>> the u.s. economy still has significant advantages versus the rest of the world. >> the data continues to show a resilient labor market. >> the story of the labor market is we are in a quiet period. how long that lasts is undetermined. >> we have to make sure we are still on good tracker. >> this is "bloomberg surveillance." jonathan: live from new york city, good morning, good morning. "bloomberg surveillance." as we coming to payroll friday -- come into payroll friday to cover your equity market is shaping up as follows.

nasdaq, down. small caps up on russell. the estimates look like this. the median 2.20. the high, 2.84. below is 1.50. jobs report just around the corner. annmarie: people are concerned with what everyone is talking about noisy, messy data. the fact that it is really going to be difficult to understand because there's a lot of hiring, not a ton of firing. it is basically stasis. the question is, this environment of we had layoffs, we had strikes, we had a hurricane hit, and also a shorter retail space. so those short-term retail jobs right now because of the holiday season is shorter is very difficult to understand what kind of number we are going to get. jonathan: let's put some numbers. dani, welcome to the program. the extent of the snapback.

bank of america putting some numbers on 60 k from the hurricane. strike, looking around 40. 100 k is a snapback from those two things alone. dani: today's report carries the have to have two jobs data with that. we had that awful report last month of the -12,000, were 12,000 negative. could get up to 100,000. you have that at stake and this report at stake was top in order to get a positive december, need a strong number to come in. jonathan: payrolls at 8:30 am and the following week, the federal reserve december 18 for the last decision for 2024. equity futures pulling back a touch. down by a tent. the tenure in and around for 20. coming up in a moment, we will check up with lori calvasina.

ed mills sucharita kodali and -- ed mills and sarah house. lori calvasina of rbc is optimistic heading into the new year. another europe's solid economic and earnings growth, some political tailwinds, and some additional relief on inflation can keep stocks moving higher. we are starting the new year with the year ended 2025 target of 6600. she joins us now. great to catch up. symbols out there. wells fargo deutsche bank. everyone is lining up to be pretty bullish into next year. you've been a little more cautious in the short term. can you give us some reasons as to why? >> we doubt we were going to start pulling back and feet -- we thought we were going start pulling back. if you look at the last few years, you tend to get potholes

in january and february. some of my concerns have been echoed by investors the past week. if i look at valuations, i'm not necessarily saying we are sitting at 2000 dot-com bubble over evaluation but would do look full uncertain metrics and we look a little under on other metrics. looking at sentiment data, making brand-new highs in terms of broader u.s. equity futures positioning and positioning in the s&p 500 contract specifically. guess when the last time was we did that? january 2018. we have been talking to clients and there's a lot of froth in the market. we do think there are some political tailwinds next year. there might be headwinds as well. we are navigating in a lot of fog right now. if you look back to january 2018, we had just come up the euphoria of tax reform that really propelled stocks higher in 2017. that bill did not get past and think until around christmas but we pretrade it all the move even though we did not know the tax rate was.

we look at where we are now, a lot of this could step has been pulled forward. that is not to say we are not going to move higher next year. we think we need to have a little of a digestion period. jonathan: there was a line you put out about the ability to absorb. to absorb bad news. what would you say bad news is? what does that look like? >> one thing that has come up recently has nothing to do the election but looking at earnings. if you think about the tone and the last few reporting seasons, it has been a bit more negative. margin expectations coming down. s&p 500 companies in the core -- forecast for next year, the tone would not say is dire but more concerned than what we had seen over the previous quarters. if you look at fundamentals, we've had this rocksolid earnings, companies navigating through everything. if we get to that outlook season in january/february that coincides with the seasonal

pothole, that could rattle investors quite a bit. we got an ear for the last few quarters about how business activity has been frozen, people were on hold because of the election. there a big expectation we are going to see this unleashing of activity. it is time to put up. it is time to see the evidence of this. that is one big thing that has nothing to do with the election itself and these text polities, cetera, that dani: could rattle investors if it happens. dani: the problem is it does not usually work to fade the bulls. what you do in the meantime? >> we look at what any potential correction could be. in my mind, their limited to 5% to 10% drawdowns. annmarie: -- you hit more than 10%, tend to go to 15% to 20%. those drawdowns are legitimate growth scare's were we don't typically have a recession but deaf ears were going to have some sort of growth slowdown are

real. i don't see that in my investment horizon. i think in a down side is going to be limited to that kind of range. you do end up wanting to buy the debt but you have to go through some stuff to get there. dani: i was looking at some of the consensus calls when we thought trump would be the next president. things have not quite played out how we expected. growth is bidding value plus of german stocks are doing well. mexican stocks are hanging in there. what looks mispriced? has something on wrong? >> if you look at pricing in the market and some higher-level things, i think are some exceptions like materials and health care but generally markets are hoping for the best. there some preparation for the worst when you say things like health care and materials having underperformed postelection. if you think about financials, that is a trump trade. very consensus. that one has been working and it is pretty clean and still has room on valuation. others have had wrinkles.

when i talk to people more constructive -- and that is not the tone i'm sensing the last few days that the past few weeks. the or constructive tone, well, this bad stuff is not going to happen. we think the risks are low. we think this is just bluster, posturing. i think that optimism is filtering in a lot of trades. annmarie: is at the catalyst when the best app becomes reality? >> i think good stuff and that step is an easy way to think about it. some of the stuff is just more complicated. we have talked a lot about this since we went to that trump speech, and mary, but the whole idea of the 15% corporate tax rate, the idea there may be some contentions on that, it seems like it is starting to filter out. i am seeing a lot of stuff floating around with this 15% right. well, it might be more complicated than that. people are not aware. when that clarity comes, if that is what ends up happening, it could suck some of the enthusiasm out.

even though it might not be bad policy. annmarie: it has fine print next to it come has to be made in the united states and likely would come after there is going to be some level of tariffs according to president-elect trump. we are hearing immigration bill, tariffs, and then tax cuts. to early next year, companies going up to start pricing in what higher tariffs might mean? >> i have been reading closely the company commentary and earnings calls. we have not had a ton but i've also been reading commentaries on anything to do with the election. a lot of the deception has been tariff -- a lot of the discussion has been tariff, tariff, terror. -- tariff. comforters were like, well, we have reduced our china footprint, diversified our supply chains, we can get through this. by the way, we're going to pass everything along to the customer so it will not impact our margins. we will see if that changes now

that more broad-based tariffs have been introduced. that is another misperception is that these companies have been going out and talking about what happened in trump version one and that is not the playbook this time around if you listen to what he has been saying. jonathan: pushed back yesterday from morgan stanley who brought up the issue of tariffs and said maybe people view them as a good thing. domestically, there could be winners that investors are excited about. do you see anything in that? >> it comes up in my conversations on small caps and industrials in particular if you're going to reinvigorate manufacturing, is that going to bring good stuff? you can extrapolate that to regional banks that will have more regional footprints in terms of various like the midwest and south east you might have manufacturing being made. i would say i think that is all good and well in the long term, but it does take time to readjust supply chains. as i've been reading commentaries from companies, they talk about, we moved out of

china and southeast asia and not hearing a lot of "we moved to the u.s." even if it ends up being positive longer term, there shorter period of disruption that could potentially impact demand, margins, and earnings. when you're in an environment where there is not a lot of room for multiple expansion, earnings are bigger driver of stock prices in the short term. jonathan: there's a massive push right now because john deere talking about their presence in america. you're going to see a series of commercials like that from various companies over the next few years. annmarie: they want to make sure the objects are showing down and washington, d.c. come that these companies are on board. to the point on tariffs, kevin said what happened and trump 1.0, we did not see a manufacturing boost due to any kind of short. they might be going elsewhere, other asian countries, just not hearing a whole lot of back to the usa. jonathan: thank you for being with us, lori calvasina.

equity futures pulling back on this payroll friday. >> the manhunt continues for the suspected shooter of united health care ceo brian thompson. bullet casings down at the scene were inscribed with the words delay and to oppose. policing the gunmen arrived in manhattan on november 29 at port authority and used a fake new jersey id to book a hostel. thompson's wife told nbc he had received some past breads, potentially rated to insurance denials. -- past threats, potentially rated to insurance denials. they attended a session with house republicans. officer part of their advisory commission referred to as doge. target cut tree trillion dollars will be the largest austerity measure in the u.s. -- the

target to cut $2 trillion will be the largest austerity measure in the u.s. david sachs tapped as the ai and crypto czar. he has become one of trump's biggest silicon valley supporters. he has ties to vice president-elect jd vance who also worked in venture capital before turning to politics. that is your bloomberg green. jonathan:, doge takes over washington. >> it is the beginning of a journey. you've heard what doge is all about. we believe it is an historic moment for the country. these two gentlemen are going to help navigate through this exciting new day. jonathan: that conversation up next. good morning. ♪

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jonathan: the outlook in the next year or so different compared to this year from last year. 4800 was the average target on the street coming in at 2024 and here we are north of 6k. just caught up with lori calvasina, 6600 at rbc. things are pretty bullish in the next year. futures taking a breather. in the bond market, things have stabilized a touch. yields are higher by single basis point. doge takes over washington. >> this is the beginning of a journey. you've heard what doge is all about. it is a new thing. this is a new day in washington and in america. the taxpayer deserve better.

they deserve a more responsive government, more efficient government come a that is leaner and we are focused on its primary objectives. that is the opportunity we have here now. we believe it is an historic moment for the country and these two gentlemen are going to help navigate to this exciting new day. jonathan: elon musk and vivek ramaswamy meet with top republicans on capitol hill and outline plans to slash government spending. as much as they want to work outside of the traditional do process, the reality is that they will need congressional support if they want to enact key items of their agenda. admiral joins us now. how much support do they have on capitol hill? >> i think have a lot of support within the republican caucus. the problem is there is not enough republicans to get to a majority to pass this in the house. right now we are looking at the beginning of the year next year, 217-215. you lose one republican, you

can't get theirs through the house. every member of the house of representatives on the republican side is going to be joe manchin. on the senate side, almost everything requires 60 votes. you will need seven democrats. you're not going to get seven democrats to support some of these things. you might able to get something through reconciliation, but we had these small margins, it is going to be very difficult to get this done. when you heard from some of the most conservative lawmakers yesterday, they said the threat comes from within that room. they were not referring to the house as a whole, they were referring to their fellow republicans because traditionally when they have big opportunities to slash the budget, they are nowhere close to the 217, 218 to get to that majority. annmarie: everyone is going to be a king on capitol hill when it comes in next year. not just lashing money and what doge wants to do, but the idea

of the tax bill. is so what people say, up to push that out to the end of next year? >> you are going to have some special elections that could potentially add to that majority . it is still only going to be a couple of seat majority. when we look at the tax bill next year, it is a really big price tag. if you want to bring down that price tag, there is some significant kind of concessions that are going to be made. historically, it is easier to give additional spending then to cut. but then you run against the opposition of the hardliners who want to support doge. i think there probably is going to be some level of a doge package tied to those tax bills trying to pay for it. when you're waiting this idea of really unpopular or hard to defend government programs versus tax cuts for the american people, that is where the republican party goes back to the traditional roots of when you are explaining or losing.

