♪ >> the market really cares ultimately about the and earnings. >> the key thing is strong growth. >> if we were to get in a situation where investors were on market, you could easily see selloff. >> we pick up the back of the bond yield is an opportunity. >> what history tells us is the periods can last a long time. announcer: this is "bloomberg serveillance" with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: "bloomberg serveillance" starts right now as we come into wednesday once

again at all-time highs on the s&p 500. equity futures on the s&p, up one quarter of 1%. after a three-day winning streak on the s&p, we add some weight to the s&p 500 a day ahead setting up as follows. look out for the data later on this morning. ism services, 10:00. don't miss that. german powell, 1:40 this afternoon. lisa: how much is he really going to inform us after yesterday we heard from mary daly and kubler talking about how much the path of rates is going to be lower. this is a federal reserve that is setting the bar that much lower to cut rates at a time in the economy keeps outperforming and that is giving that upward boom where the u.s. seems to be -- the alternative. jonathan: the u.s. looks like a bastion of stability compared to the rest of the world.

we are trying to figure that out this hour. over in europe, france facing a real possibility of their government toppling by the end of today's session. annmarie: the u.s. even at this point potentially leading up to the election, people are talking that we might be in a state of chaos. it actually came and went without a lot of fanfare but right now around the world there are these can turn. something you've talked about for months, countries around the world punishing incumbents, whether that is because intractable long gems in places like france or germany or for other issues like and south korea. the global order is changing and people are looking for new ways and maybe that means leaning into more populist voices. lisa: in 2016 donald trump was considered the chaos agent and people were wondering bastion of stability, the united states is no longer. and now it is the bastion of

stability in a world that seems to be one after another falling like dominoes. we are going to look back at this moment as some sort of pivot point. it is fascinating to me to see such political turmoil in g20 countries that are traditional allies of the u.s. that are facing pressures that rhyme and i'm trying to get my head over exactly how. jonathan: all-time highs on the s&p 500, equity futures and with higher. the euro-dollar just about holding on to hundred five. a no-confidence vote in france, and the fallout and south korea. stocks rising after posting their 55th record high. looking ahead to remarks from jay powell a little bit later on today. we expect the narrative of rate cuts and resilience to hold in 2025 and for our projected soft

landing to materialize. this landscape extend our favorable outlook for equity markets. lori, welcome to the program. do you not think the policy changes we could see in the next 12 months would be potent enough to disrupt the kind of resilience you are looking for? >> it is too early to tell. there are a number of crosscurrents that could be a threat to what we've seen as a soft landing so far, but until we actually have the ink dried on some of those policies, it is hard to know how those crosswinds will actually impact the real economy. jonathan: political changes elsewhere have been a threat to markets elsewhere. over and south korea we've seen the disruption there as well. is there scope for some performance at a time when a lot of people on this program are saying by one thing it, by america. >> right now we are still on the

momentum bandwagon also. what worked well in 2024 is likely to persist in 2025 and then suggests that u.s. large-cap in particular has room to run here. but we've also been talking about a broadening out. not just about the highflying tech names, but about financials, potentially energy, other places like consumer discretionary. it is a little bit of a nuanced story, but sadly or not so sadly, american large-cap is our primary call. lisa: how do you hedge against the idea that at some point the momentum does run out? >> first and foremost, we are trying to avoid those highflying names and looking at companies that can be a bit more durable through this kind of cycle. the other thing is looking at small caps u.s. which might have a little bit less vulnerability

with some of these global crosswinds. and look for diversifiers. we've had a position for gold in the portfolio because as you see, stocks and bonds are often moving in lockstep so getting some diversification so that you have something that is going to zig while the rest of the world zags. lisa: are you basically saying that 60-40 and the concept behind it has been upended? you are looking at moving out into other types of companies and gold. you didn't mention bond once within that. at a certain point does this have to fundamentally upend the way people construct their portfolios? >> not necessarily. in some ways we are in a better position than we were a few years ago. at that time we were very much in the camp and bonds were not providing the kinds of -- that investors needed to typically enjoy from them.

of 25% on a year-to-date basis for fixed income earning a coupon, it is still earning a coupon. it is really more about a nuanced edition. definitely still retain that allocation of bonds. they are going to return at least coupon, perhaps plus. but looking for other things especially if we have some drawdown risk in the equity markets. annmarie: when you look at potential drawdown risk next year, is the policy coming from washington? i know you are bullish that we are going to have these tax cuts looking at your research, but how do you look at tax cuts potentially next to the walls going up with higher tariffs? >> this is the thing. there are crosswinds even within the stated policy objectives. if you think about immigration, intentionally it takes labor away from sectors that are already vulnerable. think housing. if you look at tariffs, obviously that creates vulnerability around the inflation front. we do think the fed is going to

cut in december but next year's cuts are a bit in jeopardy as we wait for this agenda to kind of play through. so that is what is really tricky for investors right now. it is hard to know precisely where the dust settles. annmarie: if investors wanted a base case on a potential trump policies might impact the fed would you say there is this idea of pausing or potentially even a hike? >> we had originally penciled in four rate cuts and we are now really lowering that, in part to see how these policies do shape up, and by the way, if the fed does cut this month, while we think there is more to be done and we would like to see them do more, we think it is likely that a pause in early 2025 is warranted. jonathan: all the fed speak giving us the impression that these fed officials believe there is a long way to neutral.

i was going through some of what mary daly had to say, governor waller as well. how far away are we from what they considered neutral to be? >> we agree there is a long way to go for neutral of the problem is we could have some inflationary pressures in the early part of 2025. so one of the things that they also have to be very mindful of is that they don't cut so aggressively that they are in a position of having to hike more rapidly than they would've liked. we've always said that the inflation trajectory was not going to be a sort of smooth, one-way direction. this likely to be a bit of bumps along the way. it is more a question of timing but we do think that neutral is quite a bit lower from here. jonathan: chairman powell speaking at 1:40 later on this afternoon. lori, enjoy the outlook. new outlook over at standard chartered. start the program talking about the relatives to bear -- stability and america compared to the rest of the world.

u.s. exceptionalism is a problem for the unexceptional. an air pocket of weakness early in the year or continued fed rate cuts and uncertainty of a policy implementation. on that last point, and we will spend some time on that a little bit later this morning, the incoming senate majority leader will be laying out where the emphasis will be when they hit the ground running in 2025, and the tax cuts might have to wait. annmarie: the issue they are going to have his we need to get through this year in terms of spending it, so they would have to kick the can down the road until march of next year and then start thinking about another spending package which could include the tax cuts. the sequencing is going to be very important which is why a lot of people are nervous. when you look at how you can get things done, tax cuts, you need congress. tariffs, donald trump could do on day one. lisa: you said a lot of people are nervous. not so much in markets.

i think that disconnectedness fascinating. at what point do some of the policy nervousness percolate over into what you are seeing in the markets, that right now are seeing the glass half full and just this fabulous american exceptionalism continuing forever? jonathan: equity futures on the s&p pushing higher by a few tens of 1%. dani: south korean lawmakers submitted a bill to impeach the president after he declared martial law yesterday and then reversed in hours later. the surprise declaration because a standoff of parliament. lawmakers rejected his attempt to ban political activity and censor the media while armed forces made their way into the national assembly building. the country's defense minister has already submitted an offer to resign. shares of salesforce surging by 13.5% premarket. the top seller of customer relations management software will report quarterly revenue that topped estimates. it underscores salesforce' much-hyped ai strategy.

intel's search for a new ceo will focus heavily on outsiders. they are considering candidates like the head of marvell technology and former cadence design systems ceo. this week's sudden ouster set off an urgent search for new leadership with its bench already depleted by years of management turnover. that is your brief. >> more in about 30 minutes time. up next, the french government heading toward collapse. >> the condition fed brought us here will not be resolved for another year, at least and that is not good for french finance. in the current circumstances we discontinue as is. that means the fed governor will not be able to consolidate. >> the latest from paris, france just around the corner. live from new york city this morning, good morning. ♪

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♪ jonathan: we have a new biggest bull on the street. welcome chris harvey. i imagine more work went into it than that. we expect the trump administration to usher in a macroenvironment increasingly favorable for stocks at a time the fed will be slowly reducing interest rates. in short we are back to where equities continue to rally. lisa: and he is not alone, it is just a matter of the scope. you can imagine the american exceptionalism story having legs. i just wonder price -- whether people are pricing in imperfection. we are seeing citigroup economics surprise index higher once again, to the highest levels that we see in going back to the beginning of this year. at what point do people start questioning just how much inflationary momentum that actually is in this economy?

jonathan: chairman powell will need to address that a little bit later on this afternoon. equities right now pushing higher by one third of 1% on the s&p. the euro just about holding onto 105 against the u.s. dollar. under surveillance this morning, the french government heading toward collapse. >> the conditions that brought us here will not be resolved for another year, at least. and that of course is not good for french finance. in the current circumstances we just continue as is, but that means the governor will not be able to consolidate. the commission will be watching france very carefully and demanding the down the line france makes the decision that it needs to to do necessary cuts. so all we will get is a postponement of very hard decisions that need to happen. jonathan: investors bracing for a no-confidence vote in a matter of hours. the political turmoil creating more uncertainty around europe's future. welcome to the program.

what is the latest and what does the next 24 hours look like? >> we are less than four hours away from the beginning of the debate of this motion of no-confidence right behind me at the national assembly in central paris, and clearly the chances of the prime minister's government to survive today are very low. he had some hope, he said last night on the 8:00 news that there will be some kind of responsibility from mp's, but clearly the national rally of marine le pen has already said that they will support this vote of no-confidence, even though it has been proposed by the far left. there would be something of unbearable cynicism, and they you mccrone going to come back later today. obviously he will have to name a new prime minister. some say that this could

actually happen very quickly in the next 24 hours to avoid this uncertainty that we are seeing in the markets, that we are seeing on the path for france. so a lot will happen in the next few hours, but the big chances that we are going to see a new government in the next 24 hours. jonathan: appreciate your reporting it, i've enjoyed it all morning. markets just quieting down just a little bit over the last few days. lisa: there seems to be at least a little bit of a give-and-take of exactly what happens, even if the vote of no-confidence goes through. i do have to wonder from a structural perspective what this means, especially at a time where yields are coming in in france, but check out the yield on the periphery. they are going way down. people are seeing this is the area of stability that i want to be in. jonathan: it is difficult to find an american investor who wants to buy europe, so we found one in europe for you.

