen. we have a lot of clients over the last 18 to 24 months that have looked at what is happening geopolitically. they do business in asia. as they have looked at their china strategy, they have moved that business into asia and moved that into other parts of north america, specifically into mexico and you have been talking about tariffs and what that will mean for clients. we have questions around that still, but i can tell you one of the things they're focused on in mexico now is the deflationary environment with the peso, so we have in working with clients to help them with that.

while we see uncertainty, we are working on how to turn that into opportunity. jonathan: are they in a position to play offense or are they holding back on making investment decisions until they have clarity on policy? wendy: they are not making big investments, but they are making targeted investments, so we have seen a lot of good opportunity for our clients, especially when you think about investment banking and these are not necessarily the m&a that would hit the headlines but clients are looking at opportunity to make targeted investments. we have a client based in the southeastern united states and this company and did not have an exit strategy. they wanted to take liquidity off the table and they were looking at that liquidity event, so in the meantime we had another client based in europe. that company did not have u.s. exposure, so these companies, we

introduced them and it was a great fit. it enabled the southeastern company to have liquidity while also retaining a minority stake in the country -- company and allowed the european-based company to have u.s. exposure and leverage international expertise to help with that specific transaction. >> this raises a question, which is how much are you seeing a rush of foreign companies looking to partner with u.s. companies to get ahead of potential tariffs or actions from president-elect donald trump? >> we are seeing that. i do not know that i'll call it a rush. we have had ongoing interest as companies look at how they can diversify into the united states. the middle-market client base we cover is attractive to them and we are in position to see where those fits would make sense. we will continue to do that. lisa: is there a level at which

borrowing costs become prohibitive for companies to expand in the u.s.? do small caps outperform at a time yield are relatively high? is that a concern or not even on the table? >> it is not on the table. we are expecting that to come down this year into next year and for companies outside of the u.s. that might look at exposure into the u.s., there is ability to manage that interest-rate exposure globally and they can take advantage of borrowing in different currencies depending on what the rates are. >> do you get the sense there has been certainty for some smaller companies in different regions to expand, to make decisions we have heard stymied by political uncertainty prior to the election? wendy: absolutely.

the sentiment is interesting now. there is a lot of optimism and pent up demand. clients have been surprised that the economic environment has been more stable than they were expecting. combined with interest rates coming down and demand creating opportunity, we continue to work with clients not only as they focus on geopolitical tensions and what that means for them but also domestic and we continue to do a lot with clients with the core banking needs they have, whether loans, deposits, helping them manage the cash management process. we have a new client we have started working with based in the midwestern united states and this company is also doing business in canada. they have exposure into geographies outside north america in two different regions. when they looked at the cash management ecosystem, they were doing it on a manual basis.

they did not have a lot of visibility. they had risk they wanted to take off the table, so we help them put a solution in place. it is the platform into the bank that is online and mobile and it has enabled them to manage exposure and continue to grow in a way that is safe, secure, and efficient. jonathan: you have given us specific examples. i was noting down themes, managing the supply chain and exposure down in mexico, getting a presence in united states. what i hear is the need to be with a bigger player, and that is what we saw coming out of the regional banking crisis. is that still the same now? have you held wendy: five?

-- wendy: it is for all the reasons you have just cited. our client base is more global now than ever. they need a partner who can help them navigate uncertainty and turn that into opportunity for them to help them grow. jonathan: this was brilliant. happy thanksgiving to you and your family. thanks for being with us. i think really offered a good look at what is happening with corporate america and i would say arguably corporate america and beyond over supply chains, fx exposure, and you need a presence in america right now. selling into the united states is not enough. lisa: which is a reason why cross-border investment are going strong. how much does this really advantage the larger players to the disadvantage of regionals that have not yet clawed back? do they have a permanent structural disadvantage because of the trends? jonathan: imagine being exposed

to the peso after the month we just had? huge problems potentially. that is the latest story on the banking front. here is dani burger. >> president-elect trump is bringing someone he pardoned into his administration. he has nominated charles kushner as ambassador to france. he is the father of jared kushner, trump's son-in-law. he served two years in prison for filing tax -- false tax returns and making full statements. volkswagen workers in germany have begun their temporary walkout over cost-cutting measures. the union opposes the plan to close three german factories, lay off thousands of workers here and a fourth round of negotiations is set to take place one week from today on december 9. it is cyber monday and consumers are looking for deals online. adobe analytics tracks online

shopping and expects consumers to spend $13.2 billion today. that is 6.1% more than last year. that would make it the season and the year's biggest shopping day for e-commerce. jonathan: thank you. next on the program, bond vigilantes thriving in europe. >> the french government is looking at the french parliamentary debate and respecting every parliamentary debate that leads to an evolution. we will take what is changing. we are committed to reduce the deficit. jonathan: we will get you the latest on a last-minute concession to marine le pen. this is bloomberg. ♪ (♪♪) (♪♪)