so if you are explaining why he did not support a tax cut, that is a very difficult position for you in a republican primary and elon musk is more than happy to challenge you and give money to her primary opponent. so you probably would still get that package, but that fragile flower of consensus is going to be very difficult to hold together. annmarie: we know it some of the provisions might be in the tax bill. what do you think is going to be included when it comes to doge -fying the government. what are the cuts we could see make it into legislation? >> i think they will be on the edges. we are going to see a series of things that have been outlined previously, difficult to defend programs. what we heard is they want to cut $2 trillion annually from the federal budget. you would have to do a series of entitlement reforms to do that. i think medicaid is most at risk in that conversation.

redetermination of who gets it, more enforcement on the recipients. not too dissimilar from the provisions that democrats added into the reconciliation bills, giving more money to the irs to crackdown on waste, fraud, interviews within taxpayers. they will say this is waste, fraud, abuse on entitlement programs. i think it is very difficult to do multiple things at the same time. entitlement reform might be a step too far. if you want the savings, you will have to tackle that with medicaid being the most likely area they try to tackle. annmarie: this idea that elon musk could fund competitors to those in the house and senate if they don't fall into line. we learned yesterday that muska spent a quarter of a billion dollars on trump's campaign. what is his power to make sure that congress people in line with trump? >> for republicans, the biggest threat generally is a primary opponent.

when you have someone who was giving a quarter billion dollars, giving a million dollars away in sweepstakes, a competitive primary is about a million dollars. so to have that outside money is going to be a huge pressure. one of the questions i have is there are some states, especially in california, where there are plenty of republicans in congress where the kind of two-person kind of advancement primaries are not as impactful. so it would help with a lot of members in congress getting over the edge but there are two members voted in favor of the impeachment of donald trump who has returned. there are a handful of members from california who don't have to worry about primaries. they actually have to worry about not going too far to the right. the math will have to math. it is difficult to get that done. dani: does that change the dynamic of the slim majority we

have been talking about? does it look less slim with elon musk acting as cop? >> it is going to put pressure. at the end of the day, i go back to that when you are explaining you are losing most of as a republican, you generally have to vote in favor of tax cuts. the big question is, how much does that cost? it looks like it is going to be $4.7 trillion just to keep current law. anne-marie asked about the promises on the campaign trail. no tax on social security, no tax on tips, no tax on overtime. they could bloom that up to $10 trillion. you're not going to have a bill that. i think the over/under in terms of how much will add to the deficit through taxes for the next 10 years is about $3 trillion. you will have some of those offsets. building a coalition, we have too many members on capitol hill where perfect is the enemy of good and the more you have as perfect as enemy of good, the harder it is to actually get this package. the final thing is you have

senate majority leader thune saying he was to aggressively move this out. i say it will take the over on n that number. jonathan: conversations with market participants every single day. are they underplaying how difficult it will be to execute on this front? >> i think that is a good question. what i have seen as people are just taking a step back, taking it all in, not getting too swayed, too far on any one headline. because the market -- most market participants i've talked to lived through trump 1.0. they recognize there is a certain swing and unpredictability to this. they keep the northstar of it is still more likely than not we extend out the debt limit. more likely than not we extend out some of these taxes. we probably get some level of change through doge. if i do pick something more likely than not there, just to

regulation. you can do that without congress. the courts are really opened that up. that is what they are focused on . as we get closer, that is where we hit the return to volatility. that is probably one of the big names for next year. jonathan: ed mills, thank you so much. this has bipartisan support in some places. bernie sanders supporting some elements of it. annmarie: when you're talking about some of these cuts in the margins, there is even been democrats who have talked about some of those cuts, some of those reforms. the math has to math. that is a problem here. libby cantrell put out a note that said historically this will be the republican's smallest majority ever in the second only smallest majority in the house historically. for republicans, their first post of every vote counts. everyone will be joe manchin. but on the others of congress. jonathan: to the extent the jobs cut at, pushing $5 trillion.

before you get into the other stuff. dani: and then you have to start adding on the promises we heard on the campaign trail. cutting on social security taxes is the most interesting. do you know why? at the same time you're trying to maybe go to medicare, social security, cut some of the fat in these entitlement programs. at the same time you're saying, we are going to cut the taxes on that. there's going to be a lot of debatesht now this morning, down by a 10th of 1% on this payrolls friday. the number we looking for in our survey, 220k. up next, sucharita kodali. ♪

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jonathan: snapping a four-day winning streak on the s&p 500 yesterday. back all-time highs in the last three sessions of the week. we are down by .1% on the s&p 500. nasdaq 100 softer by a tenth. we are by a single basis point, basically unchanged on the week so far. 416.42. 10-year, 418.38. all that going into the payrolls report in about two hours. we are looking for 220 thousand. dani: i wonder if the risks are asymmetric.

it's an ingredient but is not the thing that forces it. the thing that forces a pause is inflation. the biggest risk is weak on employment report where the fed gets worried about jobs again, needs to cut instead of eight 2025 that can be inflationary. jonathan: markets are underpricing job stated in the fed's asymmetrical reaction. we want to turn to europe. the market is starting to stabilize. the euro against the dollar just about unchanged. 10-year yields are down on the week. in france, down around 287. annmarie: is a huge favor in favor of marine le pen. the fact that le pen can cause the toppling of the french government and bond yields barely budge -- she does not

want to be kicked out by the bond vigilantes. she talked to francine about passing a budget. she does not call for macron to step down. jonathan: liz truss' reputation is when you don't want to bring into an collection. entering the third day. the suspect checked into a hostile and the upper west side with a fake new jersey drivers license just days before the shooting. annmarie: this photo can be used for facial recognition technology. they are potentially closer to finding out who this was. the human instinct of the woman who checked on this individual is fascinating. former nypd deputy commissioner had this to say. they were having a flirtatious moment. he pulls down his mask, gives a smile. in that one moment he remains at this moment the most significant clue to date in this entire case. fascinating.

dani: one of the most shocking things is the vitriol online. it's a mistake to look on the internet after things like this but the lack of sympathy and discontent from people, i will say it anyway, it is never an excuse for violence. it is percolating in interesting ways. there was a decision last not where in connecticut, new york, missouri, they would stop paying depending on how long you were under anesthesia. people were upset at the time but reached a fever pitch yesterday. anthem blue cross blue shield pulled back on that decision because this discontent is bubbling up. jonathan: this certainly is not the way to deal with it. shocking what has happened in new york city in the last few days. president-elect donald trump naming david sachs as white house ai and crypto czar. he played a key role in fundraising among tech industry donors. he will lead the president of

counsel for science advisors and technology. annmarie: he's part of the paypal mafia, like elon musk and peter thiel. it is similar to doge. everyone needs to take this with a grain of salt. it's an advisory position. is vc firm says he's not leaving. it's an advisory position. will he be involved advising the president? yes. d.c. the crypto community excited thinking it gives him a direct line -- do you see the crypto community excited thinking it gives them a direct line to the president? dani: he talked about it, he has a key man risk clause for his company. he can't take on a full-time job in the government. it underscores the small tech influence right now. david sachs other vc influencers. marc andreessen is leading the search for the doge outside

agency. you have all these people that are champions of small tech, not big tech entering the government. jonathan: the secret to american success is the embrace of success. in europe it is a weird thing where it's like, regulate that. fine that person. in america i thought that was the secret ingredient. they should have influence on the course of this country. set to rule on tiktok today after president biden signed a bipartisan bill that could ban the app nationwide starting in january. annmarie: regardless of what we hear from the court, the legal saga is likely going to continue. there will likely be an appeal. when they talk about the idea of the first amendment and free speech, i think back to what brandon carr set on this program a few month ago. he is now tapped to lead the commission as chair. it is not a content issue.

it is the way the content is getting to people. he called a national security threat, and this is someone that is close to the incoming president donald trump. regardless of what happens there will be an appeal. the timeline is very short. we have until the end of january for them to divest or there will potentially be a ban. jonathan: donald trump was originally against banning tiktok, but he did and now he wants -- he is against banning tiktok. meta has gone on a charm offensive. we would like mark zuckerberg to have some influence on what's happening. i wonder if that can change the course of the story. annmarie: he made a pilgrimage to mar-a-lago to sit down with trump. you see a shift in tone from all these individuals in terms of wanting to cozy up to president-elect. i'm not sure that will change this but there's another wrinkle. one of the biggest donors to president trump, jeff yas.

he has a huge stake in tiktok. dani: the deadline is january 19, the day before the inauguration. what power does trump have? he has sharp elbows but he would need bipartisan support. it was for enacting this bill to ban tiktok. i'm not sure how much power trump has in this. jonathan: the clock is ticking. lululemon opening its outlook things to strong sales and international markets. the company sing flat sales in the united states last quarter. a 39% rise in china. athletic year still seems to be strong. the affluent fitness focused consumer is still spending. welcome to the program. what is lulu getting right this time? sucharita: a lot of it is the entire sector is doing well.

when you look at the numbers for other companies that are selling similar products, running or looking at dick's sporting goods, they are doing incredibly well as well. the shopper is spending in this category. lulu has been performing incredibly well for years. this year it was more just because of some lower guidance that some of the numbers are soft. it's been underperforming the market. the story is their overall top line has been strong. international sales have been a big driver in the success. that is perhaps one of the areas where it may have some softness in the future. jonathan: so many have struggled in international markets, particularly china. what underpins the success they are having? sucharita: a lot of it is likely newness to the chinese consumer. chinese consumers, like many

around the world are often interested in purchasing whatever is on trend and new. there is influence by social media. i think lulu has had a strong formula for success. that has been at norma's driver. in the u.s. -- an enormous driver. in the u.s., the numbers were softer in q3. i expect in the next quarter as that will be the holiday numbers it should be even stronger. dani: i might be revealing too much about my habits but all over tiktok, instagram i see influencers saying these sweat pets from lululemon, you can get the same thing on amazon for a third of the cost. what is the bigger threat to lulu? the high-ends of the world or amazon and fast fashion? sucharita: great question. the biggest threat is likely the

competition where they can become the new middle. that is where they don't want to be. they need to continue preserving their premium positioning. they need to be very careful about promotions and discounting . you are right. there are competitive threats that are at the high-end and absolutely the knockoffs at the low end. you need to make sure that every part of the brand, the logo, all those elements are preserved and protected and that discounting does not become too prevalent in the business model. dani: how are they on inventories and fighting out discounts? are they doing a good job to fend off all and in the middle? sucharita: it seems at the moment they are fairly strong. this is a company that seems to have pricing power and seems to be able to get away with minimal discounting. you don't necessarily see the

huge, huge cyber week and black friday promotions other brands -- the deep discounts other brands are forced to reckon with. they had an inventory situation earlier in the year. it seems like it stabilized a bit. it appears to have some -- they seem to be in a better position going into q4. i expect that will carry through 2025. annmarie: when it comes to the international business, it was the leggings category seen as the strength for the first time in a while. i thought the problem was the fact they were leaning too much into tightfitting clothing and had to go into a more baggy look. which one is it? sucharita: a lot of this is very dependent on regional preferences. the challenges are they will have to figure out from their merchandising standpoint, their product of element standpoint

what is appropriate in which markets where. which colors and styles will resonate more with shoppers. a lot of that will be influenced by social media. much of it influenced by store associates in stores. a lot of this will fluctuate. that is one of the challenges of being a fashion retailer. what lulu has is the ability to shape what shoppers want by what it has in the store and its positioning as what is on trend at any given moment. annmarie: when you look at consumers around the world, who is the most picky? where is the pickiest consumer? sucharita: that's a great question. consumers everywhere are pretty picky. this is one of the things that we are certainly seeing. at the low end consumers are incredibly fickle. they are the most economically distressed. even at the high-end we see a lot of fickleness.