seeing upside for stocks on the continent, writing the projected upside for growth momentum implies tactical upside for european versus global equities. sebastian joins us now for more. we for talking about this for the last few weeks on this program, how little needs to go right to really start to trigger a move higher in european equities. do you think that might have already started? >> you saw the quote from the research just now pushing the absolute call on europe and the relative called and they are just worlds apart. in absolute terms, european equities are within 3% of the all-time high. domestic growth and menton is weakening and everyone is saying why do you still have an equity market that effectively is at peak levels? and the answer is u.s. exceptionalism. the u.s. economy has power the global growth story ahead. global risk premium is extremely tied to the floor of the european asset price but in relative terms, you have underperformed by 50% on the base of this relative growth

weakness, sony relative basis we see scope for european equities to outperform because you have now priced the idiosyncratic risk premium that is not with the rest of the world and if we see a little bit of improvement and growth momentum, that could start to be priced out. jonathan: you seen this move in germany specifically, record after record in germany. here today, the likes of commerzbank up by close to 40%. is it the financials where you are thinking that might be ready outperformance comes from? >> again i have to spin the story from the other direction. thanks have already outperformed tremendously as financials generally have done very well in an environment in which risk premiums look at the u.s. high-yield reds fed, the best gauge is basically the bottom 1% of the historical distribution. banks have benefited from type of risk premium and high bond yields. this is one area where you have not priced any negativity, any

kind of risk premium. i would be very cautious on the financials. what i think is more interesting are those elements were a lot of risk has been priced. it is also the broad european equity markets relative to global equities because that is where the underperformance has been. it has not been financials. lisa: you said one thing that people have underestimated is the strength of the u.s. economy is powering the global economy including in europe and that is one of the reasons why you are seeing ongoing for organs, good performance to certain places. how long can continue given that we are talking about the u.s. potentially putting barriers up and trying to insulate some of its business and some of the strength? >> i was listening to you earlier on the program and found myself nodding because the two of us seem to be sharing a skepticism. everybody seems to have accepted that this exceptionally strong bun in the u.s. is now free from the shackles of the cycle that

it will continue indefinitely, and i sense a skepticism on your part, and i would definitely share it. we see a lot of scope for the u.s. which single-handedly has been powering the global economy to slow into the first half of next year. this going to be the impact of a strong dollar. what you have in europe is just fascinating, a completely de-synchronized inventory cycle that is giving the strongest support the u.s. economy in 10 years. in the euro area it is a meaningful drag that these are short-term swings that are going to reverse into the first quarter. we also see a lot of scope for disposable income growth. for instance, a crackdown on immigration weakens employment growth in the u.s., so taken altogether we see scope for euro area growth with -- with surprise to the upside. on the relative basis that is good for european equities, but overall that means weaker global growth menton from very low levels, and that is bad news for asset prices across the board.

lisa: does it concern you that the two largest economies in the euro region are facing governmental collapse? >> i would say france is a downside risk but in a funny way, germinate is an upside risk because you have run extremely tight fiscal policy in germany for 20 years, arguably too tight. you have under-invested in your public infrastructure and it is really starting to show. potentially if you get the outcome that we expect from the german election in february, there used to be fiscal hawks but now they want to do fiscal easing, so potentially more fiscal stimulus and germany is on the way and we really haven't seen that in a long time. annmarie: does that mean now is the time to go into some of the manufacturing that have really had a bruising time the past few months in germany? >> i see my analyst on the floor every day and he is saying when we start to buy? the problem, is it a cyclical

story or a structural story? you get a lot of onslaught from your chinese competitors, you really have snoozed through the technological revolution in the sector. there are a number of cyclicals already beaten up. some eyes look attractive -- semis are very attractive. luxury seems to be discounting too much macro weakness but for the autos, there is a very real case that your business model might be structurally flawed now, even though clearly they have sold a lot. annmarie: we look at how potentially europe is going to deal with a trump administration next year. if the two largest economies have political chaos right now internally, how are they going to act as one voice when potentially we are going to see a u.s. president put up the walls and tariff barriers? >>, salute thee, it is a huge challenge lyrically, cyclically,

but also structurally. but i am always asking what is in the price. you currently have an eight point gap, that is close to record levels. part of that is due to the inventory cycle. credit conditions have improved dramatically. clearly there are risks, there are political risks, but a lot of negativity is priced and a lot of the underlying growth drivers look more verbal than current market pricing would suggest. jonathan: we promise to find a european bull, and we found one. a lot of pessimism in the price. stellantis down, terrible year. annmarie: for somebody looking

for relative performance, they say this is really cheap. that is why he says all right, can i get excited? the answer is not necessarily. can they get the technological advance needed? lisa: talking about telling workers that the current union proposal to cut cost, insufficient to address what is going on. there's going to be a lot of cost-cutting. jonathan: they've got some big issues, that is for sure. coming up, ed al-hussainy from columbia frednee -- threadneedle following a day of turmoil. from new york, this is bloomberg. ♪

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jonathan: three-day winning streak on the s&p 500. equity futures on the s&p this morning adding some weight to the rally. of a quarter of 1% on the s&p 500. nasdaq 100 up by .6%. economic data. 8:15 for adp report this morning. ism services. later this afternoon you will hear from chairman powell. two-year yield, up by about a basis point.

416.76. let's look at the fx market. the euro had its worst month of the year so far against the dollar. at about 105. that's the story in financial markets. french lawmakers preparing for a no-confidence vote today that would topple the government. marine le pen's national rally and the left and coalition have vowed to support the motion. that is the focus for the europeans. lisa: you have to wonder why markets are rallying around this. people see it is not as bad as it could potentially be maybe. there is this question of whether macron would be renominated. how do you get confidence in the euro region when the largest economies, germany and france are facing dissolution of the governments? annmarie: this will be uncharted territory. we can't have an election until the summer. 12 months from last july.

it will be this complete block in france at the same time we have instability in germany, the two core economies of europe. income so there's a lot of pressure on macron himself. marine le pen is starting to build up a lot of momentum. while he has a mandate until 2027, will he feel the pressure to step aside? jonathan: is incredibly unhelpful. next week there will be an ecb interest rate decision. they are focused on 25 or 50. the federal reserve is looking to skip or 25. lisa: there's a question of how far diversions can go. that is the ultimate question. can you see an ecb that cut rates at least two a euro that weakens dramatically when they could be importing inflation? this is one of the challenges they are facing. jonathan: the challenge is to general motors. a $5 billion hit to restructure the troubled business over in china.

the headline just dropping. a $5 billion hit to restructure and china. the stock is down by about 1% in the premarket. this has been a struggle for a while. we go back to-2018, this is where people -- 2017-2018, this is where people wanted to be. now the competition is so tough. lisa: 2017 is a great year to benchmark this venture. in 2017, general motors hosted a $2 billion profit on this joint venture. the company lost $347 million in china during the first nine months of this year. direct foreign investment has fallen off a cliff in china. there's a question of u.s. automakers can be profitable at a time that china is having national champions funneling cash to make sure they remain. annmarie: we have seen this from a number of european, japanese , korean autos in china.

the money they give to national champions, this is why so many companies are struggling to build and become profitable in china. lisa: as you hear about a decoupling between the u.s. and china, can u.s. companies remain in china? there's a question about what will remain of gm. this is about restructuring the joint venture. what remains? what will be their expansion mechanism when somebody was companies saw china as their expansion territory? how much does the recent political noise of end that -- upend that? jonathan: stellantis down by 40%. year-to-date, general motors is up by 50%. the strength is in the united states. lisa: they have not been banking on expansion in china. they have been shrinking their presence.

they have been focusing on the united states. they have been shifting away more, tempering expectations for adoption of electric vehicles. a really interesting move and i went to how prescient it is for other auto manufacturers. jonathan: the stock is down lower in early trading but within 2%. general motors seeing a f $5 million hit in china. chairman powell's remarks. the rate cut is not certain. it remains on the table. andrew goolsby stopping short of giving a clear signal of the next meeting. they have all given a clear signal about the direction of travel. it is a long distance the neutral. lisa: there is a fragile tipping point for workers dealing with a slowing economy when rates are structurally a lot higher. the var is changing. this is -- the bar is changing for rate cuts. it's about simply shifting

generally to allow the economy to normalize in a controlled way. jonathan: chairman powell speaking at 1:40 eastern time. let's shift to south korea. efforts to remove the president are asked leading up to imposed martial law, plunging the nation into his biggest clinical crisis in decades. the opposition party filing a motion to impeach the president with the country's defense minister submitting an offer to resign. jill disis, welcome to the program. why did this happen? jill: it's been a really wild 24 hours in south korea. the first thing to keep in mind here is that it is not like everything was going a credit well for the president, president yoon. he been dealing with quite a lot of tension with the opposition party. they have the majority in parliament. they have been stonewalling is budget proposals and try to

impeach members of his cabinet. there is tension that already existed in the relationship. it felt like it went from zero to 100 overnight. you have a coming up imposing martial law pretty much in the middle the night. what you see here is this really strong reaction. you have to remember there is historical context that's important here. this is a country that has not seen a marshall outward like this in 40 years -- marshall law like this in 40 years. the public backlash was swift. people protesting in the streets. you had the opposition party come out immediately and shut this kind of thing down. he rescinded the order. it looks like you have some very serious allegations involving treason facing him. peanut now faces a potential impeachment vote. jonathan: what has the reaction been elsewhere, including the united states? whatever we heard from enemies like north korea?

jill: when it comes to allies you had blinken say they are watching the situation. north korea is interesting because they have been incredibly silent. there national broadcast a couple of hours ago did not mention the yoon story. you have to imagine for north korea, which has an antagonistic relationship with the current administration, it might be better to stay out of this one. i will say it the event president yoon is impeached, if the opposition party leader becomes president of south korea, that is a party that does have somewhat of a friendlier view toward north korea. there could be some significant applications at play if this does come through. jonathan: please appreciate your time this morning. jill disis joining us from hong kong. ed al-hussainy joins us now for more. good morning to you. instability in south korea.

instability in france. a little bit in germany and the u.k. in the last year. in america, some people thought we would be here now, december 4, worried about seeing the outcome of an election and having to wait. what is going on elsewhere? ed: what is striking is what is going on in the u.s. is so isolated from the rest of the world, especially if you look at this lens of market participants are investors. we have significant buffers versus all this instability elsewhere and we can focus on us and that is what is happening. jonathan: the problems abroad. is there any threat you can join any dots abroad right now? ed: you have to bring in france's yukiama. if you look at these democracies in the past several decades, their ability to deliver prosperity has been declining. that has been a problem.

we got really good at absorbing economic shocks. click on much spillover there has been from korea elsewhere in the world. we are not great at delivering the economic prosperity. that is one of the common through lines across these developed markets. lisa: is this the beginning of a rebuild. we were speaking with bank of america. we have seen the bottoming out and certain european areas and possibly the surprise can be to the upside. do you think people are still underestimating the isolation of the u.s. exceptionalism? ed: gosh, the u.s. economy still has significant advantages versus the rest of the world.