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jonathan: stocks are doing ok here, coming off a month of gains on the s&p and the nasdaq. bond yields a little higher, obsession yields with 40 basis points on the 10 year. under surveillance this morning, bond vigilantes thriving in europe. >> the french government is looking at the french parliamentary debate, respecting every debate that leads to an evolution. we will take into account what is changing but we will not be blackmailed. we are committed to reduce the deficit. government is a government of dialogue respect. this budget is not the result of just a government project. jonathan: the french government offering a final concession to marine le pen's party on the 2025 budget, seeking to avoid being ousted from power in a no-confidence vote.

recently sending french borrowing costs to the highest levels relative to germany since the euro zone debt crisis. joining us to discuss is michael of morgan stanley. bond vigilantes are back and thriving in europe. we sought in the u.k. and we are starting to see it in france. may be the prime minister can hold on, but it sounds like they just were. lisa: we are not going to be blackmailed, yet here you have it. jonathan: what you think is behind the more assertive bond market particularly in europe? >> i think it is the fracturing of political consensus to do with challenges being faced in putting a burden on fiscal policy when many countries have little physical space to deal with this with increased spending, cutting taxes, things like that. how do you deal when you're under pressure from all sorts of directions and no one policy mix

will fix the problems you are facing? annmarie: as an investor, how much does that make you stay away from places like the french bond market because if they do cut their budget the economy tanks and they have no government? if they do not cut their budget, they have increasing deficit with no signs of fixing it. how much do you just stay clear? michael: i think that is exactly what you do. they are being helped by the fact that german bond yields keep going down so absolute borrowing costs are not rising rapidly. they have not risen to the levels we saw in the sovereign crisis in our last decade because german bond yields were rising everywhere and causing punitive borrowing costs. not really constrained on french borrowing at the moment, but they could be over time. enforcing actions which are painful to somebody but which resolve the problem going forward.

today, greek 10 year bond yields are lower than in france when greece was insolvent 10 years ago. annmarie: is there a certain profile of countries susceptible to bond vigilantes versus not? i think about france and maybe greece, but maybe not anymore. in the u.s., it seems the u.s. is immune to potential for bond vigilantes even though the gdp is on a trajectory that is worse than any of these countries. >> it is a couple things for the u.s.. one is the u.s. dollar in the sense of global reserve currency . president-elect trump has talked about the important aspect of having exceptionally strong currency around the world, which gives the u.s. a special situation and everyone except the dollar. over time, things can get out of

control. we saw that in the u.k. for a little while. that is further down the road. issues in the u.s. need to be dealt with and the sooner the better because modest changes can affect the trajectory over the next 10 to 15 years. it is more about the next couple years. where is the new administration going to be with regard to containing growth of the deficit and debt overall? it continues to grow bigger. at some point, there will be a constraint on government policy, which usually creates an adjustment. jonathan: we should acknowledge something unique about this moment. these issues are rising outside of recessionary conditions. we are running budget deficits north of 5% in america with gdp running at robust levels and unemployment close to 4%. my question is how these bond markets will cave with economic

downturns. in developed markets, when things go wrong you buy bonds. are we going to challenge that next time around? michael: it could be. we fixed it last time with quantitative easing. we want to make sure monetary policy or deficit and inflation problems do not cause problems for long-term interest rates. but down the road if central banks feel constrained and do not want to do that, then it becomes more problematic. jonathan: does this become problematic for portfolio construction? >> inflation has gone up in the united states lately. that has been going the wrong way. the unemployment rate is coming down a little bit from levels we saw in september, putting more pressure on the fed. maybe we should not be easing too aggressively going forward.

it puts upward pressure on bond yields. jonathan: let's assume we get one. do bonds behave as a ballast next time around? >> it depends on what causes the downturn, but if you do not get that reinforcement of bonds, that limits and ties the hand in terms of fiscal response to any potential downturn and that is the fear people have, including the federal reserve and maybe the reason they are acting more carefully now as they try to thread this needle. jonathan: good to see you, michael kushma of morgan stanley. we look ahead to payrolls friday and also catch up with a strategic spear in the third hour of bloomberg surveillance's the corner. -- is around the corner.