those consumers, while flush with cash, they have so much choice. we see that in some of the u.s. numbers. that is an issue that every business that is trying to attract higher end customers has to face. jonathan: good to catch up as always. sucharita kodali of forrester research. lulu is up by more than 9% in the premarket. such a mixed month in america. lulu doing better than good. it has been really mixed the last few weeks. dani: it is the bifurcation economy. how can you say it is someone like lululemon that does cost more is more upscale? maybe it comes back to the picky consumer but you can't just assume everybody is flush with cash. you need an actual strategy now. jonathan: you say the consumer is picky, choosy.

that has nothing to do with us. dani: you need to have the right choices for them. you can't say the consumer is picky and that is why it's happening. if you don't have the strategy -- you seen this extreme ceo turnover and bringing back old people to get that culture back. something is happening now. annmarie: the international business was doing well and the leggings are back in style. you were the one that pointed out to me lulu's problem was the fact they did not have this baggier fit. it was supposed to be for yoga so it makes sense. jonathan: it's up a little more than 9% in the premarket. an update on stories. yahaira: french president emmanuel macron is meeting with key politicians to piece together a new administration. in an address yesterday, he's vowing to serve the remainder of his term and saying he will appoint a new premier in the

coming days after a vote of no-confidence in the national assembly ousted michael garnier. -- barnier. california's largest earthquake in years struck off the far northern coast yesterday, briefly triggering a tsunami warning and causing a wave of aftershocks. the magnitude 7.0 earthquake hit 50 miles offshore and was felt from oregon down to sacramento. emergency alerts were activated on local phones throughout san francisco, leading to some evacuations but the warning was lifted within an hour. the world's most expensive dinosaur has a new home. the stegosaurus known as apex wasn't failed yesterday at the natural history museum in new york. it was purchased for a record $44.6 million by ken griffin at the -- at a sotheby's auction

over the summer. that is your bloomberg brief. jonathan: you have all seen that. i have never won the lottery but they would be signs. f you money is dinosaur money. dani: it is 11 feet tall and 27 feet nose to tail. that is probably why he needs a museum. i want to go see it. jonathan: up next, the november jobs report. >> 220,000, i don't think there will be enough to deter the fed from pushing through that december rate cut. jonathan: that conversation is up next. this is bloomberg. ♪

jonathan: equities just a little

bit softer, down by a little more than 1/10 of 1%. 10-year, 418.76. the november jobs report. >> looking to friday's nonfarm payroll report, the strength will be outsized. that will be offsetting the weakness we saw the month prior. even 220,000, i don't think that it's going to be enough to deter the fed from pushing through the december rate cut. jonathan: nonfarm payrolls drop at 8:30 eastern time. economist expecting 220,000 jobs added. unemployment to hold steady. sarah house writing, "we expect the november employment report to reiterate that while the labor market remains solid, in an absolute sense the softening trend has yet to cease." sarah joins us for more.

identify the weakness for us this morning. what does that look like? sarah: it's really looking at the recent trend in payroll growth. we will get a bounce back from october, from strike affects and we think from some of the disruption caused by hurricanes. we could get some meaningful revisions given how low the survey response rate was last month. we are looking at the overall recent trends about job growth. prior to october, around 150,000. does that hold or do we see that sink lower? jonathan: could we get a postelection bounce? consumer confidence is up. business optimism is rising based on the beige book. is there something to be said about confidence? sarah: i don't think we have seen that in the november jobs numbers. that is too soon. we saw a little if you look at the nfib survey.

it came out yesterday and we did see a three-point point bounce in terms of hiring plans. we saw something similar following the first election of president trump in 2016. the bounce we saw in yesterday's numbers was smaller than what we saw in the 2016 period. there's a little to that in terms of increased confidence, increased optimism, animal spirits. the ceiling to that seems to be a little lower then what we have seen previously. dani: the words he heard from fed speakers and powell himself is not about a week labor market. it's about this -- weak labor market. it's about the ability to be cautious with rate cuts. is there a number we could get that would throw that all away? that gives the fed speakers talking about the risk to the labor market? sarah: if you saw a below consensus print that would

indicate it was not so much the storm affects we are seeing, broad-based weakness, this is similar to what we saw in the state employment level data. 29 states declined in october. there are hints the labor market, while softened, we have not seen the end of the downward trend yet. if you saw that further decelerate, the un-employ mitt rate go up, you could -- unemployment rate go up, it has not just been noise around the strikes and hurricanes. dani: if you have a freshly weakening labor market and everyone bulled up in assets and inflation from fiscal policy? sarah: the important thing is that the fed still has room to cut. when you look at where the policy rate is versus where the highest estimate were neutral

is, we are still restrictive. there is room for the fed to give a little bit more, not so much accommodation but dial back that level of restrictiveness where you are not fully moving to an economy to -- accommodative stance, but give more of a floor to the labor market. annmarie: what does that mean for 2025? dani talks about fresh policies. at the same time, the fed is still restrictive so we are seeing cuts next year. how many do you think? sarah: we are looking for a 25 basis point cut at the december meeting and probably 75 basis points through 2025. we think the cadence is going to move slower, probably more to an every other meeting basis. i think that fits with the idea

policy, at least in the view of fed officials seems to be restrictive. even if you get some tariffs, that would be inflationary but also probably going to dent growth. that is where this conversation comes back in. there are two minutes the fed is trying to protect. if you see the weaker growth, that is more of a challenge to the labor market. jonathan: is there a number for december on ice? sarah: i think it is at least 300 with probably some upward revisions to prior months. that is what you will need to get that trend notably above where it has been around 150. at least three hundred and probably then some with revisions. jonathan: sarah house of wells fargo. big take away from the fed speak. they came from governor waller and not the federal reserve chair jay powell. there is still some distance to go producing to neutral. they believe they have a lot of work to do. dani: they think they are

sufficiently or too restrictive. i go to the atlanta gdp tracker at 3.3%. it is crazy to think we are restrictive and running so hot in this economy. that is why this number -- maybe it is cpi and ppi next week that shows inflation is too hot and the fed cannot continue their cutting cycle for now. jonathan: there is a man joining us that believes we are not sufficiently restrictive. coming up, priya misra of jp morgan, everette eissenstat, john murphy of bank of america and that man is torsten slok of apollo. we are going into the big one. payrolls is just around the corner. the second hour of "bloomberg surveillance" is up next. ♪ ♪ where ya headed?

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>> we think the fed will cut here in december but we think next year's cuts are in jeopardy. >> the data could make the case if it comes in strong that they don't have to go in december. >> even 220,000, i don't think that's going to be enough to deter the fed from pushing through that december rate cut. >> what is the underlying trend? we are projecting the rebound from the prior months. >> 350 headline payrolls and a drop in the un-employment rate,

is neutral in fact higher? >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: payrolls just around the corner. 90 minutes away. equity futures on the s&p a little softer. on the nasdaq 100, no real drama. we are down by .07%. basically unchanged. we saw the estimates. welcome to the program. the estimates look like this. the median estimate is 220,000. the highest is around 280,000. dani: it is nosy because we are coming off a low payrolls report. you look at the strikes, the hurricanes. deutsche bank and citigroup expect a return of jobs in october. 80,000 new jobs created. bank of america says 100,000. also the revisions. how much are those going to play into this? what does this mean for the fed?

they want to keep optionality. we heard from jay powell in his previous public statement. this week it was we will be cautious. jonathan: for economists, that is the number one question. what does the cpi print mean on december 18? pocket participants, what can -- for market participants, what can dent the bullishness on wall street? chris harvey, deutsche bank, barclays. rbc, 6600. david rosenberg, dani, made headlines. posting the following. "those of us who found yourselves on the wrong side of the trade must consider adopting a different strategy." the bears are falling. dani: he said he's not throwing in the bearish towel but admitting what he thought was irrational might not be so irrational. things you here at the top of the cycle.

maybe we can make valuations make sense. rosenberg and black rock were out yesterday saying the current valuations aren't about 2025 or 2026. it is the promise of a i. that is tight -- it is the next decade. it is the promise of ai. annmarie: we potentially could see a pullback from right now. i'm stunned at the front page of the ft. investors have pumped almost $140 billion into u.s. equity funds since the election. an entire month, almost 150 billion dollars going into the market. dani: and you have rosenberg throwing in the towel. rabini sounded remarkably positive yesterday. i think that has frightened a few people. i'm dr. realist or whatever. it works to fight the bulls. it is usually fighting the bears that work.

jonathan: he sounded somewhat constructive yesterday, which was jarring at times. equity futures on the s&p 500 negative by 1/10 of 1%. yields up like this. 10-year just south of 420. 418.18. coming up, we will catch with priya misra as stocks lose steam. former nec deputy director everette eissenstat pond trump trade policy and we will speak to torsten slok of apollo as we count you down to the jobs report. stocks mostly flat as traders await the november payrolls. priya misra writing, "the number of payback from the hurricane and strikes but anything below 250,000 suggest a loss in labor market momentum. what can result in a pause in december is 300,000 and payrolls." -- ins payrolls.