we have spent the last several years -- the dollar has been rallying since 2011. it has been progressively strengthening. it is difficult to break that trend in the coming several years. in the short term, expectations for growth in europe, expectations for growth in asia, china in particular are at rock bottom right now. if you think about 2025, the low expectations to the upside should be relatively easy. lisa: when you look at flows, there is a hoard of cash coming into the u.s. it is that sucking sound here is the cash being hoarded up by u.s. assets. how much can you move against the momentum and try to invest elsewhere? ed: the technicals have been fantastic. the supply of these financial assets, whether it is credit or equity is significantly lower than demand. there's a lot of savings locally coming into the u.s. the finance those assets. i don't think that is going to change. you can see that through the current deficit. the rest of the world is willing to fund us. that includes the u.s. government, and that's a

fantastic position and that will not change anytime soon. annmarie: trump has a bilateral approach with the world . biden took a very multilateral approach. when you think about u.s. exceptionalism next year, is that bilateral approach going to exaggerate the momentum we are seeing? ed: my rough sense is both approaches have not meaningfully changed the structure of the u.s. economy. we are services focused. 80% services. we are closed relative to the rest of the world in traded gdp in the 20's. over 100% in germany. these trade focused changes have diminished impact and diminished impact on financial assets. annmarie: but the retaliatory effects, blockade that -- what can that mean for the u.s. economy? ed: it comes down to scale.

if we impose tariffs across the board, which is a possibility that has been floated, if there is retaliation, that starts is down and escalatory latter -- an escalatory ladder, that leads to a bad place. that will impact jobs and we will start to see a positive response from folks like the fed. how likely is it? i don't know. jonathan: chairman powell later. what are you looking for from him? what do make of the commentary with official after official conveying they believe there is a long way to neutral? do you share that view? ed: the strategy of approaching that fact is starting to change. in august, they told us the labor market is getting to a pretty good place. inflation is close to target. monetary policy is too tight. we will realign monetary policy to the data. that starts on cuts and a

journey to neutral. in the last month or so, the focus has changed and has been on growth surprising us to the upside. inflation is starting to stall out. it's been declining. it starts to make sense to work on these pauses. that's a big shift in terms of strategy. i'm looking for clues as to whether that august strategy is in play or we are changing to something different. jonathan: that is really well framed. ed, good to see you. ed al-hussainy on the political instability abroad and what we are seeing at home in the u.s. equity futures doing ok on the s&p 500. gm is down. a lot more with dani burger. dani: it will be taking on more than $5 billion in charges, falling 1.3%. the automaker is attempting to save its once profitable business in the world's largest car market.

according to a filing moment ago, gm expects to write down the value of its operations in china as much as $2.9 billion. also another $2.7 billion in charges for costs to close factories. shares of dollar tree are surging in the premarket, up 3.8%. the retailer reported third-quarter earnings that beat analyst estimates. they announced the cfo will be stepping down. the wall street journal reporting president-elect donald trump is considering ron desantis as a possible replacement to pete to run the pentagon --pete hegseth to run the pentagon. allies think that hegseth will not survivors or scrutiny. he was on the list of potential candidates that transition officials presented to trump. jonathan: thank you. that is a lot of talent in florida they need to try to replace. annmarie: you need to look at

this is not the first chest move but the second. governor desantis becomes defense secretary, that is the win he wants to appoint his daughter-in-law to marco rubio's senate seat because he's going to be secretary of state. jonathan: who gets to be governor? annmarie: at that point trump gets what he wants. the santos gets something he wants for the win to give lower trump the seat. the chief of staff susie wiles and governor desantis have a rough relationship. first she ran his campaign. they were buddies. then it ended up being a lot of bad blood between the two. jonathan: we will pick up on that story later. betting on the ai revolution. >> everything seems to be going the way you want it to go. i think there are significant warnings. the market is paying attention in the scrutiny is on ai monetization. jonathan: live from new york

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has advisors in chase branches and tools, like wealth plan to keep you on track. when you're planning for it all... the answer is j.p. morgan wealth management. jonathan: all-time highs on the equity market on the s&p 500. another quarter of 1% to the s&p. bond market deals drifting higher. a lot of economic data through the week. 10-year, 424.97. betting on the ai revolution. >> everything seems to be going the way you want it to go. i think there are significant uncertainties. the market is increasingly paying attention. the scrutiny is on ai monetization. the focus will be on all this money spent, all the hype.

where are the tangible results? jonathan: s&p 500 hitting 55 all-time highs this year, fueled by massive ai momentum. blackrock releasing their global outlook, writing, "we stay risk on as we look for transformation beneficiaries and go further overweight u.s. stocks." wei, good to see you as always. ai beneficiaries. the likes of nvidia has been the big winner. what is the next phase of this trend? wei: we continue to like the big tech part of the ai beneficiaries. they have been carrying the weight in terms of earnings growth. looking at 12 months trailing magnificent seven through the earnings, they grew earnings by 45% year on year. versus the rest of the market growing only 4%. there is a significant difference. to continues to be concentrated. we do expect the beneficiaries

to broaden out. looking at energy, i.t., industrials as we build and finance this reservation. we have to look at the combination of public and private markets as the theme plays out. it's an environment of transformation rather than of your typical cycle. given all the ai and long carbon transition, we are learning real-time what the longer term trend is heading towards instead of the fluctuations write a typical stable longer term trend. that has applications on investing over the long-term. lisa: you can't talk about this deal about buying the credit fund manager but you can talk about the convergence of public and private markets. how much are you increasing your allocation to private markets as part of the extra uber

overweight of the broader theme? wei: private market has been growing significantly in recent years. looking ahead, the private market is expected to double in aum by the end of the decade from the 2023 level. within that, infrastructure and private credit are likely going to play a big role as we think about building the transformation and we think about financing the transformation. if you look at allocation to private markets, they are quite heavily in real estate, in private equities. private credit and infrastructure are exposures we think will grow both in terms of the assets space but also their allocation in investor portfolios. lisa: the question of what it means to be more bullish on u.s. equities in the story of ai. where are you focusing and getting more bullish? have you ever been more bullish

on some of these/ -- these? wei: we have been bullish on u.s. equities all year. we are dialing of the wrist taking even more because we believe -- risk taking even more because we believe earnings can still grow. is concentrated in terms of big tech doing heavy lifting. next year the magnificent seven expected to grow 18% versus the rest of the market in a high single digit. the broadening out is one resion we believe there is -- reason we believe there is momentum for equities to run higher. how concentrated u.s. equities are. our studies show if there are good reasons and structural forces that could change the longer term trend, the main revert does not quite apply. main revert to what? the makeup of the destination is changing. we are not over indexing, especially as we look at

investing over the tactical horizon of 2025 with near-term tax cuts and deregulation talks can drive sentiment further. annmarie: you talk about the focus on the united states and what you are seeing in terms of security priorities, national economic priorities at the expense of others. who is the u.s. winning at the expense of when you look at the biggest? wei: we look at 2025. u.s. exceptionalism is a theme we expect a player for the entirety of the year. we think equities, u.s. equities versus the rest of the world. we use u.k. equity downright to found our u.s. upgrade. there's a leaning into u.s. equities. duration with government bonds. u.s. exceptionalism also is associated with greater fiscal spend.

we prefer international duration like u.k. gilt market over u.s. government bonds or duration where we expect of premium to come back even more reflecting the higher fiscal trajectory. we like quality income in credit even though the spread is very tight. from a total yield perspective it is reasonable. the tiger spread reflects the fact that government is more indebted -- the credit spread reflects the fact that government is more indebted. jonathan: thank you for joining us here in new york city. wei li of blackrock with a big biased towards the united states. we will catch up with alicia levine, jon lieber, norman roule and zachary griffiths. all that and more around the corner with equity futures up another one third of 1%. ♪ ♪

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>> our number one view for 2025 is volatility. >> the fed has pigeonholed itself and telegraphed too much easing for the next 12 months. >> they don't have inflation in a chokehold. >> data will be more critical. >> the fed needs to get out of the way. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern.

jonathan: this week is flying by quickly and that is the way we like it. stocks at all-time highs. hello wednesday. equity futures up by one third of 1% on the s&p 500. the nasdaq hired by .6%. the rally continues. fed speak continues. chairman powell at 1:40 eastern time. another appetizer before the big one on friday. lisa: so far, so good when it comes to economics of prices. pc the citi surprised -- you see the citi surprise index. key question. how much strength is too much strength? how much you people think about pausing or having the fed not cut as much? the fed seems to be torpedoing that talk. we are not net neutral. jonathan: interesting how many times we have her that.

from a lot of different people. chicago, goolsby, san francisco, governor wallin. they believe there is a long way to go to get back to neutral. lisa: there is the belief that as inflation comes down -- the pace of the rise of increased prices has slowed, essentially the rates are getting more restrictive. they have their eye on something. the lowest income consumers are the ones getting hit hardest by rates remaining at these levels. if you continue on that level, it becomes a very difficult and politically fraught scenario to keep rates at this level if wall street is salivating and popping the cork's. -- corks. jonathan: 218 at the moment. that is the median estimate for the survey. on wall street, sequencing. the focus on washington, d.c. is on the sequencing of policy.

we have a little bit of an idea about that in the last 24 hours and where the senate majority leader would like to see things go. annmarie: they want to focus on immigration. they are going to extend spending until march. get some immigration deal done in the first 30 days. that was part of one of the top issues voters came out and gave -- the republicans feel like it is a mandate. the spending issue down the year becomes more to the forefront when the continuing resolution end and then they start talking about tax cuts. where did the tariffs come in? jonathan: that is up to the president and he will not wait around. he's already started. i would how much conflict there is between the timeline on capitol hill and the timeline on mar-a-lago. lisa: that is this question of at what point is the market pricing in a perfect sequencing and dialing down of some of the promised campaign speeches

to lead a policy that allows this rally and good feeling to continue? this is a real question for people as everyone piles into american exceptionalism. jonathan: up another one third of 1% on the s&p 500. coming up, alicia levine as the s&p 500 not just another all-time high. jon lieber as capitol hill looks up trump's agenda. norman roule as israel carries out new strikes in lebanon. we begin with stocks higher. the 55th record close. looking ahead to jobs data and remarks from jay powell. alicia levine sees more room for equities to run with the market from the economic steam an incoming admin is ration with an eye on risk assets. price target of 6600. thank you for sharing your outlook with us, the top of the hour.