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>> the best fundamentals are still u.s. large caps. >> everyone is on the same side

of the boat which makes everyone vulnerable to volatility. >> i think there are significant uncertainties. >> you will get some good results, you'll get some better results. that will grant volatility in the market. >> wants to get a dose of reality in 2025, that is when you want to take risk off. >> this is "bloomberg surveillance" with jonathan ferro, lisa, and annmarie hordern. jonathan: just about unchanged on the s&p 500. nasdaq just about in positive territory. the russell, after a riproaring november, trading up by almost .2%. payrolls friday, the estimate is 200,000. the high is 200 70,000 at morgan stanley. below is 155,000 at citi.

lisa: jolts ahead of that, but that will be muddied by the weather disruptions. how high is the bar to not cut rates later this month? how much do we have to see a really riproaring number and also the unemployment rate that falls back down, we just picked back up for them to do that? it is fascinating that jay powell suddenly signed up to do a q&a on wednesday at a conference because it raises the question, what do they want to be messaging at a time that seems pretty fraught with accelerating growth, at the same time that they seem to be on a somewhat preset rate cut path? jonathan: we don't assume, we don't speculate. how much speculation will they be doing out to next year and beyond? lisa: how much do they try to remove the political tinge by saying the economy is performing better than expected? that, to me, is a more

interesting way to communicate that they were having a shift on the federal reserve board. jonathan: payrolls this friday, cpi next week. bmo sees a strong report on friday and robust cpi number may be causing the fed to pause on the 18th. lisa: otherwise, why not pause and signal they are never going to cut again? it leaves them open to a lot of political leeway because you have to imagine that 2025 will be all about jay powell defending the independence of the federal reserve at a time where he has already staked out his territory with a very definitive i will not go. jonathan: we may have a shadow vice chair. lisa: let's see. he was very definitive when asked about it, and that is the response of a lawyer who paired his dad prepared his brief and was ready to go. jonathan: the s&p 500 caps its

best month so far this year. we will speak to dana telsey on a record-breaking black friday. claudia sham of new century advisors looking ahead to payrolls. we begin with equity futures unchanged following the best month of the year on the s&p 500. tom kennedy, looking ahead to the last fed meeting, writing, odds of a pause have grown meaningfully. the labor report on friday really matters. we view the risks to the soft landing as a balance between recession and inflation re-accelerating. good morning. two very different risks for 2020 five. what are you telling clients to do? thomas: balancing on your portfolio to make sure you feel comfortable with your strategic asset allocation. are there places we can correct? heading into this meeting in december, it is fun to play this game that you are doing at here. what does the market assigned to a rate cut?

65% today. they are getting good optionality but they want to check in on september. growth number 42024, 2%, too low. inflation, 2.6%, core pce, that is too low. unemployment rate, probably too high, which is why we come back to this report on friday. i agree with you guys, last week for payrolls was an anomaly. the fed will have optionality. that is what i expect out of powell this week. that is when data dependence is. jonathan: based on what you said, i'm not sure what the options are. if you revise growth hire, revise inflation higher, down unemployment, how are you cutting interest rates? thomas: now it's about where is this neutral right? a great speech last week, could have been the week before. about the range of outcomes on neutral in the range of estimates.

we are getting to the top end of that range. what laurie was trying to do was say we are data dependent, we have to feel our way out of this, but the market has responded by pressing in more pauses into next year. i think that is the real question they had to come out with. if they end up cutting, it is just that rates are restricted. we can still come and get that soft landing. lisa: there is a question about whether it matters even right now given the fact that it seems like the fed has taken a backseat to the actual raw economic data, the headline policymaking that seems to be happening. do you think it matters, whether they cut or don't cut, it will make a big difference for investors? thomas: the way i think about, does it matter, if they continue to cut, the economy continues to surprise on the upside. that has been a theme consistently, the u.s. economy surprising to the upside. if that is the reason we are not

cutting, what are the equities i want to own? if the world is slowing, do i have the right ballast in my portfolio to keep it as resilient as it can be going into 2025? resiliency is a big piece of this. when i look at client portfolios, they tend to be overweight risk and cash. lisa: you talk about the bifurcated risks, do you have one scenario that seems more likely than the other? if the fed were to cut rates in a couple of as most expect, is that risk of a re-acceleration much greater? thomas: the point of saying they are balance between these risks, it is a more normalized environment that we are willing to appreciate. for the last 15 years, we have had the comfort and resiliency of the fed forward guidance. at the moment we don't have any forward guidance. those balance of risks of being equaled as a signal from our perspective to the world, is

your portfolio balance for the risks and outlook going forward? lisa: what is the ballast for recession? thomas: i still think the treasury market and core bonds, talking about this in the prior segment. where would you go when the economy and revenues for your stock, those revenues are deteriorating, where do you go to hide, what are your options? i don't think there is anything other than the treasury market at the moment. is it cash? we are trying to push clients into thinking about alternative ways that are long-duration. 45% of the wealthiest families in the world own alternative assets. historically you so you cannot own them because they are illiquid. 50% of all of our private as it raises were in evergreen markets. the market is changing. the last people to own real estate, infrastructure, different assets for income i

don't need to be tied to just the treasury market. jonathan: certainly if you are retiring, don't need the money for 20 years, you ask yourself while you need the liquidity? do you see clients changing their attitudes to alternatives? thomas: absolutely. if you look at three years from now, everyone of our clients will have more alternative assets is a larger percentage in their portfolio than they do today. in the private space, the secondary market is growing. then also private credit. many years, private credit is a bubble. it is a key piece, adding liquidity to sponsors at a time when they need it. jonathan: who loses out? i am thinking what asset class, security will attract that money but will not anymore? thomas: it is about how banks adjust themselves to be a part of the lending solution here. i don't think it crowds out