" priya: there seems to be a slowing. you are getting a slower pace of hiring. what we saw in the july and august reports, slowing and then a strong number. you have to think through the underlying trend. we see the labor markets growing. nothing dangerous. the speed is not high. you start to average at the last couple of months, if it seems like the trend is slowing that is why the fed is saying monetary policy is still restrictive. despite risk assets, it is the hiring pace. jonathan: important question for the bond market. the markets are underpricing downside risk to jobs data. do you think risks are asymmetrical to lower yields? priya: risk assets might be. the bond market is fair. despite hawkish rhetoric from the fed chair that they can be

cautious, the markets are looking at whether they want to cut in december. it is likely. i see asymmetry. where i think there is optimism, we are in a soft landing. we will get a policy mix that is growth positive. i'm not sure the entire mix of policy between trade, fiscal, is that also positive growth? risk assets, if you see a weaker number there has to be a bit of a reality check. maybe there is a loss in labor momentum. there is lags in monetary policy. i think the bigger reaction in risk assets -- if you get 250,000 or higher, they will continue with a soft landing. dani: the monetary policy is still in the driving seat? priya: i think that. fiscal policy. people look at the 2016 move, that was a big move in rates. significant growth positive.

the starting point is so different in terms of debt and inflation. i think president-elect trump knows that. we are talking about doge and tariffs. if the market things about the policy mix, they will be a lot of differentiation. you have to be careful about which sectors you are long in which you are not. interest rates might just stay around the same level. we were at the same 10-year yield as a year ago. fonts have done well. it is not -- bonds have done well. it's about where you are putting your bets on. dani: i wonder how much that it swings the head scratcher of yields being exactly where they were on election night when everyone thought you would get this run-up in bond yields. it has not happened. breakevens for five-year inflation has not moved. what is behind that? priya: if you look at the policy mix, to my earlier point, it is

hard to say it is all that growth positive. there is no way around it. not if the dollar keeps strengthening. i would say it is stagflationary. what does doge and up? we've --end up? we've had a lot of federal hiring. is that not going to be as high? the fed. i have to give them a lot of credit. they have talked about monetary policy being restrictive. the first 100 basis points was always easy. i'm struggling six months from now. now we get into, are we restrictive? what is neutral? i think 3% to 3.5%, if that is neutral they need to slow down that pace. they have been consistent that monetary policy is restrictive. when they see the 10-year, i

think it is fair. 4% to 4.5% is a fair read. we could stay here and still get value from bonds. you can have 6% to 7% and high quality bonds. annmarie: can we stay in the range if we get the good stuff, tax cuts, but maybe some of the on helpful things to financial markets like tariffs? priya: we will be volatile. soft landings are rare. that is why we have moved from recession soft landing, rig celebration, and i think that continues -- re-acceleration, and i think that continues to happen. do we get tariffs? that's an executive order issue. to we have to wait for fiscal until the end of next year or 2026? sequencing will matter in that range. if we get all of what has been talked about, it is not so clear it means much higher deficits or

much stronger growth. i don't think rates stay where we are. where does the fed really start to slow down? i don't think we're there yet. we could get there in six months. it will come down to the data and how different sectors respond. annmarie: everyone says the sequencing matters so much. do you have a base case? priya: some part of tariffs are announced early on, maybe inauguration day. we talk about the fed put but there is a trump put. do we start with 60 or 20? that will matter. let's talk about renegotiating trade deals. that might be all of next year or maybe two years of renegotiating. i think the market is taking some comfort in that. you don't start off with this is what i'm going to do, let's talk about it. you will probably get tariffs early and then debate how much are they cutting in terms of fraud and waste, in terms of

spending. what is the tax offset you will get? yeah, what can be done without congress happens early. jonathan: is it in the equity market with the bond market? priya: i think more the equity market. i think president trump probably looks at the equity market as a scorecard. we all understand -- equity people understand the bond market matters. did mattered a little over a year ago. we got close to 5%. jonathan: they start to care about bonds. they start to watch auctions. do we finish on the front end of the curve? i don't want to make a big deal. this two-year is stuck at 410, 420. priya: that is the market. the market changes from neutral

a lot. to be honest, we will all what will figure out what is neutral after we have crossed it. if you start to see inflation level out, and inflation has been a little hot -- the fed's confidence is still there but that cpi report is important. if you see another three, the market says we don't believe it. you get payrolls today and there is that underlying loss of momentum. the expectation of neutral will go down. not to give you a copout answer, it depends on the data but the market estimate will be depending on inflation. jonathan: it is a fair response. good to see you. priya misra of jp morgan. bond yields higher by around two basis points. with an update, yahaira. yahaira: authorities are looking for the suspect in the shooting of brian thompson. bullet casings found were

inscribed with the words delay and depose. the gunmen arrived in manhattan on november 29 at port authority and used a fake new jersey id typical hostile. thompson's wife told nbc he received some past threats potentially related to insurance denials. president-elect donald trump selected another of 20, david perdue -- appointee, david perdue as ambassador to china. the pick comes as trump threatened tariffs by as much as 60% on china before threatening an additional 10% if beijing fails to stop the flow of fentanyl into the u.s. shares of lululemon up more than 9% in the premarket. the company raising its full-year outlook due to strong sales overseas. despite slower growth in the u.s.. the strategic plan is now targeting annual revenue of $12.5 billion by 2026.

lulu says it will be fueled by rapid growth internationally, a focus on online sales and a larger product offering for men. jon ? jonathan: big expectations for the incoming trump administration. >> our expectation was always at the good news would be frontloaded and the more potentially adverse news is backloaded. jonathan: that conversation is of next. good morning. ♪ to go further, you need to be ready for what's down the road. as energy demand continues to rise, we're harnessing breakthrough innovations to increase production in the u.s. gulf of mexico.

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jonathan: and a little more than an hour we will get the jobs data. looking for about 220,000 on a headline basis. these are your scores. equities softer.

no drama here. treading water across the board. the foreign exchange and the bond market as well. under surveillance, big expectations for the incoming trump administration. >> our expectation, the possibility o win was the good news would be frontloaded on some of the yard is like the regulation -- deregulation, and then the adverse would be backloaded. what happens with tariffs? with the offsets for a fiscal package next year? jonathan: donald trump's election victory pushing sentiment to multiyear highs. investors expecting loser regulation and a tougher stance on trade. deputy director everett eissenstat writing, "business and governments should expect and be prepared for a drastically changed the landscape in the years ahead relating to trade and international trade policy." everett, welcome to the program.

how different will the approach be this time around compared to the first time around? everett: thank you, jonathan. i think we will see a significant difference. the first term there was a kind of walk into a tariff conversation. we started with existing safeguards on washing machines that led to the 232 aluminum and steel tariffs. then finally the big china tariffs under the 301 that are still in place and carried through under president biden. what is interesting about that debate is there was internal dialogue about whether tariffs were o'toole or an outcome. -- a tool or an outcome. they can be -- some believe a strong tariff regime enables domestic manufacturing and a trade deficit. those were the debates we were having. that is not where we are today.

it is definitely a tool and an outcome. what people are trying to discern now is what is that tool going to be used for and how long will the tariffs stay in place? we are looking at different scenario plannings. it is much more complex and much more advanced which will lead to greater durability for a new type of trade regime we have not seen for quite some time. dani: is the bias towards using them as a negotiating tool or expecting blanket tariffs and double digits when it comes to china and the rest of the world? everett: we could see both in different times at different countries. the president has been clear he is very committed to utilizing tariffs to change a lot of the inequities he sees in the world. he has markets he's quite concerned about. he has said and campaigned on a 10% to 20% universal tariff.

i would not be surprised if there was early manifestation of that tariff in his administration. whether it is put in place and then over time negotiated away, that is a likely outcome. he is pretty consistent doing what he says he's going to do. he has committed to using broad universal tariffs. he has shown he's going to use tariffs for the u.s.-china relationship. that is on top of the existing tariffs we have today. i would inspect them fairly early. i would not expect them to go away as handily. they will be a lot of moving pieces. we saw this past weekend with mexico and canada, tariffs were used for a specific purpose, targeted towards migration, fentanyl, border security. also the bricks-dollar threat. there's a lot of moving pieces. it will be quite complex. when we are through this administration we will have quite a different approach on

international trade then we have had for quite some time. annmarie: what is also different is the personnel. ambassador lighthizer is not going into this administration. there will be individuals like peter navarro, jamison greer. how do you expect these different individuals to use the jurisdiction they have or being close to the president? everett: the last thing you said is critical. he has been very careful in selecting individuals that are loyal to him. everybody on that cabinet from howard and jamison, they have been loyal . they have different approaches to tariffs, different statutory authorities. it will have been flow depending -- ebb and flow depending on the objective. jamison is a protege of ambassador lighthizer. he has worked with him.

he was part of his team. he's a very good trader. he will use his authority to try to achieve the outcomes on behalf of the president. howard lutnick has a different group of authorities, a different position. he has a broader mandate beyond tariffs. he has countervailing duty authorities. i think they will all play a role. you also have -- there will be a focus on wall street and how it reacts. he does want to maintain a very strong and vibrant economy. that is where some of the other voices come in. it'll be like in the past, a cacophony of voices with him being the ultimate decision-maker. dani: wall street has not really reacted, or if it has is been and a positive way. i'm curious about the business community. you say real changes are coming. have they started to make those

changes? are companies trying to right size their supply chains, get domestic supply chains and if not, are they already behind? everett: it is all over the map. some companies are quite exposed to china. candidly, it is hard to move away from china. it is a vibrant market. you have good rates. it is an efficient economy. there's a lot of capital investment there. it's very industry specific. we have seen across the board some bifurcation of markets now. if you're in a highly regulated industry, pharmaceuticals or another withers scrutiny on supply chains, you might -- where there is scrutiny on supply chains, you might see bifurcation. i think companies that are paying attention should be planning now. these actions can begin to take place as early as january 20

where you can see executive orders. one thing we consummate for my clients, it is not just what it does to your supply chains. it is the perception of your governance structure. have you prepared a contingency plan to demonstrate to markets you are prepared for shocks and you understand there may be shocks? it does not mean they will come but you have the structure and plan in place to react. that is very important. there will be a lot of unpredictability in the next cycle. having those plans in place and able to talk about it when the actions happen can be very, very impactful, both to markets and helping manage the company on a day-to-day basis. dani: i was talking to a private equity executive looking at a business that had supply chains in canada and said i like this business because they have the ability to raise prices. consumers will still buy these goods. it's a strong consumer.

for companies and politically, one is that narrative run out? this is an american populace willing to turn on the government if they have to pay higher prices. everett: absolutely. it is such a diffuse effect. for some companies it will be very price-sensitive. they don't have a lot of optionality. you can take textile or apparel reduced --produced, it is very price-sensitive. other products people will continue to pay. they might not have a choice. it depends. in the auto sector purchasing of vehicles is down. they become more expensive, that might affect the auto market more. we are watching that closely. jonathan: everett, let's do this again. former national economic council deputy director everett

eissenstat. it crosses 70 different dimensions. -- so many different dimensions. there's a prospect of trying to use tariffs as a tool to raise revenue to offset tax cuts elsewhere. this will go across migration, drug trafficking, nato funding and more. annmarie: and trying to get manufacturing at home which is why trump floated a 15% corporate tax rate if you produce in the usa. jonathan: poleward you will hear a lot in 2025, tariffs. coming up, john murphy on tesla's growth projections for 2025 and beyond. ♪

jonathan: equity futures almost totally unchanged. the jobs report one hour away. 60 minutes away, the number we are looking for is 220,000. there is manus cranny. manus: this at lululemon is the story of chinese exceptionalism. the stores overseas are doing phenomenally well. they will make 10.45 to 10.49. the conversation you just had is about the preservation of premium pricing. don't end up in the bargain bin. that is what lululemon is achieving.

the international side of the business is doing better than the u.s.. the u.s. business will continue to underperform. there macro pressures and headwinds out there. i never thought i could get excited about leggings but there you go. peloton, i remember when we went into lockdown and people were struggling to buy these machines. and there was a tortured volatility period for them. ubs has tripled their price target. they said it will be up to $10. only one sell left on this. think of the competitors. you have sephora and all of the others coming in from walmart, target, and amazon. they have raised their guidance for the year. they blasted to earnings-per-share. up above the estimate of 4.53. the pendulum is swinging in favor of this company.

a friend of the show has raised her price target. there is still 27% left in the tank. beauty and health, what more do you want on jobs day? jonathan: that is enough for me. the opening belt two hours away come the jobs report about 60 minutes away. elon musk and vivek ramaswamy making rounds on capitol hill, building enthusiasm for their efforts to slash government spending. both meeting with key figures like mike johnson and john thune. annmarie: can they dodgeify the government? one thing they want to do is make all of these federal workers back to the office although the biden administration is working on them to have a mandate to work from home before trump comes in. the big piece of the pie is entitlement programs. they are very popular.