6600 is the price target. this is a group of around 65, 67 -- a lot of you. does that make you nervous? alicia: consensus makes me nervous but doesn't necessarily mean we are wrong. what we see here is the fed cutting into a soft landing. that is the big fundamental picture here. what gets us another 10% higher? the fed is cutting into a soft landing. historically when that happens, 12 months later the markets up about 16%. we are into this structural time where equities will do quite well coming in with a market from the administration, perhaps more volatile. we think the market can move higher here. with that set up you will have more vol because of the idiosyncratic nature of policy you have been talking about for the last three weeks. i remember those days in 2017 and 2018.

jonathan: we all do. alicia: we will get some vol. don't think it'll be a straight line but it's healthy and normal. we are bullish on america and the market. we think you are set up for another double-digit return next year. jonathan: what you mean? if it is policy, what policies? alicia: it is vibes. we manage well for large clients who have businesses in the real economy. i did a lot of travel after the election and i can tell you the client base with businesses are very optimistic and bullish, in part because the certainty is back. the uncertainty of the 50-50, not knowing where policy was going puts up all on economic activity. decisions are being made. that's great. clearly the extension of tax cuts is very good. the fact that the corporate tax rate will not be going higher is also very good.

that creates a market friendly environment. andy regulation. what is not great is perhaps -- and deregulation. what is not great is perhaps the tariffs. where did they get put? safe to say that china tariffs get put on. the president can do that as part of a national security authority. the administration can do that. it is not national security, it is not clear the administration alone can do that. that will create volatility around these issues. less market from the but opportunities to buy. lisa: is predicated on the idea of the fed cutting into a soft landing when you're talking to business leaders who are optimistic, ramping up spending , ramping up hiring. when we talking about something not like a soft landing but no landing or something that is a real acceleration? alicia: you can say this year was kind of a no landing. we are coming in at 2.5% growth, maybe higher to the economist that economists see trend

growth. we have been there. it slowed a little in the first quarter or so. don't forget, all that fiscal spending increased gdp. if you try to write and fiscal a little bit to pay for these -- reign in fiscal a little bit to pay for this tax cuts. we are not getting five cuts next year. our outlook says two to three cuts next year because we think the economy is fairly strong. it seems to be much higher. i don't know how anyone can have certainty. there are 400 economists at the fed bit it seems clear it is higher than where we were during the post global financial crisis regime. the bond market has priced in fewer cuts than what rick -- where we thought a few weeks ago. the theme of the year has been expecting many more rate cuts in

the next 12 to 18 months. then the bond market pulls it back and the equity market was higher anyway because growth is better-than-expected. that is how you get a pretty bullish scenario. lisa: the overall index level. the difference between different strategists in the 66 to 7000 range -- 6600 to 7000 range, we have seen until yesterday and a couple of days ago and a performance of the small caps. do you see that continuing given that tariffs will affect some of the smaller companies more? the higher rates will affect some smaller companies more. all around, companies are consolidating their market share. alicia: consensus seems to have moved. down the scale -- moved down the scale. we like u.s. versus international, developed and emerging markets. we are in a strong dollar regime. china seems to be unable to stimulate its economy to the

extent to pick up emerging markets complex. we like u.s. over the rest of the world. within the u.s., i think you can allocate more to medium and small sized. we still like u.s. large-cap here, precisely because of what you are talking about. u.s. large-cap companies with a cash flow have better levers to deal with some of the tariff issues than small-cap companies. on the index level small caps have caught up. they have done great. going forward, the policy mix is such that i think the large caps do better. let me just say this. we have talked about the magnificent seven and large-cap tech which is not driven the market since the fed pivoted back in july when they signaled we are in a rate cutting regime. the rest of the market caught up. if you have those risk off days, which sector is going to act as defense?

that is large-cap tech. you dismiss it. it will provide stability in the portfolio in a way that small may not. that is why we are still over allocated -- overallocated to u.s. large-cap. annmarie: you rate energy prices are risk. wti this morning is below $70 a barrel even though we have issues going on in the middle east. alicia: it's not that it worries me. it is the key variable to all of this. our clients say the world is a scary place. think about what happened yesterday. france, south korea. this was on nobody's radar for the most part. how does geopolitical risk get mediated in the markets? it is typically through the oil channel and energy channel. that is the variable you want to look at. we don't think there is a risk here. not just the d in the u.s. but -- deregulation in the u.s.

the administration wants to see oil prices lower but is not a certainty. when everyone is on one side of the boat you want to keep an ey e on where you can go wrong. annmarie: you gave a nod to the political instability. do you want to double down more on the united states? alicia: i would not say we are doubling down because we have been there for two years. even overweight u.s. for two years we have been taken down our exposure to international and both developed and emerging markets. two years ago, as the fed was hiking rates. our feeling was even if we are going into recession, where do we want to allocate client capital? that is in the u.s.. what interests us is going down the scale but overweight u.s. large-cap. in our outlook we talk about how we still like where we have been .

jonathan: 6600 on the s&p for you next year. great to be with us. alicia levine. equity futures up by 131%. -- up by one third of 1%. dani: emmanuel macron is asking lawmakers to reject a no-confidence vote to topple the government. marine le pen and her national rally party have vowed to support the motion submitted by a left-wing coalition. it will pass it back by both groups. lawmakers will debate and vote on the motion in less than three hours time. democrat adam gray has one california's 13th congressional district, unseating john to where take. it is the final house contest to be called this year. -- john duarte. republicans hold 220. gray won by less than 200 votes. general motors will take on more than $5 billion in charges and breakdowns tied to its troubled

operations in china. the automaker is attempting to save its once profitable business in the world's largest car making market. according to a filing this morning, gma specs to write down the value of its operations in china by as much as $2.9 billion. it will take another $2.7 billion in charges to close factories. jonathan: thank you. more from dani later in the hour. pushing trump's agenda. >> you may see tariffs increase may be marginally on day one. there will be -- they will try to do it in concert with other things that are maybe more risk on in terms of the tax cuts, in terms of deregulation and what have you. jonathan: live from new york city this morning, good morning. ♪ ♪ where ya headed?

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jonathan: an update from jetblue. this talk is up by 2.6% in the premarket. they are lined additional clarity on the fourth quarter, raising the outlook. lisa, you have to explain this one. the election headwind? lisa: in the weeks leading up to the u.s. election pretty much every travel company, hotel company, etc., said people did not like the travel. go figure. why people suddenly think the uncertainty of the election would make them stay home? nonetheless, there was a restrained in travel -- restraint in travel. the revenge travel after the election, it was higher than expectations it medially following the u.s. election. now we can go travel -- immediately following the u.s. election.

now we can go travel. jonathan: the stock is up by about 3%. pushing trump's agenda. >> the economic direction of travel is a little mixed. we understand from the trump transition team that there is going to be attention to various economic policies. while you may see some tariffs increase may be marginally on day one, there will be -- they will do it in concert with other things that are maybe more risk on in terms of the tax cuts, in terms of deregulation and what have you. jonathan: john flynn looking to pet -- thune to focus on border security, defense and security. telling senate republicans he wants to postpone a tax focus bill until later in 2025. jon lieber joins us for more. you heard from libby cantrill moments ago talking about the word tension. can we sq how much 10 -- can we

ask you how much tension there will be between merrill lago and capitol hill -- mar-a-lago and capitol hill? jon: this is not unusual that a president comes in and has unified congress. we saw with biden, trump, obama and bush. when it happens they tend to come in with a head of steam and they get big things done. trump -- bush did a big tax cut. i know education -- an education overhaul with democrats. obama did health care. financial sector reform. trump did a big tax cuts and biden did a stimulus bill. republicans are united around the trump agenda, mainly immigration, energy, higher defense spending, extending the tax cuts. they could move quickly. the politics are not that strained. when you get into the details is when things get hard.

that is what ends up delaying an agenda like this probably until later in the year. annmarie: is that what you have immigration first out of the gate? john thune wants to do it in the first 30 days and waiting on tax. jon: i think the challenge of the tax cuts is cost. $4 trillion to extend the trump tax cuts that expire at the end of the year. it is not nothing. they have not come to terms with how much they need offset with spending cuts. the other plans they have for the border, for the fence, maybe the hundreds of billions of dollars of a 10-year cost which is how congress budgets things. these are trillions of dollars. i think they probably end up not offsetting it. it is clear they have not had the discussion and don't know exactly what they want to do on the tax side. that make it more difficult. the other issues are little

easier. i'm surprised at the sequencing. i would have thought taxes would be something they would agree on, making sure nobody gets a tax increase. that should be easy for republicans. the fact they are talking about delaying means there is more dissension among them than is obvious. annmarie: when it comes to paying for the tax bill, will it be tariffs or are they potentially a lot of bluster at first but end up being a negotiating tool? jon: i think they will be higher. trump said he will raise them. he's already laid out a plan for three countries to raise them on, mexico, canada and china. if you look at those countries, mexico and canada came immediately down to mar-a-lago to sit down with trump and probably will end up finding a way to negotiate out of those tariffs. china is taking a more wait-and-see approach, which could mean those tariffs could be the ones that are inputted on day one. i think the tariffs are both and negotiating opportunity but will

be higher by the end of next year. we don't know how much. if it is significant, if it is hundreds of billions of dollars over a 10-year period, that gives the republicans the opportunity to use the revenue to offset the tax cut. if it is smaller, they have to ask how much of a deficit hit they are willing to take. annmarie: when it comes to the raw power donald trump using now, negotiating tariffs with the likes of justin trudeau, are also reiterating he would kill the nippon steel-u.s. steel deal. what is that mean for president biden when it comes to not just the average on foreign but this deal right now there remains in his control? jon: biden's term ended two months earlier than expected. trump is the one leaders want to talk to. biden could do a couple of interesting things between now and the end of the year, pushing

for additional funding for ukraine. you can see several billion dollars going to fund the war effort. biden could approve the nippon steel deal. we don't think he will be might. this is an influx issue because the unions are getting more worried about losing their jobs if the deal does not go through due to lack of money u.s. steel has coming in. biden has the power to say that he wants to. that would surprise me. that would be a parting shot at the organized union that supported him during the campaign. some of them supported him. it is in his power if he wants to do it but i don't that he will. lisa: the market has moved on. people are looking at to donald trump mr. president and negotiations. there is euphoria run policy certainty. the number of nominees donald trump put out have already stepped down.

pete hegseth is the latest potentially from the wall street journal. matt gaetz was the first. how much do you think people in the market are overstating how much of a well oiled machine this actually is, it's much policy is going to get through? jon: on the things that matter there's a little more certainty. the big things moving the markets next year will be immigration, terrorists and physical. physical -- fiscal. fiscal remain loose. we don't of the magnitude. it is likely the magnitude of each of the things ends up being higher than anticipated. on fiscal policy, it will remain loose. i don't think there are big tax cuts coming. the immigration numbers will be big. it will not come as a shock because you not deporting 10 million people all at once. they will be a slow drip in the labor market as it tightens next year as they get to somewhere

around one million people being deported per year, is our guess. on tariffs, it could be a bigger shock than anticipated. the fact trump is putting in a more market from the cabinet allows market participants to think it will not be as bad as it looks. but tariffs are trump's favorite tool and they are going up. that shock could be the largest next year not priced in right now. lisa: does the trump administration have the finances to do these mass deportations? jon: this is one of the reasons thune wants to move quickly so they can give significant -- probably tens of billions of dollars to the southern border to help with the deportations. there will be a lot of pushback. they have to contain a lot of people and find a lot of people. in some states they will get cooperation from local law enforcement and in others they won't. half a million people being

deported to year is not that unusual in recent u.s. history. it should be easy for the trump team to get their next year and go beyond that in 2026. jonathan: good to hear from you as always. jon lieber on the sequencing for next year. a little bit of tension. you might have to wait for the tax cut. the tax cut in jobs act, that was extensive enough. what about every thing else? taxes on tips? lisa: that's not actually a tax break. did essentially stating the actual policy that exists. maybe a marketing quirk can allow some of the tax cuts to disappear. jonathan: a lot to figure out in the next 12 months. up next, norman roule. ♪