things in the way that you are talking about, money has to come from the public space to go to the private. i've issuance is nonexistent. when are we going to ask the question of why are we expecting ipo issuance to go back to where it should? private business owners don't need to go public anymore. there still needs to be a certain amount of that for the sponsors and private equity but we don't think ipo issuance will go back to where it was. lisa: this raises a question, i think of adina freeman at the exchange throwing things as she listens to you, the argument that if you don't have companies going public, don't have the same transparency, that that impede the transparency of the system. are you saying that risk will not materialize in a lot of markets that people thought of as more obscured? thomas: i think you will need to

see transparency come to the market. jp morgan provides most of the leverage to the private credit space. the sponsor giving the loans outtakes leverage from a bank. they are still connected to the banking sector. i just think the nature of transparency will change. lisa: is the argument that traditional asset classes, bonds, stocks will not have the same return going forward because we have brought forward a lot of those returns and yields are higher? thomas: not necessarily. you look back in history when you see big years like the one we just had, over the last 75 years, if you see a 25% gain on the s&p 500, next to you are up about 10%. markets can do well. i am just saying the nature of these earnings for these businesses is shifting from public companies to private companies. my clients need to adjust alongside it and invest alongside those earnings.

when are we going to ask, this is a constant, perpetual change. reversion to the mean is unlikely to happen. jonathan: key overweight, big favor next year, financials, banks, and part of it is this ipo story picking up again. are you questioning that allocation? you still like financials? thomas: they look fantastic from earnings growth change happening. you can see leverage starting to accumulate. it doesn't have to be the ipo market. it could be leverage extension elsewhere. also the curve should start to normalize here, incentivizing the lending market to pick up again. looks relatively attractive to other things that we have. financials is a key overweight to us, also industrials and utilities, tech, as well, but we are broadening out that tech discussion.

arguably in the six-month range you see it broadening out. that is where we see earnings accelerating amount. jonathan: thomas, good to see you. appreciate it. a conversation i didn't expect to have about capital allocation and these shifts we are seeing. lisa: it is relevant when we see so much money flowing into the u.s., u.s. exceptionalism, people say valuations are high, especially if these public companies comprise a much smaller portion of the overall investing market there they have traditionally. it is one we had to keep on going back to even if not in tandem with some of the more visible balls and strikes. jonathan: the last few years, equity futures, just about unchanged. let's get an update on stories elsewhere. dani: the french government is trying to avoid being ousted from power in a no-confidence vote. prime minister michel barnier

offered a final hour concession to marine le pen's party on the budget. his office said they have committed to not cutting reimbursement for medicines. the parliament is due to convene at 3:00 p.m. paris time. people familiar say that debeers have cut diamond prices more than 10% across the board. man-made diamonds and the collapse in the chinese luxury market have both undermined prices. the price cut is the first since the start of the year. the buffalo bills are heading to the playoffs after last nights 35-10 win over the san francisco 49ers. their freezing temperatures and snowfall couldn't stop josh allen with four touchdowns including one rushing and one receiving. the 49ers the season continues to go downhill with running back christian mccaffrey injuring his knee on a noncontact play.

week 13 continues tonight with the browns and broncos on monday night football. jonathan: thank you. those fans, dedicated. did you see the conditions? ridiculous. wading through the snow to find their seats in the stadium. how is that game not canceled? lisa: it is like ice fishing but watching football. you play in the snow, you feel like you are hard-core. you go home, you have war story to tell your children. jonathan: you get ill, you don't go to work. up next, morning calls. dana telsey, as a retailer see a retailer see record online black friday sales. that conversation is next.

jonathan: the opening bell, one hour, 13 minutes away. equity is just turning positive in the last few seconds. yields are higher by three basis points. the dollar stronger against everything in g10. the euro down to 1.0511. the second call from guggenheim, downgrading kohl's to a neutral setting soccer sales. finally, jp morgan downgrading cap to overweight, saying the company is at an inflection point to support sales growth. that stuck up again 4.8%. retailer seeing a record black friday. data showing consumers spent 10.8 billion dollars on line as they look for the best possible deals.