how difficult is coming from that going to be? dani: i find it interesting that they are going after jobs to be an interesting aspect of this. it explicitly said in this you need to go back to office is it will lead to voluntary quitting. what does that mean when right now it is the federal government that is doing the hiring? priya misra was just talking about the idea that the jobs number would've been negative if not for the government. if you're letting go of large swaths of the workforce, politically how much appetite is there for that and what does that do to this macroenvironment? annmarie: the american federation of government employees, a union representing 42,000 social security workers reached an agreement that will protect telework until 2029. this is one of those i know you want to bring them all back, but at least this 42,000 working for social security we will let them hybrid work. jonathan: there is a myth for

european tourists that we come to america and would look at the infrastructure and say americans do not pay enough in taxes, they need to do something about this. then you come to america and they start going to the taxes you are paying you are paying close to 50% in new york city. city tax, local tax, we need to do something about what is going on or not going on in washington, d.c. which is why so many people are on board with this effort. annmarie: they say there is way too much spending and we cannot pay our bills. entitlement programs will be running out. the money is not there. what i find interesting is what ed mills said. the pushback is going to be challenging from people who were in that room. republicans. the margin is so slim. it is the slimmest margin republicans have had in the house. annmarie: trump announcing -- jonathan: trump announcing former georgia senator david

purdue as ambassador to china. what does this mean for the path forward? annmarie: terry haines rightfully called this a cabinet of rival royce. you have hawks. marco rubio who is sanctioned by the chinese communist party. then you send someone with a lighter touch on china to go sit there in beijing. what we put out in our story is purdue work in singapore and hong kong helping american firms source cheap labor in countries. this is something trump is trying to bring that labor home. this shows a balancing act when it comes to china and trump going back to who he is, which is a dealmaker. jonathan: chevron planning to slow production growth next year in the permian basin as america's biggest oilfield, reducing capex by 10%. this could be a hurdle for trump's progress to unleash

crude production. dani: it shows trump cannot have it all. either you have lower energy prices were higher energy prices that encourage people to drill. they work against each other, as does his approach to opec. one of those will have to give. jonathan: can tesla have it all? bank of america raising price target, john murphy writing on a visit to the austin factory saying "the trip gave us increased confidence that tesla is well-positioned to grow in 2025 and beyond with its core business and longer-term investments." let's stop are in the car. -- let's start on the car. what was that experience like? john: there were many things that were very good. it sounds like the subscription rate are going up and that combined with our ride in the latest version was really

impressive. you put those together. if that continues to improve i think getting people to pay $99 for fsd will be an easy thing to execute. jonathan: where is fsd compared to something like waymo? john: waymo is working in many cities, san francisco is the biggest. it is working pretty well. tesla is not to the point where it is testing autonomous tech. that will, in 2025. that will be surveilled. as far as what is going on in the rate of change on a subjective basis, there is a massive improvement going on in tesla with fsd and that on an objective basis the target of getting to 10,000 miles without any disengagement of fsd is a target by the end of this year and next year they will make

significant progress. this is one of the few areas tesla might be under promising on its targets. annmarie: waymo did announce they will go to miami in 2026. can tesla bully waymo out-of-the-way? john: there is room for two to three players in the autonomous robotaxi space. waymo is ahead of the curve versus tesla. the way tesla is approaching this is different than everybody else, does not have a suitcase verse of sensors on the roof of the vehicle. the vehicles will look normal. consumers will appreciate in normal looking vehicle as opposed to a frankenstein vehicle. i think ultimately the way tesla is approaching this with the cameras in the vehicle will impress a lot of folks and might allow them to shoot the gap. dani: we have tesla taking the lead, you have waymo far behind. is there a future of uber and lyft in this? john: i cannot comment on them

directly but i think the companies that own the software and the hardware together are going to be the winners and that would include gm. annmarie: you said you think in terms of robotaxis and the rollout of this is underpriced on tesla. what target should we be looking at? john: the launch of the robotaxi fleet and sing these vehicles operate on a semiautonomous basis with the operators and the safety drivers will be the next proof point. understanding the launch of the cyber cap which will be in 2026 be very helpful. i also think the doge story on elon musk is the idea that we may get somebody in government that understands we need to increase the speed of travel. this technology is opening the door to something i don't think anybody in the markets fully

understands and nobody is talking about. the speed of the travel needs to go up and this technology, if it creates vehicles that cannot hit things should allow for the speed limit to go up in the real economic growth to take hold. you need somebody in government to bend people's minds with the developer of this technology and create something we saw with the introduction of the model t in 1908 to 1927 when the number of miles in the united states went up 125 times. we need to focus on this. otherwise the economy will be stuck. we will lose out to the chinese. this is the technology the u.s. needs to embrace and change the speed of travel so we can compete with chinese auto insurance. annmarie: do you think elon musk and his proximity to power, he is probably going to make a lot of trips to the white house, do you think that will be the force

the government needs in terms of deregulation and thinking about the speed? john: i think it is probably just beginning. tesla has not expressed this view of increasing the speed of travel and they are making it easier and cheaper for folks to get into robotaxis. this is the kind of things that certain d.o.t. programs are working on. there's been some thought around this but i think this needs to be the president for whoever replaces pete buttigieg who has not thought of stuff like this. we need people open their minds and think about this. otherwise we will not make a lot of progress. the speed of travel on our computers has gone up 7 trillion times in the last 10 years and our speed of travel on the roads has gone down. there is all sorts of social and economic good that comes out of this and it is bizarre the industry and the government cannot see this. jonathan: what is the destination? the current travel picture sounds like this come you go to the dmv, get a license, by a

car. or you hail a cab, yet in uber, what will that look like in the future? john: i think over time you'll see a hybrid system in place where you have public transportation, you athletes operated by fleet managers. the fleet management might expand out but as you get into suburban and rural areas you still have the individual owner operator in place and that may include vehicles dumped into or opting into fleets like managed by tesla. i think there will be a hybrid there. if you get to a point where you can get that speed of travel up significantly, even on interstate highways or if you organize traffic patterns in the city, the millionaires and the regular folks are moving faster because everyone is losing in the traffic patterns we see now. everyone can win but you can change activity. the reason i bring up

interstates is because in 1956 was last time we have real improvements on the roads in the united states. this is important suffer the u.s. economy and geopolitically. as you look at this you start opening swaths of real estate not available to folks right now because you can get there faster. houses 100 miles out of new york city start opening up for people to commute. it is what happened in new york from 1910 to 1920 when the population went from 2.3 million people down to 1.6 and it has not grown since in manhattan. there is precedent for this happening. jonathan: whole conversation on autos. we did not get to tariffs. we do that another time. let's get you an update on stories elsewhere. yahaira: rebels in syria gained control of the city of hama and a major blow to president bashar al-assad. the rebels have advanced south

and have their sights set on a key city which could cut off the country's capital damascus from the mediterranean if captured. any response from iran and russia will be crucial in maintaining whether the syrian president can maintain control. a u.s. rejected boeing's guilty plea to fraud charges related to two fatal 737 max crashes several years ago. the judge said he cannot accept the deal between boeing and the doj because it would improperly require a race to be factored into the hiring of an independent monitor and echoed concerns of family members of the more than 300 people killed by the crashes who had urged him to reject the agreement and have maintained penalties are too lenient. the world's richest man is now also america's top political donor. elon musk gave at least 274 million dollars to political groups this year, with most going towards helping donald trump win the presidential race.

that is a drop in the bucket for elon musk, who is worth more than $360 billion. that is your bloomberg brief. jonathan:, payrolls friday. >> the catch is the first estimate of october from which we are trained to estimate a trent will be revised and it might be revised enormously. jonathan: that conversation is up next. live from new york, you are watching bloomberg tv. ♪

jonathan: 42 minutes away from the jobs report. this scene is familiar from what we see on the first friday of any month. markets treading water, unchanged in foreign-exchange, unchanged in the bond market. dead flat in the equity market. on the s&p we are down .1%.

payrolls friday. >> the first estimate of october from which we are trying to estimate the trend will be revised and it might be revised to normatively because the response rate is extremely low. everyone is trying to do these precise estimates based on a number which could be obliterated given the incredible uncertainty we have right now, any precise forecasting is a waste of everyone's time. jonathan: jonathan: here is your latest. less than an hour away from november jobs report with economists expecting a rebound from october's print. torsten slok writing the fed has a very isometric view on its dual mandate, putting much more weight on low unemployment and on getting inflation to stay at 2%. torsten slok joins us for more. evidence this summer that they were putting far more weight on the risk unemployment would get away from them.

torsten: there is a question whether asked your risk on inflation and they have since this began consistently said the risk to unemployment is it will go up in all environments and that is the word you have, that if there is too much focus on let's keep unemployment low it takes the eyes off the ball of inflation, which is the risk at the moment when inflation for the last few months has started to move up towards 3% again, well above the 2% target. jonathan: we have had a morning full of people worried about the underlying pace of growth in the jobs market. are you pushing back against that? torsten: absolutely. i think the narrative is changing in the opposite direction. the fed begin to raise rates in march 2022 and your textbook would've predicted when the fed raises rates you should see car sales go down, you should see home prices fall, you should see capex spending slow down and that is not what has happened. the economy has been remarkably resilient for a number of reasons.

we also have the fiscal policy from the chips act. because of this resilience. now we are adding potential from the new administration to do tail risks to economic growth and also from tariffs, restrictions on immigration and lower taxes to lift up in inflation. all of that is switching the narrative from a soft landing to maybe we are even moving sideways. the risk of inflation beginning to move higher. the incoming data and the incoming data and last quarter was 2.8. the estimate now is 3.3. that is telling us where is this restrictive monetary policy? if monetary policy was

restrictive we would have much lower growth. the growth rate according to the cbc is to present. even to a half years after the fed raised rates maybe this idea of monetary policy is restrictive is misguided and i think jay powell, when he begins to talk about we can now be more cautious is basically a way of backtracking from this view we have to have rates down quickly. dani: maybe next week is the more important week for the market when you get cpi and ppi and in a fed blackout period. are you expecting massaging of the message from financial media to start appearing next week? torsten: if the consensus is right that we get plus 200,000 -- i go to lunch with hedge fund friends once a month and the conversation is beginning to turn around. maybe we could have the fed hiking in 2025. that is not my expectation at this point but there is a complete ignorance to the fact the data continues to be good

and 220,000 on your bloomberg screen is not about number at all. annmarie: if you not expecting a height next year, could we be done with the cutting cycle? torsten: the market has gone with expecting a lot of cuts and now the market is only expecting three cuts by the end of next year. it is coming more to a straight line meaning we are probably going in the direction of the market, saying let's wait and see what policies we are getting on tariffs, on immigration and on tax cuts. annmarie: you think the fed will have to start talking about some of these fiscal policies coming down the pipeline given the fact we have already seen the president-elect talk about them in public and have phone calls and meetings with world leaders about things like tariffs? torsten: that is why fiscal policy becomes important. the budget published a paper saying it is possible to get a turnaround in the fiscal situation and get back on a sustainable track.