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jonathan: we are two hours away from the opening bell. equity futures adding more weight to this year's rally. up .6% on the nasdaq 100. your morning movers, manus cranny. manus: pump up the margins, pump up the revenue is the message from salesforce. it is the magic word. revenue of over 8% at $9.44 billion. margins, 33.1%. a good number of deals on their ai product. piper sanders upped the game

from $405 on the stock. they say is a robust adoption. big pharma. a lot of political issues going into 2025. merck has been upgraded by hsbc. the valuation leaves a significant margin for safety. one of the big drugs they have is stabilizing. you need to take note of that. everybody hopes to great adventure in china would reap great rewards. mary byron taking a hit on the joint venture in china. 50-50 joint venture. it will cost them 2.7 billion dollars to close factories and restructure and deal with the reality, which is domestic brands are not prioritizing profitability. there is no shock there. they prioritize production. market share. the full backing of china.

that is the differentiating factor here in terms of the adventure, the misadventure and cost of paying to do business in china. jonathan: emerging national champion said that. the tri-polar world. we are seeing that across the board for the auto manufacturers in places like china, europe, the united states. they seem to be retreating to home base. at certain places, the guided states for example -- united states for example, the government is comfortable with that. lisa: which industries are able to go to home base and can sustain themselves on local production and which can't? it raises the question on the likes of apple or other companies, qualcomm, that have been interlaced with chinese production and sales in general. it becomes a big question as we talk about decoupling when the two biggest economies in the world are intricately connected. jonathan: there is one homebase that is better than others, the net is states of america.

if you have to retrieved to america, that's a good thing. if you have to retreat to europe, very different proposition. lisa: it raises the question about gm. shares of 50% this year at the same time you have volkswagen and stellantis being hammered. they are facing a 1-2 whammy. in china they have a competitive disadvantage. in their home market they don't necessarily have the ability to sell as much as they are producing. jonathan: under surveillance this morning the latest on retail. footlocker cutting its full-year sales and profit forecast siding discounts and a pullback in consumer spending. dollar tree reports better-than-expected earnings. announcing the departure of cfo geoff davis. the stock is up 3%. back to footlocker, and the premarket, is getting hammered. lisa: they have been trying to turn themselves around after trying to move away from some of the big brands. adidas and nike.

that did not really work. they are trying to rejigger. you are seeing market share capitalization -- cannibalization. the winners and losers are becoming more clear and that's fascinating when frankly you cannot make a big macro story out of one name, especially one struggling for a while. annmarie: they talk about this more cautious view. there is a more promotional environment. software consumer demand outside of key selling periods. what is more key than up until the christmas holiday season? this is when they should be doing well and they are single pullback ahead of december, ahead of christmas, hanukkah, thanksgiving. it is pretty incredible. how does 2025 look? jonathan: nike was a key partner. lady prioritized retail partnerships like the ones -- they deprioritized retail partnerships like this one.

does it tell me something about the consumer or execution? is it one of the other? lisa: especially with the juxtaposition of dollar tree. we saw some retailers do well. t.j. maxx did well. gap did well. a host of names did better-than-expected earnings and consumers that were anything but particularly cautious. with footlocker, you are under something. you are seeing a dramatic shift with do the brands sell direct to consumer, where they need the stores? that is where the story lies. jonathan: footlocker down double digits in the premarket trade. down 14%. french president amanda macron to reject the no-confidence vote that could topple the government. -- emmanuel macron. france is not the elite place where you see instability. in south korea, the opposition party calling for the impeachment of president yoon.

they are pursuing treason charges against yoon. the defense and safety ministers alleging the declaration of martial law was illegal. annmarie: there's a lot of political instability around the world. this was working with president yoon, the president that came to the u.s. and was singing american pie at the white house for state dinner. they were able to come to trilateral engagement between south korea, japan, united states. this was a foreign policy achievement and now this individual will be facing impeachment charges. lisa: he miscalculated on every level you could possibly imagine. he said this is it. . military rule no fake news. stop reporting politics. reporters were like, whatever. they continued to get a consensus against him pretty much across the board. if anything, maybe the takeaway is no way are people going to accept this in south korea.

this might actually mean a more from the relationship with north korea which has more geopolitical consequences. in the short-term it does not seem like this is a democracy about to be toppled. annmarie: if you look internally at their politics you get a 15-year term as president. he is due -- one five-year term as president. the only way he can potentially get some of the bills he wants three was to have martial law. he probably felt like i'm just going to take this gamble, see if i can get a bill through. it backfired in a grand scale. jonathan: lasted several hours. six hours. some volatility once again in south korea. let's get to be a volatility in the middle east. israeli forces carried out several drone and i'll tell her he yesterday -- artillery strikes yesterday. benjamin netanyahu says israel is enforcing the cease-fire with an iron fist.

joining us now is norman roule, former senior u.s. intelligence official. and your experience, are things like this, breaks in the cease-fire, episodes like what we see overnight, are they normal or is this out of the ordinary? norman: good morning. the cease-fire between hezbollah and israel was excited to be shaky. it is a cease fire of sorts in you have hezbollah and israel each launching limited strikes against each other. the united states remains displeased, along with the french and israel is not using the system that was set up to address hezbollah violations. the israeli posture on the region has changed. it is not going to rely on a slow and ineffective international community. david sees activity by hezbollah , it will attack before hezbollah is able to build

positions, move weapons, etc. this will be a bit of the new normal for this cease fire for a while until each side is able to basically test the other's limits, and the lebanese government can place forces in the south the separate the sides. annmarie: when it comes to gaza, president-elect trump and president bynum was saying hostages need to be released - . president biden. has hamas shifted at all? norman: no. it has called for the withdrawal of the israeli forces from gaza. the withdrawal of israeli forces from the philadelphia corridor -- delphi corridor where they can move weapons in and out of gaza, and hamas has no restrictions as to where can move its forces. for israel, this means losing the war, for most restoring control -- hamas restoring

control over gaza. the israelis believe a military option is important and the way to go in gaza. there is evidence they are setting up military installations north and the u.s. has complained about this. i don't see a significant shift taking place in gaza in the near term. annmarie: i want to ask about syria. how weakened will iran and their proxies be if iran loses its stronghold in in syria? norman: the loss of syria for iraq would be catastrophic. it is their only state allied. it has -- ally. it has been a decent partner since the iran-iraq war. iran requires that territory to shift weapons into jordan, weapons via jordan into the west bank and provide training and weapons flows into lebanon. iran is able to use damascus as

an air hub. it brings militants, including the houthis, send some to iran for extensive training and ideological vetting. the loss of this territory would be a significant pressure on iran's entire proxy architecture. lisa: is there a takeaway that it took days for rebels to topple the assad regime after years of fighting and with russia? it is a perfect storm of the ukraine-russia war and israel and gaza and hezbollah. how much of this is just the beginning of a certain percolation of other conflicts in regions that have essentially been hosts to proxy wars between iran and russia and the west? norman: great question. what we have seen and aleppo is

the russians, the iranians and syrians suffered a significant intelligence failure. they did not see the opposition group that took aleppo prepare for this attack and infiltrate the city. right now the rebels have moved -- the opposition has moved south and are now pressuring syria's fourth-largest city, ha ma. they are critical to maintaining the connection line between damascus and russian bases on the mediterranean. what you're looking at is a system that eroded, not just in intelligence but it's response capacity. russia is now responding traditionally with airstrikes on hospitals, much as it did in the past. you will see iran move personnel and weaponry, shift afghan and pack malicious to syria and bring in elements of iraqi militias. you will not see a big hezbollah

portion from syria. i would caution it is too early to say the assad regime will collapse or the force in iran will lose its control over syria. these are early days in the conflict. lisa: the fact you are seeing this rejiggering a political force in the middle east comes at a time we are talking about developed markets struggling with government dissolution, either from south korea and north korea, france, the supportive ukraine. -- support of ukraine? water hotspots that are new nodes of conflict? norman: yemen is the most prominent potential hotspot. the houthis have maintained their architecture. they can replenish and retrain and re-posture. they are geographically located

on a major trade outlet and they are able to threaten the prosperity of the gulf cooperation council with missile and drone strikes. yemen is a problem the world has ignored. i believe it will pay the price for doing so in the future. in terms of syria, lebanon, perhaps libya and other broken states in the region, we are seeing more the same. i would say you are watching the saudi's, the iraqis -- emiratie s to see if they can pull iran into the arrow fold. you are seeing the gulf cooperation council with their engine of prosperity and transformation through technology tried to improve conditions throughout the region and africa. there's a positive story that should give us hope for the region and its ability to calm conflicts. annmarie: d.c. sufficient deterrents from the united states -- do you see sufficient

deterrents from the united states? norman: there is no evidence of deterrents. houthis continue to attack american shipping. america has defended against those attacks and has successfully degraded considerable elements of houthis capacity, but they continue to fire. the definition of deterrents is they would stop fire. the policy did not prioritize deterrence play out. jonathan: always fantastic to get your insights. former senior u.s. in television -- intelligence official. a challenge to reestablish deterrence once again in the region. annmarie: the houthis and the red sea. western vessels are concerned about rebels. watch syria. if iran loses a stronghold in syria, what is that mean in

terms of rot able to support proxies -- in terms of iran able to support their proxies? dani: trump's pickford treasury secretary scott bessent his repairing for confirmation hearings. he will meet with senate republican leader john thune later today. he also plans to be with other key senate republicans, including the incoming number two leave their john barrasso this week. meta is seeking up to four gigawatts for its data centers. it is looking to deliver reactor capacity starting in the early 20 30's. he has been follows similar ones from alphabet, amazon and microsoft looking to invest in reactor tech to power their ai offerings. shares of eli lilly moving higher by more than 1% in the early trade. reporting is blockbuster weight loss drug outperformed rival

novo nordisk in the first head-to-head trial. people treated lost an average of 20% of their body weight over 72 weeks. those who got wegovi shed 14%. jonathan: more from dani in 30 minutes. setting up for a december cut. >> iv the economy is being in a good position -- i view the economy and being in a good position. there is a dual mandate of maximum employment and a stable prices. jonathan: this is bloomberg tv. ♪

jonathan: two stocks to watch,

the first is jetblue lifting his outlook. better bookings, better fees, better stock price reaction, up close to 5% in premarket trading. you have a good idea what footlocker looks like. down close to 14%. they had to cut the outlook. how many times have we heard this language from a ceo in the retail sector? the consumer is choosy, picky, smart. lisa: choosy and picky with their products and their particular sector. how much of this is a broader macro story and a marketing play and execution issue? jonathan: we will speak to an analyst from btig. don't miss that conversation. the stock getting hammered, down close to 16% in early trading. setting up for a december cut. >> iv the economy as being in a good position after making significant progress in recent years. the dual mandate of maximum