dana telsey writing, the theme of holiday 2024 is one of selectivity, whereby both consumers and retailers are more discerning in allocating dollars. dana, good morning. it is days for you. you have been to the stores so we don't have to. what is it like? dana: traffic built as you went through the day on friday. you don't have the morning rush like you did in the past because the promotions are elongated and you could have gotten deals even earlier on. the going rate seems to be. 30percent off you could get at additions to that through the weekend. today is cyber monday. the expectation is for a 6% increase. jonathan: is it a legitimate 30 percent of? consumers are starting to believe that these deals are not really deals, they are being misled somewhat. dana: they are real deals. look at the inventory levels. they are not piled high to the sky like they were in the past

but you are getting the deals for the spending that is out there. retailers know they have to promote to do that. look at the traffic we saw. we had teams around the country. whether it was abercrombie & fitch, victoria's secret, ulta, lululemon, we saw lines. was it all day? it was the height of the day where you saw traffic. lisa: never change. are they really deals? jonathan: 30% off of a price that they charged five minutes a year ago. lisa: i am wondering if there are certain types of stores that saw traffic and people became more discerning about the experience that they wanted to have. dana: i think you saw the specialty stores. victoria's secret, the lines they had was compelling. you had not seen them in years

past. bath and body works always has a line because of the deals they give. hollister's level of promotions was 30%, last year was 40%. we have a tracker showing the difference in levels of promotions. nike was more promotional than in the past, which was not surprising. lisa: do retailers like that e-commerce is taking such a big slice of the pie? is it less profitable for them to sell online with all the returns and processing, expectations that come around that? dana: over all you need both. when you are seeing today is a lot of stores will fulfill those orders, or the buy online and pick up in-store. stone physical shopping is the greatest part. you are not seeing the big pickups in traffic because people have been shopping all along for physical retail.

look at the new store that opened up in soho. traffic was big on thanksgiving day and even black friday. lisa: the point about is this a real deal? how much have the stores capitalized -- cannibalized around the excitement of black friday given that the sale stretch longer and feel like an evergreen type of an event? dana: retailers buy for promotional time periods. we know every thanksgiving day weekend, you go into a lull until the 10 days before christmas when a lot of the shopping is done. but you look at this year with five fewer days than last year, black friday weekend could account for 20% of the holiday season sales for the week of the black friday week. now you have fewer days to get to december 25. jonathan: who is winning? dana: abercrombie, hollister,

victoria's secret is doing well. as the weather got colder, people started to buy. walmart is winning. you look at the traffic at t.j. maxx, which have become more gift oriented. jonathan: i will not ask you about the correlation between the temperature and victoria's secret, but you have mentioned them a couple of times. where have they changed? dana: some of the stores are retrofitted, product lines. they reintroduced sport, bathing suits. they have a long way to go but we noticed lines there, which was different from last year. lisa: a lot of theories about why the store has cut back. we can explore them at another time. i want to take a bigger question --you are like, why not explore them now? jonathan: you seem to know something that i don't. lisa: they changed the look. it had been going for a progressive, everyone's body is wonderful kind of look, then

reverted back to -- jonathan: hot has made a comeback? is that what we are doing? dana: basically you have the new leader coming in, going to retrofit the brand. she knows how to merchandise. let's watch the next year. jonathan: what has she changed so far? dana: she just started in september, so yet to come. jonathan: what has brought the crowds back? dana: the sports category. jonathan: are they going after lululemon? dana: no one is coming after them because they have the most traffic. alo is second followed by vuori. jonathan: let's talk about the private market challengers. how much of a challenge are they providing? dana: when the margins are so strong, people come in. but when you look at what makes a leader, it is driven by the technology innovations they

have. lululemon will report later this week. it will be interesting to hear about what they're putting in in terms of their core men's and women's product, and don't forget about the growth of international. jonathan: vuori versus lulu. lisa: i have both products. i just noticed that lululemon didn't have the quality that they previously did. that seem to have revived. lululemon also reports earnings this week, so we will look at that. jonathan: if you wait long enough, somebody will come in and clear the shelf out. have they fix that yet? dana: more colors in the product, being in stock, having the right fit. vuori started as a men's brand, known as soft casual. they have added women's and they're still in the growth phase. jonathan: thank you for the update, dana telsey. lisa: there was a whole

discussion around victoria's secret where they were going to get rid of angels. i believe the angels have made a comeback, so it has sort of evolved. it starts there. that is part of what is behind some of the shifts. jonathan: become more aspirational again? lisa: i guess so. more of a vision of lingerie. we did this really well. dana: let's wait for next year and see what they have. jonathan: up next on the program, claudia sham of new century advisors, thomas tzitzouris of strategas. this is bloomberg. ♪