it does require we grow the economy and the tax base and a number of decisions that will be very important in terms of trying to get more fiscal clarity about what is coming. it is clear to her point that we will need to see in markets more evidence and more clarity about what is coming and how much is coming on tariffs, on restrictions to immigration comment on lower taxes. it happens to be the case that if you lower taxes it pushes up inflation, if you put tariffs up it pushes up inflation and if you restrict -- it also pushes up immigration. all of these policies point to the risk that there might be tailwinds not just a growth but to inflation. jonathan: what do you think neutral is? torsten: it is definitely not 3% nominal. otherwise the data should be weaker. the framework we have and that goes into the model of estimating, they give a number that is between four and 4.5%.

that means we will likely get another cuts or two, meaning 25 basis points. i think the most important thing is to watch the incoming data and the incoming data, particular core pce suggests the economy is at least moving sideways and may be beginning to re-accelerate. jonathan: one governor waller says things like there is still some distance to go introducing the policy rate to neutral, what is he looking at? torsten: i don't understand that either. the idea is there is a very important and very sophisticated framework which i totally appreciate. it is in contrast to what you are seeing in the incoming data. that is why i think it is the inertia of the groupthink on the fomc that it takes time for the committee to come around to changing their view and that is why fed speakers more recently have been switching away from saying it is a soft landing, we need to cut rates more, to saying we can proceed, we can

proceed more slowly and jay powell saying we can proceed more cautiously. all of those things tell the market we should still be position for rates higher for longer which means in fixed income how yields continue to be a good strategy. jonathan: jim bianco joins us in the next hour and agrees with you. he says the fed cannot cut anymore. just around the corner. torsten slok of apollo. coming up next and the third hour bloomberg surveillance, we will catch up with natty a level of ubs, -- with nadia lovell, jim bianco, mohamed el-erian, and jeff rosenberg. the third hour bloomberg surveillance is up next. ♪

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

>> the u.s. economy still has significant advantages versus the rest of the world. >> the labor market has been strong. >> the data continues to show a resilient labor market. >> the story of the labor market

is we are in a quiet period. >> the last one for payrolls was an anomaly. we have to make sure we are still on track. >> this is "bloomberg surveillance" with jonathan ferro, lisa abramowicz, and annmarie hordern. jonathan: this is it. 30 minutes away from the jobs report in the united states. anticipating the federal reserve decision on december 18. it is this then onto cpi next week. december 18, the big one. paul's, skip, -- pause, skip, or go another 25 basis points. almost totally unchanged on the nasdaq. 220,000 is the median, the high is around 280, the low around 150. a line you mentioned echoed by citigroup, two months of jobs data in one day. dani: we are not just going to get for the prior month, we are also going to get revisions for october.

pnb pair about says the number could be as big as 100,000. this might show us whether the weakening trend was real or it was all about strikes. annmarie: and it will show us whether the fed has a bias to the labor market depending on what kind of number we get today. andrew hollenhorst publishing with this report saying the average of today's leading in october will determine whether jobs growth is slowing or holding up more sonically, as is believed by markets and fed officials and also torsten slok. jonathan: fed officials going into the quiet period. we all understand the bias. they want to reduce interest rates by another 25 basis points. things could change a lot, january 20, when we get incoming administration, donald trump taking over and on day one making big changes. jonathan: this is the big risk -- dani: this is the big risk. what if jobs are weaker and they continue to cut until they come

head-to-head with the politics? does that mean they have already moved too far? do you get a toxic brew of view of cut interest rates and inflation is picking up? jonathan: toxic brew. bramo is proud. dani: i am in her chair. jonathan: it drifts around the table. equities on the s&p down. down .1%. coming up, we will catch up with nadia lovell, mohamed el-erian on growing global divergence, and we will speak to jeff rosenberg of blackrock. we begin with the rally losing some steam as traders await one of the bids the data points, today's jobs report. nadia lovell writing "a favorable macro economic backdrop continues to support markets and we expect u.s. stocks to move higher in 2025.

investors should brace for increased volatility due to potential changes in government policies under trump 2.0." 7000 on the s&p, bear case, a tariff shop 5100. what does that shocked look like? nadia: if we get the universal tariff trump has been talking about, that has implications for not only inflation, it has implications for economic growth. we could see a hit to earnings expectations going forward. we think that could create volatility. we saw during the trade wars that the marketed pullback. remember march 2018 when you had that first implementation of tariffs on steel and aluminum we saw the market pullback and subsequently in september as the trade wars got heated the market was down 20%. jonathan: he is not in power but he has given us a clear signal

of what he wants to do. it wants to put double-digit tariffs on china. why is the markets are resilient in the face of that? nadia: it is trying to figure out -- we are in era where we will see policy by social media or truth social and it will be difficult to determine the signal from the noise and how much of this is negotiating posturing. in terms of mexico and canada we are already seeing a reaction when he put on social media 25% tariffs if they do not do something to control borders and the traffic of drugs into the u.s.. already those countries have stepped up and had conversations with president-elect. we think that is going to be more of a stance of escalate to de-escalate. with china it is probably more escalate to decouple and that is something we have to be mindful of that we will see increased tariffs on china and that has locations for certain segments

of the markets. we have to think about parts of tech that have exposure to china. dani: the good stuff was supposed to start the cyclical rally. since then it stalled out. it has been the mag seven that led the s&p. it is not been cyclical stocks say for the financials. has the trump trade run out of steam? nadia: part of the trump trade got caught up in the strong results we saw coming out of earnings. i would say some of it was fundamental. it is not surprising to see small-cap lose some steam because that was not driven by fundamental. earnings growth is not coming through on small-cap and the 2016 playbook is being played out and now you have to think about the implication of tariffs even on small-cap. when you look at tech, the news has been incrementally positive. look at the off cycle earnings report we have had this past week. also the tone coming out of the ubs tech conference has been positive.

not to have a view on any single stock, but you look at salesforce this past week, strong topline revenue. they also talked about implementation of ai and seen some traction within agents. nvidia, no surprise come at the ubs conference continue to see exceptional demand. we think the tailwind for ai is still there and that is why you see the likes of the mag seven continue to outperform. dani: you have had prominent bears throw in the towel on their bearishness, specifically on tack. david roseburg said that what is getting priced in now is decades ahead and that is why you cannot have these lofty valuations. do you buy that how we value companies has changed? nadia: there are companies being valued on a pickup in productivity but i would not put tech in that category because you are seeing that earnings

growth. look at how much earnings growth you are seeing from tack. you'll probably see over 20% versus what we are expecting from the broader market of 8% to 9%. tech is trending at a premium valuation to the market but it is growing at double times so i think it is justified and you are seeing not only the top line , using margins and earnings growth come through. other areas of the markets, could there be potential fraud unit where valuation needs to come down and companies have a valuation reset? potentially, but i do not think tech is in that category. annmarie: how vulnerable is tech to something like your tariff shock? 80% of these are made in taiwan. nadia: we have to watch the implications for taiwan. we have heard president-elect trump to say taiwan needs to play a role in their security. at the same time the president-elect is in favor of

american advanced technology and making sure american state of forefront of that and there is reassuring happening. in terms of plants in the u.s. able to manufacture chips. i do not think you will see that will happen overnight. i do not think the president will do anything destructive to american innovation. we have to be at the forefront of ai in the world. i do not think he will do anything to do that. annmarie: your case of a tariff shop of 5100, what happens if we get that coupled with a 50% corporate tax rate if you produce in the u.s.? nadia: that goes back to how do you define what is produced in the u.s. if you get that tax cut, i'm not her how that will be funded. we have to look for pennies under the sofa to fund this. let's pretend you do get that. it does favor of the smaller companies in the u.s. because

they tend to manufacture in the u.s.. you could have some offsets with that. i think there is going to be a big headwind from tariffs that you are not going to necessarily see this uplift in the market. we think tariffs will continue to have headwinds to the market. jonathan: how many bears have you spoken with? are there any left. nadia: you have been talking to me for a few years and now i have always been in the bullish camp. i have a lot of company now and i am in good company. i would not say we are necessarily overly bullish. i think we are balanced and i do not think there are many bears left because of the fundamental pictures. we have to be cautious of the risk. the president already sitting out social media posts before he takes office we have to take that seriously. there will be increased volatility. jonathan: lori calvasina was on the program talking about the

capacity to absorb bad news. how stretched arbery we at how do you gauge that? nadia: valuation is at the upper echelon. it does not leave much room for error. that is why i think if you get news around tariffs, if you get these broad-based tariffs implementation that is going to add some volatility to the market and you can see the market trade down. we also have corporate earnings season around the same time the president takes office. if we see incremental positive news on the corporate fundamental side. valuations are on the upper hand. jonathan: what is the base case for you and the team? nadia: our base case is 6600 and i know you will say a lot of people are around that but i would like to point out we initiated that in mid-october. i am glad to see others are joining us in the 6600. that is our base case driven by

8% to 9% earnings growth. jonathan: we've known each other while. you preempted me there. nadia lovell. let's get a social media post from president-elect donald trump going to bat for his nomination for defense secretary saying "peter hegseth is doing very well, great student with the military state of mind. he will be a high energy who leads with charisma and skill. he is a winner and there's nothing to be done to change that." annmarie: push back and he is still backing pete hegseth to be his defense secretary. he is struggling when it comes to meetings with senators. it does not look like he will have the votes. the conversations i have been having is there was a conversation with governor desantis and president-elect trump and of pete hegseth cannot make it through governor desantis is ready to step in. jonathan: let's get you an

update on stories elsewhere. here is your bloomberg brief. yahaira: authorities continue to search for the suspect in the shooting of brian thompson. bullet casings found at the scene or inscribed with the words delay and depose. police say the government arrived in manhattan on november 29 at port authority and used a fake new jersey id to book a hostile. thompson's wife told nbc he had received some past threats, potentially related to insurance denials. the european union and the south america block have agreed to a long-sought trade deal despite objections from france, which has vowed to obstruct the ratification. the sides agreed in principle to a deal that would create a market of 780 consumers while eliminating tariffs on goods like cars and industrial products. france and poland are the most opposed of her concerns over impacts on the agricultural sector. china implement a new export

rules to ban the sale of certain goods to the u.s. for companies not just inside the country but outside as well. the measure attempts to replicate the reach of u.s. and european sanctions against chinese products by restricting items that are chinese made or contained chinese components. any company or individual that violates the provisions will be "held accountable." that is your bloomberg brief. jonathan: up next we will get you morning calls plus catch up with jim bianco of bianco research as we count you down to the november payrolls report. that drops in 16 minutes. ♪