employment and stable prices. the labor market remains solid and inflation appears to be in a sustainable path to our 2% goal. jonathan: fed officials leaving the door been to reduce interest rates this month. zach griffiths expecting fed funds to finish 2025 in the 425 to 450 range. the first path is a cut in december and a long pause in 2025. the second is the fed cutting several meetings and eventually reversing course and the second half of 2025. zach, good morning. you are saying hikes if they keep cutting. zach: we see that as a potential outcome depending on the policy initiatives of the trump administration. we are taking them seriously in terms of tariffs and what they will do with migration policy. you could have an inflationary impulse from both the labor market and these tariffs we think will be coming in this

incoming administration. we are looking at market negatives and terms of the trump agenda versus the market positives which are holding today so far. lisa: when you talk about neutral rate, the goal here is to understand what is neither restrictive nor stimulative to an economy that seems like it is just fine. is this policy restrictive for the investment and high-yield companies you cover? zach: that is the question we have been grappling with. demand has been very strong. deals are getting done in tight spreads. we had to reconsider how tight policy is. you are seeing instances where interest rate sensitive sectors are taking a bit of a hit. when we think about going forward i don't think the fed is in a position to cut as much as markets price for if we get the policy mix we are anticipating. what is that mean for investors? you have a fiscal policy that will push yields higher and potentially spreads wider as fundamentals come under

pressure. you don't have that monetary easing bias that buoyed markets throughout 2024. lisa: sorry for a basic question but some argue that lower rated companies are struggling the most with high rates and they will have to refinance. they are not as profitable. some people argue that is capitalism. if you don't have profitability, you can't borrow as much money and then you will struggle. what is it actually a problem versus the way markets are supposed to work after years of funneling out free money? zach: that comes down to it will be more about credit selection in 2025. there will be names yielding elevated levels. you need to avoid the ones that these higher borrowing costs may be a reality for longer. they will not be a route and the next couple of years and he dilma to own the debt now. -- you don't want to own the debt now. lisa: if people thought that,

essentially the fed put means we go back to that. that is the key question here. jonathan: what would constrain the fed put? that's inflation. would it constrain the fed put? zach: we seek core pce stuck around to 20%. perhaps coming -- 2.8%, perhaps coming down in the middle the year. accelerating again in the second half of 2025. you can see rate hikes coming back on the table. that would be a big market negative. we had an expectation of more cuts from global central banks buoying fixed income. jonathan: you say a cut in december and march and they have to think about hiking. how many cups do you think would be the mistake? 1, 2, 3? zach: when we talk to our clients, our call is you will get less in terms of cuts in

aggregate and 2025 them with the market is priced for. that keeps costs higher for longer and pushes yields higher across the curve. maybe flatter than what the market is currently priced for. when you think about what you do in that environment, we think up a quality as short in duration. jonathan: i like how you dodged the question. zach griffiths, not the first to tee up the possibility of hikes in 2025. lisa: there a lot of unknown despite the euphoria rent market exceptionalism -- around market exceptionalism. jonathan: i got coming out of the pandemic wrong because i was waiting for credit problems that never camera. did not happen. lisa: you can pretty much joined all of us. everybody pretty much got a run. we both got a run. jonathan: in the next hour, dan

suzuki, janine stichter, ian shepherdson and ian lyngen. ♪

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>> the market really cares ultimately about revenues and earnings. >> equities need strong growth.

>> if we were to get into a situation where investors were screwed by the bond market you could see frequent selloff. >> what history tells us is that the periods of exuberance come after a long time. >> this is bloomberg surveillance. jonathan: the scores look like this, equity futures up point 25%. we come up at all-time highs. this is a frustrating feature because you can cherry pick a single name and tell a big story. jetblue tells you everything is great, looking's are up in the fees are ok and the stock is running up 5% consumers are doing really well. look at footlocker, it is saying that the consumer is picky and choosy in the stock is getting slammed by 17%. is this about company execution or industry? does this tell you anything

about what the u.s. consumer is? lisa: i think it does. jetblue is gaining from their shift to try and cater to a higher end consumer, the premium offering is gaining some momentum and increasing profitability. they have benefited from oil prices being suppressed. on the flipside footlocker is not as us -- not as exposed to the high end consumer. so they are more susceptible to little hit but -- jacobson a strategy that has struggled over the past few years. jonathan: the stock is down 17%. things are murky looking at the earnings and it will be when it comes to the data. you will get the adt -- the adp report no moment and went at friday we will hear the payment report. one part of his challenge is to strip out the bounce back that everyone is expecting. this is what we heard from bank of america. the hurricane took at least 60 k

off of october payrolls and strikes have accounted for 41 k. and the payrolls report should reflect 100 k of payback or more. whatever we get on friday we need to strip out 100 k or more. lisa: that is why fed officials have been lowering the ball all -- the bar all week. it is not weakness, need things to be on course that is not inflationary for us to take away some of the restraint see on the economy towards a neutral path. that is why you are hearing all of this rhetoric saying we are looking at rate cuts even if we get a big number up front. annmarie: when chair powell last had this public appearance on november 14 he said the economy is not sending signals that we need to be in a hurry. what will he say today given that we are so close to the next meeting? is he drifting back from the idea that we do not need to be in a hurry? if everyone else's lining up for

december. jonathan: about 12 minutes from now. we will catch up with rb advisors as the sp -- as the s&p 1000 closes. the footlocker sees a softer computer -- consumer and we are looking for nerve -- november payrolls. the s&p 500 posting a record high. suzuki of rb advisors saying that the market narrative swings between bullishness and bearishness. even as the narratives have shifted from pessimism to optimism, underlying growth has been quite steady all year long. dan joins us for more. are we at an extreme -- extreme right now? dan: we are getting there. everybody is getting bullish on the growth outlook and in the u.s.. people are worried about inflation because growth is so

good and then you will have all of these fiscal -- all of this fiscal stimulus. jonathan: you have been looking at small caps in the month of november. double digits just like november 2020 and november 2016. as at a place you want to be? dan: for the time being that makes sense. you have to think about the current environment of who is going to benefit most from accelerating nominal growth. small caps is among those beneficiaries and that is a good place to be. michael: we were -- lisa: we were looking at the earnings. how do we come up with a bigger story and see says from earning pictures? what do you make of the increasing dispersion between the winners and losers? dan: i think my perspective is actually that the dispersion is actually decreasing. if you think about it a year ago there was a handful of winners and that was it.

more and more every earnings season that we go through more companies are putting in better growth. you still have winners and losers and you will still have them. there are more winners than losers and the winners are geared towards the nominal growth environment. lisa: how do you hedge against exuberance building in markets? dan: do not get too far over your skis. we have been pointing out that people's optimism is getting extreme. the conference board's survey says that a record number of people things that stocks are going to go up. household equity allocations are at an all-time high. i think the thing is that people have a financial plan for a reason but they forget the plan during times of extremes. when things are bad they want to sell everything and when times are good they let it ride. the whole point of a financial plan is to smooth out the ups and downs. annmarie: you have a new report talking about $7 trillion on the

sidelines and when you say you look at more nuance historically that is not a lot. dan: first of all, the whole point of putting out that piece was to shed a little bit more light because there are a lot of headlines and numbers being thrown around with not a lot of understanding. $7 trillion in money market assets is like getting a lot of headlines but the reality is that household cash levels are almost triple that amount. 18 to $19 trillion is the annual revenue of the s&p 500 like three years of government spending. it is a big number so when you put in perspective of household allocations it is down because while cash allocations have gone up 40%, stock exposure has gone up over 50%. so, the percentage in cash is low history and down relative to five years ago. annmarie: where do you see a lot of that cash going? dan: it is not like it is going

anywhere, it has not kept pace with stock allocations. but where it is taking share a little bit over the last few years is relative to bonds. bonds have seen the biggest drawdown in history, almost 50%. people do not like it when the things that they own go down and they would like to own less of it. so cash is done very well so cash relative to bonds has gone up -- cash relative to bonds has gone up. lisa: when you have a financial plan, it is trying to even out the extremes. the way to even it out with cash rather than bonds or inflation is one of the biggest risks. dan: as you think long-term, the whole point of a 60-40 is because bonds is the diversifier. that works extremely well in a far -- falling rate secular environment. if we are right that is no

longer the case. the time to own bonds is a cyclical protection. if things are going into a major slowdown you want that diversification. outside of that you want less bonds in the portfolio because higher rates is not good for bond prices. if you look back to the 60's and 70's not that we are going into that but the higher end rising rate environment cash did well. lisa: at a certain point are you looking at the risks as being more heavily balanced to a re-acceleration or inflationary environment rather than the cyclical downturn where bonds would provide you some sort of haven? dan: in the near term that is correct with cyclical and secular forces putting pressure on inflation. that is good for nominal growth. you could get to a point what is the fed's response going to be? at some point they might step in to pull the punch borrow --

punch bowl away and bring forth that slowdown. you have to be nimble. for the time being, all signs point to stronger nominal growth. jonathan: how policy dependent is this? is it dependent on the incoming administration doing things? dan: it is not. we do not tend to be event driven. china invests based on policy is the road to ruin. you should have bought solar and wind and energy was the best-performing stuff and you can do that with every administration. jonathan: you like energy for next year which is where this conversation was going. dan: i do. policy is not the story. even when you read through the policy the thing i like is that it reinforces cyclical and secular stories. when i looked through tariffs or tax cuts or immigration policy what i see is pro-inflation. that is already the case regardless of policies or not. jonathan: good to see you and

great to catch up. talking about the reflation and yields higher by four basis points. 4.27 on the 10 year. let us get you an update on stories elsewhere with your bloomberg brief. dani: jetblue shares higher by nearly 4% and a boosted forecast for forecourt -- fourth-quarter results in higher-than-expected bookings in november and december as well as lower costs. under its new ceo jetblue says it will pull back to core markets in northeast and southeast u.s. puerto rico hoping to reduce expenses and boost sales. meanwhile on the other things, footlocker shares plunging more than 15% premarket. it cut its full-year sales progress -- forecast. shoppers are trending down according to discounts ahead of the holiday season. the company is focusing on a

turnaround, renovating stores and prioritizing a rewards program and revamping digital operations. the match ups are set for the nba cup quarterfinals. the first round of games tipoff next week. the next host the hawks after beating the magic. orlando will face off against the milwaukee bucks. in the western dallas it is okc and houston. that is your brief. jonathan: and nobody cares and that is important. i know that some people care tv ratings are down for the nba and i think there is a link between the story and what is happening with footlocker and basketball culture at large whether it is not en vogue and that is why they are struggling. lisa: maybe they are all watching the women's basketball teams because those took a lot of action out of the room. jonathan: those ratings are up. that is an important count. lisa: just throwing that out there. jonathan: we can have that conversation in a moment as footlocker reports after

consumer spending comes in a little bit softer over at footlocker. that stock is down by 16%. the adp report drops next. ♪