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jonathan: equity futures positive across the board on the s&p, nasdaq, ross all. small caps outperforming up by more than a quarter of 1%. let's get an update on your morning movers with manus cranny. manus: the headline on stellantis is that carlos taveras, the efficiency csar is gone, but it goes from unanimous support to him to stay until 2020 62 him to leave with immediate effect. this is questioning the capacity

of the efficiencies they want to go in. we have a problem, that one the message from michigan. they opposed short-term decision-making. this is less about the problem with china. they had a market share of over 12% in 2022. that had dissipated to just under 8%. this is not a china problem, this is a usa problem with sales. nvidia down a quarter of 1%. what is the opportunity from the new set of regulations that the biden administration has leveled on top of the chip industry? 140 new companies will be restricted in what they can sell, but bridgewater sold 1.8 million shares and bought supermicro. a little bit of a backstop this morning. you just finished a conversation

about retail. jp morgan upgrading gap to overweight from neutral. they had a meeting with the cfo and ceo. they believe in the reincarnation, believe in the marketing story that had been delivered. improve merchandising, marketing across all four brands. i got the full 30% off, and i feel like i really did accomplish a bargain on black friday. jonathan: thank you, manus cranny. some of the movers. here is another one. in town down more than 50% this year. this headline is not a surprise. intel announcing the retirement of ceo pat gelsinger. the board has formed a search committee for his successor. lisa: this comes at a time when other chip manufacturers have done well. he will also be stepping down

from his position on the board. the foundry leadership will remain unchanged. the only thing that changes is that pat gelsinger will not be there. you made the point, how do you feel as a leader when you start down and the shares go up? that seems to be where things are with the initial reading. jonathan: you can learn something from the data and how the market respond to that data. the market is responding favorably to his exit. the hard work that has to be done here, though, how outside this company is relative to where the market is right now. the winners right now are nvidia. what does this company need to do in the coming years, decade to improve things? this is a big turnaround effort. lisa: their hands are somewhat tied due to the grants it has gotten from the government, how it will be deployed when they get the money. there are questions about how you can turn around a ship in a fast-moving industry when there is a clear leader.

if intel is going to be the national champion in the united states, how do they beef up their production in the u.s. when there is not the expertise with people to make the same products is in taiwan? jonathan: more updates this morning. just going over that breaking news, intel announcing the retirement of ceo pat gelsinger. that stock is up in the premarket by close to 5% now. let's turn to the federal reserve, the next decision two weeks from wednesday. claudia sham of new century advisors writing, for both the fed and other policymakers, now is not the time for complacency. watch labor market and the rate of business formation. if they slip, productivity could slip away, too. the economy has come too far in the last few years to allow that to happen. claudia, welcome to the program. the supply side of the economy

and the hard work that it's been doing so far over the course of 2024, and where that leaves the federal reserve as it thinks about 2020 five and beyond? claudia: it is so important we don't just look at the gdp number and say it is almost 3% and move along. why is growth so good? if we are overheating, the fed steps in to raise rates and cools things down. that is not what's happening. we have seen a real pickup in growth. we were promised a recession and got an acceleration. we have seen for two years running almost 3% growth. if you look under the hood, a lot of that is coming from productivity. that is the holy grail of economic prosperity. we should be spending time figuring out exactly how did we get to this place where we have seen a pickup in growth. this is something the u.s. is seeing and peer countries are not. lisa: given that people believe

that this is becoming a productivity story, does this mean that from your perspective it is not inflationary, that it does not preclude the federal reserve from cutting in a few weeks time? claudia: inflation happens when demand is outstripping supply. there is more to it, but if we have too much demand and not enough supply, we will get price increases to make the market work. but if we can get more supply, and that is the lesson -- we didn't get this inflation without recession without the supply side help. we got it not just from supply chain but from workers coming online and also getting people in more productive positions, getting more capital in their hands to do their jobs. that was the way to solve the problem of inflation. it can also help us think about growth in the long term. but we have to get out of our head it is all growth and the

fed does interest rates. productivity is a tough nut to crack. it is not primarily about the federal reserve. lisa: how does jay powell message this at a time when he is speaking on wednesday at a moderated conversation, ahead of a time, as we have been hearing from analysts, the fed is likely to adjust their projections with unemployment going down, growth also going up, given the fact that you have seen upside surprises to growth? claudia: powell has made a real effort on this. i would tell him to double down on it. he has said it multiple times, the fed doesn't have a growth mandate. that is a wishy-washy way of saying that sometimes the fed needs to get out of the way. this is one of those times where the fed needs to get out of the way. high interest rates being a necessarily restrictive on the economy relative to the dual

mandate, it has costs. this high growth is not guaranteed. that is the thing about productivity that we have learned in the past. holding onto it is what is really hard. we should not be taking this lightly, that we have this growth pickup, productivity renaissance. the question is what can all policymakers, what lovers can we pull to get this going? i will continue to go back to his mandate of employment is important because the more we have dug into this productivity boom, it goes back to the labor market. the dynamic labor market is very much tied to the higher productivity in the economy. jonathan: i wonder from your perspective whether you think it is distorted that fed's understanding of the influence they have over inflation. claudia: i think the fed has