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jonathan: everybody is at 6600. these are the price targets. most people are 6500. morgan stanley, goldman sachs. jp morgan. rbc 6600. nadia lovell 6600. bank of america 6666. wells fargo 7077. equity futures right now on the s&p 500 -.1%. the opening bell an hour and 13 minutes away. 13 minutes away we get a jobs report in america. bank of america upgrading dollar general to buy, noticing improved inventory positioning and positive customer experiences. that is up more than 2%. jeffries downgrading deere the

hold setting negative impacts of tariffs in 2025. citi raising its price target on lululemon pointing to strong international sales and gross margin. that stock is higher close to 9%. november payrolls moments away. economists expecting 220,000 and for unemployment to hold steady. joining us is jim bianco of bianco research. what are you looking for in 12 minutes? jim: probably looking at the october report as much as november. i like the joke that this is the monthly payrolls report because we have 47% response rate for october. that usually rises to about 95% on the second pass. we could get more respondents for the october pay report in this revision than the initial release and that number could go up a lot because a lot of those businesses were closed because of the hurricanes and they have reopened and re-reported they have employees.

not only does november matter put october matters as much. if we get 220,000 around the estimate and we get a big upward revision, that will put the fed in a tight spot because we are only at 68% that they will cut rates in the december meeting. a strong number could push it to 50-50. jonathan: you say inflation looks like it bottom to the summer. you do not think they should be cutting in december. how big is the gap between you and them at the moment? jim: it depends. if you look at the. chart they are all over the place at the fit. the one thing chariman powell likes to say is there is some kind of unanimous consensus view. the dot chart says there is not. there are still members that they could they do cut two more times and there are members that think they do not need to cut. if you look at the long-term. they cannot agree on where the neutral rate is.

it is anywhere between 4.5% percent. i am in the camp where the economy is doing five. i am in the camp that says jay powell, look at the rise of long-term yields. it is a signal to you the cuts we have done or unnecessary the market is more worried you're creating too much stimulus and potentially an inflation problem. we will see what winds up happening in 10 minutes and next week with cpi and which way they go. annmarie: if we get a strong number is this bond market mispriced. i know you said yields have been moving higher but they've been moving lower in the past month. we are near the lows of the recent months. is something mispriced with all of the more optimistic estimates out there for what the jobs figure will look like today? jim: the bond market moves on more than just the payroll report, it also moves on what is happening in europe and the weakness there. we have seen the strengthen the

dollar in the flight to quality as the french government collapses and what is happening in south korea may be pushing people into the u.s. treasury market because it is the reserve currency. to your original question, if we get a strong number and those probabilities go to 50-50 the fed has made a terrible mistake because they are in their quiet period and now we will be back to what we were in september, watching the wall street journal reporter who is the effective federal reserve chairman during the quiet period, and whether or not he gets that call from unknown saying blue horseshoe likes 25 or not and reports it in the paper and that is how global financial markets will be working for the next 10 days on a strong number. it is not what the fed wanted but they've created this monster. jonathan: talk to me about how problematic that is for communication at the federal reserve. is that a problem that the named reporter you named -- certainly that is not his fault -- but how problematic is that? jim: it is hugely problematic.

the fed created a system that put him into that position because now he has to be careful of the opinions he has. if he writes an opinion piece that this is my opinion it could be mistaken for that unknown phone call and people will think this is a policy prescription and he could be creating policy when that was not his intention all along. they have created a huge problem. if we get a weak number and probabilities go to 95%, it is not a problem. this could be the second time in four months this will happen to the fed. dani: we remember before the fed moved 50 basis points, we cannot figure out if that was from fed officials or that was his opinion. how much of that leads to a volatile bond market? we have seen that play out time again when the messaging has been strange. what does that mean for 2025

when we are said to get more volatility because of the different prescription from fiscal policy. jim: i agree. from fiscal policy everyone will get a truth social account and we will also be watching the quiet periods in any one of these stories could swing markets one way or the other. we have not even thrown in the idea that maybe inflation is taking up, maybe europe is weakening, maybe germany is going into recession. all of this will play into a volatile cocktail for the u.s. bond market. you mentioned everybody is at 6600 for their forecasts. i understand the forecast. the fly in the ointment could be everybody agrees the economy is strong, the fed does not need to cut rates. the offset will be you will have to go to 6600 and the s&p with rising long-term yields because that will be the natural response. yields will go up in response to

more inflation and in response to stronger growth and that could be a drag on a lot of those forecast. annmarie: you are making the point the data is good and to john's point he brought up politics and said the data is good and that will help the fed. how political will it look if they do not cut in december and they cut once in an election and once during an election week? jim: they have already baked their cake. that is why the 50 basis point move in september was such a mistake. even if they cut in december and refrain in january. the data could look good and be a perfectly logical reason, but then somebody with a truth social account will say you cut rates before the election and then when i want, you stopped. that will be a difficult thing for them to have to communicate through. they set this up with the 50 basis point move seven weeks before the election. they made it look political and if they stop they make it look

political, and if they keep going because they are afraid of the politics they made sasser beta policy mistake. they made this been for themselves. jonathan: that post was incomplete. leads and that is why you nominate kevin walsh to be the next chairman of the federal reserve. where you expecting that change to happen even if he just makes the nomination and we have to wait for the term to finish? jim: president-elect trump is very close with kevin warsh. he did not get any seat. i think he has a plan for him. i think that is federal reserve chairman. if you saw scott bessent, the treasury secretary said we might have a shadow fed chairman. nominate him this spring or summer than everything the fed does, you will have kevin warsh on your studio during fed meetings to basically second-guess whatever chairman powell says that every press

conference and every federal reserve meeting. this could become another source of volatility for the market. there is one of the chairman says and what the next chairman thinks. we could wind up seeing something along those lines. jonathan: jonathan: this could be messy. jim bianco of bianco research. the jobs number drops in four minutes. payrolls. 220,000 is the estimate. we will break it down with mohamed el-erian and jeff rosenberg. as dani that all morning, two months of jobs data in just one day and it all drops in a few moments time. ♪

it's our son, he is always up in our business. it's the verizon 5g home internet i got us. oh... he used to be a competitive gamer but with the higher lag, he can't keep up with his squad.

so now we're his “squad”. what are kevin's plans for the fall? he's going to college. out of state, yeah. -yeah in the fall. change of plans, i've decided to stay local. oh excellent! oh that's great! why would i ever leave this? -aw! we will do anything to get him gaming again. you and kevin need to fix this internet situation. heard my name! i swear to god, kevin! -we told you to wait in the car. everyone in my old squad has xfinity. less lag, better gaming! i'm gonna need to charge you for three people.

jonathan: december 6, the last jobs report of 2024 is seconds away. the scores going into it look like this. equity futures .5%. the nasdaq unchained and the russell positive. here's a flavor of the snapshot, the 2, 10 and 30 year. the two year yield is higher by almost a basis point. with the jobs number here is mike mckee. mike: we are coming in in the neighborhood of what the markets were expecting. 227,000. that is a little bit stronger than the 220 we saw -- that we

had for a forecast consensus. the prior month of 12,000. i am looking and i want to get those numbers for you because we have been revised up in september by 32,000. in october only by 24,000 to 36,000. very small revisions, which suggests that we will get something more. there is some concern that the strikes have not washed out of the data. or we saw a lot of job creation and not much of a rebound from the hurricanes. the unemployment rate is 4.2% up from 4.1%. we have to check that on a three digit rounding rate. the change in manufacturing payrolls is strong, 22,000 compared to a -46,000 unrevised. average hourly earnings up .4%. there was some thought that maybe it has been pushed up by a

lack of low income jobs. and hourly earnings on a year-over-year basis, 34.3 unchanged. the labor force participation rate drops to 62.5% from 62. -- 62.6 which suggests that we have a larger labor force during the months. we will check into that and get back to you in a moment. i am sure you are getting market reaction. jonathan: equity futures with a little bit of a pop near session highs of the s&p 500 up to close to a 10th of 1%. if we turn the page this is what it looks like. yields are lower and a little bit higher down by four basis points to 4.1%. further along the curve we are down two basis points. we can get a decent guess of where the dollar is trading, just softer against the euro.

the euro-dollar back at 1.6. it is a small upside to price but a major snapback or the big upside revisions that was expected. dani: instead you have employment rates that do increase. the unemployment rate goes to 4.2% even though you had a decline in the participation rate. you get status quo and a labor market that is not too hot. this does not do anything to shake the fed off of their course. jonathan: i want to ask you about the unemployment rate, have you seen anything to suggest what is behind the move up to 4.2%? mike: the labor force rose by 174,000, but we saw a decline of 355,000 in the number of employed in the household survey, a huge decline. it is kind of inexplicable other

than to say the numbers are a kind of volatile on a month over month basis in the household survey. it does not square what we are seeing on the establishment side. a lot of people will be wondering which one gives us a better picture. dani: as you look through these revisions what color do we get around the report of october? does this change our understanding of it all, something punctuated by strikes and the weather effects? mike: everybody has to dig and more. the immediate takeaway is that the narrative that we saw, the big strike and hurricane it -- hurricane related drop-off in october is not as correct as anticipated and it might have been an outlier month where a lot of people did not get jobs for one reason or another whereas the november numbers do not show a big snapback so it shows extra strength in the labor market. it could also relate to the

timing of when companies added temporary workers for the holidays. but that is not clear at the moment. jonathan: thank you. equity futures posited by .10%. i want to cross over to tom who joins us now. your first -- your first reaction and what jumps out to you? tom: at the end of the day the report is consistent which is to say that labor has slowed down quite a bit. there are some cracks in the labor backdrop but the floor is not falling out. we like to look at something called cyclical hiring. take private jobs and we gained 100 120,000 jobs. even if we exclude the prior month which was the impact of all of those things that we know, boeing in the hurricane, you are averaging 100,000 jobs. again, our view has been the continued economic expansion

will roll into the coming year. you are going to do it with a labor backdrop that has slowed down and will remain soft. dani: just to be clear, does this change anything when it comes to december and december cuts and the rhetoric? tom: no. i think you are right. i do not think it changes anything. at the end of the day this is a number that will support the fed cutting rates. i think looking for 200 more cuts is reasonable. but i think it is interesting because people are looking for and are hopeful that this report will bounce back in a more notable way than what we have seen. and that drives home when you look at all of this other labor data has really slowed down quite a bit. if you are waiting for the payroll report to crack it is too late. this is one of the most lagging economic indicators and

something that we will appreciate now and will revise. when we look at some of the leading metrics it seems like things are slowing down. dani: does that mean the bigger risk is next week's cpi, ppi and import prices? tom: when you think about the things that drive monetary policy decisions a lot of them is lagging. i think you are right. i think that we are probably going to swing around this data. when this report at 227,000 is reasonable you cannot discount the next one. that is how the data has been rolling. and then you build in the revisions. you are not looking at the current month and then you have to look at what the prior month from a revisions perspective. rings will end up being volatile. jonathan: welcome to the program you just missed out on the jobs number, 227 and the median estimate was 107 -- 270.