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jonathan: the adp report is seconds away. just a little bit firmer up .1%. this is after closing at all-time highs. as we look the payrolls report the median estimate is .218 and looking at a big bounce back from the soft 12 k in october. yes -- the estimate is 150 with the number. here is michael mckee. michael: we come in a little bit lower than 150,000 but we get

146,000 jobs found by adp during the month of november. that is a significantly lower number than the 223 they had found the prior month and we only got 12 out of nonfarm payrolls. we will see what happens when we get the number on friday. a lot of questions about how much noise is in the data and we will see a rebound or not and apparently we saw something of a rebound in adp but not huge. jonathan: a lot of economists have done the work in the kind of rebound we can expect. how much of that will come from hurricane disruption, and strike sending. are we looking for a number around 100 k in a snap from those two readings alone? michael: we could get 100,000 in terms of a snapback. that will fluctuate this week as additional details come in. we had 30,000 people who were out on strike will be added again.

the question is how may people were out of work the weeks that we saw the hurricane effects in the south. and how many of them have been able to go back to work. and on top of that you want to add in new job creation in the fed will be more interested in that than the overall number. lisa: i am looking at the revisions for the adp employment change and it is about a 50,000 job difference in terms of a decrease from what was reported of 233,000. with revisions like this, on a monthly basis, does the surprise have to be really extraordinary, north of 100,000 to make a difference for some of the macroeconomic calls coming out of the u.s. central bank? michael: it might be. we do not generally see such big revisions but because of the fact that so many companies could not report due to the

hurricanes it is probably going to be an element of that in these numbers coming out on friday. and we also see in the adp revised number that companies that could not report or could not get an accurate account for the month of -- month of october was able to report in. the fed is less concerned with the overall job creation number if it is more or less in line with what we have seen in the trend. they are looking at the unemployment rate which is forecasted not to be changed. but that is not going to be affected and has not been affected by the strikes or hurricanes. jonathan: thank you for the update and we appreciate it. the adp report drop, 1400 -- 146,000 against the estimate of 156,000. equity futures high about .3%. the first call is from hsbc upgrading merck to buy, as they

leave significant margin safety. the second call from morgan stanley raising the price target on salesforce to $405 with excitement on thousands of deals in the pipeline. finally, wells fargo raising its price target on blackrock to $1200 citing long-term opportunity. the stock is up .2%. to retail, soft consumer demand weighing on footlocker. it slashed its sales guidance and profit guidance. joining us is janine. what has gone wrong at footlocker? janine: they are doing a lot of the right things. this becomes a situation where you are a retailer selling third-party brands you are only in control of your old desk -- of your own destiny to an extent. we know the biggest brand is nike and they have been very weak. they are doing different things

to bring in new brands but they are fighting an uphill battle when nike is as weak as it has been. they have had to promote nike a lot to get it out the door and that is where we are seeing numbers fall below what we thought they would be. jonathan: that is why nike is down by 2%. i will follow-up, what is going wrong with nike and what are they not making that footlocker would like to sell? janine: two-pronged, and overall the issue has been lack of innovation where for a long time they were really focused on the channel and moving it to direct and away from wholesale and they forgot about product. and it is two categories. running wear, other brands has made traction and nike has lost residents with the everyday runner. and then on the lifestyle side. that is the air force wines, the jordan's and the dunks, and those that where -- that you wear every day. for that product they have not come out with anything new or

exciting and the market is oversaturated with the product you are out on black friday they were taking 30 to 40% off of the styles that you would have never seen them discount. other years he would see them selling at a premium. it has been a changing of the tides where they do not have the cool product which is what footlocker needs. lisa: we can ignore the idea that the consumer is just weaker or not shopping as much, they are just not shopping there because it does not seem cool, is that right? janine: there is some element of consumer consciousness but it is that they do not have the in demand product because there is not a product working for nike the way we have seen. 50% of the consumer is lower income, and that is definitely a headwind. stepping back, comps and gross margins were up so it was not a terrible result. it was just that there was optimism built into the back half of the year that you would see a lot of these initiatives

get them going, things like loyalty and better product us ointments -- assortments and you are fighting against the tide of a weak nike. the last thing i will point to you is we are seeing a change in the way that consumers shop and the cadence. we saw a strong back-to-school season and then a lull, and then a strong black friday and then a lull into the holidays. that makes it hard for companies to forecast those businesses when shoppers are shopping around the peaks and the lulls. lisa: on a broader level are we seeing the direct consumer idf aid or are we seeing it gain traction as there is a tension built between the likes of nike and footlocker as they played around with these distribution channels. janine: we are seeing the pendulum swing back in the direction of wholesale versus dtc. a few years ago it was about

dtc, because it was higher margin. with companies and what nike is the poster child is that they need distribution in other places than nike.com. not everyone wants to shop there. you need footlocker to reach a different consumer and we are seeing them working with their wholesales partners that we have seen in the past. we are seeing that across the industry as well. annmarie: do you feel like they are putting more money into the items that people do not want. nike and footlocker are developing a new basketball section called home court that they will roll out in hundreds of those stories. is this a waste of money at this point? janine: we think that basketball has been a bright spot for nike and footlocker. if we think of what the footlocker of the future looks like that is where they need to invest. footlocker is known for basketball. rather than trying to be everyone forever -- everything

for everyone, do what you do best and invested basketball. and make it a unique experience. because when you are selling product which is 80% sold in other places and most of what you have is not exclusive, differentiate on the customer experience and for footlocker it is basketball. it is a good investment but it will not pay off immediately. it is tabled stakes and we do not know how much that will be able to drive a sales recovery. annmarie: do you think it is more things like these almost experiences that you could have in the store that footlocker should lean into. you started this segment earlier saying they are in charge of their own destiny. will that be part of the journey? janine: that is a big part of it. what makes someone shop at footlocker, or nike.com, it is the selection that they can curate that they cannot control product.

it is the experience in the stores which is investing in the remodels of home-court experiences and loyalty which is a big area they have been investing behind. it is something that they had a lot of success with in ulta. they are taking what they can do and putting forward those issues. jonathan: we appreciate your time. that is footlocker getting hammered in the premarket down to close to 20%. the nba tv ratings are suffering. shaq says it is because everyone thinks they are steph curry and steph curry ruined it so everyone is just trying to shoot three pointers they cannot shoot. lisa: is that so? i am not sure and i am not a basketball expert and if you tried to plumb the depths of my knowledge on women's and men's basketball you will be left

disappointed. there is a question of how you keep cool at a time when there is real dispersion around the chinos of cool and how they are deployed with influencers. annmarie: i remember when football -- footlocker used to have nba players signing autographs and you do not see lines out the door. jonathan: it is not as cool as it used to be. lisa: the 90's, come on? the bulls in the next were amazing. jonathan: they should do a 1990's revival kind of thing. lisa: they will, wait five years. jonathan: up next, ian shepherdson and ian lyngen going into payrolls friday. ♪

let's go boys.

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jonathan: 60 minutes away from the opening bell, futures elevated and that highs. we had the adp report out. 146,000. a small downside surprise. the median estimate was 150. -- 150,000. this labor market is looking for a big bounce back. the estimate we have heard nonfarm payrolls is around 220,000. with some morning movers let us cross over to manus cranny.

manus: as an elevated -- elevated is a press yet word -- is a good word. it is a salesforce ai product that is a good line. lou burke says that the monetization will take a few quarters. 400 and $500, a robust multi-adoption. the revenue in the margins are 33%. a snapshot of merck. right now hsbc popped this up to a buy. they see 28% on the upside and evaluation leaves room to grow. the ceo at gm, pragmatic ceo and she is looking at her china business. the stock is lower and she will take a $5 billion hint -- hit between restructuring value of the equity investment. china has its national champions

if not intact but in autos. this is a reflection and mary captures this. she says domestic brands do not prioritize profitability production. one snapshot, jp morgan is day six on the back foot. i cannot see any other flow across that we are down 2%. this is day six of the downside. it is not a sword of damocles, but it is interesting on what is moving the big bang. jonathan: especially when that is a consensus overweight. thank you for that. mary is one of the best. that is absolutely brilliant. they do not care about profitability over in china. lisa: highlighting how they are overproducing to flood the world with cheap goods and they want to support auto manufacturers that keep cranking out electric vehicles to some -- to solidify

their dominance. how much is this them throwing the towel in at a time when foreign companies have a disadvantage? jonathan: general motors a name to watch and jay powell another name to watch speaking at 1:40 eastern time. ian shepherdson writing that low hiring suggest that payroll growth slowed due to underlying weakness. we continue to look for a muted 250 k rebound consistent with a 125 k trend. good morning. glad to see you in person. the obvious follow-up is hurricane and strike. let us clean this up. what is the underlying story? ian: it is hard to get a clean read but we had hard data from florida so we can strip out the hurricane effects. we know how many people were on strike and we can guess roughly how many other people were affected. we have a reasonable idea of the trend but the catch is that the

first estimate of october will be revised and it might be enormously because the response rate was extremely low, way lower than normal. everyone is trying to do precise estimates based on a number that could be obliterated friday morning. i think the trend for all the chaos is around 100 private and 125 headline. if you are is doing zero in october you need to do 250 in november. given the uncertainty, anymore precise forecasting is just kind of a waste of everyone's time. i am curious to know what the number will be but i am curious about what they do to september and october. we got a big revision to august, and so we all think these numbers are precise that are not. they are a first stab and you need the second and third before you have any real idea. jonathan: lisa said the number one number has been the revisions and on the headline print. we will play the same game all

over again and the federal reserve has to play the game and take their first step and guess where policy should be. there seems to be a bias to reduce interest rates this month. there seems to be a belief that they are a long way away from neutral. do you believe with both of those? ian: i think they will ease and they will skip january. i do not have any idea that it is above control. half of the workforce works for small businesses and they are paying 9.5% for their money. we tend to focus on the large corporate sector in the quoted companies but you have to peel back and see where most people work which is not for s&p companies but small businesses. and those guys are relying on banks and banks are not lending much and when they are they are charging 9.5%.