been very humble and open to the fact that there is a lot going on with inflation that we don't understand. they have been clearer than people watching the fed, that there are tools have been limited. a lot of dynamics of inflation having to do with supply side that is not about the fed. the fed has a mandate with inflation, they have stepped in. when we see inflation picking up, they would step back in. it is not that the fed is out of the picture with inflation. they have tried hard to make it a more nuanced conversation. nuance is tough. balancing the two sides of the mandate, saying this is not about growth -- high growth does not mean that we need to hike, does not mean that we have no reason to cut. it's a dual mandate. the growth conversation is a separate part of this. jonathan: we enjoyed this conversation. always good to see you, claudia

sam of new century advisors. we will hear from chairman powell, we will get payrolls on friday. we will get cpi the week after that, federal reserve decision. michael mckee joins us for more. mike: while you were talking, we got two speeches added to the calendar. tom barkan of richmond will be speaking on wednesday and thursday. overall, we have a significant number of members of the open market committee who are going to give us their thoughts. the only one that will really matter is jay powell, as always. where he is, the markets will anticipate the fed will end up. the real question is what can he say about where the fed ends up, given that jobs is not until friday, cpi until next week? lisa: they all matter, i enjoy every single speech. i just want to say thank you for adding to them. i think it is fascinating that

they are being added now. it is before the quiet period, but also a time when there is question about the fed's independence, and also how they will address policy changes potentially coming down the pike that will have a significant impact on the economic outlook. how much of this is getting ahead of that? mike: i don't think most of this is based on that. some of it is an opportunity, shall we say, to talk about that, but when you look at what they say about fed independence, it is the same sentence from everyone of them. it's important because it gives the fed credibility. you take that away, the markets have a problem. they don't want to talk about the guy that is going to be president, we shall not mention his name on the fed. the framework will start to be what they start talking about. chris waller is speaking today about that.

there was an interesting bill dudley column, saying the fed has some work to do their. we will see how far these people want to go in terms of front running that. the rest of it will be just talking to their constituencies, especially the fed bank presidents, talking to rotary clubs, universities in their districts. jonathan: tons of fed speak next week. going into it, bond yields are higher across the curve, up by seven basis points on the 2-year. just pushing higher after dropping last week. with us now is thomas tzitzouris from strategas. you've talked about this marriage between full employment and declining inflation, said that the honeymoon would come to an end. has it come to an end already? thomas: i think so. for the most part in 2025, we will see you move sideways between 2.20 5, 2 .5%, core and

cpi around there, but by the middle of next year, we start to see the second wave of inflation beginning to emerge. lisa: is it coming from policies are naturally existing inflation? thomas: we have looked at the data over two years in developed economies. 85% of the time you get a second wave of inflation because the first wave is caused by something structurally changing, amplified by fiscal and monetary policy, but the initial change is a structural shift in the economy. the shift was the labor market becoming exceptionally rigid. covid accelerated this, but the labor market became exceptionally rigid as we transition from the baby boomers retiring to having the gen z and millennials not necessarily having those skills yet, being geographically rigid about where they want to work, as well. lisa: when you talk about potential policies coming down the pike, how much of it is

immigration, clamping down on that, that could be more inflationary than some of the tariffs? tom: we don't take credit for this work, but we are kind of quoting work that we have seen, but terrace would add between zero and 1% to cpi over the next 10 years. it could be worse if there was essentially retaliation tariffs, but it is not a huge impact. the deportation of labor has a much more substantial impact come upwards of 10% on cpi total. but there is a lot more uncertainty because you have to estimate, what is the household formation rate going to be, childbirth, demand for housing, and what impact will that have on consumer pricing? jonathan: federal reserve about two weeks away. are they hitting pause in december? tom: if they want to maintain this perception of being independent, i will say no.

the fed has pigeonholed itself and telegraphed too much easing for the next 12 months and an end to balance sheet reduction. i think they are stuck. the data coming out friday could make the case, if it comes in strong, that they don't have to go in december. but any sort of hawkish talk will look very suspicious. jonathan: what is the difference between being politically motivated and being policy motivated? tom: i guess i would say, they made quite a bit of effort in the last 12 months to communicate an end to balance sheet reduction. those examples, putting out a new metric on their website, talking about reserves in the system, their way of saying they want to desperately and balance sheet reduction. even if the data changes, they shouldn't have telegraphed that. 12 months ago, we were talking about the dallas fed president

talking about the need to almost immediately and balance sheet reduction. they got ahead of themselves for that. if they change courses now, despite the fact that the data has improved, it will look suspicious, the market will see that as politically motivated. lisa: if they cut, how much do you not like the long end of the yield curve? tom: for now we like it because we see liquidity bonanza coming in, upwards of 75 basis points coming in between now and june. that is roughly what is priced in. we see a debt ceiling standup taking place out to the middle of the first quarter. despite the unified government, republicans in the senate will hold donald trump's feet to the fire on the budget for 2026 and going forward. we have this unintended consequence when we have a debt ceiling standup where liquidity comes out of treasuries and goes into bank reserves. that flattens the treasury curve. on top of that, the deficit should be smaller next year.