unemployment is at 4.2% in the wages are hotter than expected in line with the previous month at 0.4%. joining us is mohammed u.s. had seven or eight minutes to chew over the numbers, what stands out to you. mohammed: as jim pointed out the challenge of the market would have been a consistency strong report. this is a somewhat strong report but not consistently strong. it was strong on the earning side and is strong on the labor participation coming down side and less apply and is also strong on a small beat on unemployment. the fact that the unemployment rate went back up means that the fed will be comfortable cutting by 25 basis points and that the market will increase the probability of this happening. on the policy front, this did not complicate what would have been a messy situation for the

reasons that jim pointed out. on the economy side the labor market remains solid and u.s. exceptionalism is set to continue. jonathan: it makes the decision easy to cut 25 but we still have to wait for cpi. i wonder if it is hard to signal anything for 2025 and a news conference. what will that exercise look like? mohamed: it would be hard for this fed because it is so reactive and so data dependent that it would simply tell us that it will remain data dependent. i suspect that while the range will compress a little bit this will have quite a wide range in terms of the terminal rates. you know, the fed has two options. the option that it took in 2021 which was completely wrong to look forward and it has shied away from that and went to the option of being data dependent and i suspect they will stay that way. we will not get any strong

signals other than we will remain data dependent. dani: can i get your opinion on this what it looks like in december and what the summary of economic projections looks like if they can project forward if at all? tom: i think he is right. prudence is in demand right now and powell is in a tricky spot. think about his speech at the deal book the other day, i think what he laid out to me made a lot of practical sense. they are going to wait to see how the data unfolds. he has already laid the groundwork for eights cap after -- for a ski[p after the december meeting. but after the last presser. so, when i think about set up at large, i do not think they need to make wholesale changes. the economy is more or less

evolving in a similar fashion to what they have for 2025. again, it is in their best interest to not make any wholesale changes. this is a nip and tuck outcome. dani: when it comes to the data we are waiting on cpi. the last time you were on you said inflation is not dead. let number could we see that could change the fed's thinking? mohamed: and you heard from the chair saying that inflation has been more stubborn then he and the fed expected. we see inflation stuck at a 2.5 to 3% range for the core measure. the fed will have to make a decision. my gut feeling is that it will run with this number promising us to percent down the road. and i suspect that we will see 75 basis of cuts. but, they will be spread out,

like you just heard. it will be cut, pause, orkip and then we will have a huge conversation, was this a hawkish scap, or 8 -- skip or the devilish skip. we need the third differential because we lack policy guidance. jonathan: what kind of skip or cut are you expecting? what are you looking for? mohamed: no one will predict this when you know the reaction function is backward looking. because it would depend on the latest number, unfortunately. jonathan: cpi drops next wednesday and bond yields are lower by about four basis points. equity futures are still higher on the s&p 500 by close to .2%. the numbers dropped 12 minutes ago and i want to cross back over to mike mckee. you went through what was behind the uptick in unemployment in the snapback we did not really get. a lot of people were working --

were looking for a big snapback. where did we get growth and where did we miss out? mike: we saw a decline in retail sales hiring, -28,000 in the month of november where people are staffing up, which leads you to believe that there might be seasonal effects and seasonal adjustment factors holding down the number of jobs created. trade and transportation jobs also down 23,000, and that is usually when we see additional ups or fedex drivers. a little bit of a surprise. we did see manufacturing rebound with 34,000 jobs. construction, only 10,000. and we are looking at the government hiring, that is one of the highest at 43,000 but almost all of that was state and local in the federal government lost 2000 jobs. leisure and hospitality rebounded 53,000 jobs and about

28,000 of those were in the restaurant business. people getting jobs there. i wanted to point out the three digit unemployment rates. 4.246 for november. basically just below 4.3%. that would've gotten the fed's attention if not worried them. they forecast in september 4 .4%. jonathan: as we count you down to the opening bell in 46 minutes we see the outperformance on the small caps. the russell by point 10% -- by .8%. at the front end up with the yield curve with the yields down four basis points. jeff, welcome to the program. the panel is suggesting that the doors wide open for 25 basis point reduction, is that your sense or weeks time? jeff: that is the read. this is clearly reiterating a gradual slowing in the labor markets, as much as was pointed

out to three digits, that unemployment rate helps the fed to cut. the market was pricing 70% of the outlook and the bond market initial reaction is increasing that on the gradual labor market slowdown. that is very much the read and as the panel was discussing we are pivoting to the pause and skip debate and that kind of message that means. the big debate is over the degree to which cuts have to take place in 2025. and the disconnect between financial conditions which are going to be easier after today and the degree of restrictiveness that you see some of the committee members believe justifies the number of cuts that they are forecasting into 2025. dani: are you arguing that you needs a fed who pays attention more to financial conditions?

that conversation has gone by the wayside. are they going to have to rethink cuts because of what the market is doing? jeff: it has but there was a little bit of acknowledgment and powell acknowledging that we cut for the and then the data revised. the whole issue is about the strength of the economy and as mohamed points out, it is a very data dependent and reactive fed. the date of that is key -- the data that is key is economic growth. you do not see it well below potential but above potential. and that is telling you that monetary policy is not as restrictive as i think it is. there is a disconnect whether you are looking at the growth measures or labor market. take out 100,000 and that is hurricane and strike payback. the labor markets are moderating and that is the best evidence. outside of that see the impact on financial conditions. animal spirits is a very

supportive conditions environment. so maybe you do not need to keep pushing into financial conditions or easing by the degree of cuts they have been signaling. dani: they mentioned the third degree. if the door is open for this cut there is going to be a bias to 25 basis points, then what is the tone or rhetoric, is it going to be a hawkish cut of 2025 with a change of fiscal policy in washington? jeff: hawkish relative to expectations. so two or four weeks ago the market was expecting a very aggressive pace of fed cuts. now we have priced that out from the markets. so there is a little bit less of a disconnect between the fed moderating the pace of cuts into 2025 and market expectations. that might read hawkish but if that confirms expectations not so problematic. if there is a greater acknowledgment that would be

surprising and read hawkish. when you get into 2025 it will be about understanding this pace of cuts has to slow because the economy and the data does not support the amount of restrictiveness that the fed thinks they currently have. jonathan: another round of fed speak and then into the quiet period. we mentioned this quote in a speech from him early this week. cut or skip and this is what he had to say. "there is still some distance to go to reducing the rate to neutral." i just want to give you the final word, they think they are a long way away from neutral and they have space, meaning they can carry on cutting interest rates. how much distance do you think there is because where we are and where neutral might be? tom: it depends on who you ask. think about the dispersion and estimates of what neutral is. at the low end it is to .25 --

2.25. and the top end is 150 basis points away. depending on who you ask it could be very far away from it. i think what will happen is this. if you look at the 25 dot, the median is 3.4%. that is going to ship tire. and to that point, i think they will wind up shifting higher to where the market is. the market is about 370 -- 3.70. when you take out one of those four cuts for next year, it falls in line with what the market is thinking. and i do not think that has to be terribly disruptive. jonathan: tom, appreciate your time. mohamed, i want to come back on the same question. how we reconcile the differences between where the market believes neutral is and what the federal reserve is signaling. how do we close that gap?

mohamed: by holding a key variable, what is the inflation target. if the target is to percent, then you should not cut in december. if inflation is somewhere between 2.5 or 3%, which is desk -- which is justified by all of the structural and long-term changes, then you cut. we are fudging this and no one wants to talk about this. i don't know if you saw a few fridays in the afternoon the fed put out its discussion of the monetary framework and said that we would not discuss the inflation target. critical to this is what the de facto target they would run with. my only feeling is that they will run slightly higher and that means that, ultimately they will end up between 3.3 quote -- three point75 and four. dani: what about the argument

that they cannot abandon their inflation target because it is important for people not to run away and think they will have higher inflation and change habits. is there any credence? mohamed: i think there is and there are many ways to do it and people have come up with different ways. my concern means that if you truly believe that 2% is given to them and is not an arbitrary number. and if they try to get there and stick to that inflation target, they will sacrifice american exceptionalism and that is what i way about. at the end of the day they will fudge it by saying to percent down the road and it will be a long road. jonathan: you -- dani: do you agree that 2% down the road will be very long? jeff: this is an important debate and the fed has had this debate. they will not announce a change to the inflation target. they will stick to the target for the reasons that you point out. it is very important to the

expectations but there is room for interpretation. so 2.6 or 2.7 and i agree with mohammed that the cut in december of 25 basis points is telling you where they lean on inflation versus growth. i think there are long-term consequences because if the bond market wakes up to the fact that there is a tolerance for inflation and the real test as -- is as long as inflation is moving lower or sideways they can play the fudge it game. the real test is what happens when the acceleration in growth and impact on conditions presses on inflation. the one thing we did not talk a lot about and it is hard to see whether the wage number today and the slight uptick is a shift or not, we have not seen the wage numbers confirming -- conforming to the 2% target.

the real challenges what they do when inflation goes back up. i am not predicting that but that is where you put this two verses fudging to 2.5 to task. jonathan: jeff, thank you. if you are joining us, welcome. 227,000 is a number up against a 220,000 estimate. unemployment creeping higher very close to 4.3. the estimate was 4.1%. this leaves the door wide open for an interest rate reduction. one more data point to go and dpi next wednesday. mohamed still with us for final thoughts. you published the ft column ahead of their conversation and i notice the contents. it is not about whether the u.s. will outperform, it will. it is the extent to which it will diverge. you noted earlier and i think it is a perfect time to finish and think about the rest of the global economy as we get 227 and

start to complain about whether that is good enough the rest of the world is struggling. china and a potential japanification, and europe's inability to govern itself. in a tri-polar world, what does 2025 look like? mohamed: a world of dispersion. i have been saying the good, the bad, and the ugly of the goal -- of the global economy. the good is the u.s., that is china and the ugly is europe. and we have had confirmation of that. it is a world where there will be significant differences in systemically important economies and that will play out in the currency market and it will also play out in yields. but it will continue to suck capital into the u.s. and that is the good news for the u.s. markets. if you think of there is no alternative but there is no

alternative to american exceptionalism. dani: just to hang on the point of europe, robin brooks at brookings wrote a column basically saying that europe desperately needs a weak euro and now should be the moment that the ecb cuts and they cuts aggressively because they need some sort of stimulus not coming through governments. would you agree with that? mohamed: a weaker euro is like pushing on a string. europe needs fundamental reforms. the draghi report sets out the problem with productivity and competitiveness. a weaker euro and stimulus does not address those issue. i think it is much deeper than that and europe has to understand that unless it takes serious steps, it will fall further behind. unfortunately, to take further steps you need political leadership and we know what the situation is like in france and

germany. there is no european policy without france and germany leading. jonathan: there is very little leadership. we are lucky to get some time with you. we appreciate it. on this payrolls friday, looking ahead to next week. ecb is around the corner. let us get to the week ahead. before we get the weekend we are going into the quiet period for some federal reserve. look for some comments. and then we get further into next week, on tuesday, opec holding the year ahead conference. wednesday, cpi. thursday, ppi and jobless claims. and then that ecb interest rate decision. the guest lineup on monday looks like this, adp, chris of wells fargo to -- wells fargo and the iif president tim adams. good morning to you all and have a wonderful weekend, thank you for choosing bloombergtechtv tv. this was bloomberg surveillance. ♪

♪ ♪ ♪ something has changed within me ♪

♪ it's time to try defying gravity ♪ ♪ ♪

matt: futures turn higher after the jobs number beats. katie: bloomberg open interest starts right now. sonali: coming up the labor market bounces back from storms and strikes, the u.s. added 227,000 jobs in november and that estimates. matt: blackrock and pimco, we will get reaction on the jobs report as well as acting labor secretary julie sue,, rick