the fed needs to take -- to get a move on. that is why payroll growth is trending at about 100 were at the start of the year was trending at 200. we do not want that to go down to zero. i am hopeful that will not happen but the fed is cognizant of the risk. lisa: we have earrings -- we have ian shepherdson on right now and we have ian lay in on later. this has been the story where something can look at data and paint it in two different ways all giving a fair shake to it. i am thinking about the jolts we got out yesterday. some people can look at this number and say it is better than expected and it the number of quits for the first time in 17 months which points to job growth and positivity. you shut a bunch of cold water, stop it. ian: they get revised a lot and it would not surprise me if the number gets revised down. the job opening number just

oscillates around the trend in the trend is countered by the indeed job posting numbers and they are falling. initial print for jobs i do not care. the quits rate gets revised as well. we put fuller -- far too much faith in the numbers in the month-to-month movements which are almost random and the initial estimates are really random. we have to step back and look at the bigger picture. lisa: is it random that they are surprising to the upside? there is a clear trend and that is that people are underestimating where the economic data comes in and does not give you confidence? ian: on the consumer side that is interesting for sure. the footlocker story is astonishing terrible. remember, the very last payroll number that we had for october was a big downside surprise. private payroll down 28 k plus

or -100,000 at least. there is no ambiguous story to tell. there are various strands where you can be reasonably confident. the brazenness is not doing well because of the small business sector. manufacturing has probably bottomed out. that is welcome but it is small. growth is slowed. is it still slowing, i am not sure. i might have a better idea once we get the november payrolls and revisions but i am not seeing a pickup in the leading stuff. that tends to lead payrolls by three or four months. it has stabilized but it is weak and not getting better. the consumer has been driving spending and gdp growth and they have been relying on drawing down the pandemic savings which are pretty much gone and they have had a couple of years of strong income growth fading away. last year it was 4% after-tax and this year, one to two.

next year, kind of the same. momentum is not really there, not terrible. the momentum is definitely bad. annmarie: is this the last hurrah for the consumer and do you see the consumer slowing down? ian: i do. i do not see the growth in retail sales and services consumption because the cash flow is not there. most of the time people spend cash flow. over the last couple of years they have been drawing down the pandemic handouts and savings. that has gone for most households. a be at the top there is some remaining strong stock prices -- maybe at the top there is some strong stock boosters/. retailers have seen a little of this, looking at some of the pricing behavior. that seems to be indicative that they are seeing less traffic on the stores and websites and then maybe thinking we have had the best of it. i do not think the holidays will be terrible.

jonathan: why is this the real deal? what has changed? ian: payroll growth. over the last six to nine months there has been unambiguous slowdown. we can argue about the individual numbers and when fed officials start quoting payroll numbers i put my head on the desk. they do it all the time. what they should be recognizing is the trend has slowed substantially and you can measure it in many different ways, but the fact it is of the order of 100 k month and this time last year or early part of next year it was 200 k. it is not terrible but enough to nudge the rate up and make people nervous about future job prospects. we know that it is taking people longer to find jobs if they do get laid off and that wedge growth has slowed. jonathan: 218 on friday and you are near the top which is unexpected but you are looking for 250. do you want to talk about mid

table mediocrity? ian: did you have to go there? jonathan: big newcastle united fan. ian: it is tragic. we beat arsenal and east and west ham. jonathan: it looks so good. ian: a couple of big nasty injuries and increasing concerns about a lack of tactic -- tactical flexibility. jonathan: you are thinking about jose coming back to the premier league? ian: anything but that. lisa: some of the best fans on the planet, newcastle united fans. bloomberg economics is looking for 180 2000 jobs to be added on friday coming below the median of 218. we are pleased to catch up with anna wong. welcome. while customer the underlying weakness that is identified and whether you share a similar view? anna: so, we identified that the

underlying weakness is in leisure and hospitality for november. in october the weakness unrelated to hurricanes, or the strike at boeing was professional and business services. these two are rather cyclical sectors. a lot of people miss the signs because one would've thought that leisure and hospitality would have been affected by the weather. what we are seeing is a pervasive jerk -- geographically pervasive weakness in leisure and hospitality and that is why we are not as optimistic as ian and thinking that it will rebound to 150. lisa: what is more important, the headline number, unemployment rate, revisions, or wage gain? anna: for markets the printed nonfarm payrolls. it is quite important to know what the number will be. in terms of thinking about the

real momentum of the labor market, it would be adjusted for revisions. you know that powell had mentioned that he pays attention to the qcew report and does a mental adjustment. the latest, which we got a couple of weeks ago to no fanfare in the market is that the average downward revision per month and nonfarm payroll should be about 100,000 from july of last year to june. so if you think everything should be revised down by 100,000 and we are getting 182,000. then the real job creation was only 82,000 which is well below the pace needed to stabilize unemployment. for that reason we expect the unemployment rate to climb. jonathan: that is why you are looking for 182. thank you. they need -- the median estimate is 118. quits were up, layoffs were down

and that is the month of october but that does speak to strength dominated by weakness. lisa: people feel confident enough to quit and you saw that go up, the rate of people who feel confident enough for the first time going back 17 months and that should be a positive feeling and yet we learn why it is all downhill from here and why we are all underestimating some of the potential risks to growth. jonathan: the federal reserve is feeling confident enough to reduce interest rates based on communication so far. the incoming fed rhetoric has been consistent in the messaging that while rate cuts are being made on a meeting by meeting basis there is appetite for another move. good to see you. you've identified this and i want to go straight to it. why is the two-year that 4.20. the fed says we have a long way to go and yet we have this two year yield that is stubbornly above 4% and stuck there.

what is that about? ian l.: the market at the moment is still treating the results of the election. they are more worried about inflation or a search about reflation and what happens when there is a renewed trade war. they are not listening to the fed or worried about the fed cutting in december and then in q1 and q2. in a typical environment one would expect affected funds to function as a ceiling for nominal rates when the fed is cutting. we could easily find that on inverted sooner rather than later which will create an interesting dynamic. lisa: who is right, the fed or the market? ian l.: at this moment the fed is correct in normalizing rates because they are normalizing rates not because the economy is slowing or the jobs market has turned over, but because they

believe they have won the war in inflation. that is a nuance often overlooked. normalization is not easy and it is cutting back to neutral. lisa: this goes to the point of the battle of the ians, and i will call it that all morning. when you look at the jolt report and say it is solid and shows ongoing strength and the overall trend is downward. what is the right signal at a time where you hear companies talking about reinvesting in business is and hiring after the election. uncertainty is resolved and leaning into the idea of american exceptionalism? ian l.: i am sympathetic to the argument that we are overdue for a spike in the unemployment rate and the trend has been lower. the reality is that the data shows a resilient labor market as a theme. we have an unemployment rate at 4.1%, very low. the concern and i think this is shared among all of the ians

that i know, that there will be an eventual spike in the unemployment rate that then gets the consumer on the wrong foot. annmarie: when it comes to the jobs report what number would give the fed a reason to say we are going to stay on pause? ian l.: a very significant headline print or a three handle on the unemployment rate. you can be at 350 headline payrolls and a drop in the unemployment rate. and the question becomes and this is legitimate, is neutral higher? have we not be as -- have we not been as restrictive as 550 has been? it comes down to whether or not we see an unexpectedly higher cpi number and not payrolls. to the point, they are cutting because they believe they have won the war on inflation. annmarie: when you look at 2025 and the idea that the market is taking the key is from the

policies out of washington, what does that mean for the fed come january? ian l.: there are only semi-things that trump can do without congress, so i think that the fed pauses to see what those things are. they take that meeting off and reassess the situation and reassess the situation in ca trajectory of growth -- see a trajectory of growth and they see the tariffs if they are a tax on the consumer or trigger the inflation. i suspect it will be a tax on the consumer and a one-off increase and then we move forward. lisa: do you think people are underestimating the chance of a material slowdown. incredible profitability and this incredible boom in the stock market and beyond? ian l.: at this moment people are underestimating the chance that we have a slow down. but i am the most concerned about is historically the fed has been successful at taking the edges off of the cycle on

the upside and downside and this is what central banks are designed to do. it has resulted in all of the major corrections occurring in the form of a crisis. so, where are the imbalances. record high stock prices speaks to the idea of a lot of optimism. and a lot of optimism overlooking the downside. a little bit nervous in terms of valuations as well as generally in risk assets. jonathan: trying to set policy into that. to the upside and downside. lisa: i have to say that i am not a little happy that i do not have to do it. good luck to all of the people on the committee. jonathan: we will speak -- he will speak later on this afternoon. thank you. with an update on stories elsewhere, let us cross over to dani burger. dani: president-elect donald trump's pick for the dea has withdrawn from consideration. he said that there was unfinished work left in his

current role. he had faced backlash from conservatives due to enforcing lockdowns during the pandemic. gm will incur more than $5 million in charges tied to its china business. it expects to rank down the value of its valuations and it will take a hit to close factories and restructure operations after years of declines and the automaker and its chinese partner. the worst performing airline this year is tunisia air which ranks on travel times. brussels ranks number one. two north american airlines made it to the bottom 50, jetblue and air canada. jonathan: exclusive around the table, someone who has flown tunisair. annmarie: into tunis, and i do not think it was the worst.

it was a while ago and maybe things have changed. jonathan: it is a win-win. jetblue is not doing so well. i can speak to that another time. lisa: really. jonathan: in a little bit later during a commercial break. setting you up for the day ahead, you are watching bloomberg tv. ♪

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jonathan: let us give you a snapshot of the price action going on at the opening bell. equities are higher by point 3%. a small downside to price on atp. bond yields up by five basis points to about 430 -- 4.30 and let's call it 4.28. the trading. cash trading diary looks like this. remarks from powell at 1:30

p.m.. followed by beige book tomorrow. jobless claims on thursday and friday consumer sentencing damon -- data. and then friday november payrolls. and then an ecb rate decision. just before we go and a final word. i know we have some reporting regarding the trump transition of who is in and out. lisa: the idea that governor desantis could be the next defense secretary actually has legs and i am told that he was almost basically given the job yesterday. potentially we will hear moral about this -- more about that. but pete tags seth with a lot of hurdles. lisa: there is so much euphoria in markets going perfectly that there is a question about whether we are underpricing a slowdown in the ians laid it down. jonathan: is that the take away? the wrapup from the ians.

tomorrow we will catch you up with max, nouriel, kathy jones of charles schwab and an ian free program. we are going to head over to michael mckee sitting down with the st. louis fed president and the gic central banker symposium. let us take a listen. >> something that would fall into the category of soft landing or goldilocks? >> i try to stay away from labels. i think of it clinically and we have a dual mandate and we have to focus on that dual mandate and i do not try to put labels around it. i love that folks -- i know that folks want to put labels on it and that is fine. when i began the remarks, achieving the dual mandate is within sight. you still have headline pc inflation above target which is within the margin of error of standard deviation.

if you look at the rate at % that is a low and so -- ♪

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gotcha. take that. whoa! bruh! i'm fine. that smack looked bad. not compared to the smack down i'm giving you. you sure you're, ok? you know you're down 200 points, right? lucky, she convinced me to get help. i had a concussion that could've been game over. in actual reality, you've only got one life. don't mess with your melon. if you hit it, get it checked.

>> we are 30 minutes away from the start of trading after a 55th record on the s&p 500. katie: bloomberg open interest starts right now. sonali: coming up, we are wooing the bargain hunters and dollar tree is seeing better sales but footlocker fails to keep pace with frugal shoppers. matt: gm's