we could actually be looking at a shortage of treasuries temporarily until we raise the debt ceiling. we are actually bullish on duration until we get through that debt ceiling raise. when we get through that debt ceiling raise, it is off to the races again. bond vigilantes will find a new appetite to put more shorts on. jonathan: good to see you. his view on the next 12 months. breaking news in the last 15 minutes if you are just joining us, coming from intel. up in the premarket by 4%. on that news and stories elsewhere, let's go to dani burger. dani: shares up four percent on intel. the company announcing the retirement of ceo pat gelsinger. he also retired from the board of directors effective yesterday. the board has formed a search committee for a successor. shares of intel are down more than 50% this year. people for miller tell us blackrock is nearing a deal to buy private credit manager hps

investment partners, valuing them at more than $12 billion. the deal would give blackrock more than $50 billion of alternative assets. it was a record-breaking weekend at the movies. amc theaters said more than a .8 million went to the movies between wednesday and sunday. it was the company's biggest thanksgiving period in its history. disney was also a big winner. "moana 2" broke the record for highest grossing thanksgiving weekend. jonathan: thank you. we will pick up on the intel story in just a moment and catch up with mandeep singh on the others i do this commercial break, as well as setting you up for the week ahead, as we count you down to payrolls friday. from new york, this is bloomberg. ♪

jonathan: the opening bell, 30 nine minutes away. equities just about unchanged on the s&p 500. today, we will get ism manufacturing and s&p global manufacturing pei. on wednesday, remarks from jay powell. thursday, the trade balance plus another jobless claims. friday, umich sentiment and in november payrolls report. getting back to that breaking news, intel announcing its ceo pat gelsinger is retiring effective immediately. mandeep singh joins us now for more. the stock is higher by 4%, on the session lower by 50%. big step back. the problem for this industry

right now, the winners seem to be specializing in one thing, either you design the chips or you make them. the intel's of the world are trying to do everything. why is that turning out to be so difficult? mandeep: intel as an entity was too big to turn around to begin with. we have a history of tech turnarounds, far and few, microsoft being the most successful turnaround. the reason they will so successful, they anchored on one thing, cloud. they even gave up on the operating system, didn't really invest that much. in the case of intel, the foundry turnaround was the hard part. the achilles' heel for pat gelsinger was he kept on throwing money on foundry when tsmc was way ahead in terms of that aggressive strategy. that was so unrealistic to begin with. that is where focusing on the design side would have been the right approach. amd being so successful because they spun off global foundries. look at how far they have come

when it comes to the design side. lisa: how much are intel's hands tied for whoever comes in because of government contracts specifically tied to the presence as a foundry? mandeep: i think the foundry side for intel, they were a recipient of the chips act, have been getting money from the government in terms of turning them around. in the case of intel, they have an installed base for x86, the court architecture still being run on pcs. on the data side, they have lost share to nvidia. but the government is in favor of local manufacturing, and that is supportive of intel as a company. lisa: the larger question is what should they be focusing on, which are they get rid of? mandeep: the problem is the foundry side is a very low margin business because it requires such upfront heavy capex, you are never going to get to that mid 70% growth margin like tsmc for at least

five to seven years. on the design side, they have a pc refresh cycle coming up. if this ai wave is really secular, 15 years, people will upgrade. that is where intel is still the dominant architecture. there is no nvidia. they are losing some share but it is still intel. that is where they can generate a ton of free cash flow. anybody stepping in now coming in from outside or inside, cannot really guess, would be focusing more on that pc client opportunity. jonathan: big challenges for them. what is the first thing they need to do? mandeep: make a strategic decision. they try to acquire power semis, another foundry, which never went through because of regulatory hurdles. they had three lands of layoffs. if you are trying to turn around, you cut deep enough once, you don't do three rounds of layoffs. setting that strategy would be paramount. jonathan: searching for a

successor, does it need to come from outside the company given what you said? mandeep: if it is somebody from the design side, they need somebody from nvidia. if they are doubling down on the foundry, get somebody from tsmc. it makes sense to get somebody from one of those companies. jonathan: mandeep singh, appreciate it. the latest news on intel, higher by 4%. no doubt, we will be picking up with the story in about five minutes time. that is the story to watch coming into the opening bell. lisa: the new co-ceos, formerly the ceo of micron. gives you a sense of where their minds are at. jonathan: coming up tomorrow, we continue the conversation. lee cantrell of pimco. from new york city, this is bloomberg. this was "bloomberg surveillance

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♪ ♪ when y ♪ something hast with changed within me ♪ ♪ it's time to try defying gravity ♪ ♪ ♪

matt: some ceos leading their post 30 minutes until the start of cash trading. welcome to bloomberg open interest. sonali: bloomberg open interest starts right now. ♪ matt: coming up, pat gelsinger retires instantly as intel ceo after a storied career. the